29 May 2011

Sigmund Freud: A Quote for the Day

"If we admit for the moment that the rule of Pharaoh's empire was the external reason for the appearance of the monotheistic idea, we see that this idea, uprooted from its soil and transplanted to another people -- after a long latency period takes hold of this people, is treasured by them as their most precious possession and for its part keeps this people alive by bestowing on them the pride of being the chosen people."

-- Moses and Monotheism

Reading Freud's book has led me to think about his sources. As intellectually ambitious as he was, Freud wasn't going to create a new theory of Biblical scholarship working from scratch. He leaned on recognized authorities in the srea. One of these was Ernst Sellin.

Grapple with Sellin as a figure in the history of biblical scholarship? A task for another day, at least for me.

28 May 2011

Laws of Nature

I'm not as comfortable as are some with the phrase "laws of nature."

One way of framing the issue of "physicalism" versus various non-physicalist or dualist views of the world is to ask whether humans or something about human nature constitutes an exception to the laws of nature. If the ansawer is "no" then (runs this line of thought) you are a physicalist.

Not so fast! I have to say. The phrase "laws of nature" implies something ironclad, and this biases whatever constitutes the "physicalism" thus defined. For all we know, though, every 'law of nature' may be probabilistic. That almost certainly is the case with the second law of thermodynamics, for example. The reason heat disperses is that there are lots and lots of molecules moving about and the law of "large numbers" applies. If there is a small group of fast-moving molecules that start off as a tight knot (a hot spot, in macro terms) and a surrounding group of slower-moving molecules, (cooler surroundings) then the fast ones will disperse into the slower ones, even though some specific fast-moving molecules will be moving toward one another some of the time. At a macro level, that won't matter.

I'm out of my debt there and shouldn't go any further, but the bottom line is that the famous 2d law is a statement of probability, which at the macro level looks like an inevitability.

Suppose every law of nature, even gravity, turns out to be probabilistic. This means that we will be in a position to accept something like ideas of free will as applied to human nature without making of the human mind an "empire inside the empire." This line of thought, as you can see, points us toward Penrose, quantum computing, etc.

27 May 2011


Lead tablets discovered in a remote cave in Jordan, that may have a bearing on our understanding of the life of Jesus, have been making rather a big splash in some of the European papers, but seem not to be making the rounds in the US yet.

Fortunately, there's this internet thingy, which turns all the world into a single news stand.

The Daily Mail on March 21 had this.

The BBC called in an expert of its own choice.
Yet of course, as The Sunday Times warns us it is important to be skeptical about large claims. Such matters are so tempting for fraudsters.

26 May 2011

Novastar Financial

Anybody remember Novastar? It was big news in 2004, and then again in 2007.

It was a subprime lender that used a controversial accounting system called gain-on- sale, a system that was a red flag for short seller attention.

Novastar Financial was an enthusiastic participant in the housing/mortgage bubble of a time that already seems long ago. Gretchen Morgenson and Joshua Rosner have rescued Novastar from oblivion in their new book, RECKLESS ENDANGERMENT.

Here is a link to an excerpt from that book.

In 2004, at a time when the company's stock was worth $70, the Wall Street Journal printed a very well-written analytical story questioning the basis for its whole business model, which was offering high-risk loans to people with a poor credit record. Put so baldly as that, it seems obviously wrong. But somehow, at the time, that had to be said -- and the WSJ was sharply criticized for saying it.

The company took a stock price hit after the WSJ story came out, but for the most part continued along nicely (the "rising tide" of that era lifting all boats, including the least seaworthy) until February 2007, when it announced in its fourth quarter 2006 results a loss of $14.4 million, which was $0.39 a share. The general expectation had been a gain for the quarter of $0.73 a share. I'll do the arithmetic for you -- that's a difference of $1.12 a share, a heck of a failure to 'meet the number.'

Failing to meet the number by itself is not necessarily fatal. But in this case the attendent circumstances so perfectly confirmed what the shorts had been saying for three years -- that it had been meeting its numbers until then only by trickery which could not be sustained indefinitely -- that the end came very quickly.

During the period 2004-07, Novastar had a persistent message-board cheerleader who called himself sometimes Bob O'Brien, sometimes Easter Bunny. On a couple of occasions Bob the Bunny posted a list of the "most common basher myths," for example the "myth" that NovaStar was paying out in dividends more than it was earning, which was not sustainable. That "myth," like several of the others, happened to be true, but the Easter Bunny (who really is a myth -- oh nomenclatural irony, where is thy sting!) explained how to "debunk" it with various evasions about GAPP versus the IRS etc.

In February 2007, when Novastar made that disastrous fourth quarter disclosure, O'Brien finally saw the light. "I've been duped!" he cried! Not so much as a matter of expressing regret for the role he had played in duping others ... more a matter of ... what would you call it? ... whining.

He wrote this: "I have been body-slammed by this. Many of my friends are devastated by this. Some of my relatives, too. Personally, you bet. Very expensive lesson: Don't bet more than you can afford to lose. And don't bluff. I will not be buying anymore stocks in the U.S. markets, that's for sure. I'm quite done now. This casino has lost its allure."

Thus the grave has its victory. A story worth remembering.

22 May 2011

Evolution From Space

I'm finally in possession of a copy of a book I've only heard about and read second-hand reports of until now. It is EVOLUTION FROM SPACE by Fred Hoyle and N.C. Wickramasinghe, published in 1981.

The late Fred Hoyle was of course a very prominent astronomer and astrophysicist, once the leading proponent of the steady-state theory of the cosmos, and renowned for his work on the evolution of stars.

Wickramasinghe is professor of applied mathematics and astronomy at Cardiff University.

Today, they spin out their theory of panspermia. It is a theory not only of the origins of life on earth, but in their hands (as the book's title implies) a theory of how life has developed since. For the arrival of new genetic material from the stars was not, for them, as it was for other advocates of panspermia, a one time event.

Let's take fairly recent history -- in terms of geological or biological time. Let us consider especially the span of time between the emergence of the first hominids and our own selves. Hoyle and Wickramasinghe quote a Japanese biologist, Susumu Ohno, thus:

"Did the genome of our cave-dwelling predecessor contain a set or sets of genes which enable modern man to compose music of infinite complexity and write novels with profound meaning? One is compelled to give an affirmative answer....It looks as though the early Homo was already provided with the intellectual potential which was in great excess of what was needed to cope with the environment of his time."

This seems to Hoyle et ux to mean that Ohno has given up on Darwinism. If the cave dwellers already had the capacity to compose like Bach, without an environment that would get them any natural advantage out of composing like Bach, or having that capacity, then ... something other than natural selection was clearly at work.

If new genetic material repeatedly rains down on the earth from space, and if it must be absorbed somehow, then it is easier (these authors think) to see how human develpment could get ahead of the environment to this degree.

At least ... I think that is what they are saying. I have only just dipped into the book.

21 May 2011

Calculus, Certainty, and Monarchism

The Intermediate Value Theorem, an important part of differential calculus, (I would even say an "integral" part, were that not a groaner of a pun) was first clearly stated in a textbook written by an iconoclastic royalist Frenchman, Augustin-Louis Cauchy in 1821.

That intrigues me for a couple of reasons. One, those of us who are pikers in calculus tend to infer from what little we're heard of its history that Newton and Leibniz simultaneously created it fully blown. That what they created was tentative and only gradually developed into the body of work we have today -- that higher mathematics has an intruguing history with a lot of players -- is itself a bit counter-intuitive for some of us.

A more specific reason to think about Cauchy is ... Cauchy. He must have been a fascinating guy.

In Cauchy's own mind, it appears, his contributions to higher math melded with his own monarchical politics. In the introduction to his Cours d'Analyse. he wrote, "It would be a grave error to think that one only finds certainty in geometrical demonstrations, or in the testimony of the senses; and although no person until now has tried to prove by analysis the existence of Augustus or of Louis XIV, every sensible man will agree that this existence is as certain for him as the square of the hypotheneuse or Maclaurin's theorem."

Note that the example of an unquestionable human-world truth here is the existence of great monarchs, and that the renowned pillar of both Bourbon rule and Bourbon memories, Louis XIV, is one of only two of the monarchs named.

20 May 2011

Link Farming

Because there is no such thing as gluttony in re: food for thought.

1. Thomas de Quincey considered it a grave complaint against John Locke that he died a peaceful death at an advanced age.

2. The Onion has some fun with the reputation of Navy SEALs.

3. Here's some biology re: the other sort. How does one estimate their age?

4. Those wonderful Taiwanese animators are on the case of M. Strauss-Kahn.

5. $3,000 a night for the room? Who paid? Some thoughts on that subject.

6. Alas, it now appears there won't be a long protracted bidding war for control of the NYSE's parent corporation. Darn. Bidding wars are kind of fun for the spectators. (Okay, the wonky spectators.)

7. Philosophy. A kitchen table is a kind of "table." The tide table that helps you decide when you should go to the beach is also a kind of table. Does that mean kitchen tables and tide tables have something in common, the essence tableness? What about "being"? Discuss.

8. Rene Descartes' thoughts on the sort of subjects that we would
call physics, astronomy, geology....

9. And a biography of the fellow.

By the way, my bet is that the world won't end tomorrow, and nobody will be raptured.

19 May 2011

Bergson and Humor

I enjoyed the recent article in SLATE outlining five theories of humor, and why none explains the field. The point, apparently, is to introduce and justify a sixth theory, one based on evolutionary biology and advocated by Matthew Hurley at al.

But I do think author Nina Shen Rastogi misunderstood one of the five, specifically the "mechanical theory." In her account, this is the view of philosopher Henri Bergson, who "believed that it is inadaptability or rigidity -- the repetitive nature of our personalities -- that is the source of humor."

Rastogi thinks this is wrong, because many examples of rigidity aren't funny at all, and because puns aren't mechanical, but ARE funny. Her example of a non-mechanism witticism comes from Douglas Hofstadter, "Email is the happy medium between male and female."

Aside from the fact that the email pun doesn't quite manage to split my sides, Rastogi is off base here. Bergson's view was that humor arises from the juxtaposition of the vital and the mechanical, the living and the routine.

Consider slapstick physical comedy. A man slips on a banana peel. He starts wheeling his arms around to try to restore his balance. That's funny. Why? Because he began the scene as a human being, a vital purposive creature, and ended it as a system of off-balance levers.

Puns are another example of Bergson's point (not a counter-example)! After all, what is more vital than language? What more mechanical than the classification of words by their mere sound, regardless of their actual meaning?

15 May 2011

P/ NP Issue

I wrote about the mathematics of cryptography here in August 2010.

There's a critical and apparently still open issue called the P/NP problem.

I've since learned something else intriguing. This problem may involve the question of whether there is a mathematically provable distinction between time and space.

Walter Savitch, a long-time professor at the University of California, San Diego. Savitch's theorem demonstrates that there is an algorithm for determining whether there is a path between two vertices in a directed graph.

Dexter Kozen, in a book called The Theory of Computation, notes that this has a bearing upon, although it is not identical to, "the most important open question
in theoretical computer science," the question of whether P = NP.

For example, if you define "P" as a set including all easily-solved problems, and "NP" as the set of all problems that can be easily recognized as accurately solved once somebody else has done so, then it seems intuitively obvious that "P" and "NP" are not the same set. If they were the same set, it would be a troubling fact for computer scientists, because it would mean that everything is (in principle) hackable.

Savitch's theorem says that the spatial equivalents of P and NP are equal. The distinction, if any, involves the passage of time.

14 May 2011

Bravo, Ron Paul!

This is great. Give 'em hell Paul.

I'll say nothing further.

13 May 2011

Microsoft buying Skype

The price tag seems high to me. $8.5 billion? with a "b"? for a money-losing service?

MS' problem, I suspect, is simply that its core business, involving Windows and the Office Suite, is sooo ... 20th century. The folks in the corporate suites over there must feel at times like they're trying to sell manual typewriters.

So they're reaching out, not just for peripheral activities, but in hopes of defining for themselves a new core.

In this case, they had to grab for it before Google got it. I understand, dudes. Really.

But $8.5 billion? Carl Sagan money. "buh-illions."

Here's Reuters from Tuesday morning.

And here are a few pertinent words from Felix Salmosn.

Note that the commenter on Salmon's blog entry makes a case that Skype wouldn't have made a good match for Google. Could Google simply have head-faked MS into a money-losing deal neither of them really wanted?

12 May 2011

History of AIG

AIG is in the news again: The US government wants to sell the interest it acquired in this giant insurance company upon bailing it out in the horrid autumn of 2008. After a period of braggadocio about how the spin-off was going to net enough money to make the taxpayers whole -- in fact, to make us taxed folk net gainers on the deal -- everybody involved seems to have realized that this is not the case after all.

Here is what Forbes has to say. And here is a few words from Reuters.

'Lest we forget, AIG came to a bad end in its previous incarnation largely due to the Financial Products unit (AIG FP), which was taking the long side of mortgage derivatives long after more savvy folkk had grown wary of it. Here are a few words from Roddy Boyd's recent book on the subject, FATAL RISK.

This represent's Greenberg's thinking on the subject of FP as of the autumn of 2001:

"Nor is it a stretch to imagine Greenberg thinking that as long as he had a smart, hardworking sort in that slot who respected him and the AIG legacy well, that was all you needed. There developed a widespread perception that managing FP was very similar to being in charge of an elite military unit: with a clearly defined mission and parameters, close supervision from an experienced member of the ranks and enough operating latitude, positive results were nearly assured. There had, after all, been almost a decade since any material FP screw up."

08 May 2011

Sovereign Bank in Springfield, Mass.

On first stepping in to the lobby of the Sovereign Bank building in downtown Springfield, Mass., you see what appear to be reproductions of some very well-known paintings.

Among those represented are: Botticelli's "Birth of Venus," Magritte's "Son of Man," Vermeer's "The Milkmaid," and so forth.

You'll see a photographic representation of the Magritte with this post. You can see photos of the Botticelli and Vermeer works by following those links.

But the paintings in the lobby of Sovereign Bank, it turns out, aren't reproductions, as you'll see if you look more closely. These are 1:1 scale copies, made by college students (non-art majors).

The result is fascinating -- I wish I had had photo reproductions of the originals with me while I was looking them over last weekend. As it was, I could sense but not really study the differences.

Each of the examples involves one or more human figures -- I suspect anything abstract could be construed as 'cheating.' And in these human figures (with the notable exception of the Magritte, which famously involves a green apple where the face should be) require the portrayal of a human face. And there's the rub, for the copyists.

As Cicily observed to me, none of the faces looked quite right. It is as if this is the crucial distinction between a master and even a good copyist.

We weren't there to see this, but to watch Josh Oliveira paint live. For a photo of the result go here.

With all due respect to Oliveira, I think the lobby copies could be transformed with some proper curatorial attention into a wonderful exhibit. As it is, too much is left unexplained by the scarce explanatory material about. Did the students chose which painting they were going to copy, for example, or did they pull the assignment of a hat?

If the latter, I hope the hat involved was a bowler!

07 May 2011


The crisis of 2007-08 was a typical central-bank-induced boom and bust, an illustration of the maxim that central banking is the disease that it affects to cure.

[Rewrite all of this a bit stylistically].

When a bubble bursts disastrously, the critical question is not why it burst – it burst because it was a bubble! – But how it could have been blown up into the dimensions that made its bursting so dire an event. The answer to that is here, as it is often, some version of the “greater fool” theory.

Sooner or later the greatest available fools will be the ones already in possession, and then the situation proves unsustainable, and unfortunate -- not just for them, but for a variety of counter-parties who have come to depend upon those who turned out to be the greatest fools.

Listen to the cheerleader moral support that the greatest fools were getting as late in the process as December 2007. "There is no recession. Despite all the doom and gloom from the economic pessimistas, the resilient U.S economy continues moving ahead—quarter after quarter, year after year—defying dire forecasts and delivering positive growth. In fact, we are about to enter the seventh consecutive year of the Bush boom."

So said Larry Kudlow, cable TV economics maven. It's important not to let these blowhards go utterly uncorrected as the realities they denied smack us in the face. Its important because otherwise naive folk might think Kudlow is saying something of significance the next time he bloviates.

So let the record show: a boom is the necessary preface to a bust. Bubbles can't burst until they've been blown. The "Bush boom" for which Kudlow was still cheerleading even as it disappeared, like the Clinton boom before it, was a central-bank promoted drinking binge, necessitating an awful hangover.

And geniuses like Kudlow are the alcoholics at the party who are always saying, "I've only had two or three."

That's how an alcoholic counts, by the way.

One, two, three, four, two-or-three, two-or-three, two-or-three.

This is the dynamic that Greenspan enabled and even encouraged through monetary policy. Especially after the 1998 LTCM crisis, investors had the impression that the Fed would act as the greatest fool, and rescue any large institution in trouble as necessary.

Blaming, and cracking down on, leverage or speculation on this basis is rather like responding to an outbreak of rickets by cracking down on Vitamin D peddlers.

The way forward begins with the repealof the legal tender laws. [Explain.]

06 May 2011


Notes toward what will become my chapter 16.

1. speculative bubble in crude oil
a. spring and early summer -- Masters' testimony
b. late summer and fall -- why the bust?
c. what policy consequences?
2. history of ethanol subsidies
a. broad coalition forms by 2010
b. Grover Norquist
3. peak oil? plateau oil? abiogenic oil?
4. realities and fantasies

Back to 1a above.

There was a bubble in crude oil prices in the summer of 2008. Some observers thought this may have tipped the US into the financial crisis of that autumn. Let's discuss this.

One school of thought in May 2008 (expressed by witnesses in hearings that month before the Senate Committee on Homeland Security and Governmental Affairs) was thgat institutional investors and commodity-price indexes had just recently become important factors in the determination of commodity prices, including those for food and fuels.

The chain of cause and effect would then be this. Various Wall Street entities such as Dow Jones, Goldman Sachs, Standard & Poors, created innovative commodity futures indexes. This allowed people or institutions to bet on an increase in commodity prices without actually having to buy something specific like cotton, or to trade even in specific derivatives such as cotton futures. No, the "index speculators" preferred to bet on the whole asset class at once, seeing it as "uncorrelated" with either bonds or stocks, and thus as a valuable addition to the portfolio.

As Michael W. Master, managing member of a long/short hedge fund, told the Homeland Security Committee, what was new about the index speculators was that they weren't concerned with traditional notions such as price per unit. They had made a portfolio allocation decision, and would "buy as many futures contracts as they need[ed], at whatever price [was] necessary," until all of the portion of their money that they had allocated to the commodities asset class was at work there. Thus, this was a form of demand separate from physical or commercial demand/supply calculations.

On January 2007 the Commodity Futures Tradings Commission changed the way it broke down its "commitment of trader" numbers, creating a new category for the newly-prominent index funds.

It is possible, then, that the sharp rise in certain prices beginning that spring owed something to the new indexes and to the rise of a new class of index speculator.

It is also possible, and I suspect probable, that the sharp rise combined a small effect from the rise of index speculators and a larger rise from old-fashioned directional speculators who thought that the index speculators would be a huge factor and who wanted to be on the same side as them.

But ... what about the sudden decline?

05 May 2011

More on Marc Hauser

In September I wrote about Marc Hauser director of the Behavior Program at Harvard University, now on leave.

As I noted, Hauser acquired some renown for experiments on the cognition of primates, especially cotton-top tamerin. His experiments were thought to contribute to evolutionary psycholigy, i.e. to an understanding of the biological roots of our behavior as humans. His results, though, are now regarded as presumptively tainted, due to "evidence of scientific misconduct" in connection with some of his reported data.

So ... what is new? One of his controversial results has been rehabilitated -- has been, if you will, cleansed of that taint. This is big news, now just for those other primates but for human beings, and for the study of psychology as a natural science.

Justin N. Wood was the first named author, and Hauser the second, on the original paper, published in September 2007.

It found that certain non-human primates can distinguish intentional gestures by human beings from merely accidental or random movements.

This rather confirms my view, expressed last week, that the most humanly important fact taught to laypeople in general by scientific work on evolution is that we are path dependent beings. Who we are depends upon our history. For a discussion of the notion of path dependence in the social sciences go here.

01 May 2011

Home Ownership

Some thoughts toward what will become chapter 15.

The Republican Party contains within it elements that do understand what happened in 2007-08. I speak especially of those who reacted enthusiastically to Ron Paul's rather quixotic primary campaign that year. They understood what was happening as it was happening. They understood that the Federal Reserve cherapened credit in order to rescue the U.S. from the relatively mild recession of 2000-2002 and that the lending supported by that cheapening was bound to put money into the hands of people who didn't know what to do with it. That is always what such a cheapening does.

The party is what explains the hangover.

Though Paul's supporters deserve the credit for insight here, they were and remain outsiders.

The orthodox view the Republican Party seems to have developed is different, it is one that routinely overstates the role of the government sponsored entities (GSEs) in the housing boom and bust of 2007-08. Yes, the GSEs did play a role, but they were never the force driving events, and the efforts to Republicans -- those more sentral to the party hierarchy tnan Paul's small faction -- to make them seem so have come across as an ignoble quest to blame the powerless.

Came December 2010, this view had hardened into dogma, championed by Peter Wallison, a member of the Financial Crisis Inquiry Commission, the bipartisan panel that was supposed to issue a report soon explaining what did happen in 2007-08 and why. Wallison explains blows with Joe Nocera in a way that exposed his (Wallison's) own vacuity, and the continued special-pleading of his party.

Joe Nocera co-wrote, with Bethany McLean, a fine book presenting their own wel-researched take on the crisis, "All the Devils are Here." The title is a reference to Shakespeare's "The Tempest," and Nocera/McLean use it to suggest that the crisis had a lot of causes, plenty of "devils." The government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, play a role in their story, but only a supporting role. They were not leading the devilish pack, as Wallison would have preferred.

Well before Wednesday, December 15, 2010, reports were in circulation that the FCIC, under the chairmaship of Phil Angelides, a Democrat and the former state treasurer of California, harbored tensions that would make a single unified report impossible.

On that Wednesday, the Republicans on the committee, under Wallison's leadership, put out a statement of their own view of what had happened three and two years before. This was, so to speak, a dissenting opinion timed so as to precede the commission's report proper: saying "we disagree" before there was anything on the table whence to dissent.

Their view was this: "The GSE's easily met the affordable housing goals during the 1990s, but these goals were incrementally increased as part of a new housing policy agenda that began during the mid-1990s under President Bill Clinton and continued throiugh the 2000s under President George W. Bush....trying to get something for nothing -- to subsidize homeownership without increasing the budget deficit -- was a recipe for a crisis."

It was, they meant to say, the recipe for this crisis.

Nocera wrote in his column on December 17 that, as any reader of the Nocera/McLean book would have understood, he agreed that "Fannie and Freddie need fixing." In the two years and three months since the worst of the crisis they had "cost the taxpayer around $150 billion in losses, far more than, say, the American International Group."

Nocera also believed, though, that excessive focus on the GSE was a way to "tread lightly over the culpability of other nongovernmental culprits like the credit ratings agencies and Wall Street itself."

The exchange gets more intriguing....

Knowledge is warranted belief -- it is the body of belief that we build up because, while living in this world, we've developed good reasons for believing it. What we know, then, is what works -- and it is, necessarily, what has worked for us, each of us individually, as a first approximation. For my other blog, on the struggles for control in the corporate suites, see www.proxypartisans.blogspot.com.