Milo Minderbinder Would Be Proud

The Real Housewives of Wall Street

Even cleverer than buying eggs at seven cents a piece in Malta and selling them to the mess for five cents and making a profit.

During the financial crisis, the Fed routinely made billions of dollars in “emergency” loans to big banks at near-zero interest. Many of the banks then turned around and used the money to buy Treasury bonds at higher interest rates — essentially loaning the money back to the government at an inflated rate. “People talk about how these were loans that were paid back,” says a congressional aide who has studied the transactions. “But when the state is lending money at zero percent and the banks are turning around and lending that money back to the state at three percent, how is that different from just handing rich people money?”

And that’s not even the worst of it…

Apply Online

Why Is It Rocket Science That Laws Should Apply Online Too?

When I write a letter to somebody, nobody has the right to intercept the letter in transit, break its seal and examine its contents unless I am under formal, individual and prior suspicion of a specific crime. In that case, law enforcement (and only them) may do this. Of course, I am never under any obligation to help anybody open and interpret my letters. It is perfectly reasonable to demand that this applies online as well.

When I write a letter to somebody, no third party has the right to alter the contents of the letter in transit or deny its delivery entirely. Shouldn’t it be perfectly reasonable to demand that this applies online as well?

When I write a letter to somebody, nobody has the right to stand at the mailbox and demand that they be able to log all my communications: who I am communicating with, when, and for how long. Again, to demand that this applies online as well would only be logical.

Pretty good questions.

It's Like Those Miserable Psalms

… they’re soooo depressing.

This story about a bank getting off light, Wachovia Paid Trivial Fine for Nearly $400 Billion of Drug Related Money Laundering, made me flash back to two recent stories: Why Isn’t Wall Street in Jail? and another article (whose title or link I can’t recall) pointing out the ridiculousness of fining a company trivial amounts for large illegal profits. If the penalty is less than the profit, that’s not a deterrent — it’s a business plan.

Tough Love

American workers got what they deserved

To make matters worse, you’re again being played for a chump. The same puppets who did nothing while your standard of living decreased are now using the oldest gimmick in the book — jealousy — to continue their assault on American workers. Rather than protect Americans’ jobs, they deflect your attention through jealousy.

“Cut the pay of government workers,” they cry. “Increase their health premiums. Decrease their pensions. Break their unions. After all, you’ve suffered so they should suffer too.” And in your misery, you buy their argument while more jobs head oversees. Pretty stupid, eh?

Because People Could Die

Back when I was teaching in the Navy’s nuclear propulsion program, I saw that there was an foundational attitude towards operational systems: these are the rules — obey them. It is not up to you to decide that it’s OK to not follow them. And the unspoken undercurrent to that is because if you don’t, people could die. This applied to the reactor systems, because they were designed to work a certain way and had safeguards that assumed you were operating it according to procedure. The attitude was also present, as far as I could tell, to general shipboard operations. Most of my students were going to serve aboard submarines, and the potential for disaster is magnified by orders of magnitude when you are in a closed container some depth below the surface, and a loss of propulsion or breathable air could spell your doom. (Not that duty aboard a surface ship means tolerance for corner-cutting, either). That’s why they continually drill — practice your responses to emergency situations and do it right, because if you don’t, people could die. Commanding officers are used to orders being carried out, rather than getting “that’s not in my job description.” And you know what? The navy has a pretty good track record for a task that’s just a little dangerous. (As a side note, I can only imagine the frustration of the navy folk atop my org chart, dealing with a staff that is >90% civilian and who generally lack this ingrained response to following orders and rules without question*, and among whom are several people who do decide that a rule is silly and therefore will not be followed)

This attitude goes beyond the military. It’s why we have safety rules and building codes, and people who work within professions that have them, you will generally find a serious attitude toward such protocols. The people with experience do not relish putting their health or life at risk at the behest of someone looking for a shortcut. And usually a shortcut is a temptation for those who wish to save time and/or money, and for whom it means putting someone else at risk.

I was reminded of this when I read Millions saved in Japan by good engineering and government building codes. (The link title is a play on a tweet by Dave Ewing, who proclaimed that it was a headline you would not see.) And though some of the numbers are out of date (it was posted on the 12th, and the death toll is significantly larger), the idea is still valid. The Japanese have recognized the continual danger of earthquake and tsunami and instituted building codes to minimize the destruction, despite the fact that it costs more to do that. While such efforts did not (and probably cannot) result in no damage or loss of life, the devastation was far less than has occurred with weaker earthquakes elsewhere.

The difference is that Japan has made a commitment to earthquake-safe buildings, and had the money to carry out that commitment. Haiti lacked the money to implement strict construction standards and a government capable of compelling compliance. Builders and government regulators in the United States have the power and the resources to ensure Japanese standards of construction apply here, but my sense from living in California for 3 years is that we may lack the commitment needed to do this.

I think Josh is right about the US lacking the commitment — it’s just not how we do things here. We moan and wail about how damnably expensive regulation is, and how we should be free from government intrusion (curiously, I have yet to see any small-government proponents claim that the nuclear power industry is over-regulated). The question of how much money a regulation will cost is always asked, but the question of how many lives will be lost or saved does not seem to get the same attention. We bemoan the loss of life and note the monetary costs when a bridge or dam fails, but the money to inspect, repair and modify them isn’t always spent. There is a push to let businesses regulate themselves, to let “the market” take care if such things, except that “the market” doesn’t punish transgressors until after the fact, if at all. Action is taken, or not taken, for money, not because people could die. Prevention is usually invisible, which was the point behind the tweet, and too often we reward politicians for bold responses, not bold prevention.

* “without question” is not the same as “without grumbling.” Generally speaking (or Admirally speaking, since this is the navy) you grumble but do the task, and sailors are excellent grumblers.

Misplaced Angst

Your iPod is polluting China and L.A.—and Wyoming might be next

You may have been aware too that in manufacturing your electronic marvel, the Shenzhen plant emitted roughly 25 pounds of the greenhouse gas carbon dioxide. It’s even possible that you were aware of the 9-10 pounds of CO2 emitted in transporting the device to you from China.

Oh my GOD! 35 POUNDS of CO2 in getting my iPod delivered to me. That’s horrible!

Um, no, not really.

Bbbbut, 35 POUNDS!

Let’s look at that. Of 35 pounds (16 kg), about 9.5 lbs (a little over 4 kg) is Carbon. Two gallons of gasoline contain 11 pounds of Carbon. It sounds like a lot, but realize that driving 10,000 miles a year in a car that gets 25 mpg you dump 4 tons of CO2 into the atmosphere. Context matters.

Further, the blurb about China burning coal to generate the electricity to do the manufacturing needs to put in context as well. In the United States, the average person uses FOUR TIMES as much electricity as the average person in China. Add to that the China has been aggressively pursuing green energy — they already lead the US in wind energy generation, and are pushing forward in solar while we drag our feet. The US is not “greener than thou” and shifting the blame for pollution/CO2 distracts from the need to get our own house in order.

Let's Overreact Some More

There are calls to shut down US reactors owing to earthquake concerns, despite the Japan situation being caused by a tsunami (which resulted from an earthquake).

Global earthquake activity since 1973 and nuclear power plant locations

This map shows a heatmap of 175,000 4.5+ magnitude earthquakes since 1973 based on data from the USGS (United States Geological Survey). And worldwide locations of nuclear power stations using information from the IAEA (International Atomic Energy Agency)

Amazing display revealing where the major fault lines are, along with the realization that there have been more than 175,000 earthquakes above this magnitude (and many more weaker than this) in the last (almost) 40 years and how few reactors are actually near earthquake activity.