The Friday Bacon

So do I baby, so do I.

Guns on the Border

With people turning to gun violence during times of desperation and with the recession increasing incidents of desperation the MSM has been covering incidents of gun violence frequently lately. Of course in the MSM this topic always is an opportunity to discuss gun control. At the same time the Obama administration has been discussing gun control in relation to Mexican drug cartel violence on the border. In the MSM this leads to discussions that assume the return of the Brady Ban. I get the feeling that this is a wag the dog situation. Especially since it seems that reports in the MSM of violence on the boarder are inflated beyond all proportion.

My suspicions are raised even more that the MSM is just getting their gun control rocks off when Homeland Security Secretary Janet Napolitano says that a renewed assault weapons ban would not be effective in reducing Mexican drug cartel violence.

Of Silent Passings

From The Fringe Element

I have previously mentioned how the origins of D&D are intertwined with southern Wisconsin. I have been chided, probably in response to the articles I have written regarding Gary Gygax. I have been chided for not recognizing the passing of Dave Arneson. Arneson is pictured above as the bearded guy on the left. The bearded guy in the center being accused of being the murderer is Gary Gygax.

Dave Arneson was instrumental in the creation of D&D back in the ancient days before anyone had thought of a role playing game or a character sheet, or a Dungeon Master. These words are so significant in my life that these men seem to be earth shattering geniuses. I find myself hard pressed to separate out how their original ideas have changed the face of gaming or created whole new dimensions of the paper, miniatures, board game, and video game industries.

Sadly, I never paid much attention to the names on my books which would have given me some inkling of the great men to whom I owe the many hours of nerdy squealing joy. Equally sad is the fact that often we never hear of significant people until after they have died. Arneson Died last week on Tuesday. He was only in his early 60's.

UPDATE: According to our commentator(commenter?) the man I identified above as Dave Arneson is actually Mike Carr. From my perspective this is conflicting information coming from third parties. If Wikipedia has taught me anything it is the value of verification on the internet. So, if anyone can positively identify those in the above image I will go off of that in the future. My goal was to post an image related to this article and not just swiped from Wikipedia, and thereby enrich the imagescape of the internet. However I would warn against using the images I post as a reference since it is abundantly clear I do not know who these people are.

The Friday Bacon

First Person Reporting. ZOMG!

There is(are?) still thirty minutes left to file your taxes as of my typing this. However here in Cleveland it may be more difficult to file your taxes than in previous years since the post office will not be staying open till midnight. At least not all of them. Only the main branch of the post office will be open till midnight tonight because of budget cutbacks stemming from the recession. Someone saw this coming and positioned an advertising blimp over the city for all the people lining the streets waiting to get into the post office. Unfortunately my camera sucks and this is all I got.

UPDATE:

There also may have been a basket ball game. But this is the level of reporting you get from a blog.

Time Warner Seeks to Destroy the Internet

Like a cartoon villain, Time Warner has enacted a devious plan that promises to destroy something that brings joy to the people like you and I. If you haven't heard about this yet, Time Warner has begun testing a tiered system where they charge you by both the speed and total amount of bites you operate at in a month. If you aren't feeling outrage right now, then you don't understand what I just said.

Time Warner is attempting to take advantage of the average person's ignorance of how computers and the Internet operate by manipulating ambiguities in language to make it seem like there is somehow a finite amount of Internet out there. When operating under that vague understanding of resource use that is so obvious in the physical world, it seems reasonable that they would want to charge us for how much of something we use. The thing is that this is a deception. There is not a finite amount of internets out there that one day we might us up much like we might one day use up all the oil. There are just limits on how much can be delivered to a certain number of users at any given moment. Which is why the erroneous "tubes" analogy is so attractive.

It is helpful to think of this from the end of the ISP. Faced with the need to consistently upgrade their capacity to handle many more and more customers at the faster and faster speeds that are needed to run the more and more intensive operations we perform over the Internet the ISP decides, not that the costs will one day become prohibitive(because as the Wired graph shows, that simply isn't true. And simple logic tells you that if they faced a problem of overhead they could simply raise their rates. They are the cable company after all), but that since this technical reality creates users of different needs, using a different metric vastly changes your rate structure and you can balloon your revenue.

The simple capitalist, free market logic is obvious here. Where you have a monopoly in your individual markets you can charge whatever you want. Since most regions of the country are serviced by a single cable company or ISP they can all do this without fear of being out competed by the numerous other companies out there. The only customers that will be spared are those that live in competitive markets. And sure enough ATT has started testing this idea out themselves. Now Comcast, the big villains of the last bandwidth war are looking competitive because all they have is a cap.

The slightly less obvious reason that is highly compelling for a cable company to do something sinister like this is that they are a cable company. They are primarily in the business of offering TV entertainment and people going over to the Internet to get their shows whenever they want(even their own customers) deprives them of a customer for their other services, and of ad revenue since people are having difficulty finding satisfying advertising solutions on the Internet. Largely because you have accurate measures of how effective your ads are on the Internet where they are cheap, but have to pay top dollar for television ads that are widely believed to be entirely ineffective.

The tiered structure is basically Time Warner punishing online gamers and online movie watchers for getting their entertainment elsewhere.

The tiers are also very low. Or at least in the way we measure Internet use anymore. Time Warner points out that their first tier, 1G, satisfies the needs of a third of their customers. These are basically the people that don't use the Internet. I admit that these people will probably pay less for the same amount of Internet. Anything above your grandmas Internet use enters an onerous tiered system where you pay for each gigabyte you use. In a month.

Apart from the possibility of viruses and malware using Internet without your consent and beyond your control, this is an attack on the basic philosophy that has led to the Internet and computer use as we know it. We all converted over to cable Internet because it was fast and primarily because we didn't have to pay for every minute of Internet use through a dedicated phone line. It freed up so much of the initial cost barrier of the Internet and increased the speed to the point where it became the multi-media communications tool it had always promised to be. This type of Internet service created the concept of the computer as the always-on, always-connected Internet terminal. This philosophy of the personal computer is central to the way we think of computer use and central to how software operates. Going back to a tiered structure where one pays based on an almost arbitrary metric is an attack, an attack based in greed, but an attack on the philosophy that was foundational to Web 2.0. We will never be able to proceed to Web 3.0 with this albatross around our necks.

That is where monopolies hurt business. Even regional ones. This was a lesson we learned around the last great depression and hopefully with a Democratic congress it is not a lesson we will have to re-learn the hard way. There is at least one Congressman trying to fight back. He has proposed the interesting philosophical change of calling the Internet a utility. I like that. If phone service was essential to daily life enough to be called a utility then the Internet is as well.

You should write to your representatives at the state and federal level. Raising Cain on the Internet will only go so far to produce resistance to this move by Time Warner and Ma Bell. You have to get the honest perspective of the people to the government before the industry twists the story.

It's easy to question the validity of an economic argument that relies on the business generation of the Internet. If you are a moron, or have been living in a cave since 1990. It is easy to point out that many small businesses and individuals have been able to expand their sales and start new businesses because of the low overhead cost of the Internet and its ability to reach an international consumer base. But there are specific businesses that will be impacted by this kind of tiered Internet usage structure. Online gaming is the first that comes to mind. This is now the primary business model for game manufacturers. Every gaming platform is connected to the Internet. The single player content is often secondary in importance to the users of the games. And every gaming device now can download new titles entirely from the Internet. This new business model for the gaming industry that drastically reduces overhead and cuts out the middle man would be jeopardized by requiring gamers to engage in a cost benefit analysis of whether the game would be worth the additional tiered charges.


I currently use Time Warner service to access the Internet. But that will change as soon as I can find an alternate service provider. The only thing a corporation can understand is their own greedy, short term, self interest. So the only way to communicate with them is with money. So I will be taking mine away from the finks at Time Warner for even thinking about using the byte as a metric for billing.

The Friday Bacon

The Ben Franklin Report: Fraud around Every Corner

When it comes to expertise in winding down failing financial institutions, there are few more expert than William K. Black, who in a previous position, served as a regulator on the front lines of the S&L Crisis. Sitting down with Bill Moyers, Black makes a very strong case that the entire housing bubble was the result of fraud and inherently fradulent practices, whereby information was not disclosed by the borrower, or in many cases was not even so much as required for the loan. The full half hour interview is probably one of the most consise descriptions of the various problems of the financial industry. Among the most serious allegations in the interview, is that the Prompt Corrective Action Law, a product of the S&L crisis, has been completely ignored. The law sets forth the various categories of capital, ranging from Well Capitalized to Critically Undercapitzlied. If, for instance, a bank were undercapitalized under the provisions of this bit of law, it would be required to submit a Capital Restoration Plan that "is based on realistic assumptions, and is likely to succed in restoring the institution's capital". Even if the plan is accepted by the relevant federal banking agency, the undercapitalized bank is not allowed to acquire any interest in any company or insured depository institution. Thus, if this law were enforced, the banks that have been the recipients of bailouts would not be allowed to gobble up their former competition, at the going market rate or the weekend shotgun wedding rate. If the re-capitalization plan is not acceptable for whatever reason or has been improperly implemented, the executives and directors could potentially be dismissed if they have been employed for longer than 180 days. However, even if they survive management improvements, they will take a hit to the pocket, as the bank is required to seek FDIC approval of any bonus, which have so famously come to be a sticking point in the public debate.

Sean Oleander writes a piece which neatly serves as a continuation of Prof. Frank's points, pointing out the roles current administration officials played in the blissful years during which this crisis-to-be was allowed to metastisize.

One need look no farther than the treatment of the Civil Rights Division of the Department of Justice to see that the rule of law was tattered beyond recognition during the Bush Administration. While some may see a certain continuitiy in the financial community to be an asset in such interesting times, but perhaps a better description would be collusion. How much is a bailout worth in campaign donations? Like the War in Iraq, the current financial bailout was planned with very little trancparency by industry insiders, and, again analogous, the cost to the Treasury, even within the first 12 months of operations, have gone far beyond projections.

The problem is all the more immediate with the Social Security Trust Fund failing almost a decade earlier than scheduled. Having served as a piggy bank since the Reagan Administration, the fund is going to start depleting itself, forcing President Obama and Secretary Geithner to borrow more money in the form of treasuries than they might be forced to otherwise. How much more money will be poured into deep, dark holes before the information asymmetry and fraud that is at the heart of the ongoing crisis is resolved? With the establish protecting its mighty Samson from a haircut, the federal government will probably just spend itself out of existence before admitting the problem.

Ben Franklin Report: The Mark to Market Rule

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As if in direct response to Colbert's challenge to create something, anything to believe in to turn the recession around, the Financial Accounting Standards Board changed the Mark to Market rule. Unfortunately this was actually in response to intense pressure from Congress and the Banks. This lets banks revalue their toxic assets before reporting them on their books. (Which makes me wonder why this was done just after the end of the first quarter.) The banks that took on more risk than they could manage don't just get to value these assets at whatever they want, they get to value these pieces of steaming crap at whatever they think someone would pay if anyone was interested in buying a steaming pile of shit just because someone called it golden.

Of course this looks exactly like what we have been doing so far in relation to this banking fiasco. We looked at the disaster and saw that the people in charge had established a system of perverse incentives that encouraged highly risky acts and called them extremely safe because of a complete lack of regulation. Our response has been to give even more huge shit tons of cash these very same people that fucked us for fun and profit and by removing any other regulation that insists we call a spade a spade. I am finding it harder and harder to resist the urge to call for murderous mobs to converge on Wall Street.

The Wall Street response to the reduction of regulation was obvious. Though, two years ago, if you said that Dow 8,000 would be good news people either would have thought you were crazy or they would have been terrified.

In this article, John Berry tries to criticize the negative reaction to the rule change that I outlined above. But he is comparing apples to oranges when he says,

The family doesn’t have to put up money to cover the difference between the mortgage and the lower market value. Nor should the Atlanta bank have to take a big hit on its reported income because some other mortgage-backed securities owner sold in a depressed market.

He is comparing the effect on banks that have to back their lending by having 10% of that value on their balance sheets. Which of course home owners don't do. And the family that is upside down on their mortgage will have to pay that money on the mortgage that is more than the value of their home just because they bought at the wrong time.

Lots of pundits and apologists for the financial industry keep trying to accuse home owners that face loosing their residence of buying beyond their means. Through this argument they try to push some of the moral culpability for this fiasco on people who only wanted a nice house. They didn't buy above their means, they listened to the market. The market told them what they were worth. It's not their fault the market lied to them because they couldn't have understood the market. Seriously, if huge banks couldn't see this coming when they specialize in finance, then its simply irrational to accuse home buyers of wrongdoing just because the effect of their actions is to further reduce the property value of their neighbors.

Berry does make a legitimate point about the removal of reality in accounting. He asserts that the Atlanta bank he is referring to in the above quote intends to hold on to its mortgage backed securities until they mature. Meaning the bank will be getting all the money from the mortgagees. This is the family in his apples to oranges scenario who has to pay the full value of the mortgage even though the house is worth less. (But hey, at least it still provides the same amount of warmth and shelter. Its just that breakfast nook they added doesn't mean they can afford to send the kids to college.) This means that the banks assets are really worth nearly their full value because the bank will get paid what it originally bargained. So the accounting rule lets them value their assets at what they can reasonably expect to still get paid over 30 years and they can lend out more money to consumers and businesses which increases liquidity and gets the markets moving again and leads to more manufacturing, more jobs, and more spending. Everyone's happy.

Except that just brings us back to where we started last November. No one knows how many mortgages will go into arrears or how many will be devalued through the proposed new bankruptcy rules. The short of it is we don't know if the mortgage backed securities will be worth what they were originally bargained for in 30 years when they run their course. All we do know is that they will be worth less. If not become worthless.

The Friday Bacon

Opening the fridge...



juice, chocolate, oranges, some leftovers....

On closer inspection...



BACON!!!