Facebook Terms of Use

I just read my Facebook Privacy Policy and Terms of Use. It was OK, but one passage in the former (the Privacy Policy) really struck me:

Facebook may also collect information about you from other sources, such as newspapers, blogs, instant messaging services, and other users of the Facebook service through the operation of the service (e.g., photo tags) in order to provide you with more useful information and a more personalized experience.

That's a little creepy. They don't say much about how they'll disclose the information they've collected. There were other places that were ambiguous, too.

For content that is covered by intellectual property rights, like photos and videos ("IP content"), you specifically give us the following permission, subject to your privacy and application settings: you grant us a non-exclusive, transferable, sub-licensable, royalty-free, worldwide license to use any IP content that you post on or in connection with Facebook ("IP License"). This IP License ends when you delete your IP content or your account unless your content has been shared with others, and they have not deleted it.

OK, so they aren't assuming copyright - that should be a gimme, but who knows in this world. Their intellectual property license appears to be reasonably eliminated - but what happens if some asshole refuses to delete the content? That gives Facebook the license? Facebook should then be able to tell that person to delete the content and remove the license. And they should explain that.

I never realized that Facebook's terms require real names. I've been thinking about seriously slowing down my website registration - truth is, it's easy to say now, but the websites always have goodies for the registree.

Also working on the Xmarks terms (I seem to recall being unimpressed by their Privacy policy). It was with Xmarks that it was finally drove home to me: when you submit information to a website, it generally can be pulled whenever whoever works for that website wants it to be pulled up. There's no notification to the user whose information it is, and no real checks and balances. All companies should send notifications.

There should be laws stating that I can always ask a business to give me all the personal information it has on me. Then I should be able to look into destroying that information if I don't feel it's well-placed in their hands.

I checked Myspace today - someone messaged me. The last message I'd gotten was from Tom back in September 2008. In February 2008, they changed their Terms and Privacy Policy. No summary of the changes. Not surprising for a company started by eUniverse (a company whose ventures included software in KaZaa) and purchased by Fox News, the company which supports O'Reilly, Hannity, Glenn Beck and related crazies.

Notably, however, the Better Business Bureau's terms seems to be the worst of those I've looked at. They're short and ambiguous about key details: what can they do with my complaint information; what's up with the "only governments/organizations" can link? It's just not clear.

Improvement costs energy

So now I'm sitting on a brown loveseat in a tiny, rustically-urban apartment, ready to post. You may know what that means. I am nearing the anniversary of my arrival here. When I first arrived, I slept on the floor in a dorm room while looking for work. I haven't mentioned my work yet except to say that I'm a government bureaucrat. I'm afraid to say too much, but I work in the regulation of the financial industry. I never imagined that people at my level in an industry would do the sort of things I do. Much of my power is illusory, but some of it is real.

Doing anything worthwhile takes focus, delayed gratification, the sacrifice of worry, and the sacrifice of other, tantalizing information. Every moment that I blog I take away from something else. It doesn't take away much, but enough. So I'm off to something else

Philosophy and science do not mix

Several months ago I filled out a form for my philosophy department asking the usual questions: what are you doing, what do you think your philosophy education did for you, ect. I said that I entered college thinking that philosophy was the foundation of knowledge, and now I feel like I know enough to focus on other disciplines. I'll be trying to avoid philosophy in the future. I didn't say that I feel like philosophy has become in large part mental masturbation, although it was probably implied. Yet here I am, writing about philosophy.

I finished A People's History of Science by Clifford D. Connor a few days ago. I was pleasantly surprised by the book: it captures and appears to validate my cynical, somewhat contemptuous attitude towards extremely abstract philosophy and economics perfectly. There are several theses, drawn from various historians/philosophers of science who seem to have done the major legwork. The most blatant thesis, drawn from Edgar Zilsel is that mechanics, craftsmen, laborers, sailors, and other common people advanced science. In support of this, Connor notes numerous figures and evidence that scientists did not attribute their findings to unsung assistants. I found two other theses particularly intriguing: that the oft-cited "Greek miracle" was anything but, and that the traditional scientific elite sometimes acted contrary to good science and ethics.

Most of us are vaguely aware of the latter, but may be surprised by the former. I know I was surprised: when I entered college as a freshman, I cited Greece as the foundation of Western civilization. My professor suggested Egypt, Babylon, and Phoenicia, but I was skeptical and never got the chance to investigate further. Connor shows that there is a reason for that. My comments below largely relate Connor's story (which are relating other academic stories); I don't have enough background knowledge to affirm or contest his facts.

Another intriguing thought covered briefly is the possible Oriental origin of Western Civilization's science, argued by Joseph Needham. I won't discuss this in more detail; although I find in intriguing, it's likely more controversial than Needham makes it appear. According to Needham, the list of Chinese technologies imported into Europe include printing, gunpowder, magnetic compasses, clockwork, casting of iron, stirrups, Pascal's triangle, rudder, segmental-arch bridges, and much more (p. 165).

The Greek Miracle

The Greeks themselves cited Egypt as the root of their wisdom. Aristotle, Plato, and Herodotus all said mathematics was brought from Egypt (Connor p. 123). Some said Pythagoras brought it, although Connor says that is unlikely; Thales was also reputed to have spent time in Egypt. Connor (p. 126, citing Martin Bernal) says that these statements by the Greeks were downplayed by "Classical Philologists" at the University of Gottingen in the late 1700s. Connor says that the scholars of antiquity apparently tried to explain away the Egyptian and Phoenician influence, including the adoption of the Phoenician alphabet, because Egyptians were a black mongrel race. Connor, citing Martin Bernal, is not exactly clear on how the influence is explained away. Among the scientists who extended this tradition was Georges Cuvier, the secretary of the Parisian Academy of Sciences. The Royal Society and the Academy were the two most prestigious scientific institutions of the day.

Connor argues that the Ionian materialists (Thales, Anaximenes, Anaximander) had a pro-science philosophy which was supplanted by the highly abstract, teleological philosophy of Socrates, Plato, and Aristotle. Benjamin Farrington has apparently developed the argument in Science in Antiquity that Plato's influence "was one of the main reasons for the death of science in the Greek world" (p. 146), as thought became increasingly a priori. Connor mentions something which I don't think was ever mentioned in my ancient philosophy class: only Plato's Timmaeus was known to European scholars up to the 1100s. Hippocrates stands out as an exception to the antiempirical Greek tradition. Commenting on Connor's perspective, I do think that the Greeks contributed to science (which was passed on to the Arabs), but I agree with Connor that Socrates and Plato probably had negative to neutral impacts. Aristotle was more of a scientist, but unfortunately he did not seem to emphasize the scientific method, as Francis Bacon later pointed out (leading to the "Baconian method"), although Bacon's thoughts were preceded by The Canon of Medicine and I believe Bacon's philosophy was more reflective of the culture than instructive. Galileo was studying physics in the early 1600s, while Bacon first published the Novum Organon in 1620.

Dirty Secrets of Scientific Elite

Like Howard Zinn, Connor digs up information deeply buried. The last half of the book focuses on how the scientific elite's emphasis on "value-free science" actually supported conservative politics and dubiously moral agendas (eg social darwinism, eugenics). Robert Boyle, the chemist known for Boyle's Law, could afford to hire numerous assistants ("Making Experiments by Others Hands", p. 330 - Tycho Brahe is another great patron, p. 324) and pursue scientific investigations. That and his undeniable scientific brilliance made him a major figure in the Royal Society. He along with others in the Royal Society believed in witchcraft and demonology (see, for example, his book The Devil of Mascon) and presumably did not oppose the ridiculous trials and punishments which went along with it. Connor notes that the burning of witches reached an all-time high in the 1630s (p. 365), coinciding with the rise of the Royal Society. Similarly, the famous proscientist philosopher Francis Bacon brutally tortured at least a few people (p. 363).

Connor frames the scientific landscape of the 1600s as a battle between the entrenched gentry elite (represented by figures such Boyle and Bacon above) and the craftsmen and artisans who do a lot of legwork. Connor chooses Bacon as a representative of the former group and Paracelsus as a representative of the latter (p. 305). Interestingly, neither figures were true scientists. Bacon isn't known for any science; Paracelsus had odd hermetical views on medicine and his theory on the "dose makes the toxin" is just common sense (and misleading common sense at that; some substances have negative effects at practically any dose while most substances are beneficial or neutral up to a hazardous exposure). Nevertheless, Paracelsus campaigned against a rotten Galenic medicine, preached the virtue of working with raw materials and alchemic exploration, which Connor says inspired revolutionary scientific figures such as Paracelsus admirer Johann Rudolph Glauber (p. 371), a notable chemist. The battle can be seen, for example, in the Parisian Royal Academy's rejection of Joseph von Fraunhofer, the inventor of the spectrometer, as a full member (p. 375). The last quarter of the book notes that programmers and "garage entrepeneurs" were the new craftsmen.

Concluding thoughts

The book brings together several amazing scholars in the history and philosophy of science. Reading their Wikipedia articles, it is clear that these people's works were often more controversial than Connor makes them appear. Avoiding the appearance of dishonest bias is one of the most important techniques for a good nonfiction writer. By relying on concrete and well-cited facts for his case, Connor actually manages to avoid seemingly dishonestly biased, even if his bias is clear. Connor doesn't say that the great scientists were not great scientists, but he isn't afraid to point out their flaws whereas most history draws a whitewash.

One New York Times review says that the book misses something when it doesn't describe the personalities of its individuals. I didn't get that impression; I get enough description of individuals, and he certainly doesn't avoid going deep into individuals. Disorganization is the biggest problem; the same people will be covered in different places on only slightly different topics. The NYT review also criticizes the extreme use of quotes. Again, this doesn't bother me - I like to know exactly what the cited source is saying, and if someone with more expertise has said something eloquently before, why not repeat it?

I definitely disagree with Connor on strange pseudosupernatural scientific theories. For example, he doesn't criticize the problems with Paracelsus' medical philosophy, and later he appears to defend Franz Mesmer's animal magnetism movement as a "people's science movement" when it was actually superstitious and possibly fraudulent. It sounds like a precursor to the modern "therapeutic touch":

Mesmerist therapy consistened in channeling the magnetic fluid through the patient ... often though not always the magnetic power was directed into a patient by a laying of hands ... the patient would report ... intense heat ... patients tremebled violently, went into trances... (pp. 404-5

You get the picture. Don't get sucked into thinking that anything is valid science.

As far as another theme, the values embedded in science - raw scientific data is value-free. The processing, interpretation, and application are not value-free. The decision as to what science to pursue is not value-free. Scientists cannot hide behind science for their values (or lack thereof). While it should go without saying, I think it's worth it to say that scientists, even brilliant ones, are not always good people. In many cases they are reactionary and immature.

Corporate auto mechanics, or lack thereof

I've been looking into auto mechanics because I'm worried about the clutch in my car. I felt some shuddering the other day. I think I tend to ride the clutch. I'm a bit worried about taking my car to the shop. I'm not rich. The last time it seemed like the small-town mechanics kept my car for a couple weeks and charged me what seemed like a lot for essentially just an inspection.

After doing some research I've learned that I should be looking for ASE (Automotive Service Excellence) certified mechanics. I've been looking for a corporate auto mechanic. People who know me might find that strange, but I've had a favorable view of corporations for a long time. As a gluten-intolerant person, the businesses which have are organized in their response to gluten are usually corporations (PF Changs and Red Robin come to mind). I used to have my oil changed by Jiffy Lube. Corporations have professional managers who are looking at the global scale. The services they provide are fairly predictable from location to location (eg McDonalds food). They often allow the customer to have an account with past history (my Jiffy Lube account) which can be pulled up anywhere.

I found an excellent analysis by Fulcrum Inquiry of the auto repair industry which confirmed my suspicions: the industry is highly fragmented with few to zero corporate giants; The Pep Boys (NSYE:PBY) and Monro Muffler Brake (NASDAQ:MNRO) are the only ones worth mentioning, and they're both basically small caps. I find this surprising. Corporate auto repair shops would have the following advantages:

• More oversight to keep the mechanics "honest".
• Organized customer account records showing the parts repaired, overview of issues, ect. This would be one of the biggest draws for me. The data could later be sold if the ownership changes.
  
• Market power in buying equipment, which could be passed on to customers.
• Systematic tracking of the reliability of parts, to locate the best deals.
• Prioritization of the training on common auto issues.

Although I recognize the advantages of corporations, I don't like corporate governance. Dispersing ownership among countless small owners and putting all the power in a professional manager with relatively little ownership doesn't make sense. The ideal system is a few medium-sized owners, each of whom has a representative on the board. I don't really like leveraged buyouts as an alternative to our flawed corporate governance system, either. But that's a discussion for another post.

What I've been doing

Since I got a cushy government job several months ago after graduating from college, I've been living stress-free and catching up on leisure reading in both fiction and nonfiction. I've been learning a lot, and most of it is highly bloggable. Why, then, haven't I been blogging?

I've begun to seriously worry about my digital identity. It's apparent from several comments that there are people who know who I am, and I don't know who they are. Some people might wonder why this might be a problem. The problem is that this site was intended to be a place where I could truly speak my mind and voice controversial opinions. In many cases these opinions will not be correct, and sometimes they may sound absurd. I'm an intensely private and self-conscious person and I can't stand to have my mistakes archived in the Wayback Machine for all to see for the rest of my life. I've played fast and loose with my identity on this site, and at some point I plan to cultivate a new internet identity more carefully. Statements signed by my real name will ideally be carefully-researched and screened for neutral wording.

In my last post I mentioned that I was reading The Skeptical Environmental, a book which is overwhelmingly researched. While I can't say that I've fact-checked it thoroughly, on the surface it appears accurate to call it, as one Amazon reviewer says, a tour de force in environmental science. It's admittedly shaken my "ecowarrior" philosophy to the core. Prior to reading it I read a Worldwatch State of the World book, which I found disappointing. Lomborg heavily criticizes the Worldwatch books and exposes in some cases what appears to be scientific dishonesty on the part of environmentalists, even global warming theorists. My thoughts on the issue are still developing, but while my convictions were shaken, I still disagree with Lomborg on his major conclusions and remain concerned about biodiversity, global warming, persistent pollutants, farming, and water. Yet I highly recommend the book for the one of the best available monographs on the statistics and theory behind environmental issues.

I'll skip some of my other reading aside from mentioning that it relates to medicine, scientific controversy, and corporate conflicts of interest (eg Marcia Angell's The Truth About the Drug Companies). Today I saw a section (p. 145) in The Money Culture (a humorous book on Wall Street) which related my thoughts on some of these issues:

Like about half of America, my father believes he can systematically beat the stock market ... shallow pretenders ... bother him ... it pleases him to see Rukeyser embarrass the various hemline theorists, 75-year cyclists, Elliot Wavers, and druids ... he watches Louis Rukeyser for the same reason every right-thinking, sexually repressed, country club Episcopalian lingered long and hard over the delicious defrockings of Jimmy Swaggart and Jim Bakker. It confirms his skepticism about alternative forms of belief. (emphasis mine)

Ultimately, I'm not right-leaning. I probably rate high on the psychological "openness" score. However, I try to be rational. I'm willing to investigate implausible claims before writing them off. That's perhaps wasted a lot of my time, but it's also helped me learn a lot. Ultimately I've tentatively concluded that fringe scientists and theorists are more likely to engage in scientific dishonesty. But they don't have a monopoly on such improprieties, and rationally one cannot come to firm conclusions without investigation and empirical evidence. There are, for example, ways to make a lot of money trading stocks. It's not nonsense. But it doesn't have anything to do with Elliot Wave theory -- which, I'll admit, I haven't investigated and have little regard for.

The Unavoidable Trend: Aging

Lately I have been reading The Skeptical Environmentalist by Bjorn Lomborg. I haven't gotten that far, but expect a critical review in a few weeks. Yesterday I was reading an early chapter, and it was arguing that things have improved and that overpopulation is not a serious issue. I've always supported the former point, although I'm skeptical of the latter. I don't have the book handy (my home computer is in bad shape), but I believe he says that the proportion of people over 50 will be half of the world population in 2050 (up from 20% or so right now). What I do remember distinctly, however, is his statement that 80+ will be 10% of the population, whereas they were less than 1% when he wrote the book in 2000.

This is an incredible trend, and no doubt lots of money will be made on it. It makes me want to get into the health sciences profession.

Family and Consumer Sciences Research Journal

The journal even my mother would love.

Contrarian Investment Strategies: The Next Generation

I liked the last contrarian investor book so much that I'm now reading the next one. It's a fair bit of review so far, but it never hurts to read about the experts making major screwups another time. You can see what I'm talking about on page 68 of the preview. Currently I'm on page 81 where he's discussing the ubiquitous overconfidence cognitive bias. Highly recommended.

UPDATE: I actually finished this book later that night. As the first comment stated, his critique of the efficient markets hypothesis (spread throughout the book) was magnificent. I'm working on taking some notes for later, since unfortunately I only had it on a 2-week interlibrary loan.

Thundarr the Barbarian and Hiero's Journey

My coworker reads fantasy/science fiction novels. I haven't done that since high-school (and one brief spurt in college), but I miss them. So he gave me a copy of Hiero's Journey, a fun little book about a post-apocalyptic fantasy world.

It reminded me distinctly of Thundarr the Barbarian, a similarly post-apocalyptic but less sophisticated fantasy TV show on Cartoon Network. I've managed to find the first couple episodes on Youtube.

Later, I might watch a bit of Pirates of Darkwater. When I was a kid, I only watched a few episodes of these shows here and there through the kindly recordings given to us by our elderly neighbor. We didn't have cable.

UPDATE: The shows got old quick.

Web of Debt and history

I happen to be browsing through Web of Debt, a recent book on the conspiracy theories involving bankers. Most of it is stuff I've heard before, but I found Chapter 5 interesting. It is on the "historical revisionism" of the Middle Ages. It cites Thorold Rogers and William Cobbett in making the case that the Middle Ages was not as backward as it is typically perceived. They quote Thorold as saying that "a labourer could provide all the necessities for his family for a year by working 14 weeks".

I haven't checked their sources, although I plan to at some point. But I know the same point is also made in reference to Paleolithic societies, see the reference to Sahlins in this part of the Wikipedia hunter-gatherer article.

There's a couple reasons why we might work so much more in modern society. One, there are dwindling natural resources combined with a much larger population. Probably more importantly, however, there is just a greater demand for various material goods.

These reports could be exaggerated. I'm not sure how these reports are compared to modern hunter-gatherer societies, such as those in the Amazons, but such comparisons may not be realistic to other regions, since that is an extremely tough region. I would expect other hunter-gatherer societies to have more leisure than Amazonian tribes.

The book attributes the difference to usury, which seems dubious, although it is perhaps true that our current banking system puts greater emphasis on infrastructure and investment, which requires that we forego present consumption to a greater degree.

The Things They Carried

I finally finished this book by Tim O'Brien on the Vietnam war. The most poignant chapters were Speaking of Courage and the Lives of the Dead. Tragedies of suicide and childhood romance, respectively. I've always been a sucker for childhood romance. Hearts in Atlantis, by Stephen King, was one of my favorite books partly because the first third was about childhood.

Administrative law, the environment, and mercury

21 CFR 25.34 (Code of Federal Regulations) is eye-opening. It allows the FDA to basically ignore the environmental implications of certain things in that list, such as Class II medical devices and electronic products (Class II means that they could be unsafe, but probably aren't).

In 67 FR 7620 (enjoy the ugly document, courtesy of the federal government!), the FDA made its move to finally reclassify dental mercury from a Class I medical device (completely safe) to a Class II medical device.

In section VII, it states this:

VII. Environmental Impact

The agency has determined under 21 CFR 25.34(b) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

How cute. Meanwhile, in 2005 the WHO stated that mercury from dental amalgams + laboratory and medical devices contributed 53% of total mercury emissions.[1]

For those curious as to how I ended up reading the CFR, I was reading an article[2] from the Journal of Law and Health.

The United Shareholders of America Campaign

Please join Carl Icahn (and myself) in the United Shareholders of America Campaign.

The Contrarian Investor

I wish I had written this book. Although it was published in 1979, the topics it covers are still the bleeding edge of investment science today -- behavioral science and the herd effect, value investing, low price-to-earnings, and cash flow.

The only area in which I differ with David Dreman is in technical analysis. He cites a fair amount of academic evidence against technical analysis. I haven't looked at that research, but studies of technical analysis are easily cherrypicked and misinterpreted. The fact that 90%+ of professional Forex traders use technical analysis is evidence enough of its usefulness. However, Dreman points out the ridiculousness of the other extreme, the efficient markets hypothesis, and the truth is that much of technical analysis is of dubious use.

Since much of this stuff is review for me, I skimmed it. He cites plenty of interesting information, including some psychology literature that I'd never heard of such as Gustave LeBon's The Crowd and Irving Jarvis's Victims of Groupthink, and a bunch of studies showing that experiments frequently make mistakes. Other literature was familiar, such as Muzafer Sherif's light experiment (when "confederates" in a study estimate the distance of light from them, the subjects yield to the judgment of the crowd) and Tversky and Kahneman's look at cognitive biases and judgmental heuristics.

Since the book was written in the 70s, the last chapter of the book is devoted to inflation. Conventional wisdom of the time was that inflation made stocks a poor investment. Dreman particularly focuses upon the Modigliani and Cohn position that professional investors just don't understand how inflation impacts equities.

First, investors confuse nominal and real interest rates (real interest = nominal - inflation). Since bonds pay high nominal rates in inflationary times, such as 9 percent in 1979 when inflation was 7 percent, investors look for rates of return from stocks in excess of 9 percent (the excess to adjust for rate) instead of in excess of the real rate of 2 percent. (UPDATE 2009-10-7: This paragraph doesn't make any sense to me right now. Why would investors looking for higher rates of return from stocks lead to them outperforming bonds? Outperformance occurs when an investment is not valued highly enough...)

Second, investors don't account fully for the effects of inflation. Inflation may create inflated profits (under the last-in first-out accounting method) and depreciation is exacerbated, but corporations benefit from being able to pay back their debt on much cheaper terms -- since the debt is relatively fixed and their income is being inflated.

Put together, these two factors make equity investments much better than bonds -- generating something like twice the return over a 10-year period.

Summary of the Equity Bailout; Money Going to Bailouts?

Here is a nice summary of at least one of the bailout plans, the $250 billion preferred stock recapitalization plan, ie the TARP (Troubled Assets Relief Program) Capital Purchase Program. In other news, someone says that a State Street (NYS:STT) banker is getting a nice bonus check this year, courtesy of the US taxpayers.

I'm still not sure how this program is structured exactly, but I hope that this $250 billion comes from the $700 billion. The Wall Street Journal seems to say that ("TARP will also be used by Treasury when it puts new equity into banks").

The Federal Reserve's Holdings of US Treasury Bonds Declines?

When the Federal Reserve wants to manipulate the federal funds rate, it buys and sells US treasuries in open market operations. When it wants to lower the rate and increase the money supply, it buys treasuries. In September 2007, it had $780 billion in these treasuries on its balance sheet. Last July, it had only $478 billion.[1] Such a decline is unprecedented. Since the US economy nearly always grows, the money supply must increase proportionately in order for deflation not to happen. And yet here we see one influence on the money supply cut by nearly 40%. Yet the monetary base has spiked.[2] This is because the Fed sold its treasury bonds to the public in order to make way for more loans. As long as it doesn't sell the bonds to US banks, it won't hurt the US money supply.

The details are in the Fed's current balance sheet. The new loans are listed in the Term Auction facility and the "other assets". I don't feel terribly comfortable analyzing it. On their September 2007 balance sheet other assets is only 40 billion. These other assets may not be quite clear, although I haven't investigated thoroughly. Bloomberg has sued[3] to gain access to the collateral on the loans and that might include more information on these other asset.

The Big Picture, my favorite financial blog, has a nice graphic on this.

Worldwatch Institute's State of the World 2007

I'm browsing through this book, and it is generally pretty good. It seems to focus on cities, however, and it is not as heavy on the facts and graphics as I sort of expected it to be.

I read the first half more closely, and now I'm more browsing. I was interested to read about eucalyptus as a cash-crop in Timbuktu, which lead me to the Wikipedia page. Apparently the tree is mainly native to Australia, and there's some major concern that it is an invasive species in South Africa.[1] Yet Worldwatch made no mention of that! The plant they mentioned next as helping to revitalize rural Africa, bourgou, seems more solidly ecological, and the National Research Council mentioned it favorably in a book on "Lost Crops of Africa". Apparently it can survive for months under water,[2] making it somewhat unique, and thus can be planted and harvested in areas where nothing could be grown previously.

A Proposed Solution to the Housing Crisis

Part of what I seek to do here is to raise things that aren't being heard enough. As Krugman notes, the current bailout plan looks to be throwing money at some US banks without compensating US taxpayers for the risk they're taking.

What's worse is that this fix might not even fix the problem, because it is not only the subprime loans which are the problem -- it is all sorts of loans. Jason Lindt makes this case, and although I can't vouch for his numbers, he makes it convincingly. He says we should go straight to the problem: banks' insolvent balance sheets. While the current bailout plan looks like a sneaky way to throw money at banks, a good plan should specifically offer capital to these banks by purchasing their preferred stock. This gives them some Tier 1 capital as a cushion, and it also makes them pay us dividends in the future.

I still have questions about this. Sometimes the dividends on preferred stock don't get paid, but then they stack up cumulatively. The Tier 1 capital page says these types of preferred stock don't usually apply to Tier 1 capital. We might need a strange kind of which is more geared towards the long-term, and also gives us voting power in these companies. We need to put these banks on long-term payment plans, because it is going to be a while before they'll be able to pay us back for the mess they've caused.

Incidentally, as to the cause of this, Anton Wahlman notes something I haven't heard before: the effect of the Taxpayer Relief Act of 1997, which exempted profits on personal residents from taxation. That law likely contributed more than the Community Reinvestment Act bullshit, which has been refuted.

The paths

If you live in a world of your own,
A world of isms and a dusty tome, hook a left.
Search till you die;
the wisdom you seek is a lie.

If you live in the world of matter,
A world of irrational symbols, reactions, and recursion,
try the path to the right,
but know you may be in for a fight.

You live in a world of people,
Some are strong, and some feeble.
Beware the bull; his word can pull.
And consider neither path, young soul.

My goal?

Granted curiosity infernal,
I seek life eternal.