Don't Take The Money

As I've stated before, I do not believe economics is a real science.  It appears at least one Political Scientists believes the same of his discipline.  From Political Scientists Are Lousy Forecasters:

It’s an open secret in my discipline: in terms of accurate political predictions (the field’s benchmark for what counts as science), my colleagues have failed spectacularly and wasted colossal amounts of time and money. The most obvious example may be political scientists’ insistence, during the cold war, that the Soviet Union would persist as a nuclear threat to the United States. In 1993, in the journal International Security, for example, the cold war historian John Lewis Gaddis wrote that the demise of the Soviet Union was “of such importance that no approach to the study of international relations claiming both foresight and competence should have failed to see it coming.” And yet, he noted, “None actually did so.” Careers were made, prizes awarded and millions of research dollars distributed to international relations experts, even though Nancy Reagan’s astrologer may have had superior forecasting skills.

When first reading the above paragraph, my initial reaction was such lousy forecasting is the result of a combination of telling politicians etc. what they want to hear, because they are paying the bills, and intellectual inbreeding.  The author appears to agree (although not in those words):

Alas, little has changed. Did any prominent N.S.F.-financed researchers predict that an organization like Al Qaeda would change global and domestic politics for at least a generation? Nope. Or that the Arab Spring would overthrow leaders in Egypt, Libya and Tunisia? No, again. What about proposals for research into questions that might favor Democratic politics and that political scientists seeking N.S.F. financing do not ask — perhaps, one colleague suggests, because N.S.F. program officers discourage them? Why are my colleagues kowtowing to Congress for research money that comes with ideological strings attached?

This sounds much like what has occurred in the field of economics (although I would be shocked to hear a economist admit it).   The N.S.F. may stop giving grants to political scientists, and this is a good thing.  If a practitioner desires to develop a real science, then there is a price: to be intellectually free, do not take the money.  As pointed out later in the op-ed piece:

These results wouldn’t surprise the guru of the scientific method, Karl Popper, whose 1934 book “The Logic of Scientific Discovery” remains the cornerstone of the scientific method. Yet Mr. Popper himself scoffed at the pretensions of the social sciences: “Long-term prophecies can be derived from scientific conditional predictions only if they apply to systems which can be described as well-isolated, stationary, and recurrent. These systems are very rare in nature; and modern society is not one of them.”

Stop trying to be something you are not; maybe then political science (or economics) can become a real science.

Irrelevancy

In politics, irrelevancy is a career move.

Don't Let The Door Hit You...

If that's the best they can do for a threat...

Banker fury over tax ‘witch-hunt’:

Bankers on Wall Street and in Europe have struck back against moves by US lawmakers to slap punitive taxes on bonuses paid to high earners at bailed-out institutions.

Senior executives on both sides of the Atlantic on Friday warned of an exodus of talent from some of the biggest names in US finance, saying the “anti-American” measures smacked of “a McCarthy witch-hunt” that would send the country “back to the stone age”.

There were fears that the backlash triggered by AIG’s payment of $165m in bonuses to executives responsible for losses that forced a $170bn taxpayer-funded rescue would have devastating consequences for the largest banks.

“Finance is one of America’s great industries, and they’re destroying it,” said one banker at a firm that has accepted public money. “This happened out of haste and anger over AIG, but we’re not like AIG.”

The banker added: “It’s like a McCarthy witch-hunt...This is the most profoundly anti- American thing I’ve ever seen.”

5 thoughts:

1. Revenge is a very "American thing."

2. Don't let the door hit your ass on the way out! If that's talent I would hate to witness incompetence.

3. It's amazing to hear someone whine, "I can't believe you hate me," after running everything into the ground.

4. They should do the right thing and jump out a window. The world would be a far better place without them in it.

5. Another example of intellectual inbreeding...

Intellectual Inbreeding: Corporate Free Traders

Here's an example of intellectual inbreeding. Although not the point, Wall Street and Bernanke by Dave Lindorff illustrates the flawed thinking of the corporate free trader crowd. Just like Marxists, this bunch began believing its own B.S. Its feedback did nothing but reinforce a flawed ideology of economic internationalism. It's interesting to note that both Marxist and "free trade" reacted similar: both grasped the remedies of its flawed rival.

Excerpt:

The same kind of analytical brilliance has been routinely ascribed by economic pundits to investors when it comes to business decisions--particularly mergers and acquisitions, or divestments and breakups. If Bank of America announces that it is going to buy the foundering Merrill Lynch and shares of B of A fall, then the merger is a bad idea. If the shares rise, it's a good idea. And so it goes.

The whole idea that a bunch of people who sit around at computer screens betting on stocks and eating cheese doodles all day really know much of anything, or that taking their herd responses collectively as some kind of delphic oracle has always seemed the height of folly to me. But if you really wanted proof that investors taken collectively are idiots, you could simply look at today's stock market. Yesterday, every index plunged by about 4%, pulling the overall market to lows not seen in 12 years, because of concerns that the recession was deepening, that the big banks were toast, and that the government's economic stimulus plan was not going to help much.

There was every reason to expect the downward trend to continue, but up stepped Federal Reserve Chair Ben Bernanke, and, in a statement presented in Congress, said that in his considered view, the current recession could be over by the end of this year.

Relieved investors jumped back into the market and bought stocks, pushing the Dow and the S&P indexes back up by almost as much as they'd lost the day before.

But wait a minute! Isn't Ben Bernanke the same guy who was chair of the Fed last year and the year before? The same chair who completely failed to see the coming credit crisis and global financial collapse? And if that's the case, why on earth would investors take seriously anything he says about the future direction of the economy?

Why indeed? Maybe they're smoking a little too much hope?

The herd mentality can never be more than mediocre, and probably less. Anyone believing in its wisdom is a tool.

See also How the Economy was Lost by Paul Craig Roberts.

Intellectual Inbreeding: Achievetrons

The latest issue of Harper's has an article called Achievetrons by Lewis H. Lapham, which describes the consequences of intellectual inbreeding when influenced by Maximum Advantage. The resultant products all thing the same: Me First.

Excerpt:

It also illustrates The recommendation deserves to be ranked with the ones until recently in vogue at the Palm Beach Country Club among the members acquainted with the achievetron Bernie Madoff. For the past sixty years the deputies assigned to engineer the domestic and foreign policies of governments newly arriving in Washington have come outfitted with similar qualifications—firstclass schools, state-of-the-art networking, apprenticeship in a legislative body or a think tank—and for sixty years they have managed to weaken rather than strengthen the American democracy, ending their terms of office as objects of ridicule if not under threat of criminal arrest. The Harvard wunderkinds (a.k.a. “the best and the brightest”) who followed President John F. Kennedy into the White House in 1961 hung around the map tables long enough to point the country in the direction of the Vietnam War. Henry Kissinger, another Harvard prodigy, imparted to American statecraft the modus operandi of a Mafia cartel. The Reagan Administration imported its book of revelation from the University of Chicago’s School of Economics (“privatization” the watchword, “unfettered free market” the Christian name for Zeus) and by so doing set in motion what lately has come to be seen as a longrunning Ponzi scheme. Take into account the Ivy League’s contributions to the Bush Administration—Attorney General John Ashcroft (Yale), Secretary of Defense Donald Rumsfeld (Princeton), director of Homeland Security Michael Chertoff (Harvard)—and I can imagine a doctoral thesis commissioned by the Kennedy School of Government and meant to determine which of the country’s leading institutions of higher
learning over the past fifty years has done the most damage to the health and happiness of the American people.

The higher educational system has sold itself to capitalist ideology (as opposed to ideas) and the military-industrial complex. Although the people and examples cited above hail from different academic backgrounds, the most corrupted reside in the intellectually bankrupt economics departments whose theories and models where large contributors to the looming financial disaster. As was the case with Marxists, these sort too readily believed their own B.S.* Science is not about building a model and calling it reality. Ideology has been mistaken for fact. A real science would recognize the inherent limitations in its models. Assumptions are not laws; their economics has none. Complexity has more potential for instability. Constraints almost always exist. Standing on the Earth's surface, one does not float up. Perhaps they forgot where they were? Achievetrons indeed.

As such, the "best and brightest" can be described thus:

1. In advertising law, best means as good as any other.
2. The brightest create by burning.
   

When these sort promise to "fix" something, expecting the worst is completely justified.

* (The initials are not coincidence.)

Addendum
From Hope latest victim of economy (Seattle PI):

"Right now, more than a crisis in mortgages or in housing, we have a crisis in confidence. That is the biggest problem in trying to analyze the current market," said James Stack, president of market research firm InvesTech Research in Whitefish, Mont. "You cannot analyze psychology."

The lights are on, but nobody's home...

Low Hanging Fruit

You don't see something like this everyday: Letter: Andrew Lahde, Lahde Capital Management:

Today I write not to gloat. Given the pain that nearly everyone is experiencing, that would be entirely inappropriate. Nor am I writing to make further predictions, as most of my forecasts in previous letters have unfolded or are in the process of unfolding. Instead, I am writing to say goodbye.

Recently, on the front page of Section C of the Wall Street Journal, a hedge fund manager who was also closing up shop (a $300 million fund), was quoted as saying, “What I have learned about the hedge fund business is that I hate it.” I could not agree more with that statement. I was in this game for the money. The low hanging fruit, i.e. idiots whose parents paid for prep school, Yale, and then the Harvard MBA, was there for the taking. These people who were (often) truly not worthy of the education they received (or supposedly received) rose to the top of companies such as AIG, Bear Stearns and Lehman Brothers and all levels of our government. All of this behavior supporting the Aristocracy only ended up making it easier for me to find people stupid enough to take the other side of my trades. God bless America.

There are far too many people for me to sincerely thank for my success. However, I do not want to sound like a Hollywood actor accepting an award. The money was reward enough. Furthermore, the endless list of those deserving thanks know who they are.

[...]

Lastly, while I still have an audience, I would like to bring attention to an alternative food and energy source. You won’t see it included in BP’s, “Feel good. We are working on sustainable solutions,” television commercials, nor is it mentioned in ADM’s similar commercials. But hemp has been used for at least 5,000 years for cloth and food, as well as just about everything that is produced from petroleum products. Hemp is not marijuana and vice versa. Hemp is the male plant and it grows like a weed, hence the slang term. The original American flag was made of hemp fiber and our Constitution was printed on paper made of hemp. It was used as recently as World War II by the U.S. Government, and then promptly made illegal after the war was won. At a time when rhetoric is flying about becoming more self-sufficient in terms of energy, why is it illegal to grow this plant in this country? Ah, the female. The evil female plant – marijuana. It gets you high, it makes you laugh, it does not produce a hangover. Unlike alcohol, it does not result in bar fights or wife beating. So, why is this innocuous plant illegal? Is it a gateway drug? No, that would be alcohol, which is so heavily advertised in this country. My only conclusion as to why it is illegal, is that Corporate America, which owns Congress, would rather sell you Paxil, Zoloft, Xanax and other addictive drugs, than allow you to grow a plant in your home without some of the profits going into their coffers. This policy is ludicrous. It has surely contributed to our dependency on foreign energy sources. Our policies have other countries literally laughing at our stupidity, most notably Canada, as well as several European nations (both Eastern and Western). You would not know this by paying attention to U.S. media sources though, as they tend not to elaborate on who is laughing at the United States this week. Please people, let’s stop the rhetoric and start thinking about how we can truly become self-sufficient.

With that I say goodbye and good luck.

All the best,

Andrew Lahde

I laughed so hard I almost fell off my chair. In other words, this guy was stoned and still did better than the "low hanging fruit." His rant also sounds like a warning of the perils of intellectual inbreeding to me...

The Burning Continues

"The Republicans pillage the soil and the Democrats salt the Earth."

The economy continues to burn in a conflagration of worthless paper. So let's at least stay warm with its flames.

Nations Weigh Global Action to Crisis. They're going to take "action." As if incompetence were a virtue!

US stocks slide to five-year low. And it ain't over yet.

The Russians get on message. Dumping the dollar. (See Also.)

To the Bunkers! Just like Hitler?

The GOP Peddles Economic Snake Oil. As if the Democrats offer anything better. (Of course, even when the Republicans do the right thing, they do it for the wrong reasons.) The Republicans pillage the soil and the Democrats salt the Earth.

The world is at severe risk of a global systemic financial meltdown and a severe global depression. Can it, in theory, be stopped? Of course, but I have faith that so-called leaders will always do the wrong thing (at least from their perspective).

National Orientation. And here's why: they will never be oriented correctly, because they have lost the ability to observe as a consequence of intellectual inbreeding.

I'll certainly have fun pissing on their graves!

Maximum Advantage in all Things: Bailout #4

Back to form...

On the Presidential election:

Whomever wins, they will be a one termer, or even the last real President. A broken Federal Government will never have the same respect or legitimacy. How are they going to enforce their mandates? Neither candidate is up to the task of doing anything else but captain a sinking ship, and they'll damage state and local government in the process. Even corporations won't be immune to hyperinflation.

The political elites in this country are so out of touch. Those not physically inbred, like the Bushes, are intellectually inbred, like Paulson and Bernanke. They've spent so long only listening to money, that they cannot even conceive of the foundations of their power being undermined by their own actions. A bailout will make them hated, and they don't even know it. They confuse social isolation with acceptance. As a West African acquaintance said, "In any other country there would be a coup." (Or at least a General Strike.) It is hated by almost everyone of all political persuasion except the top 1% (at least the stupid ones). As far as I'm concerned, they can go bankrupt and die. They actually except us to take it bent over, just so we can still lend us money? What a priviledge: I can be screwed so they can screw me again! And on top of it, my earning power is reduced so I get screwed again and again. If they pass this bailout, this country is more doomed than it needs to be.

On This Modern Warrior Archetype Part Six.9.18

9p. Meritocracy is mostly a fable. Connections always count. The degree is directly proportional to the level of decline. As the relative weight increases, ability counts for less. At a certain point, associations count for everything. Shared fantasies are a potentially fatal consequence of such inbreeding. Unless after the fact, policy becomes increasingly unexamined. Only reaction is possible. Damage control becomes constant. Stress eventually leads to a breaking. Delusion is an extreme response to broken down policy. Unable to respond, constrained by high costs produced by unrealistic expectations, only desperation remains. The next step is living in a bunker. Failure is always someone else’s fault.

On This Modern Warrior Archetype Part Six.8.14

8o. Standardization is necessary for the most efficient operation any technical system. Components must be compatible. Maximum Advantage, as stated previously, leads toward the application of technical efficiency toward all human affairs. As such, humans are encouraged and nominally rewarded by their degree of standardization. In many such instances, seeking normalization is a perfectly rational and completely unworkable. The result is dysfunctional. Yet, still many will attempt to tread the same impossible path to the point of no return. As a sure sign of intellectual inbreeding, reinforced by regularization, these sort call their stupidity optimism. Consequently, this habit is very difficult to break, and generally takes a disaster. At this stage, the herd mentality will be very susceptible to panic. Lest tragedy occur, This Modern Warrior Archetype must be ready to de-escalate and calm the situation. Constructive action must be advocated. Rebuilding is the most efficient means. As an incentive towards success, never forget that, one way or another, chaos is the surest route to tyranny.