Missiles in the Eastern Europe

The US says it needs missiles to protect Europe against nukes from Iran. That's partly true, but the missile base could go in any number of countries. Russia says its nuclear deterrent is threatened by a European missile shield. That's partly true, but the number of anti-missile missiles can be limited by treaty to less than a dozen, so that they would not offer any realistic defence against Russia's thousands of warheads.

So what's this all about?

It's about Russia's sphere of influence. Russia notes correctly that the more secure its former vassals are against the prospect of a military strike, the more independent they become. In fact Russia's foreign policy is dependent on intimidation. It is to the US/Europe's advantage for those countries to feel militarily secure, thus the desire to place military bases in their territory. It is one thing to briefly invade a NATO country. It is quite another to kill American soldiers.

So what kind of base should we put there? Air Force? Tanks? A small missile defence is the least threatening option.

An analogy might be if your neighbor two doors down is inimidating your neighbor next door. It is right to stand up to him to make her feel secure. But you should consider carefully before helping the guy who lives above his garage (like maybe Belarus) especially if there is a familial relationship.

The hard part is how to handle borderline cases, like Georgia and Ukraine. They are fragile democracies, and have a right to self determination, but there is that familial relationship. Russia's strategy now is likely to be to try to repeat in Crimea what they did in Abkhazia and South Ossetia. We should make it clear that if they take Crimea, they lose the rest of Ukraine.

Palin Troopergate

Today's headline (the day before the election):

A report has cleared Gov. Sarah Palin of ethics violations in the firing of her public safety commissioner. The report, released Monday, said: "There is no probable cause to believe that the governor, or any other state official, violated the Alaska Executive Ethics Act in connection with these matters." It was prepared by Timothy Petumenos, an independent counsel for the Alaska Personnel Board.

If you don't know, the Alaska Personnel Board members are appointed by Palin.

Reminds me of the old joke about the Soviet Olympic team.

Tomorrow's headline: Among the top two candidates, McCain came in second, Obama came in second last.

Oil and Exchange Rates

Someone I know was trying to convince me that exchange rates between the dollar and middle eastern currencies are the primary driver for oil price fluctuations, along with commodities speculation (never mind that the Saudi currency and others are tied to the dollar). So I did a little analysis. Here are the graphs:




DPB is dollars per barrel. The currency graphs are the price of a unit of currency in dollars. They are scaled to make them comparable. There is a mild correlation, but the oil price fluctuations are much larger than the currency fluctuations. This means the exchange rate cannot be driving the oil price, it has to be the other way around. When oil prices go up, the US economy will suffer, and the value of the dollar is weakened.

BTW, the price of oil is mostly driven by demand. All producers except for the Saudis are pretty much maxed out, a sign that we are close to the production peak.

Credit Crisis

Alan Greenspan is trying to steer the blame away from himself. Before the House Oversight Committee, he said that outside of credit default swaps, the bulk of financial derivatives had not caused major problems. He said the boom in subprime lending occurred because of the huge demand for investment opportunities in a global economy, and he blamed the crash on a failure by investors to properly assess the risks from such mortgages, which went to borrowers with weak credit.

This totally misses the point. The free market ideology says that smarter investors would recognize the risks of this model and punish those who did not mitigate the risks. The very existence of speculative bubbles should refute that ideology, but people can be pretty obtuse. Free markets are useful, but they must be recognized as unstable.

Here's the real culprit. For decades, financial institutions have been required to maintain as liquid assets a fraction of the mortgage balances they hold. This policy was designed to prevent the kind of fiscal meltdown we're seeing today. But to the bankers, this dead money is billions in wasted income. So JP Morgan invented Credit Default Swaps, which are basically insurance policies against forclosure losses. With those risks off the balance sheet, the bankers were free to invest the extra money and make billions without breaking the law. The insurers were not banks, and were not bound by the protective regulation.

This would not be a problem except for one thing. Insurance companies survive hurricane payouts using premiums paid by policyholders in earthquake zones. Just an example, but you get the idea. No catastrophe affects all policyholders at once. But that is not true of housing prices. They are cyclical. The insurance model does not work for mortgage risk.

If you think the insurers should be required to maintain the liquid assets, you get it.

Bailout Bill Defeated

OMG. Representatives under reelection have defeated the bailout. If they think grumpy fiscal conservatives are a threat to their campaign, just wait 'til they feel the wrath of millions of newly unemployed voters.

Seriously, the time for discussion and anger is over. We have to pass the best bill we have, no matter how flawed.

More on First Debate

I saw a clip on youtube where McCain's refusal to look at Obama was described as contempt. It's an interesting theory, but I don't think that's what it is. I am starting to think it is intimidation. Obama's backround is the ultimate intellectual, Professor and Harvard Law Review Editor. McCain is a soldier. He got in the Senate based on character and common sense approach to politics. He is not Obama's intellectual equal and he knows it.

First Debate

Did you notice McCain did not look at Obama once?

$700 Billion Bailout

This bailout would be the biggest transfer of wealth in history, from working Americans to predatory lenders and those who supported them. If I'm going to bail out a corporation, the shareholders should be wiped out. The government should own the company, and should auction it's shares or assets at some future date.

Otherwise we are going to repeat this exercise in the future. Those companies which are "too big to fail" would be free to take outrageous risks in pursuit of higher profits. That is a recipe for disaster if I ever heard one.

McCain and Trust

John McCain hit the nail right on the head in his acceptance speech for the Republican nomination. He said the Republicans have lost the trust of the American people. That's really an understatement, at least for this former Republican.

He claims to be different, and to advocate change. And it would be believable, given his reputation. But Obama's point that he voted with Bush 90% of the time is telling.

His stated policies are on the whole better than Obama's, but the differences are pretty minor. But where they really differ, he is pretty scary.

His platform on abortion is too extreme. The platform supports a constitutional amendment that "The unborn child [from the moment of conception] has a fundamental individual right to life, which cannot be infringed." This means a 12 year old girl, raped by her father will be forced by the federal government to bear the child. That is positively barbaric.

He supports even further cutting taxes on the wealthy. This just makes me sick, and I won't talk about it any more.

His responses to various questions lead me to believe he is a warmonger. At the least he tends to think about international issues in military terms. When asked about how to deal with evil in the world, he dismisses any notion of containment, and insists on defeating it. Well, there is a lot of evil in the world, and many countries wish us harm.

If you vote for a warmonger, please do not be surprised when you get a war. What I am really afraid of is, Given McCain's attitude toward global ideological struggle, the opponents in his war will not be Iran or North Korea. They will be Russia and China.

Faith Forum

Some comments on the recent Faith Forum 'debate' at Rick Warren's Saddleback Church.

I love the forum. This is a great opportunity to learn how the candidates think, and to hear unrehearsed answers without the distraction of partisan attacks and punch lines. I hope this becomes a tradition. Thank goodness one of these evangelicals has finally realized you attract more flies with honey than with vinegar.

McCain has much better domestic policies, and Obama has much stronger foreign policies. I know this is the opposite of what the ignorant masses think. I'm glad I don't have to answer to public opinion polls like these guys.

McCain sees every foreign policy issue through the prism of the military. It is a little scary when military thoughts crept in to his answers to non-military questions. His approach to evil in the world is single minded: "you have to defeat it". As president, I wonder how he would handle the half dozen or so evil regimes that exist. Would he attempt to defeat all of them at once, or one at a time? I am a firm believer in taking what people say at face value, and I have no doubt that he would get us into more than one new war if elected. We can pray it is not against Russia or China. Iran would be disastrous enough as it is. Watching him talk about war, do you get the impression of a man whose fondest wish is to recreate the glory of WWII?

Another thing that is scary is his opinion on the supreme court. He opposes the four liberal justices, who have maintained our personal liberties. I can assure you that replacing just one of them with another right winger will have a noticeable negative effect in your life.

Curmudgeon

McCain's depiction of Obama as a celebrity appeals to the curmudgeon in us. It resonates in a couple of ways.

1. People resent celebrities for achieving fame and fortune without hard work.
2. People are tired of hearing about the next new thing, which is really nothing special.

Unfortunately for Obama, number 1 is hard to fight, but he did it well against Hillary, who is a much better campaigner than McCain. And it is usually a small factor in presidential elections. Claims of 'not ready to lead' don't stand up for anyone who is objective and listens to what Obama is saying.

Number 2 should be easier. You just have to explain what the new thing is about, until it seems less risky. Very few voters want another Republican disaster, so the bar for this is not too high. Obama should address this issue head on, as is his style. He should talk about how change can be scary, but the risks can be managed. This has the additional advantage that his opponent becomes the candidate of the status quo (as if he is not that already).

If the Republicans want to subtly 'define' Obama as a 'celeb', then Obama should 'define' what their argument is by answering charge 2 instead of charge 1.

Stealing Trash

Here's an article on trash stealers, who go around swiping people's recycling, and ... recycling it. Some of this stuff is criminal and should be fully prosecuted, like stealing manhole covers and free magazines. But stealing homeowners recyclables is doing them a service.

Now, I don't mean it helps them to have the stuff gone. What I mean is, it lets them know they are being overcharged for waste management. Garbage is a serious racket. Our homeowner's association contracts with a local company at $7/month for curbside trash and recycling service. Our city recently passed a law that said that anyone who does not have a contract through their homeowner's association which includes recycling, has to use the city's designated provider at $20/month. Ouch.

The city's provider is happy to charge extra for the recycling service, and then sell the raw materials for a hefty profit.

If freelancers can make a profit provide recycling service for free, why are residents being charged?

Public Election Financing

As expected, Obama has declined to have the taxpayers foot the bill for his campaign. This decision has drawn an amazing amount of criticism. Hoping to understand the outrage, I have read a number of articles, but the only argument I could find was something like "changing your mind is a bad thing". Have these authors never changed their minds?

Public financing is a good idea for reducing the influence of special interests in government. Politicians get and keep their employment by winning elections. Winning elections requires money. Raising millions generally requires donations from special interest groups. As a result, politicians primarily serve special interests. Public financing tries to put a stop to this by giving the money to the candidate so that he does not have to serve special interests to pay for his campaign. Good idea in theory, but it doesn't work so well in practice. Organizations which are supposedly independent of the politicain's campaign can spend any amount they want. So the candidate is still beholden to the special interests who finance those organizations.

At the time Obama said he would use public financing, the only two choices were those above. The public financing option, with it's spending limitations, was the more principled position. But there has been a dramatic change in the electoral landscape. Obama has shown (and surprised himself) that millions of individuals making small contributions can finance a campaign themselves. This is a third way (individuals). This is a revolutionary change in ethical politics, and a dire threat to lobbying organizations whose business model relies on politicians dependence on thier money.

So here's a simple (and fairly imperfect) analogy. The weather forecasts rain on July 4, so the town picnic is planned as an indoor affair. On the day of the picnic the skies are clear. The Mayor announces the good news that there will be fireworks after all. And all the newspapers criticize him. "He said there would be no fireworks, and he lied. What happened to his promise to be a different kind of politician...".

Bank Security

The other day I went to 1stBank without my account number. They asked for my verbal password. Funny, I never set such a thing. They assured me I did and wrote it down on a slip of paper. It was my login password! They tried to convince me I had set it once and forgotten it, and that all their customers do. The problem is, it is not a word at all but a string of characters that is awkward to say. I would never say it out loud in front of other customers as it could allow anyone to use my online account to transfer funds. In fact the teller could just do that anonymously from the comfort of his home, if he realized what it was. He could do that for any number of accounts.

The other scary part of this is, online passwords are supposed to be encrypted using a one-way hash. If you forget a password, they are supposed to reset it to a random string, then you have to change it when you next log in. They are not supposed to have any way to recover a password. That way, disgruntled system administrators cannot get them. The fact that they created verbal passwords from their online passwords means they are not securing the online passwords. This is much worse than keeping credit card numbers in their database. 1stBank has $8 billion in deposits!

Mercury and Alzheimer's

I was curious whether anyone had studied a possible connection between vaccines and Alzheimer's disease. Using Google, I found this quote, widely distributed on the web:

According to Hugh Fudenberg, MD, the world's leading immunogeneticists and 13th most quoted biologist of our times (nearly 850 papers in peer review journals): If an individual has had 5 consecutive flu shots between 1970 and 1980 (the years studied) his/her chances of getting Alzheimer's Disease is 10 times higher than if he/she had one, 2 or no shots. Dr. Fudenberg said it was so and that it was due to mercury and aluminum that is in every flu shot. The gradual mercury and aluminum buildup in the brain causes cognitive dysfunction.

For every page which includes this quote, there are 3 ridiculing it. But none of the discussion has any flavor of credibility. There are lots of ad hominem attacks on Hugh Fudenberg, but I can't find any reasonable dispute of his long and distinguished scientific career. He is a key player in the early evidence for a link between mercury and autism. That link seems to have been disproven, but that is common in science.

Given the controversy, his role in it, and his many awards, I find it curious that Dr. Fudenberg does not have a Wikipedia page.

As far as I can tell, the above quote is based on an interview with Dr. Fudenberg, and not on a peer reviewed article, so it has little weight. But I could not find any studies rejecting a connection with Alzheimer's. So those who think this possibility is worthy of ridicule are basing their conclusions on prejudice.

Here's an interesting video that explains why people worry about mercury's effect on brain function.



Here's another quote from a guy trying to debunk the mercury connection:

A 1997 study from the Universities of Calgary and Kentucky exposed rats to high concentrations of mercury vapor for four hours per day up to 28 days [8]. Some of the rats showed brain lesions similar to those found in humans with Alzheimer's disease. Anti-amalgamists assert that this study provides evidence that dental amalgam fillings can cause Alzheimer's disease [7]. However, humans with an average of 25 surfaces of amalgam fillings would only inhale 2 µg Hg/m3 during four hours of stimulated conditions [9] versus the 250 or 300 µg Hg/m3 vapor used in this study. The rats were therefore exposed to over 100 times greater concentrations of mercury vapor than humans with 25 amalgam surfaces would typically inhale, even under stimulated conditions. The rat study therefore has little relevance to whether mercury from amalgams causes Alzheimer's disease.
...
[7] Scientists connect Alzheimer's Disease to mercury: Bio-Probe News Website. Available at: http://www.bioprobe.com/ReadNews.asp?article=31. Accessed March 31, 2001.
[8] Pendergrass JC, Haley BE, Vimy MJ, Winfield SA, Lorscheider FL. Merucry vapor inhalation inhibits binding of GTP to tubulin in rat brain: similarity to a molecular lesion in Alzheimer diseased brain. NeuroToxicology 1997;18:315-24.
[9] Langworth S, Kölbeck K-G, Åkesson A. Mercury exposure from dental fillings. II. Release and absorption. Swed Jdent J 1988;12:71-2.

But this would tend to support the connection. If the concentration was 100 times higher for only one month for 1/6 of each day than humans get with 25 amalgam surfaces, then you could expect a similar result with the lower concentration for 8 years with 4 amalgam surfaces (did that make any sense?). Linearity is a big assumption, but unless shown otherwise, it is the best assumption available.

The Political President and WMD

Scott McClellan's book on Bush's political presidency is shocking, but should not be a surprise. What is a surprise is that the Bushies thought they could keep their shenanigans secret.

In response, and in defence of the handling of pre-war intelligence, Condoleezza Rice asks "You can agree or disagree about the decision to liberate Iraq in 2003, but I would really ask that if you ... believe [Saddam] was not a threat to the international community, then why in the world were you allowing the Iraqi people to suffer under the terms of oil-for-food."

The argument at the time (at least the persuasive one) was that he had a documented history of pursuing (and using!) WMD and such countries must submit to inspections. This is simply common sense. It was more than the current justification for sanctioning Iran. Is she saying we should not be doing that?

I recall watching Powell present his argument for war to the security council. Most of the evidence was satellite images of buildings. This one is a chemical weapons factory... that one is a bio lab... etc. At the time I wondered how they knew these things. They just looked like buildings to me. But there was a long history of analysts figuring out fuzzy pictures like that. Cuban missile crisis, etc. So maybe they knew something that was not obvious to most people. I assumed they must have secret information that they could not reveal. Why did I assume that?

1. Everyone in the White House had access to whatever additional secret information they had.
2. No rational person would trust the presented evidence alone as indicating anything.
3. If there was a war, all buildings would be identified, and everyone would know the truth.
4. Every country that trusted us, would never trust us again.
5. 200 years of hard earned political capital would be spent on a single security council vote.
6. The Bush legacy would consist of ruining the good faith and credit of the United States of America.
7. No one in their right mind would want that legacy. What gain could possibly be worth that?

My point is that McClellan's description of a political administration run amok is not just credible, but is the inescapable conclusion once we found out the prewar intelligence was more or less manufactured. His book is no surprise at all. By assuming insiders would stay loyal, Bush failed to realize that at least one of the operatives surrounding him was an honest public servant with conservative principles and a belief in good government.

At least Nixon was rational. Someone at Newsweek came up with the right term for our current administration: 'idiocracy', rule by the stupid.

Shooting Down Satellites

Here's a post about Chinese doubts about the US shooting down one of its own satellites. Some quotes: "Some Chinese are not buying the U.S. explanation of why it shot down a crippled spy satellite." and "...events that U.S. readers might take at face value."

OMG, does anyone actually believe the bogus stories both governments composed? The Chinese shot theirs down as a matter of national security. It had to know if it could reduce US capabilities in the event of war. (The reality is it reduces only a little as most of the important satellites are in farther orbits, and the US has inertial systems too, not just GPS.) The US has wanted to do such a test for a long time, but faced a delicate detente with the Russians over space weaponization since 1985. The Chinese test forced their hand, or allowed a fortunate excuse, depending on your point of view. In any case it is quite impressive the US was able to prepare and execute a successful test in a matter of weeks.

What is more interesting is the after-the-fact responses. The US expressed sensible and measured alarm at the military implications, and the debris left in orbit. After the US test, the Chinese response was practically a mirror of the original US response. Unfortunately, the facts were different, and the Chinese response made little sense. For example, the US test was in low orbit and the debris would fall into the atmosphere in a matter of days and weeks, not years like the Chinese debris. Also, the US had a plausible justification, its wayward satellite would soon enter the atmosphere at an uncontrollable location, possibly threatening populated areas (ooo, I'm scared).

The actions were similar, but the handling of public relations was vastly different, showing the US advantage of many years of cold war experience.

China's Controlled Media

Here is a link to a translation of a blog describing the huge gap between Chinese and Western perceptions of the Tibet uprising.

The German woman is pretty ignorant, so I won't discuss that side much, but the Chinese author is proud and naive. He is thouroughly informed by China's state controlled press, and he believes every word. To get a sense of the bias of China's media, you need to compare the Chinese reporting to that of the West. It is usually not as strong as it is made out, but there are cases where there is manipulation or suppression. It is of course overt in this case.

Does he really believe these people are risking their lives without any legitemate grievances?

And if the situation in Tibet was as China's media portrays it, it should be to China's great advantage to expose it to the world.

But there are larger implications of a controlled press that are disturbing. First, the Chinese government has demonized Tibetan culture as part of their propaganda campaign. The blogger writes about past tribal rituals like requiring human skins as gifts, as if that justifies suppression of an entire culture. Demonization of a minority is especially sensitive in a country like Germany which has a ghastly history of that. This is tantamount to institutional racism and should be condemned more strongly than the authoritarian suppression of a semi-violent uprising.

Second, while China's rise has thus far been peaceful, there will come a time when their technology will be equal that of the West, and their industrial production will be larger. The balance of power must shift, and the issue of Taiwan, which is veiwed by China as a foreign occupation of their land, will be viewed as an attainable military objective. If the Chinese media remain state controlled, thier attitude on Taiwan would surely be aggressive. And that will likely lead to world war. They would quickly take Taiwan by force. The West would sanction and blockade. They would need to invade their neighbors for resources, etc. I do not know who would win such a war, but it is armageddon for sure.

So again, if we have to pressure China on it's authoritarianism, press freedom is a more important issue than democracy.

Pee in a Cup

I recently applied for a job through an agency. They said all of their placements have to authorize a criminal background check and take a drug test. I don't have a problem with a background check, and I think employers are wise to do that, but I do have a problem with the drug test. Passing it is not an issue. I do not even use alcohol, tobacco, or caffeine. But it is a matter of principle. It's a terrible invasion of privacy. If the job involved operating heavy machinery or something dangerous, that would be fine, but what I, or my coworkers do in their own time is none of the employer's business. Not to mention the possibility of secretly screening for health insurance liabilities.

I told the agent ambiguously that I might have an issue with that. We proceeded to schedule an interview with the client. I aced the interview, which was with the sole proprieter, so I knew I had leverage. I asked generally if certain requirements were his, or just the agency's. He said "you mean the drug test and backgrounder? That's the agency". Apparently he had been forewarned.

So when the agency called back, and explained the details and tried to send me a contract, I figured they would just forget about the tests. But they didn't. Apparently it would get them in trouble if they tested some, but not others. I sensed this would not be an issue, so I declined the offer.

I called back the client, who called the CEO of the agency, and they made an arrangement where the client just pays a finder's fee, instead of me being employed by the agency as a 'consultant'. As it turns out, the client had done that before for someone who could not pass a pee test. It's fun to use the invisible hand to slap big brother.

Disclaimer: Don't try this at home unless you can afford to miss that opportunity.

B2 Bomber Problem

I thought of an interesting and not too difficult go problem. Black to play and escape with his B2 bomber.

Add a comment if you have seen this somewhere before.

The Wrong Speech

Obama's race speech was brilliant. Unfortunately it was the wrong speech.

Many things were explained by it, but the gist that I got out of it was: the history of race in this country explains the source of the hateful remarks of Rev. Jeremiah Wright. Various sound bites were distilled and reported in the media, none of which are likely to influence casual voters.

The problem is, the pastors remarks were not racist, they were anti-American. An anti-war candidate's biggest weakness is the impression of a lack of patriotism. The picture of Obama smiling with pastor Wright puts him smack in the middle of the 'blame america first' crowd. This is political suicide. Look what it did to Ward Churchill, who described WTC victims as 'little Eichmanns'. Surely it is academically worthwhile to try to understand the motives of the enemy. Yet he lost his tenure at a liberal university, even though that is impossible for controversial speech.

Americans don't want to know that an anti-American tirade is an understandable consequence of historical injustice, they want to know deep in their gut that the candidate disagrees with it. The speech Obama should have given would have said: "America is blamed by many people for all sorts of things. Here's why they are wrong."

An Open Letter to Geraldine Ferraro

Dear Geraldine,

A political orator of Obama's caliber comes along once in a generation. When they are white males, they usually become president. Even Obama's political enemies admire his skills in this area. Yet you do not believe he could have even contended for the democratic nomination if he were white.

When you resigned from Clinton's campaign, we could have given you the benefit of the doubt. You're not a latent racist, you just honestly don't see the skills that we do - the genius that more than adequately explains his popularity. But now you have described his race speech as "brilliant" (which it was), and yet somehow still feel his support is race based.

If this is not convincing, consider this: every successful african american since the civil rights era has been accused of exploiting affirmative action to get where they did, without exception and regardless of their skills. It was only a matter of time before someone made that accusation about Obama. That someone was you.

I feel sorry that you were referenced negatively in a speech that may well be taught in future history classes, but you have noone to blame but yourself.

Why the Pastor Matters

Obama is doing the best he can to distance himself from inflammatory remarks by his pastor. Each day he repudiates them in more strident terms, and has now removed the man from his campaign. But it is not enough.

Suggesting that we deserved to be attacked on 9/11, or asking that "god damn america" are certainly deserving of repudiation. The problem is, this man remains Obama's spiritual advisor. Now some people might consider a misguided spiritual advisor to be just another acquantance, like the boor who spews sexist jokes at the weekly poker game. But a lot of people don't. To a huge number of americans, a spiritual advisor is someone who has a profound and somewhat mysterious influence on their lives. And this man has already had a profound influence on Obama. From NYT: "Mr. Obama credits a sermon of Mr. Wright’s, 'The Audacity of Hope,' with drawing him to Christianity, and he used those words as the title of his second book". Obama claims the pastor is not a political advisor, but for many people that will not be good enough, and many of these are people who would otherwise vote for him.

I think Obama needs to seriously consider a new pastor. (Bonus political points if he chooses, or even just consults with Billy Graham.)

Gaming Inflation

Have you noticed that prices are going way up, but the government still gives us a low number for inflation? There's a reason for that. In 2000 the Federal Reserve switched to the PCE (Personal Consumption Expenditures price index, or Core Inflation) instead of the CPI (Consumer Price Index, or Headline Inflation) to produce a smaller value. This can be justified by noting that inflation has a large psychological component. Those green papers with Franklin's picture are only worth something if people believe they are.

But it is getting a bit ridiculous. First they remove 'volatile' products (such as gas and food) from consideration, as those prices may fluctuate temporarily. But the huge increases in those prices are not temporary. Gas is high and will continue to rise because of billions of people in China and other developing countries buying cars and using energy. It's a simple supply and demand problem. It has very little to do with middle east tensions. And food price increases reflect gas price increases.

Next, they consider consumer substitutions. The idea is if price fluctuations temporarily lower the price of an alternative, so consumers switch products, then the other product can be used in the PCE. The problem is, the change in buying habits may be permanent too.

For example, you bought a Toyota last time for 10k. This time, you have 11k to spend. You can't afford a Toyota, which is now 20k, so you have to buy a Yugo. The PCE substitutes your Yugo for the Toyota and sees 10% inflation. But the actual inflation was 100% over that time period.

Since the categories of things consumers spend money on is relatively constant, and they tend to spend all their money, the PCE most closely measures the rise in consumers' income.

Here's how the fed describes it:

"The chain-type price index for PCE draws extensively on data from the consumer price index but, while not entirely free of measurement problems, has several advantages relative to the CPI. The PCE chain-type index is constructed from a formula that reflects the changing composition of spending and thereby avoids some of the upward bias associated with the fixed-weight nature of the CPI. In addition, the weights are based on a more comprehensive measure of expenditures. Finally, historical data used in the PCE price index can be revised to account for newly available information and for improvements in measurement techniques, including those that affect source data from the CPI; the result is a more consistent series over time."

—Monetary Policy Report to the Congress, Federal Reserve Board of Governors, Feb. 17, 2000

Guys, that "upward bias" you are tying to manipulate away is called "inflation".

Hillary the Tactician

Has anyone else noticed the dramatic shift in press coverage of Hillary and Obama? By some counts Hillary gained 3 delegates on March 4, barely denting Obama's lead of nearly 100 delegates. Yet the press practically threw a ticker tape parade for her Hillaresurgence. There was virtually no fallout when in a fit of paranoia, Clinton likened Obama's intention to increase his emphasis on their differences to Ken Starr. Meanwhile, the press has been skewering Obama left and right.

This is of course a direct result of Hillary's complaints about the media treating her unfairly, as evidenced by the now infamous SNL skit, and the media's neurotic self conscious nature. Realizing this was happening, the Clinton campaign took advantage and threw everything but the kitchen sink at Obama in the runup to the March 4 primaries.

If nothing else, the Clintons are tactically brilliant. Welling up before the New Hampshire primary and Super Tuesday are two more examples. (Once could have been considered a fortunate coincidence)

The problem with tactical leaders is they garner intense opposition. Karl Rove comes to mind. Bill Clinton too is not remembered for his ideas, but for his political skills. How many of you remember what the Clinton Doctrine says? The Republican revolution of 1994 was largely a reaction to his tactical victories.

Contrast this with Reagan. Not tactically brilliant, but he is remembered for his ideas of small government and defeating communism by outspending it.

(For the record, the Clinton Doctrine was about military intervention against genocide)

Talking to Enemies

GW Bush, McCain, and Hillary all agree that we should not talk to hostile leaders without preconditions. Obama disagrees. He is right and they are wrong.

This can best be seen by turning the issue around. Consider the case of Suu Kyi, an opposition leader in Burma/Myanmar. The burmese government (a repressive dictatorship) refused to meet with her about the recent unrest unless preconditions were met, such as "she renounce widespread calls for international sanctions against the military regime".
Here is a news item.

Surely renouncing sanctions should be a result of negotiation, not a precondition. Otherwise what motive does the junta have for giving any concessions at all?

Predictably GW Bush insisted (correctly) that the meeting should take place without preconditions.

Such hypocracy arises when one takes the attitude that our people are good and the other side are evil people who need to be controlled. I will not argue that those who are hostile to us are not evil, but asking them to implicitly accept that categorization for all to see by submitting to preconditions is not going to work, for obvious reasons.

Here's another analogy: in a hostage situation, imagine the police refuse to answer the phone when the hostage takers call, claiming that 'taking hostages was wrong and so they should release the hostages first, before we talk'.

Bhutto's Assassination

Well it looks like Scotland Yard's report on Bhutto's assassination will not be published anytime soon. I suspect they don't want to be embarrassed by shamefully sloppy work. I'm not talking about the technical details, but of the obvious questions that are ignored by the report, as evidenced by excerpts that are available. There are many, but the two biggest in my view are these:

1. They do not explain why they did not investigate who ordered the hosedown of the crime scene. It is not hard to find out something like that. If the authorities will not cooperate, they should say so.

2. Why is the injury on the right side of her head instead of the left? The report implies that she was thrown into the escape hatch. But that is rather silly. She is inside the vehicle. The blast is outside. The left side of the car could be instantly compressed, driving the left side of the escape hatch into her skull. But her body does not feel the blast pressure directly, so she can't be thrown with that much force into the right side. Put another way, if a rightward velocity is imparted to her body, a greater rightward velocity will be imparted to the car, which has a much larger surface area and is exposed to the blast directly. The relative velocity of her body to the car will be leftward. (A 'swingback' of the car would occur much too slowly to cause such violent damage.)

Watch the video and decide for yourself:

Clinton's Race Card

Why do the South Carolina primaries bring out the worst in some people?

Obama has admirably avoided discussing race in his campaign. I suppose it is just self interest. If he is labeled as 'the black candidate', he cannot possibly win.

For that very reason, the Clintons would like nothing better than to interject race into the campaign. But they have to be pretty subtle. And so they have. Speaking at Benedict College, a historically black college in South Carolina, Hillary praised African American Congressman Charles Rangel, D-N.Y., for his political achievements: "He didn't get there you know by leapfrogging - he got there by lots of hard work day in and day out". The term 'leapfrogging' is intended to provoke jealousy of someone who gets ahead without waiting their turn.

This is not the first time they have insinuated this. The 'fairy tale' comment is relevant here. I don't see how people could interpret it as a racial slur, and I also don't believe Bill's claim that it only referred to Obama's inconsistent opposition to the war (which isn't true anyway). Rather it indicates to me that Bill has been obsessing over Obama's 'out of nowhere' rise to political success. Apparently Obama just doesn't know his place.

Superdelegates

From Wikipedia: Superdelegates are delegates to a presidential nominating convention in the United States who are not bound by the decisions of party primaries or caucuses. Superdelegates are elected officeholders and party officials.

In other words in a close contest, after the party rank and file have voted in the primaries, the party establishment gets to decide who really gets nominated. Thus the image of the smoke filled back room. Presumably the superdelegates demand political favors from the winning candidate.

Normally this would not be all that bad, but there is a potential issue this time. One of the Democratic candidates has much better connections with the Washington establishment, and the other is an African American. If Obama gets a majority of the popular delegates, and a back room deal is made to nominate Hillary, it will be very hard to avoid the notion of a racially motivated conspiracy. I don't know how strong the backlash would be, but I would bet many of those superdelegates would lose enough support that they would be vulnerable in their next election. It would certainly be very damaging to the Democratic party.

Between now and the convention, look for both sides to claim to be ahead in the delegate count. Obama will not count the superdelegates. The Clintons will count the ones who have specified a preference. But take it with a grain of salt. A preference is not a commitment.

Electoral College Short Circuit

A number of states are passing legislation that all their presidential electoral votes should go to whoever wins the national popular vote. It only takes a few states doing this to effectively kill the electoral college for everyone: if even one state switches results based on this rule, it would usually be enough to guarantee the popular candidate gets more electoral votes.

This idea is really dumb for several reasons. The first reason is well known. If the popular vote is close enough that hanging chads in Florida can affect the result, then a full national recount will be necessary. An awful lot of lawyers will send their kids to college on the windfall from that one. And you can guarantee the winner will be from the party which has a majority on the Supreme Court. (It's not funny that in Bush v. Gore, the republican justices all voted against states rights and the democrats all voted for it, exactly the opposite of what would be expected.)

The second reason it is dumb is that candidates have no strong reason to campaign in a manner beneficial to those states.

Finally, the only way a state's new law make a difference in the election result would be if the national popular vote overrules the state's own popular vote. Each state's short circuit law can never help the state get its preference elected, it can only hurt.