Archive for March, 2009

The differences between the parties

Monday, March 30th, 2009

Michael Barone is a bit provocative today when he writes that Democrats are abnormal. That should fill up his comment box. Jonathan Chait raises some of the same issues in TNR this week. Chait writes:

The last Democrat who held the White House, Bill Clinton, saw the core of his domestic agenda come to ruin, his political support collapse, and his failure spawn a massive Republican resurgence that made progressive reform impossible for a decade to come. The Democrat who last held the White House before that, Jimmy Carter, saw the exact same thing happen to him.

Barone sees a fundamental difference:

the Republican Party is the party of people who are considered, by themselves and by others, as normal Americans—Northern white Protestants in the 19th century, married white Christians more recently—while the Democratic Party is the party of the out groups who are in some sense seen, by themselves and by others, as not normal—white Southerners and Catholic immigrants in the 19th century, blacks and white seculars more recently.

I disagree with both of them. The parties have evolved the past 40 years and do not resemble the parties of the 1930s and 40s. I have read quite a bit about Wendell Willkie and his nomination as the GOP presidential candidate in 1940. My review of one biography of him is here. Willkie was a modern figure who was very reluctantly nominated by a deeply isolationist Republican Party in 1940. He came within 600,000 votes of defeating Roosevelt and probably only the war kept Roosevelt in office. In 1944, he was denied the nomination and Dewey, an immature and unseasoned politician, was defeated handily by the dying Roosevelt. The Republican Party of today is nothing like the party of 1940, or even of 1948.

Eisenhower made an enormous change in the party and the Civil Rights struggle split the Democrats, ending their domination of the presidency for the next 50 years. Carter was elected because of the Watergate scandal and lasted only one term. Clinton benefited from the third party candidacy of Ross Perot and never did get a majority in spite of being re-elected. Obama has now been elected because of the financial collapse and the weak candidacy of John McCain.

The Democrats have become the party of a cluster of self interested entities whose concern is less in governing than in accomplishing the goals of the interest group. The Teachers unions are determined to keep vouchers suppressed and to keep the money coming in education funding. Their interest in results with students is minimal. The great industrial unions are a thing of the past or, as in the case of the auto industry, an albatross around the neck of dying industries. The steel industries restructured themselves in bankruptcy but the auto companies have been diverted by the lure of government money. It will be a poor bargain, losing billions of taxpayer funds and probably failing completely in the hands of politicians.

The growth of unions is limited to public employees and here is where the other great power of the Democrats is lodged. These unions have used political power to obtain salaries that exceed the same levels of compensation in private industry. Secondly, they have obtained promises of lavish pension and health benefits that previously only existed in the dying industrial unions. There are no layoffs and, even in bankrupt California, the numbers of employees grow steadily. Unfortunately for the public employees, just as in housing prices, trees do not grow to the sky. Everything comes to an end when the laws of gravity are exceeded. The first harbinger was the city of Vallejo, which declared bankruptcy last year. The cause ?

The city of 117,000 is facing ballooning labor costs and declining housing-related tax revenue that have left it with a $16 million deficit forecast for the year starting in July. In bankruptcy, creditors will be kept at bay while officials devise a plan to balance the books. City services would still operate.

The Democrats have also attracted a prosperous segment of the population which may not agree wth all the economic nostrums of the Democrats but are attracted by issues like global warming, gay rights abortion and other social causes that transcend economics and are fashionable right now. The global warming thing has taken on some of the characteristics of a cult. Children are taught recycling even though it has been shown to be ineffective in conserving resources. Wealthy people buy Priuses and “green” coffee and organic vegetables as a social class statement. The economic policies of Obama may shake the faith of some of these people who are more libertarian than true blue Democrats.

What about the Republicans ? Tradition has it that the GOP is the party of big business. Is that true ? Most of the political contributions from Wall Street were going to Democrats. Now, in fairness I should say that business men tend to support whoever is in office. Incumbents get the larger share of contributions as businesses buy protection from Congress. In the 2008 election Wall Street backed Obama with millions.

Illinois Sen. Obama, who captured the Democratic presidential nomination on Tuesday after a lengthy primary battle against New York Sen. Hillary Clinton, has received $7.9 million (4.1 million pounds) in contributions from the securities and investment industries, according to the Center for Responsive Politics.

His opponent, Republican Sen. John McCain of Arizona, banked a little under $4.2 million, putting him behind fellow Republicans Rudolph Giuliani and Mitt Romney, who have long since dropped out of the race.

And that was just the primaries.

Who are Republicans ? Barone has some theories.

that the Republican Party is the party of people who are considered, by themselves and by others, as normal Americans—Northern white Protestants in the 19th century, married white Christians more recently.

There is more to it than this. Cuban exiles and Vietnamese exiles have been loyal GOP supporters since they attributed the loss of their homelands to Democrats’ policies. Small business owners are probably the most firm Republican supporters just as lawyers tend to support Democrats. They are acting in the best interests of their occupation, as big businessmen once did 50 years ago. Many of those small business owners are minorities and that may mitigate the effects of racial politics, which favors Democrats even though blacks obtained their Civil Rights through Republicans. Hispanics tend to have families, although illegitimate birth rates are rising.

The Christian conservatives have been credited with far more power than I believe they have in the party. Republicans, since the 1960s when cultural radicalism was adopted by the Democrats, have attracted those who are mostly concerned with children and families, and that includes the Christian conservatives. Many of them are not particularly conservative economically, although many have small businesses. The central theme seems to be a conservative outlook on economics and family life. That includes self reliance and independence. Abortion is a major issue with these voters.

Democrats have trended to communitarian beliefs in which individualism, including such topics as gun ownership and the military, is to be suppressed in favor of group rights. It comes down in the end to individualism versus group rights.

communitarianism emphasizes the need to balance individual rights and interests with that of the community as a whole

This includes “spreading the wealth” around and punishing individual achievement with high taxes, even taxes that total more than 100% when state and city taxes are included.

Luke Y. Thompson Returns From Exile

Saturday, March 28th, 2009

By Bradley J. Fikes, C.O.R.

UPDATE: I’m at The Olde Ship Inn with Luke Y. Thompson and QDPSteve. Delicious libations and conversations are pouring . . .

This afternoon, I’m visiting film critic, American/Irish/British cultural hybrid and  debonnaire man about town Luke Y. Thompson. Occasion: Luke is vacating the Santa Ana crib where he’s been for a couple of years to return to the culture capital of America, Los Angeles.

I first met Luke online, commenting on the late Cathy’s Seipp’s blog. Luke was a FOC, itself a recommendation, and an entertaining person in his own right. I’ve since met him IRL, and found him a great companion in search of good sushi, especially sea urchin.

Like about 12 quintillion people, Luke’s career is about The Business. He wants to write about movies, he’s been in a couple, such as Mad Cowgirl. He had written for the OC Weekly, hence his move to Santa Ana, but was laid off. Since then, Luke has been freelancing and working against great odds to return to Los Angeles on a limited budget.

So Luke managed to swing it, he’s moving out tomorrow, and the meet-up at The Olde Ship Inn in Santa Ana is where we shall toast Luke this afternoon with tequila and other fine spirits, and begin hours of Saturday revelry.

I will add to this post when I get there — have laptop, will blog.

Enjoy your Saturday!

A theory on the housing bubble

Friday, March 27th, 2009

It is pretty clear by now that the origin of the bubble was the push to increase home ownership among low income people. The first action in this direction was the Community Reinvestment Act passed in the Carter Administration. The role of the CRA has been disputed by left-leaning commentators including the oddly named “Businessweek, which represents the views of few businessmen I know. Still, you can learn a lot of history by reading between the lines of opposing views.

The Community Reinvestment Act, passed in 1977, requires banks to lend in the low-income neighborhoods where they take deposits. Just the idea that a lending crisis created from 2004 to 2007 was caused by a 1977 law is silly.

Read those two sentences and note which one is fact and which is opinion.

Now, let’s look at an official site and see what it says.

The CRA requires that each insured depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution’s application for deposit facilities, including mergers and acquisitions.

Notice the steel fist through the velvet glove ?

Here is another opinion from a different perspective. The CRA was modified and expanded in 1995. Here is more history with comments on the Clinton Administration’s expansion of the law.

The CRA regulations were substantially revised again in 1995, in response to a directive to the agencies from President Clinton to review and revise the CRA regulations to make them more performance-based, and to make examinations more consistent, clarify performance standards, and reduce cost and compliance burden. This directive addressed criticisms that the regulations, and the agencies’ implementation of them through the examination process, were too process-oriented, burdensome, and not sufficiently focused on actual results. The agencies also changed the CRA examination process to incorporate these revisions.

That means quotas, of course.

The financial collapse had other causes, as well, and I don’t want to reargue the entire story. Bush allowed the Fed to keep interest rates too low in the mid-2000s. Investment banks got too enamored of exotic derivatives like credit default swaps, which was bad enough. What was worse was an informal market in trading derivatives of the derivatives.

What I am interested in is where this all began. I would like to suggest that Margaret Thatcher had something to do with it. In the late 1960s, a concept arose called The Right To Buy, which allowed council housing tenants to buy the home they were living in, with a discount for the rent they had paid for some period of time. This quickly became popular and the theory was that owners would take better care of the home they owned than a renter would. Labour, once she had passed form the scene, adopted the same policy and she is now being blamed for the British housing bubble in similar fashion.

The theory was probably right so long as the house being bought was modest and within the means of the buyer to maintain. Once housing prices began to rise, disaster followed.

The left and anti-Semitism

Thursday, March 26th, 2009

Pat Oliphant has been a political cartoonist since the 1960s. Many of them have been pretty funny, even if I don’t share his politics. He is a political liberal but he seems to have drifted farther left the past few years. Now, he seems to have gone over the edge. The cartoon above clearly ignores the facts of the Israeli-Hamas conflict to assume facts not in evidence, as lawyers say. Why does the political left assume the role of jihadist ? They certainly would not accept the life style of those living under the rule of Hamas. Does this mean that they consider the Palestinians too stupid to know the difference ?

I don’t know.

Appreciating Rush Limbaugh

Wednesday, March 25th, 2009

By Bradley J. Fikes, C.O.R.

Patterico’s Pontifications kicked up a bit of discussion early this month when the eponymous blogger/crimefighter wrote a post saying he hoped Rush Limbaugh would fail in his bid to become the de facto head of the conservative movement.

While I differed with Patterico on his point, I’m glad he made the post. Because having to research what Limbaugh said, and the context in which he said it, made me decide to become a regular listener.  Limbaugh is a welcome counterpoint to the spin we get from the Obama administration as relayed by a sympathetic mainstream media.

Limbaugh isn’t always accurate, a point he often makes ironically by claiming to be error-free. But he provides a valuable service by challenging the media narrative with a much different interpretation of events. And while I am a Libertarian, not a conservative, most of what El Rushbo says could have been taken from the texts of quasi-libertarian Ayn Rand.

A little background. Patterico, himself a conservative, is mainly a fan of Limbaugh’s. But he says Limbaugh chose the wrong way to frame the conservative opposition to President Obama:

I know: when he says he hopes Obama fails, he doesn’t mean he wants to see Americans suffer. He just doesn’t want liberal policies enacted because he thinks they’re bad for the country. I get it. I agree with that.

But, you know, that’s nuance.

The problem is, Americans have short attention spans and don’t always do nuance well. Just by writing the title of this post the way I did, I’ll get an angry reaction from some — even though, if you read the post, I haven’t said anything particularly negative about Limbaugh.

To see for myself if Patterico was right, I went to Limbaugh’s site, read his words and downloaded his broadcasts. And I found Limbaugh to be well-reasoned. If you like a free market, if you don’t want a vast intrusion of government into the economy, you pretty much have to hope Obama fails.

Why do we have to accept the premise here that because of the historical nature of his presidency, that we want him to succeed?  This is affirmative action, if we do that.  We want to promote failure, we want to promote incompetence, we want to stand by and not object to what he’s doing simply because of the color of his skin?  Sorry.  I got past the historical nature of this months ago.  He is the president of the United States, he’s my president, he’s a human being, and his ideas and policies are what count for me, not his skin color, not his past, not whatever ties he doesn’t have to being down with the struggle, all of that’s irrelevant to me.  We’re talking about my country, the United States of America, my nieces, my nephews, your kids, your grandkids.  Why in the world do we want to saddle them with more liberalism and socialism?  Why would I want to do that?  So I can answer it, four words, “I hope he fails.”

El Rushbo has fun. He mocks Obama’s sudden tongue-tiedness, revealed when he’s without benefit of a teleprompter, in hysterically funny performances, even doing a pretend interview with TOTUS, the Teleprompter Of The United States.

But more importantly, Limbaugh has been relentlessly covering the power grabs by Obama, and the frightening demonization of companies like AIG by Obama and the Democratic leaders in Congress, for their political benefit.  Mob rule, John Adams would have called it.

And the media has not been eager to say what it is. One of the most sickening examples to me was how the media covered protests at the home of AIG executives, demanding they return the bonuses contractually given to them.

The Associated Press carried a story that uncritically covered the protests as a struggle by ordinary folks against greedy executives:

“We think $165 million could be used in a more appropriate way to keep people in their homes, create more jobs and health care,” said Emeline Bravo-Blackport, a gardener.

She marveled at AIG executive James Haas’ colonial house, which has stunning views of a golf course and the Long Island Sound. The Fairfield house is “another part of the world” from her life in nearby Bridgeport, which flirted with bankruptcy in the 1990s and still struggles with foreclosures and unemployment.”

“Lord, I wonder what it’s like to live in a house that size,” she said.

What the Associated Press didn’t tell you is that Emeline Bravo-Blackport is the local community organizer for the Association of Community Organizations for Reform Now (ACORN).

On his March 25 show, Limbaugh talked with the wife of one of the AIG executives, who said her husband was so stressed at the attacks that he was taken to the hospital with heart pains. And he’s also worried about the impact on their three children that the company their father works for is being vilified.

Limbaugh said:

It is not presidential for the president of the United States to stand up and to denounce a single company like this for the express purpose of creating mob behavior and a mob mentality.  This is his life.  What do you think a community organizer does?  A community organizer, for ACORN or anybody else, goes to the downtrodden in any community and says, “You are here, and you are where you are because they have given you the shaft, they have taken what is rightfully yours, they are the people we need to protest and punish to get back what is rightfully yours.”  He’s just taking it now beyond the stages of Chicago to the stages of America.  That’s who Barack Obama is.  He is behaving as any community organizer does, who is an acolyte of Saul Alinsky, whose objective is chaos and the destruction of American capitalism, or capitalism anywhere.  So you can sit there and act outraged at the media but the media are just slaves to Obama, and they’re going to follow his lead.  So your anger here needs to be taken to the top.  Eva, I’m glad you called.  Thanks very much.  I appreciate it, and I really feel bad for you.

Strong stuff indeed, and I don’t necessarily buy all of it. Never ascribe to malice what can be explained by incompetence. But I’m sure glad Patterico wrote that blog post. It prompted me to find out just what Limbaugh is actually saying, as opposed to what his critics say. Now my daily routine includes downloading Limbaugh broadcasts, so I can listen to them on my way home.

I don’t take Limbaugh’s word as The Truth. The point leftists miss is that Limbaugh doesn’t expect you to. He expects you to listen and think critically, and read on your own.  Compared to the groupthink that pervades the MSM, Limbaugh’s approach is much more open-minded, one might almost say, liberal.

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Obligatory disclaimer: The opinions expressed here are those of the author, Bradley J. Fikes, and do not necessarily reflect the views of his employer, the North County Times.

Obama is lying about infrastructure

Tuesday, March 24th, 2009

This post on ChicagoBoyz points out that the political left, including Obama, has no intention of investing in energy infrastructure. The post notes this NY Times editorial piece which exposes the left’s antipathy to transmission infrastructure. Here is the agenda as seen from the left:

PRESIDENT Obama has laid out an ambitious agenda for dealing with our energy needs and climate change: he proposes to double the supply of renewable energy within three years, establish a cap-and-trade program to reduce carbon emissions and use federal stimulus dollars to help homes, businesses and governments use energy more efficiently. This is the right blueprint for increasing the number of green jobs, encouraging economic growth, ensuring that the United States has the energy it needs at reasonable prices, and reducing the risk of global climate change.

Aside from “renewable energy” which constitutes 3% of US energy production with a practical cap of 10% of need by 2020, let alone three years, there are no plans to produce more energy.

lawmakers should resist calls to add an extensive and costly new transmission system that would carry electricity from remote areas like Texas, the Great Plains and Eastern Canada to places with high energy demands like Boston, Chicago and New York. This idea is being promoted by energy companies and by elected officials who see it as an economic development opportunity for their particular state or region. Long-distance transmission lines are needed, they argue, to ensure that the president’s energy goals are met.

We have already eliminated windmills near Cape Cod because they offend Ted Kennedy. Does anyone think New York City is to be covered with solar panels ? The only possibility for wind power and solar power is to generate it in places where it is possible, then transmit it to the places where it is needed.

In Massachusetts, we get about 5 percent of our power from hydroelectric plants in Quebec. Our distribution utilities are negotiating to install a second transmission line for Canadian hydropower, which would be paid for through long-term power-purchase contracts approved by the New England states whose residents use that power. Developers of remote wind-power farms in eastern Canada have said they would also like to sell us electricity, but unless the combined cost of the power they could provide and its transmission is competitive with our other renewable energy choices, their projects won’t get approved. That’s the way it should be.

The real agenda of the political and environmental left is to reduce power usage, no matter what the consequences. Cap and Trade will certainly do that. Now all we have to do is find work for all those laid off by factories leaving the environmentally sensitive states. The real story is here:

the US has failed to invest in generation and transmission assets over the last 25 years or so. “Base load” generation primarily consists of 1) coal plants (no one is building new ones because of environmental legislation) 2) hydroelectric plants (no one is damming rivers due to the Sierra Club) 3) nuclear plant (they are far too expensive, regulation is uncertain, and Three Mile Island hasn’t gone away). There have been some “peaker” plants running natural gas (more expensive) and some minor “renewable” projects but generally we have just been “running in place” with regards to capacity and utilizing up all the “reserve” capacity that had been built up in previous years, as evidenced by blackouts in places like California.

The future with Obama, Reid and Pelosi is grim.

Here is an upbeat appraisal of Obama’s plans but note very little about building new transmission lines.

The fascist chick peeks out from the Democrat shell.

Sunday, March 22nd, 2009

UPDATE #2: Here is an interesting discussion of the sources of the AIG meltdown and the contribution of CDSs.

Let’s start by looking back to the dot-com era, which also happened to be the era of the day trader. Remember them? A successful day trader in the late 1990s could gain a following over Internet chat then use that following to make money by becoming an alpha trader. He’d say “I’m selling this” or “I’m buying that” and copycat day traders would do the same. If enough of them acted they could influence the price down or up and – since the leader was leading – he could almost always liquidate his position with a profit. The quickest of his acolytes would make profits, too. Those who didn’t profit weren’t seen as exposing the inherent flaws of this system, they were just viewed as too slow.
To a certain extent, the heirs of day trading have taken the lessons of that earlier era and applied them with devastating effect in the Twitter Age.
If a bunch of wealthy traders get together at Starbucks and agree to short-sell a company or a financial instrument, driving down that price ideally to the point where it never recovers, well that’s against the law. But with trading automation and the Internet as a platform it is possible to accomplish this same end WITHOUT it being explicitly illegal. It is even possible that the perps don’t know the level of damage they are inflicting, though I doubt that’s true. The trick is to avoid communication. If there is no communication between traders there is no chain of causation, no conspiracy, just an unhappy accident.

Read the rest. Cringely is the best source of info on the computer industry.

UPDATE: The Wall Street Journal comments on the disastrous precendent being set with the punitive 90% tax on bonuses passed by the House.

The financial system will suffer in particular, just when the Obama Administration is desperately seeking more private capital to ride out future losses. Facing such limits on the ability to reward talent, every bank CEO will try to pay off the TARP as soon as possible, whether or not this leaves the bank with a weaker capital base. Hedge funds and other investors that Treasury needs for its new Public-Private Investment Program, or for the Federal Reserve’s TALF, will also be warier, if they’ll play at all. Treasury may promise nothing punitive for these programs, but that’s also what it said about the TARP.

The Washington Monthly crowd are excited at the prospect of secret votes on Obama’s legislative priorities. The plan is to deny the Republicans the opportunity to debate the bill by introducing it and voting it into law in secret.

Senior members of the Obama administration are pressing lawmakers to use a shortcut to drive the president’s signature initiatives on health care and energy through Congress without Republican votes, a move that many lawmakers say would fly in the face of President Obama’s pledge to restore bipartisanship to Washington.

Republicans are howling about the proposal to expand health coverage and tax greenhouse gas emissions without their input, warning that it could irrevocably damage relations with the new president.

“That would be the Chicago approach to governing: Strong-arm it through,” said Sen. Judd Gregg (R-N.H.), who briefly considered joining the Obama administration as commerce secretary. “You’re talking about the exact opposite of bipartisan. You’re talking about running over the minority, putting them in cement and throwing them in the Chicago River.”

The budget reconciliation process was devised to iron out differences in House and Senate versions of the same bill. The bills would originate in the respective committees, be debated and passed, first by the committee and then by the entire house.

With 58 Senate seats, Democrats need the support of at least two Republicans to block a filibuster. But they could pass a reconciliation bill without any Republican votes — and without the support of troublesome moderates in their own party.

Some moderate Democrats are arguing that reconciliation would empower their party’s liberal wing while undermining a critical aspect of Obama’s popular appeal — his promise to work across the aisle.

The “moderate Democrats” just happen to be the same ones up for election next year. That suggests how popular this is likely to be with voters.

It looks like fascism to me. And, if you doubt that, look at this.

With almost no public attention, both chambers of Congress in the past week advanced an alarming expansion of the Americorps national service plan, with the number of federally funded community service job increasing from 75,000 to 250,000 at a cost of $5.7 billion. Lurking behind the feel-good rhetoric spouted by the measure’s advocates is a bill that on closer inspection reveals multiple provisions that together create a strong odor of creepy authoritarianism. The House passed the measure overwhelmingly, while only 14 senators had the sense and courage to vote against it on a key procedural motion. Every legislator who either voted for this bill or didn’t vote at all has some serious explaining to do.

Last summer, then-candidate Barack Obama threw civil liberties to the wind when he proposed “a civilian national security force that’s just as powerful, just as strong, just as well-funded” as the regular military. The expanded Americorps is not quite so disturbing, but a number of provisions in the bill raise serious concerns.

But he plans to cut Defense to “reduce the deficit.”

The worst airline in the world

Friday, March 20th, 2009

Apologies to Keith Olbermann (Did I say that ?) but Michael Totten has a hilarious story about flying on Alitalia. If anybody wants to know what the health care system Obama will design is like, read this.

A fifty year-old Italian man in a fedora started screaming at both of them.

A man standing next to me chuckled.

“Do you understand what he’s saying?” I said.

“I’m from Argentina,” he said, “but I speak Italian. That man is cursing like you wouldn’t believe.”

Mr. Enraged was screaming like you wouldn’t believe – wild-eyed, nostril-flared, spittle-flecked screaming.
Listening to him and imagining which curse words he used he was entertaining, but mostly the guy came across like a belligerent jerk. The two Alitalia employees on the receiving end of his tirade weren’t responsible for our predicament. The baggage handlers were on strike, but the counter employees were still on the job.

Later, though, I realized that Mr. Enraged was just ahead of everyone else. The rest of us booked on the flight to Chicago would learn soon enough that a huge number of Alitalia’s employees absolutely deserved to be screamed at.

It’s a hilarious story as long as you didn’t have to live through it.

What do fools look like ?

Thursday, March 19th, 2009

We have seen a week of faux outrage over the AIG bonuses, bonuses that were specifically protected by an amendment by Senator Dodd. Meanwhile the fool-in-chief rants at the CEO of AIG, Edward Liddy. The fact is that Mr. Liddy took the job at the request of the government and is being paid $1 per year. He was comfortably retired when he was asked to come back to work to aid his country in a time of crisis. What he, and the other AIG executives who agreed to stay on and unwind the financial chaos are getting is a frightening amount of abuse.

A sense of fear hung in the room — the palpable, unsettling kind that flashes across people’s eyes. But there was anger, too. No one would express it publicly, of course. Who wants to hear a wealthy financier complain? And yet, within those walls off Danbury Road lies a deep sense of betrayal — first by their former colleagues, now by their elected leaders.

The handful of souls who championed the firm’s now-infamous credit-default swaps are, by nearly every account, long since departed. Those left behind to clean up the mess, the majority of whom never lost a dime for AIG, now feel they have been sold out by their Congress and their president.

“They’ve chosen to throw us under the bus,” said a Financial Products executive, one of several who spoke on condition of anonymity, fearing reprisals. “They have vilified us.”

Ayn Rand’s novel, Atlas Shrugged, which has seen soaring sales ( Sales Rank: #183 in Books ) the past few months, seems to be coming true. In the novel, the people who made private industry work walked away from their jobs and let the government, which was not satisfied with their performance, take over.

“They are replaceable,” Pasciucco acknowledges. “If we were running a long-term business, we could probably replace them over time, not all at the same time.”

But it would be impractical at best, dangerous at worst, to get rid of everyone at Financial Products, according to AIG officials. If everyone leaves, Pasciucco said, “you don’t have people that really, truly understand the book [of business]. We’re still big enough that that matters.”

If they did walk out the door, who would volunteer to work at the Chernobyl of the financial world? And what would become of the mammoth portfolio that remains?

“It would become the biggest naked position on Wall Street,” one longtime Financial Products executive said, “and everybody would exploit it.”

So Barney Frank and Chris Dodd are riding the wave of public indignation about the practices of people who are no longer at AIG.

Numerous employees indicated that they would be willing to return the money, but most wanted nothing more to do with the firm. It was a preview of the possible exodus to come, one that concerns Liddy himself.

“My fear is that the damage is done,” he told a congressional subcommittee. “That they will return [the money], but that they will return it with their resignations.”

There is little doubt within Financial Products that he’s right about that.

Nobody is going to give it back and then stay,” said one of the firm’s employees. “If they give back the money, then they will walk. And they will walk into the arms of AIG’s counterparties.”

We may have the opportunity to see how Barney Frank and Chris Dodd do running a big financial services operation. Have they ever run anything but their mouths ? I guess we will learn.


Thursday, March 19th, 2009

Autism is a childhood developmental condition that has had a suspected increase in incidence in recent years. It causes a major mental developmental arrest at an early age. Some children begin to develop speech and then regress, a factor that has led to unfortunate theories of causation, such as the hysteria about childhood immunization. Now, a cluster of cases among Somali immigrants in Minnesota might offer some new leads to the cause.

Autism and schizophrenia share some similarities in that both conditions result in problems with social interaction and functional behavior. The autistic child fails to develop speech and other social behavior such as emotional attachment to others. Schizophrenia has similar effects on interpersonal behavior. The autistic child often seems to live in a world cut off from others, responding to inner stimulation but unable to relate to parents or other children. Similarly, the schizophrenic is unable to interpret visual cues and social interaction is difficult. The schizophrenic typically has auditory hallucinations, hearing voices. The autistic child may have similar inner stimuli but is unable to express what is happening because of speech failure.

There are theories about schizophrenia as a consequence of brain development, especially the phenomenon of cerebral dominance which gives us speech and handedness. Now, new theories implicate hormone changes that might be common to both conditions. Animal studies have suggested this association.

Understanding the neurobiological substrates regulating normal social behaviours may provide valuable insights in human behaviour, including developmental disorders such as autism that are characterized by pervasive deficits in social behaviour. Here, we review the literature which suggests that the neuropeptides oxytocin and vasopressin play critical roles in modulating social behaviours, with a focus on their role in the regulation of social bonding in monogamous rodents. Oxytocin and vasopressin contribute to a wide variety of social behaviours, including social recognition, communication, parental care, territorial aggression and social bonding. The effects of these two neuropeptides are species-specific and depend on species-specific receptor distributions in the brain. Comparative studies in voles with divergent social structures have revealed some of the neural and genetic mechanisms of social-bonding behaviour. Prairie voles are socially monogamous; males and females form long-term pair bonds, establish a nest site and rear their offspring together. In contrast, montane and meadow voles do not form a bond with a mate and only the females take
part in rearing the young. Species differences in the density of receptors for oxytocin and vasopressin in ventral forebrain reward circuitry differentially reinforce social-bonding behaviour in the two species.

This is from Philosophical transactions of the Royal Society of London. Series B, Biological sciences. 2006 Dec 29;361(1476):2187-98., “Oxytocin, vasopressin and pair bonding: implications for autism.”, by Hammock EA, Young LJ.

This may seem a rather far fetched association with human autism but there is more.

CNS neuroscience & therapeutics. 2008 Fall;14(3):165-70., “Oxytocin levels in social anxiety disorder.”, by Hoge EA, Pollack MH, Kaufman RE, Zak PJ, Simon NM.

Department of Economics, Claremont University, Claremont, CA, USA.

Oxytocin is a neuropeptide recently associated with social behavior in animals and humans, but the study of its function in populations with social deficits such as autism, schizophrenia, and social anxiety disorder has only recently begun. We measured plasma oxytocin in 24 patients with Generalized Social Anxiety Disorder (GSAD) and 22 healthy controls using an enzyme-linked immunosorbent assay. There were no significant differences in oxytocin level (pg/mL) between patients (M=163.0, SD=109.4) and controls (M=145.0, SD=52.9, z=0.21, P=0.8). Within the GSAD sample, however, higher social anxiety symptom severity adjusted for age and gender was associated with higher oxytocin level (R2=0.21, beta=0.014, SE=0.006, t=2.18, P=0.04). In addition, dissatisfaction with social relationships was associated with higher oxytocin levels (R2=0.18, beta=-0.20, SE=0.10, t=-2.01, P=0.05). Our data provide preliminary support for a link between social anxiety severity and plasma oxytocin. These findings may suggest a possible role for oxytocin as a facilitator of social behavior, an effect which may not be fully utilized in individuals with severe social anxiety.

This is very preliminary but the existence of the Somali cluster of autism cases might allow further work in this association. Oxytocin has been known as the hormone that begins labor and brings the mother’s milk “down” but it is increasingly seen as having other roles in human behavior. It is not unusual to see the hormones, originally thought to have a single function, assume new roles as physiology is investigated. It would be very interesting if these hormones turn out to play a major role in mental illness. Freud is finally gone from the treatment of major mental illness.

“This is one of the first looks into the biological basis for human attachment and bonding,” said Rebecca Turner, PhD, UCSF adjunct assistant professor of psychiatry and lead author of the study. “Our study indicates that oxytocin may be mediating emotional experiences in close relationships.”

The study builds upon previous knowledge of the important role oxytocin plays in the reproductive life of mammals. The hormone facilitates nest building and pup retrieval in rats, acceptance of offspring in sheep, and the formation of adult pair-bonds in prairie voles. In humans, oxytocin stimulates milk ejection during lactation, uterine contraction during birth, and is released during sexual orgasm in both men and women.

Vasopressin is also involved, especially in males. Vasopressin is a hormone secreted by the pituitary gland and associated with water retention by the kidney. It now appears that it has other functions, as well.

Progress in brain research. 2008;170:337-50.

Neuropeptides and social behaviour: effects of oxytocin and vasopressin in

Heinrichs M, Domes G.

Department of Psychology, Clinical Psychology and Psychobiology, University of
Zurich, Zurich, Switzerland.

The fundamental ability to form attachment is indispensable for human social relationships. Impairments in social behaviour are associated with decreased quality of life and psychopathological states. In non-human mammals, the neuropeptides oxytocin (OXT) and arginine vasopressin (AVP) are key mediators of complex social behaviours, including attachment, social recognition and
aggression. In particular, OXT reduces behavioural and neuroendocrine responses to social stress and seems both to enable animals to overcome their natural avoidance of proximity and to inhibit defensive behaviour, thereby facilitating approach behaviour.

Doesn’t this sound like autism ?

AVP has primarily been implicated in male-typical social behaviours, including aggression and pair-bond formation, and mediates anxiogenic effects. Initial studies in humans suggest behavioural, neural, and endocrine effects of both neuropeptides, similar to those found in animal studies.

Schizophrenia is more common in males and is hereditary. Anxiety is a major factor. There may also be a hereditary association in autism. This is enormously exciting research and might even be the first sign of a cure for these disorders of brain function.