Thoughts on the debt ceiling

It looks like we may avert a debt disaster after all. Of course, this will come at a heavy price, namely deep cuts which will stifle an already nearly-dead recovery. Furthermore, this proposed agreement would include approximately $2.5 trillion in cuts over the next decade with absolutely no increased revenue. Considering the GOP currently controls one-half of one-third of our national government, this is a Republican coup de grâce if there ever was one.

Below are my thoughts, adopted from an email I wrote yesterday to friends.


Most people in this country believe that the debt ceiling allows us to spend more money, take on bigger obligations, etc. This is not the case, and is a hugely important distinction, especially because almost everyone doesn’t realize this (unless they follow the debate closely, which most Americans don’t). It simply allows us to pay for our existing debt obligations. Obama loves to use the analogy of someone who buys a car, drives it off the lot, and then refuses to make his monthly car payments. In that case, the debt ceiling is hit when he fails to make a payment, not when he tries to buy a new car.

Interestingly, I think it was in the Economist that someone mentioned that the debt ceiling itself is an archaic and almost obsolete invention, and only the US and Denmark, I believe, use it (although, true to stereotype, the Danish are much more timely about getting it raised).

But the point is, the debt ceiling represents money we’ve already spent. Increased spending down the road is an entirely separate issue. (Ironically, if we do default on our debts, the nation’s debt is going to increase significantly due to interest rate hikes alone.) Furthermore, Republicans raised the debt limit 7 times under Bush, 11 times under Reagan, etc. and, while the potential of its raising has occasionally been used as a cudgel to enact small reforms, the threat of default has never yet been wielded to my knowledge. Many like to bring up the fact that Obama voted against raising the debt limit in 2006, for which he has since (conveniently) expressed regret, but it is important to note that he did so in protest against a then-assured debt ceiling increase (in a Congress in which both houses were controlled by the GOP). There is a huge difference between taking a symbolic no vote against certain passage and actually holding the nation hostage until one’s own rigid policy prescriptions are implemented, the threat of default be damned.

Finally, in that we do have a debt ceiling and in that it does represent existing — not future — spending, it might be helpful to take a look at who’s contributed the most to its ever-increasing levels and draw one’s own conclusions about fiscal hypocrisy.

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Bill Keller: Democracy is dangerous. Maybe we should tone it down.

If nothing else, New York Times executive editor Bill Keller’s resignation from his position to return to writing columns has accomplished this: instead of inferring his stupidity from years of the Grey Lady’s questionable editorial choices, we can now confirm it directly by reading his essays. After vaingloriously confronting Arianna Huffington — including his now-infamous, yet not inaccurate disparagement of her as “the queen of aggregation” — and variously deriding new media as vapid and emotionless, Keller has now set his sights on the News of the World phone-hacking scandal.

Whether Keller’s latest column, “Why Tyrants Love the Murdoch Scandal,” was penned out of faux-modesty or genuine concern is at once an academic debate and one for which either answer is equally terrifying. For it is not the motive behind his words, but the fact that they exist at all — and in the pages of the vaunted New York Times, no less — that imbues them with such awesome power.

The first signs of trouble appear immediately. Notice, for example, that signature Kellerism: the cloying way he simultaneously feigns to refrain from, while gleefully leaping into, criticism of an arch-nemesis, News Corporation’s Rupert Murdoch. “Nor is this the place to celebrate a rival’s troubles,” he writes, before adding, “True, I did pull from my files and savor the indignant letters we received from News of the World’s top editors last year as we prepared to publish an investigation of the paper’s phone-hacking culture and Scotland Yard’s timidity — work that has been fully vindicated in recent weeks.”

But even such condescension is little more than a distracting aside. His real problem lies in the substance of his column. Keller inexplicably uses the fall from grace (from acceptance? from toleration?) of Murdoch’s News of the World to make a broader point about freedom of the press. Apparently, the police and parliamentary investigation of Murdoch’s publication represents some sort of threat to the democratic principle of free expression. We know this because Keller quotes an anonymous South African friend, who notes that his native country, which is already growing increasingly hostile to an unfettered media presence, may indeed find justification for its repression in the goings-on of the phone-hacking scandal. “‘You can be sure they will use the phone-hacking fallout to help make their case,'” Keller’s bizarrely unnamed friend informs him. “‘Nobody pays much attention to the effect of something like this on little countries like ours.'”

Indeed one doesn’t. And that is precisely because the effect is insignificant, if it exists at all. “Despots love to see a free press behaving badly,” Keller solemnly intones. And yet they seem to do just fine in its absence. There is no more enduring truism of totalitarian states than that they will, and do, seize inspiration for their tyranny in the most absurd places. To censor one’s perfectly legal, and even morally necessary, actions in order to appease the beast beyond our shores is patently insane. Paraphrasing Voltaire, if the phone-hacking scandal did not exist, it would be necessary — for dictators around the world, at least — to invent it. By this logic, perhaps Norway should think twice about imprisoning Anders Behring Breivik, for fear this may inspire crackdowns on political protest in Uganda.

Holding sacred democratic institutions hostage to the whims of dictators would seem to be anathema to the current executive editor of the New York Times, which is why its implied advocacy is so shocking. No one is suggesting — even in Britain, where press restrictions are more in vogue — that a nation should block access to the independent media or prevent it from expressing controversial viewpoints. In fact, Keller admits as much: “I’m not terribly alarmed that either Britain or the United States will significantly roll back the protections that allow us to hold our governments accountable — up to and including the hot scrutiny of stories like the WikiLeaks disclosures.”

What is taking place, however, is the mandatory legal process necessitated by News of the World‘s culture of disdain for the laws of the nation in which it operated. To ignore their incursions would be a far greater abandonment of democratic ideals, and would thus provide correspondingly greater fodder for the consistently bad intentions of undemocratic regimes.

The Oslo tragedy and media narratives

The facts of the Oslo bombing and shootings — already being called Norway’s September 11th — are still being discovered, and yet the mass media’s narrative, much like a preemptively written obituary of a public figure, was already neatly in place. Here are a few examples:

Kristian Harpviken, interview in Foreign Policy magazine:

“The only concrete supposition [as to the identity of the attackers] that would emerge in a Norwegian context would be al Qaeda.”

The Wall Street Journal:

“…In jihadist eyes [Norway] will forever remain guilty of being what it is: a liberal nation committed to freedom of speech and conscience, equality between the sexes, representative democracy and every other freedom that still defines the West. For being true to those ideals, Norwegians have now been made to pay a terrible price.” [Note: This quote appeared in the original version of the article, but the WSJ later deleted it along with other modifications, after it became apparent that a non-Muslim, non-al Qaeda-affiliated person was suspected of the crimes.]

Jennifer Rubin, The Washington Post:

“This is a sobering reminder for those who think it’s too expensive to wage a war against jihadists. I spoke to Gary Schmitt of the American Enterprise Institute, who has been critical of proposed cuts in defense and of President Obama’s Afghanistan withdrawal plan. ‘There has been a lot of talk over the past few months on how we’ve got al-Qaeda on the run and, compared with what it once was, it’s become a rump organization. But as the attack in Oslo reminds us, there are plenty of al-Qaeda allies still operating. No doubt cutting the head off a snake is important; the problem is, we’re dealing with global nest of snakes.'”

I could continue with additional quotes, but these and other, similar proclamations have already been covered and debunked by the likes of James Fallows at The Atlantic, Benjamin Doherty at Electronic Intifada, and especially Glenn Greenwald on Salon.com.

The point is that, not only is the media’s first instinct to jump to the Islamists-as-terrorists trope, but, as Greenwald helpfully exposes, sometimes the mistaken attribution to Islamic fundamentalists is the only prerequisite for labeling an act as “terrorism” in the first place. Thus, a horrifying act can only be terrorism if it’s committed by a Muslim; conversely, no matter how gruesome the act, it is not terrorism if it’s committed by someone other than a Muslim.

As it turns out, the story is already taking shape quite differently than initially reported. The New York Times’ lead article now states:

The Norwegian police on Saturday charged a man they identified as a right-wing fundamentalist Christian in connection with the bombing of a government building in central Oslo and a shooting attack on a nearby island that together killed at least 92 people.

As stunned Norwegians grappled with the deadliest attack in the country since World War II and a shocking case of homegrown terrorism, a portrait began to emerge of the suspect, Anders Behring Breivik, 32. He was described as a religious, gun-loving Norwegian obsessed with what he saw as the threat of multiculturalism and Muslim immigration to the cultural and patriotic values of his country.

“We are not sure whether he was alone or had help,” a police official, Roger Andresen, said at a televised news conference. “What we know is that he is right wing and a Christian fundamentalist.”

The enduring tragedy of the Oslo attacks is that the laughable performance of our mainstream media will go undetected and un-criticized by most, because it is far more convenient to stick to an accepted script than to question the prefabricated story-lines we’ve come to expect. The word “terrorism,” when used to such dubious and unproductive ends, has gained precisely the opposite of its original meaning: as my friend Sam described it, “This sort of language quickly becomes bloated beyond its meaning and has the tendency to pervert anything that precedes it or follows it. It is eager and anxious to be helpful but in doing so tries to excuse itself from being complicit with the historicity of the problems it is trying to rectify.”

By jumping to call anything and everything that is perpetrated by Islamists “terrorism” — even when, as in this case, the entire conjecture as to the identity of the participants was incorrect from the start — and refusing to use the same word to describe actions taken by other disaffected groups, we’ve stripped the word of all meaning. “Terrorism,” much like “Hitler” and “Nazi,” has undergone such a grotesque transformation in usage that it’s lost any true power it once had as a descriptor. Unfortunately, it seems very unlikely that anyone in a position of power is likely to notice or care.

Debt ceiling hijinks?

So if this is simply a Republican negotiating tactic, yesterday would be a good time to get serious.

And now it’s almost tomorrow. Or, to borrow a movie title in the service of a horrible cliche, it’s almost The Day After Tomorrow.

A brief thought about inverted scrolling on Mac OS X Lion

I downloaded and installed Max OS X Lion yesterday, and probably the most immediately noticeable update is the way in which you use the track pad to scroll. Previously, if you wanted to see text below the bottom of the visible page, you swiped with two fingers in a downward direction, and the page would scroll down in response. Now, the default has switched so that, to see more text below, you must swipe two fingers up, not down (and vice versa).

There is a certain logic to this. First of all, in direct opposition to the title of this post, it’s not really inverted scrolling: the way we’ve always scrolled is actually the inverted version, and this update “corrects” that. We are moving definitively in the direction of Apple Singularity: the convergence of user experience across all Apple products. Due to the massive rise of the iPhone and iPad, both of which are entirely touch-based, users have grown used to swiping down to scroll up and vice versa, because it feels natural to do so when you’re interacting directly with a screen.

The problem I see with trying to integrate the iPhone/iPad experience with that of a MacBook Pro, for example, is that there is a long history of user interaction with computer visuals, and that history is completely unaccustomed to the new “inverted scrolling” method. Most obviously, to move a cursor around a screen, you don’t touch the screen: you use the track pad. But when using this track pad, since you’re not physically (and I use the word “physically” here in a metaphorical sense, not literally) swiping a page up and down like you do on the iPhone or iPad, the natural expectation is for the cursor to move in the same direction as your finger movements.

This is still exactly what happens when you’re simply moving the cursor. But now, the moment you want to scroll, you’re forced to override your instincts and scroll in the opposite direction of what you want to see, despite the fact that the act of moving the cursor is handled exactly oppositely. So you basically have two sets of track pad rules for the same device, a MacBook Pro. On the iPhone and iPad, you only have one set of rules, which is to scroll in the opposite direction of what you want to see, and it feels natural because a) those devices have always only worked that way, and b) due to the touchscreen, you actually feel as if you’re swiping a physical piece of paper up or down, which would correspond perfectly to the movements you’re making on the screen. On the computer, you’re using a trackpad; you’re not swiping on the screen, so there’s already a disconnect between your finger movements and what’s happening on the screen.

By throwing “inverted scrolling” (which can be changed, by the way; it’s only a default) into the mix, Apple is either betting that this will catch on long-term on laptops as well, or they’re not particularly concerned with placating their laptop users — a possibility which is increasingly viable, given the incredible revenue growth of their touchscreen devices. I actually haven’t even switched back to the old settings, because in a way I agree: we are inexorably marching towards a touchscreen future (even though, I hope, laptops won’t disappear completely), and on some level it does make sense for all the scrolling rules to work similarly, no matter on which device. It just feels a little strange and unnatural on a laptop, where we’ve had years to get used to another system and where we continue to use that old system when it comes to moving the cursor but have switched to the new one for scrolling.

Book review: Jackass Investing, by Michael Dever

The front cover of Jackass Investing is adorned with images of hundred-dollar bills strewn about in haphazard fashion. The subtitle is “Don’t do it. Profit from it.” Inside, the content is structured not by chapters, but by “myths” that Michael Dever methodically busts one by one. He does this, he emphasizes time and time again, to save the reader from accumulating a “poor-folio.” Even the design of the book’s web site, http://www.jackassinvesting.com, seems one small nudge away from that of a low-budget Ponzi scheme.

So one can forgive me, I hope, when I confess that these elements immediately recalled for me the overly-gesticulative, used-car salesman aura of Mad Money‘s Jim Cramer. Dever, the founder of Brandywine Asset Management, is not gun-shy with his similes. But I soon learned not to conflate style with substance. Jackass Investing is a very useful book indeed, not least for the clear language Dever uses to rapidly rebut decades of conventional wisdom in the world of investments.

As a relative novice to active investing (I am, however, the proud owner of an E-Trade account and a quickly depleting “poor-folio” of international stocks), I would be hard-pressed to counter Dever’s claims with fact-finding of my own. But that, in a sense, is what makes this book so compelling: the common-sense nature of each of his principles is immediately obvious to financiers and laymen alike.

Dever is especially harsh on the oft-cited philosophy of “buy-and-hold,” a mantra often repeated by the chattering class on TV but which represents, in the author’s words, “neither rocket science nor sound investment advice.” Buy-and-hold is uniquely favorable to a bull market but not much else, and thus its usefulness to investors has “shriveled together with the values of their stock portfolios throughout the secular bear market that began in 2000.”

Jackass Investing is singularly concerned with “return drivers,” those forces pushing specific assets up in value. For much of the last several decades, both individual and institutional investors generally invested in stocks, bonds, and other assets based on the general upward trend of the market, without paying closer attention to the underlying problems. The price/earnings (P/E) ratio was usually increasing as well, signaling that investors were jumping on the bandwagon and were comfortable paying more for the same stock than they would have during a bearish run.

Dever opts instead for a novel trading strategy, one that is simultaneously intuitive and counter-cultural. He carefully explains why experts are not to be trusted, disavows readers of the myth that ratings agencies can protect them from bad investment strategy, and, perhaps most importantly, emphasizes that portfolio diversification is both absolutely vital and almost universally ignored.

“Portfolio diversification,” Dever declares, “is the financial equivalent of magic.” For years, diversifying one’s holdings has usually been defined as taking positions “across multiple asset classes in order to diversify their risk.” In reality, however, many stocks, bonds, and real estate assets are supported by similar return drivers, thus exposing themselves to “event risk.” If the underlying stimulus factor changes or shifts, all holdings — regardless of asset class — could decrease sharply in value.

True diversification, then, means dipping one’s toes into unfamiliar waters. Dever goes into great detail on home-team bias, the principle (unconscious or otherwise) by which investors stick to the familiar, better-known assets, leaving potentially high-value stocks and other financial instruments out of their planning with nary a second thought. “For example,” Dever explains, “while the U.S. equity markets account for just over 30% of the total capitalization of all the world’s equity markets, U.S. institutional investors allocate more than 50% of their money to U.S.-listed companies…Japanese institutions hold more than 80% of their money in Japanese companies, despite Japanese markets accounting for less than 9% of the world’s capitalization.” By shutting oneself out of foreign markets (or futures contracts, or commodities trading, or any other market conventionally deemed overly risky), one is severely limiting significant money-making opportunities.

Here’s where Dever’s approach becomes slightly ambiguous. As I see it, the continued existence of longstanding tropes such as buy-and-hold is due to the absence of a simple alternative. Fundamentally, Dever’s ideas fall into that category. But while the ideas themselves may be easy to grasp, the execution requires a lot more work than its buy-and-hold counterpart. Whereas the latter can be accomplished simply by purchasing a collection of assets and virtually ignoring it thereafter, the former necessitates a more hands-on approach, in which thorough research, investigation, and asset selection all play major roles. Dever would argue that such background work is required for all forms of investing, and that failure to do so will inevitably result in sub-par returns. The question, then, is whether his approach excludes investors without much time on their hands.

I also would have preferred to see more examples of actual trading strategies presented in opposition to the myths Dever debunks in each section. For this he continually refers readers to his web site instead.

Jackass Investing, then, far surpassed my shallow initial judgments and provided clear insights into investing strategies that, as Michael Dever writes, “should not be controversial, but…will be.” Hell, I even logged in to my E-Trade account a few chapters — nay, myths — in, sold off my under-performing BP stock, and loaded up on Renren, a Chinese social network. After all, if 1.3 billion people with rapidly increasing Internet access isn’t a damn strong return driver, I just don’t know what is.

Return of the prodigal blogger

After a self-imposed month of absence in June and a carryover helping of apathy lasting halfway into July, today I return. (Like Harry Potter, only with less fanfare.) A voluntary writing ban can last for only so long before disintegrating in a cloud of rusty word-dust. I say rusty because I am. Over a month ago I began posting on my new Tumblr feed (as well as significantly stepping up my Twitter prolificacy), and — due to my utter lack of practice elsewhere — I’d never gotten so much enjoyment out of devising captions.

Notwithstanding my two-pronged double-T social networking pastimes (tweeting and tumbling happily along, I did), long-form writing beckoned, and so here I am. In the blogosphere (I hate that word), long-form can actually mean something approaching book-length, but here I only use it to distinguish these missives here from their more concise 140-character counterparts.

By the way, I just discovered that WordPress has added Google’s +1 button as a sharing option for posts now. This brings me to a somewhat related point, which is that my Houdini-like vanishing act from this blog in June precipitated quite a foray into social networking in general. Google+’s launch roughly coincided with my “blogstinence,” and Twitter helped fill that gaping void known as narcissism-deprivation as well. I also recently acquired a Spotify account and have slowly begun reentering the chaotic and mostly annoying world of Facebook. “Hello, world,” indeed.

I can tell this post is going nowhere, so now’s as good a time as any to wrap things up. But suffice it to say that you should expect to see more of me in the very near future, cobbling together spare consonants, vowels, and the occasional exclamation mark toward whatever ends I please — which theoretically could be absolutely anything, and in practice will consist almost entirely of jokes likening Mitch McConnell to a Thanksgiving turkey.

Oh, and one more thing. I’m moving to Paris next month for grad school. My girlfriend is moving to Alaska for a law clerkship just days before. This seems (and is) vaguely ridiculous, but we’re staying together, which isn’t at all. So I would remind you (and by you I refer, of course, to exactly no one) that, if you could forgive my unannounced sabbatical last month, I would kindly thank you to equally absolve me of any sub-par upcoming performances, which will no doubt include fits and starts and the occasional sputtering “I can’t speak the language and I’m going to fail all my classes.” The first part will be true (at least at the beginning), and hopefully not the second.

I have never read Ernest Hemingway’s A Moveable Feast, although I’m about to, but yesterday a former French professor emailed me its opening line as a sort of benediction for the coming year: “If you are lucky enough to have lived in Paris as a young man,” Hemingway writes, “then wherever you go for the rest of your life, it stays with you, for Paris is a moveable feast.”

And with that, I bid you good night.