Joe Nocera says that your blood should boil

More than even Citi or Merrill, A.I.G. is ground zero for the practices that led the financial system to ruin...Other firms used many of the same shady techniques as A.I.G., but none did them on such a broad scale and with such utter recklessness. And yet — and this is the part that should make your blood boil — the company is being kept alive precisely because it behaved so badly.

Joe Nocera explains this very lucidly in his NYT column.

The story is that A.I.G. traded on its reputation of being a well-run company, with an rare AAA credit rating, to convert all kinds of junk into AAA by backing it.

Jumping to the middle of the story:

The regulatory arbitrage was even seamier. A huge part of the company’s credit-default swap business was devised, quite simply, to allow banks to make their balance sheets look safer than they really were. Under a misguided set of international rules that took hold toward the end of the 1990s, banks were allowed use their own internal risk measurements to set their capital requirements. The less risky the assets, obviously, the lower the regulatory capital requirement.

How did banks get their risk measures low? It certainly wasn’t by owning less risky assets. Instead, they simply bought A.I.G.’s credit-default swaps. The swaps meant that the risk of loss was transferred to A.I.G., and the collateral triggers made the bank portfolios look absolutely risk-free. Which meant minimal capital requirements, which the banks all wanted so they could increase their leverage and buy yet more “risk-free” assets. This practice became especially rampant in Europe. That lack of capital is one of the reasons the European banks have been in such trouble since the crisis began.

•

At its peak, the A.I.G. credit-default business had a “notional value” of $450 billion, and as recently as September, it was still over $300 billion. (Notional value is the amount A.I.G. would owe if every one of its bets went to zero.) And unlike most Wall Street firms, it didn’t hedge its credit-default swaps; it bore the risk, which is what insurance companies do.

It’s not as if this was some Enron-esque secret, either. Everybody knew the capital requirements were being gamed, including the regulators. Indeed, A.I.G. openly labeled that part of the business as “regulatory capital.” That is how they, and their customers, thought of it.

There’s more, believe it or not. A.I.G. sold something called 2a-7 puts, which allowed money market funds to invest in risky bonds even though they are supposed to be holding only the safest commercial paper. How could they do this? A.I.G. agreed to buy back the bonds if they went bad. (Incredibly, the Securities and Exchange Commission went along with this.) A.I.G. had a securities lending program, in which it would lend securities to investors, like short-sellers, in return for cash collateral. What did it do with the money it received? Incredibly, it bought mortgage-backed securities. When the firms wanted their collateral back, it had sunk in value, thanks to A.I.G.’s foolish investment strategy. The practice has cost A.I.G. — oops, I mean American taxpayers — billions.

Here’s what is most infuriating: Here we are now, fully aware of how these scams worked. Yet for all practical purposes, the government has to keep them going. Indeed, that may be the single most important reason it can’t let A.I.G. fail. If the company defaulted, hundreds of billions of dollars’ worth of credit-default swaps would “blow up,” and all those European banks whose toxic assets are supposedly insured by A.I.G. would suddenly be sitting on immense losses. Their already shaky capital structures would be destroyed. A.I.G. helped create the illusion of regulatory capital with its swaps, and now the government has to actually back up those contracts with taxpayer money to keep the banks from collapsing. It would be funny if it weren’t so awful.

I asked Mr. Arvanitis, the former A.I.G. executive, if the company viewed what it had done during the bubble as a form of gaming the system. “Oh no,” he said, “they never thought of it as abuse. They thought of themselves as satisfying their customers.”

Yet another...

Yet another Sri Ganesh.


This lens has a reputation for being tricky. I hope that is not what I'm seeing (100% crop) - see the halo?



PS: I think that halo is bokeh. The Depth of Field is incredibly small. ImageBrowser screenshot showing the focus point below:

Truth-O-Meter

PolitiFact is tracking the status of each of Obama's 500 campaign promises.

Merry-Go-Round

The carousel in the Freehold Raceway Mall, supposedly one of half-a-dozen or seven of its kind.
Each is ISO 800, 16mm, f/5.6, 1/25 seconds. Full scale images are on flickr, showing lots of good detail,
or here, and here (warning - large!)

Beginner's guide to the Financial Crisis

Beginner's guide to the Financial Crisis—the best I've found so far.

California

The State of California is in bad shape financially, and is set to raise all kinds of taxes on regular people, to issue IOUs instead of tax refunds and the like. Amidst all this, the Republicans that run the state insist on a tax cut on corporations.

As digby points out:

Conservatism has been stripped of everything but its essence --- cheap thugishness. I honestly can't remember a time in the last 30 years when they weren't holding a gun to the states' head no matter what the economic climate. If times are good they have to cut taxes. If times are bad they have to cut taxes. It's no wonder that the regular folks decided they shouldn't have to pay taxes either.

I guess it puts the federal stimulus package in perspective. The reason the Republicans didn't vote for it was simply because it didn't include enough goodies for their corporate owners. In that sense, I guess it was a huge win for liberal principles.

Thrown for a curve

Remember Murray and Hernnstein and their book, The Bell Curve? Since obviously America is a pretty good meritocracy, and obviously IQ measures intelligence, IQ determines where Americans land up in life's race. It is just too bad that IQ is mostly inherited and that blacks have an IQ gap relative to whites. No program can ameliorate the natural inequality in society. So they said.

Well, here's some news.

A Los Angeles study suggested that four consecutive years of having a teacher from the top 25 percent of the pool would erase the black-white testing gap. — Nicholas Kristof in the NYT

PS: Remember then-Harvard President Lawrence Summers' speculations on whether biological differences between men and women resulted in women being at a disadvantage in mathematics, and that explained the relative absence of women in certain sciences? Well, funnily, it turns out that this so-called math gap doesn't exist in societies with high gender equality. See this.

The researchers also studied the percentage of students of each sex among the top scorers on the test. In the gender-equal countries, girls made up half or more of those who scored in the top one percent. The sex ratio of top performers is especially important because these students are the ones most likely to excel in careers in science and engineering. Summers had suggested that because of biological differences, it is nearly inevitable that a much higher percentage of these top performers will be boys.

A difference does persist - girls do better at arithmetic than geometry; boys do better at geometry.

My takeaway is that biological differences may be real; but we are currently no where near being able to attribute persistent inequality to those differences - cultural or environmental factors are currently much more important. The tendency of the conservative is to try to justify the status quo as both correct and immutable, at one time as God-given, and now as determined by genetics and biology.

Adventure of a Wedding Photographer

What a story! Murphy's law applied. Preparation and some luck carried the day.

PS: I don't think you have to register to read the story. If for some reason, it doesn't work, leave me a comment.

Acceptance of Evolution

Stolen from Andrew Sullivan:

Hunger in New Jersey

Food Banks need help!

Where's the Revolution

Billmon observes the resistance to caps on executive compensation at companies that are bailed out with federal funds, and employers trying to block former employees from receiving unemployment benefits, and wonders why no one sees the possibility of revolution.

Cablevision - Optonline - Outbound Mail Filtering?

Cablevision's customer support for Optonline says that they do not do outbound mail filtering. They certainly do inbound mail filtering to catch spam.

However, for the last week or so, my email from my Optonline address has not been delivered. So this morning I started experimenting between my (web-based) yahoo, gmail accounts and my optonline account both from my laptop and from Optonline's web-email interface.

I discovered that

1. Email, when delivered between the three services, is virtually instantaneous.
2. All outbound email from Optonline, whether from my laptop or from the web-email account, that contains my blog URL: http://arunsmusings.blogspot.com is not delivered (or, more accurately, as of writing has not been delivered).
3. All outbound email from Optonline, whether from my laptop or from the web-email account, that does NOT contain my blog URL, has been delivered.
4. Optonline does not deliver inbound email from Yahoo and Gmail if it contains my blog URL.
5. Optonline does deliver inbound email form Yahoo and Gmail if it does NOT contain my blog URL.
6. Between Yahoo and Gmail, all mail is delivered, both with and without my blog URL.

My email signature commonly has my blog URL.

Seems clear as fine camera lens glass to me that Optonline does outbound mail filtering, even though their service desk denies it.

Using their webmail demonstrates that software on my PC cannot be responsible.

The three questions are:

1. Why?

2. How did my blog URL get on their list? I do not send out email to anyone who is spiteful enough to put my blog URL on a spam list. BTW, I tested using another blogspot URL, and those emails were not blocked.

3. How does one even submit a URL or other text string to be blocked? I don't see how going through the optonline pages. However this is happening, I think a hacker has to be involved.

Slashdot has a thread from 2008 on outbound mail filtering. Cox Cable also does it, and a blocked URL is mentioned there.

I tried to send an email. The email only contained text. The text Cox objected to was "http://my_homebox_IP_number/"

PS: My best guess is that someone has put my URL on a internet gambling or child pornography list - those are the only reasons I can think of for blocking a URL in email.

On the Edge of the Abyss

Quoting from this dkos story

According to Rep. Paul Kanjorski (D) (PA-11), in mid-September of 2008, the United States of America came just three hours away from the collapse of the entire economy. In a span of 2 hours, $550 billion was drawn out of money market accounts in an electronic run on the banks.

Rep. Kanjorski: " I was there when the secretary and the chairman of the Federal Reserve came those days and talked to members of Congress about what was going on... Here's the facts. We don't even talk about these things.

On Thursday, at about 11 o'clock in the morning, the Federal Reserve noticed a tremendous drawdown of money market accounts in the United States to a tune of $550 billion being drawn out in a matter of an hour or two.

The Treasury opened up its window to help. They pumped $105 billion into the system and quickly realized that they could not stem the tide. We were having an electronic run on the banks.

They decided to close the operation, close down the money accounts, and announce a guarantee of $250,000 per account so there wouldn't be further panic and there. And that's what actually happened.

If they had not done that their estimation was that by two o'clock that afternoon, $5.5 trillion would have been drawn out of the money market system of the United States, would have collapsed the entire economy of the United States, and within 24 hours the world economy would have collapsed.

Now we talked at that time about what would have happened if that happened. It would have been the end of our economic system and our political system as we know it."

....

" Ya know, we're not any geniuses in economics or finances... We're representatives of people. We ought to take our time, but let the people know this is a very difficult struggle.

Somebody threw us into the middle of the Atlantic Ocean without a life raft and we're trying to determine what's the closest shore and whether there's any chance in the world to swim that far. We. Don't. Know."

Novel: The Messenger

The Messenger by Daniel Silva

Israeli Intelligence battles Saudi terrorists - one of these books will one day be a major motion picture. Reads well, and difficult to put down once started. As with all fiction, suspend belief when reading it and all will be well. For its genre, it rates four stars out of five.

Pace Andrew Sullivan

One of uniform features of blogs by conservatives is that comments are not allowed. You have to write to the author, and you never know whether they've read it, or simply discarded it into the bit bucket. Andrew Sullivan, at the Atlantic, often admired by leftie types, is no exception. His quote of Will Wilkinson, Cato Institute flack, therefore led to this response:

Will Wilkinson:

Government-subsidized borrowing gave us the housing bubble, precipitated financial Armageddon, helped prompt recession and mass unemployment. But, as the infomercials say, that's not all! By zealously pushing home-ownership, federal housing policy has pinned to the map many now-jobless Americans who otherwise would have moved to find new work.

------
I'm reading James Grant's book "Mr Market Miscalculates : The Bubble Years and Beyond". Grant is the editor of Grant's Interest Rate Observer. (http://www.grantspub.com/).

The book consists of essays written from 1999 to May 2008. Many essays touch on the residential mortgage and derived markets.

Grant writes about the "too-big-to-fail" syndrome, which he believes led investors to take greater risks than they would have otherwise, and the low interest rates promoted by the Federal Reserve; but nowhere does he write about government-subsidized lending as having contributed to this mess. (Where he stands philosophically - e.g., he writes that Glass-Steagal 1933 was misguided, and was happy at its demise).

Here is a quote from June 15, 2007, commenting on a speech by Kevin Warsh, a Federal Reserve Governor:

"Reading between Warsh's lines, it's apparent that the Federal Reserve carries a torch for the Efficient Markets Hypothesis. Are investors invariably cool and calculating? Are markets frictionless? Is information universally disseminated to all the lucid participants? Do they act on it? If you answer "yes" to these questions, you, too, may find the board of Governors of the Federal Reserve System a collegial place to work.

I will meet Warsh halfway. I will concede that markets are just as efficient as the people who operate in them. How efficient is that? Let us turn to mortgage finance to find out. Here is a living laboratory in complexity gone wrong. During the long upswing, lenders were happy to credit a highly counterintuitive proposition. They accepted that a clump of low-rated mortgages could be transformed into a highly rated security. Only very smart people could dream up such a wonderful idea. And only educated people could accept it (they are taught to respect great minds, no matter what cockamamie conclusion those minds arrive at). What was the source of this alchemy? The reordering of cash flows to assure continuous payments to the holders of the senior claims. Risk of nonpayment, such as it was, was borne by the holders of the mezzanine and equity tranches. They bore it willingly. The ratings agencies lent their imprimatur to the assumptions and calculations on which the projections were based.

Investors bought with confidence. It reassured them to know that the ratings agencies deployed default probability generator models featuring a Monte Carlo multi-step default probability apparatus -- whatever that was. Besides, the mortgage scientists and ratings agency quants believed that diversification was their shield and armor. A given residential mortgage-backed security would contain mortgages from every region of the country. The diversity of collateral delivered low correlation in credit performance; they could hardly all default at once. As for house prices, the mortgage scientists observed that they almost invariably went up. And all agreed that home ownership was an unalloyed social benefit.

And if the lenders, borrowers, ratings agency analysts, investment bankers, appraisers, etc., hadn't been human, the story might have a happy ending. But it won't, because people in markets neglected to judge the effects of their actions on others. Uniquely uninhibited underwriting practices pushed up house prices and thereby coaxed more borrowers to employ greater leverage. Not wanting to be left behind, lenders completed with one another to offer the easiest terms. Loans tumbled out of the origination mills into the securitization factories, emerging as ABS or CDOs, investment-grade for the most part and thereby suitable for widows, orphans and foreign central banks. Thankfully, too, there were hedge funds and proprietary trading desks to absorb the residual credit risk of the lower-rated tranches. Warsh paid tribute to these social benefactors in his talk the other day: "By serving as willing counterparties in a variety of contracts, these institutions, in my view, are serving as a critical linchpin in the development of more complete markets."

Interjection - where is the government subsidized-lending in the cycle described here? This is entirely a creation of the private sector.
______
'
A little later, Grant states:

"My bet is that, come the next bear market in credit, correlations will prove to be shockingly high across the full spectrum of debt instruments. It will turn out that everything ws correlated to credit itself -- to the ability to borrow on terms over which posterity will shake its head, muttering, "What were they thinking?"

----------
I know you're a conservative, and thus by habit must blame the government. But you also strive to see what's under your nose, and surely that trumps your ideology.

Grant has an essay from Nov 4, 2005, "In Kansas We Busted" which describes what happened in the Great Plains segment of the real estate market of 1886. "...the lesson of the Great Plains levitation is that, in order to create a really big asset-price bubble, a central bank is neither necessary nor sufficient. A critical mass of human beings is all that's required".

PS: A consistent theme in Grant's writing is that investors see what they want to see, which is not necessarily consistent with reality. The nature of large masses of people is, on occasion, to create bubbles. In this case, the housing bubble was contributed to by "lenders, borrowers, ratings agency analysts, investment bankers, appraisers, etc." and the effects of their actions on each other. It had nothing to do with government-subsidized lending.

Our Liberal Media - 2

(via dailykos)



---
National Public Radio, too!

In Reporting On White House Economic Stimulus Package, NPR Interviews Six GOP Congressmen For Every Democrat
Based on NPR’s own data, NPR demonstrated a preference for Republican members of Congress in its reporting on President Obama’s Economic Stimulus Package. A review of NPR’s “Morning Edition” and “All Things Considered” broadcast records for the month ending February 3, 2008 indicates in the 50 stories on the stimulus, NPR interviewed and quoted 12 GOP Congresspersons, while only quoting 2 Democrats.....When viewed in context - that NPR’s sole Washington news analyst is FOX News’ employee and O’Reilly Factor guest host, Juan Williams, combined with numerous interviews with Heritage Foundation, Cato Institute, American Enterprise Institute, and National Review pundits, with no members of the progressive movement given equal time - NPR demonstrates a clear and unambiguous conservative bias in its reporting. Additionally, during this same period no White House spokesperson was interviewed or quoted by NPR.

McCain: "an appalling fraud"

Andrew Sullivan points out:

McCain campaigned on rural broadband as a way to stimulate the entire American economy. In fact it was a centerpiece of one of his economic plans: "Broadband access needs to be a top priority." But now that he's senator, he's against it. In fact, he brought it up on FOX news last week as being the epitome of wasteful and unnecessary spending, but I've been to a campaign rally where he campaigned for it.

And he once introduced legislation supporting it.

QOTD

ondelette:

...That mentality is rampant in a much larger domain than the traditional press. It appears as a natural follow on to treating any domain more like a business than its original nature. The press has always had an earning a living side, but it wasn't the main reason for its existence. A decent living was also the goal of many businesses without being their primary purpose for existing. Academia has non-business goals, non-entrepreneurial goals. When the mentality of business management gets in where it doesn't really belong, it reduces the organization to one where business is the primary goal, where maintaining power or gathering wealth are primary and the original purpose is a sideshow.

Point of fact, 'business principles' are very useful for organizing and presenting some things. But they properly are only the primary purpose of, well, business management. What they were originally invented for. Assigning most of life to the status of a facade, always with the same, dreary ulterior motive, blanches out our social organizations and makes them unable to function according to their true purpose. A news organization needs to be passionate about news, not power or money or security. If someone wants an organization that is passionate about business, or money, or power, one should find such organizations, and not corrupt one whose purpose is different.

Excerpt from Fruitless Fall

An excerpt from Fruitless Fall: The Collapse of the Honey Bee and the Coming Agricultural Crisis, by Rowan Jacobsen.

Webster has nothing against technology itself. He's aware that the scientific method has brought much progress. But he also sees that it isn't always the best approach. Controlled studies can handle only one or two variables at a time. So science breaks down a problem into the smallest units possible, then studies them one at a time to see what manipulating that one variable will do. It establishes tiny blocks of knowledge.

But when dealing with complex systems, with countless variables and feedback loops, science must throw up its hands. Look at the amount of attention paid to human nutrition, with rudimentary progress. Or our continuing inability to predict weather. Science's goal is to understand why something works so that it can manipulate and control that system. We have an obsession with knowing and controlling, and disdain more intuitive relationships with the world. But sometimes it isn't necessary to master a system in order to work harmoniously with it.

Webster, steeped in non-Western wisdom traditions, knew what his goal was: to establish an apiary that wasn't reliant on heroic human intervention and technology. If all the problems he and his beekeeping colleagues were having stemmed from human technology, then he was happy to let go of the reins and let the bees guide the development of their own apiary. He would be the caretaker, taking cues from the bees.

In his essays, he explained, "I tried to design a system where all the components of health (stability, resilience, diversity, and productivity) could function and grow —whether the mechanisms were known or unknown. Nature is much bigger than we are, and just allowing her methods to work could be the key to the future— both for the bees and for us." Later he added, "We'll never understand everything about Nature, but we can learn to live and work under her benevolent care and protection. Many have done this in the past, and there's no overriding reason why we can't do the same now and in the future. Working this way not only allows us to move away from the predatory and destructive economic and social system we live in now—it creates a real alternative. Making a living this way allows Nature to heal because of our work, rather than be continually degraded."

Of course, it also meant years of poverty. But what is poverty? "The state of one who lacks a usual or socially acceptable amount of money or material possessions," according to Merriam-Webster's. It exists only in the context of an economic system. If you can't afford the same sneakers or minivans or steak as your neighbors and you feel humiliated or inferior or just plain sad as a result, then poverty can cause real mental and physical duress. But if your goal is "to have a nice life in the country, centered around farming, gardening, and especially—keeping bees" (that's Kirk Webster), then poverty starts to look an awful lot like a traditional, healthy existence.

The problem, as Webster might see it, is that farms have been co-opted into the modern economy, and farmers are forced to start acting and thinking like other businessmen. There's nothing wrong with a farmer having a good head for business, but farms— at least, environmentally conscious ones— can't be run like other businesses. Businesses are predicated on the assumption of endless growth. When starting a business, you write your five-year business plan, then borrow a big wad of money and hope that your growth stays ahead of your interest payments. It's a Ponzi scheme based on new waves of consumers funneling money into your business. And it depends on the assumption that you can always make more product. No matter how mature your company gets, you are expected to keep making more product. If Coca-Cola or Exxon has a flat year, shareholders savage the company.

But in the world of biological systems, nothing grows unstoppably except a cancer. A healthy farm is immersed in the cycles of nature: steady growth, steady decay, a well-maintained balance. To grow economically, it has to either eat up more land or produce more on the same land. Those have been the basic farming trends for half a century or more. But neither can go on indefinitely. Land is finite, and many technological innovations that have allowed farmers to wring more product from their land have come by sacrificing the long-term health of the soil. In other words, the innovations weren't really offering something for nothing. Like fossil fuel, they were taking a resource built up over millennia (fertility) and liquidating it in a one-time spree.

There are good reasons why we shouldn't measure farms with the same yardstick we use for other businesses, but how do we do that in a culture where the economy has become the default measure of value? Weekly grosses of movies are printed in more newspapers than movie reviews are. When any disaster befalls the country, from September 11 to Hurricane Katrina, we look to the Dow Jones to gauge the nation's trauma.

For many years beekeepers have felt the tension of trying to work within a growth-based economic system while shepherding animals who don't thrive under that pressure. Why are there so few young beekeepers? Children watched their parents struggle to make a living in an inflationary world and decided they wanted no part of that life. Beekeepers wanting to stay in business have followed "economies of scale" principles, borrowing lots of money, buying out other apiaries, getting larger and larger, and expanding their pollination coverage to stay afloat.

Kirk Webster had other ideas. He understood that all the trends in the industry—indeed, in the country—would only lead him and his bees to greater misery, so he decided to step off the train and follow a different path. He counseled his colleagues wanting to opt out of the industrial model to cultivate self-sufficiency.

Beekeepers must become experts at producing honey, pollen, queens or other bee products, and enjoying a simple, low-cost lifestyle in a rural place. By investing some of your time and money in the self-sufficiency aspects—raising your own queens, building your own equipment and buildings, welding, gardening,etc.—you become partially removed from the instability of the overall economic system. It takes really good management to make all these jobs fit together right, and some income is sacrificed in the boom years; but over the long run the apiary is more stable, resilient and enjoyable to work with.

QOTD

Steven Pearlstein writes in the WaPo that many in Congress (Republicans) need personal economic trainers; they would fail Economics 101. He provides a metric for measuring stimulus items:

Spending is stimulus, no matter what it's for and who does it. The best spending is that which creates jobs and economic activity now, has big payoffs later and disappears from future budgets.

Me:

Corporate tax cuts, for instance, have a multiplier effect of between 1 and 0.7, and does not disappear from future budgets, unless the tax cuts are repealed. Food stamps, we are told, have a multiplier effect of 1.5 or so; and will decrease if the economy improves.

Rep. Brad Miller on the financial crisis

Are We Going to Buy the Bezzle, is a well-written piece on dailykos by Rep. Brad Miller, which explains some things about the current financial crisis. Recommended read.

PS: Bezzle

PPS: I mentioned previously that I'm reading James Grant's "Mr Market Miscalculates". There are some essays in there from September-October 2006, which elucidate the rather rotten structure of CDOs (Collateralized Debt Obligations) based on subprime mortgages. The financial industry really indulged in free market malfeasance.

QOTD

Glenn Greenwald on salon.com:

Due to traveling, I've been subjected to far more cable news over the last 24 hours than I typically endure in an entire month.....And, just as a general note: if you watch cable television news during the daytime, you can actually physically feel your brain shrinking.

David Brin on how bad it has been

David Brin is one of my favorite science-fiction authors, in particular I enjoyed his "Uplift" series. He is also a dailykos contributor. Here is an excerpt.

2. AN ILLUSTRATION OF HOW BAD IT’S BEEN

Which leads me to an article published recently in the Wall Street Journal by Eliot A. Cohen, Condoleeza Rice’s foreign policy advisor, or the (supposedly) smart guy who guided the smart people who guided Pax Americana for all but two months (so far) of the 21st Century. In "How Government Looks at Pundits" Cohen offered his list of reasons why government insiders have little patience or use for input from others, beyond the narrow circle of those who receive "three-to-six-inch-thick briefing books, every day."

On the discussion list of SIGMA (the "think tank of scientific science fiction authors") several members were all-aflutter over how this splash of cold water should remind us outside consultants to keep our expectations low, no matter who is in power or what philosophies or personalities guide our myriad agencies.

Appalled at this complacent acceptance, I’m afraid I went a bit ballistic! Nobody else seemed to recognize Cohen’s article as a lengthy and utterly horrific apologia by one of the chief architects of the demolition of the American Pax,. In-effect, a longwinded whine about how nobody but a uniform and self-referential ingroup should ever expect to be heeded.

In vain, I searched his article for any mention of processes that might track outcomes and/or re-appraise policies in light of predictive success or failure. No mention of the pragmatic aim of finding people - both inside and outside of government - who happen to be right a lot and bringing them into the "briefing books" layer. No interest - or curiosity - about how his own error-avoidance methods might improve. Nor, of course, any awareness that the self-limiting perspective that he described might be a pathology. A perniciously destructive one, that merits correction by smart, sincere, skilled and patriotic people. What I did find was the following especially bizarre excerpt:

"Do not prescribe a policy that the current group of officials cannot hope to implement because of who they are. I have had highly intelligent individuals -- including some with senior government experience -- sit in my office and lay out perfectly plausible policies that the current team, limited by time remaining in office, the pressure of competing and more urgent crises, and the all important mix of personalities, could never hope to put into effect. Moreover, core beliefs and style constrain policy makers profoundly. So don't ask them to do something outside their range of psychological possibility by, for example, proposing cold-eyed realpolitik to a band of idealists or vice versa."

So, let me get this straight. We are to be guided by a core "band" that steers the ship of state with gut-level certainty, while accepting no advice, no feedback or course-correction based on ongoing metrics, having culled themselves of not only diversity of philosophy, but any difference in personality? As if any leader worth more than a bucket of warm seawater would not make sure to employ realists and idealists and all kinds that might both temper and challenge one another? Questioning assumptions and seeking good ideas, whatever the source?

Reminder, this was the best and most highly-touted kind of "expert" that we got under Bush. The very brightest of the brightest of those who have been ruling us, all but two months of the 21st century. With results and outcomes that are blatantly obvious to all.