sageofthpalouse

08:44 pm: Moving day. Thursday we packed our stuff; Friday, shut down the servers & computers mid day and left the building for the last time. Our office location is changing from downtown Portland to the suburbs further south, and an escape from city taxation.

I will miss the Portland Pearl District urban setting and its close-packed ambience. A Jane Jacobs kind of place, mostly older renovated 3 & 4 storey buildings, calm two lane traffic, colorful & charming small businesses, the West Coast’s gold-standard bookstore (Powells), good inexpensive food, many pedestrians, children not a rarity, lots of “eyes on the street.”

Thus ends a 2.5 year phase that was the start of a last ditch career change. My first full time job in almost five years. It came at the end of an increasingly anxious 18 month job search. I felt then, and do now, very lucky to be employed. Even luckier now, considering 3 years ago the economy was strong, not a cloud in the sky. I would probably be unemployable starting out now. Am glad I didn’t delay the decision to career change.

Dinner with friends who are also ex employees of the large multinational company we worked with “since college.” John went out to the campus site. All the buildings are dark and empty he said. He called it “the morgue.” At its peak the local division we helped get off the ground employed nearly 4,000 people in high paying manufacturing and design jobs. Through the early 90s, a hard time for the computer industry, our four loosely related printer divisions contributed nearly 80% of the company’s total profits and over 150% of the computer segment’s profits (you’ll have to take my word, in those days they didn’t break the financials out to any lower level of detail). That local printer business is nearly gutted. The manufacturing is all offshore since the mid 1990s. About 100 employees are left in town, roughly the headcount for the initial 10 years we labored to bring early products to market. My few colleagues from that era who still live here all have left the company and are scraping along at odds & ends and part time stuff. Maybe I’m just projecting, but when I run into one of them my age, I see a bit of battle fatigue and a smidge of regret.

Though I understand the economics of moving jobs offshore, and probably benefit as a shareholder, that decision still angers me at a personal ego-involved level. Not only did we throw away a hardwon core manufacturing competency, organizationally speaking. We virtually gave those jobs away to strangers who will never know us, or care.

10:50 am: US Board of Geographic Names approves “Salish Sea” name. http://crosscut.com/blog/crosscut/19183/

What now? Will perplexed mariners ply the fogshrouded coasts in vain searching for the Straits of Juan de Fuca? Will compasses spin wildly? Will Saint Elmo’s fire rain from the mizzenmasts? Will ships go bump in the night?

Technicality: it is a name addition, not a name change. Lt Peter Puget can rest easier, but not in fully in Peace (merely in Place?). Puget Sound is still Puget Sound, but try telling that to some ignoramus from Brooklyn! Anything west of Jersey City, it’s all Salish Sea to them!

Will Pierce County nullify? Will Pierce County seceed from the state of ... Sealth? (And why is Washington the only state that apparently has the word “State” in its name? Try that if you’re from Colorado. “Hey, I’m from Colorado State!” Yeah, great, they lost seven in a row).

08:34 pm: Following the Oregon PERS situation with some concern. Because of the market losses in 2008, the PERS actuary sees trouble ahead, even when making generous assumptions about future recovery of PERS investments.

Foreseen needs for pension funding: through the year 2020, pension set-asides must rise from current 15% of payroll to between 20% and 30% of payroll. http://www.oregon.gov/PERS/docs/financial_reports/actuarial_service/2008_system_valuation_presentation.pdf p39. These increases will be necessary to meet existing obligations -- promises already made.

“Payroll” is tax collections from all sources, paid as salary and benefits to state and local government employees, fire, police, K-12 and community college.

Translating that percentage rise: pension funding must rise by 5% - 15% of the payroll budget, the difference between today’s 15% set-aside and the projected set-aside percentage. Thus to hold all other payroll benefits constant, tax collections will need to increase, or government payrolls will need to fall (layoffs with no tax relief) approximately a similar amount, or a combination of tax increases and service cuts must occur.

How much money is an additional 15% of payroll? Oregon PERS payroll 2008 was about $8 billion http://www.oregon.gov/PERS/docs/financial_reports/2008_cafr.pdf p73. 15% of that is an extra $1.2 billion annually, even with zero growth in payroll ... fairly serious money in Oregon, whatever its source. PERS payroll grew about 50% over the last 10 years. The 2020 set-aside requirement is probably closer to $2 billion annually. Or put in terms of layoffs, if your workgroup is 20 people, could you stand to lose three of them to make up a pension funding shortfall for everyone else?

Even with these funding increases the actuary gives a 50% probability that the system will be funded only about 70% sufficient to meet existing promises in 2020.

Is Oregon typical? Oregon is the best funded public employee retirement system in the 50 states. http://www.opb.org/thinkoutloud/media/uploads/shows/documents/PERSfaq.pdf p2. As Oregon goes, so go the others, except they go worse. Many states, Oregon included, indulged financing gimmicks to reduce pension set-asides in the past. These included sale of pension obligation bonds with the proceeds going into the PERS investment pools. Borrowing cheap to invest go-go. The problem there: the investment pools lost 25 – 35% of their value versus one year ago, while the bond obligations are ticking away, and must be repaid at full value. In addition, the debt service (interest) of most pension obligation bonds was structured to rise in the future, as was much municipal debt issued in the past ten years. These rising costs of past finance will further strain the issuing governments’ cash budgets.

What does this all mean? Pension issues could become more contentious; pension shortfalls and reforms are more likely. Not all government entities are funded equally; it looks less likely that all the promises can be kept in all the jurisdictions. There are no winners in this situation. PERS employees are likely to suffer both financial loss and scapegoating. Taxpayers will feel their own pain. If you are unfortunate enough to be a member of both groups, it will be a double dose.

The added PERS set-asides strike me as a good broad brush analogy to individuals collectively saving for retirement. An additional 5% - 15% of personal budgets set aside ... serious money whatever the source.

07:51 pm: Dave's Interminable Opera Reports, part MMLXXVII, all different and all seemingly alike, to be continued ...

This weekend we heard Portland Opera’s West Coast premier of Orphee, a 1993 work by Phillip Glass. It is modern psychodrama, full of mirrors, doublings, doubt and ambivalence. A Twilight Zone feeling (the underworld is “The Zone”). All the sung roles have wordless doubles. They move between the upper and underworlds as mirroring doubles. Not typically “classical” opera, but typically “modern” art. The libretto (French) is taken nearly verbatum from a 1950 film by Jean Cocteau. The film is one of hundreds of adaptations of the Orpheus myth. Cocteau’s script focuses on artistic creativity and its impact on the families who are involved with the artist. The story is dreamy surreal and apparently superficial, but with a little attention it grows deep and complex ... what is lasting, what fades and dies, what one wants from life: love or immortality?

There is spare humor. Motorcyclists inflict the casualties and cart them off to the underworld. Orpheus gets to the underworld with a little help from Death's chauffeur, well he's not a real chauffeur, just a student who's been working at driving for the last couple weeks. Death herself goes on trial in the underworld for falling in love with the poet Orpheus, and for acting “without orders.” She is granted permission to smoke, and one of the Motorcycle demons gives her a light.

The composer was in town for the dress rehearsal. This article sketches some of the preparatory action and the composer’s own comments. He saw the film in the 50s, it made a great impression, but he didn’t really understand it until working on the opera. There is a bit of autobiographical doubling as well. Glass’s wife died two years prior to this opera’s composition, like Eurydice in the myth, the film, and the opera itself. http://news.opb.org/article/6167-portland-opera-records-philip-glass-orfee/

If you are not familiar with Glass’s music, it is built from repetitive and constantly evolving melodic fragments. I had never heard a vocal work by this composer, and wondered how his instrumental style would work with sung parts in a two hour piece. In Orphee the sung notes are nearly speech intonation, atonal pitch sequences, like modern jazz riffing on speech. The lack of sung melody meshes well with the prose text (though my French is non existant, it could be complex blank verse for all I know). The sung notes feel isolate airy & pointilistic, they float over and around the pulsing glimmering instrumentation. The effect is of an organic sentient living growing dying entity (Glass’s music to the film Koyaanisquatsi shows the interwoven natural and manmade world to great effect this way, with clouds washing over mountains like waves, and traffic pulsing thorugh cities like blood cells).

Glass’s style of music has been called pulse, hypnotic, trance, even ecstatic. I would call this opera spellbinding. It filled me with wonder and hope. I havent studied this composer, but besides Schonberg, there seems to be a forerunner in Beethoven. Especially the luminous variations of the second half of Beethoven’s last piano sonata, C major, Op 111, one of which is even called the jazz or “boogie-woogie variation.”

10:59 am: Bring passenger rail back to rural college campuses http://wsm.wsu.edu/s/index.php?id=756

Romantic, economically and socially desireable, but what about all those cars on campus? Would the cell phone generation take the dopey train to Seattle let alone dopey Spokane? Be caught dead boarding?

Re the article, I liked the architecture school’s business plan and their optimism. They see entrepreneurs flourishing everywhere along the rail line. I like to think that kind of synergy might happen in this and other localities. What political barriers exist? Are the economic assumptions just wishful thinking? What kind of farmers market you gonna get in The Palouse in winter anyway? The article incorporates a little pun about the past and the future. Did that past even exist? Should it return?

Read Philip Roth’s “Indignation.” Topic is small college angst, then death, narrated by the guy who has died. He’s condemned to endlessly and bodilessly re-voice his brief past, with nobody there to listen (that’s where our intrepid reader would come in: no author however neurotic and disembodied is without hope). Hope being the most organic & lowest spiritual virtue, the usual dirty book caveats apply. I admire this author, I see his choices of subject as ... subject, not object. One especially brilliant ... subject ... line in Indignation concerns a certain WASP senior, business major, and his car. It all lurches downhill without brakes and ends very badly.

Trains are from the past. Trains are good. Unless they haul you to the concentration camp or crush your car. That would say more about us than our trains. Use trains and cars responsibly, that’s my conclusion.

08:45 pm: Halloween, my favorite holiday. Cheap, easy, and colorful. Lots of trick or treaters this year as the weather is moderate and the rain let up early in the day. I love the costumes on the smaller kids in particular, as they try out alter egos. Generally, little kids are super heros or fairies, mid kids are witches or monsters, big kids are princesses or bums. A couple teenage ghouls this year in spiffy suits and ties. Pageantry well worth the treats.

Today Joyce found an old handpainted Krishna on muslin at a garage sale. Looks authentically Indian probably a copy of a classic scene. An elegant Islamicised blue Krishna and four maidens in their flowing pajama robes by moonlight with cows and lotuses and temples. It seems to me a true expression of fusion India ... the worlds greatest and so far most successful experiment in democracy and diversity.

Is Halloween universal, or is this synchronicity, or what?

Am now midway through Vickram Seth’s Two Lives. Proceeding slowly. To the death camps and the letters immediately post war from the survivors (no one in this book survived the camps their deaths are foregone conclusions). The letters are submerged privation and horror, almost unbearable to read in their stoicism & understatement. And in some cases self justification and rationalization. The appalling cynicism and banality of the Nazis, how they systematically made their victims complicit. Primo Levi (Auschwitz survivor) wrote we must be very careful not to judge the victims, we were not there.

There is lots here. Many questions, few answers. Why did Henny marry Shanti? In what ways is the author learning about his own place in the world?

Music http://www.allmusic.com/cg/amg.dll?p=amg&sql=43:25149 – Haydn Sonata #20 c minor – storm and stress.

08:10 pm: Geeky Finance Topic with Some Practical Implications
Mortgages may be harder to get in the future and more expensive if you get one. My conclusion from an interesting (to me) technical paper about pricing opaque financial derivatives such as CDOs (aka packages of allegedly nice and allegedly naughty mortgages). These little CDO beauties were central to the financial crisis of last year. http://www.cs.princeton.edu/~rongge/derivative.pdf

One concern about financial derivatives is whether they are correctly priced in terms of the junk they package. That is, could the creator of a CDO have loaded it with “lemons” using inside information that is unavailable to the CDO market? then peddled it to fools like us, or more likely, fools like our pension fund? If so, could this tampering or “cherry picking” be detected using market based information that is available to all? Thus correctly pricing the risk of loss into the amount paid for the investment? After all, riskier investments are priced cheaper, with a higher reward if they work out. That is the nature of a risk investment.

The paper gives a new dimension to the phrase “toxic asset.” The authors claim that it is computationally intractable to determine, using public information, if large CDOs are correctly priced. That is, as the size of the CDO grows to typical proportions, additional computer power to determine correct pricing grows exponentially faster than the thing being analyzed. Eventually – and actually in practice -- the pricing problem cannot be solved except as an approximation, or a guess.

(Aside: an example of a computationally intractable problem is factoring a large number. You can take two big prime numbers from a list, multiply them, and produce a humongous number. This takes a trivial amount of time. You have the inside information about what two prime numbers you cherry picked. However given the humongous number, it may take a long time for any computer program to break it into the two primes that produced it. As a candidate humongous number grows bigger, the factoring problem may take approximately forever. Messages are encrypted today in related manner.)

If the authors’ result is correct, it means there is no effective way to prove a CDO has been untampered, or loaded with hidden lemons, even after the fact. If it does indeed blow up and the buyer suffers a loss, tampering cannot be proven, even after the fact, in a practical way because of the inherent complexity (intractability) of the math underlying the investment itself.

I’m not sure what the practical implications are for these toxic investments. I guess their owners will have to grin & bear the un-compensated risk. Since tampering is possible, it is almost certainly there, ticking away in your bond mutual fund or pension fund. There have been proclamations that the markets for these things didn’t fail, only the market for credit failed. However if these investments are toxic as the paper hypothesizes, fear and uncertainty may demand higher risk premiums on them (the current owners will take a pricing haircut if they try to sell).

I will be interested to see if the international financial and legal community can deconstruct these things into their components and somehow defuse them further. But even defusing would have a negative effect because it might make mortgages more scarce.

CDOs and their ilk played a role in the easy availability of mortgage financing. Availability makes the buying and selling of a house less expensive and more feasible, a good thing on balance. The CDO concept is not inherently evil, but it turned out to be more dangerous than most people realized.

11:32 am: Got the yard cleanup started. But it's raining hard now. And what precisely would that "it" be?

When I started this blog, I cribbed British (male) author Evelyn Waugh’s journal age six: “every day a poem!” I see we equally have failed. Though he failed first, and younger; thus securing the Romantic Laurels.

OK here’s a current favorite (unoriginal as usual) in fragment ...

Our old man didn’t like our appearance.
He said only women have long hair.

So me and my brother borrowed money from our mother:
We knew what we had to do.
We went downstairs past the barber and gymnasium,
And got our arms tattooed.

Technically the whole song lyric (Tattoo, The Who) is near perfection. Internal rhymes and near rhymes, alliteration, onomatopoeia (hey, I looked it up). Also nuance and subtlety. That unselfconscious precise British phrase “our appearance.” The tension between appearance and reality. Bypassing conventional symbols of masculinity barber & gymnasium rushing to (then dubious) conventional symbol tattoo. Irony and humor, they knew what they had to do.

Hold on, there’s a rider to the tale ...

My dad beat me because mine said “Mother”
But my mother actually liked it and beat my brother;
Cause his tattoo was of a lady in the nude,
And she though that was extremely rude.

The simmering late-60s sex wars, conventional images of female sexuality gouged into male flesh ... appearance and reality again. Beatings for Rude and Oedipal? Or depending on your perception of the symbols: respectively the most heartfelt relationship on earth and the most beautiful thing a man will ever see.

Well the "old man" really was out of line. When he first appears in the song, his lietmotif is announced a bit like Darth Vader’s but on a dominant major not minor modulation. However, clearly the nude was conventionally rude; the wrong thing done for the right reason.

For a brief shining moment back in the day, I think The Who were The Ones.

09:02 pm: This academic finance paper drew my ire http://insidertrading.procon.org/sourcefiles/abnormal.pdf (pdf file, 8Mb).

The authors present strong evidence that U.S. Senators profit from trading stocks based on insider information. Such activity is illegal for most people, but is not prohibited for lawmakers.

What is the dollar value of this information advantage? The paper shows a long term, statistically significant, outperformance (beating the market) of 1% per month, tracking the Senator’s stock purchases and assuming an equal weight portfolio (where all stocks selections assumed to be initially of equal value.)

One percent per month may not sound like much, but it is huge over time. In one year this adds up to “beating the market” by 12%. This is a feat matched perhaps by Warren Buffett, but by few others.

12% per year means your selective bets double in value every 6 years, over the alternative of owning a diversified mix of market investments. After twelve years you are 4x ahead of the market, after 18 years (not an unreasonable tenure in the Senate) you are ahead by 8x.

Think of it this way: if you made any investments 18 years ago, multiply what they are worth now by 8. That is a first approximation of what an average Senator achieved in comparison, investing the same amounts you did. Arguably, they did this at your expense, you might have sold to them!

This is wrong and it is corrupt. There is a reason transparency.org places the United States well behind many other developed nations in its corruption index. We have an institutionalized culture of money corruption. It is a matter of degree, but not of substance. It is not in America’s best interest.

I should explain why I believe this is corrupt besides my manifest envy of these powerful well connected workers-of-the-system. Most disturbing is the potential for corrupt legislation, regulatory capture, and interference with regulators, what the authors dryly refer to as “rents from influence.”

To quote a portion of the authors’ conclusion:

It should be noted that these results should not be used to infer illegal activity. Current law does not prohibit Senators from trading stock on the basis of information acquired in the course of performing their normal Senatorial functions ... [however] it seems clear that Senators have demonstrated a definite informational advantage over other investors ... Until now, the primary focus of ethical concern with respect to legislative activity has been on campaign finance reform. Some Senators, most notably John McCain of Arizona, have expressed a strong belief that the methods currently used to fund political campaigns inherently cause agency problems. However, our results suggest that the problems may extend beyond campaign financing. Political power confers many benefits. Among those benefits are privileged access to information, the power to influence legislation, and the power to influence the application of regulatory jurisdiction by administrative agencies. It makes sense that politicians would use such powers for personal gain and also that they compete for any rents that arise from such influence. Our results are consistent with the hypothesis that such rents exist.”

(my italics)

10:14 pm: God is not Great ... how religion poisons everything, by Christopher Hitchens. An entertaining but ultimately futile book.

My mixed review. His logic is unconvincing. Rhetorical thrust generally along the following lines. Religion poisons everything: religious people have done stupid, deceitful, corrupt, horrendous, evil things; let me tell you about them. These bad actors who did horrendous, evil things include people like Pol Pot and Joe Stalin: therefore they were “religious.” Thus religion is poison. It might be possible for the rest of us to get along with poison, live and let live. If it would simply leave me alone, I would leave it alone. But no, it is temperamentally unable to leave me alone; it pervades all & actively seeks out its victims, me included. Therefore religion poisons everything. QED.

Hitchens pens his litany of poison with flair and wit. I predict you will agree with him on some specific point or other. If you are able to overlook the distortions and factual errors (there are no supermarkets in Antelope Oregon for instance, but who cares?), you might find it worth reading.

Worth reading as polemic, but not as rhetoric. Hitchens “arguments” could also apply to science. Untested manmade chloro-fluorocarbons are everywhere up and down the food chain. Science is poison. It would be one thing if Isaac Newton kept his thoughts to himself, but no. Science is temperamentally unable to keep quiet and keep its hands off me. Those subterranean nukes are metaphysically absolute, and they just wont leave me alone. Those chloro-fluorocarbons and their ilk are in every product I touch or interact with, without my permission and for practical purposes unavoidable. Science poisons everything.

Worth reading as polemic. Hitchens is not some kook who runs around insisting poison kills people when all he’s saying is people kill people. He understands personal responsibility just fine: the book is an attack on delusional irresponsibility perpetrated by individuals under the cloak of religion. Because it is harsh toward religious individuals and religion in general, God is not Great is ad hominem and divisive. But Hitchens malice at least is elegant, often funny, sometimes self-deprecating, is critically-constructive, distorts yet does not egregiously distort his opponents, is not a cynical demonic parody of his opponents, and is reasonably based in fact. I would rather read Hitchens than Falwell, though you could reasonably ask, why read any of these culture wars outpourings? Because: toxic religion is pervasive and it is potent corrosive and threatening.

I reject Hitchens “everything” mantra, which might threaten to engulf God is not Great itself. Consequently, I side with unpoisoned “good guys,” even those tainted by barely detectable religious residues; they must have a few answers. Hitchens himself approximately fits those criteria. His answer seems to be in part: get ready by reading good books, then do “mental fight” (my paraphrase, not his quotes). On that point, I just wish Hitchens had given Blake a little bit to say, and the Ayatollah, a bit less.

09:48 pm: Preliminary impressions of Two Lives, by Vikram Seth (2005).

The opening pages of Two Lives are astonishingly high quality. The descriptions are pitch perfect and the details are vivid.

A literal displacement to a foreign place near London frames what will be a journey of discovery. This time honored writer's opening gambit might usually involve storm and stress, yet here the writing is understated, surprisingly so for writing this strong. Every word is nuanced, every word counts. Small telling details foreshadow bigger themes to come.

An example. Here is a fragment describing in flashback the author’s prior visit, age nine.

“It was late. I was leafing through a pile of magazines in another room. One of them – I think it was Life – contained an illustrated article about Adolf Eichmann. I cannot now remember much about it, but it must have covered his crimes, his capture and his trial. At one stage ... Aunty Henny stepped into the room, saw what I was reading, and said to me, ‘So, Vicky, what do you think of him?’ My reply was that he was an evil horrible man. This seemed a natural enough reaction, but it had a strong effect on Aunty Henny. ‘You think so? You think so?’ she said, and looked at me searchingly. But instead of discussing matters further, she left the room and I went back to my reading.”

You think so? Reader, be attentive.

Aspiring writers are well counseled to create strong opening pages. Two Lives shows how this can be achieved through mastery of writing craft. Of course it helps that the author has an important story to tell, and interesting characters to work with.

09:47 pm: Soap-opera opera.
The Portland staging of La Boheme (Puccini, 1896) was very good opera. Approachable and engaging.

Libretto is impressionistic and sketchy. Like memories of one’s youth ... the arc of fairly ordinary lives, aspiring but generally failing to reach lofty goals. The characters are sympathetic, they all are fundamentally good intelligent people, they lack the character flaws necessary to be truly unkind, they connect emotionally. They transcend their “story.”

Mostly absent: psychological drama, focused motivated plot development, strong displacements, stressful conflict and resolution. Instead you know Mimi is dying, you sense the others will not achieve much success unless they give up some of their idealism. You can identify, and you end up caring about them as people.

The music is seamlessly beautiful and accessible. Not off-putting or overly demanding. It loves its subjects. Many melodic (and a few harmonic) echoes of Turandot, the Puccini opera I’m most familiar with. La Boheme is 30 years earlier. In other words, if you ever start delving into deeper connections with this composer, there is material to connect.

No high barriers to comprehension and enjoyment here. True opera snobs may look down on Puccini a bit. But because it is high reward low barrier, La Boheme is another opera I can comfortably recommend to newbies. Of those less than 20 we’ve actually seen, my short list for never-seen opera before is now: Magic Flute (any age), (plus for grown-ups) La Calisto, La Boheme. It just struck me this list might most strongly appeal to young, middle aged, old first-time opera-goers respectively.

I dont mean to leave the impression this is a boring or angst-ridden work. There is wit and autobiographical humor. One favorite bit: the old paramour gets stuck with two restaurant bills -- his own, and the Bohemians. Clearly: a "patron of the arts."

09:52 pm: This is neat. http://www.columbian.com/article/20090925/LIVING/709259985
Bernie Rubio, who was a high school classmate of Dan’s and also a crosscountry teammate, is appearing in La Boheme with the Portland Opera this week. He’s confident enough now to go by his given name Jose, of which opera has several luminaries. He had a strikingly beautiful voice in high school and followed his gift, at least this far, which is far! Pavarotti played soccer in his younger days before he realized he could sing for a living. Maybe bought pizza & beer for the ol team when he wasn’t appearing at La Scala?

08:53 pm: Carol wrote about markets & self fulfilling prophecies. It’s an interesting topic ... sociological and market-technical all at once.

I believe it, as in bank panics, speculative bubbles, crashes, ponzis. The prophesies can also be positive – loans to successful businesses, simply saving and investing (act like the rich: they live below their means and they invest the surplus).

Not that markets are forums of prophecy run amok. Markets are generally neutral on prophecies in my opinion. At least in the short run. Self fulfilling prophecy has positive feedback (it is self reinforcing). Markets have negative feedback features that dampen excesses in either direction. Every market trade has two sides. Self fulfilling prophecies cannot overwhelm all at once, every “believer” has a matching disbeliever. Short selling tends to stabilize excessive rising markets (they sell) and falling markets (they buy). Market making creates the opportunity for a trade where negative feedback can exert influence. NYSE market specialists were (are?) obliged by rules of the exchange to “make a market” ie offer either to buy or to sell (within other rules, sometimes trades are suspended) – however in Bernie Madoff’s NASDAQ this market making role is not so clear. The computers can simply refuse to answer the phone if you are a seller in a falling market. NASDAQ is not another Madoff ponzi, but in times of trouble you may have neither a trade or a price. You should always have at least one of those two.

I wonder if what feels like self fulfilling prophecies in the markets and the economy are more accurately described as vicious circles and virtuous circles? Complex systems that feed demand when prices rise (gov mandated mortgage lending) – hard to distinguish from a speculative bubble.

Regulatory capture – where small groups of influential people shuttle between private finance and government – removes an element of market contrariness and negative feedback. This capture seems especially harmful where complex systems are evolving rapidly (globalization, unregulated derivatives like credit default swaps), and where imperfect information is a major factor behind big profits in these systems.

What you can do personally ... bubbles and confirmation bias as positive feedback. I believe the best market participants are always looking for disconfirmation. They usually will say, here’s how I see it, what am I missing? I hear this often from the smartest people. Us stupider (more normal) people are too sure, seek confirmation, are overconfident (misjudge odds both of likely and remote events), don’t evaluate alternatives or risks, indulge hindsight (selective, even false, memory and confirmation). When the trend is in our favor the confirmation bias is overwhelming. We are geniuses! We have control!

Not. At least, not for long.

That negative feedback can turn with a vengeance. The other person’s self fulfilling prophecy? Or simply putting prophets in their place? Jonah, one of the great comic figures of the Bible ... sulks when his prophecy doesn’t work out. It is hilarious. He is everyman that way. I like to think of the Book of Jonah as autobiography.

08:30 pm: Torrential Rains ... Bands of Leeches
I thought this news report was funny and charming enough to quote at length.

By Michael Casey Associated Press

"BANGKOK - The rare Arakan forest turtle, once though to be extinct, has been rediscovered in a remote forest in Myanmar, boosting chances of saving the reptile after hunting almost destroyed its population, researchers said Monday.

"Texas researcher Steven Platt and staff from the New York-based Wildlife Conservation Society discovered five of the brown-and-tan-spotted turtles in May during a survey of wildlife in the Rakhine Yoma Elephant Sanctuary.

"The sanctuary contains thick stands of impenetrable bamboo forests, with the only trails made by the park's elephants, said Platt, of Sul Ross State University in Alpine, Texas.

"Platt said he and his team were able to reach the area only by small boat and endured round-the-clock torrential rains and bands of leeches before finding their first Arakan turtle on May 31.

"'At this moment, all of the physical hardships of the trip were forgotten,' Platt said in an e-mail interview.

"Native to the Arakan hills of western Myanmar, the turtles were believed extinct for close to a century until they started turning up in Asian food markets in the mid-1990s.

"The local name for the turtle is "Pyant Cheezar," which translates to "turtle that eats rhinoceros feces." Sumatran rhinos were once found in the area, but vanished half a century ago due to hunting.

"Scientists blame the near-disappearance of the turtle on their popularity in Asia as an ingredient in cooking and medicine. Known by its scientific name, Heosemys depressa, it is listed as critically endangered by the International Union for Conservation of Nature and Natural Resources and has proven difficult to breed in captivity.

"The discovery in May makes scientists hopeful that the species can survive."

With habitat and diet like that, I would be depressa’d too ... not to mention endangered. Kudos to the resolute scientists from Alpine Texas and from New York.

10:22 pm: We spent a perfect weekend, and that is literally true, with friends Rick & Carol in Ashland, at the by-now-almost-nonstop Shakespeare Festival. An opportunity to see two plays (neither one by The Bard though), indulge in outstanding food & wine, discuss and reflect on family and passage of time, shop for timeless pithy Shakespeare quotes on t-shirts, and stroll the easy paths along Ashland Creek.

Both plays had strong tones of optimism, a good thing in these economic times. Paradise Lost (Clifford Odets) was written in 1935 and could have been bleak, the family is nearly destroyed by economic stress. But the play ends with an affirmation of human energy and goodness. My goodness! This would seem to leave desperate tragedy a la Ashland to Shakespeare. Maybe some other happier time we will take in MacBeth or King Lear.

Music Man (Meredith Willson) maybe is more subversive than Odets, you have the ambiguous flim-flam man who could stand in for any kind of elicited optimism ... of the good-self-fulfilling-prophecy variety. Really: are magicians, preachers, politicians, musicians, impressarios, rainmakers, poets, etc anything BUT flim-flam? I had not sat still for Music Man in 40 years. It was a delight to discover some of its nuances, mostly over my head 40 years back. It is anything but lightweight Broadway.

A random association that seems fairly strong –

The Music Man “Rock Island” (1957) ...
1st Salesman: Ya can talk, ya can talk, ya can bicker ya can talk, ya can bicker, bicker bicker ya can talk all ya want
but is different than it was.
Charlie: No it ain't, no it ain't, but ya gotta know the territory.
Rail car: Shh shh shh shh shh shh shh

vs King Crimson “Elephant Talk” (1981) ...
http://www.dailymotion.com/video/x1johp_king-crimson-elephant-talk_music

Talk, its only talk
Babble, burble, banter, bicker bicker bicker
Brouhaha, boulderdash, ballyhoo
Its only talk ...

And if you listen at the link or to other music videos of this number, check out the echo’d “Sssssh ... “

10:13 pm: Realized after posting the prior thing, that I had purchased two CDs, the second without much forethought. Turns out the tracks with lyrics mostly utilize spoken, not sung, words. Coincidence? or subconscious affinity with the jazz CD?

Reading and enjoying a little science classic -- How to Lie with Statistics, Darrell Huff, W.W.Norton Co, 1954. Quick, breezy, declarative sentences; a period piece with timeless content. If any internet innovation is apparently missing, I’ll let you know. Chapters (1982 edition) include The Sample With the Built in Bias, The Well-Chosen Average, Post Hoc Rides Again, How to Talk Back to a Statistic.

Our cabin renovation is 98.7% complete to a confidence interval of one sigma. It looks great. Now I have to schedule with the builder for an on-site tutorial in theory and operation of the composting toilet.

A guy on PBS tonight was extolling the virtues of working with one’s hands to earn a living. Sad that such advocacy is necessary. We have devalued manual labor and mistakenly concluded it does not require much mental capacity. Ironically, “knowledge work” can be numbingly mindless. And he asserted (I agree) that we have lost a great deal of self-reliance in the bargain. I wonder if the economy has reached an inflection point. Manufacturing to regain market share; ability to build and fix stuff and make it work and last, to regain respect and renumeration.

11:57 am: Kannada ... Telugu ... Gujarati ... Tamil ... Malayalam ... English ...
Much anticipated trip to Ashland ... attempting some mini prep for the plays we will see there including Music Man. Powells keeps promising Meredith Willson’s “There I Stood With My Piccolo” as “coming in August.” So far coming only to a website near you, but there’s still time for the book, which sounds funny and droll from the title.

Some light reading on Music Man revealed the origin of the famous Trouble in River City as a long excised section of dialog.

The origins in speech theme impelled me – laterally – to go pick up jazz saxophonist Rudresh Mahanthapa’s recording Mother Tongue. It is a concept album that points up the diversity of languages in India. The tracks are named for some (by no means all!) of India’s major languages. The jazz riffs are based on transcriptions of native speakers’ indignant reactions to the following dumbass question “Do you speak Indian?” or possibly the more incrededibly numbnuts question “Do you speak Hindu?” ... One track of course is “English” and I can imagine the original response: “You are expecting from ignorant Americans what?” or perhaps “Crackah boy, I speakin de Suthin Baptis!”

Mother Tongue ... is a term of art in India where English is the definitive text of law, but to my ear the jazz takeoff is tongue in cheek, like a momma cat pinning a cub and roughly licking it into shape.

If you are actually fortunate enough to come into possession of this remarkable CD, a suggestion: don’t peak at the track listings first. Can you guess which one is “English”? I goofed and missed my chance. It sure does sound English to me, but unfortunately not a hint of River City ... maybe River Ganges.

Did song come before speech? If so, this recording goes to a concept of jazz and its improvisational conversational forms as primal sublimated speech. And “language is fossil poetry” poets might agree. There is that remarkable passage in Coleridge’s Ancient Mariner where the dead sailors come to “life” ... they are mere tools, bodies and spirits without souls, but they are musical. Very cool and creepy.

Now please have mercy on my pedantic little post. It has kept me at rest for a few minutes. The shirked task before me is: cleaning gutters.

01:08 am: A recent NPR piece about internet’s stifling effect on journalism, especially the nature of web sites as aggregators for people making assertions, versus old school journalism that emphasizes investigation evidence and confirmation.

Finished reading Dexter Filkins The Forever War. It is first hand reporting from Afghanistan (pre 9-11) and Iraq (2003 – 2006). Heartrending, surreal, absurd, boots on the ground.

Earlier this spring read Shadow Country by Peter Matthiessen. Difficult, labyrynthine, literary, rewarding. The sum of its parts transcends Mister Watson, the mysterious central character.

After these bleak ultra-real tragedies, sister in law Anne’s summer reading gift Nature Girl (author Carl Hiaasen) provided needed comic relief. Set like Shadow Country in West Florida’s Ten Thousand Islands. A caper and a satire.

10:24 pm: Some pictures from Joe & Erin’s hike up to 8,500 foot level of Cooper Spur on Mt Hood’s NE side: http://www.flickr.com/photos/34450190@N08/sets/72157622008718913/ Check out the slideshow version for some nice stitched panoramas with the Three Sisters in the distance.

Maybe that 10,000 Haleakala altitude training paid off!