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Ongoing Investigation

So, it’s funny how this oil derrick just looks like an I-beam with a few other chunks of steel welded to it, connected by a hinge to a sort of gallows. If you spend any time at all examining the picture for its constituent parts, it almost begins to break itself down. What other kinds of things might be made with these materials?

Many more pictures here of what happens to a place when a boom goes bust, especially one based on oil production. The sociological connection to everything required for extraction is not far removed from this idea; but neither is the way we shield ourselves and our tender sensibilities from the extraction costs when they include exploding bodies and flag-draped coffins. It’s scandalous how we permitted the government to ban photographs of soldiers returning home in cargo planes. That’s the extent of our honor right there. Look away, indeed. These are the costs of our dependence strategies, the further externalities, if you will, and if we can’t handle them then we should perhaps think twice about tying our liberty and freedom to gassing up.

These are among the cautionary guidelines we should consult in our decision-making. Without them, we’re just walking in front of cartoon scenery. You can’t section off moral hazard as though it’s a completely separate consideration. Unless you’re able to do that. Then, you’re all set!

I hope they’re making this up. According to wikipedia, the derrick device was named for its resemblance to a hangman’s gallows; the derrick-type gallows was itself named for an Elizabethan Era executioner.

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Turning Japanese

I try to resist the impulse to use pop songs in post titles, but I’m only human. My disdain for Wally what’shisname, however, remains in tact. S’why I get feverish in certain airports, methinks.

So Krugman believes we are fiscally morphing into our seemingly reserved and genuflective brethren. But if you look at what is meant by the words Japanese, economic and model in the 1990’s vintage, you’ll see that what people refer to as the ‘lost decade’ was merely a decade of flat growth. Well, tell you what:

Get. Used. To. It.

Otherwise called a starting place, for most of what is going to follow. The dissonance of what’s happening in the financial economy right now, talk of recovery and longing for normal times is all due to the fact that there’s no going back. And we shouldn’t see this as a bad thing. Our pent-up imaginations have all the rough stuff shoved to the fore, and we’ve conditioned ourselves to be righteously afraid of it. But it’s just us, our dogs, cats and cattle, and back in there somewhere also is the idyllic train rides to see your lover and long walks to the park, stolen flowers, broken kisses and other things you can’t put on a price tag on without them seeming like an old lady‘s hat. The fact is old ladies are people and hats are things they wear out in the sun.

We’re trying to understand the tunnel of love from a technical standpoint and well, the two just don’t mix. You can’t say where or how we’ll come out of this, but seeing that as the fun part takes a little more than the promise of low, low prices or assembly-line built excitement. Sorry.

Technical note: I discovered posterous, and am trying to make the most out of the sweet spot of not knowing what it’s for before that, too, passes.

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World’s Longest Undefended Border

Between Canada and the United States? Between clever and stupid? You’re getting warmer. Try the critical dividing line between credit creation and value creation. Seeing these as one in the same is like, well, looking at the huge land mass between Panama and the North Pole and seeing a single, harmonious country. It’s not all the same, though it would change much if some solidarity formed around being North Americans, not all of it good.

There is some good, bad and wrong in this article. The author points to some interesting distinctions that have been missed, or at least underplayed, concerning credit and value.

There are some simple rules for sound banking and sound economies that need to be followed: Whenever credit is created and used to increase the amount of goods and services provided, it will be noninflationary: more money comes about, but also more goods and services. This is boring banking, without excessive bankers’ bonuses. But it is the kind of stable banking that created the postwar German and Japanese economic miracles, and also explains the rise of China and other East Asian so-called miracle economies.

But whenever credit is created and used for unproductive purposes, inflation comes about: more money chases a limited amount of goods or assets. The unproductive credit creation can take two forms: When credit is extended for consumption, it will result in consumer price inflation. When credit is extended for non-gross domestic product transactions (which means mainly financial and real estate transactions), there will be asset inflation. Both cases are unsustainable and if sufficiently large, result in banking and economic crises.

We can be more or less strict about any of this from a regulatory point of view, but what banks create with credit largely defines how we lope from bubbles to busts to bubbles again. Bankers were once (and will be again soon) the stiff, uptight types whose very boringness epitomized financial prudence featuring risk aversion, right down to their Brooks Brothers’ suits. This is the boring banking of low, constant annual returns – you may have heard of it. Though they may have been disparaged from time to time as prudish stereotypes, there was a certain reliance on them as a personification of the confidence we could place in the system. Credit was slow moving for a reason. But when, as the writer points out, credit is created and used for unproductive purposes, all manner of skulduggery becomes possible.

And here’s the civics class section that coach skipped over – when something involving money becomes possible in our system, it’s as good as mandatory.

We get exotic financial instruments and bankers in Zegna and Armani spinning a whole different kind of confidence game. These episodes, if that’s all they are, point back to an economy abandoned of its fundamentals, where people are making money off of money that, it turns out, isn’t real money. Inflated value is not real money, so you should not be able to get easy cash (more debt) in return for not having it.

Q: How can you afford a $789,000 home financed at 5.8% if you’re not an anesthesiologist?

A: You can’t.

There are all manner of warning signs that no one wants to believe (Dow 36,000?) and it’s easy to look back and say well, we should have known, what with all those e*trade commercials during breaks in ‘Flip that House’, you could see greed getting the best of the least among us first*. Yes, we should have and in fact many, many people did refuse the basic temptation to jump in and not get left out of the gold rush, which was based on nothing more than self-conjured pool of suckers-R-us.

* I’m thinking of the conscience-challenged here, first, but there’s a growing body of evidence which suggests some preternatural disposition toward not asking questions if the answers keep coming at a 30% annual rate of return.

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Home Grown Power

Somewhat counter-intuitive take on the new electrical grid that’s been bandied about as an infrastructure project within the stimulus bill(s) set to appear at State House near you.

But there are better — and cheaper — ways to get more clean power flowing to the big cities. Renewable energy resources are found all across the country; they don’t need to be harnessed from just one place. In the Northwest, the largest amount of green power comes from hydroelectricity. In the Northeast, the best source may be the wind over the ocean, because it blows harder and more consistently there than on land. Offshore wind farms have been proposed for Delaware, Massachusetts, New Jersey and Rhode Island. In the Southwest, solar energy can be tapped on a large scale. And in the Southeast, biomass from forests may one day be a major source of sustainable power. In each area, developing these power sources would be cheaper than piping in clean energy from thousands of miles away.

As his omniscient narrator, I’ll say this is predicated on using far less power to make any of these suggested power solutions work, as we should begin to stipulate about every single thing. The writer draws a distinction between a smart grid and high-capacity transmission lines, the former distinguishing itself as a locally-deployed system within a multi-dimensional strategy against waste and inefficiency. Which is the only way to really address waste or efficiency. Once we get into what some of these concepts – a smart grid, for instance – mean, they begin to define long-term solutions in the only way in which they can be defined as viable – on a local scale. Ideas can come from anywhere, but they have to make sense there, first. Then a next-step Mandlebrot set in reverse motion can begin – leading the way toward more grander-scale solutions as we pan out. Or, luck be your lady tonight, altering their urgency into something more manageable.

Of course, changing how we think about a big new electrical grid for the country opens up more space to think about trains, SUPER and otherwise. Which is as it should be.

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The Consumed Vertigo of Catastrophe

French theorist Jean Baudrillard (1929-2007) was a sharp critic of contemporary society who twisted philosophy, social theory and cultural metaphysics into a chaotic ball of illuminating knots. The snippet below is from his 1970, The Consumer Society: Myths & Structures. This section is titled The Miraculous Status of Consumption.

The usage of signs is always ambivalent. Its function is always a conjuring – both a conjuring up and a conjuring away; causing something to emerge in order to capture it in signs (forces, reality, happiness, etc.) and evoking something in order to deny and repress it. We know that, in its myths, magical thought seeks to conjure away change and history. In a way, the generalized consumption of images, of facts, of information aims also to conjure away the real with signs of the real, to conjure away history with the signs of change, etc.

Reality we consume in either anticipatory or retrospective mode. At any rate, we do so at a distance, a distance which is that of the sign. For example, when Paris-Match showed us the secret forces assigned to protect the general [De Gaulle] training with machine guns in the basement of Prefecture, that image was not read as ‘information’ i.e. as referring to the political context and its elucidation. For every one of us, it bore within it the temptation of a superb assassination attempt, a prodigious violent event; the attempt will take place, it is going to take place; the image is the forerunner to it, and embodies the anticipated pleasure; all perversions have their acting out. What we see here is the same inverse effect as in the expectation of miraculous abundance within the cargo cult. Cargo or catastrophe – in both cases, we have an effect of consumed vertigo.

We may, admittedly, say that it is, then, our fantasies which come to be signified in the image and consumed in it. But this psychological aspect interests us less than what comes into the image to be both consumed in it and repressed: the real world, the event, history.

What characterizes consumer society is the universality of the news item [le fait divers] in mass communication. All political, history and cultural information is received in the same – at once anodyne and miraculous – form of the news item. It is entirely actualized – i.e. dramatized by the spectacular mode – and entirely deactualized – i.e. distanced by the communications medium and reduced to signs. The news item is thus not one category among others, but the cardinal category of our magical thinking, of our mythology.

That mythology is buttressed by the all the more voracious demand for reality, for ‘truth’, for ‘objectivity’. Everywhere we find cinema verite’, live reporting, the newsflash, the high-impact photo, the eye-witness report, etc. Everywhere what is sought is the ‘heart of the event’, the ‘heart of the battle’, the ‘live’, the ‘face to face’ – the dizzy sense of a total presence at the event, the Great Thrill of Lived Reality – i.e. the miracle once again, since the truth of the media report, televised and taped, is that I was not there. But it is the truer than true which counts or, in other words, the fact of being there without being there. Or, to put it another way, the fantasy.

What mass communications give us is not reality, but the dizzying whirl of reality [le vertige de la realite’]. Or again, without playing on words, a reality without the dizzying whirl, for the heart of Amazonia, the heart of reality, the heart of passion, the heart of war, this ‘Heart’ which is the locus of mass communications and which gives them their vertiginous sentimentality, is precisely the place where nothing happens. It is the allegorical sign of passion and of the event. And signs are sources of security.

So we live, sheltered by signs, in the denial of the real. A miraculous security: when we look at the images of the world, who can distinguish this brief irruption of reality from the profound pleasure of not being there? The image, the sign, the message – all these things we ‘consume’ – represent our tranquility consecrated by distance from the world, a distance more comforted by the allusion to the real (even where the allusion is violent) than compromised by it.

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Secret Science Nights

… might make science a little less secret. Imagine going to a rock club (yes, suburbanites, people do actually leave their homes in the evening) maybe a little earlier than a show usually starts. You line up outside the door with generally the same kinds of people you usually see, plus a few others that you might not. You get inside, get a drink, but instead of noticing the first act’s gear set-up on stage, there’s a screen with a podium in front, maybe the little apple is already glowing. Then a bearded fellow comes on stage, fires up his power point and starts bouncing around the periodic table or conjuring Pleistocene megafauna to the all-too-interested gathering. It could happen.

The crowd is young and hip, mostly in their 20s and 30s, eager to gain entry to tonight’s hot-ticket entertainment event. Once the doors open, about 50 lucky people secure chairs, while another 50 stand four-deep around the room, and another 50 are gently turned away at the door.

“This is the third time I haven’t made it in,” a disappointed young woman sighs.

A mixtape of music plays through the speakers and the audience sips drinks from plastic cups while waiting for the featured act to begin. It won’t be the latest indie band, or an up-and-coming comedian. This is not the typical New York club scene. This is the monthly meeting of the Secret Science Club.

Really… what’s the answer to a disinterested/confused populace but making science more available and accessible? Particularly within in the confines of a nightclub. It might turn dull really quickly, but who’s fault would that be? The ‘nerdy’ connection in the article is unnecessary, as is the strict limitation to science (you could just as well sneak in some secret philosophy). But now is when we need to mix it up (in a pugilistic sense) the most, and especially if there is a stock supply of expertise in your town that goes home in the evenings just to sit at home and watch cable. Create a venue and they might come.

Bonus: would there be any side benefits to academicians facing a pop audience? Knowledge-as-power flows in both directions.

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Flowr powr

Not that kind, but it will be increasingly important to sidestep the common stereotypes that have barnacled themselves to the various ‘isms’ promoting the environment, marginalizing its proponents as merely dirty hippies, hopeless and idealistic, man.

One of the cognitive leaps, and there will be a few, about embracing a new energy future is imagining what that future will be like and getting familiar with yourself and your surroundings within such a mental space. Then the climb down in consumption likely begins to seem more natural and preferred rather than punitive and lesser. Much as we self-identify with our cars now, you have to become one with several ideas, including but not limited to input problems related to carbon emissions and recognizing that the energy issues must cease to be framed by thinking that fossil fuel is energy rather than a material substance that has chemical energy.

How might we go about this? Maybe one of the places to make inroads on both counts is video games. This flies in the face of my own instincts, which is why I’m offering it up so deliberately, to both show and try to tell why this might work, in some small way. Because both issues referred to above are psychological, we seem to want to understand them less than we might be able, settling for merely what we know. It’s the crucial under-performance at which we excel. Present company emphasized.

So this game company, actually that game company, came up with this concept, and part of their description stuck out at me.

The game exploits the tension between urban bustle and natural serenity. Players accumulate flower petals as the onscreen world swings between the pastoral and the chaotic. Like in the real world, everything you pick up causes the environment to change (emphasis added). And hopefully by the end of the journey, you change a little as well.

So… I don’t know, and am willing to stand corrected. But I think that’s part of it.

Via.

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The mall is flat

That title is stolen from Atrios, who refers to him as Little Tommy Friedman, age 9. I couldn’t agree more. Besides being married to a billionaire mall developer, he’s also a jingoist of the first order, using his NYT column to rhetorically taunt the Serbians back in the mid-90’s: “You want 1940? We’ll give you 1940. How about 1540? or 1340?” Implying that we would bomb them back to some past age. Excellent, Tommy.

Vanity Fair now has Friedman’s Five Worst Predictions and it’s a passable list, reflective of the intellect that allows him to breeze past CNBC producers straight to the pineapple daiquiris in the green room. Though this list of brutishly simplistic conclusions based on counter-intuitive and patronizing over-extrapolations of routine activity in the developing world leaves out some doozies, the thing about Friedman that almost makes my head explode is the seemingly highest-regard in which he is held by academics, many of whom I know personally. I just don’t get it that they don’t get it. Maybe the flat world idea is just too easy and useful to let pass despite its fundamental flaw, and so they can’t. It’s truly one of the great mysteries of my proximity to academia. But I think he essentially misunderstood the cabbie or whomever it was in Bangalore that first told him that line. And now it’s everywhere. And it’s truly stupid.

At least he makes our usual question easier to answer.

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What does 6.2% mean?

I can dig it when the Grey Lady steals my construct.

On Friday, the Bureau of Economic Analysis reported that gross domestic product fell at an annualized rate of 6.2 percent from the third to the fourth quarter of 2008. This was bad news, but some journalists have exaggerated the finding merely by misreading the report.

That post and graph is by a UChicago economist. Another economist I read regularly is Brad DeLong at Berkeley (who hopefully will be taking academic leave to work at the Treasury department very soon). Anyway, this post reminds me of something I heard DeLong say in a NPR essay, I think yesterday. He was talking about all the bad news that’s out there, about the fixation on the stock market as an indicator, the unemployment numbers, the CPI… and he was saying that its enough to make us all worried and scared. But he pointed out that because of certain trends in the fundamentals of the economy (which have been out of whack for several years, really), the stock market should be going down. And though we’ve known about most all of these trends and statistics since last fall, the news media has been more all over them of late. So while they are sufficiently dire that we should be worried and scared, we shouldn’t be more worried and scared than we were in December just because the news media is finally rending their garments.

But… check out DeLong; he has a great running gag (except its not so funny) about the Washington Post Death Watch that should serve him well when/if he gets back to DC.

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le mensonge dans une bouteille

Bastardized phonyms using a different language that has a close but completely different meaning… draw comparisons where appropriate. Working on this week’s column, I’m seeing a route through to making the point that

Is there any doubt that most of the talking heads on cable, along with an uncomfortable ratio of the professional politicians they report and comment on, do not know what they’re talking about when it comes to the causes for and ways out of our economic recession?

And I come back to the ‘fools or liars’ construct, where your interlocutor (or presidential candidate –  candidate McCain was offering something up seemingly every other day this summer and twice on weekends) offers a point predicated on only one of two possibilities – either he’s a fool or he thinks you are.

And the trends continue, unabated. Krugman today, on the Treasury plans to make low-interest, non-recourse loans to lure private investors into buying bad assets:

And the insistence on offering the same plan over and over again, with only cosmetic changes, is itself deeply disturbing. Does Treasury not realize that all these proposals amount to the same thing? Or does it realize that, but hope that the rest of us won’t notice? That is, are they stupid, or do they think we’re stupid?

I don’t know which possibility is worse.

And this

ABC News reports on “upper-income taxpayers” who are trying to reduce their income so they avoid proposed tax increases on those earning more than $250,000.

According to ABC, one attorney “plans to cut back on her business to get her annual income under the quarter million mark should the Obama tax plan be passed by Congress and become law.”  According to the attorney: “We are going to try to figure out how to make our income $249,999.00.”  ABC also quotes a dentist who is trying to figure out how to reduce her income.

This is stunningly wrong.

The ABC article is based on the premise that an individual’s entire income is taxed at the same rate.  If that were the case, it would be possible for a family earning $249,999 to have a higher after-tax income than a family earning $255,000, because the family earning $249,999 would pay a lower tax rate.

But that isn’t actually how income tax works.

And that’s just today… this morning, actually. Please make it stop. Has anybody seen the bridge?