Two Curious Political Calculations

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by Richard Crews
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The ways of Washington and the ways of Wall Street are mysterious.

Apparently "derivatives"--mixed bags of investments based on stocks, bonds, mortgages, credit insurance, and side bets--are too complicated to be regulated by the federal government. Wall Street financiers tell Congress that even simple steps like requiring banks (and quasi-banks) to keep enough cash on hand to assure they can afford the derivatives they love to shuffle or developing some exchange or clearing function that would require the general (financial) world be told what's going on and guarantee that some grown-up is sure they can be paid for would be too restrictive and stifling. The economists and financial experts in Washington simply can't understand the problems. The Wall Street financial institutions can't either, but that is beside the point.

So the real question is, whom do you trust?

The answer, of course, is NEITHER. So the answer--like the "checks and balances" designed to keep mischievous branches of government operating out in the daylight--is, put BOTH in positions to watchdog one another. This is not easy. But with a lot of head-scratching (and hand-wringing) on both sides, it can be done.

The other strange political calculation that is emerging from Washington these days is, if financial reform goes first, that kills immigration reform for this year. If this makes sense to you, please let me know. The only thing I can figure is that the Republicans expect to get so much soup on their ties double-dealing and double-talking to keep Wall Street strong (and their campaign coffers brimming) while appearing to want to regulate it (voting against Wall Street is a very popular American pastime these days) that if financial reform goes first, they (the Republicans) simply won't have enough political capital left to stall and abort immigration reform.

Get it? (I don't.)
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Cosmic Xenophobia

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by Richard Crews
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Stephen Hawking has sat in his wheelchair for decades unable to speak or move about, and he has thought about things. He is such a brilliant mathematician and astrophysicist and his personal story is so touching (so overwhelming, really) that people keep taking note of what he says.

He said a few years ago that since we are poisoning our planet Earth beyond habitability, we had better get our human DNA off of the planet; we had jolly well better send astronauts and colonists to giant space ships, asteroids, Moon bases, Mars, and the like--sort of move it or lose it. He also said that although he did not believe time travel back to the past was possible, he would not wager against it for two reasons: First, if it hasn't been done so far, it might still be accomplished in the future, so it was a bet one could never win. Second, the person betting against him might be secretly visiting from the future and therefore simply know better--it was an unfair bet.

Recently Stephen Hawking produced a curious opinion about SETI, the search for extraterrestrial intelligence. He said that we are better off not looking because any intelligence we spot out there in the Cosmos is likely to be far advanced compared to us, and would likely be inclined to come "colonize" our planet once they know we're here. And, he said, remember what happened to the local populations wherever the mighty Europeans of the past few hundred years found them and took them under their wing.

The usual argument against this is that a technologically advanced civilization would surely be spiritually advanced as well. They would see value in human beings' primitive endeavors and would not destroy or overwhelm us.

Which, to my mind, begs a very important question--what is our ultimate goal? Is it to preserve human DNA come hell or high water? Or is it rather to further the highest forms of mental and physical (and, therefore, spiritual) achievement? It seems to me that if a superior race arrives on Earth, it is our cosmic duty to get out of their way. Similarly, if--as seems likely--over the next few decades computers become better at thinking and doing everything than we are (including building ever better computers), our responsibility as a race is to tip our hats and get out of the way.
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Midterm Alert

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by Richard Crews
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The party in the White House usually loses seats at a midterm election. This is related to:

(1) voter apathy (a presidential election is much more sexy than midterms),

(2) disillusionment (it's a lot harder to get things done than it was to campaign about them)

This year there are two additional factors:

(3) sticker shock (it costs a lot to get things done--especially to rescue the U.S. economy and cultural values from nearly a decade of abuse)

(4) free-wheeling prevarication and obstructionism (the Republicans discovered a cynical, powerful political tool).

A significant shift to Republican power could still bankrupt the country:

(1) they will oppose a value added tax (most first-world countries have a VAT)

(2) they will oppose increased taxes on unearned income (that's non-salaried income--principally stocks and bonds)

(3) they will oppose increased taxes on the very wealthy (remember Bush's "tax cuts" that, in fact, favored the rich)

(4) they will oppose advancing Social Security access age (consistent with a graying, but active, population)

(5) they will underfund education access, infrastructure repair, and green energy development, the long-term building blocks of a strong future for the U.S.

So, those of us who are really watching what's happening--rather than being confused and diverted by the media hype and Republican spin--must VOTE in the November 2010 midterms.
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Apocalypse Pending

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by Richard Crews
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When I was a little sprout, Nazi submarines could be sighted off the coast of Long Island; the street lights were turned off and we blackened our windows at night so as not to help German bombers find their way to New York City. When the Axis was defeated in 1945, the civilized world heaved a sigh of relief--but not for long. Within a few years the Cold War came along; for decades the world was fractions of a second away, at every instant of the day and night, from global annihilation.

Now that the Russians have been bankrupted into docility, we find ourselves moving swiftly into civilization threats like global warming, terrorism, population explosion, pandemics, worldwide water loss and contamination, and more.

Perhaps it has always been so. If it wasn't the Goths and Visigoths, the Huns and Persians, the Vikings and Infidels who were threatening to slaughter your family and town, and burn your crops and dwellings to the ground, then the local feudal landlord and his toughs were just as likely to do it to you--painfully and permanently.

Going back even farther, it seems that a few tens of thousands of years ago a giant volcanic eruption cast a climate pall around the world and drove our species to the brink of extinction.

But somehow the human race has always managed to pull through. It almost makes one believe in God or fate or something like that, although such superstitious cheeriness is a hard sell pending more definitive evidence. Even George Bernard Shaw has Joan of Arc (a religious fanatic but also an extreme military and political activist) say, "If we leave to God to do the things that we should do ourselves, we shall be defeated and serve us right."

In the 1960s I declined to have children because it seemed close to certain that they would not have a chance to live out a reasonably full life cycle. In 1970, I reneged--and Andy has now made it to age 40, and experienced a full spectrum of life struggles and triumphs.

My present--and final--consolation is that, at age 73, I shall soon be passing on to "a greater rest than I have ever known." I am losing interest in the deeply violent and poisonous legacy my generation seems determined to leave behind.

Ah, me! We shall see.
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The Goldman Sachs Scandal

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by Richard Crews
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Yesterday the Securities and Exchange Commission (SEC) filed charges against Goldman Sachs, one of the largest and most prestigious investment banking and securities firms on Wall Street. The charges described that in 2006 Goldman Sachs created a series of derivatives worth about one billion dollars that were designed to fail. These complex securities grouped together bad mortgages--mortgages that were known to be beyond the owners' abilities to pay. Goldman Sachs then sold these securities to some of their clients without disclosing that the securities had been designed to be weak. They then also allowed a large client to go short these securities so that when they failed, that client would make money.

Goldman Sachs of course charged brokerage fees on both sides of the deal--a total of some $15 million. They also bought insurance (credit default swaps) against future losses.

There are several truly amazing things about this constellation of transactions.
First: it probably was not illegal.
Second: there was no regulatory agency effectively overseeing such transactions.
Third: the process could be accomplished entirely out of sight without full disclosure to the parties involved or to the financial community at large.
Fourth: this sort of activity was common among Wall Street firms.
Fifth: the Goldman Sachs executives involved in this paid themselves multi-million dollar salary bonuses in 2006.

Now do you think that there should be new and stronger laws regulating financial institutions?

+++++++

Mitigating factors:
In 2006 "everyone" was long real estate; it was the height of the housing bubble so suckers to buy grouped mortgage derivatives were easy to find.
Such complex derivatives had only been around a few years and were not well understood by anyone--investors or regulators. They were not sold (or "cleared") on an exchange.
Financial transactions, on real estate or anything else, are always a gamble. It is only in retrospect now that the housing bubble has burst that a deal like this looks like it was set up for suckers and sharks.
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Bee-Gate: The Great Honeybee Conspiracy

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by Richard Crews
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In recent years we have heard dire tales of loss of honeybees. Beekeepers have found thousands and thousands of hives mysteriously deserted. This pandemic, called "colony collapse disorder," has been attributed to Varroa mites (or other infections), chemicals, genetic disorders, habitat degradation, or obscure combinations of these factors. In simplest terms, it seems that the bees' heretofore heroic capacity to adapt to the threats and encroachments of civilization have simply been overwhelmed.

In China, we hear, vast fruit crops now have to be pollinated by hand--by thousands of human workers going from blossom to blossom, tree to tree, orchard to orchard. In the U.S., commercial honeybee hives may have to be trucked hundreds of miles to fill in gaps of pollination coverage--and fields and orchards are often reduced to half or less of their usual yield. Moreover, many honeybees trucked across country, die in the effort and never return home.

Claims have been made that bees pollinate a large fraction of our food; that pollination capacity is declining worldwide; and that the decline and impending demise of honeybees may be catastrophic for human food production--it may threaten the very survival of the human race.

But it turns out that, as Mark Twain said, "Reports of my death have been greatly exaggerated."

Bees do not pollinate many important food crops. Moreover, many staple foods such as grains can self-pollinate or be pollinated by the wind. In fact, if there were no bees at all, the decline in global agricultural production would be about 4 to 6%.

But are bees even declining? Even in Europe and the U.S. where the most dire specific reports have been generated, the decline in local bees has been more than compensated for by increases in foreign bee populations. And in Asia, Africa, and Latin America bee-pollination has been pretty much business as usual. In fact, the average yield of bee-pollinated crops has been steadily increasing throughout the world for decades.

Clearly we gullible greens have been victims of an insidious, deceptive bee-gate conspiracy.

I am tempted to attribute this to the Republican Party, but I can't figure out how.

+++++++

See: http://www.newscientist.com/article/mg20427316.800
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Wall Street Regulation Then and Now

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by Richard Crews
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There are two fundamental functions of financial institutions such as banks. The first is allocation of capital. An example of this is a bank's receiving deposits from many customers, and making loans of batches of this money to businesses that want to buy inventory or equipment, or to new homeowners purchasing a property. Other examples are financial institutions that create stocks and bonds thereby, in effect, pooling the money of investors who buy those stocks and bonds so that businesses have working capital.

The second fundamental function of financial institutions is to safeguard wealth. Depositing ones savings in a bank or buying stocks and bonds is a lot safer than buying extra chickens, storing up grain from a good harvest in sacks in the basement, stuffing dollar bills under a mattress, or burying gold coins in the back yard. Someone who uses such traditional safeguards can become the victim of fire, theft, or bad weather.

For several decades prior to 2008 financial institutions, large and small, operated more and more without substantial government supervision. This was called "deregulation." The belief was that financial managers would act responsibly and ethically.

But financial managers are human beings. Some gave in to the greed, short-sightedness, laziness, and deceitfulness that often afflicts our species. And the ones who took such self-serving shortcuts artfully, made more money than the others, so more and more followed suit. They used excessive leverage (essentially claiming they had more money than they did--much more--as much as 30 or 35 times more); they made loans to people they knew could not pay them back; they bribed bond-rating companies which were supposed to assess and assure the true value of bonds; but most of all they invented derivatives so that they could sell stocks back and forth to one another at ever increasing prices.

The result was, for example, millions of bad home loans, bundled to hide their weakness and sold to distant investors, and a vast network of complex, back-scratching insurance deals (totaling several tens of trillions of dollars) supposedly guaranteeing these, but in reality far in excess of any company's ability to pay.

When the housing bubble burst--that is, when a homeowner could no longer sell or refinance a home for several percent more every year--the whole phony stack of cards came tumbling down.

The obvious remedy to prevent this happening again is new, stronger laws and watchdogs (regulators).

The trouble is that financial institutions used the rebound from the financial debacle they had caused to get rich and powerful again--to start paying themselves multi-million dollar bonuses again; to start pouring multi-millions of dollars into lobbying and political campaigns again.

A year ago financial managers stood amidst the wreckage of their industry humbly pleading for help. Now they stand atop a mountain of profits again, arrogantly and artfully demanding that Congress do nothing to impede their games.
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A 3x5 Essay about the 3x5 Essay

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by Richard Crews
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+++++++

[First paragraph]

I-1. [Sentence of general introduction] An expository essay is a form of writing that presents information about a topic or explains a point of view.

I-2. [Key idea number one] An expository essay can be organized many different ways.

I-3. [Key idea number two] One way of organizing an expository essay is according to a "three-by-five" (3x5) format, so called because there are five paragraphs which are designed to cover three ideas or sub-topics.

I-4. [Key idea number three] Whatever form an expository essay takes, it should be written in interesting and accurate prose that conducts the reader comfortably toward the desired conclusion.

I-5. [Transition to the next paragraph] Before examining closely the 3x5 essay structure, let's consider the range of structures or organizations that expository essays can have.

+++++++

[Second paragraph]

II-1. [Sentence introducing first key idea] There are several possible essay structures that come readily to mind.

II-2. [Discussion of first key idea] The material might be presented historically with the earliest observations or foundation first followed by the developments year-by-year.

II-3. Or, depending on the topic, one might present the simplest, most basic, underlying concepts first and gradually progress to more and more complex ideas derived from these.

II-4. One interesting format is to present a leading question first and then answer it, or present a counter argument or negative position first, and then refute it.

II-5. [Sentence for transition to second key idea] However, the 3x5 form can be used for almost any topic.

+++++++

[Third paragraph]

III-1. [Sentence introducing second key idea] A 3x5 essay has five paragraphs, each of which has five sentences.

III-2. [Developing the second key idea] The first sentence of the first paragraph is a general introduction; the second, third, and fourth sentences of the first paragraph each introduce one of the three key ideas; then the fifth sentence of the first paragraph summarizes the first paragraph and makes a transition to the second paragraph.

III-3. The second, third, and fourth paragraphs each have five sentences; each paragraph has an introductory sentence, three development sentences, and a concluding sentence--each of these paragraphs is devoted to one of the three key ideas of the essay.

III-4. Finally, the fifth paragraph has five sentences that are used to introduce the conclusion, summarize each of the three key ideas, and draw a general conclusion for the essay.

III-5. [Sentence for transition to third key idea] Within this tight, formal structure, the writer must use great care, but also wit and imagination to create interesting prose.

+++++++

[Fourth paragraph]

IV-1. [Introducing third key idea] There are several general ideas to keep in mind in order to produce prose that is clear and accurate but also attractive.

IV-2. [Developing third key idea] First and foremost the author should be sure to have the facts straight and to present and explain them as simply and clearly as possible.

IV-3. In line with this, the author should be sure that words are used accurately and that grammar and punctuation are used correctly.

IV-4. To be sure, the author should try to work in explanatory metaphors--perhaps even poetic imagery--and be witty and charming, which keeps the writing interesting; but this is always in the service of expository accuracy and clarity.

IV-5. [Sentence providing summary and transition to last paragraph] An essay which is mainly meant to explain or inform should also be written to please the senses and entertain the mind.

+++++++

[Fifth paragraph]

V-1. [Sentence introducing the last paragraph] Expository writing may at first seem drab and dry but if done well, it can be both useful and interesting.

V-2. [Summary of key idea number one] The organizational format may be 3x5 or historical or one of many other possibilities.

V-3. [Summary of key idea number two] If the 3x5 format is chosen, it is very rigorous indeed.

V-4. [Summary of key idea number three] Whatever organizing format is used, the prose should be accurate and interesting.

V-5. [Sentence with overall, final conclusion] Writing an expository essay can indeed be a challenging and also useful endeavor.

+++++++
+++++++

Here is the same essay without the distractions and interruptions.

+++++++

A Three-by-Five Essay about the Three-by-Five Essay

An expository essay is a form of writing that presents information about a topic or explains a point of view. An expository essay can be organized many different ways. One way of organizing an expository essay is according to a "three-by-five" (3x5) format, so called because there are five paragraphs which are designed to cover three ideas or sub-topics. Whatever form an expository essay takes, it should be written in interesting and accurate prose that conducts the reader comfortably toward the desired conclusion. Before examining closely the 3x5 essay structure, let's consider the range of structures or organizations that expository essays can have.

There are several possible essay structures that come readily to mind. The material might be presented historically with the earliest observations or foundation first followed by the developments year-by-year. Or, depending on the topic, one might present the simplest, most basic, underlying concepts first and gradually progress to more and more complex ideas derived from these. One interesting format is to present a leading question first and then answer it, or present a counter argument or negative position first, and then refute it. However, the 3x5 form can be used for almost any topic.

A 3x5 essay has five paragraphs, each of which has five sentences. The first sentence of the first paragraph is a general introduction; the second, third, and fourth sentences of the first paragraph each introduce one of the three key ideas; then the fifth sentence of the first paragraph summarizes the first paragraph and makes a transition to the second paragraph. The second, third, and fourth paragraphs each have five sentences; each paragraph has an introductory sentence, three development sentences, and a concluding sentence--each of these paragraphs is devoted to one of the three key ideas of the essay. Finally, the fifth paragraph has five sentences that are used to introduce the conclusion, summarize each of the three key ideas, and draw a general conclusion for the essay. Within this tight, formal structure, the writer must use great care but also wit and imagination to create interesting prose.

There are several general ideas to keep in mind in order to produce prose that is clear and accurate but also attractive. First and foremost the author should be sure to have the facts straight and to present and explain them as simply and clearly as possible. In line with this, the author should be sure that words are used accurately and that grammar and punctuation are used correctly. To be sure, the author should try to work in explanatory metaphors--perhaps even poetic imagery--and be witty and charming, which keeps the writing interesting; but this is always in the service of expository accuracy and clarity. An essay which is mainly meant to explain or inform should also be written to please the senses and entertain the mind.

Expository writing may at first seem drab and dry but if done well, it can be both useful and interesting. The organizational format may be 3x5 or historical or one of many other possibilities. If the 3x5 format is chosen, it is very rigorous indeed. Whatever organizing format is used, the prose should be accurate and interesting. Writing an expository essay can indeed be a challenging and also useful endeavor.
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Three Supreme Court Nominees

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by Richard Crews
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There are three strong candidates to fill the vacancy on the U.S. Supreme Court that will open up with Justice Stevens' retirement in the next few weeks. These three make up Obama's "short list." All three are brilliant intellectuals with stellar legal and judicial careers.

The most likely nominee is Elena Kagen (49 years old*). She is presently the U.S. Solicitor General having been confirmed by the Senate only last year. She got an AB (summa cum laude) from Princeton, then a B.C.L. from Oxford, and her J.D. (magna cum laude) from Harvard Law. She served as professor of Law at the University of Chicago, and as dean of Harvard Law School (in fact, interestingly, she was appointed by Larry Summers when he was president of Harvard). She has limited judicial experience--she has never served as a judge and had never argued a case in court before becoming Solicitor General last year. On the liberal side, she is known as a supporter of gay rights, but also has favored the extension of "battlefield law" (including indefinite detention) beyond traditional battlefields.

It is particularly significant that Elena Kagen is eminently confirmable in the present, very hostile Senate political environment since she is not seen as a "flaming liberal" and went through a Senate confirmation process (including receiving Republican votes) just a year ago.

The most acceptable of the three to the hostile Republican minority in the Senate (where a simple majority will be required for confirmation, but the process can be stalled by filibuster) is Merrick Garland (58 years old*). He is currently a Federal Judge in Washington D.C. He earned a B.A .(summa cum laude) in Social Studies from Harvard University, and then his law degree (magna cum laude) also from Harvard. He is seen as a "judicial moderate."

The most liberal (and therefore least confirmable) of the three is Diane Wood (59 years old*). She has been a Federal Judge since 1996, and was previously a professor at the University of Chicago Law School. She earned a B.A. in three years from the University of Texas at Austin, graduating with "highest honors." She then went to the University of Texas School of Law where she was editor of the Texas Law Review and earned her J.D., graduating at the top of her class with "high honors."

Whoever Obama's nominee is, the person will clearly be a stellar candidate--well qualified intellectually and with substantial legal experience. Nevertheless, the Senate Republicans have promised a "whale of a fight." They will presumably continue their obstructionist agenda, so this confirmation should provide fascinating theater even though a despicable and embarrassing display of "democracy in action."

+++++++

* On the question of age, Brookings Institute wrote--"What about the nominee’s age? Although President Nixon’s first three appointees were over 60 at the time of nomination, from Justice Rehnquist to Sotomayor, only Justice Ginsburg was over 59 and the average age of the three most recent appointees was 53 at nomination. The desire to appoint justices likely to be around for a while may eliminate Wood (who will turn 60 in July) or even Garland (now 57), and favor Kagan (who turns 50 later this month)."
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The New Face of Obamania

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by Richard Crews
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As we saw Obama ascend to power, we were struck with two different sorts of observations. One was--here was an intelligent and thoughtful man, well informed and civil in debate, technologically up to the minute in communication and fund-raising know-how, and consummately skillful in political, organizational, and other administrative matters. The other was--here was someone (call him a "liberal" or "centrist," a "pragmatist" or "non-ideologue") who largely agrees with me--on the environment, education, science, international diplomacy, even on fiscal responsibility and wealth redistribution.

As we awoke from the dream, contradictions (or disparities) between these two views emerged. On the one hand, he got rid of torture, secret prisons, and secret wiretaps; but, on the other, he seemed to delay closing Guantanamo and getting out of Iraq and Afghanistan, and to resist condemning U.S. "war criminals" of the prior administration. Fiscally, he seemed willing to bankrupt the federal government to rescue the economy. And now he is expanding nuclear power and offshore drilling despite the ecological dangers.

What is a "thoughtful" citizen to do when we elect an able man to be president, and then--darned if he doesn't disagree with us?

My view is that the first array of observations (that he is an intelligent and thoughtful man) must take precedence over the second (that he largely agrees with me). The actual, effective functioning of the presidency is an arduous and complex matter. It depends on integrating data and expert opinions on many matters--financial, ecological, political, etc.--far beyond my meager resources and abilities, and turning these into an overall, high-principled strategy and a workable set of tactics.

In my view, we must commit ourselves--while maintaining skeptical oversight--to the general notion that Obama has high principles and excellent smarts, and knows what he is doing.
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