The SEC and Python?

Wednesday, April 28th, 2010

Prof. Jayanth R. Varma’s Financial Markets Blog mentions an April Fools-worthy proposal — two weeks too late — involving The SEC and Python:

We are proposing to require that most ABS issuers file a computer program that gives effect to the flow of funds, or “waterfall,” provisions of the transaction. We are proposing that the computer program be filed on EDGAR in the form of downloadable source code in Python. … (page 205)

Under the proposed requirement, the filed source code, when downloaded and run by an investor, must provide the user with the ability to programmatically input the user’s own assumptions regarding the future performance and cash flows from the pool assets, including but not limited to assumptions about future interest rates, default rates, prepayment speeds, loss-given-default rates, and any other necessary assumptions … (page 210)

The waterfall computer program must also allow the use of the proposed asset-level data file that will be filed at the time of the offering and on a periodic basis thereafter. (page 211)


Joseph Fouché has some fun with the idea:

An executable security filing may have advantages over paper filings. Debuggers for programming languages are, at this point, more advanced than debuggers for corporate accounting and derivatives. Putting the security filing in Python will actually make it more readable, since the last time I checked most financial statements aren’t Turing complete. If they were, it might destroy the very fabric of space-time. Python has lots of high quality software development tools and a cadre of even higher quality software engineers to those tools. Python may eventually come to subsume a great deal of human communication in the future since Python is more aesthetically pleasing than most human languages.

He also shares a few of his “core political beliefs”:

The only other high level (above assembler) programming languages that should be allowed to exist are C and any open source functional programming language (R, Lisp, Scheme, Haskell, Erlang, etc.). Perl will be retained because having a barbaric freakish culturally dissonant enemy along your frontier produces and maintains asabiya.

Blankfein’s Apha Deception

Wednesday, April 28th, 2010

Eric Falkenstein addresses Blankfein’s alpha deceptioninvestment alpha, not status alpha:

Loyd Blankfein was grilled by the Senate yesterday, and he highlighted one of the oldest tricks in the alpha deception handbook. Don’t admit to being a merely a middleman, because that’s too transparent. That’s a skill to be sure, but something many people can do, and most don’t make $10MM a year doing it. Instead, say, you are ‘transferring risk’, ‘taking risk’, ‘selling risk’. If you buy and sell investments, this is technically true.

But it’s hugely misleading. Senator Claire McCaskill better characterized Goldman as a bookie whose main job is setting a line so they aren’t taking a position on the outcome, their customers are, just in offsetting ways. Making markets is first and foremost about pricing (setting the line), secondarily about hedging, and finally about how the residual risk agregates up. If you price correctly, the other two are de minimus.

But as I explain in my Finding Alpha book, one reason why ‘risk’ remains prominent in academic finance though it has never been identified precisely is that it has the ability to rationalize a lot of useful deception. Risk is presumably the most important thing in finance, its essence. But what is ‘risk’? That depends: it could be beta, a regression coefficient with the aggregate market; it could be volatility, or the correlation with the wealth-to-income ratio.

Bill Sharpe, one of the founders of the Capital Asset Pricing Model, now prefers a 12 factor model of risk that totally obviates his Nobel Prize winning insight, though no one seems to note the inconsistency. It is that which, in combination with an expected return, defines how much of some asset one wants to buy. Now, because an expected return is a straightforward concept, alpha deceptors don’t like to go there. Instead, they talk about the risk that could rationalize any desire for any expected return. And since ‘risk’ has both an insanely squirrelly but rigorous (covariance with the Stochastic Discount Factor!), and also has a subjective, intuitive definition, it allows one to say nonsense and get away with it.

It’s sort of like post-modern gibberish where one can talk about ‘Transgressing the Boundaries: Towards a Transformative Hermeneutics of Quantum Gravity’, and get smart people to think you, too, are smart, because it uses profound but amorphous words in a plausible sequence.

So, when alpha deceptors hide behind the ‘we are risk managers’ defense, remember, a real risk manager has a prosaic job, doing things that one can understand: verifying income on loan applications, measuring CAPM betas, calculating VaRs even. They are straightforward, and you can argue about key assumptions. The whole ‘risk manager’ spiel is because if you are getting paid $1MM+ a year, you know that there’s probably someone just as smart as you making half that who wants your job, so better make it sound like you are doing financial string theory. As ‘risk’ is essential, important, and undefinable, Blankfein and Sparks could talk about ‘selling risk’ and keep senators at bay.

The McCarthy Era Never Ended

Wednesday, April 28th, 2010

The McCarthy era never ended, Arnold Kling notes; Congressional hearings are still all about self-promotion:

The objective of every Congressperson at every hearing is to get on the evening news by bullying a witness. The only question I have is whether McCarthy is the one who started it, or whether he happened to be the one guy who got called out on it.

Too bad somebody at Goldman could not have called out a Senator. It must have been tempting to say, “Look. You can’t make a market by bending over backwards giving buyers every reason not to buy and sellers every reason not to sell. Sophisticated investors understand how we operate. Just like everybody who goes to play blackjack understands that some of the cards are dealt face down. You can complain that you think all the cards should be face up, but that would totally change the game. Do you hold to such high standards in your election campaigns? Do you think your disclosure of the consequences of your votes is honest? Do you disclose how lobbyists told you to vote? Do you go out of the way in your campaigns to give people all the possible reasons not to vote for you? You want to tell me about my responsibility to my clients? How would you like to hear my opinion about your responsibility to your constituents?”

Blame deflection. That is what this whole financial “reform” theater is all about.

Medieval Credit

Wednesday, April 28th, 2010

In medieval Europe, coins were hard to come by:

Prices after 800 AD were calculated largely in terms of an old Carolingian currency that no longer existed (it was actually referred to at the time as “imaginary money”), but ordinary day-to-day buying and selling was carried out mainly through other means. One common expedient, for example, was the use of tally-sticks, notched pieces of wood that were broken in two as records of debt, with half being kept by the creditor, half by the debtor. Such tally-sticks were still in common use in much of England well into the 16th century. Larger transactions were handled through bills of exchange, with the great commercial fairs serving as their clearing houses. The Church, meanwhile, provided a legal framework, enforcing strict controls on the lending of money at interest and prohibitions on debt bondage.

Of course, Europe was an economic backwater then:

The real nerve centre of the Medieval world economy, though, was the Indian Ocean, which along with the Central Asia caravan routes connected the great civilisations of India, China, and the Middle East. Here, trade was conducted through the framework of Islam, which not only provided a legal structure highly conducive to mercantile activities (while absolutely forbidding the lending of money at interest), but allowed for peaceful relations between merchants over a remarkably large part of the globe, allowing the creation of a variety of sophisticated credit instruments. Actually, Western Europe was, as in so many things, a relative late-comer in this regard: most of the financial innovations that reached Italy and France in the 11th and 12th centuries had been in common use in Egypt or Iraq since the 8th or 9th centuries. The word “cheque”, for example, derives from the Arab sakk, and appeared in English only around 1220 AD.

Earth Day Predictions from 1970

Wednesday, April 28th, 2010

I didn’t come across these Earth Day predictions from 1970 until well after this year’s Earth Day, but they do beautifully illustrate why you shouldn’t trust experts:

“We have about five more years at the outside to do something.”
— Kenneth Watt, ecologist

“Civilization will end within 15 or 30 years unless immediate action is taken against problems facing mankind.”
— George Wald, Harvard Biologist

“We are in an environmental crisis which threatens the survival of this nation, and of the world as a suitable place of human habitation.”
— Barry Commoner, Washington University biologist

“Man must stop pollution and conserve his resources, not merely to enhance existence but to save the race from intolerable deterioration and possible extinction.”
New York Times editorial, the day after the first Earth Day

“Population will inevitably and completely outstrip whatever small increases in food supplies we make. The death rate will increase until at least 100-200 million people per year will be starving to death during the next ten years.”
— Paul Ehrlich, Stanford University biologist

“By [1975] some experts feel that food shortages will have escalated the present level of world hunger and starvation into famines of unbelievable proportions. Other experts, more optimistic, think the ultimate food-population collision will not occur until the decade of the 1980s.”
— Paul Ehrlich, Stanford University biologist

“It is already too late to avoid mass starvation.”
— Denis Hayes, chief organizer for Earth Day

“Demographers agree almost unanimously on the following grim timetable: by 1975 widespread famines will begin in India; these will spread by 1990 to include all of India, Pakistan, China and the Near East, Africa. By the year 2000, or conceivably sooner, South and Central America will exist under famine conditions…. By the year 2000, thirty years from now, the entire world, with the exception of Western Europe, North America, and Australia, will be in famine.”
— Peter Gunter, professor, North Texas State University

“Scientists have solid experimental and theoretical evidence to support… the following predictions: In a decade, urban dwellers will have to wear gas masks to survive air pollution… by 1985 air pollution will have reduced the amount of sunlight reaching earth by one half….”
Life Magazine, January 1970

“At the present rate of nitrogen buildup, it’s only a matter of time before light will be filtered out of the atmosphere and none of our land will be usable.”
— Kenneth Watt, Ecologist

Stanford’s Paul Ehrlich announces that the sky is falling.
“Air pollution… is certainly going to take hundreds of thousands of lives in the next few years alone.”
— Paul Ehrlich, Stanford University biologist

“We are prospecting for the very last of our resources and using up the nonrenewable things many times faster than we are finding new ones.”
— Martin Litton, Sierra Club director

“By the year 2000, if present trends continue, we will be using up crude oil at such a rate…that there won’t be any more crude oil. You’ll drive up to the pump and say, `Fill ‘er up, buddy,’ and he’ll say, `I am very sorry, there isn’t any.’”
— Kenneth Watt, Ecologist

“Dr. S. Dillon Ripley, secretary of the Smithsonian Institute, believes that in 25 years, somewhere between 75 and 80 percent of all the species of living animals will be extinct.”
— Sen. Gaylord Nelson

“The world has been chilling sharply for about twenty years. If present trends continue, the world will be about four degrees colder for the global mean temperature in 1990, but eleven degrees colder in the year 2000. This is about twice what it would take to put us into an ice age.”
— Kenneth Watt, Ecologist

Adventures of a Bystander

Tuesday, April 27th, 2010

David Foster recently mentioned Peter Drucker’s Adventures of a Bystander, in which he tells his own life story indirectly, via profiles of people has known:

In the chapter titled “Ernest Freedberg’s World,” Drucker writes about two old-line merchants. The first of these, called “Uncle Henry” by those who knew him, was the founder and owner of a large and succesful department store. When Drucker met him, he was already in his eighties. Uncle Henry was a businessman who did things by intuition more than by formal analysis, and his own son Irving, a Harvard B-School graduate, was appalled at “the unsystematic and unscientific way the store was being run.”

Drucker remembers his conversations with Uncle Henry. “He would tell stories constantly, always to do with a late consignment of ladies’ hats, or a shipment of mismatched umbrellas, or the notions counter. His stories would drive me up the wall. But gradually I learned to listen, at least with one ear. For surprisingly enough he always leaped to a generalization from the farrago of anecdotes and stocking sizes and color promotions in lieu of markdowns for mismatched umbrellas.”

Reflecting many years later, Drucker observes: “There are lots of people with grasshopper minds who can only go from one specific to another — from stockings to buttons, for instance, or from one experiment to another — and never get to the generalization and the concept. They are to be found among scientists as often as among merchants. But I have learned that the mind of the good merchant, as also of the good artist or good scientist, works the way Uncle Henry’s mind worked. It starts out with the most specific, the most concrete, and then reaches for the generalization.”

Drucker also knew another leading merchant, Charles Kellstadt (who had once run Sears). Kellstadt and Drucker served together on a Department of Defense advisory board (on procurement policy), and Kellstadt told “the same kind of stories Uncle Henry had told.” Drucker says that his fellow board members “suffered greatly from his interminable and apparently pointless anecdotes.”

On one occasion, a “whiz kid” (this was during the McNamara era) was presenting a proposal for a radically new approach to defense pricing policy. Kellstadt “began to tell a story of the bargain basement in the store in Chillicothe, Ohio, where he had held his first managerial job, and of some problem there with the cup sizes of women’s bras. He would stop every few sentences and ask the bewildered Assistant Secretary a quesion about bras, then go on. Finally, the Assistant Secretary said, “You don’t understand Mr. Kellstadt; I’m talking about concepts.”

“So am I,” said Charlie, quite indignant, and went on. Ten minutes later all of us on the board realized that he had demolished the entire proposal by showing us that it was far too complex, made far too many assumptions, and contains far too many ifs, buts, and whens.”

After the meeting, another board member (dean of a major engineering school) said admiringly, “Charlie, that was a virtuoso performance. but why did you have to drag in the cup sizes of the bras in your bargain basement forty years ago?”

Drucker reports that Charlie was surprised by the question: “How else can I see a problem in my mind’s eye?”

Drucker draws this conclusion, citing Plato’s Phaedrus and the Krito:

They teach us that experience without the test of logic is not “rhetoric” but chitchat, and that logic without the test of experience is not “logic” but absurdity. Now we need to learn again what Charlie Kellstadt meant when he said, “How else can I see a problem in my mind’s eye?”

What idiot signed in as Maxim Afinogenov?

Tuesday, April 27th, 2010

At Tuesday night’s adult pick-up hockey at the Pelham Ice Rink in Birmingham, Alabama, one of the players signing in asked a reasonable question: What idiot signed in as Maxim Afinogenov?

Turns out, the “idiot” actually was Afinogenov, the 30-year-old right-winger for the NHL Atlanta Thrashers, three-time Russian Olympian, and seven-time member of the Russian National Team that is competing in the IIHF World Championships next month in Germany.

The man known in hockey as “Mad Max” for his blazing speed up and down the ice has been in Birmingham all week with his girlfriend, Elena Dementieva, the top-ranked tennis player on the Russian team that plays the United States in a Fed Cup semifinal match that begins today at the Birmingham-Jefferson Convention Complex Arena.

But with the Thrashers’ season over and training camp coming up for the Russian National Team, the Moscovite was looking for some ice time.

Jeff Cheeseman, director of hockey for the Pelham Civic Center, couldn’t believe it when he got the call from Afinogenov’s agent.

“His agent said he wanted to skate,” Cheeseman said. “So I told her we had an adult pick-up game on Tuesday nights, and (Afinogenov) showed up. We limit the number of players, so you have to sign in and pay $10. I made sure his name was first on the list.”

But no, he didn’t make Afinogenov pay the $10.

“He was very professional, sharing the puck and everything,” Cheeseman said. “Then I told him we have a little better level of competition on Thursday nights with BASH (Birmingham Area Select Hockey). These are guys who played college or minor league, a few of the old Birmingham Bulls.

“As a general rule, we don’t allow drop-ins. We made an exception.”

The biggest problem Thursday turned out to be which team Afinogenov played with. He started out on the Black team and within 10 minutes the score was 7-2, with Afinogenov scoring all seven goals — “the quickest paced 10 minutes we’ve ever played,” Cheeseman said.

At that point he was “traded” to the White team, which wound up winning, 16-13.

“Of the 29 goals, Maxim scored 17, including the last three after it was tied, 13-13,” Cheeseman said. “And he didn’t come off the ice in either the second or third periods. He told us he was looking for conditioning. And besides, who was going to tell him to come off”

I don’t play hockey, but this reminds me of the time I decided not to go to Chris Brennan’s Westside Tournament, and Genki Sudo, not yet a name in American MMA circles, decided to show up and compete. The first fighter he schooled was Bao Quach, one of Brennan’s best students and now a pro fighter.

Monumental Fiasco

Tuesday, April 27th, 2010

Curzon calls Senegal’s recently unveiled African Renaissance Monument, built near Dakar International Airport, a monumental fiasco:

The ceremony marking completion was held last week on the 50th anniversary of Senegal’s independence from France. At 50 meters in height, it is taller than the Statue of Liberty (49 meters) and represents an African couple and child. Senegalese President Wade has said that the message of the statue is about “Africa emerging from the darkness, from five centuries of slavery and two centuries of colonialism.”

So, what’s the problem? Well, first, it was built by the Mansudae Overseas Project Group of Companies — the North Koreans.

And, second, it’s surrounded by slums:

The locals are suffering from frequent power cuts and unstable food prices, added with floods that occasionally make large numbers of people homeless. That such resources were spent on such a monument in the middle of this makes many Senegalese consider the statue not a celebration of their freedom but a cruel joke that mocks them on a daily basis.

Payment for construction was made with a US$25 million land grant, which has been rumored to have since been resold for US$70 million. The Senegalese president told the international press that he had he no budget for the statute, so he instead offered the construction firm state-owned land. Other reports, however, say that the land was privately held and was given by a businessman with close ties to the president.

Then there are the religious leaders on both sides of the domestic community who are appalled by the statue. Senegal is 94% Muslim and the local imams are furious with the statue that they say is idolatrous and utterly immodest, with the woman baring her breasts. The president also had to apologize to the Christian minority when he compared the statue to Jesus Christ.

The project has also attracted controversy due to his claim that, as the president was the originator of the idea for the statue, he claims intellectual property rights and is entitled to a large cut of the profits that are raised from visitors to the statue.

And finally there’s the logistical, tourist factor. It turns out that the observation room, located at the top of the man’s head, can accommodate only 15 people, and the elevator carrying them to the top can hold only 5 persons. The monument is also sweltering on the inside and must be air conditioned at considerable expense, in a country where many residents face regular powercuts.

A History of England’s Social Architecture

Tuesday, April 27th, 2010

Richard Reeves summarizes David Willetts’ already-brief brilliant history of England’s social architecture:

He shows that far from being a modern invention, the nuclear family is a long-standing feature of Anglophone societies. (We are, he says, “the first nuclear power”.) The idea that we used to live in big, warm, noisy My Big Fat Greek Wedding-type families is a myth. “Think of England as being like this for at least 750 years,” he writes. “We live in small families. We buy and sell houses. We go out to work for a wage.”

The English have a private, market-based idea of property, in contrast to the familial property forms of our continental neighbours. Over a 44-year period in Leighton Buzzard, more than 900 houses changed hands. Two-thirds were sold to someone outside the family, rather than being passed down. The years in question? 1464 to 1508.

By contrast, the large familial networks of continental Europe act as the institutional anchor for property ownership and transmission, as well as for the formation of businesses and the provision of welfare. Willetts speculates that the property-managing function of French families may explain why romantic love there is more often associated with extramarital relationships. The orientation towards family-owned firms in Germany helps to explain the strength of the Mittelstand, the medium-sized, locally rooted layers of corporations.

Willetts does not at any point fall victim to the awful if-only-we-were-more-like-the-continentals lament. He does not want to alter our social DNA. But our particular social economy has two important consequences. First, the smallness of our families puts a greater emphasis on non-familial civic institutions. Small families need civil society more. This is why medieval guilds, trade unions and churches have played such an important role in our history.

Second, the welfare role of government is greater in a society marked by a highly privatised notion of property and small families. Breadwinning men are less likely to have family resources to fall back on, so need out-of-work benefits. This system worked reasonably well until the rise in divorce rates in 1970s and 1980s. Then, millions of women, many with dependent children, suddenly became reliant on the state. As Willetts puts it: “A welfare system that was originally designed to compensate men for loss of earnings is slowly and messily redesigned to compensate women for the loss of men.” And everybody — but especially women — ends up poorer. This is why Willetts, certainly no reactionary, is so pro-marriage.

Strong parental relationships also influence children’s well-being, which in turn affects the chances of upward social mobility, another of Willetts’s preoccupations. Drawing on the very latest and best research, Willetts shows how the middle classes are tightening their grip on the opportunities available for the next generation. The professions are all but sealed off from the poor: “The competition for jobs is like English tennis, a competitive game but largely one the middle classes play against each other.”

That, oddly, is from a Guardian review of a Tory MP’s new book, The Pinch: How the Baby Boomers Took Their Children’s Future — And Why They Should Give it Back.

Hat tip to Steve Sailer, who believes that this “cultural DNA” is particularly vulnerable to mass immigration.

Aretae mentions the same article as supporting one of three hypotheses on the Industrial Revolution — namely hypothesis three: the English are weird — which brings Devin to share some significant excerpts from Carroll Quigley‘s Tragedy and Hope: A History of the World in Our Time:

As an island off the coast of Europe, Britain had security as long as it had control of the narrow seas….In this way, by following balance-of-power tactics, Britain was able to play a decisive role on the Continent, keep the Continent divided and embroiled in its own disputes, and do this with a limited commitment of Britain’s own resources, leaving a considerable surplus of energy, manpower, and wealth available for acquiring an empire overseas. In addition, Britain’s unique advantage in having security through a limited commitment of resources by control of the sea was one of the contributing factors which allowed Britain to develop its unique social structure, its parliamentary system, its wide range of civil liberties, and its great economic advance.

The Hidden Costs of Populism vs. the Hidden Benefits of War

Tuesday, April 27th, 2010

Bryan Caplan presents a policy trade-offs conjecture:

1. In economic policy, people under-estimate trade-offs.  When contrarians point out the large hidden costs of “feel good” legislation — protectionism, price controls, Medicare, etc. — the public and politicians furrow their brows in skepticism.

2. In foreign policy, people over-estimate trade-offs.  When contrarians point out the large, blatant costs of war — massive loss of life and wealth — the public and politicians credulously invoke just-so stories about the large hidden benefits of bloodbaths.

For example, if someone points out that the minimum wage increases unemployment, most people roll their eyes in disbelief, or attack his intentions.   Where’s the absolute proof?

On the other hand, if someone claims that killing thousands of children in another country protected/will protect our own children from a similar fate, most people take the argument seriously, or nod in hard-headed agreement.

This double standard would be dangerous even if expert understanding of the hidden costs of economic policy and the hidden benefits of foreign policy were on equal footing.  But the heart of my conjecture is that they’re not: Economists know a lot about the hidden costs of populism; foreign policy experts know very little about the hidden benefits of war.

The disemployment effect of the minimum wage might be moderate or large, but it’s there.  When people point to the benefits on a war, on the other hand, there’s often real uncertainty about whether the benefits are positive or negative.  Will the war frighten our enemies — or provoke them?  Will pre-emptive action remove a rising threat — or inspire a new threat that otherwise wouldn’t have existed?

Example: Almost no one thought World War I would give birth to anything like Communism or Nazism, or that the “war to end wars” would soon pale before World War II.  And who foresaw that the first Iraq War would inspire a wave of anti-American terrorism — which would then inspire a second Iraq War?  In each case, people at the time imagined that they faced clear, stark trade-offs, when the only really clear fact was that they were going to spend a lot of resources in order to kill a lot of people.

Coinage was not invented to facilitate trade

Tuesday, April 27th, 2010

The so-called Axial Age — when Rome was rising and falling, China was fragmenting into warring states and re-merging into an empire, and all the world’s great religions were forming — was a time of great creativity and great violence, and these came together in the development of coinage:

Coinage, which allowed for the actual use of gold and silver as a medium of exchange, also made possible the creation of markets in the now more familiar, impersonal sense of the term. [...] Coinage, certainly, was not invented to facilitate trade (the Phoenicians, consummate traders of the ancient world, were among the last to adopt it). It appears to have been first invented to pay soldiers, probably first of all by rulers of Lydia in Asia Minor to pay their Greek mercenaries. Carthage, another great trading nation, only started minting coins very late, and then explicitly to pay its foreign soldiers.

Mencius Moldbug Channeling Elihu Root

Monday, April 26th, 2010

The Center for a New American Security describes itself as developing strong, pragmatic and principled national security and defense policies.

Mencius Moldbug finds that such “principled” policies work against their own principles:

Yet somehow, we have the strictest ROE since Gandhi invaded Heaven, and civilians keep getting their guts all over the road. Accidentally, of course. But have you ever heard of risk homeostasis? The more American troops behave like Gandhi invading Heaven, the less worried your average Pashtoon is about being mistaken for a Taliban. You’ll note that they drive pretty recklessly, too.

What’s needed is not to incinerate the civilians, but to conquer them. The art of conquering Pashtoons, or other warlike tribes, is no big secret. Make every Pashtoon responsible to a sheik, who is responsible to the Viceroy. If the Pashtoon causes trouble, his sheik hangs him. If his sheik doesn’t hang him, the Viceroy hangs both Pashtoon and sheik. Or at least, fires the sheik and replaces him with his cousin.

Can General McChrystal fire his traditional leaders? Or his non-traditional leaders? Or, God forbid, hang them? See, that’s your first problem. Fix that problem, then get back to me. Or tell me, with a straight face, there’s no one in Kabul who needs hanging.

A little suspension will not put any great strain on your execution machinery, either. Eldon Gorst in Egypt used to muse that if he could hang one Egyptian a year, chosen at his sole personal discretion, all disturbances would end for all time forever. Alas, the mysterious art of colonial government was moving in the exact opposite direction. With what result, we now see!

Bet you don’t even know who Eldon Gorst was. See, there’s your problem. Arrogant ignorance, plain and simple. Americans are dying because of it. They will continue to die.

Our troops have all the technical devices anyone could ever need to conquer a country. At their feet lies the most pissant country ever conquered, inhabited by the most backward peasants in the known universe. But we can’t do it. We are institutionally incapable of knowing how to do it. Google Books has scanned the entire Second British Empire, all written in English and accessible at a click. No one goes near it.

Today, in 2010, it would be far easier for USG to put a man on the moon, than nail up a gallows in Kabul. And we couldn’t put a man on the moon, either! Alas, it will be a long time before civilization returns to the Korengal. All I can say is one thing: when it comes back, it will come back with a rope and something tall.

There’s much more.

Would You Like to Play a Game?

Monday, April 26th, 2010

Scott Brown looks back at WarGames, the film that turned geeks and phreaks into stars — and notes that it didn’t even start off as a film about hacking into NORAD’s computer system:

In 1979, Walter Parkes, the future head of DreamWorks Pictures, was a young screenwriter with the outlines of an idea he’d developed with Lawrence Lasker, a script reader at Orion Pictures. Called The Genius,it was a character film about a dying scientist and the only person in the world who understands him — a rebellious kid who’s too smart for his own good. The idea of featuring computers and computer networks would come later.

Walter Parkes, Screenwriter: WarGames is looked upon as technologically prescient, but we actually started off with a concept that had nothing to do with technology.

Lawrence Lasker, Screenwriter: We were complete newbies. In 1979, we didn’t even know that home computers could hook up to other computers.

Peter Schwartz, Futurist and creative consultant: I spent 10 years at the Stanford Research Institute, from 1972 to the end of 1981. That’s where all this began. Walter and Larry came to SRI with a script idea called The Genius. And it was about a boy and a relationship he had with a great scientist named Falken, who was basically Stephen Hawking.

Lasker: For me, the inspiration for the project was a TV special Peter Ustinov did on several geniuses, including Hawking. I found the predicament Hawking was in fascinating — that he might one day figure out the unified field theory and not be able to tell anyone, because of his progressive ALS. So there was this idea that he’d need a successor. And who would that be? Maybe this kid, a juvenile delinquent whose problem was that nobody realized he was too smart for his environment. That resonated with Walter. So I said, let’s actually go talk to people about how a kid could get in trouble and get discovered by a brainy scientist and take it from there.

Parkes: Before our conversation, the Falken character was just a way to access the adult side of the movie. It wasn’t even much about computers yet.

Schwartz made the connection between youth, computers, gaming, and the military — and The Genius began its long morph into WarGames.

Schwartz: There was a new subculture of extremely bright kids developing into what would become known as hackers. SRI was in Palo Alto, and all the computer nerds were around: Xerox PARC, Apple just starting — it was all happening right there. SRI was node number two of the Internet. We talked about the fact that the kinds of computer games that were being played were blow-up-the-world games. Space war games. Military simulations. Things like Global Thermonuclear War. SRI was one of the main players in this. SRI was, in fact, running computerized war games for the military.


Monday, April 26th, 2010

Virginia has the highest percentage of personalized license plates in the nation, and its Personalized Plates Work Center puts requests through computer analysis before passing them on to to a 20-person Word Committee for review and a vote — but sometimes a sinister coded message sneaks through:

The owner of a Ford truck bearing the license plate 14CV88 will have to find a new message after the DMV on Wednesday canceled its earlier approval of that series of letters and numbers.

A photo of the truck hit the Web a few days ago, went viral on car and other blogs and finally came to the attention of the Council on American-Islamic Relations, an advocacy group for American Muslims. On Wednesday morning, the group complained to the DMV that the plate contained a white supremacist and neo-Nazi statement.

A few hours later, the DMV agreed that the plate contains a coded message: The number 88 stands for the eighth letter of the alphabet, H, doubled to signify “Heil Hitler,” said CAIR’s Ibrahim Hooper. “CV” stands for “Confederate veteran” — the plate was a special model embossed with a Confederate flag, which Virginia makes available for a $10 fee to card-carrying members of the Sons of Confederate Veterans. And 14 is code for imprisoned white supremacist David Lane’s 14-word motto: “We must secure the existence of our people and a future for white children.”

The giveaway that something was amiss, Hooper said, was the truck itself. An enormous photo of the burning World Trade Center towers covers the entire tailgate, with the words: “Everything I ever needed to know about Islam I learned on 9/11.”

Hooper at first thought the picture was a Photoshopped hoax. But when he called the DMV and discovered the plate was registered in 2005 to a Ford F-150 pickup truck, Hooper started to worry.

“If the license plate had been on a VW Beetle with nothing else on it, or a Volvo station wagon, no one would probably have noticed,” said Hooper. “But when the Confederate flag is thrown in… it shows the convergence of anti-government and anti-Islamic sentiments that unfortunately seem to be growing.”

I can only imagine the harm caused by adding 14CV88 to the back of that truck.

The Problem with Online Education

Monday, April 26th, 2010

The problem with online education, Matt Mireles says, is that it solves a smaller problem than it creates:

Namely, it solves the problem created by a one-size-fits-all course structure that come from the brick-and-mortar school system: curriculums are not tailored to the individual and thus produce a sub-optimal learning experience.

What it eliminates (as far as I can tell) is the a) intimate social structure and bonds that come from being forced into a classroom for several hours a week, b) rigor and discipline of being forced to get shit done on a fixed schedule, and c) peer pressure that drives much of the psychology of academic achievement.