What is Obama thinking?

Yet another post urging Obama to show some backbone.

Republican congressional leaders have said they will let all of the Bush tax cuts expire unless the president bows to their demand that the top 3 percent of Americans be included in any tax cut extension.

Obama should call their bluff.

See the whole thing here. It has lots of sound arguments—ethical, econonmic, and political—for standing up to the Republicans.

The real question is why posts like this are even necessary. What's going on in Obama's head that he's not doing this on his own initiative?

Bees solve the TSP

From the Media Center at Queen Mary, University of London:

Scientists at Queen Mary, University of London and Royal Holloway, University of London have discovered that bees learn to fly the shortest possible route between flowers even if they discover the flowers in a different order. Bees are effectively solving the 'Travelling Salesman Problem',

Of course it's not as mathematically formal as the preceding suggets. Here's the abstract from The American Naturalist.

Animals collecting resources that replenish over time often visit patches in predictable sequences called traplines. Despite the widespread nature of this strategy, we still know little about how spatial memory develops and guides individuals toward suitable routes. Here, we investigate whether flower visitation sequences by bumblebees Bombus terrestris simply reflect the order in which flowers were discovered or whether they result from more complex navigational strategies enabling bees to optimize their foraging routes. We analyzed bee flight movements in an array of four artificial flowers maximizing interfloral distances. Starting from a single patch, we sequentially added three new patches so that if bees visited them in the order in which they originally encountered flowers, they would follow a long (suboptimal) route. Bees’ tendency to visit patches in their discovery order decreased with experience. Instead, they optimized their flight distances by rearranging flower visitation sequences. This resulted in the development of a primary route (trapline) and two or three less frequently used secondary routes. Bees consistently used these routes after overnight breaks while occasionally exploring novel possibilities. We discuss how maintaining some level of route flexibility could allow traplining animals to cope with dynamic routing problems, analogous to the well‐known traveling salesman problem.

In the PR release Dr Nigel Raine from Royal Holloway's school of biological sciences is quoted as saying,

Despite their tiny brains bees are capable of extraordinary feats of behaviour.

Of course this is not quite so extraordinary. All they need do is keep track of the distance for any route and then through experimentation among different routes select the shortest found so far. Even that's not trivial, but it's a lot less sophisticated than "solving" TSP.

Jon Stewart on Glenn Beck on George Soros

The Daily Show With Jon Stewart	Mon - Thurs 11p / 10c
George Soros Plans to Overthrow America
www.thedailyshow.com
Daily Show Full Episodes Political Humor Rally to Restore Sanity

Selling blood plasma for a little extra spending money

From The Chronicle of Higher Education.

“For a lot of college students, it’s just a little extra spending money,” Mr. Canze [the opinion editor Central Michigan University’s student newspaper] said when I asked about the plasma trade. “I probably know nine to a dozen people who will go regularly. They screen you, hook you up, pump you, and get you on your way.” Each visit to the local BioLife Plasma Services facility takes about an hour, during which you can read, listen to music, or get on Facebook through the company’s Wifi network. The facility even offers day care. …

You make $20 per BioLife visit, Mr. Canze told me. You can go as often as twice a week, and if you go at least once a week for a month, you get a $20 bonus. The math is easy enough—you can make $180 a month. That’s real money, especially for college students, especially in Michigan.

Let's use the lame duck session for something useful.

Sign the petition to the left.

In America, it's far more shameful to owe money than it is to steal it.

Fantastic article by Matt Taibbi in the Rolling Stone, "Courts Helping Banks Screw Over Homeowners". He describes the massive fraud underlying the foreclosure mess. The title of this post is the last line of his article. Guess who owes money and guess who steals it.

Let the Bush tax increase take effect

Jame Kwak of The Baseline Scenario makes a good case for allowing Bush's temporary tax giveaway to end as scheduled.

The question is: Is it better to extend the tax cuts for everyone or for no one? The answer is to extend them for no one.

Health Care Budget Deficit Calculator

The Center for Economic and Policy Research has an animated graphic that lets you compare health care costs in the US with those of other countries with similar standards of living— and life expectancies that are greater(!) than ours. It's amazing how we are bankrupting ourselves compared to the rest of the world.

Brad DeLong explains

Brad DeLong is one of the smartest and most insightful economists around. He is also an irrepressible blogger. In this piece he explains why intelligent economists (including himself) didn't foresee the financial problems we are now facing.

What we did believe? We believed that the Federal Reserve could handle whatever financial crisis the markets could throw at it. We believed that the Federal Reserve had the policy tools, the risk management skills, and the incentives to firewall the real economy from financial dislocations, and to clean up whatever financial messes were left behind. There were solid reasons for these beliefs: they were called 1987, 1991, 1997, 1998, and 2001. In all of those episodes--some of them involving financial losses much greater than those of the initial subprime mortgage crisis--the Federal Reserve had successfully firewalled the real economy off from financial turmoil.

Once we had concluded that the Federal Reserve had the tools and the competence to absorb financial shocks, the jaws of the trap snap shut. Leverage then appears to be a positive good rather than a danger. Why? Because if the past two centuries of financial market history prove anything, it is that the markets are woefully short of patent capital willing to bear risks. The financial rich are overwhelmingly the patient risk-bearers. The financial poor are those who sought safety, or who were unwilling or unable to hold their positions and wait for fundamentals to reassert themselves. Leverage then becomes a way of taking the money of the risk-averse of whom the market has too many--for that is what low long-term returns on "safe" portfolios tell us--and putting it too work in the hands of the too-few who will use it to take the long-term risks that the market, historically, has always handsomely rewarded. And financial sophistication becomes a way of concentrating and amplifying the rewards of risk-bearing to call forth additional risk-bearing capital to bolster the numbers of the too-few.

The argument is bullet-proof and correct--as long as Greenspanism is true doctrine, as long as the Federal Reserve does in fact have the policy tools, the risk management skills, and the incentives to firewall the real economy from financial dislocations, and to clean up whatever financial messes were left behind.

Here it is worth stressing that these intellectual commitments are not the result of being hypnotized by the princes of Wall Street. They are the result of disciplined and concentrated analysis of the historical patterns of asset prices and returns. They are the result of confidence in the intellectual power of the discipline of monetary economics as applied through the policy instrumentality of the Federal Reserve. And they are the result of the economists' insight that whenever there is an area of economic activity that pays huge, outsized rewards the odds are that we need more of it done. …

And while these intellectual commitments are certainly fueled by too-close attention to and admiration for central bankers, they are not especially closely tied to contacts with or worship of the princes of Wall Street.

Notice, especially the last line of the next to last paragraph. It is one of the insights of economists that whenever there is an area of economic activity that pays huge, outsized rewards the odds are that we need more of it done. That means in particular that we need more Wall street speculation.

That may be true. The original source of hedge fund profits was finding inefficiencies in markets, and in doing so making them less inefficient. But what happened is that as the inefficiencies shrank it took more and more leverage to make the same amount of money. Eventually the entire system became both over-leveraged and over-sized in markets that were too small to handle them. So something else has to deal with over leverage in too small markets. That's not a problem with hedge funds doing what they do; it's a problem with how hedge funds (and banks) are regulated.

A friend sent this

Working people frequently ask retired people what they do to make their days interesting.

Well, for example, the other day my wife and I went downtown and went into a shop.

We were only in there for about 5 minutes.

When we came out, there was a cop writing a parking ticket.

We went up to him and said, "Come on, how about giving a senior citizen a break?"

He ignored us and continued writing the ticket. I called him a Nazi.

He glared at me and started writing another ticket for having worn tires.

So my wife called him an unprintable name. He finished the second ticket and put it on the windshield with the first.

Then he started writing a third ticket. This went on for about 20 minutes. The more we talked, the more tickets he wrote.

Personally, we didn't care. We came downtown by bus and noticed that the car had a Palin bumper sticker.

We try to have a little fun each day now that we're retired.

It's important at our age.

The Volker rule

would prohibit banks from trading for their own profit. Felix Salmon explains why it's a good idea.

the explicit thinking behind the Volcker Rule is that there are good and bad ways for a bank to become globally competitive. The bad ways involve taking unnecessary risks with taxpayer money. The point of the Fed’s discount window is to provide a funding source for banks to make loans into the broad economy, not to provide a near-zero cost of funds for proprietary bets. And no bank in the world will deliberately cross-subsidize its lending operations with its prop-trading profits.

Shuttering prop desks, writes Bachus, “will cause these firms to be less profitable”. Well, yes. That’s a feature, not a bug. We don’t want financial institutions to be profitable: they’re middlemen, and their job is to help capital flow to where it can best be put to work, rather than to retain as much of that capital as possible for themselves, in the form of profits and bonuses. [Emphasis added - Russ]

Use coffee grounds or sand to pick things up

From Science News.

The simple gripper is made of a bag of coffee grounds and a vacuum, though other grains such as couscous and sand also work, says study coauthor Eric Brown of the University of Chicago. To pick something up, the bag of loose grounds first melds around the object. Then as a vacuum sucks air out of the spaces between grains, the gripper stiffens, packing itself into a hard vise molded to the outline of the object. Reducing the bag’s starting volume by just a teeny amount — less than 1 percent of the total — was enough to make the gripper latch on, the team found.

This transition from fluidlike behavior (such as dry sand flowing out of a bucket) to solid (a hard-packed sand castle) is a physical process called “jamming.” Because the gripper’s bulb conforms to any shape evenly before the vacuum jams it, it’s extremely versatile. “Our goal was to pick up objects where you don’t know what you’re dealing with ahead of time,” Brown says.

Won only 4 out to of 9—but at least 23 lost and 25 won

Blue is good (4); Red is bad (5).

19. Legalize marijuana. Yes. (Lost) Why not? May not solve all our drug problems, but moves in the right direction.

20. Modify how citizen's redistricting commission works and extend it to Congressional districts. No. (Won) Prop 11 (2008) created a citizen's commission to do redistricting for state offices. This changes the criteria to be used for redistricting. The commission is mandated to draw lines that conform to neighborhoods. This won't make districts any more competitive. If this is applied at the state level as well, it will make those less competitive. In addition, it will have the effect of making Democratic voters more highly concentrated than Republican voters and will therefore help Republicans.

21. State Park fee. Yes. (Lost) Helps save state parks.

22. Prevent state from taking money from local governments. Yes. (Won) Will force the state to face its financial problems. Will at least let local governments do their jobs.

23. Suspend pollution rules. No. (Lost!) Of course not.

24. Cancel tax breaks. Yes. (Lost) These were corporate tax breaks forced on the state in 2008 and 2009 by the 2/3 rule to get a budget passed. Reverse the extortion.

25. Majority vote budget. Yes. (Won!) Kill the 2/3 rule for passing a state budget.

26. Require 2/3 rule for imposing fees. No. (Won) Makes it much harder to hold polluters accountable for the problems they cause. We have a 2/3 rule for taxes, which has crippled the state. Let's not add to the problems.

27. Kill redistricting commission. No. (Lost) A "Yes" vote would return redistricting authority to the legislature. Not a good idea. Prop 11 (2008) already gives that authority to a citizen's commission. Let it stay that way.

CREDO Action is happy

Nice column by

Mohamed A. El-Erian, chief executive and co-chief investment officer Pimco. He starts by saying that gridlock, often thought to be good for business, is not given our current economic situation.

While certain sectors of the economy are in control of their destinies, the private sector as a whole is not in a position to do this. It needs help to overcome the consequences of the "great age" of leverage, debt and credit entitlement, and the related surge in structural unemployment. The urgency to do so increases in the rapidly evolving global economy, as United States sheds a bit more of its economic and political edge to other countries daily.

Simply put, these realities make it necessary for Washington to resist two years of gridlock and policy paralysis. Democrats and Republicans must meet in the middle to implement policies to deal with debt overhangs and structural rigidities. The economy needs political courage that transcends expediency in favor of long-term solutions on issues including housing reform, medium-term budget rules, pro-growth tax reforms, investments in physical and technological infrastructure, job retraining, greater support for education and scientific research, and better nets to protect the most vulnerable segments of society. [Emphasis added]

Success requires an element of policy experimentation as well as confidence that mid-course policy corrections will be identified and undertaken on a timely basis. And such efforts must be wrapped in an encompassing economic vision that acts as a magnet of conversion nationally, counters growing international frictions and facilitates much-needed global economic coordination.

This is not an easy list. It will be difficult to translate today's political extremes into a common vision, analysis and narrative. Yet the longer it takes to do this, the greater the effort needed to restore our tradition of unmatched economic dynamism, buoyant job creation and global leadership.

Good luck getting the Republicans to go along with that!

They really are crazy

Here is Dan Freeman on Andrew Breitbart's website.

The nearly two years of corruption, plunder, and economic destruction—combined with the mockery of the American people and vilification of the private sector—has crystallized for many a realization of a home grown threat more destructive and imminently dangerous to America than any of the substantial external threats we faced over the last century. It’s a threat that has been building quietly for many years but has come to the fore since President Obama was elected. Have you wondered how the radical left managed to capture the reins of power and govern in direct opposition to the will of two thirds of the population? The answer is the New Axis of Evil. It is the power base of the left (and the Democratic Party).

Here is his gallery of the worst of the worst.


I recognize Paul Krugman at the middle lower right and George Soros at the upper left. I don't recognize the other people. Anyone know who they are? I imagine a lot of people are unhappy that they didn't make Freeman's honor roll.

Freeman wants to exclude a lot of people from being part of the country. If 99% of the country disagreed with him, he would still be saying that those people are the New Evil Empire and he is fighting to save the country from them.

From James Kwak of Baseline Scenario.

Middle class wages have been declining for ten years and stagnant for thirty years, and if you have a financial system that allows people making $15,000 a year to take out $400,000 mortgages, I don’t think that’s the fault of the guy making $15,000. I think it’s the fault of the financial system.

But, let’s say I’m a guy who makes $15,000 a year. I realize, wow, I can get a $400,000 mortgage and I can live in this house for a few years, and if housing prices go up, I can flip it and I can actually make a couple hundred thousand dollars. And let’s say I’m really clever, and I say, if housing prices go down, I’ll just walk away and I will have gotten to live in a really nice house for three years at no cost to myself. I mean, that’s the worst, most cynical spin you can put on it, right? But this is exactly what people on Wall Street do. The person who is criticizing the janitor for doing this is the same person who thinks that businesses should exploit every legal opportunity to make profits. So even if you attribute the worst possible state of mind to the guy making $15,000, he’s still just doing what any businessman should do under the circumstances. But our national ideology somehow doesn't allow us to think about it in those terms.

My proposition recommendations (again)

See State guide and Ballot*pedia.

19. Legalize marijuana. Yes. Why not? May not solve all our drug problems, but moves in the right direction.

20. Modify how citizen's redistricting commission works and extend it to Congressional districts. No. Prop 11 (2008) created a citizen's commission to do redistricting for state offices. This changes the criteria to be used for redistricting. The commission is mandated to draw lines that conform to neighborhoods. This won't make districts any more competitive. If this is applied at the state level as well, it will make those less competitive. In addition, it will have the effect of making Democratic voters more highly concentrated than Republican voters and will therefore help Republicans.

21. State Park fee. Yes. Helps save state parks.

22. Prevent state from taking money from local governments. Yes. Will force the state to face its financial problems. Will at least let local governments do their jobs.

23. Suspend pollution rules. No. Of course not.

24. Cancel tax breaks. Yes. These were corporate tax breaks forced on the state in 2008 and 2009 by the 2/3 rule to get a budget passed. Reverse the extortion.

25. Majority vote budget. Yes. Kill the 2/3 rule for passing a state budget.

26. Require 2/3 rule for imposing fees. No. Makes it much harder to hold polluters accountable for the problems they cause. We have a 2/3 rule for taxes, which has crippled the state. Let's not add to the problems.

27. Kill redistricting commission. No. A "Yes" vote would return redistricting authority to the legislature. Not a good idea. Prop 11 (2008) already gives that authority to a citizen's commission. Let it stay that way.

My recommendations agree with Credo Action and the League of Women Voters where we both take positions. I differ with most other progressive groups in that I oppose 27 while they favor it. I differ with the Courage Campaign in that I support 22 while they oppose it. Here is a score card.