Global Cooling

Though we long ago took the fork in the road that veered away from Adam Smith’s invisible hand, one would hope that, as a democratic and ostensibly freedom loving society, we would endeavor to hold on to some basic tenets of a laissez-faire economic model.  As in most election cycles, this year’s cadre of candidates, especially the Democrats, are promoting ideas to “fix” our economy that would make even Lord Keynes roll over in his grave.

There is little doubt that our economy has suffered systemic damage due to the sub-prime crisis in the mortgage industry.  As an economy moves from growth to recession, there is almost always some dramatic event to point to as a catalyst and the meltdown in CDO’s can claim that fame in this instance.  To say, though, that this is the cause of our economic woes would be naïve.  Nevertheless, Obama and Clinton have made it loud and clear this week that, if elected, it is their intention to provide some type of direct stimulus to those disenfranchised homeowners, or, might we say, previous homeowners, who have been adversely affected by the terms of the mortgages that they signed to purchase said homes in the first place.  Mr. McCain does not go so far as to offer direct aid to individuals, but seems to be satisfied with the Federal Reserve’s moves towards backstopping JP Morgan in their buyout of Bear Stearns, the sub-prime poster child, as well as offering relaxed lending arrangements for financial institutions, both bank and broker alike. 

It may be, at this point in our development, too late to play it straight.  Our financial system, and by association the major financial systems of the world, have become dependent upon a framework of a de facto insurance policy that has and will assume all risks beyond the threshold of our corporate infrastructure.  Perhaps this began with Chrysler so many years ago, but whatever the precedent, it has surely become standard operating procedure going back to the Resolution Trust Corp., the Latin American Debt bailout, LTCM and, now, Bear Stearns.  The Greenspan Put has, apparently, been exercised, and not only is the Fed now taking marginal paper as collateral, but it looks as though some form of governmental stimulus will be directed towards individuals who did not read their loan documents (this latter point makes it quite difficult to apply the “too large to fail” doctrine to this scenario.)

In their never ending quest for appeasement, the elected official who seeks office for self rather than societal good (read as “all politicians”) can not help but to pander to the public and promote policies which, more than economic meddling, often prove quite harmful to the health of the system.  Would we have, years ago, let a few large, name brand, weak institutions collapse in spectacular implosions, we would, today, likely be blessed by a financial system built upon granite rather than sand.  On both Wall and Main, and from the top down, our tolerance for risk has grown out of proportion with our abilities to manage risk.  We reach and reach and reach for yield and forget the timeless principles of investing or borrowing that are supposed to maintain equilibrium.  Should our governments and regulatory institutions, who, by the way, are peopled and not monolithic, computerized entities, continue to add drams to the scale, it will become harder and harder, and much more painful, for market forces to ever work things out.  By the sound of it, our new leader, whoever it may be, has a pocket full of drams.

As a final note, as you listen to the candidates rail against the mortgage industry, take note of how much that industry is contributing to their campaigns.

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As reported by Bloomberg, Oracle is off more than 6% in after hours trading on weaker-than-expected quarterly sales.  This seems to contradict the bold statements made by CEO Larry Ellison some months ago to the effect that Oracle was immune to a slowdown in the economy.  

Ego, and Mr. Ellison has it in spades, seldom pays. 

You may want to read our Post from December 20th regarding Oracle.

Why let the truth get in the way of a good story?  Read this article regarding Hillary Clinton’s rememberance of a 1996 Bosnia trip.

Perhaps it has something to do with the definition of “IS.”

 

As you are most likely well aware, the Supreme Court of the United States is in the process of hearing Heller vs. Washington D.C. , the first Second Amendment case that this particular court has taken up, and one of the few Second Amendment issues that any Supreme Court has heard since 1933.  The case will determine whether the handgun ban that has been in place in Washington D.C. since 1976 is, in fact, legal.  

            Amendment II to the United States Constitution

            A well regulated militia, being necessary to the security of a free state, the right of   the people to keep and bear arms, shall not be infringed.

The crux of this case, and all gun-rights cases for that matter, lies within the definition of the term “militia.”  Those on the left argue that militia is a synonym for the US Military or, at worst, some other government sponsored, organized military body.  Those on the other side take “militia” to mean a civilian, citizen army in the model of the minutemen.  In other words, to the former, the right to keep and bear arms is a collective right granted to our nation’s military, while to the latter, the same rights are allocated to each of us as individuals.  As you can see, there is quite a gulf between the two interpretations, and there are infinite degrees in between.

In thinking about the men who signed the Declaration of Independence and put into words the Constitution of the United States, men who fought, bled and died in the pursuit of liberty and the destruction of tyranny, it is quite hard to imagine that they would have constructed an amendment that would grant collective rights to the state at the expense of the individual.  Quite the contrary, these were zealots in their quest for individual freedoms and most of them, by today’s standards, would likely be considered as radicals.  In addition to foreign threats, which defense may very well be best made by a national military, the founders were well aware of the potential abuse of the local government and the Second Amendment was written in order that the people may have some recourse against this threat.  It does not go without considerable notice that this amendment was placed second, only behind free religion, speech and assembly, in the order of things.  They knew then how important this matter was as a check and balance on the insatiable thirst for power that governments always fall prey to.

Eternal vigilance and apathy are mutually exclusive.  Once you allow your rights to slip away, they can only be regained at a high cost.  I encourge you to read the quotes that follow and decide on this matter for yourself.

Militia (according to Merriam Webster online)
          1          a: a part of the organized armed forces of a country liable to call only in emergency            
                      b: a body of citizens organized for military service
         2              the whole body of able-bodied male citizens declared by law as being subject to call to military service

What the Framers said about our Second Amendment Rights to Keep and Bear Arms
(source, George Mason University)

• “I ask, sir, what is the militia? It is the whole people, except for a few public officials.”
  - George Mason, in Debates in Virginia Convention on Ratification of the Constitution, Elliot, Vol. 3, June 16, 1788

• “Whereas civil-rulers, not having their duty to the people duly before them, may attempt to tyrannize, and as military forces, which must be occasionally raised to defend our country, might pervert their power to the injury of their fellow citizens, the people are confirmed by the article in their right to keep and bear their private arms.”
  – Tench Coxe, in Remarks on the First Part of the Amendments to the Federal Constitution

• “The best we can hope for concerning the people at large is that they be properly armed.”
  – Alexander Hamilton, The Federalist Papers at 184-188

• If the representatives of the people betray their constituents, there is then no recourse left but in the exertion of that original right of self-defense which is paramount to all positive forms of government, and which against the usurpations of the national rulers may be exerted with infinitely better prospect of success than against those of the rulers of an individual State. In a single State, if the persons entrusted with supreme power become usurpers, the different parcels, subdivisions, or districts of which it consists, having no distinct government in each, can take no regular measures for defense. The citizens must rush tumultuously to arms, without concert, without system, without resource; except in their courage and despair.
  – Alexander Hamilton, Federalist No. 28

• “That the said Constitution shall never be construed to authorize Congress to infringe the just liberty of the press or the rights of conscience; or to prevent the people of the United States who are peaceable citizens from keeping their own arms … “
  – Samuel Adams, Debates and Proceedings in the Convention of the Commonwealth of Massachusetts, at 86-87 (Pierce & Hale, eds., Boston, 1850)

• “[The Constitution preserves] the advantage of being armed which Americans possess over the people of almost every other nation…(where) the governments are afraid to trust the people with arms.”
  –James Madison, The Federalist Papers, No. 46

• “To suppose arms in the hands of citizens, to be used at individual discretion, except in private self-defense, or by partial orders of towns, countries or districts of a state, is to demolish every constitution, and lay the laws prostrate, so that liberty can be enjoyed by no man; it is a dissolution of the government. The fundamental law of the militia is, that it be created, directed and commanded by the laws, and ever for the support of the laws.”
  –John Adams, A Defense of the Constitutions of the United States 475 (1787-1788)

• “Before a standing army can rule, the people must be disarmed; as they are in almost every kingdom in Europe. The supreme power in America cannot enforce unjust laws by the sword; because the whole body of the people are armed, and constitute a force superior to any band of regular troops that can be, on any pretense, raised in the United States. A military force, at the command of Congress, can execute no laws, but such as the people perceive to be just and constitutional; for they will possess the power, and jealousy will instantly inspire the inclination, to resist the execution of a law which appears to them unjust and oppressive.”
  –Noah Webster, An Examination of the Leading Principles of the Federal Constitution (Philadelphia 1787).

• “Who are the militia? Are they not ourselves? Is it feared, then, that we shall turn our arms each man against his own bosom. Congress have no power to disarm the militia. Their swords, and every other terrible implement of the soldier, are the birthright of an American…[T]he unlimited power of the sword is not in the hands of either the federal or state governments, but, where I trust in God it will ever remain, in the hands of the people.”
  –Tenche Coxe, The Pennsylvania Gazette, Feb. 20, 1788.

• “Whereas, to preserve liberty, it is essential that the whole body of the people always possess arms, and be taught alike, especially when young, how to use them; nor does it follow from this, that all promiscuously must go into actual service on every occasion. The mind that aims at a select militia, must be influenced by a truly anti-republican principle; and when we see many men disposed to practice upon it, whenever they can prevail, no wonder true republicans are for carefully guarding against it.”
  –Richard Henry Lee, The Pennsylvania Gazette, Feb. 20, 1788.

• “What country can preserve its liberties if its rulers are not warned from time to time that their people preserve the spirit of resistance? Let them take arms.”
  – Thomas Jefferson to William Stephens Smith, 1787. ME 6:373, Papers 12:356

• “No Free man shall ever be debarred the use of arms.”
  – Thomas Jefferson, Proposal Virginia Constitution, 1 T. Jefferson Papers, 334,[C.J. Boyd, Ed., 1950]

• “The right of the people to keep and bear … arms shall not be infringed. A well regulated militia, composed of the body of the people, trained to arms, is the best and most natural defense of a free country …”
  – James Madison, I Annals of Congress 434, June 8, 1789

• “What, Sir, is the use of a militia? It is to prevent the establishment of a standing army, the bane of liberty …. Whenever Governments mean to invade the rights and liberties of the people, they always attempt to destroy the militia, in order to raise an army upon their ruins.”
  – Rep. Elbridge Gerry of Massachusetts, spoken during floor debate over the Second Amendment, I Annals of Congress at 750, August 17, 1789

• ” … to disarm the people - that was the best and most effectual way to enslave them.”
  – George Mason, 3 Elliot, Debates at 380

• ” … but if circumstances should at any time oblige the government to form an army of any magnitude, that army can never be formidable to the liberties of the people, while there is a large body of citizens, little if at all inferior to them in discipline and use of arms, who stand ready to defend their rights …”
  – Alexander Hamilton speaking of standing armies in Federalist 29

• “Are we at last brought to such humiliating and debasing degradation, that we cannot be trusted with arms for our defense? Where is the difference between having our arms in possession and under our direction, and having them under the management of Congress? If our defense be the real object of them under the management of Congress? If our defense be the real object of having those arms, in whose hands can they be trusted with more propriety, or equal safety to us, as in our own hands?”
  – Patrick Henry, 3 J. Elliot, Debates in the Several State Conventions 45, 2d ed. Philadelphia, 1836

• “The great object is, that every man be armed … Every one who is able may have a gun.”
  – Patrick Henry, Elliot, p.3:386

• “O sir, we should have fine times, indeed, if, to punish tyrants, it were only sufficient to assemble the people! Your arms, wherewith you could defend yourselves, are gone …”
  – Patrick Henry, Elliot p. 3:50-53, in Virginia Ratifying Convention demanding a guarantee of the right to bear arms

• “The people are not to be disarmed of their weapons. They are left in full possession of them.”
  – Zacharia Johnson, delegate to Virginia Ratifying Convention, Elliot, 3:645-6

• “Certainly one of the chief guarantees of freedom under any government, no matter how popular and respected, is the right of citizens to keep and bear arms … The right of citizens to bear arms is just one guarantee against arbitrary government, one more safeguard, against the tyranny which now appears remote in America but which historically has proven to be always possible.”
  – Hubert H. Humphrey, Senator, Vice President, 22 October 1959

• “The militia is the natural defense of a free country against sudden foreign invasions, domestic insurrections, and domestic usurpation of power by rulers. The right of the citizens to keep and bear arms has justly been considered, as the palladium of the liberties of the republic; since it offers a strong moral check against the usurpation and arbitrary power of rulers; and will generally … enable the people to resist and triumph over them.”
  – Joseph Story, Supreme Court Justice, Commentaries on the Constitution of the United States, p. 3:746-7, 1833

• ” … most attractive to Americans, the possession of arms is the distinction between a freeman and a slave, it being the ultimate means by which freedom was to be preserved.”
  – James Burgh, 18th century English Libertarian writer, Shalhope, The Ideological Origins of the Second Amendment, p.604

• “The right [to bear arms] is general. It may be supposed from the phraseology of this provision that the right to keep and bear arms was only guaranteed to the militia; but this would be an interpretation not warranted by the intent. The militia, as has been explained elsewhere, consists of those persons who, under the laws, are liable to the performance of military duty, and are officered and enrolled for service when called upon…. [I]f the right were limited to those enrolled, the purpose of the guarantee might be defeated altogether by the action or the neglect to act of the government it was meant to hold in check. The meaning of the provision undoubtedly is, that the people, from whom the militia must be taken, shall have the right to keep and bear arms, and they need no permission or regulation of law for the purpose. But this enables the government to have a well regulated militia; for to bear arms implies something more than mere keeping; it implies the learning to handle and use them in a way that makes those who keep them ready for their efficient use; in other words, it implies the right to meet for voluntary discipline in arms, observing in so doing the laws of public order.”
  -- Thomas M. Cooley, General Principles of Constitutional Law, Third Edition [1898]

• “And that the said Constitution be never construed to authorize Congress … to prevent the people of the United States, who are peaceable citizens, from keeping their own arms…. “
  –Samuel Adams

Contrast the above to the following quote made by a much different man some 150 years later: (souce, George Mason University)

            The most foolish mistake we could possibly make would be to allow the subject     races to possess arms. History shows that all conquerors who have allowed their    subject races to carry arms have prepared their own downfall by so doing.”
            - Adolph Hitler, Hitler’s Secret Conversations 403 (Norman Cameron and R.H.      Stevens trans., 1961)

Finally, it never hurts to refresh our minds as to the rights, as free people, that the founders felt it necessary to confirm.

United States Constitution

Bill of Rights

Amendment I

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the government for a redress of grievances.

Amendment II

A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.

Amendment III

No soldier shall, in time of peace be quartered in any house, without the consent of the owner, nor in time of war, but in a manner to be prescribed by law.

Amendment IV

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

Amendment V

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a grand jury, except in cases arising in the land or naval forces, or in the militia, when in actual service in time of war or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

Amendment VI

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the state and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the assistance of counsel for his defense.

Amendment VII

In suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise reexamined in any court of the United States, than according to the rules of the common law.

Amendment VIII

Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

Amendment IX

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

Amendment X

The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.

 

Those of us interested in such matters almost universally found it fascinating to read and learn of some of the details of the proposed acquisition of Bear, Stearns Cos. by JP Morgan Chase at what many have called a fire-sale price.  Among the most fascinating elements of this deal is the apparent orchestration on the part of the Federal Reserve to ensure that Bear fell into the hands of JP Morgan.  It has been reported, in fact, that the Fed is providing the liquidity for this transaction and, further, and as previously mentioned on these pages, that they are agreeing to provide a kind of put so as to protect Morgan from losses on the most risky portions of Bear’s portfolio.  There is little doubt that this acquisition is little more than a Fed bailout of a major institution with Morgan reaping a windfall in the role of the white knight. 

The question that immediately comes to mind (it was also suggested to me) is, Why isn’t Goldman getting this deal?

The list of Goldman, Sachs alumni who are well placed in government and agency positions is unrivaled amongst investment banks.  As a matter of reference, a quick list of some of the most prominent follows:

Joshua Bolten -                                    current White House Chief of Staff

Jon Corzine -                                        Governor of the State of New Jersey

Mark Carney -                                     Current Governor of the Bank of Canada

Henry Paulson -                                   Current United States Treasury Secretary

Robert Zoellick -                                  US Trade Representative (2001-2005), Dep. Secretary of State (2005-2006),     World Bank President

Robert Rubin -                                     Former United States Treasury Secretary, ex-Chairman of Citigroup.

George Herbert Walker IV -               member of the Bush family and current managing director at Lehman           

So what happened? How did they miss out on a deal that seems like such a layup?  There are two possible answers. 

First, maybe there is a lot more to this deal than the public has heard and maybe it is not quite as sweet as it seems at first glance.  Bear, Stearns was reported to have had a leverage ratio in the neighborhood of 30 to 1 (Carlylesque!) and it is not much of a stretch to imagine that the “1″ was, in many cases, quite dubious.  The $30bn that the Federal Reserve has supposedly guaranteed may just be a drop in the bucket once the veil is lifted from the rogue trading house.  $2.00 per share may yet prove quite high.

Secondly, and possibly most likely, is that there is the slightest hint of a bad smell wafting around Goldman and it has yet to be revealed just where the stench is coming from.  To date, Goldman has navigated the mind-field that is the current state of the financial markets, and especially the fixed-income markets, almost completely unscathed.  Though their earnings have fallen significantly, they have avoided the huge write downs, and meltdowns, of most of their peers.  Even before the sub-prime avalanche began to cascade at ever increasing speeds, taking out the weaker players by the dozens, Goldman, Sachs had positioned itself as THE premier investment bank in the world. Period. 

It would not be a stretch to speculate that the world’s leading investment bank, with the most sound equity base and the most far-reaching political connections in the business, would be first in line to take advantage of the best opportunities that governments, central banks and corporations had to offer.  I look for more to emerge on this topic. 

In other, related news:

John Meriweather still can’t run a hedge fund!

Merrill, and others, still have CDO problems.  

Thornburg Mortgage near the brink.  

Let me start this communiqué by stating that the happiest, make that most relieved, person in America yesterday had to be Elliot Spitzer.  It is a great bit of irony that on the day that he is scheduled to hand over the keys to Albany in disgrace, the very Wall Street bankers that he so zealously pursued as District Attorney steal all the headlines, saving him from further shame.

Now, on to Bear, Stearns.  By now it is well known that JP Morgan Chase, with liquidity provided by the Fed, has purchased Bear, Stearns for about $236mm, or $2.00 per share, in the face of the company’s imminent demise.  One could speculate that Morgan was generous in their offer as any company worth only $2.00, as compared to a closing price of upwards of $70.00 earlier last week, was potentially worth nothing.  Given that it could prove difficult to bid $0 for something and actually get it, Morgan had to put some positive number on the table and, viola, the entire company is purchased at $2.00.  The beauty of the deal, and the portion that might make Pierpont proud, is that, seemingly, the Federal Reserve has agreed, in addition to financing the overall purchase, to guarantee Morgan against losses on the most risky (read as “worthless”) portion of Bear’s portfolio comprised, in large part, of mortgage securities.

 It is, to me, somewhat hard to believe that this maverick, blue-collar trading house founded over eighty five years ago, our fifth largest investment bank and one of only a handful who eschew retail business, a firm that survived the Great Depression, World War II, the economy of the seventies, the Savings and Loan Crisis, Black Monday, the dot-com bubble, and myriad lesser economic and financial shocks, would allow itself to be brought to its knees by something so mundane as home mortgages.  Of course, we all know that home mortgages, once out of the hands of the originators, are not quite what they used to be and that the “securities” (used loosely) held by Bear, Stearns and its colleagues were, and are, anything but vanilla.  Yet, whatever instruments one holds, and however esoteric these instruments may be, the question still begs, “Where was the risk control?”

Like a good bookie, the secret to running a good investment bank is to always be neutral.  You underwrite bonds, you mark them up, you sell them to your customers, you earn the spread and you go home flat.  The risk to your firm’s equity is minimized and you make money the old fashioned way, slowly.  But slowly, in this age of investment banks who have moved away from the time-tested partnership structure and embraced the publicly traded corporate format whereby management’s feet are seldom held to the fire by nameless, faceless shareholders, just won’t cut it anymore.  Quarterly results and year-end bonuses have pushed these firms to the edges, and, obviously, sometimes over the edges, of their particular skill sets.  Rather than confine themselves to underwriting fees and security markups, Wall Street has, for many years now, pushed the envelope and consistently put more firm equity at risk in ventures like trading their own portfolios, hedge-fund management, and etc.  The problem with this approach is that there are very, very few prolific traders out there and most of them are well aware that they can make much more money on their own than they could ever make within the walls of any investment bank.  So then, guess who is running these trading portfolios?  Correct, the less experienced and less skilled end of the trading herd.  And this, even for corporate executives whose entire net worth is not tied to the fate of the company, makes management nervous.

Arrive the quant.  Wall Street, and its customers, loves quantitative analysis.  When you have the propeller-head in your office and he is describing to you the various mathematical formulae that work together to form his model, your eyes must, at some point, glaze over, your head must fall back, your ears must become numb, and you must substitute every dizzying word out of the quant’s mouth from that point on as “black box.” 

“The “black box” will tell us what securities to own.”

“The “black box” will tell us when to add to our position.”

“ The “black box” will tell us what to use as a hedge.” 

“The “black box” will keep us delta neutral.” 

And then the real kicker,
 

“The “black box” will enable us to use our excess equity to supercharge our earnings and consistently increase firm revenue and, importantly, executive compensation and bonuses, regardless of market direction or the state of the underwriting environment!”

“I like this idea.  Let’s do it.  But wait, let’s not limit ourselves to one “black box,” let’s get lot’s of them.”

LTCM had a black box.  So did Amaranth.  So did Bear, Stearns.  So does most everyone else from investment banks, to hedge-funds, to deposit banks.  The black box is fine and  quantitative analysis is certainly an important part of the financial world.  We must, though, be mindful of the human element and the wisdom gained from experience.  We must, though, give proper respect to risk.  Risk in financial markets takes on a variety of forms, with liquidity risk being the one that seems to be most often overlooked by the quants; the “black box” just can’t seem to calculate for it.  Based on the “black box,” a firm takes huge positions in derivative instruments whose value is based on mortgage backed securities.  What you have, in effect, is a derivative of a derivative.  So, how does the firm hedge this position?  Of course, there is no perfect hedge.  There is no futures contract which mirrors this derivative.  The only choices are to structure an OTC hedge, to stay naked, or to offset the position with more liquid securities which, while not exactly a true hedge, should perform in a way which somewhat mirrors the position.  My guess is that the hedge often takes the form of a combination of the three just mentioned strategies.  As such, the quants believe they have limited the risks.

Ah, but there’s that liquidity factor again.  Even if the bank hedged these derivatives in one form or another, suppose huge sell orders were to come along at or near the same time?  The “black box” says the chances of that are minimal as housing prices always go up and defaults always remain within a tight range.  Further, the banks have the hedge funds who are anything but risk averse and who are constantly screaming for product.  Should there be any kind of systemic stress, they could sell big chunks to them, financed, of course, and move them off of the bank’s books.   Or, better still, these derivatives can be packaged into more pools and sold to institutions.  Even further, Bear, Stearns, and every other bank has known for years now that they have the “Greenspan Put” to back them up.  Should a big customer get into serious trouble, it is a given that the government, or some agency thereof, is going to engineer a bailout.  The risks are minimal and the returns are great.

All this is to say that, not unlike tulipomania, the enticements of excessive returns have once again masked the assumptions of risk.  In spite of the massive amounts of computational technology we have at our disposal, we are no further along, when it comes to evaluating risk and reward, than were the Phoenicians.  From Nobel Laureates and master bridge players to you and I, we can all become intoxicated with thoughts of success and wealth to the point of ignoring dangers that lie less than an arm’s length away.  The story of Bear, Stearns is anything but new.  The same questions asked after every debacle will be asked now and are sure to be asked again at some point in the not too distant future.  There will forever exist fear and greed and when one of these factors grossly outweighs the other, harsh ramifications are sure to follow.   

__________________

First, a 2004 clip:

And now, in 2008:

As pointed out to me by a friend today, Democratic voters must realize that they are voting for HILLARY Clinton, not BILL!  There should be no assumption that Bill will be running the show from behind the curtains should Hillary be elected.  In my opinion, quite the contrary.  This would be her chance to step out of her husband’s shadow and dance to the beat of her own, distinct, drummer. 

Bill Cliinton, as evidenced by this first clip, had, and has, the ability to make people feel good, to trust him, to believe in what he is selling.  Hillary, as evidenced in the second clip, lacks these same qualities and, in fact, is a divisive figure who invites people to draw lines in the sand.  

________ 

Ordinarily, I don’t really care for Fox News.  They seem to have a penchant for a modern day version of yellow journalism stemming from the wiles of Rupert Murdoch, their commander in chief.  While I have the uptmost admiration for the business acumen of Mr. Murdoch, his style resembles that of Ayn Rand’s Gail Wynand who, himself, was a reflection of William Randolph Hearst.  It is hard to imagine looking to the press of any of the aforementioned in hopes of finding real, unfettered, unbiased news.  In defense of Mr. Murdoch, though his figure might currently cast the largest shadow in the media business, it is quite doubtful that any of his competitors, blue-blooded or not, are providing us any more straightforward, hard-hitting journalism than he. 

All of this is an extended caveat before encouraging you to peruse the story that follows.  Printed at Foxnews.com, it is written by research scientist and author John Lott, who is known for his positions on gun rights issues and whose work is always worth the read.  Here, he provides some clarity to the global warming debate.

Global Warming: Is it Really a Crisis?

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