Thursday, August 30, 2012

LEGO Nazis

So, I was thinking about Christmas toys for my grandchildren and looking at eBay for ideas, and I discovered LEGO Nazis.

Monday, August 27, 2012

Book Review 248: China's Wings

CHINA'S WINGS: War, Intrigue, Romance and Adventure in the Middle Kingdom During the Golden Age of Flight, by Gregory Crouch. 498 pages, illustrated. Bantam, $30

Gregory Crouch absolutely delivers on the war, intrigue, romance and adventure in this rousing, and authentic, story of how air service came to and, remarkably, survived in China in the '30s and '40s.

Before reading “China's Wings,” my notion of the coming of aviation to China began with Japanese military planes assisting the invasion of Shanghai and, slightly later, the picture of hundreds of thousands of peasants pounding gravel to construct airstrips for the B-29s of the XIV Air Force.

It turns out that civilian aviation was imposed over the medieval structure of China from around 1930, with American and German firms. Crouch gives a pretty good (but not perfect) overview of the way outside businesses penetrated China.

The China National Aviation Corporation was remarkable in many ways, not least in that the Chinese government for the first time retained a controlling interest in one of these joint ventures.

This structure, which later brought in Pan Am, created many headaches for William Bond, the American manager, but also, during the period of American neutrality up to December 1941 allowed Bond to arbitrage the split ownership to legally accomplish some things that an all-American or an all-Chinese business could not have.

China's Air” is largely a biography of Bond. Though he did not speak Chinese, Bond seems to have had an amazing facility for figuring out the intricate politics of China. He also had to cope with the slightly less intricate politics of Pan-Am, which needed a base in China to complete its transPacific route.

A second remarkable character in the book is Moon Chin, and his story provides a fair sample of the strange turns the story of “China's Wings” takes.

Moon Chin was born in China, but his immigrant father was in San Francisco when the earthquake resulted in the burning of all the immigration records. Despite the Chinese exclusion laws, this event allowed some Chinese to claim that children had been born in America and were thus citizens. The government permitted this.

Moon Chin thus grew up in Baltimore. A flyin' fool, he ended up flying for CNAC and, surviving into his nineties, provided plenty of background to Crouch, who came to this history after Bond died but early enough to interview many CNAC veterans.

The book is packed with nuggets of information, but Crouch makes the case that aviation was crucial to the survival of a national government in China: Without planes, it took 62 days to travel from Shanghai to Chengtu. With planes, a day.

It was not the volume of traffic – there were hardly a dozen planes available to CNAC – but the fact of communication that made the difference.

China's Air” is filled with derring-do and the off-duty escapades of its young pilots, but nestled inside all this stirring stuff are nuggets that suggest how important and completely unpredictable things were.
CNAC had ended up with a few old biplanes that were unusable on its routes after Japan started shooting down airliners. Its manager, P.Y. Wong, had the inspiration to use them to ship out tungsten from the interior on a route to Hong Kong that was not, until later, interdicted by the Japanese.

Tungsten was crucial for alloy steel, and China produced half the world's supply. Without the tons of tungsten, the United States would have had a more difficult task in rearming.

Despite the romance of aviation and the drama of war, “China's Wings” is primarily a business history, and one of the best.

But Crouch covers a great deal of ground. A West Pointer, he is especially strong on logistics; and in the final chapters he raises some provocative and controversial questions about American aviation policy in China.

It was Bond who devised the idea of an air train to China after the Japanese closed the Burma Road, and CNAC flyers pioneered it. There are many hair-raising stories about flying “The Hump,” but Crouch questions whether the effort didn't prolong the war in Europe by a winter.

It is a commonplace of military history that the enormous efforts to supply China and, later, the XIV Air Force paid small returns because of the incompetence and corruption of the Nationalists and the misplaced strategy of Claire Chennault.

The same precious cargo planes, Crouch proposes, could have kept the Allied armies advancing in western Europe when their offensive stalled for lack of supplies in late 1944.

I am skeptical. The Allied generals and armies weren't performing well against the Germans, and the Allies had failed either to capture or to improvise a port after five months. Despite the protestations of the in-over-his-head George Patton, there is little reason to suppose a few tens of thousands of tons of gasoline would have cracked the German army then.

Besides, although Chiang fought (or didn't fight) a phony war, there was considerable value in keeping China in the fight even notionally. China very likely would have collapsed without any lifeline to the outside world, and China did tie down a third of the Japanese army.

It's a question how readily Japan might have deployed those forces, but considering how very expensive it was to eliminate each Japanese soldier in the Pacific, not having to face the Mainland divisions was a great advantage to the Americans. (Whether keeping China in the war was good for the ordinary Chinese is another question, and the answer probably is no.)

Less controversially, Crouch says that lessons learned flying The Hump made the success of the Berlin Airlift possible, and the long time it took the Army Air Force to learn CNAC's lessons about Burma make it pretty clear that from a standing start, the Air Force could not have run the Berlin Airlift.

It's a wonderful story.

Sunday, August 26, 2012

Book Review 247: Wily Violets & Underground Orchids

WILY VIOLETS & UNDERGROUND ORCHIDS: Revelations of a Botanist, by Peter Bernhardt. 255 pages, illustrated. Morrow

One way (of many) that tips us off that creation “scientists” are phonies is that they never write about plants. They are interested only in animals, and really in only one animal: us.

Real scientists are just as interested in plants. In fact, during the elucidation of evolutionary theory, many breakthroughs came from studying plants.

But in popular science writing, animals get the lion's share of attention, and usually the big, showy animals, too. There are 100 books about sharks for every book about minnows; and for every book about sharks, a hundred about birds.

It does take a deft touch to write as engagingly about plants as about animals, and Peter Bernhardt has it. Many of the essays in “Wily Violets & Underground Orchids” were written for Natural History magazine in the days before it became tendentious.

The neat trick of Natural History in those days wtas that it combined articles about the exotic with thoughtful reflections on the state of research in the field (see Stephen Jay Gould before he became wordy and boring); and Bernhardt was among the best of the NH stable at that approach.

Reading a whole bunch of essays by the same author – say Pascal James Imperato on public health – was a painless way of being informed about the main problems of the subject. Like a TED talk only more reliable.

Bernhardt's problem was pollination. It turns out that it is a whole lot more complicated than the bee making love to the blossom.

Really, we would expect that, but who expects an orchid that lives its entire life underground. Who pollinates that? As of the date of his essay on that subject, Bernhardt was pulling for a beetle, although the evidence was pointing to a phorid fly.

One of the chapters concerns the Christmas star orchid from Madagascar. If Charles Darwin had never written a word about speciation, he still would have been the greatest theoretical and experimental biologist of his time (perhaps of all time), and one of the top field biologists as well.

The Christmas star hides nectar in a long tube – 11 inches long.

Darwin, who had never been to Madagascar, surmised that the pollinator was an insect with an 11-inch tongue, and most likely a sphinx moth.

He was ridiculed by the creationists of his time as a fantasist. The sphinx moth with the 11-inch tongue was discovered decades after Darwin died. And still no one had seen it drinking the nectar, but as Sherlock Holmes would have deduced, the circumstances, however improbable, required the conclusion. (Sphinx moths with long, but not that long, tongues have been discovered doing the same trick on other Madagascar orchids.)

With a wicked sense of humor that we also never find among creationists, the taxonomist who described the Christmas star moth named it Xanthopan morgani subspecies praedicta.

Book Review 246: The Mediterranean Was a Desert

THE MEDITERRANEAN WAS A DESERT: A Voyage of the Glomar Challenger, by Kenneth J. Hsu. 197 pages. Princeton paperback

This little book leaves a reader with a lot to think about.

For one thing, geologist Kenneth Hsu never mentions where the Glomar Challenger came from – it was one of the devil's offspring of the Cold War, one of only a very few CIA harumscarum projects to provide any actual benefits to the citizenry, although only after the CIA had given up the ship.

I doubt today any scientific author would fail to mention the origins of the ship, but Hsu wrote in 1983, and attitudes have loosened up since then.

The voyage took place back in 1970, and now I suppose everyone with even a passing interest in geology thinks of a dried up Mediterranean Sea as “something we have always known about,” the way we have “always known” that continents drifted.

But the discovery that the Mediterranean had dried out – the proof lies in certain types of evaporite rocks that can only form in the dry – came not so long after the clinching evidence for plate tectonics was published. Both findings were met with skepticism, even incredulity at first, but while some theories are hard to swallow, the evidence for a dried out Mediterranean was straightforward enough, once it was obtained.

The drama of “The Mediterranean Was a Desert” comes from how difficult it was to get those drill cores.

Deepwater drilling, too, has come a long way since 1970.

Last, the interest of this particular discovery applies to concerns about climate. It takes a long time to dry out a sea over a mile deep using nothing but sun and wind.

But it is now known that it happened over and over again, and within a comparatively short time, just a few million years.

Continents drift at a slow rate, but it turns out big seas can dry up quickly, and given nothing more than normal variation in inputs. The repeated drying and refilling of the Mediterranean was roughly coincident with the evolution of Homo from an ancestral non-humanoid primate.

Hsu's tale makes all the panic about climatic changes in the past thousand years sound like children being afraid of monsters under the bed.

An unfunny joke

About now, I imagine Mitt Romney would trade some of those silver spoons he was born with for a sense of humor. It has been a while since an American politician strode the big stage with such a tin ear.

It isn't just that he doesn't know how to be funny, though. His clumsy crowd-warmer about nobody asking him to show his birth certificate reveals some serious problems.

First, it was just awkward, like saying the trees in Michigan are the right height.

Second, he could have gotten as much crowd empathy by just reminding the crowd that he and Ann were homefolks. The birther joke didn't add anything to that.

It did, however, third, raise questions about how independent Romney is of the crazier elements of his party. The convention is loaded up with birther speakers. A national, as opposed to a party, leader might be expected to want to curtail that, in the interest of drawing more people into the big tent.

Fourth, it raises questions about how far-seeing Romney is. If he wants to stick to economics, birther jokes are a strange way to show it.

Fifth, it was just stupid, because millions of Democrats shot back: Yeah, but lots or people have asked to see your tax returns and your foreign bank accounts.

Florida missed again

It has now been six years since a hurricane has come ashore in Florida. The global warming panicmongers promised us we would get more and bigger storms.

They were wrong.

As a result of this lack of hurricanes, most of Florida has endured a serious drought. Florida depends on big storms for its fresh water. It has had a few tropical storms that brought significant rain, including one earlier this summer which broke a very long drought in north Florida.

From the point of view of humans living in Florida, more tropical storms would be the best solution: They would get the water without the destruction.

I see no reason to suppose that the recent dearth of hurricanes is being caused by climate change, or at least by any kind of unusual climate fluctuation. But if it is, then so far at least, climate change is good for Florida.

Monday, August 20, 2012

$35,000 parking spaces

Least surprising local news of the week is that the county will not proceed with making the Wailuku Municipal Parking Lot a multi-story garage, at a cost of $35,000 per stall gained.
That’s right. The parking spot would cost more than the car parked in it.
This is usual. When I worked in Des Moines, Iowa, the city built a series of multistory parking garages downtown, and each stall cost roughly twice what a new car cost in those days. The garages charged 35 cents an hour to park, and, remarkably, that was sufficient revenue to pay off the bonds. (In Des Moines, they used something called “tax increment financing,” which was a form of betting on  the come – the bonds were supported by the expected increase in property taxes that was to come about when the garage made surrounding property more valuable; the parking lot equivalent of trickle-down economics. It worked, in the sense that the bonds did not default. It did not work, in the sense that the city was trying to revitalize downtown. People did not decide to forgo free parking at the suburban malls in order to pay 35 cents to park downtown.)
Should a Wailuku multistory garage get built, and should it be required to be self-supporting, presumably it would have to charge in the neighborhood of 75 cents an hour. Since the municipal lot is used largely by workers who park without charge, I do not see them welcoming the opportunity to pay $6 a day to park.
It shouldn’t have required an environmental impact statement to figure this out.
There’s a reason multistory garages are uncommon. They are ridiculously expensive. Only resorts, whose land is even more ridiculously expensive, have them; and Queen Kaahumanu Center.
At Kaahumanu Center, the owners (at the time, ML&P) wanted to retain their standing as the primo mall on the island, because of a rule of thumb in the mall business that the No. 1 mall enjoys an 8% premium in revenue over lesser malls. Unable to grow out, Kaahumanu Center had to go up, making itself two stories and adding two very expensive parking garages.
As it turned out, it didn’t work, for several reasons. One, Duncan McNaughton built a loooong strip mall along Dairy Road and placed in it a lot of stores that normally you’d find in the local dominant mall, like Sports Authority. Two, because Maui is a tourist island, Shops at Wailea and Whalers Village scarfed up the high-end retailers like Coach that normally you’d find at the local primo mall.
But Shops at Wailea did not become the local primo mall because it doesn’t have the stores that draw people to the dominant mall for their day-to-day shopping – no Macy’s or equivalent.
As often happens, Mainland rules don’t apply here.
Wailuku is certainly congested,  but it is not obviously a place to put expensive parking: In general, it has the lowest commercial rents around.
So parking is likely to remain a pain in Wailuku. The only old city I have been in where no-charge parking downtown is not a pain is Savannah, Georgia. It was founded as a military colony and the original layout set aside every sixth block or so for militia training grounds.
Remarkably, these were not poached for development even after militia uses receded. As a result, there are miles of empty block fronts where cars can park a short distance from the built-up blocks where people want to go. It’s awfully expensive in land, but it works.

Saturday, August 18, 2012

Portuguese running out of gold

For a lot of people, including on Maui, gold jewelry is their backstop in hard times. Times are so hard in Portugal that, according to a report byBloomberg News, ordinary Portuguese are beginning to run out of gold, and the stores that sprang up there — as they did on Maui — to buy gold are beginning to close. 

This is really remarkable. Portugal has been a magnet fort gold since its navigators started to explore the African coast in the 1400s, searching for the sources of the gold reaching North Africa at the end of the caravans from Timbuctoo. More gold flowed in when they reached India 500 years ago, and Portugal continued to amass gold from mines in Brazil, which was a colony until later in the 19th century.

Nut grafs:

“ ‘We have no more gold to save us from being kicked out this month,’ the 46-year-old said as he stood in the area of downtown Lisbon popular with cash-for-gold stores. ‘Everyone I know is struggling, even the gold stores are empty because nobody has any more gold left to sell.’     <P>
“Oliveira encapsulates a growing trend in debt crisis- stricken Europe as household gold supplies dry up after record prices and a deepening recession prompted a proliferation of places to exchange the metal for money.

“In Portugal, the historical home of some of Europe’s biggest gold reserves, the number of jewelry stores, which include cash-for-gold shops, increased 29 percent in 2011 from a year earlier, a study commissioned by parliament found. In the first quarter, an average of two new stores opened every day, the report said. Now some of them are closing. 

“ ‘Business has gone from great to terrible in a matter of months,’ Luis Almeida, whose family has owned a gold store near Lisbon’s Rossio Square for more than 40 years, said in an interview. ‘The sad truth is that most of my clients have already sold all of their gold rings.’ ”  

Book Review 245: The Madoff Chronicles

THE MADOFF CHRONICLES: Inside the Secret World of Bernie and Ruth, by Brian Ross. 269 pages. Hyperion, $19.99

In “The Age of Turbulence,” one of the most embarrassingly silly autobiographies ever written by an American, Alan Greenspan wrote (in September 2007), “the first and most effective line of defense against fraud and insolvency is counterparties' surveillance. For example, JPMorgan thoroughly scrutinizes the balance sheet of Merrill Lynch before it lends."

Fifteen months later, Americans learned about Bernard Madoff.

You might suppose that after Madoff made a mockery of the shibboleths of unrestrained finance capitalism for over 40 years, public figures would no longer speak about the evils of regulation. You would be wrong.

Although Brian Ross's “The Madoff Chronicles” is dated (it was published in 2009, before Mark Madoff killed himself), it is still worth reading because of the clear depiction of how stupid, oblivious, uncaring and reckless the leaders of finance capitalism were – when they were not simply crooks.

True, not all were complicit or taken in. An unknown number of financial institutions did do enough investigation to recognize that Madoff was a fraud. They refused to do business with him.

But these men, although smarter or at least more wary than the run of Wall Street, were only slightly less irresponsible and anti-public than the out-and-out crooks. Not one of these financial Paternos thought it appropriate to report a crime in progress.

(The exception was not an institution but an individual, Harry Markopoulos.)

Finance capitalism is like that. If the individual capitalist does well, somehow magically all the rest of us are supposed to also be incrementally better off, even if it appears somebody has robbed us of every cent.

Aside from his son Mark, apparently only two of Madoff's victims have killed themselves. Ross writes that both men were concerned about their personal honor in an old-fashioned way. Though Ross does not say so, the implication is that honor is as scarce as brains on Wall Street.

The Madoff Chronicles” are gossipy and thinly sourced. Most of what is in here has also been in the daily press, but the book does provide a good snapshot of the shock and dismay that the Madoff crime created at the time.

That is, among people who believed in the bona fides of unregulated finance capitalism.

Those of us who believe that unregulated finance capitalism operates and is designed to operate as a continuing criminal enterprise were surprised to hear about Madoff, because we hadn't heard his name, but we were not surprised to learn what he had done.

When I say unregulated, I mean that in a practical, not legal sense.

Regulations were in legal effect, but Madoff's career – especially the part after he started to become a big player – was exactly congruent with Reaganism. Regulators were not encouraged to regulate.

Thursday, August 9, 2012

The Japanese Holocaust deniers

Memorializing the bombing of Hiroshima is immoral and disgusting. It wouldn't have to be, but the way it is done is always immoral and disgusting, and we are treated to a replay in the second week of August each year. The 2012 display of historical ignorance, failure of ethical understanding and dishonesty is well above the usual average, however.

The Pearl Harbor Memorial is now adding a shrine to Hiroshima as part of its display. Brad Wallis, head of a private group supporting -- mangling would be a better term -- the memorial, told the Honolulu Star Advertiser, "The meaning of the memorial now goes beyond (Pearl Harbor) remembrance. It has become an opportunity for reflection on life and death, war and peace."

Wrong, it's become an exercise in false moral equivalence and a conspiracy to absolve Japan of some of the worst crimes in history.

Annual speeches by mayors of Hiroshima make this plain, but at least it is understandable that in a democracy the mayor of Hiroshima will always distort and lie about his city. It would require a politician of remarkable honor, knowledge, skill and moral candor to try to be different, and it is unlikely that even the most skilled and honest politician in Japan could succeed electorally on a platform of truth and reconciliation.

The Japanese, taken generally, do not believe their country did anything wrong except to lose during the war. A good example is Honolulu religious leader Takamasa Yamamura of the Myohoji Temple, who told the newspaper, "Our younger generation is beginning to forget about this tragedy (of) the 20th century. We must not forget about Hiroshima, and we must build a peaceful century."

This is disgusting. Except for a few far leftwingers, though, to listen to the Japanese the only tragedy was the one caused  by the Americans in  bombing Hiroshima. You will not hear from them that Hiroshima was the main military port for the conquest of China. Hiroshima was not a city full of innocent civilians. It was a guilty city full of people who were thriving on the plunder taken from China.

Yamamura's "young people" have not forgotten anything. The Yamamuras ahave labored mightily to prevent them from learning what Japan did. To pick one example among thousands: When the Japanese conquered Hong Kong, they herded 50 English nurses into the sea, then shot them dead.

The world would never have known about this crime, except that one -- just one -- nurse survived.

That was not even among the 10,000 worst Japanese crimes. Even if you accept the Japanese argument that it was purging Asia of European colonialists, what about the 100,000 Indonesian women and children who died in deliberately horrendous conditions in the slave labor camps along the Thailand railway. They were not colonialists.

It must be perfectly clear: Yamamura is the Japanese equivalent of a European Holocaust denier. He should   be scorned and driven into the dark corners of society along with the other supporters of genocide and totalitarianism.

As for Wallis. It is understandable if unforgivable for a Japanese to throw in with the immoral story. Why a non-Japanese would join in is inexplicable in morally acceptable terms.

Sunday, August 5, 2012

Naming the new McCarthyites

In an editorial, Bloomburg News has a nifty name for the new McCarthyites in Congress, although I was content with continuing to call them McCarthyites. But "Joe McCarthy Re-enactors Caucus in the House of Representatives" has a certain stylishness to it.

I recommend the whole editorial, although I do not agree with many parts of it. 

It wanders around and criticizes many people, but it is ostensibly about Mitt Romney's refusal to reveal his tax returns. I don't know what his tax status is, but here is my guess:

Romney had a lot of appreciated stock he could give to an exempt entity -- like the Mormon Church. That could have reduced his cash tax liabilities to $0 or close to it. Thus, Romney could be telling the truth when he says he paid 100% of his tax obligations, and Senator Harry Reid could  be right in saying Romney paid no taxes.

That would explain why Romney feels he cannot release his returns.

The leftists will jump him for paying no net taxes, and the evangelicals will jump him for giving tens of millions to the Mormons.

(I note that Romney claims to have given considerably more than the required tithe to his church. This is not unusual among Mormons, but would be a two-fer if he was in the happy position of having to offset a lot of income and wanting to curry favor with his sect by overgiving.)

Saturday, August 4, 2012

Rightwing victims are hard to find

According to the rightwing, leftist, commie gummint policies are victimizing countless god-fearing, right-thinking Murricans.

They cannot get guns to shoot up kids at a movie theater without going through onerous purchasing rituals on the Internet.

The productive rich are taxed so heavily that they are richer than ever

Packs of rightwing journalists hunt for pitiful, suffering millionaires and other victims of leftism, but like G. David Schine, who went to an Army base to expose commies in the military for Joe McCarthy and "came back with the scalp of a pink dentist," it is as hard to find genuine rightwing victims as the McCarthyites always found it to find genuine leftwing conspirators.

They hunted for a small businessman who was inconvenienced by municipal regulations and found Joe the Plumber, but he wasn't harassed by municipal regulations because he didn't bother to comply with them,

They hunted for a small businesswoman whose business was (going to be) harmed by requirements that she provide health benefits for workers, but it turned out the one they found wasn't harmed. When she had medical expenses, she just stiffed the doctors and declared bankruptcy.

The latest hilarious hunt for rightwing victims takes us to Wheaton, Illinois, where what H.L. Mencken disparagingly called a freshwater college is about to be morally corrupted by the requirement that it include contraceptive medical benefits to employees, although it turns out that Wheaton College has already been voluntarily .providing that coverage with so little harmful effect that the college administration claims not to have realized what it was doing.

It reminds me of the time I was doing a story about gay bars and went to interview a rightwing Lutheran pastor who had been loudly preaching the rightness of heterosexuality (while wearing a suit of Roman armor: I am not making this up). I asked him if he would be disturbed if a gay disco opened its doors 50 feet from the side entrance of his church. "That will never happen," he replied. "This church is very influential in this town."

My next question was: "Are you aware that such a disco has been in operation for six months?"

It isn't hard to find victims of rightwing policies. To find rightwing victims, not so much.

Letter to my nephew

My youngest nephew, Thomas, asked me to fill out a questionnaire on how or whether to oppose Iranian projects for nuclear weapons for a school project.

The Survey Monkey form did not allow for much beyond the strongly disagree, disagree, neutral or don't know, agree, strongly agree response, so as a thoughtful uncle I sent him the following note:

Ke aloha no!

I took your survey. Can you send a copy of your paper when it's done?

Allow me to offer a piece of information that no one seems to realize. Check with your dad to see if I'm right.'

Aside from the political or moral pros and cons, it is objected as a practical matter that if Iran has hidden its nuclear processing facilities deep underground, they will be invulnerable to attack from the air.

This may be true so far as direct bombing goes, but nuclear processing requires vast amounts of electricity. That's why America put its near the TVA and the Grand Coulee Dam. Iran's electrical generating plants are above ground. You could shut down Iran's nuclear processing by destroying its electric plants.

Uncle Harry

Friday, August 3, 2012

Some inside baseball talk about news

I may be retired from reporting but I still enjoy reading a reporter sticking it to reporters. I don't know any other work group that takes the pure joy reporters do in washing the dirty linen in public.

In this case, it's radio reporter Bob Garfield exposing the "not authorized to speak" epidemic for the Guardian.

Best almost relevant comment from a reader (named Koolio):

''If the press were doing their job they'd have realised Mitt Romney is Sacha Baron Cohen's new spoof character."

Stupid banker tricks

Considering how many advantages they are given, it ought to be nearly impossible for a banker to lose money. But they do. I think it is because bankers are stupid.

This week's exhibit is Sandy Weill, who took a bank that repeatedly lost money bigtime making loans that no sane person would have made (to Latin American kleptocrats, for example) and merged it with a successful insurance company (Travelers) to create a really huge money-losing machine. Weill himself, however, kept a lot of money.

Therefore, people listen to what he has to say, no matter how ridiculous it is.

Earlier this week, Weill, long retired, told business reporter Andrew Sorkin that Too Big Too Fail banks ought to be broken up, along the lines of Glass-Steagall, into what RtO has distinguished as safe banks and risk banks.

People in the business news business who don't think much of Sorkin (and who, I suspect, envy the money he's made in his side deals) jumped all over Sorkin for not pressing Weill about his about-face. That's a valid point, but it is not the important point.

Weill, who stupidly mimicked Steve Case by merging a big money loser (AOL) with a  big moneymaker (TimeWarner) to create a really, really big money loser, still doesn't understand what he did, or anything about banking. He apprehends that his monster turned into a loser, and because it was less of a loser when it was smaller, considers returning to the old way -- break up the Yankees! Send Ruth back to Boston!

But you cannot do that. Glass-Steagall operated superbly for six decades, in a comparatively simple environment. It took time to transfer funds, and scads of backoffice clerks to keep up with the transfers. A billion-share day on Wall Street was huge. To a degree that people would find extraordinary today, people with money were more or less committed to keeping it in the place they had always had it. The costs to extract a lot of money and move it were significant.

Technology changed that. I can convert my retirement funds into yen without the assistance of a professional moneychanger and at very small cost. I don't (although it would have been a moneymaker for me anytime these last many years), because I treat money like an old-fashioned banker.

Plus, I don't have a great deal of it.

The psychology of modern people with big amounts of money is different. They take a short view of monetary assets and move them around chasing fractions of a fraction of a percent of return -- why do you think all those unnecessary derivative products came from? All their money is hot, as the Wall Streeters say.

Financial operations have become a endless series of one-night stands.

But that means that safe banks, should they be regulated into existence again, will not be able to attract funds. Their returns will always appear meagre compared with the transiently successful risk banks, so the hot money will go to the risk banks, and the safe banks will die of starvation. (Over a longer period, safe banking will, in competent hands, return more than the global total of risk banks, but nobody will pay attention to that.)

If Weill doesn't get that, and obviously he doesn't, then his notion that smaller banks will be able to fail without affecting the overall financial structure is moonshine. (The failure of thousands of small banks during the Roaring Twenties -- about 2 a day -- undermined the middle classes and contributed in the long run to the depth of the Depression when the big institutions also came under pressure. This point is not well understood by macroeconomists, but if you talked to old country bankers when they were still alive, as I did when I was a young reporter, it becomes clear enough. At the simplest level, it drove cash into mattresses, contributing to the debt crunch which forced solvent businesses to close.)

We actually need deposit banks that we can rely on without government props (other than deposit insurance, which is not normally subsidized from the fisc), but it is not clear to me that they can exist in a world of all hot money.

Thursday, August 2, 2012

The 93rd most popular e-book

At least among the free books at Project Gutenberg, yesterday it was "Cork: Its Origin and Industrial Uses" by Gilbert E. Stecher. Whoda guessed?

Are stocks a Ponzi scheme? How about bonds?

Idly, I wondered about the "Dow 30,000" book I recalled seeing (but never reading) on a day when the Dow struggled, again, to get to 13,000 and when Bill Gross, the <a href="" title="current genius,"></a>, declared that securities are a "Ponzi scheme" and we will never again see the returns of the past century.

I had forgotten that there were also "Dow 36,000" and "Dow 40,000" books, and learned -- what I had not known before -- that James Glassman, author of the "Dow 36,000" book, was a financial adviser to John McCain's presidential campaign and is today founding <a href="" title="executive director"></a> of the George W, Bush Institute at Southern Methodist U.

That explains a lot. Rightwingers will believe any kind of nutty talk about economics.

Apparently,  the rightwingers are now promising a "Romney boom" if we will only vote for his nebulous economic policies. As RtO observed many times when the latest crash started, we know how to ruin markets, but nobody really knows how to rebuild them, It's Bush's (and Reagan's) recession. He still owns it.

About comments and commenters

RtO would be pleased to have more comments (and more readers, too). But RtO is pretty happy with the few commenters it does have,

Other places are not so fortunate. Consider the Spokesman-Review.

That Idaho paper allows reader comments on news stories, something The Maui News tried and quickly thought better of in 2008. (We tried for a while to get the level of discussion up; I personally spent more time than I had to spare tracking down and blocking a persistent Jew-hater before we gave it up as a  bad job.)

Spokesman-Review columnist Shawn Vestal says the reader comments at his paper are a sewer of stupidity. He has several other cogent things to say about the (at best) naivete of the Internet promoters who thought that the Interwebs would be good for free speech.

(It is cruel justice that all threads about the technology consist of sniping by Apple and Microsoft fanboys at each other for being stupid. They're right. All of them.)

If you comment or read comments, Vestal's thoughts are worth reading. Nut grafs:

"But what has emerged in the era of online commenting is, about three-quarters of the time, a sewer of stupidity and insults and shallowness. The visions of a digital public square, with less gatekeeping and more democratic forums for discourse, seem quaint and comical in the light of what has actually come to pass.

"I have mostly stopped reading the comment threads on the newspaper’s website, because it is almost always infuriating and pointless. It is especially so when I have persuaded someone to share their story – only to see them mocked for their painful experiences or physical appearance. Which is common.

"The idea that the newspaper has to spend time and treasure defending this nonsense – not protecting a whistleblower; not battling the government for access to public records – is repulsive. It’s a perversion of what, in other circumstances, is a valuable journalistic relationship: helping to get at the truth by protecting people for whom it’s dangerous to speak the truth. That relationship has been distorted and demented on Internet bulletin boards, and now the monkeys who are in there throwing poop want to be treated like Karen Silkwood."

Well, I'm glad this corner of the Web is above that.