Who Cares?

From an article in the Wall Street Journal:

Public pension funds and other big investors have long squeezed out a few extra bucks by lending stock held in their portfolios -- for a fee -- to short-sellers. Now those funds are starting to feel a squeeze of their own.

The collapse of Lehman Brothers Holdings Inc. and Washington Mutual Inc. have set off new troubles in the securities-lending business, and the recent freeze in short-term debt markets has only compounded the problem.

So they bought stocks with your retirement savings and then loaned them out to short sellers? And this helped invest your money in the economy in what way?

This is exactly the kind of thing that is turning me away from the bailout. What kind of wacky idea is that? Buying stocks and then lending them out for short sellers is such an obscure concept that I'm almost glad they're getting their fingers slammed in the door just because the whole thing reeks of gambling.

Why not buy stocks and then take the certificates to Vegas for a turn at the roulette wheel?

America's steelworkers rely on you to take out subprime loans, use the money to buy stock in their firms, loan that out to short sellers and use your profits to buy third order derivatives on Brazilian wheat futures so that they can continue to produce the steel we need!

Cheezburger of the Day

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On Cats and Alarm Clocks

If you have one (a cat) you do not need the other (an alarm clock). Yesterday, our Maximum Leader woke me up at 3:30 AM. This morning is was 2:00 AM. The raccoons seem to have followed us in spite of our recent move and our cat door is manual once more. That means I leave it closed at night, but open it in the morning so our Maximum Leader can get out. Her definition of "morning" and "middle of the night" seem to be a bit blurred.

What? What did I do wrong?

Oh, the waking you up thing. Hahahahaha!

So What Gives? Is There a Crisis or Not?

Dig this post from Carpe Diem showing that lending hasn't dried up and in fact has continued to grow. Here's one of the graphs.

"Total Loans and Leases at All Commercial Banks" reached an all-time high of $7.026 trillion (reported weekly) in mid-September, going over $7 trillion for the first time in history.

The best explanation for this came from the comments section of that post, submitted by Kentucky Packrat.

How can interbank lending be frozen while other types of lending are ok?

It's a sign of the CDS meltdown. The banks trust their customers to repay their debts more than they trust each other to stay solvent.

Hmmmm.

The Reason the Interweb Tubes Were Made

... was so that we could buy these and use them on our refrigerators at home.

There is no Crisis!

If there was, then Speaker Pelosi would have made an effort to rally bipartisan support for the bailout package. Instead, for her, it was just another day playing politics.

Why should anyone on either side have stuck their necks out in favor of this highly unpopular bill if she thinks it's so unimportant that she can use it to launch a tirade against the opposition?

H/T: The Volokh Conspiracy

The Crash is all the Fault of the Republicans

... because they didn't put duct tape over the mouths of the nitwit Democrats who fought against the regulation of Fannie Mae and Freddie Mac.

Two More Thoughts on the Financial Crisis

Good friend and semi-anonymous commenter Brian had this to say on an earlier post:

(T)he government wanted to extend home ownership through securitizing mortgages, the Republicans wanted less regulation and between the two you end up with mortgage bankers handing out gobs of money to anyone willing to lie about their income. The two ideologies combine to form a perfect storm. Everything went OK until property prices actually started to fall, then the riskier banks were caught with this stuff in their portfolios.

After sifting through the comments on other blogs, it dawned on me that the Law of Unintended Consequences was at play here, too.

When Fannie and Freddie decided to buy up subprime loans, they did it to help po' folk buy homes. However, the mortgage brokers were paid commissions on anyone getting these loans. Consequently, it wasn't just the po' folk getting in way over their heads, it was everyone, rich and poor alike. The next door neighbors of some good friends are losing their house because they got a liar's loan on a house that then fell in value. That house was in a nice part of town, too.

Fannie and Freddie set out to make it easier to borrow money and boy did they ever!

The second thought is this: enough with the politics already! What this all comes down to is the investment companies were too incompetent to manage their businesses. Instead, they blame the Republicans for easing regulations and the Democrats for subsidizing risky borrowers. No matter who did what in DC, shouldn't you be expected to run your own business with thrift and foresight? Essentially what the blamers are saying is that they needed people like Barney Frank to watch over them. Barney can't even run a brothel in his own house and not screw it up! What makes you think he's even vaguely competent when it comes to your business?

If you're relying on the government to put boundaries on your behavior so you don't wreck everything, you're doomed already.

Losers.

Barney Frank, Chairman of the House Financial Services Committee and also a big, fat idiot.

The Pellet with the Poison

... is in the flagon with the dragon!

Don't let the politicians and news get you down. Life is still good.

What Gives With NFL Field Pass?

I am one unhappy rodent. Here I go and buy NFL Field Pass for the year so I can listen to my beloved New Orleans Saints and a day comes when I can't tune into the game because I have to go to Mass and then to my daughter's soccer game. No worries, I've got NFL Field Pass which lets me listen to archived games, right?

Wrong!

I get home and find out the Saints crushed the 49ers and Drew Brees threw for over 360 yards. Fantastic! I pop open an Abita Turbo Dog beer and kick back to listen to the archived game and what do I get? "We're sorry, this game is not on the air. Please tune back during broadcast hours."

Broadcast hours? What broadcast hours? If the games are archived, how can their be broadcast hours? I want to hear the darned archived broadcast!

ARGH!

Update: OK, I'm good. The archived broadcast is up and I'm tuned in at 5:15PM on Sunday. Way cool. Geaux Saints!

The Deal is Done

... and it doesn't look too bad considering the fact that the Republicans' fanaticism for deregulation and the Democrats' childish notions of social equality have screwed us all and are now leading to those two groups "solving" the problem.

The WSJ has the details, the DC Examiner has the scoreboard. Thank God for the Republicans in the House of Representatives. They can't hold a candle to Newt Gingrich's congress, but at least they're fighting the good fight.

In a comment over at our Monastery of Miscellaneous Musings, I vented a bit. Here's a little taste.

Wouldn't it have been nice to have been in the fourth or fifth year of a balanced budget right now? Wouldn't it have been nice to be paying down the debt? I think the Iraq War was the right decision, but that may have been the only decision they got right.

The monks have had enough of the Country Club Republicans, too. Read their post - it's quite good.

How Deregulation Drove Things Along

From a timeline of the crash at The Big Picture blog:

2003-'07: The Federal Reserve failed to use its supervisory and regulatory authority over banks, mortgage underwriters and other lenders, who abandoned such standards as employment history, income, down payments, credit rating, assets, property loan-to-value ratio and debt-servicing ability. The borrower's ability to repay these mortgages was replaced with the lender's ability to securitize and repackage them.

2004: The SEC waived its leverage rules. Previously, broker/dealer net-capital rules limited firms to a maximum debt-to-net-capital ratio of 12 to 1. This 2004 exemption allowed them to exceed this leverage rule. Only five firms -- Goldman Sachs, Merrill Lynch, Lehman Brothers, Bear Stearns and Morgan Stanley -- were granted this exemption; they promptly levered up 20, 30 and even 40 to 1.

In the comments of that post, the notion that the Community Reinvestment Act contriubuted to this problem is debated. It's worth reading. In the end, however, the fact that Fannie and Freddie bought hundreds of billions of dollars of bad loans is most certainly a key part.

HUD stuck with an outdated policy that allowed Freddie Mac and Fannie Mae to count billions of dollars they invested in subprime loans as a public good that would foster affordable housing.

No matter how much Fannie and Freddie drove this disaster, claiming that free market purity would have prevented this mess is clearly false.

Update: This press release from HUD put out in 2006 is pretty damning evidence that the government was using Fannie and Freddie as tools for social engineering.

A Response to Comments on my Last Bailout Post

Some of my favorite people, Justin, B-daddy and the Ohioan, stopped by and left comments on my (allegedly) last post on the bailout. My response got pretty long and I've decided to make it a post in and of itself. I'm just excerpting from the comments left there, you can wander over and see their full statements for yourself.

Here we go.

B-daddy

Absent guarantees that government will repeal the Community Re-investment Act, dismantle Freddie and Fannie, and have a time certain limit on unbundling the bad assets, I cannot support this bail out. And the fact is, once one starts down such a path, such guarantees are almost always broken by government anyway.

The Ohioan

I don't like big government, I don't like the nanny state, and I really don't like the government getting involved with private markets.

Since you sort of asked us to choose, I guess in this case I think the first is worse than than the second, so with very lukewarm support, I'm in favor of a bailout.

My reply

Thanks for the comments. (I luvs comments! I must has moar!)

:-)

I stopped by my local Wells Fargo branch yesterday to talk with the investment banker there. We chatted about the WaMu takeover. He said their Wells Fargo branch had seen lots of people walking in with money pulled out of WaMu opening accounts at Wells Fargo. It was the beginning of a run on WaMu.

I think the terror of the situation is not in the economics, but in the psychology. You just can't afford to have runs on banks. Once it begins, no one will know who is solvent and who isn't. Rumors will spread and people will leave work to get their money and if nothing else, just keep it in cash.

No bank has the reserves to withstand that kind of panic. Even the healthy ones like Wells Fargo and JP Morgan would go under. That's why this bailout is necessary. The posts and comments across the blogosphere all focus on the rational response to what's happening. In truth, we probably could swallow a few toads in the form of bank failures and survive if it didn't result in a panic. However, man is not a rational animal, he is a rationalizing animal.

The bubble was created in part by mortgage brokers deciding to make money for themselves by making lousy loans, knowing they were contributing to the upcoming crash, but also knowing their contributions were so tiny that if they stopped, the only effect would be less money for them personally. In the same way, each individual would rationalize pulling their money out of their bank by deciding that their deposit was so small that it would have no effect on the bank run, but if they left it in they could suffer major losses personally.

Finally, B-daddy's fear is well founded. The dispensation of bailout checks will be managed by a Democratic congress and quite possibly an Obama administration. We got into this mess because they have yet to accept the notion that poverty has very little to do with money. Through the Community Reinvestment Act, first a Carter and then a Clinton program, they made sure that loans were available to people regardless of credit history. The redistribution of wealth will be at the heart of the bailout execution. You can see it in their press releases. Both Chris Dodd and Barack Obama think that mortgage defaults, caused by a non-existent recession, was the cause of this crash.

In spite of that, I would rather have $700B in the hands of Barney Frank and Nancy Pelosi to hand out to homeowners who couldn't balance their checkbooks if you held a gun to their heads rather than a panic and a run on the banks.

My Take on the Debate

I watched a little of the debate last night and paid some attention to what Barack Obama said. I figure if McCain gets elected, we will have a divided government and things will coast on more or less as they are right now. Come mid-2009, the credit crisis will have eased and life will get back to normal. The last 8 years have been pretty good and the coming debt tsunami is not yet upon us.

Obama came across to me as a mixture of Jimmy Carter and an Ivy League academic. He was ready with the checkbook for all voters. A tax cut for 95% of the population at a time when the deficit is $400B doesn't even begin to make sense. Couple that with his plans for lots more government spending and you get the Carter years all over again. 8-10% unemployment, interest rates in double digits and so forth. Obama was selling the notion that socialism works, it just hasn't been done correctly yet.

Obama was also all for punishing corporations and closing tax loopholes and blah blah blah. Down with businessmen, up with the proles! Punish Wall Street, reward Main Street! That the two streets are inextricably linked doesn't seem to have occurred to him. Whatever.

Four years from now the debt crisis might be close enough to see. We might have some cautionary examples of desperately debt-ridden countries struggling to avoid bankruptcy in Europe to draw lessons from. If Obama should win, the combination of another failed attempt to get socialism right and frightening images of the French or Italians in the middle of societal upheaval might lead to a massive return to fiscal sanity here at home.

Cheezburger of the Day

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(Maybe) One Last Post on the Bailout

Today I heard what might be the most cogent argument against the RTC-like bailout being proposed by the Bush administration. It was given (no surprise) by Newt Gingrich. In essence, he does not like the idea of giving the government $700B to run around buying worthless investments. Given the propensity of congress to give money to their friends, the idea of allowing the government to spend that much on handing out cash in exchange for dubious investments is alarming.

Having said that, I still like the idea. I'm willing to make the leap of faith to think that there will be sufficient safeguards to protect us from the congress going crazy.

Additional posts worth reading: Robert Samuelson discusses how this is a crisis of confidence in the banking system. Banks are wary of lending each other money because their afraid the other bank is using garbage equities as collateral. It's like a financial game of hearts where no one knows who has the queen of spades.

Paul Kedrosky makes the great point that perfect is the enemy of good enough.

I'd love to hear what y'all think about this deal.

A Video Tutorial on the Banking Crisis

This video, picked up from Hot Air, falls apart around 7:00 and fails to mention the role played by the risk-inducing incentives for mortgage brokers, but it does a good job of explaining the government's place in this whole mess.

How it Happened

After listening, reading and digesting information on the banking crisis, here's my simplified take on how this whole mess went down. There are only two components to the problem.

First off, banks were used as instruments of social equality, more specifically, the quasi-governmental Fannie Mae and Freddie Mac were used. The political sentiment was that we needed to help poor people own their own homes.

Fannie and Freddie did this by becoming a key enabler of the mortgage crisis. They fueled Wall Street's efforts to securitize subprime loans by becoming the primary customer of all AAA-rated subprime-mortgage pools. In addition, they held an enormous portfolio of mortgages themselves.

In the times that Fannie and Freddie couldn't make the market, they became the market. Over the years, it added up to an enormous obligation. As of last June, Fannie alone owned or guaranteed more than $388 billion in high-risk mortgage investments. Their large presence created an environment within which even mortgage-backed securities assembled by others could find a ready home.

The concept was that poor people were poor because they did not have access to credit. The truth is that poor people are poor because they're lousy money managers.

Second, mortgage brokers and managers were rewarded for profit, but not penalized for losses. I don't have a source for this on the web, it came from an interview I heard on the Dennis Prager show of a fellow who use to be a high level manager for one of the brokerage firms. This compensation scheme biased the market heavily towards risk. So long as the real estate market went up, the loans paid off and everyone in the chain made lots and lots of money. They may have known the bubble would burst, but individually they felt powerless to stop it and would have been penalized had they opted out of the bubble.

Here's a very succinct summation. Fannie and Freddie provided a market for lousy loans. Mortgage professionals were paid to make loans. They loaned the money to people who could not pay it back and dumped the risk off on Fannie and Freddie and then rushed out to make more loans. Eventually the whole house of cards fell in.

Update: This post from John Allison, President & CEO of BB&T, a South Carolina bank, is a must read. John is not in favor of the bailout, probably much to the delight of our good friend B-Daddy. Here's a tidbit:

Freddie Mac and Fannie Mae are the primary cause of the mortgage crisis. These government supported enterprises distorted normal market risk mechanisms. While individual private financial institutions have made serious mistakes, the problems in the financial system have been caused by government policies including, affordable housing (now sub-prime)...

Ocean Beach Seagull

It's just a seagull, but I liked the way the composition and the colors turned out.


Click on it for a better image.

Update: My dad called to tell me that this is an immature seagull, hence the unusual colorings. Thanks, Dad!

Tonight on CSI:NY

... a whole bunch of people being slaughtered and/or tortured in new and vile ways.

I just sat through my first full episode of CSI:NY. I can't think of any reason to watch anything so hideous. The show is beyond parody or satire. It was so utterly horrific that I don't want to pollute this blog with a prose description of the episode. The whole thing was sickening. I need a psychic shower. I need something light and pleasant. Something like this.

There. I feel better. Don't you?

Deregulation Led to the Crisis

... but not in the way you might think. Dig this.

Blogworld Expo 2008 - How Financial Blogs Influence the Markets

As you might expect, given the state of the markets, this session very quickly devolved into a discussion of the current banking crisis. It was tremendously enlightening and the discussion with the audience was terrific. To deal with the main topic of the session, the quick answer is that financial blogs do not affect the market. A description of the original intent of this session can be found here.

Now on to the good stuff.

The moderator of the panel was Barry Graubart who blogs at Content Matters. The panel consisted of

Paul Kedrosky from the Infectious Greed blog,
James Ledbetter who writes on economic topics for Slate,
Howard Lindzon who writes his own blog and
Felix Salmon from the Market Movers blog.

Here's the discussion, or at least as much as I could transcribe. It was pretty fast and furious.

• Paul - He believes that the new RTC is going to cost between 1-2 trillion dollars.
• Felix - The temporary ban on short selling is a terrible idea.
• Howard - The market was on its way to a crash and this was the only way to prevent something horrific. Wiping out the short sellers hurt us. The stock market is like a giant brain and this was a shock to the system.
• James – He thinks this will get political very quickly. This was a triumph for socialism. He likes the short selling ban, but only so long as we ban buying stocks as well. (That was sarcastic.)
• Felix – There is unanimity in the financial blogosphere about what has happened – they are all against the ban on short selling.
• Paul – The US economy and markets are like a supertanker and everyone else is a normal boat. When we move a little bit, everyone else gets thrown all over the place.
• Howard – The next month is going to be very interesting. He likes to look at the stocks outside of the direct hit – he was looking at the consumer stocks as the banks got killed.
• My own note - None of them were taking any responsibility for their profession – those of us out here in the rest of the world weren't the ones who concealed the lousy debt inside of bonds.
• Felix – Crashes are worse when there is no short selling.
• Paul – Everyone knew the dot com bubble was going to burst, but no one could time it. No one wants to be the one who jumped off before the top was hit. There was no reason to get out of the real estate market so long as it was going up. Bloggers can be negative as early as they want because they have so little at stake.

Paul Kedrosky
• Felix – He thought it’s easy to overstate the degree to which they knew it was going to happen. They didn’t know how bad the default risk was.
• Paul came up with an example of someone who saw this all coming.
• James – He doesn’t think the bloggers deserve that much credit for calling this. People didn’t forsee the perfect storm of subprime loans and the drop in real estate prices.
• Felix did not feel the blogs play much of a role in perpetuating rumors. He believes the bloggers are more skeptical by nature.
• Paul said there is an amazing amount of gossip that occurs on the trading floor and he wished the bloggers could make this more transparent.
• James believed that the problem was group think. My note: That’s a problem everywhere from the NFL to the Pentagon to the MSM. It’s human nature to not want to stick out while everyone is agitating for one thing and you believe in something else.
• Howard is not in blogging to make money, he’s in it to build his brand equity of himself.
• Felix – The vast majority of the people on Wall Street don’t read blogs and many of them don’t read the Internet. For the most part, they’re doing their jobs. Email is the way you reach the big boys on Wall Street. Most financial bloggers have a hedge fund or a service to sell, they aren’t blogging to make money on the blog.
• They all saw the market going lower.
• Paul – The blogs have unleashed the voices of very narrowly focused experts. This is one of the great merits of the financial blogosphere. Calculated Risk is the blog they all used as a good example of it.
• In group blogs you usually want to read just one of them, you don’t want to read the rest.
• Howard really likes Twitter as a tool because there is some sort of reputation analysis because you can see the number of people following any one particular twitterer. In contrast, you don’t know who or what is behind a Reuters story.
• Howard gave concrete examples of just why Gary Vaynerchuk was right. He wants people to come into the conversation and add content to it.
• A real estate professional in the audience said that in his circle, everyone from the bloggers to the mortgage brokers to the realtors all knew the growth was crazy, but the media did not cover it. It wasn’t until the bubble burst that they paid attention. The panel agreed that the same thing is true in the financial blogosphere.
• Howard – He runs a hedge fund and his management of the hedge fund is 50 times better now that he blogs and reads the blogs. All of that expertise at his fingertips as a community makes him smarter.
• Paul has examples of hedge fund managers who write to him about things he has written and claim he has affected the decisions they make. He thinks the blogs have quite a bit of impact. Me: This does not seem to affect the MSM.
• Commenter from the audience - The ban on short selling was put in place so that they could have 30 days to move all the bad bank stocks into the RTC. The bank stocks have been protected because their tendrils are all through the economy. GM can be walled off, but the banks can’t be. My note: This last bit of information may have been the best tidbit of information I gained from all of Blogworld. It was wonderfully succinct summation of the problem and the solution.

Felix Salmon and Howard Lindzon

Blogworld Expo 2008 - Beyond Blogging: Stories & Social Media Lessons Learned in the Real World

Now that I've managed to unpack and clear away the debris at home and at work, I'll get back to posting about the sessions we attended at Blogworld. Here's the full description of this session.

Dave Taylor was introduced the moderator for this session. Dave is very active in the blogging community and one of his blogs is Ask Dave Taylor. The panelists were the following:

Tac Anderson – a serial entrepreneur who blogs at newcommbiz,
Michael Brito of Intel who writes the blog Conversations Matter,
Rohit Bhargava of the Ogilvy PR blog,
Anne Plese of Cisco where she works with the Cisco Data Center blog and
Kelly Feller of Intel who writes at the Armchair Marketing blog. Correction to original post: Kelly was the moderator of the session.

Here are my notes from the session.

• Tac owned a skateboard shop and instead of creating a website, he created a Myspace page. It turned out to be huge because all of his customers were there. While working for HP, he ran an ad campaign allowing people to vote on their favorite blogs. It got people involved in the process and it was a big success. You can read about it here.
• Michael Brito - Yahoo tried to do an American Idol-like contest entirely on line. People would video themselves singing country songs and then watchers would vote. Hundreds of people participated. The second phase flew the top 10 to Nashville where they performed in front of judges and the winner got a record deal. It was a big success.
• Less successful were efforts that did not use evangelists on line to push their efforts and allow people to participate.
• Rohit – 100 athletes, 100 blogs - Lenovo Voices of the Olympic Games is a blog and a YouTube channel. It allowed visitors to follow the individual journeys of 100 different athletes from many different countries. It helped to personalize the games.
• Lenovo incentivized the athletes by giving them laptops and flip cameras. The athletes’ passion came through.
• Corporations need to find their own voice. It can be difficult because bigger corporations don’t know who they are. Blogging can hlep a corporation define itself.
• The “Are we there yet?” - stories from the road blog for Ford was a big hit. They blogged family road trips rather than using car magazines to write about their cars. They gave 5 families Taurus cars for 3 weeks to take on family road trips. They used mom and dad bloggers to tell their story. (I can't seem to find a link to this site.)
• Anne Plese – her job was to make a new Cisco technology relevant to their customers. Their product managers were asked to write white papers in response to real-time conversations on IT buyer blogs. The marketing team got to know all of the conversations that were going on about the products and they all got involved in the conversations on blogs external to Cisco. There was no lag between the launch of the product and the response to the customer reactions. Cisco developed a blogger relations focus. They nurtured their relationships with bloggers the same way you nurture the relationships with the old school media and analysts.

Tac Anderson of newcommbiz

Before You Rage at the Bailout Again

... read this.

Forget the ideologues. The bailout is absolutely necessary for most people's financial health.

First, all those commentators sputtering about the supposed $700 billion "cost" should take a look at ordinary Americans' savings.

On Monday, fears that this deal might be held up on Capitol Hill, or even abandoned altogether, caused the stock market to fall about 4%.

The amount wiped off share values? Oh, about $610 billion. In six and a half hours.

Indeed, since the start of this month U.S. shares have lost nearly $1 trillion in value, and since the start of May the figure is a staggering $2.2 trillion. This is the financial cost of this crisis to America's savers and investors. It has come out of 401ks, 403bs, IRAs, mutual funds, college savings plans and pension funds.

There's more.

Second: This bailout probably isn't going to cost the taxpayers anything like $700 billion anyway. That's the figure being bandied about. But it's just the tag put on the upfront investment. OK, no one on Wall Street knows how to value these subprime assets and related derivatives. And nobody wants to own them right now. But they aren't going to be worthless. If Uncle Sam buys them, holds them for a while, and then sells them in an orderly fashion, he should get a lot of the cost back – maybe even most of it.

Did you read the whole thing? Good. Now feel free to return to your talk radio, Daily Kos, Hot Air or Huffington Post and continue to hyperventilate.

China: Equal Pay for Equal Work

... err, or something like that. Women able to lactate are now able to make big bucks in The Land Where The Infrastructure Shines Like Gold. It turns out their milk powder was tainted by poisonous chemicals and it's making the babies sick.

As Chinese parents panic about the tainted milk -- which authorities now admit began in late 2007 -- that has killed four and sickened more than 53,000 children, the fallout is breathing new life into an ancient profession. Wages for Chinese wet nurses, who post online ads and sign up at housework agencies around the country, have doubled since the milk crisis began on Sept. 12. They now run as high as 18,000 yuan a month.

God bless the Chinese. Their amazingly wonderful infrastructure has managed to create high-paying, green jobs that raise women out of poverty. It's a triple play!

Tonight's Pork Chops

... were made from this recipe found on Cooks.com.

ONE POT PORK CHOP DINNER

Delicious and easy to prepare.

1 can tomato soup
1/2 c. water
1 tsp. Worcestershire sauce
1/2 tsp. salt
1/2 tsp. oregano
6 to 8 small whole potatoes
4 to 8 carrots, split lengthwise

Brown chops, add rest of ingredients, cover and simmer 45 minutes or until tender.

Our review: Nom nom nom!

Right Before President Roosevelt Entered His Time Machine

... Joe Biden remembers him doing this:

When the stock market crashed, Franklin Roosevelt got on the television and didn't just talk about the princes of greed. He said, "look, here's what happened."

Outstanding! Luckily, we still have pictures from that event.

And this time, Mr. President, we won't let that nitwit Lincoln anywhere near the control panel!

Big Kitteh

... is big!


A friend of mine took this photo while visiting the National Zoo and then posted it on his Facebook page. I love the Internets Tubes!

How do you buy from Amazon?

After hearing a recommendation for the book Groundswell at Blogworld and then getting another recommendation from a friend, I just went over to Amazon and bought the thing. When I buy products from Amazon, I always look at the user reviews. The only reviews I read are the 1 star reviews. I look for common themes in the 1 star reviews where people are really unhappy with the product. If there is a theme, I decide whether or not I can live with that flaw.

How do you buy from Amazon?

Groundswell, by the way, has 39 reviews. 29 5 stars, 9 4 stars and 1 3 star review. There are no bad reviews for it.

Cheezburger of the Day

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How to Burn 20-30 Minutes of Your Life

... and be much wiser for having done so.

Read this post and then go through the entire set of comments below it.

A Thought on Las Vegas

Last night we drove back to San Diego from Las Vegas after having a fantastic time at Blogworld Expo. Las Vegas is positively marinated in porn. It's everywhere you look. The billboards, the news stands, the ads on buses and cabs, it's everywhere. There's even a chain of coffe shops called Sexpresso (I just found out these started in the Pacific Northwest - here's a blog post with some photos). Driving by a Sexpresso in Vegas, we saw a girl in a leather teddy and fishnet stockings walk out of the store, dance around in front of the door and then go back in. It may have been the least sexy thing I have ever seen in my life.

As we drove back to San Diego and we were passing through Temecula, I wondered if people living in Vegas who didn't travel much, felt a massive culture shock when they visited places like Des Moines or San Diego. Do they get off the plane and on the way to their hotel begin to wonder, "Where's all the porn?" Do they miss it? Do they think we're weird?

Bring on the 5 Year Olds!

... Bring. It. On.

Thanks to our Offical Artist, we found this quiz.

28

Created by OnePlusYou - Free Dating

How about you?

Road Trip Home!

Well, we had a great time at Blogworld Expo. I will be doing more posts from the sessions we attended and the thoughts we had during the Expo, but for now I'll leave you with one of my favorite road trip music videos. Enjoy.

Blogworld Expo 2008 - Mike Shinoda

Just a photo, not a summary of the keynote. That will come later. Mike is the lead chanter singer for Linkin Park.

Blogworld Expo 2008 - Saturday Night Party Photos

Here's a dozen photos I snapped at the opening night party last night. Feel free to download and use them yourself.

And a good time was had by all.

Viva Las Vegas!

Blogworld Expo is being held in one of my favorite cities in the whole world, Las Vegas*. In addition to advertisements for porn all over the place, signs with phone numbers you can call to get strippers sent to you and skanks dressed in leather teddies and fishnet stockings dancing in front of coffee shops, we have this scene from the world famous Strip.

It's like a snow drift, only more colorful!

Best of all, they go on for a long way down the Strip. Yay!
* - Las Vegas is not actually one of my favorite cities.

Blogworld Expo 2008 - Keynote by Anil Dash and Chris Alden of Six Apart

At work, we use Six Apart's Movable Type as our blogging platform. We're very happy with it, so I was excited to hear what these two had to say. They didn't disappoint. In addition to the expected discussions of their company, they talked about where they thought blogging as a social media is going. Here are my notes from their presentation.

• Six Apart is a company of 200 people.
• They recommended we visit blogs.com. I've never seen it until just now as I'm writing this post, so I can't say anything about it one way or another.
• Six Apart Media was just launched trying to help bloggers monetize their sites.

With the preliminary discussion of their company done, they moved on to the meat of their talk. Anil is a broad and emotional thinker. His themes are so expansive and beautiful that notes were difficult to take as I listened. Here's my poor attempt at capturing some of what he said.

Anil Dash
• Bloggers want to connect. Bloggers love the web because it lets us make these connections and share our passions. It’s not about the technology, it’s about making the connections with the other people who care as much about our passions as we do.
• Dollarshort.org (now mena.typepad.com) was one of the first blogs. Anil showed a screen capture or perhaps and archived page of Mena's first post. I wish I could find it, it was quite touching.
• It doesn’t matter what the blogger's affiliation is – MSM or personal, the real question is what are they accomplishing with their blog.
• Anil mentioned how well internal corporate blogging has paid off in GM, Siebel and Boeing.
• Blogging is moving from an activity to an industry.
• Starting in 2007, the majority of Internet users were reading blogs.
• All of the online advertising trends are going up. The media is being transformed, there is almost no barrier to entry now. The power of blogs is the freedom of expression, control of your own site, control of your online identity and management of your advertising. Personal autonomy is key.
• Six Apart is encouraging the discussion of blogging 2.0. What do we, the blogging community, want out of it? Blogging 1.0 was about personal publishing. Blogging 2.0 is about social publishing. It sounded sort of like the merger of Facebook and Blogger, and add to that Vox, Twitter and Tumblr.
• Today’s mainstream social media are like yesterday’s MSM.
• This was particularly exciting to me - Anil discussed the use of OpenID as a way to manage your identity so that your blog is what represents you in the comments on other sites. This breaks down the barriers of registration and allows your participants to bring along their native identity to your site. This is a wonderful concept. I want my identity carried over into the other accounts and I want The Scratching Post to be easily accessible across the network.
• Anil also mentioned Blog It – it will allow you to created content and alert people across a wide variety of platforms. It's another product with which I am unfamiliar.

I really enjoyed this talk, particularly the details they gave about their vision of the future of blogging. OpenID is an idea whose time has come. I work very hard on The Scratching Post and I want it to be my identity. I need to look into this some more.

Chris Alden

Blogworld Expo 2008 - Rick Calvert, Vicar of Victory

I'll bet that most of you Blogworld attendees did not know that the force behind Blogworld, the one and only Rick Calvert, was a member of the Feline Theocracy. Well, he is. He's our Vicar of Victory and we are delighted to see him do well. Bravo, Rick!

Our Vicar of Victory, looking rather stern.

Blogworld Expo 2008 - Keynote by Richard Jalichandra of Technorati

Richard went through an enormous number of statistics that Technorati has been collecting for some time along with personal discussions they have had with some of the top bloggers. Technorati will be publishing their findings starting Monday at their site. Here are my notes from that session.

• Forget about using the word "consumer" – people are now producers of content.
• Centralization is dead, fragmentation rules. Man, my organization is going in the opposite direction in terms of management style. It will be interesting to see the cultures clash.
• Richard went through a list of Web 2.0 platforms and their role in the world. Social networking is all about sharing and communicating. Online journals are about sharing and life casting. Blogs are for information and influence.
• Blogs are media!
• One study said that there are 80 million unique visitors in the US going to blogs. A different study by eMarketer says it’s 94 million.
• 4 of the top 10 entertainment sites are blogs.
• Larger blogs are taking on the characteristic of the mainstream media. The Huffington Post is an example of this. Meanwhile, the mainstream media are creating their own blogs. Blog trends, stories and behaviors are influencing the MSM. You can take a look a the way Sarah Palin has been savaged in the press through rumors and innuendos started on blogs as an example.
• Most bloggers are male, most are young, most are affluent and most are educated. How those sets overlap was not shown.
• Blogging is all over the country. It is not localized to major metropolitan areas. It is also International. Interestingly, most bloggers publish in English. This could drive English even more as the global language.
• When they asked bloggers to categorize their blogs by subject area, 43% fit into the "other" category. When asked, they said their niche was so fine that it didn’t fit into a category. That sounds like an army of experts instead of an Army of Davids.
• Most people blog to share their opinions and expertise.
• 71% of the top 100 bloggers use tags. OK, OK, I get the message. I'll start using tags!
• The big bloggers write often as well, typically several times a day.
• The big bloggers know their external tools and use them. Bloggers are also active web20 users. They comment, subscribe to rss feeds, watch videos on line and so forth. None of this is surprising, since we live a considerable portion of our lives online.
• Brands permeate the blogosphere. Lots of brand reviews and blogging about brands. This is why you need to monitor the blogs to see what people are saying about your brands. Your brand is in the blogosphere whether you like it or not. You can’t control the media, but you can engage in the conversation.
• And now the same message as every other talk - Be authentic and be transparent!
• You can’t just hide out on your own blog, you’ve got to participate across the blogosphere.

Richard Jalichandra

Blogworld Expo 2008 - Gary Vaynerchuk of Wine Library TV Keynote

To say that this was an energetic Blogworld session is a vast udnerstatement. Gary is one of those people who seems to be single-handedly hasterning the entropy death of the Universe. He is a creature of pure energy and his style and passion made this hour go by very fast. His theme was that social media was all about branding and getting yourself known as an expert in your area. Here are some notes I managed to take amidst the flurry of good advice from Gary.

• You need to spend 2-3 hours a day of communicating on blogs and in the comments. Find the blog leaders in your field and participate in their comments. Answer every email and every comment on your blog forever. This community work is huge – build up name recognition by leaving comments everywhere. If you know what you’re talking about, you’ll win.
• Content is king, but marketing is queen and the queen runs the household.
• Technology is fine, but the connection is the factor, what makes us tick are the human connections. You have to go to every meet up that you possibly can.
• You need to build up brand equity by sharing your knowledge. You need to be pumping out content every day, if not, you will be out-hustled.
• Hustle is an imperative essence of this. Things don’t just happen. If you want to build a business, you have to work like mad.
• You have to put out great content and you have to find money – find a way to monetize your content.
• Gary said he doesn’t sell wine, he was building personal equity. With that, he earned the offers he has received. For example, Guy Kawasaki has brand equity.
• You need to become the king of your domain. We’re in the middle of a gold rush.
• You have to be doing what you love because you’ll need to work 17 hours a day. You need to Google the topics you are trying to work so you can get them to buy advertising on your site. There are more and more people in the corporate world who get it.
• If your goal is to build a company and sell it, then you need to make money. People don’t want to buy companies with users, they want to buy companies that make money.
• Make swag for your products – that’s the quickest way to build brand equity.
• You have to be patient waiting for your marketing efforts to pay off. The big players in the corporate world know it’s coming and they have patience.
• Work on getting the most traffic you possibly can. The best way to do that is to become part of the community where the community knows you and knows you’re an expert.
• You need to have a huge email button on your blog. You want to induce conversation at every turn. You need to have friend buttons for Twitter, Facebook, LinkedIn. Your job is to create a connection - a two way connection. You need to have your IM address available all the time.
• Remember that your goal is to build business, not go hang out with people.
• You have to be authentic. (We heard that in every session.)
• Check out Ping. fm. It allows you to tweet to multiple platforms.
• Using the @ in Twitter is a great way to make connections.
• He spends a lot of time searching for people who say bad things about him and he engages them and converses with them. Don’t waste your time on hating people. Spending any energy at all being angry at other people is a waste of time. Don’t spend your time finding people to be angry with, instead find places to leave comments on your expertise.
• Comment on all of the big blogs in your area.
• Gary tried a full-page ad in the New York Times. It cost about $30-40,000 and resulted in no payoff at all. It’s just a matter of time before the Internet kills off the newspapers and the old media.
• Gary's method is not scalable, but you need to do it as long as you can.
• Team up with others and don’t worry about how much they’re contributing – take every viewer you can get.
• People resist the new media because they can’t control their message.

Gary Vaynerchuk

Blogworld Expo 2008 - How to Implement Blogs & Social Media Strategies for Big Business

This was another excellent panel discussion in the business segment of Blogworld. The moderator was Michael Rubin from GasPedal and the panelists were Michael Brito of Intel, Hillary Weber from Kaiser Permanente and John Andrews from WalMart.

Here are my (somewhat) raw notes from the session. This was a very lively session with lots of interaction from the audience. A Twitter feed where tweets with the #bwe08 tag were collected was displayed on the screen behind the panel and gave the audience the ability to ask questions in real time. The Twitter feed rapidly outstripped the panel's ability to answer the questions, so the Michael Rubin picked the best questions to keep the discussion going. The use of Twitter was very effective.

• WalMart bloggers focus on the message of the WalMart brand – they blog all about saving money and being frugal.
• A question arose quickly about the role of blog evangelists - does every company need a Robert Scoble? It was generally agreed that you needed a high-power champion of web 2.0. Social media is not easy in the corporate world because of the cooperation required across the organization and you have to work with people who are uncomfortable with the technology. The Kaiser group had a doctor who created their farmers markets and created a newsletter and then moved from their to blogging and did it all in his spare time. He was Superman! The guy was passionate and involved. His work evolved into the first corporate blog.
• On the Internet, Intel monitors posts and tweets and sends their people wherever the conversation is happening to make sure the company is not misrepresented.
• I asked if it was necessary to have management and bloggers make use of web 2.0 outside of work as well as within work. Hillary Weber person thought it critical that their seniors and others use web 2.0 outside of work. Their uneducated managers are kicking and screaming about the techanagoly and are a real impediment to progress. WalMart managers don’t know anything about it, but the ones who get involved did go out and get twitter accounts, blogger accounts and so on. Intel – it’s crucial that the managers use the tools and understand them.
• What companies are doing it right? Dell is doing it well. Ideastorm is a good example. Southwest Airlines was a good example. Lego seems to have a good one. Stoney Fields Farms have a good one. Wells Fargo has a good one. WF started talking about their history first and not banking. BestBuy does it well and McDonalds does it well also – BMW, too. They make use of their workforce and users. Home Depot was another good one.
• Home Depot was directing people on where to get help during the hurricanes and used Twitter for that so that cell phone users could get at the information ata a time when people at home wouldn’t have power. Very clever.
• Line level employees are a much better source of blogging than the management they have a better connection with the customers. The higher you go up the food chain the less time they have to blog. Worker bloggers are more credible than manager bloggers.
• Being authentic is crucial.
• The Kaiser blog is definitely on brand – helping people thrive is the message stated in any number of ways.
• The Intel bloggers are working full time on other projects. This one bothered me. In the corporate orld, nothing gets done unless there is money put behind it. Unless your bloggers are given time dedicated to blogging, you'll keep getting blog posts in dribs and drabs and have to constantly harass them for content.
• Johnson and Johnson has started a health channel on youtube. WalMart has a youtube channel with 40+ videos on it.
• None of them work for companies where time is set aside deliberately for blogging or sharing information. Instead, they’re making the tools super cool and hoping that the workforce uses them. That seems doomed to fail to me. Hope is not a strategy.

John Andrews, Hillary Weber and Michael Brito

Blogworld Expo 2008 - Corporate Blogging: Myths and Realities

This morning at Blogworld Expo, we heard a panel discussion about how corporations are using blogs to connect with their custoemrs. It focused primarily on external, Internet-accessi ble blogs. The panelists were Paula Berg of Southwest Airlines, Mario Sundar on LinkedIn and Chris Baggott of Compendium Blogware. The session was dominated by questions, answers and discussions with memberws of the audience. That interaction made it particularly valuable. What follows are my notes from the discussion.

Myths and realities:
• My customers don’t read blogs. Reality: Southwest discovered this was definitely not the case. Their blog, Nuts About Southwest has turned into an informal, but useful, focus group. It's a means by which they maintain contact with their customers.
• Blogging is risky. Reality: Not blogging is riskier. The discussion about you and your products is going on out there on the Internet Tubes. You can ignore it and let damaging conversations spread or you can take part in the conversation and make sure your message gets out there.
• Blogging has to be professional. Reality: Blogging is all about your personal voice. If your blog reads like a press release, you lose credibility.
• Producing content is too time consuming. Reality: Not producing content can be fatal. Blogs are a way to keep your information at the top of search engines and give your customers and potential customers access to your products and message.
• You shouldn’t moderate content or comments. Reality: Unmoderated contents can be fine for some sites, but you need to keep an eye on the discussion and intervene when it turns nasty.
• Blogging has no real ROI. Reality: Marketing in general has a very nebulous ROI. It's as much about managing your corporate brand as anything else and that's worth quite a bit even if you can't quantify it.

Random notes from the session:
• The book Groundswell was recommended by the panelists.
• The LinkedIn corporate communications team uses their blog to educate their users about their product.
• You need to establish the purpose of your blog so that it doesn't twig off into random topics. For example, the Southwest Airlines blog was a chance to give their customers a behind the scenes look at their company. It's importasnt to keep in mind that the blog can evolve into something much more as you engage in conversations with your readers.
• It’s important that the culture of the company should shine through on the blog.
• The panel did not advocate CEO blogging – the employee bloggers have much more passion and credibility, but some of the audience members thought it was very important.

This was an excellent session, particularly because of the interactions with the audience.

Paula and Mario.

Blogworld Expo 2008 - Dave Taylor Keynote

Here's our first report out from Blogworld Expo - the Dave Taylor keynote speech on "How did we get here and where are we going?" Dave Taylor is an author and blogger. One of his three blogs is Ask Dave Taylor. From there you can find the rest of his publications if you so choose. Here are my notes from his talk.

• Blogging is storytelling
• There has always been a bias issue - We only see bias when we disagree with what is being said. He brought up the example of the New York Journal issue by Hearst that dealt with the destruction of the USS Maine and set off the Spanish-American War.
• Blogs are diaries, but diaries are historical records as well. The Diary of Anne Frank is a good example. She didn't write it with the intention of having millions of people read it. It was just a record of her life and yet it has turned into a major historical document.
• People need to have a voice. Making money is a tiny part of blogging, it’s all about making your voice heard. He gave examples of political graffiti from various countries. He then moved on to this blog post about South Africa. People are taking real risks to post their views. He gave an example of a Saudi blogger who was jailed for speaking his mind.
• Blogging is easy to start – it’s a very democratic device to getting your voice heard. It's a very effective communications because it is bidrectional, global and free.
• Blogs prevent the silencing of the past a la George Orwell – "who controls the past controls the future and who controls the present controls the past." More voices means less control. At their core, bloggers are journalists.
• The PR and marketing departments in organizations across the world are losing control of their situation. CNN has recognized this and has developed iReport to bring news from all kinds of people all across the world.
• These days, everyone can have their own media channel and you can’t tell the difference between NYTimes and FilmBuzz (Dave's Twitter feed). That leads you to wonder, how do you trust anything you read?
• The Internet is becoming pervasive – Chrysler is bringing it to cars, Amtrak is bringing it to trains and Row 44 is bringing it to airplanes.
• Spam comments prove the health of the blogosphere – no one would bother spamming a dying industry.
• My favorite quote from Dave - "The revolution won’t be televised because the infinite channels of our new media ARE the revolution."
• All of the 1950s projections of the future were wrong – they showed one-way communications – the Jetsons watching TV.
• The iPhone is changing the whole nature of the computer industry.
• Corporations are learning how to deal with the new world. Level 1 – corporations can use the blogs to send out their point of view. Level 2 – corporations can participate in the conversation. Imagine the world as a big party and you are just one person at the party – you can’t interrupt everyone and demand they come and see you – it’s their party, not yours. Press releases don’t work so well any more. You need to be involved in the conversations about your product. You can't expect people to read your press releases in response to negative blog posts or comments they read on another site. In fact, by many people press releases are seen as spam. The question being answer is this - How do you communicate with a culture that doesn’t want to hear your normal PR broadcasting?

Dave Taylor

You're Leaving?

... how terribly fascinating.

Can you do it quietly? It's time for my mid-morning nap.
Our Maximum Leader was clearly devastated by the news of my road trip.

Road Trip!

We're heading for Vegas, baby! A friend and I are on our way to Blogworld Expo, riding in the world-famous FredMobile*. I'll be blogging from there to let you know what's going on. If you're going to be there and you want to meet up or you'd just like me to try and find some people or get some questions answered, leave me a comment and we'll do our best to get you what you want.

Look out, Vegas, here comes the FredMobile!
* - It may not actually be world famous.

If You Visit This Link You Might Be Breaking The Law

... so don't say you haven't been warned!

In the video, watch for the scenes of power plants releasing steam into the atmosphere as a symbol of environmental destruction. I want to make it perfectly clear that I oppose the release of steam in all forms. Steam can become clouds which can become rain which is a major part of all hurricanes. We must stop the release of steam!

Err, I seem to have gone off track. Here's the link. Don't go there. It's too horrible for words.

Steam - the bane of all Mankind!

Some Quick Thoughts

Watching the market meltdown and having absorbed the campaign rhetoric from both sides, I'm struck by a few things.

1. The global consensus is that governments manage economies. I've got longer posts on this, derived from a book I'm reading now, but the essence is this: once we decided that governments managed economies, government budgets became untethered from fiscal realities. Balancing the budget could wait, the economic slowdown of (fill in a year between 1965 and 2008 here) had to be dealt with right away! Until this notion that the government runs the economy is put to rest, the debts will continue to grow.

2. Obama is running around saying this is the worst economy in the last 30 50 100 6012 years. If that's the case, doesn't that argue against more government intervention? The government just blew through $9,700,000,000,000 worth of borrowed economic stimulus and Obama thinks we have the worst economy since Caligula sang to his horse. Now we want to do even more?

3. That debt number is going to go through the roof as Social Security and Medicare fall apart.

4. Western Europe has done the same thing and has it worse.

5. McCain subscribes to this concept, too. He thinks we need to cut taxes to stimulate the economy. I thought that's what we'd been doing while running up that debt. How come it didn't work?

6. As we watch that concept painfully fall apart, there's another one that is falling apart, too. The secular, do-your-own-thing culture has proven itself a failure. People cannot determine morality for themselves. We actually need an objective, rigid set of morals that cannot be disputed. Barack Obama in his Greek Temple speech said this.

Yes, we must provide more ladders to success for young men who fall into lives of crime and despair. But we must also admit that programs alone can't replace parents, that government can't turn off the television and make a child do her homework, that fathers must take more responsibility to provide love and guidance to their children.

Emphasis mine. In the absence of a rigid moral code, that means absolutely nothing. It could mean anything from more Similac and Pampers delivered to a guy's 3 baby mamas or it could mean marriage before sex. All Obama and his social liberal friends know is that whatever we're doing right now isn't working. They haven't quite made the leap to realize that the destruction of traditional morals has wrecked huge swaths of society.

I'm voting for McCain, but I think much larger forces are at work in the world. Two concepts that took decades for their failures to become apparent are going to have to be unwound no matter who wins the presidency.

Global Keynesian Economics

... has a mighty payoff - debt! Everyone across the globe is getting into the act. Governments everywhere are "managing their economies" and producing their best product - debt.

US debt - $9.7T
The following are all normalized to the size of the US economy.
German debt - $9.4T
French debt - $9.2T
English debt - $5.5T

Just think - all of these monstrous debts were run up during a time with almost no major crises or wars. Instead, it was the entire Western world managing their economies just like Keynes said we should. Balance the budget? Save for future emergencies? Nonsense! Let's manage our economies! Yay!

Think what your life would be like if you managed your money at home like this.

Note to Putin: Angering the West may not Have Been Such a Good Idea

... now that your economy is becoming a train wreck.

Russia moved Wednesday to bolster its increasingly stressed banking sector, as global economic turmoil deepened fears the country could face a crisis similar to the financial collapse of 1998.

Russia's primary stock indexes, MICEX and RTS, plummeted, with banking stocks leading the way, prompting regulators to halt trading for the afternoon.

Any time trading is stopped, that's a bad sign. There's more.

Economists also warn that the deepening financial turmoil is likely to dent Russia's red-hot economic performance in the coming months, as financing dries up for companies and banks.

"Russia's economy has entered the crisis phase," warned Mikhail Dmitriev, a prominent economist who advises the government. "Russia has been practically cut off from external financing and we're much more dependent on them than it seems."

Cut off from external financing? Ow! That must hurt. Maybe that invasion of Georgia wasn't such a good idea, particularly when all you sell are raw materials and commodity prices are falling rapidly. Here's a 6-month chart of the Russian stock market. Note how it fell from around 3500 to below 1500 in the last few months. We just had a 500-point drop in the DOW and everyone threw up on their shoes. (As of the writing of this post, we've recovered about 300 points of that loss in less than two days.) The Russians have had the equivalent of a 6000-point drop in the last four months.

Wheee! It's like a going down a big hill on a roller coaster!
And that, my dear Mr. Putin, is why you need to play nicely with the other countries.

It Must be all That Terrific Infrastructure Barack was Talking About

... that leads to industrial solvents in baby food.

Chinese authorities have found the industrial chemical melamine in baby formula made by 22 different producers, indicating that China's problems with tainted baby formula extend far beyond that made by Shijiazhuang Sanlu Group Co.

The additional cases turned up in extensive tests of baby formula conducted by regulators in the wake of the widening scandal, which has so far claimed two deaths and caused over 1,200 babies to fall ill in China.

Investigators found 69 batches made by some of China's best known formula makers were contaminated with melamine, an industrial chemical normally used in non-food products...

Non-food products? I'll say. The stuff is made into countertops for your kitchen!

Only 40% of the countertops tested were found to be contaminated with baby food.
I'm sure that as soon as the press finishes it's investigation of Sarah Palin's shoe store receipts from 1987, they'll be right on this one, complete with questions for Barack Obama about his claim that the Chinese infrastructure is better than ours.

Right.

Comment of the Week Award

...goes to B-Daddy, from The Incredible Lightness of Being ... Obama blog. Here's what he had to say about the financial crisis and the finger pointing about corruption in the government watchdog agencies who stood by, took political donations, and allowed it to happen.

This discussion proves why reform and smaller government go hand in glove. With fewer goodies to give out there are fewer opportunities for corruption. Steve Forbes said it best when he ran for President in the 90s, discussing why campaign finance "reform" never works. When you have an ant problem in the kitchen, you can keep setting traps and trying to seal the doors, but sooner or later you're going to have to remove the cake from under the sink.

Outstanding work, B-Daddy!

Anyone for a Windfall Losses Subsidy for Big Oil?

From today's WSJ:

Crude-oil futures rolled further downhill Tuesday as turmoil on Wall Street encouraged investors to exit futures contracts to raise cash.

Light, sweet crude for October delivery was recently down $4.60, or 4.8%, at $91.11 a barrel on the New York Mercantile Exchange. November Brent crude on the ICE Futures exchange, which debuted as the front-month contract Tuesday, fell $4.80 to $89.44 a barrel.

This is bound to affect Exxon's bottom line and dramatically cut into their profits. If we were willing to soak them with a windfall profits tax, it's only fair to start debating subsidies for them now that they look to take a financial hit.

Meet Lehman's Board of Directors

As the financial bombs continue to go off and investment firms and banks go under, pay special attention to the way the politicians and press frame the discussion. Most of it will be in terms of what the government could have done to prevent the crisis.

It's all nonsense. Dig this profile of Lehamn's board of directors.

Nine of them are retired. Four of them are over 75 years old. One is a theater producer, another a former Navy admiral. Only two have direct experience in the financial-services industry.

Meet the Lehman Brothers Holdings Inc. external board directors, a group of 10 people who, perhaps unknowingly, carried the health of the world’s financial system on their shoulders the past 18 months.

That's hardly the group you would pick to lead an investment firm. For a time, it worked. Here's Lehman's stock price chart from the last 5 years.


In January of 2007, when this crisis was brewing, LEH was around $85. It had turned a nice profit for the shareholders and the company was showing fantastic growth. Profits almost doubled between 2004 and 2007. All the while, today's catastrophes were gestating.

Thanks to companies like Lehman, more and more people were buying homes. Of course, they couldn't afford them, but it was a big jackpot for everyone. The folks whose money mangement skills had kept them renting duplexes could now invest in real estate, real estate that was surely going to keep appreciating.

Which politician currently in office was going to stand up in 2007 and tell the financial world and the citizens of the country to stop all of this madness? Who was going to introduce the regulations that kept knuckleheads from buying houses? Which party was going to endorse policies that would deflate the stock prices of companies like Lehman? Nobody who wanted to get re-elected would ever do that.

The current financial crisis perfectly illustrates how the government does not manage the economy. No politician "gets the economy moving again" no matter how much they flap their gums. The press, with their brows furrowed in confusion at the sight of their own checkbooks awaiting balancing, lucky enough just to find their way in to work in the morning, can't comprehend the notion that bubbles and crashes are a natural consequence of human economic activity.

Instead of preparing for crises like this through thrift and restraint during good times, we rush about pointing fingers at each other when the crash hits, having rushed about only 6 months earlier taking credit for the boom.

Some day, if we're really lucky, we might wake up to this. Hopefully we can do this before the Social Security and Medicare bombs go off. Hopefully we can do it before we jump off the cliff of a massive, new health care program. In the meantime, we'll be treated to campaign commercials that claim credit for market success and blame the other side for market failures.

Update: Investors Business Daily blames Bill Clinton. If I had the stomach for it, which I don't, I'd check out Paul Krugman at the New York Times to find a similarly convoluted reason why it's all Bush's fault.

Update 2: While he's biased in favor of the right, Captain Ed points out how those champions of government regulation, the Democrats, went right into the tank for the mortgage industry.

Cheezburger of the Day

more animals

Who Gets the Credit and Who Gets the Blame?

Lehman is about to go under. Washington Mutual might not be far behind. Wells Fargo is turning a profit and shows no signs of any distress at all.

Do we blame President Bush for the failures and give Harry Reid the credit for the success? Vice versa? Or do we finally admit that the government can no more "manage the economy" than they can appoint a board of directors that will either ruin a company or bring it profit.

If governments could really manage the economy, then why isn't France, with one of the most managed economies of all, the global economic giant? Do we want to claim that Frenchmen are inherently stupid?

I don't.