Dante’s Inferno – Canto I

After reading five translations in detail this week and comparing them to the original Italian, I think we’re going to switch to Longfellow’s translation as our primary text; even though Cary’s is superficially more similar to the Binyon translation that I prefer, I am coming to believe that Longfellow’s is the best of the three freely available ones, at least for our purposes. I am increasingly unenthusiastic about Pinsky’s pedestrian translation, the credible justification he offers for his metaphorically prosaic approach notwithstanding. As should be obvious after taking the quiz, I am focusing on content, not interpretation. Unless the various meanings behind the metaphors are spelled out explicitly and unmistakeably in the text, I will not ask you questions about them. Such matters of interpretation rather than content will be reserved for discussion in the comments. The reading for next week is Cantos II and III.

It would appear I am not alone in my preference for Binyon. “If he wants to read Dante, he had best go to Binyon, but since Binyon’s English is sometimes as difficult and contorted as Dante’s Italian, he may prefer Ciardi.” If you’re planning on actually buying a text rather than downloading one, I’d recommend the Viking portable edition.

Research is hard

It appears global warming scientists are even more ignorant than biologists:

The Netherlands has asked the UN climate change panel to explain an inaccurate claim in a landmark 2007 report that more than half the country was below sea level, the Dutch government said Friday…. The spokesman said he regretted the fact that proper procedure was not followed and said it should not be left to politicians to check the IPCC’s numbers. The Dutch environment ministry will order a review of the report to see if it contains any more errors, Vallaart said.

The joke that is AGW/CC just keeps on giving.

The irrelevance of Glass-Steagall II

Arkady explains why the Volcker Rule is inadequate:

This topic may sound mundane, but understanding the history behind this controversial act is important to absorb as talks about it’s reinstatement heat up. Glass-Steagall was repealed in 1999 by the Gramm-Lichey-Bliley act and has been blamed by many as the primary cause of the 2008 Housing Crisis. Recently John McCain and ex-Fed chairman Paul Volcker proposed the return of Glass-Steagall along with many Democrats and prominent bloggers including Karl Denninger of Market Ticker fame. However without examining the history of Glass-Steagall and the cause of its existence can lead to needless legislation and shift the conversation away from the true root cause of our financial system.

It’s a good article. While there is no question that the rollback of Glass-Steagall exacerbated the ongoing financial crisis, it clearly was not and could not be the root of the problem, as the global scope of the crisis clearly proves. The problems in Greece, Portugal, Spain, and Dubai cannot be traced to Washington. That doesn’t mean it’s not a good idea to prevent the banks from digging themselves into even deeper holes, but it is essentially a sideshow.

The real problem, as Arkady points out, is the increasingly creaky Federal Reserve System, which will eventually fail on the basis of its structural dependency on ever-increasing debt.

The Baseline Scenario likewise concludes that the Volcker Rule is insufficient:

I testified yesterday to the Senate Banking Committee hearing on the “Volcker Rules”. My view is that while the principles behind these proposed rules are exactly on target – limiting the size of our largest banks and preventing any financial institution backed by the government, implicitly or explicitly, from taking big risks – the specific rule changes would need to be much tougher if they are to have any effect.

As events should demonstrate reasonably soon, all of the finagling over petty details will likely be rendered meaningless by the tidal wave of debt-deflation. One really big default will be enough to set off the panic; the recent market retreat is a sign that the investing class is beginning to realize that the reflation strategy has failed.

Mailvox: gammas and the church

JM wonders about the transformation of the church:

I am sure you’ve gotten quite a bit of mail on the while alpha, delta, sigma discussions, but I have some questions. Just as a delta can model alpha behavior, is it possible that our overly feminized society is creating betas and gammas from alphas (or sigmas)? Would a true alpha tell mom to go pound sand during sensitivity training?

How do you distinguish between socipathic behavior and alpha behavior OR a sigma’s attitudes toward the world and Asperger’s Syndrome? For instance, for all my life, my attitude as been mostly sigma-like, but recently, it’s been pointed out to me that my withdrawal and disinterest is a result of Asperger’s. It bothered me at first, but after thinking about it, I don’t care. I just wish I could make it work for me a little better.

And finally, I have seen gammas (and to a lesser extent omegas) attempt to behave as alphas in situations where there are few true alphas – church groups come to mind. I know many “pastors” who are slimly little, ass kissers who will do anything to get people to like them, but when someone asks them a question beyond their pay grade that challenges their authority, they go into a bitchy little approximation of an uber male. How would you categorize this or is this expected from gammas?

I would say that Western feminized societies are primarily turning betas into deltas and deltas into gammas. The imaginations of many commenters here notwithstanding, there are very few genuine alphas and sigmas about and they tend to be much less subject to social pressures than normal men. Game is threatening to the feminist agenda because it teaches Deltas and Gammas to surmount their assigned status in the social hierarchy by willful and synthetic means. A true alpha isn’t likely to be at for “sensitivity training” in the first place, so I think it would most likely be a Beta who would go, but resist. Alpha behavior is easily distinguished from sociopathic behavior because Alphas are successful, charismatic group animals. It’s the Sigmas and Omegas who are the sociopaths; the Sigmas are the charming ones and the Omegas are the creepy ones. The difference between the Aspie – who is almost always going to be a Gamma or Omega – and the Sigma is that the Aspie has fundamental difficulties with human relations whereas the Sigma makes friends and seduces women with ease. It’s not about introversion vs extroversion and a few people don’t seem to have grasped the point that Sigmas are almost always confused with Alphas, not Gammas or Omegas.

The most important thing to understand is that one’s role in the social structure is not defined by one’s internal motivations, but by the perception of others. One can alter this perception over time, but it’s the perceptions that are the ultimate metric, not the internal dialogue.

As for the pastoral behavior, what you are describing is textbook Gamma behavior. Gammas who find themselves in charge almost invariably behave like petty, micromanaging dictators; Gamma male behavior is very similar to normal female behavior in a lot of ways. It should be no surprise that as the feminization of the church proceeds, the only men who will be left in it will be Gammas since they are quite comfortable with all the bitchy, passive-aggressive political infighting and petty rule-mongering that is the hallmark of female-dominated institutions. Academia is another area that now tends to be overloaded with Gammas, as they are the only men who are not reluctant to submit to female domination. But as various Protestant denominations have been demonstrating in real time, the church that worships at the altar of sexual equality is not a church that will worship Jesus Christ for long.

Mailvox: splitting up

BNP appears to already know it can get messy:

I was wondering if you would ask your commentators, and say yourself, what an unmarried dad should do when he and his partner are splitting up acrimoniously? I am being as nice as possibly can be, but she is simply a woman on a hate mission. I wouldn’t care, but I love my son more than anything else in the world, and want to see him right. Indeed, I want joint custody. I’m not sure how to go about getting it though.

The first thing to do is to stay focused on your prime objective, which is to preserve the possibility of your relationship with your son. This absolutely does not mean acting servile towards his mother, but it does mean setting aside all of the anger and frustration you are probably feeling towards her. That relationship is dead, so don’t worry about it and don’t let her push your buttons. And while she does hold a lot of the cards, she doesn’t hold all of them. Money is always the big one, so make sure that you don’t play your only real card too soon and always make sure that whatever you give her is contingent upon her delivering her end of the bargain.

It’s probably best to preemptively lawyer up and get a consultation on what sort of rights and responsibilities you have in your state of residence. It’s unfortunate that the legal system will take advantage of your desire to do the right thing by your son, but that is the reality of the world we now live in.

Why mainstream economics is not science

A concise summary:

The entire point of the scientific method is to rule out premises that are contradicted by observations. It has never meant beginning with premises you know to be false and absurd, tracing out whatever implications you can draw from there, and, when circumstantially finding congruence with your “predictions” and observed data, asserting the result of your machinations as “scientific knowledge.”

The reader should now be able to note just how shaky and peculiar the methodological stance of positivist, or rather “positive,” economics actually is. In Friedman’s essay, “The Methodology of Positive Economics,” he defends deriving consequences from clearly false premises with regard to the study of human action. He aptly states that hypotheses are not required to be “realistic” in their assumptions.

Unfortunately for him, a “hypothesis” that incorporates notions and assertions that are demonstrably false is not a hypothesis but a falsehood. Many of the falsehoods that are defended by him, like homo economicus, perfect competition, and perfect knowledge, are still applied in neoclassical economics today.

One can identify from Friedman’s essay a confusion about the way in which assumptions are utilized in the natural sciences. Systems are never modeled according to assumptions that are fantastically flawed in describing them. If physics is truly the science that modern neoclassical economists seek to emulate, it is unfortunate for them that they have utterly misunderstood its methodology. Much of what is labeled “economics” today therefore cannot correctly be described as a science.

The intrinsic non-science is a very important point that I implied, but never quite managed to state so succinctly in RGD. But in significantly fewer words, this is what I was working towards getting across to the reader in the chapter “N-body economics”.

How to torture your husband

If the goal is to put men off marriage, then this sort of non-stop, ribald hilarity would appear to be an excellent way to go about it:

Let’s face it: Even the best husbands need a little punishment every now and then, even if it is just to get him to treat you like the princess you really are. In her hilarious book, 101 Ways to Torture Your Husband, Maria Garcia-Kalb talks us through some clever tactics to help us learn how to make him beg for mercy….

10. Bribe him with sex , then don’t pay up

Sex is great, but the monotony of marriage tends to stifle it, so that’s why men can be lured but the bribing manoeuvre so easily, First, withhold intimacy for two weeks. Your husband will be on a “sex fast”, he’ll be thrilled by the prospect of ‘getting some’, which is when you make your offer.

“Okay honey. We can have sex tonight if you do the washing or mow the lawn (or whatever if might be that you want him to do).”

Your man will immediately agree and get the chore done. When he comes around to “collect” his reward, tell him that the office is closed and he will have to come back tomorrow. Lick it up a notch by wearing racy underwear in bed but sleeping all night long.

The book is obviously supposed to be tongue-in-cheek, but I don’t see what is so tremendously hilarious about stating the inescapably obvious. It’s not as if men don’t know that women are unreliable when it comes to paying their debts; they are disproportionately likely to file for bankruptcy and lose their properties in foreclosure after all. This failure to understand the appeal of the unexpected is why most comediennes suck. Because they don’t actually have a sense of humor, seeing them try to tell jokes and relate amusing anecdotes is rather like watching a dog try to ride a bicycle. They just don’t seem to understand that it’s not the complaining itself that is the funny part. Now, I’m not saying this book quote isn’t funny because I find it offensive in any way, I am merely pointing out that there is nothing even remotely amusing about it. I mean, how is a woman welshing on a promise of sex any different than her telling a woman who is unemployed that she’ll pay her to clean the house for a month, followed by a subsequent refusal to pay the woman? HA HA HA HA HA! (wipes eyes) Oh dear, when you put it that way, I suppose it really IS a good one….

Now, despite the lame foundation there is a way to make it at least vaguely humorous. You see, the next morning, when our lingerie-clad princess-protagonist asks her long-suffering husband why he is so unaccountably relaxed about her failure to deliver on the promised erotic acrobatics the evening before, he shrugs and replies laconically.

“I was sorry to hear that your office was closed, but fortunately your sister’s offers 24-7 delivery.”

Of course, any man who is dumb enough to fall for the blitheringly transparent “I find it sexy when men do [insert unpleasant task that woman doesn’t want to do]” routine is a hopeless Gamma who eminently deserves whatever hell the women in his life are going to put him through.

Too big to prosecute

The Federal Reserve appears to have broken the law in the AIG bailout:

I looked at the source document folks – and while most of it looks ok, there’s one little line in the trust agreement that might be the problem referred to – specifically, here:

Section 1.03. Trust is Irrevocable. This Trust Agreement and the Trust shall be irrevocable and, except as provided in Section 5.01 hereof, unamendable except that the Board of Governors may terminate or amend its authorization pursuant to Section 13(3) of the Federal Reserve Act, thereby revoking or amending the Trust in accordance with Federal law, provided, however, that a Trustee’s rights to resign as a trustee hereunder and to compensation and indemnification with respect to acts or omissions occurring prior to any such revocation or amendment may not be modified without the written consent of that Trustee.

A trust of this sort, to be lawful, has to be irrevocable – you can’t reserve the ability to modify it later. The NY Fed knew they didn’t have the authority to take equity – thus, these “trust” agreements. I’ll note for the peanut gallery that I’m not an attorney, but I do have a reasonable understanding of the requirements for an irrevocable trust of this general sort to be valid. A phone call with the plaintiff’s attorney, David Yerushalmi this morning confirmed that this indeed was the primary problem. Mr. Yerushalmi went on to assert that this establishes a prima-facie violation of the money laundering statute – an extremely serious allegation as that law, if violated, carries very heavy criminal penalties.

There is also apparently a second issue in that the beneficiary is named as The US Treasury, which is, effectively, a bank account and not a “person or entity.” That’s a potential problem too although I can see the counter-claim being made that “The Treasury” is in fact The institution of The Treasury, not the account called “The US Treasury.” This is an explosive allegation – if the trust is defective then it is as if it never existed, and the entirety of the AIG bailout and everything related to it may be criminally unlawful.

It should be completely obvious at this point that Bernanke, Geithner, and Paulson, among others, are criminals who merit investigation, prosecution, conviction, asset forfeiture, and life imprisonment. How long with their government pals attempt to protect them before they finally throw them to the populist wolves? Or are they simply too big to prosecute? The real question is this: is America a society of law or is it simply one more corrupt and crumbling oligarchy about to collapse into the dustbin of history?

Walk away, walk away

Walk away, walk away, banks will crumble:

Nearly 10.7 million, or 23 percent, of all residential properties with mortgages were in negative equity as of September, 2009. An additional 2.3 million mortgages were approaching negative equity, meaning they had less than five percent equity. Together negative equity and near negative equity mortgages account for nearly 28 percent of all residential properties with a mortgage nationwide.

If you own a property that is underwater, it is financially insane for you to continue paying the mortgage if it is less expensive to rent a similar place. There is no “moral” aspect to the situation since the contract clearly delineates the limits of your responsibility. So long as you give up the property, you have abided by the contractual terms specified as part of the deal. While it’s very important to confirm that you have no more liability than the loss of the property before taking such an action – the debtor’s liability varies on a state-by-state basis – that’s the only decisive factor.

As for fears of how a mortgage default will impact your credit score, were you not paying attention for how the banks have behaved over the last ten years? During the expansion phase, banks will loan to anyone who will take their money and during the contraction phase they’re not going to loan to anyone who would find themselves underwater, so in practical terms it’s a non-issue. Keep in mind that 90% of the 4.5 million homeowners who are more than 25% underwater haven’t defaulted yet. But most of them will, and the impact of that wave of defaults is not going to improve your home equity position.

Debt-deflation continues apace

Although it has been drowned out by all the excited reports of massive GDP growth in the fourth quarter of 2009, the economic situation continues to worsen in the eyes of those who are focused on much more important variables, such as the amount of credit in the system. The most recent Fed report, for the week of January 20th, shows that commercial bank loans and leases have reached a new low since 2008, $37.6 billion less than the revised October 21, 2009 low. Bank loans have contracted nearly 9% from the October 2008 peak and are already down 0.42% in the first three weeks of 2010. At the present rate, bank loans will contract another 7.67% in 2010, exceeding last year’s record credit contraction of 7.05%.

To put this in perspective, the only reason the chart goes back to 1973 rather than 1947 is that the lowest rate of credit growth from 1947 through 1972 was 2.65% in 1949.  It’s not just that two straight years of credit contraction has only happened once before in the post-war era, it’s that the magnitude of it is completely without precedent.  And this is all without the banks being forced to take write-downs for the bad loans that they made and securitized off their books.   As the Market Ticker has been pointing out since April 2007, selling on bad loans to investors does not take a bank off the hook when, as was very often the case with subprime and Alt-A loans, there is a fraudulent element in the mortgage such as overstated income.

S&P put out a report the other day in which it essentially said “if the banks have to eat the reduced value now they’re all insolvent.” We in fact have fixed none of the underlying issues that brought down Fannie, Freddie, AIG, Bear and Lehman. The only reason we have seen supposed “improvement” in the markets is that the government has given permission to lie to financial institutions in the exact same form and fashion (that is, hiding actual liabilities and probable losses) that brought down ENRON. But the underlying loss is still real, still present, and still out there. Refusing to recognize it doesn’t make it go away. It just sweeps it under the carpet with the hope (wish really) that the institution will be able to screw you, the consumer, out of enough money to cover the shortfalls before they’re forced to recognize the already-occurred losses and thus declare bankruptcy.

If the mortgage security put-back issue comes to the fore, my linear projection of 7.67% bank loan contraction almost surely be overly optimistic, just as my forecast for 2009 deposit failures in RGD was. If we are still in the early stages of debt-deflation, then we must still be in the early stages of economic contraction. Paul Krugman likes to write about demand gaps, but even his most negative calculations are dwarfed by the size of the credit gap between the pre-2009 8.37% average annual credit growth and the 2009-2010 -7.5% annual contraction.

Debt is always the core of the problem. Witness how the imminent debt implosion in Greece makes the previously unthinkable prospect of sovereign defaults and the eventual disintegration of the Euro and the European Union look increasingly more likely:

The EC has no data on public debt beyond 2008, when the figure was €237bn, or 99.2pc of GDP. A surging budget deficit of 13pc of GDP has pushed the figure much higher since then. Brussels expects the debt to reach 125pc this year, and 135pc in 2011 unless spending is slashed. If auditors discover a fresh chunk of hidden debts, this would test Greek financial credibility to the limits. “If there is anything too this, it is the final straw,” said one banker.