This morning I read the P-I (Seattle Post-Intelligencer) with my coffee for the last time. The paper P-I. Today was its last paper edition. Sad to see it go. The reality is that I haven't purchased a paper newspaper in a long time. I read the P-I in the morning but it is the web edition I read. At least the P-I will continue on as a website. Time will tell if that will work. The Seattle Times remains but I feel it's also terminal. I used to work for the Seattle Times as did many other teenagers. During my Senior year in high school (1961-1962) I delivered the Times. I remember the special edition for the 1962 worlds fair. I had to use my dad's truck -- a 1930 International Harvester 6-Speed Special, but that is another story.
Back in 1993, the Knight-Ridder newspaper chain began investigating piracy of Dave Barry’s popular column, which was published by the Miami Herald and syndicated widely. In the course of tracking down the sources of unlicensed distribution, they found many things, including the copying of his column to alt.fan.dave_barry on usenet; a 2000-person strong mailing list also reading pirated versions; and a teenager in the Midwest who was doing some of the copying himself, because he loved Barry’s work so much he wanted everybody to be able to read it.
One of the people I was hanging around with online back then was Gordy Thompson, who managed internet services at the New York Times. I remember Thompson saying something to the effect of “When a 14 year old kid can blow up your business in his spare time, not because he hates you but because he loves you, then you got a problem.” I think about that conversation a lot these days.
The problem newspapers face isn’t that they didn’t see the internet coming. They not only saw it miles off, they figured out early on that they needed a plan to deal with it, and during the early 90s they came up with not just one plan but several. One was to partner with companies like America Online, a fast-growing subscription service that was less chaotic than the open internet. Another plan was to educate the public about the behaviors required of them by copyright law. New payment models such as micropayments were proposed. Alternatively, they could pursue the profit margins enjoyed by radio and TV, if they became purely ad-supported. Still another plan was to convince tech firms to make their hardware and software less capable of sharing, or to partner with the businesses running data networks to achieve the same goal. Then there was the nuclear option: sue copyright infringers directly, making an example of them.
As these ideas were articulated, there was intense debate about the merits of various scenarios. Would DRM or walled gardens work better? Shouldn’t we try a carrot-and-stick approach, with education and prosecution? And so on. In all this conversation, there was one scenario that was widely regarded as unthinkable, a scenario that didn’t get much discussion in the nation’s newsrooms, for the obvious reason.
The unthinkable scenario unfolded something like this: The ability to share content wouldn’t shrink, it would grow. Walled gardens would prove unpopular. Digital advertising would reduce inefficiencies, and therefore profits. Dislike of micropayments would prevent widespread use. People would resist being educated to act against their own desires. Old habits of advertisers and readers would not transfer online. Even ferocious litigation would be inadequate to constrain massive, sustained law-breaking. (Prohibition redux.) Hardware and software vendors would not regard copyright holders as allies, nor would they regard customers as enemies. DRM’s requirement that the attacker be allowed to decode the content would be an insuperable flaw. And, per Thompson, suing people who love something so much they want to share it would piss them off.
Revolutions create a curious inversion of perception. In ordinary times, people who do no more than describe the world around them are seen as pragmatists, while those who imagine fabulous alternative futures are viewed as radicals. The last couple of decades haven’t been ordinary, however. Inside the papers, the pragmatists were the ones simply looking out the window and noticing that the real world was increasingly resembling the unthinkable scenario. These people were treated as if they were barking mad. Meanwhile the people spinning visions of popular walled gardens and enthusiastic micropayment adoption, visions unsupported by reality, were regarded not as charlatans but saviors.
When reality is labeled unthinkable, it creates a kind of sickness in an industry. Leadership becomes faith-based, while employees who have the temerity to suggest that what seems to be happening is in fact happening are herded into Innovation Departments, where they can be ignored en masse. This shunting aside of the realists in favor of the fabulists has different effects on different industries at different times. One of the effects on the newspapers is that many of their most passionate defenders are unable, even now, to plan for a world in which the industry they knew is visibly going away.
The debate on Israel is changing. The assault on Gaza was a turning point. It is becoming clear to many as to the true face of Israel. Read this Greenwald piece and read his links. They are all a must read.
Anyone who doubts that there has been a substantial -- and very positive -- change in the rules for discussing American policy towards Israel should consider two recent episodes: (1) the last three New York Times columns by Roger Cohen; and (2) the very strong pushback from a diverse range of sources against the neoconservative lynch mob trying, in typical fashion, to smear and destroy Charles Freeman due to his critical (in all senses of the word) views of American policy towards Israel. One positive aspect of the wreckage left by the Bush presidency is that many of the most sacred Beltway pieties stand exposed as intolerable failures, prominently including our self-destructively blind enabling of virtually all Israeli actions.
Iran -- mocked the war-seeking cartoon caricature of that nation as The New Nazi Germany craving a Second Holocaust. To do so, Cohen reported on the relatively free and content Iranian Jewish community (25,000 strong). When that column prompted all sorts of predictable attacks on Cohen from the standard cast of Israel-centric thought enforcers (Jeffrey Goldberg, National Review, right-wing blogs, etc. etc.), Cohen wrote a second column breezily dismissing those smears and then bolstering his arguments further by pointing out that "significant margins of liberty, even democracy, exist" in Iran; that "Iran has not waged an expansionary war in more than two centuries"; and that "hateful, ultranationalist rhetoric is no Iranian preserve" given the ascension of Avigdor Lieberman in Benjamin Netanyahu's new Israeli government.
Zionism is the problem The Zionist ideal of a Jewish state is keeping Israelis and Palestinians from living in peace.
It's hard to imagine now, but in 1944, six years after Kristallnacht, Lessing J. Rosenwald, president of the American Council for Judaism, felt comfortable equating the Zionist ideal of Jewish statehood with "the concept of a racial state -- the Hitlerian concept." For most of the last century, a principled opposition to Zionism was a mainstream stance within American Judaism.
Even after the foundation of Israel, anti-Zionism was not a particularly heretical position. Assimilated Reform Jews like Rosenwald believed that Judaism should remain a matter of religious rather than political allegiance; the ultra-Orthodox saw Jewish statehood as an impious attempt to "push the hand of God"; and Marxist Jews -- my grandparents among them -- tended to see Zionism, and all nationalisms, as a distraction from the more essential struggle between classes.
To be Jewish, I was raised to believe, meant understanding oneself as a member of a tribe that over and over had been cast out, mistreated, slaughtered. Millenniums of oppression that preceded it did not entitle us to a homeland or a right to self-defense that superseded anyone else's. If they offered us anything exceptional, it was a perspective on oppression and an obligation born of the prophetic tradition: to act on behalf of the oppressed and to cry out at the oppressor.
For the last several decades, though, it has been all but impossible to cry out against the Israeli state without being smeared as an anti-Semite, or worse. To question not just Israel's actions, but the Zionist tenets on which the state is founded, has for too long been regarded an almost unspeakable blasphemy.
Yet it is no longer possible to believe with an honest conscience that the deplorable conditions in which Palestinians live and die in Gaza and the West Bank come as the result of specific policies, leaders or parties on either side of the impasse. The problem is fundamental: Founding a modern state on a single ethnic or religious identity in a territory that is ethnically and religiously diverse leads inexorably either to politics of exclusion (think of the 139-square-mile prison camp that Gaza has become) or to wholesale ethnic cleansing. Put simply, the problem is Zionism.
One of the creators of the successful Israeli movie Waltz with Bashir has produced a new animated film to highlight the continued blockade of the Gaza Strip and its 1.5 million Palestinian residents.
Yoni Goodman, who was director of animation for the Golden Globe-winning movie, said he was motivated to take part in the project by the recent war in Gaza. His 90-second animation, Closed Zone, follows a young boy chasing a bird through the Gaza Strip who finds his way out blocked at every turn.
"The issue was always important in my opinion, meaning the issue of the closure," said Goodman in a second video about the making of the Gaza animation.
In a small hotel in East Jerusalem last week, I met a Norwegian aid worker with many years of experience working in occupied Palestine, who told me the following story:
She and some colleagues went to visit a project their organization was running in one of the West Bank villages hard hit by the many land grabs Israel has undertaken since the 1993 conclusion of the "Oslo" agreement between Israel and the PLO. They met with a gathering of canny village elders, one of whom greeted them by saying this: "Welcome! Well, as you know we are simple people, and not all of us are good at reading your way of writing. But when we look at the word 'Oslo' the way you write it, it is clear to us that it begins with a zero and ends with a zero... "
That is indeed a great reading of the meaning of "Oslo" (the agreement) from the Palestinian point of view.
In the mechanistic template imposed by western leaders on the Middle East, of ‘moderates’ who must be supported versus ‘extremists’ who must be isolated and undermined, Hamas has to be painted, by mechanical necessity alone, as ‘extremists’. Hamas has become the ‘extremists’ to answer in neat symmetry to the ‘moderates’ of Ramallah, who for other reasons American and European leaders wish in any event to support.
generally accepted, force a deterministic interpretation that can blind its advocates to the perverse results of such narrow and rigid conceptualising: a defeated and humbled Hamas, western leaders suggested, was to be ‘welcomed’ as a blow to Hesballah, which in turn represented a strike at Syria, which weakened Iran - all of which strengthened the ‘moderates’; and, the model implies, serves to make Israel safer. It is a narrative that has reduced the Palestinian crisis to no more than a pawn in the new ‘Great Game’ of an existential global struggle waged against ‘extremism’
The appealing clarity of such a simple, and simplistic, model-making has however obscured its overriding flaw. The pursuit of this narrow formulation of moderates versus extremists has yielded the perverse result - not of bringing nearer a Palestinian state - but of pushing it beyond reach, possibly for good.
On the one hand, Mahmoud Abbas is left discredited, lacking the legitimacy to take forward any political solution: on the other, the ‘extremist’ branding of Hamas has enabled the West to block Hamas’ and other factions’ access to the Palestinian leadership institutions. Palestinian leadership institutions remain captive to one section of Fatah in Ramallah. In short, western policy has brought about a void in which no Palestinian leader, and no Palestinian movement, now has the potential to achieve a credible mandate - or to move forward politically.
Attempts to undermine Hamas have all failed - be they economic siege, political cleansing (with British and American experts grooming a special operations militia around Abbas in order to politically-cleanse the West Bank of Hamas influence), the repression of Hamas’ political and charitable institutions, or, more recently, the Israeli military onslaught on Gaza.
A study conducted by the Central Intelligence Agency (CIA) has cast doubt over Israel's survival beyond the next 20 years.
The CIA report predicts "an inexorable movement away from a two-state to a one-state solution, as the most viable model based on democratic principles of full equality that sheds the looming specter of colonial Apartheid while allowing for the return of the 1947/1948 and 1967 refugees. The latter being the precondition for sustainable peace in the region."
The study, which has been made available only to a certain number of individuals, further forecasts the return of all Palestinian refugees to the occupied territories, and the exodus of two million Israeli - who would move to the US in the next fifteen years.
Second is the image quality. I printed this image at 13"x10" and it looked like a medium format image. One of the unique things about this camera is that it is a liveview interchangeable lens camera. The only one so far. That means no mirror as in a SLR or DSLR. The viewfinder is electronic which is a bit of an acquired taste but it lets you focus in low level light that would be impossible to focus an SLR or even a rangefinder. Because there is no mirror the distance from the lens mount to the sensor is very short allowing, with the right adapter, to mount just about any rangefinder or SLR lens. My Pentax M42 screwmount adapter arrived yesterday. Because the sensor size is half the length of a 35mm negative the lense focal lengths are effectively doubled. Not good for wide angle but very good for telephoto. My 85/1.8 becomes a fast 170mm lens. My 50/1.4 is an even faster 100mm lens. I did a quick test shot with the 85mm lens and I'm very encouraged. I'm going to see if I can get a shot of the moon with my 300mm lens with the 2x adapter. That will be an equivalent of 1200mm. Whoo boy! Another time sucker. Pictures will ensue.
This is for Blaine and anyone else who missed it. This is one of the best pieces of television I've seen since Jon Stewart was on Crossfire. Watch this series. Stewart nails the financial media but why does it take a comedian to do what the journalists are supposed to be doing?
Our local Ace Hardware is stocking up on plastic lawnchairs.
The primroses, without any help from us, are starting to blossom. But, as I write this, it is snowing.
I've been absent from this blog because I've been way too busy. A lot of that is because my camera strap sales keep going up. Given this economic environment it's a good problem to have. A very good problem. And then the Epson 3800 17" wide printer has returned. I was doing prints for Don last year but he wasn't able to sell them and he took the printer back. Recently he has hooked up with a gallery in Los Angeles that wants them. These are prints of negatives of Hollywood stars taken mostly in the 1950s. He found them in a studio space he took over in the the early 1970s. They were in a trash bag. He has been trying to find a market for them ever since. It looks like he may have found it and I will be printing them. I've been having to clear out room in the basement for it. That means moving stuff (valuable artifacts all) into a storage unit. This will also give me more room for my straps and my own printing. And then we have been going down to Tacoma weekly to visit Zoe's mom at Western State Hospital. Mostly weekly. Eventually we get to burned out and it slides to a week and a half or two. Western State is trying to get rid of her but she isn't really ready. Zoe has a couple of posts here and here. And tomorrow I pick up several guitars for product photography for a customer. I will try to make posting more regular.
It's a term we should get used to, researchers warned on Thursday, predicting a flood of new residents driven north by heat waves, fires and other calamitous effects of global warming.
With one speaker raising the specter of a new migration on the scale of the Great Depression, state and county officials admitted they have barely started getting ready.
The warnings came at a conference of planners, scientists and government officials drilling into the results of a study released this week examining what Washington faces -- for our food supply, our forests, our drinking-water supplies and public health, among other fronts -- as the globe warms in coming decades.
"We're going to have an influx of climate refugees," said Richard Hoskins, an epidemiologist with the Washington Health Department. "This is going to have a tremendous impact on our public health (system). Local public health has a very full plate as it is."
This Bill Moyers interview with Simon Johnson is a must see. One of his main issues is that as long as we keep the bankers in power that caused this problem the problem will never be solved. Watch or read the interview.
The battle is joined as they say — and here's the headline that framed it: "High Noon: Geithner v. The American Oligarchs." The headline is in one of the most informative new sites in the blogosphere called: baselinescenario.com. Here's the quote that grabbed me:
"There comes a time in every economic crisis, or more specifically, in every struggle to recover from a crisis, when someone steps up to the podium to promise the policies that — they say — will deliver you back to growth. The person has political support, a strong track record, and every incentive to enter the history books. But one nagging question remains. Can this person, your new economic strategist, really break with the vested elites that got you into this much trouble?"
And here's the man who asked that question. Simon Johnson is former chief economist at the International Monetary Fund. He now teaches global economics and management at MIT's Sloan School of Management and is a senior fellow of the Peterson Institute. He is co-founder of that website I quoted — baselinescenario.com — where he analyzes the global economic and financial crisis.
Welcome, Simon Johnson to the Journal.
SIMON JOHNSON: Nice to be here.
BILL MOYERS: What are you signaling with that headline, "Geithner vs. the American Oligarchs"?
SIMON JOHNSON: I think I'm signaling something a little bit shocking to Americans, and to myself, actually. Which is the situation we find ourselves in at this moment, this week, is very strongly reminiscent of the situations we've seen many times in other places.
But they're places we don't like to think of ourselves as being similar to. They're emerging markets. It's Russia or Indonesia or a Thailand type situation, or Korea. That's not comfortable. America is different. America is special. America is rich. And, yet, we've somehow find ourselves in the grip of the same sort of crisis and the same sort of oligarchs.
The prevailing consensus on any economic policy is a fascinating beast. For years it can stay put, seemingly immovable, and even - in some cases - becoming enshrined in legislation or central bank statute. One day it begins to shake, ever so slightly; under the pressure of events, a wider range of serious opinion develops. And then, all of a sudden, the consensus breaks and you are running hard to keep up.
We saw this last year with regard to discretionary fiscal policy - fiscal stimulus - in the US. Eighteen months ago, very few mainstream economists or other policy analysts would have suggested that the US respond to the threat of recession with a large spending increase/tax cut. The consensus - based on long years of experience and research - was that discretionary fiscal policy generates as many problems as it solves. To argue against this consensus was to bang your head against a brick wall, while also being regarded as not completely serious.
At some point in November/December 2007, this consensus began to shake. The history may prove controversial but my perspective at the time and in retrospect is that Marty Feldstein was the first heavyweight economist to question the consensus (including in interactions on Capitol Hill), and he was followed closely by Larry Summers’ influential writings in the Financial Times. Within a month or so, the consensus broke. Not only did we get a fiscal stimulus in early 2008 for the US, but the IMF quickly adopted the same pro-stimulus line globally and the terms of the debate changed everywhere. This fed into a process out of which came at least a temporary new quasi-consensus: a large US fiscal stimulus is part of the sensible policy mix today.
The consensus on banking just broke cover. For some weeks it has been under intense pressure. At least since the fall, serious people have been informally floating various new ideas on how to deal with the technical problems surrounding toxic assets and presumed deficient bank capital. But since mid-January, the mainstream consensus - that we should protect existing large banks and keep them in business essentially “as is” - seems to have cracked.
Paul Romer and Willem Buiter favor an approach that emphasizes the creation of new banks. Roger Farmer wants to go in a completely different direction. These are just a few examples of the great (and completely constructive) new dispersion of ideas around banking - post links to your favorite new ideas in comments below.
The body count is still rising. For months on end, marked by bankruptcies, foreclosures, evictions, and layoffs, the economic meltdown has taken a heavy toll on Americans. In response, a range of extreme acts including suicide, self-inflicted injury, murder, and arson have hit the local news. By October 2008, an analysis of press reports nationwide indicated that an epidemic of tragedies spurred by the financial crisis had already spread from Pasadena, California, to Taunton, Massachusetts, from Roseville, Minnesota, to Ocala, Florida.
In the three months since, the pain has been migrating upwards. A growing number of the world's rich have garnered headlines for high profile, financially-motivated suicides. Take the New Zealand-born "millionaire financier" who leapt in front of an express train in Great Britain or the "German tycoon" who did much the same in his homeland. These have, with increasing regularity, hit front pages around the world. An example would be New York-based money manager René-Thierry Magnon de la Villehuchet, who slashed his wrists after he "lost more than $1 billion of client money, including much, if not all, of his own family's fortune." In the end, he was yet another victim of financial swindler Bernard Madoff's $50 billion Ponzi scheme.
An unknown but rising number of less wealthy but distinctly well-off workers in the financial field have also killed themselves as a result of the economic crisis -- with less press coverage. Take, for instance, a 51-year-old former analyst at Bear Stearns. Learning that he would be laid off after JPMorgan Chase took over his failed employer, he "threw himself out of the window" of his 29th-floor apartment in Fort Lee, New Jersey. Or consider the 52-year-old commercial real estate broker from suburban Chicago who "took his life in a wildlife preserve" just "a month after he publicly worried over a challenging market," or the 50-year-old "managing partner at Leeward Investments" from San Carlos, California, who got wiped out "in the markets" and "suffocated himself to death."
Would the Obama economic plan, if enacted, ensure that America won't have its own lost decade? Not necessarily: a number of economists, myself included, think the plan falls short and should be substantially bigger. But the Obama plan would certainly improve our odds. And that's why the efforts of Republicans to make the plan smaller and less effective - to turn it into little more than another round of Bush-style tax cuts - are so destructive.
So what should Mr. Obama do? Count me among those who think that the president made a big mistake in his initial approach, that his attempts to transcend partisanship ended up empowering politicians who take their marching orders from Rush Limbaugh. What matters now, however, is what he does next.
It's time for Mr. Obama to go on the offensive. Above all, he must not shy away from pointing out that those who stand in the way of his plan, in the name of a discredited economic philosophy, are putting the nation's future at risk. The American economy is on the edge of catastrophe, and much of the Republican Party is trying to push it over that edge.
Asia: The Coming Fury As goods pile up in wharves from Bangkok to Shanghai, and workers are laid off in record numbers, people in East Asia are beginning to realize they aren't only experiencing an economic downturn but living through the end of an era.
For over 40 years now, the cutting edge of the region's economy has been export-oriented industrialization (EOI). Taiwan and Korea first adopted this strategy of growth in the mid-1960s, with Korean dictator Park Chung-Hee coaxing his country's entrepreneurs to export by, among other measures, cutting off electricity to their factories if they refused to comply.
The success of Korea and Taiwan convinced the World Bank that EOI was the wave of the future. In the mid-1970s, then-Bank President Robert McNamara enshrined it as doctrine, preaching that "special efforts must be made in many countries to turn their manufacturing enterprises away from the relatively small markets associated with import substitution toward the much larger opportunities flowing from export promotion."
EOI became one of the key points of consensus between the Bank and Southeast Asia's governments. Both realized import substitution industrialization could only continue if domestic purchasing power were increased via significant redistribution of income and wealth, and this was simply out of the question for the region's elites. Export markets, especially the relatively open U.S. market, appeared to be a painless substitute.
Stiglitz is saying something slightly more radical than what I've been saying for some time. You don't need the current banks. If they won't lend, let them go under. If the Fed can lend to banks, why can't it lend directly to banks and consumers.
Banks exist to be intermediaries between central banks and those who need credit. They are given the ability to create money through fractional reserve money (yes, create) and they also have the right to borrow money at rates that no one else can receive. If you could take your money, multiply it by 10 (that's not the exact number, but as an example) and lend it out, think you could make a profit? If you could borrow money at 1 to 5% and then lend it out for more than that, in some cases 15% more, think you could make money?
Banks thus are given by governments an incredibly valuable privilege. It's really hard to overstate how easy it is to make steady returns as a bank as long as you don't get greedy. In exchange for the right to create money and borrow it at rates no one else gets, banks are expected to add some value to the equation. Specifically, they are expected to figure out who is a good credit risk, and where money should best be loaned and used. There are two sides of this - money should be loaned where it has a high return. It should also be loaned to folks who can pay it back. It should be invested in the same way—return averaged with risk.
Yesterday I discussed the "let the banks go under" option. Let's talk about the ups and downs of this possibility, because there are significant risks associated with it, which is why folks like Summers and Geithner are acting like they stared at the Gorgon and have been turned to stone.
The case for it is simple enough: if you don't force the losses and the write downs, and instead allow a combination of impaired bank balance books and government accepting the losses, whether through a bad bank, insurance or other means, you have to write off trillions and trillions (I'm guessing, globally, a minimum of 8 trillion, and it is probably much higher than that). That money will not be available for useful investments, for income, for social security or anything else. It will be commited for a generation. This is essentially what happened in Japan, when Japan refused to have its banks really accept and acknowledge their losses. If you're old enough, you remember the days when Japan had probably the world's most dynamic economy. No longer, instead they have an economy that's in and out of the hospital, one where the good times have never, ever returnred.
That's the zombie bank route combined with a bad bank that doesn't nationalize banks. Pay it off over a generation.
This method has the advantage (from the point of view of decision makers) that it leaves the same class of people in charge of the economy. From the point of view of ordinary citizens that's probably a bad thing, since the current elites are not only incompetent, they are wedded to old infrastructure and and old model of organizing the economy. Just as England did not succesfully make the leap from a coal economy to an oil economy in time to avoid its own fall, current interests are stoppng America from investing in the future—whether that is true in the internet, where the US has awful broadband compared to its competitors or in new energy technology, where others are ahead in solar wind and indeed virtually every renewable technology. Keep these folks in charge, and this will continue.
Now the problem with letting banks go under instead is that it forces an acknowledgment of losses in a short period.
Zoe's mom, Gerry, is still at the Alzheimer's ward at Western State Hospital in Tacoma. They are looking to place her back in the community but no luck so far. I don't see how they can given the care level she needs, but Western State is under pressure to find her a place. We have been visiting her weekly. She had a seizure a couple of months ago but has been OK since. Last night around midnight (why is it always in the middle of the night?) we had a call from the nurse on Gerry's ward. She had fallen on her face again. Zoe spent several hours calling to see what her condition was. They gave her a CT scan and all was well with her head. It turned out to be a bladder infection, which can cause stability problems in older patients. No seizure this time. We will be going down Wednesday.