Tidbits on February 3, 2009
Bob Jensen

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On May 14, 2006 I retired from Trinity University after a long and wonderful career as an accounting professor in four universities. I was generously granted "Emeritus" status by the Trustees of Trinity University. My wife and I now live in a cottage in the White Mountains of New Hampshire --- http://www.trinity.edu/rjensen/NHcottage/NHcottage.htm

Bob Jensen's blogs and various threads on many topics --- http://www.trinity.edu/rjensen/threads.htm
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In case you're wondering what winter is like in the White Mountains in February

 Auntie Bev forwarded the following picture of one cohort pleading for early stimulus checks, hopefully before springtime:


Bailout Game Humor (actually an entertaining chronology of events to date more than a game) --- http://www.thebailoutgame.us/
Bob Jensen's hints on how to blow up this game --- http://www.trinity.edu/rjensen/2008Bailout.htm

The  "Stimulus Act" really is a euphemism for a "Socialist Revolution"

On Saturday I was having fun and laughs while playing The Bailout Game above. Then on Sunday I read the most discouraging article of my entire life. Suddenly I realized that the phrase "Stimulus Act" really is a euphemism for a "Socialist Revolution" that takes place without any taxation, government debt, or civil war. And the way it is evolving is so simple --- why didn't I think of that?

Very soon Uncle Sam will own Wall Street, all U.S. banks, General Motors, Caterpillar, Mobil-Exxon, ConAgra, all the K-12 schools, the colleges, the physicians, the hospitals, the news media, the accounting firms, nearly all our real estate, etc. The last to go will be law firms, but that's only because lawyers control all three branches of Federal and state governments.

How can such a revolution take place without oppressive taxes, massive borrowing, and bloodshed? The answer is really so simple that no true Western scholar could dream of such a brilliant way to finance a revolution. For years economic theorists have had it all wrong about taxes, debt, and sacrifice. The simple, albeit amazingly simple, solution was invented by the Zimbabwe School of Finance. It works in phases:

  1. Poison the banks with hundreds of millions Main Street's toxic fraudulent investments that are virtually worthless to a point where banks cannot survive on their own with these investments and the stock market cannot recover without viable banks. It's so hard to blame all the crooks on every Main Street in every city and town.

  2. Have the government take over the banking system of the entire nation. It's called Nationalization of the Banking System.

  3. Install a money printing press in every branch of every bank in the nation.

  4. When anybody with a sob story wants money, simply print whatever they request and, above all, don't burden them with obligations to pay back so they don't become disgruntled voters.

If we overlook his human rights abuses, Zimbabwe's President Robert Mugabe really deserves the 2009 Nobel Prize in Economics since his monetary theory underlies the entire U.S. 2009 Stimulus Bill. Instead the 2009 Nobel Prize will probably go to Lawrence Summers who now supervises economic taxing, borrowing, and spending of the United States. Summers did not invent the Zimbabwe Theory of Economics, but he's become the major implementer.

Zimbabwe's central bank will introduce a 100 trillion Zimbabwe dollar banknote, worth about $33 on the black market, to try to ease desperate cash shortages, state-run media said on Friday.
KyivPost, January 16, 2009 --- http://www.kyivpost.com/world/33522

The women at Harvard University were correct all along. The most dangerous man in the entire world is Lawrence Summers --- http://en.wikipedia.org/wiki/Lawrence_Summers

Lawrence Summers biggest accomplishment will eventually be to fund a U.S. national health care plan. Canadians have such a plan that they finance with taxes. Over half of the average Canadian's income each year is taxed to finance nationalized health care. Larry Summers has a better plan to finance it without taxes or borrowing. He really is brilliant.

George W. Bush was a spendthrift president who stuck us with the Medicare Drug Plan, but he was stupid to insist on borrowing to finance his budget deficits. Bush should've adopted the Mugabe/Summers plan early on to simply print trillions upon trillions of dollars without taxes or borrowing. Absolutely brilliant! Why didn't I think of that before now for the bailout instead of thinking the big and bald Hank Paulson would have a better solution? He didn't!

What went so terribly wrong in three months time?

Good Bank, Bad Bank by Dr. Seuss --- http://thereformedbroker.com/2009/01/29/good-bank-bad-bank-by-dr-seuss/

I watched the show on October 19, 2008, in a CBS Sixty Minutes TV module, when Leslie Stahl interviewed the CEO of Bank of America, Ken Lewis. Mr. Lewis was charming and forceful when he bragged heavily that BofA was much stronger than the other failing banks and was only accepting some Bailout money as a “patriotic duty.” He said BofA really had no need for Bailout cash since his truly giant international bank was in such strong shape even after the subprime scandal first made the news.

Bank of America indeed no longer held toxic mortgage investments before the subprime scandal broke, meaning that any such mortgages and related toxic paper that BofA or its subsidiaries brokered were quickly sold for a profit to CitiBank, Fannie, Freddie, Bear Stearns, Lehman Brothers, Merrill Lynch, and other such buyers of deadly mortgage paper.

Bank of America was destined to become almost the largest and certainly the most profitable bank in the world!

Buying Countrywide Financial, the nation’s biggest culprit for generating fraudulent subprime mortgages, was one dumb Lewis decision. Millions of former home owners are poised to sue Countrywide. But BofA purchases got even dumb and dumber. BofA became further infected with Merrill Lynch’s toxic investments and losing operations. BofA impulsively bought a disreputable sick horse without first consulting an expert veterinarian --- http://www.bankofamerica.com/merrill/


Bank of America’s Suicide Dealings

BofA bought out Merrill Lynch after one weekend of negotiation: 
This will make an interesting classroom case for accounting, finance, and business policy courses around the world

“BofA's Lewis: Accepting bailout money was patriotic,” by Peter Moreira, Dealscape, October 20, 2008 --- http://www.thedeal.com/dealscape/2008/10/bofas_lewis_accepting_bailout.php

And Stahl focused primarily on the Oct. 13 meeting when Paulson summoned the heads of the nine largest U.S. banks to Washington and told them that the government would invest in them all, so no bank would be stigmatized as a weak bank. In fact, Stahl said, Paulson told his former peers (he once headed Goldman, Sachs & Co.) that it was their patriotic duty to participate.

"I don't remember if he used the word, but there was an element to that," Lewis replied, "that this was the right thing for the American financial system, and therefore it was the right thing for America." Lewis added that he agrees with the secretary's sentiment that it was a patriotic move.

The investment by the government will probably last three to five years, after which Lewis expects the government will sell out. And the move is conditional on no executives at the banks making more than $500,000 per year, unless the institution pays additional taxes.

Lewis, a critic of outlandish executive compensation even though he earned $25 million last year, also said he supports the restrictions on salary. In fact, when one banker began to argue with Paulson about the compensation restrictions, Lewis cut his competitor short, telling him he was out of his mind.

"The importance of this deal getting done versus these elements of executive comp were just out of sync," Lewis said. "I mean, this was so much more important. And all of us can take a little less money."

The final segment of the report highlighted how BofA pounced on Merrill Lynch & Co., buying the Wall Street titan for $50 billion after one weekend of negotiation. Does Lewis regret not waiting for Merrill to go to the wall and buying the company for less money?

"Some think that we should've waited till Monday and see if they would've gone bankrupt," he said. "Some think we would've gotten it for, you know, dirt cheap. But my point is, you would have a tarnished brand. You would've had chaos. You would've had a court ruling over all the sale of assets. And it was worth it to us to pay a more market price so that we could not have that happen." -


Now in early 2009, Bank of America is likely to be nationalized along with other largest banks in the United States?
What went so terribly wrong at BofA over the past three months?


Regulators are split on what to do next. The Federal Deposit Insurance Corporation is backing a plan to create what it calls an aggregator bank, which would buy up the loans of BofA, Citigroup and the rest of our now troubled system, theoretically putting an end to the escalating losses eating away at the banks' capital. But if the government buys those assets at current market rates, banks would be forced to take immediate losses on the sales, doing more harm than if the government just left the troubled loans where they are. Sources say the Federal Reserve would prefer to let the banks keep the loans and troubled bonds for now and instead provide the banks with insurance policies guaranteeing that the government will swallow a good deal of future credit losses. But a similar deal that the Fed struck with Citi did little to boost that company's stock or stave off fears that it may soon go under. That's why a small but growing number of people are starting to talk about nationalization. Speaker of the House Nancy Pelosi recently said nationalization, or something close to it, is a better solution than just buying bad assets ...
"Why Your Bank is Broke," by Stephen Gandel, Time Magazine, February 9, 2009, Beginning on Page 23 --- Click Here

But do the math, and you can begin to understand how really botched this bailout has been. Since October, the government has deposited $165 billion into the accounts of the nation's eight largest banks. Yet those same financial firms are now worth $418 billion less than they were four months ago, and the Congressional Budget Office estimates that the government's preferred shares are worth at least $20 billion less. In Wall Street terms, that's throwing good money after bad. All told, the government's annualized rate of return on its investment in the nation's largest banks is -1,096%. That's well beyond Bernie Madoff territory; he topped out at a mere -100%. (See pictures of the demise of Bernie Madoff.)

So how could $438 billion — $418 billion of their money and $20 billion of ours — go poof, just like that? Here's the easiest explanation: our banking system has sprung a leak.

. . .

TARP does nothing to patch the hole in the banking system. And it certainly doesn't do anything to encourage banks to make more loans. Yes, banks have gotten nearly $300 billion in money from the government, and that's a lot of dough. But it's not free dough. In return for federal cash, the government has taken preferred-stock shares as the firm's markers. Unlike common stock, which is the kind you or I would buy from a broker, preferreds have to eventually be paid back, so they are really loans, not additional capital. (See which country has the best bailout plans.)

Say a bank has $5 in capital and $100 in loans. Now the government gives the bank an additional $100 in preferred shares and says, "Go make more loans." Well, the bank might then have $200 in loans, but it still has only $5 in common shareholders' equity. The result: if just 2.5% of its loans go bad, the bank's shareholders are wiped out. Wisely, the largest banks in the nation lent less in the fourth quarter of 2008 than in the previous three months — a strategy that has drawn some complaints. But that hasn't removed the pressure on their shares. That's because the banks have had to continue to take loan losses. And banks don't have the option to pass those losses off on the new money they got from the government. They have to write down their common stockholders' equity first. And as that capital falls, so go the bank's shares. Some are alarmingly close to zero.

No bank's stock has fallen more in value during the past four months than Bank of America's. The combined value of its shares is now $37 billion. That's $123 billion less than they were worth at the end of September. In the third quarter, BofA was forced to write down $4.4 billion in loans, or about 1.8% of its loan portfolio. Compared with what some of its competitors wrote down, that wasn't a heck of a lot; Citigroup, for instance, had a $13.2 billion charge in the same quarter, primarily related to loan losses. But the relatively small loss took BofA's thin tangible equity, the type of capital that matters most to shareholders, down to a ratio of just 2.6% of loans, according to FBR. By that measure, Bofa was a weaker bank than any of its rivals, including Citigroup. But since the market was so focused on bad loans and the charge-offs banks had to take, no one seemed to notice BofA's faults.

That is, until the fourth quarter. In mid-September 2008, in a deal pushed by regulators, BofA agreed to buy Merrill Lynch. The acquisition actually boosted BofA's capital ratios, but it also added losses to an already fragile capital structure; Merrill Lynch lost $15 billion in the fourth quarter alone. Knowledge of the impending losses forced BofA CEO Ken Lewis to ask the government for an additional $20 billion in TARP funds — on top of the $25 billion it had already received — as well as about $100 billion in loan guarantees. Without the government assistance, BofA says, it couldn't have closed the merger.

The Merrill losses, which weren't publicly revealed until early January, have angered shareholders, some of whom have sued the company for not informing them sooner. And last week, the losses also led Lewis to ask Merrill's top executive, John Thain, to resign for failing to keep BofA officials apprised of his firm's bottom-line problems. Thain says Lewis knew all along. (See pictures of TIME's Wall Street covers.)

. . .

Regulators are split on what to do next. The Federal Deposit Insurance Corporation is backing a plan to create what it calls an aggregator bank, which would buy up the loans of BofA, Citigroup and the rest of our now troubled system, theoretically putting an end to the escalating losses eating away at the banks' capital. But if the government buys those assets at current market rates, banks would be forced to take immediate losses on the sales, doing more harm than if the government just left the troubled loans where they are. Sources say the Federal Reserve would prefer to let the banks keep the loans and troubled bonds for now and instead provide the banks with insurance policies guaranteeing that the government will swallow a good deal of future credit losses. But a similar deal that the Fed struck with Citi did little to boost that company's stock or stave off fears that it may soon go under.

That's why a small but growing number of people are starting to talk about nationalization. Speaker of the House Nancy Pelosi recently said nationalization, or something close to it, is a better solution than just buying bad assets, because if the government takeovers succeed, then taxpayers get to keep the profits when they eventually resell the banks. But if the government doesn't turn a nationalized bank around, it could be very costly to taxpayers.

For the rest of the article --- Click Here

Jensen Comment
So why can't the government simply buy up the banks (with printed money so there are no increases in taxes and national debt), turn things around, and make the banks private once again in the land of milk and honey?

 The reason bluntly is that every cohort in the United States from General Motors to the 50 states to college campuses and now to ACORN have already been promised hundreds of billions in stimulus money with election guarantees of no new taxes to pay for such things. The U.S. is maxed out on its national debt, so the only answer lately has been to print billions of dollars under the Zimbabwe Theory of Finance. Yes, our government has already been financing some of the Bailout with billions of this type of printed money --- http://www.trinity.edu/rjensen/2008Bailout.htm#NationalDebt

Who wants to invest in shares of a denationalizing bank bursting with Zimbabwe dollars?
Barney’s Bank is here to stay until China cashes in its share of our national debt and buys out the entire United States. Barney Frank now owns Fannie and Freddie, so he might as well add our nation’s bank to his collection. It will likely remain so until China decides not to roll over its share of our national debt and, thereby, purchases nearly all of what was once the United States of America.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
Alexander Tyler. 1787 - Tyler was a Scottish history professor that had this to say about 2000 years after "The Fall of the Athenian Republic" and about the time our original 13 states adopted their new constitution.
As quoted at http://www.babylontoday.com/national_debt_clock.htm (where the debt clock in real time is a few months behind)

The "Stimulus Bill" has already gone too far after cohorts in the United States discovered "they can vote themselves largesse from the public treasury." There's no turning back. The Stimulus Bill morphed into a Perfect (Stimulus) Storm for a socialist revolution in the United States. Although they did probably not intend to be the members of the first Politburo of the United States, the new Politburo will be comprised of Barack Obama, Nancy Pelosi, Harry Reid, Chris Dodd, and Barney Frank. Egad! This group cannot say no to anybody with a sob story!

We'll take Manhattan
the Bronx and Staten
Island too.

Lyrics by Karl Marx and Score by Vladimir Lenin

Sadly your retirement funds will probably head toward the deep south in terms of real, not Zimbabwe-like dollar, spending power.

"Six Errors on the Path to the Financial Crisis," by Alan S. Blinder, The New York Times, January 24, 2009 --- http://www.nytimes.com/2009/01/25/business/economy/25view.html?_r=1&ref=business

My list of errors has six whoppers, in chronologically order. I omit mistakes that became clear only in hindsight, limiting myself to those where prominent voices advocated a different course at the time. Had these six choices been different, I believe the inevitable bursting of the housing bubble would have caused far less harm.

In 1998, when Brooksley E. Born, then chairwoman of the Commodity Futures Trading Commission, sought to extend its regulatory reach into the derivatives world, top officials of the Treasury Department, the Federal Reserve and the Securities and Exchange Commission squelched the idea. While her specific plan may not have been ideal, does anyone doubt that the financial turmoil would have been less severe if derivatives trading had acquired a zookeeper a decade ago?

The second error came in 2004, when the S.E.C. let securities firms raise their leverage sharply. Before then, leverage of 12 to 1 was typical; afterward, it shot up to more like 33 to 1. What were the S.E.C. and the heads of the firms thinking? Remember, under 33-to-1 leverage, a mere 3 percent decline in asset values wipes out a company. Had leverage stayed at 12 to 1, these firms wouldn’t have grown as big or been as fragile.

The next error came in stages, from 2004 to 2007, as subprime lending grew from a small corner of the mortgage market into a large, dangerous one. Lending standards fell disgracefully, and dubious transactions became common.

Why wasn’t this insanity stopped? There are two answers, and each holds a lesson. One is that bank regulators were asleep at the switch. Entranced by laissez faire-y tales, they ignored warnings from those like Edward M. Gramlich, then a Fed governor, who saw the problem brewing years before the fall.

The other answer is that many of the worst subprime mortgages originated outside the banking system, beyond the reach of any federal regulator. That regulatory hole needs to be plugged.

The government’s continuing failure to do anything large and serious to limit foreclosures is tragic. The broad contours of the foreclosure tsunami were clear more than a year ago — and people like Representative
Barney Frank, Democrat of Massachusetts, and Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation, were sounding alarms.

Yet the Treasury and Congress fiddled while homes burned. Why? Free-market ideology, denial and an unwillingness to commit taxpayer funds all played roles. Sadly, the problem should now be much smaller than it is.

The next whopper came in September, when Lehman Brothers, unlike Bear Stearns before it, was allowed to fail. Perhaps it was a case of misjudgment by officials who deemed Lehman neither too big nor too entangled — with other financial institutions — to fail. Or perhaps they wanted to make an offering to the moral-hazard gods. Regardless, everything fell apart after Lehman.

People in the market often say they can make money under any set of rules, as long as they know what they are. Coming just six months after Bear’s rescue, the Lehman decision tossed the presumed rule book out the window. If Bear was too big to fail, how could Lehman, at twice its size, not be? If Bear was too entangled to fail, why was Lehman not?

After Lehman went over the cliff, no financial institution seemed safe. So lending froze, and the economy sank like a stone. It was a colossal error, and many people said so at the time.

The final major error is mismanagement of the
Troubled Asset Relief Program, the $700 billion bailout fund. As I wrote here last month, decisions of Henry M. Paulson Jr., the former Treasury secretary, about using the TARP’s first $350 billion were an inconsistent mess. Instead of pursuing the TARP’s intended purposes, he used most of the funds to inject capital into banks — which he did poorly.

To illustrate what might have been, consider Fed programs to buy commercial paper and mortgage-backed securities. These facilities do roughly what TARP was supposed to do: buy troubled assets. And they have breathed some life into those moribund markets. The lesson for the new Treasury secretary is clear: use TARP money to buy troubled assets and to mitigate foreclosures.

Six fateful decisions — all made the wrong way. Imagine what the world would be like now if the housing bubble burst but those six things were different: if derivatives were traded on organized exchanges, if leverage were far lower, if subprime lending were smaller and done responsibly, if strong actions to limit foreclosures were taken right away, if Lehman were not allowed to fail, and if the TARP funds were used as directed.

All of this was possible. And if history had gone that way, I believe that the financial world and the economy would look far less grim than they do today.

Jensen Comment
Alan Blinder missed some whoppers.

  1. The SEC was authorized to regulate investment banking and consistently failed to do so through several crises, including the dot-com crisis of the 1990s and credit default swap crisis commencing in 2008 --- http://www.trinity.edu/rjensen/2008Bailout.htm#SEC
    Also so see http://www.trinity.edu/rjensen/2008Bailout.htm#Bailout
    This is an admitted failure of SEC Directors from Arthur Levitt though Christopher Cox.

  2. The Federal Reserve failed in regulating investment banks. Alan Greenspan belatedly admitted that he was largely at fault.
    "‘I made a mistake,’ admits Greenspan," by Alan Beattie and James Politi, Financial Times, October 23, 2008 ---

    “I made a mistake in presuming that the self-interest of organisations, specifically banks and others, was such that they were best capable of protecting their own shareholders,” he said.

    In the second of two days of tense hearings on Capitol Hill, Henry Waxman, chairman of the House of Representatives, clashed with current and former regulators and with Republicans on his own committee over blame for the financial crisis.

    Mr Waxman said Mr Greenspan’s Federal Reserve – along with the Securities and Exchange Commission and the US Treasury – had propagated “the prevailing attitude in Washington... that the market always knows best.”

    Mr Waxman blamed the Fed for failing to curb aggressive lending practices, the SEC for allowing credit rating agencies to operate under lax standards and the Treasury for opposing “responsible oversight” of financial derivatives.

    Christopher Cox, chairman of the Securities and Exchange Commission, defended himself, saying that virtually no one had foreseen the meltdown of the mortgage market, or the inadequacy of banking capital standards in preventing the collapse of institutions such as Bear Stearns.

    Mr Waxman accused the SEC chairman of being wise after the event. “Mr Cox has come in with a long list of regulations he wants... But the reality is, Mr Cox, you weren’t doing that beforehand.”

    Mr Cox blamed the fact that Congressional responsibility was divided between the banking and financial services committees, which regulate banking, insurance and securities, and the agriculture committees, which regulate futures.

    “This jurisdictional split threatens to for ever stand in the way of rationalising the regulation of these products and markets,” he said.

    Mr Greenspan accepted that the crisis had “found a flaw” in his thinking but said that the kind of heavy regulation that could have prevented the crisis would have damaged US economic growth. He described the past two decades as a “period of euphoria” that encouraged participants in the financial markets to misprice securities.

    He had wrongly assumed that lending institutions would carry out proper surveillance of their counterparties, he said. “I had been going for 40 years with considerable evidence that it was working very well”.

    Continued in the article

    Jensen Comment
    In other words, he assumed the agency theory model that corporate employees, as agents of their owners and creditors, would act hand and hand in the best interest for themselves and their investors. But agency theory has a flaw in that it does not understand Peter Pan.

    Peter Pan, the manager of Countrywide Financial on Main Street, thought he had little to lose by selling a fraudulent mortgage to Wall Street. Foreclosures would be Wall Street’s problems and not his local bank’s problems. And he got his nice little commission on the sale of the Emma Nobody’s mortgage for $180,000 on a house worth less than $100,000 in foreclosure. And foreclosure was almost certain in Emma’s case, because she only makes $12,000 waitressing at the Country Café. So what if Peter Pan fudged her income a mite in the loan application along with the fudged home appraisal value? Let Wall Street or Fat Fannie or Foolish Freddie worry about Emma after closing the pre-approved mortgage sale deal. The ultimate loss, so thinks Peter Pan, will be spread over millions of wealthy shareholders of Wall Street investment banks. Peter Pan is more concerned with his own conventional mortgage on his precious house just two blocks south of Main Street. This is what happens when risk is spread even farther than Tinkerbell can fly!
    Read about the extent of cheating, sleaze, and subprime sex on Main Street in Appendix U.

3. U.S. auditing standards explicitly require careful estimation of bad debts. The auditing firms failed the world when auditing sub-prime mortgage receivables, the collateralized debt obligation (CDOs) investments, and the credit derivative instruments sold to insure those investments? Where were the auditing firms that were paid millions to audit commercial and investment banks as well as Fannie Mae and Freddie Mack?
See http://www.trinity.edu/rjensen/2008Bailout.htm#AuditFirms

4. Subprime: Borne of Sleaze, Bribery, and Lies --- http://www.trinity.edu/rjensen/2008Bailout.htm#Sleaze
Much of this began with good intentions to make housing credit available to minorities and poor people in general, but politicians figured out how to play Robin Hood with taxpayer money and used Congressional power over Fannie Mae and Freddie Mack to do just that.

5. Congress, perhaps intentionally under the leadership of President Obama, is now turning the economic crisis into a perfect storm to bailout spendthrift state governments, ailing companies and unions such as American automobile manufacturers and the United Auto Workers, most anybody else with a sob story.


Cartoon link forwarded by David Fordham



The problem with the current bailout is that the government may be giving money to companies that don't have a long-term future: zombies. On paper, for example, the Treasury Dept. says it invests Troubled Asset Relief Program (TARP) money only in "healthy banks—banks that are considered viable without government investment" because "they are best positioned to increase the flow of credit in their communities." That's the right idea. In practice, though, the criteria aren't so stringent. Banks like Citigroup still aren't strong enough to lend. "The bailout model is socialism," says R. Christopher Whalen, senior vice-president for consultancy Institutional Risk Analytics. He advocates selling failed institutions in pieces, as was done to resolve the savings and loan crisis in the late '80s and early '90s. In fact, Washington may be moving toward something like that with Citigroup. When a big employer runs into trouble, it's tempting to keep it going at any cost. Economists call this "lemon socialism"—the investment of public money in the worst companies rather than the best. The impulse is misguided, says Yale University economics professor Eduardo M. Engel. "You don't want to protect the jobs," he says. "What you want to protect is workers' income during the transition from one job to another."
Peter Coy, "A New Menace to the Economy:  'Zombie' Debtors Call them "zombie" companies. Many more has-been companies will be feeding off taxpayers, investors, and workers—sapping the lifeblood of healthier rivals," Business Week, January 15, 2008 --- http://www.businessweek.com/magazine/content/09_04/b4117024316675.htm?link_position=link2

What prolongs major economic depressions?
What really raised the United States our of the Great Depression of the 1930s?
What is different about 2009 versus 1932?

"How Government Prolonged the Depression:  Policies that decreased competition in product and labor markets were especially destructive," by Harold L. Cole and Lee E. OHanian, The Wall Street Journal, February 2, 2009 --- http://online.wsj.com/article/SB123353276749137485.html?mod=rss_opinion_main

The New Deal is widely perceived to have ended the Great Depression, and this has led many to support a "new" New Deal to address the current crisis. But the facts do not support the perception that FDR's policies shortened the Depression, or that similar policies will pull our nation out of its current economic downturn.

The goal of the New Deal was to get Americans back to work. But the New Deal didn't restore employment. In fact, there was even less work on average during the New Deal than before FDR took office. Total hours worked per adult, including government employees, were 18% below their 1929 level between 1930-32, but were 23% lower on average during the New Deal (1933-39). Private hours worked were even lower after FDR took office, averaging 27% below their 1929 level, compared to 18% lower between in 1930-32.

Even comparing hours worked at the end of 1930s to those at the beginning of FDR's presidency doesn't paint a picture of recovery. Total hours worked per adult in 1939 remained about 21% below their 1929 level, compared to a decline of 27% in 1933. And it wasn't just work that remained scarce during the New Deal. Per capita consumption did not recover at all, remaining 25% below its trend level throughout the New Deal, and per-capita nonresidential investment averaged about 60% below trend. The Great Depression clearly continued long after FDR took office.

Why wasn't the Depression followed by a vigorous recovery, like every other cycle? It should have been. The economic fundamentals that drive all expansions were very favorable during the New Deal. Productivity grew very rapidly after 1933, the price level was stable, real interest rates were low, and liquidity was plentiful. We have calculated on the basis of just productivity growth that employment and investment should have been back to normal levels by 1936. Similarly, Nobel Laureate Robert Lucas and Leonard Rapping calculated on the basis of just expansionary Federal Reserve policy that the economy should have been back to normal by 1935.

So what stopped a blockbuster recovery from ever starting?
The New Deal. Some New Deal policies certainly benefited the economy by establishing a basic social safety net through Social Security and unemployment benefits, and by stabilizing the financial system through deposit insurance and the Securities Exchange Commission. But others violated the most basic economic principles by suppressing competition, and setting prices and wages in many sectors well above their normal levels. All told, these antimarket policies choked off powerful recovery forces that would have plausibly returned the economy back to trend by the mid-1930s.

The most damaging policies were those at the heart of the recovery plan, including The National Industrial Recovery Act (NIRA), which tossed aside the nation's antitrust acts and permitted industries to collusively raise prices provided that they shared their newfound monopoly rents with workers by substantially raising wages well above underlying productivity growth. The NIRA covered over 500 industries, ranging from autos and steel, to ladies hosiery and poultry production. Each industry created a code of "fair competition" which spelled out what producers could and could not do, and which were designed to eliminate "excessive competition" that FDR believed to be the source of the Depression.

These codes distorted the economy by artificially raising wages and prices, restricting output, and reducing productive capacity by placing quotas on industry investment in new plants and equipment. Following government approval of each industry code, industry prices and wages increased substantially, while prices and wages in sectors that weren't covered by the NIRA, such as agriculture, did not. We have calculated that manufacturing wages were as much as 25% above the level that would have prevailed without the New Deal. And while the artificially high wages created by the NIRA benefited the few that were fortunate to have a job in those industries, they significantly depressed production and employment, as the growth in wage costs far exceeded productivity growth.

These policies continued even after the NIRA was declared unconstitutional in 1935. There was no antitrust activity after the NIRA, despite overwhelming FTC evidence of price-fixing and production limits in many industries, and the National Labor Relations Act of 1935 gave unions substantial collective-bargaining power. While not permitted under federal law, the sit-down strike, in which workers were occupied factories and shut down production, was tolerated by governors in a number of states and was used with great success against major employers, including General Motors in 1937.

The downturn of 1937-38 was preceded by large wage hikes that pushed wages well above their NIRA levels, following the Supreme Court's 1937 decision that upheld the constitutionality of the National Labor Relations Act. These wage hikes led to further job loss, particularly in manufacturing. The "recession in a depression" thus was not the result of a reversal of New Deal policies, as argued by some, but rather a deepening of New Deal polices that raised wages even further above their competitive levels, and which further prevented the normal forces of supply and demand from restoring full employment. Our research indicates that New Deal labor and industrial policies prolonged the Depression by seven years.

By the late 1930s, New Deal policies did begin to reverse, which coincided with the beginning of the recovery. In a 1938 speech, FDR acknowledged that the American economy had become a "concealed cartel system like Europe," which led the Justice Department to reinitiate antitrust prosecution. And union bargaining power was significantly reduced, first by the Supreme Court's ruling that the sit-down strike was illegal, and further reduced during World War II by the National War Labor Board (NWLB), in which large union wage settlements were limited by the NWLB to cost-of-living increases. The wartime economic boom reflected not only the enormous resource drain of military spending, but also the erosion of New Deal labor and industrial policies.

By 1947, through a combination of NWLB wage restrictions and rapid productivity growth, we have calculated that the large gap between manufacturing wages and productivity that emerged during the New Deal had nearly been eliminated. And since that time, wages have never approached the severely distorted levels that prevailed under the New Deal, nor has the country suffered from such abysmally low employment.

The main lesson we have learned from the New Deal is that wholesale government intervention can -- and does -- deliver the most unintended of consequences. This was true in the 1930s, when artificially high wages and prices kept us depressed for more than a decade, it was true in the 1970s when price controls were used to combat inflation but just produced shortages. It is true today, when poorly designed regulation produced a banking system that took on too much risk


Continued in article

Jensen Comment
So what's different about 2009 versus 1932?
There are three main differences that complicate economic recovery. Firstly, technology such as factory robotics displaces unskilled labor, and we're running out of alternatives for unskilled or low-skilled labor to find replacement jobs.

Secondly, in the the 21st Century, developing nations in Asia, Africa, and the southern part of the Western Hemisphere can now make high quality products (and even produce high quality services in the networked age) that make it more and more difficult to maintain wage differentials that are higher in the United States. This leads to more pressure for destructive trade barriers that, in turn, make workers in other sectors unemployed such as when a tariff on steel products puts workers at Caterpillar Tractor (a huge exporter of products) out of work.

Thirdly, the southern border of the United States has and always will be a joke in terms of blocking the flow of poor people south of the Rio Grande River from flooding the labor market. The flow comes from many more nations other than Mexico, although Mexico's prosperity or economic collapse is nearly perfectly correlated with other Latin American nations. At the moment, most of Latin America is on the brink of civil war, power takeovers by drug cartels, and economic collapse.

The U.S., however, has a comparative advantage. Because it was so prosperous in the late 20th Century, it will take longer to be destroyed by Zimbabwe-like economic policy vis-a-vis other Latin American nations who will adopt the same destructive policy at a faster rate.

Sad, because this is likely to be Obama's last shot at getting this economy on its feet and running by 2010. For Americans are not as patient as they were in the 1930s, when FDR could try one idea, then another, then another for five years, and continue to roll up massive electoral victories. If Obama gets this one wrong, and all this pork and welfare fail to generate real growth, his party could face a wipeout in 2010, and his opportunity could be lost forever. Does he really want to bet the farm on the nag Nancy Pelosi just trotted out of the House?
Patrick Buchanan, "Nancy Pelosi's New Deal." WorldNetDaily, February 3, 2009 --- http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=87870

President Obama could have made big history here (Stimulus Bill). Instead he just got a win. It's a missed opportunity. It's a win because of the obvious headline: Nine days after inauguration, the new president achieves a major Congressional victory, House passage of an economic stimulus bill by a vote of 244-188. It wasn't even close. This is major. But do you know anyone, Democrat or Republican, dancing in the street over this? You don't. Because most everyone knows it isn't a good bill, and knows that its failure to receive a single Republican vote, not one, suggests the old battle lines are hardening. Back to the Crips versus the Bloods. Not very inspiring.
"Look at the Time In Congress and the boardroom, failure to recognize a new era," The Wall Street Journal, January 31, 2009 --- http://online.wsj.com/article/SB123326587231330357.html?mod=djemEditorialPage

Actually there are millions of people dancing in the street over the Obama/Pelosi/Reid give away!
The "Stimulus Bill" has already gone too far after special interest (including our colleges) cohorts in the United States discovered "they can vote themselves largesse from the public treasury." There's no turning back. The Stimulus Bill morphed into a Perfect (Stimulus) Storm for a socialist revolution in the United States.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury, with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.
Alexander Tyler. 1787 - Tyler was a Scottish history professor that had this to say about 2000 years after "The Fall of the Athenian Republic" and about the time our original 13 states adopted their new constitution.
As quoted at http://www.babylontoday.com/national_debt_clock.htm (where the debt clock in real time is a few months behind)


The "Stimulus Bill" has already gone too far after special interest (including our colleges) cohorts in the United States discovered "they can vote themselves largesse from the public treasury." There's no turning back. The Stimulus Bill morphed into a Perfect (Stimulus) Storm for a socialist revolution in the United States.

The Perfect (Stimulus) Storm for California
A new analysis shows that California would get a whopping $21.5 billion under an economic stimulus plan that's expected to be approved by the House next week, making it the biggest winner among the 50 states. That's according to the National Conference of State Legislatures, which analyzed the new spending proposals offered by House leaders.
Rob Hotakainen ,
"California could reap $21.5 billion from U.S. stimulus plan,"  The Sacramento Bee, January 24, 2009 --- http://www.sacbee.com/capitolandcalifornia/story/1569761.html
Los Angeles hopes to get $5.5 billion --- http://www.2theadvocate.com/news/politics/38517612.html
San Francisco might even stop harassing the U.S. military and the Immigration Service for a day in return for a few billion.

The Less-Than-Perfect (Stimulus) Storm for Illinois (until they impeached Blago)
None of the funds provided by this Act may be made available to the State of Illinois, or any agency of the State, unless (1) the use of such funds by the State is approved in legislation enacted by the State after the date of the enactment of this Act, or (2) Rod R. Blagojevich no longer holds the office of Governor of the State of Illinois.
Draft of the Stimulus Act
I’m unaware of any previous case of the Congress dangling a bag of money over state legislators’ heads like this before. I’d also be surprised if it fails, no matter how commanding Blagojevich looks on “The View.” Illinois is not really in the position to turn down cash right now.
David Weigel, "Starving Out Blago," The Washington Independent, January 26, 2009 --- http://washingtonindependent.com/27252/starving-out-blago

The Perfect (Stimulus) Storm for Construction After the Recession
An analysis by Forbes publications of where most jobs will be created singles out engineering, accounting, nursing, and information technology, along with construction managers, computer-aided drafting specialists, and project managers. Unemployment rates among most of these specialists are not high. The rebuilding of "crumbling roads, bridges, and schools" highlighted by in various speeches by President Obama is likely to make greater use of unemployed workers in the construction sector. However, such spending will be a small fraction of the total stimulus package, and it is not easy for workers who helped build residential housing to shift to building highways . . . The likelihood that such a rapid and large public spending program will be of low efficiency is compounded by political realities. Groups that have lots of political clout with Congress will get a disproportionate amount of the spending with only limited regard for the merits of the spending they advocate compared to alternative ways to spend the stimulus. The politically influential will also redefine various projects so that they can fall under the "infrastructure" rubric. A report called Ready to Go by the U.S. Conference of Mayors lists $73 billion worth of projects that they claim could be begun quickly. These projects include senior citizen centers, recreation facilities, and much other expenditure that are really private consumption items, many of dubious value, that the mayors call infrastructure spending. Recessions would be a good time to increase infrastructure spending only if these projects can mainly utilize unemployed resources. This does not seem to be the case in most of the so-called infrastructure spending proposed under various stimulus plans.
Nobel Laureate Gary Becker, The Becker-Posner Blog, January 18, 2009 --- http://www.becker-posner-blog.com/

The Perfect (Stimulus) Storm for Signing Up Voters for the Democratic Party
The House Democrats’ trillion dollar spending bill, approved on January 21 by the Appropriations Committee and headed to the House floor next week for a vote, could open billions of taxpayer dollars to left-wing groups like the Association of Community Organizations for Reform Now (ACORN). ACORN has been accused of perpetrating voter registration fraud numerous times in the last several elections; is reportedly under federal investigation; and played a key role in the irresponsible schemes that caused a financial meltdown that has cost American taxpayers hundreds of billions of dollars since last fall. House Republican Leader John Boehner (R-OH) and other Republicans are asking a simple question: what does this have to do with job creation? Are Congressional Democrats really going to borrow money from our children and grandchildren to give handouts to ACORN in the name of economic “stimulus?” Incredibly, the Democrats’ bill makes groups like ACORN eligible for a $4.19 billion pot of money for “neighborhood stabilization activities.” Funds for this purpose were authorized in the Housing and Economic Recovery Act, signed into law in 2008. However, these funds were limited to state and local governments. Now House Democrats are taking the unprecedented step of making ACORN and other groups eligible for these funds:
Rick Moran, "ACORN eligible for billions from stimulus plan," American Thinker, January 26, 2009 --- http://www.americanthinker.com/blog/2009/01/acorn_eligible_for_billions_fr.html
Jensen Comment
Keith Olbermann correctly points out that ACORN will not get the funds directly but must bid competitively for such funds. What he does not explain is why ACORN appeals so much to the Democrats controlling the Bailout disbursements.

The group (ACORN) that pushed banks into the risky loans that brought the economy down is now eligible for a huge chunk of stimulus cash. The stimulus plan does create jobs — for community activists.
"ACORN's Seed Money," Investor's Business Daily, January 27, 2009 --- http://www.ibdeditorials.com/IBDArticles.aspx?id=317952439188615
Jensen Comment
It's never too late to create new  jobs to register fictitious and real street people to vote for Democrats. Soon ACORN will have stimulus funds to register more Democrats. The goal is to have only the most liberal Democrats in all three branches of the Federal Government. Michael Moore may well replace Obama eight years from now.

The Perfect (Stimulus) Storm for Transfer Payments to Medicaid and the Poor
Another "stimulus" secret is that some $252 billion is for income-transfer payments -- that is, not investments that arguably help everyone, but cash or benefits to individuals for doing nothing at all. There's $81 billion for Medicaid, $36 billion for expanded unemployment benefits, $20 billion for food stamps, and $83 billion for the earned income credit for people who don't pay income tax. While some of that may be justified to help poorer Americans ride out the recession, they aren't job creators.
"A 40-Year Wish List You won't believe what's in that stimulus bill," The Wall Street Journal, January 28, 2009 --- http://online.wsj.com/article/SB123310466514522309.html?mod=djemEditorialPage

Buried deep inside the massive spending orgy that Democrats jammed through the House this week lie five words that could drastically undo two decades of welfare reforms. The very heart of the widely applauded Welfare Reform Act of 1996 is a cap on the amount of federal cash that can be sent to states each year for welfare payments. But, thanks to the simple phrase slipped into the legislation, the new "stimulus" bill abolishes the limits on the amount of federal money for the so-called Emergency Fund, which ships welfare cash to states.
Charles Hurt, "Change for the Worse," New York Post, January 30, 2009 --- Click Here

The Perfect (Stimulus) Storm for school districts, child care centers and university campuses
The economic stimulus plan that Congress has scheduled for a vote on Wednesday would shower the nation’s school districts, child care centers and university campuses with $150 billion in new federal spending, a vast two-year investment that would more than double the Department of Education’s current budget. . . . Critics and supporters alike said that by its sheer scope, the measure could profoundly change the federal government’s role in education, which has traditionally been the responsibility of state and local government.
Sam Dillon, "Stimulus Plan Would Provide Flood of Aid to Education, "The New York Times, January 31, 2009 ---
Jensen Comment
It's beginning to smell like annual entitlements here as recipients become dependent upon their government checks (which might better be called the checks and no-balances system of Congressional financing).

The Perfect (Stimulus) Storm for Amtrak, Artists, Child Care Businesses, and Global Warming Research
We've looked it over, and even we can't quite believe it. There's $1 billion for Amtrak, the federal railroad that hasn't turned a profit in 40 years; $2 billion for child-care subsidies; $50 million for that great engine of job creation, the National Endowment for the Arts; $400 million for global-warming research and another $2.4 billion for carbon-capture demonstration projects. There's even $650 million on top of the billions already doled out to pay for digital TV conversion coupons.
"A 40-Year Wish List You won't believe what's in that stimulus bill," The Wall Street Journal, January 28, 2009 --- http://online.wsj.com/article/SB123310466514522309.html?mod=djemEditorialPage

The Perfect (Stimulus) Storm for Failing Newspapers
Taxpayer cash is going to rescue so many people these days that it is hard to sort the truly awful ideas from the merely terrible. Then we heard the doozy out of Pennsylvania, where Governor Ed Rendell has discussed a state bailout of the company that owns a pair of Philadelphia newspapers, the Inquirer and the Daily News. Philadelphia Media Holdings is in default on its loans, having missed debt payments going back to June. With no buyers knocking on the door, the Philadelphia Bulletin has reported, owner Brian Tierney went hat-in-hand to the Governor's office to talk about giving the paper some public help. Mr. Tierney won't comment on the record, while Mr. Rendell's spokesman tells us the conversations weren't specific but that state help is a possibility. Times are tough, but as they say in Philadelphia, this is nuts in eight different ways. Starting as a business proposition: When McClatchy bought Knight Ridder in 2006, the Inquirer and the Philadelphia Daily News were spun off and sold for $515 million to investors led by Mr. Tierney, who made his money in advertising and public relations. The buyers put up around 20% in equity and took on some $400 million in debt, enough leverage to raise eyebrows even before the credit crunch. Mr. Tierney is now no different than thousands of other Americans who borrowed too heavily during the credit mania.
 "Bad News in Philadelphia The worst bailout idea so far: newspapers," The Wall Street Journal, February 2, 2009 --- http://online.wsj.com/article/SB123353263226537457.html?mod=djemEditorialPage
Jensen Comment
Only newspapers that were unfledging in support of Obama in the 2008 election might be bailed out. That means almost all of them that are about to go bankrupt, including The New York Times.

The Perfect (Stimulus) Storm for Labor Unions (Half of Stimulus Goes to Unions)
Almost half of the $820 billion would end up in the pockets of Democratic-controlled unions, such as the Service Employees International Union, and federal, state, and municipal employee unions. At 680 pages long, neither Obama nor any member of the House had enough time to read the entire bill before the House voted. The $820 billion would be enough to give every unemployed American $75,000. Says Ben Stein: "There has been pork-barrel politics since there has been politics, but the scale of this pork is beyond what had ever been imagined before -- and no one can be sure it will actually do much stimulation. ... This has been a punch in the solar plexus to the kind of responsible, far-seeing, mature government processes that are needed to protect America."
"Ben Stein: Half of Stimulus Goes to Unions," NewsMax, February 1, 2009 --- Click Here

The Perfect (Stimulus) Storm for Democrats in Congress
This is supposed to be a new era of bipartisanship, but this bill was written based on the wish list of every living -- or dead -- Democratic interest group. As Speaker Nancy Pelosi put it, "We won the election. We wrote the bill." So they did. Republicans should let them take all of the credit.
"A 40-Year Wish List You won't believe what's in that stimulus bill," The Wall Street Journal, January 28, 2009 --- http://online.wsj.com/article/SB123310466514522309.html?mod=djemEditorialPage

But the real risk here is to Mr. Obama, and it isn't from Republicans. It's from his fellow Democrats. Given the miserable economy and the Beltway's neo-Keynesian policy consensus, a true compromise would have gathered overwhelming support. But rather than use Mr. Obama's political capital to craft such a deal, the White House abdicated to Speaker Nancy Pelosi. House Democrats proceeded to ignore all GOP suggestions as they wrote the bill, shedding tax cuts while piling on spending for every imaginable interest group. The bipartisan opposition reflects how much the Pelosi bill became a vehicle for partisan social policy rather than economic stimulus.
"A Warning to the President The cost of abdicating to Nancy Pelosi," The Wall Street Journal, January 30, 2009 --- http://online.wsj.com/article/SB123327812504331563.html?mod=djemEditorialPage

After decades of watching their extravagant, wooly-headed, far-left programs languish in never-never land, Democrats are now realizing their once-forlorn hopes for a return to the good old days. Massive giveaways for their pet socialist schemes — and payoffs to labor unions and other financial supporters — will now be the order of the day. This time they are outdoing their New Deal, Fair Deal, Great Society overspending extravaganzas, cobbling together an $825 billion package they laughingly call a stimulus program, allegedly designed to put unemployed Americans back to work and get the economy back on track.
Michael Reagan, "Unclogging The Liberal Money Pipeline," The Philadelphia Bulletin, January 30, 2009 --- http://www.thebulletin.us/articles/2009/01/30/commentary/editorials/doc498284c72d9b0049142444.txt

The Perfect (Stimulus) Storm for a Universal Healthcare Entitlement in the United States
The more we dig into the pile of spending and tax favors known as the "stimulus bill," the more amazing discoveries we make. Namely, Democrats have apparently decided that the way to gun the economy is to spend even more on health care. This is notable because if there has been one truly bipartisan idea in Washington, it's that the U.S. as a whole spends too much on health care. President Obama has been talking up entitlement reform as a way to free up the money for his other social priorities. But it turns out that Congress is using the stimulus as cover for a massive expansion of federal entitlements.
"The Entitlement Stimulus:  More giant steps toward government," The Wall Street Journal, January 29, 2009 --- http://online.wsj.com/article/SB123318915075926757.html?mod=djemEditorialPage
Jensen Comment
On January 28, ABC News reported how the Canadian Universal Health Care Plan was so much more efficient in terms of accounting efficiency, largely because third party billing in the U.S. has become a quagmire. However, what ABC failed to mention, probably deliberately, is that over half of the average Canadian's salary is taxed mostly for health care. Much has been made about the months or years Canadians wait for non-emergency medical treatments. But seldom does the liberal U.S. press mention the enormous tax bill that goes with the Canadian Universal Health Care Plan. Taxpayers need not worry in the United States however. The new entitlement payment plan in the U.S. simply entails printing money rather than taxing or borrowing --- http://www.trinity.edu/rjensen/Entitlements.htm

The Perfect (Stimulus) Storm for Fannie Mae and Freddie Mac
Although shareholders in Fannie and Fred sucked gas, the companies themselves are being bailed out
"Fan and Fred's Lunch Tab A quarter-trillion dollars, and rising," The Wall Street Journal, January 29, 2009 ---

It seems a lifetime ago, but it's only been six months since the Congressional Budget Office put a $25 billion price tag on the legislation to bail out Fannie Mae and Freddie Mac. At the time, then CBO Director Peter Orszag told Congress that there was a "probably better than 50%" chance that the government would never have to spend a dime to shore up the two government-sponsored mortgage giants.

So much for that. In the past few days Fannie and Freddie have requested a combined $51 billion from the Treasury to compensate for losses in their loan portfolios. This comes on top of the $13.8 billion that Freddie needed in November.

The latest requests take the tab to $70 billion or so -- but that's not the end of the story by a long shot. Earlier this month, CBO released its biannual budget outlook. And largely ignored underneath the $1.2 trillion deficit estimate for fiscal 2009 was the little matter of a $238 billion charge for rescuing Fan and Fred. To put that in perspective, $238 billion is more than the entire federal budget deficit in fiscal 2007

The CBO's $238 billion estimate represents its guess of the long-term cost of paying for the guarantees that Fannie and Freddie write on their mortgage-backed securities. Nor is that just a post-bubble hangover. The last $38 billion of that is for losses on new business this year. And for all anyone knows, that number, like the earlier estimates, is wildly optimistic.

For starters, that $238 billion doesn't include $18 billion that the CBO expected the Treasury to lend the wonder twins this year. But in any case we're already well beyond $18 billion on that score: As of this week they've already requested $70 billion since the fiscal year began -- and we still have eight months to go. So you can add $70 billion to the $238 billion, which gets us to $308 billion -- and even that might be conservative. Rajiv Setia, an analyst at Barclays, figures the duo will need $120 billion from Treasury this year alone, which would mean another $50 billion on top of the $70 billion already requested.

Back when the bailout was being debated last July, Senator Jon Tester (D., Mont.) worried that the Fan and Fred bailout could cost $1 trillion. Given that the two companies combined have more than $5 trillion in debt and mortgage backed securities outstanding, Mr. Tester's guess isn't looking worse than anyone else's.

At that same time, Senator Kent Conrad (D., N.D.) said that the CBO's $25 billion estimate would be "very helpful to those who want to advance this legislation." And no doubt it was. A spokeswoman for Fannie promoter Barney Frank said then, "we especially like that there is less than a 50% chance that it will be used." The CBO had figured that there was a 5% chance that losses would reach the $100 billion cap on the credit line created by the July law. Now CBO's best guess is more than double that.

The bigger picture here is that politicians like Mr. Frank have been telling us for years that Fannie and Freddie's federal subsidy was a free lunch. We are now slowly, and painfully, learning the price of Mr. Frank's famous desire to "roll the dice" with Fan and Fred. Keep that in mind the next time you hear a politician propose a taxpayer guarantee. The only sure thing is that the taxpayers will pay.

Barney's Rubble --- http://www.trinity.edu/rjensen/2008Bailout.htm#Rubble

Accounting Fraud (when Frank Raines was CEO) at Fannie Mae --- http://www.trinity.edu/rjensen/theory01.htm#Manipulation

The Perfect (Stimulus) Storm for Greening the Planet
President Obama will use billions of stimulus dollars to reduce carbon emissions
From the "Best on the Web Today," The Wall Street Journal, January 28, 2009:

An additional problem is that whereas global warmists are emotionally consistent--in a constant state of alarm, accompanied by contempt, even hatred, for those who dare ask questions--their claims are filled with logical inconsistencies. A reader spotted a hilarious example in this Los Angeles Times article:

Even if by some miracle of environmental activism global carbon dioxide levels reverted to pre-industrial levels, it still would take 1,000 years or longer for the climate changes already triggered to be reversed, scientists said Monday.

The gas that is already there and the heat that has been absorbed by the ocean will exert their effects for centuries, according to the analysis, published Monday in the Proceedings of the National Academy of Science.

Over the long haul, the warming will melt the polar icecaps more than previously had been estimated, raising ocean levels substantially, the report said.

And changes in rainfall patterns will bring droughts comparable to those that caused the 1930s Dust Bowl to the American Southwest, southern Europe, northern Africa and western Australia.

"People have imagined that if we stopped emitting carbon dioxide, the climate would go back to normal in 100 years, 200 years," lead author Susan Solomon, a senior scientist at the National Oceanic and Atmospheric Administration, said in a telephone news conference. "That's not true." . . .

Solomon said in a statement that absorption of carbon dioxide by the oceans and release of heat from the oceans - the one process acting to cool the Earth and the other to warm it--will "work against each other to keep temperatures almost constant for more than 1,000 years."


Glenn Beck Explains What's Wrong With Obama's Stimulus Program (video) --- http://www.thehopeforamerica.com/play.php?id=249

A Famous Economist Explains What's Wrong With Obama's Stimulus Program
But, in terms of fiscal-stimulus proposals, it would be unfortunate if the best Team Obama can offer is an unvarnished version of Keynes's 1936 "General Theory of Employment, Interest and Money." The financial crisis and possible depression do not invalidate everything we have learned about macroeconomics since 1936. Much more focus should be on incentives for people and businesses to invest, produce and work. On the tax side, we should avoid programs that throw money at people and emphasize instead reductions in marginal income-tax rates -- especially where these rates are already high and fall on capital income. Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.

Robert J. Barro, "Government Spending Is No Free Lunch:  Now the Democrats are peddling voodoo economics," The Wall Street Journal, January 22, 2009 ---
Robert Barro is an economics professor at Harvard University and a senior fellow at Stanford University's Hoover Institution.

Back in the 1980s, many commentators ridiculed as voodoo economics the extreme supply-side view that across-the-board cuts in income-tax rates might raise overall tax revenues. Now we have the extreme demand-side view that the so-called "multiplier" effect of government spending on economic output is greater than one -- Team Obama is reportedly using a number around 1.5.

To think about what this means, first assume that the multiplier was 1.0. In this case, an increase by one unit in government purchases and, thereby, in the aggregate demand for goods would lead to an increase by one unit in real gross domestic product (GDP). Thus, the added public goods are essentially free to society. If the government buys another airplane or bridge, the economy's total output expands by enough to create the airplane or bridge without requiring a cut in anyone's consumption or investment.

The explanation for this magic is that idle resources -- unemployed labor and capital -- are put to work to produce the added goods and services.

If the multiplier is greater than 1.0, as is apparently assumed by Team Obama, the process is even more wonderful. In this case, real GDP rises by more than the increase in government purchases. Thus, in addition to the free airplane or bridge, we also have more goods and services left over to raise private consumption or investment. In this scenario, the added government spending is a good idea even if the bridge goes to nowhere, or if public employees are just filling useless holes. Of course, if this mechanism is genuine, one might ask why the government should stop with only $1 trillion of added purchases.

What's the flaw? The theory (a simple Keynesian macroeconomic model) implicitly assumes that the government is better than the private market at marshaling idle resources to produce useful stuff. Unemployed labor and capital can be utilized at essentially zero social cost, but the private market is somehow unable to figure any of this out. In other words, there is something wrong with the price system.

John Maynard Keynes thought that the problem lay with wages and prices that were stuck at excessive levels. But this problem could be readily fixed by expansionary monetary policy, enough of which will mean that wages and prices do not have to fall. So, something deeper must be involved -- but economists have not come up with explanations, such as incomplete information, for multipliers above one.

A much more plausible starting point is a multiplier of zero. In this case, the GDP is given, and a rise in government purchases requires an equal fall in the total of other parts of GDP -- consumption, investment and net exports. In other words, the social cost of one unit of additional government purchases is one.

This approach is the one usually applied to cost-benefit analyses of public projects. In particular, the value of the project (counting, say, the whole flow of future benefits from a bridge or a road) has to justify the social cost. I think this perspective, not the supposed macroeconomic benefits from fiscal stimulus, is the right one to apply to the many new and expanded government programs that we are likely to see this year and next.

What do the data show about multipliers? Because it is not easy to separate movements in government purchases from overall business fluctuations, the best evidence comes from large changes in military purchases that are driven by shifts in war and peace. A particularly good experiment is the massive expansion of U.S. defense expenditures during World War II. The usual Keynesian view is that the World War II fiscal expansion provided the stimulus that finally got us out of the Great Depression. Thus, I think that most macroeconomists would regard this case as a fair one for seeing whether a large multiplier ever exists.

I have estimated that World War II raised U.S. defense expenditures by $540 billion (1996 dollars) per year at the peak in 1943-44, amounting to 44% of real GDP. I also estimated that the war raised real GDP by $430 billion per year in 1943-44. Thus, the multiplier was 0.8 (430/540). The other way to put this is that the war lowered components of GDP aside from military purchases. The main declines were in private investment, nonmilitary parts of government purchases, and net exports -- personal consumer expenditure changed little. Wartime production siphoned off resources from other economic uses -- there was a dampener, rather than a multiplier.

We can consider similarly three other U.S. wartime experiences -- World War I, the Korean War, and the Vietnam War -- although the magnitudes of the added defense expenditures were much smaller in comparison to GDP. Combining the evidence with that of World War II (which gets a lot of the weight because the added government spending is so large in that case) yields an overall estimate of the multiplier of 0.8 -- the same value as before. (These estimates were published last year in my book, "Macroeconomics, a Modern Approach.")

There are reasons to believe that the war-based multiplier of 0.8 substantially overstates the multiplier that applies to peacetime government purchases. For one thing, people would expect the added wartime outlays to be partly temporary (so that consumer demand would not fall a lot). Second, the use of the military draft in wartime has a direct, coercive effect on total employment. Finally, the U.S. economy was already growing rapidly after 1933 (aside from the 1938 recession), and it is probably unfair to ascribe all of the rapid GDP growth from 1941 to 1945 to the added military outlays. In any event, when I attempted to estimate directly the multiplier associated with peacetime government purchases, I got a number insignificantly different from zero.

As we all know, we are in the middle of what will likely be the worst U.S. economic contraction since the 1930s. In this context and from the history of the Great Depression, I can understand various attempts to prop up the financial system. These efforts, akin to avoiding bank runs in prior periods, recognize that the social consequences of credit-market decisions extend well beyond the individuals and businesses making the decisions.

But, in terms of fiscal-stimulus proposals, it would be unfortunate if the best Team Obama can offer is an unvarnished version of Keynes's 1936 "General Theory of Employment, Interest and Money." The financial crisis and possible depression do not invalidate everything we have learned about macroeconomics since 1936.

Much more focus should be on incentives for people and businesses to invest, produce and work. On the tax side, we should avoid programs that throw money at people and emphasize instead reductions in marginal income-tax rates -- especially where these rates are already high and fall on capital income. Eliminating the federal corporate income tax would be brilliant. On the spending side, the main point is that we should not be considering massive public-works programs that do not pass muster from the perspective of cost-benefit analysis. Just as in the 1980s, when extreme supply-side views on tax cuts were unjustified, it is wrong now to think that added government spending is free.

Denny Beresford forwarded the following link. I don't know how long it will be a free download.
"The Crash: What Went Wrong? How did the most dynamic and sophisticated financial markets in the world come to the brink of collapse? The Washington Post examines how Wall Street innovation outpaced Washington regulation.," The Washington Post, January 2009 ---
Jensen Comment
The above site has three links to AIG and what went wrong with their credit default swaps.
Part 1 "The Beautiful Machine" --- http://www.washingtonpost.com/wp-dyn/content/article/2008/12/28/AR2008122801916.html
Part 2 "A Crack in the System"--- http://www.washingtonpost.com/wp-dyn/content/article/2008/12/29/AR2008122902670.html
Part 3 "Downgrades and Downfall"--- http://www.washingtonpost.com/wp-dyn/content/article/2008/12/30/AR2008123003431.html

"Everything You Wanted to Know about Credit Default Swaps--but Were Never Told," by Peter J. Wallison, RGE, January 25, 2009 ----
Click Here 
Also see http://www.trinity.edu/rjensen/2008Bailout.htm#Bailout

I sure hope my stimulus check arrives before springtime. I plan to spend it quickly while it still might buy something of value, maybe faster horses, younger women, and older whiskey.

My share of Obama's give-away won't be large enough to feed horses, give credit cards to younger women, and pay for my new liver?

I guess I'll just fill up my heating oil tank before the price shoots up to $100 a gallon. Some companies can now afford to by old oil tankers and store up millions of gallons of oil. Sadly, I don't have an oil tanker. But I do have a couple of very old gas guzzlers.

Free Online Textbooks, Videos, and Tutorials --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks
Free Tutorials in Various Disciplines --- http://www.trinity.edu/rjensen/Bookbob2.htm#Tutorials
Edutainment and Learning Games --- http://www.trinity.edu/rjensen/000aaa/thetools.htm#Edutainment
Open Sharing Courses --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI

Online Video, Slide Shows, and Audio
In the past I've provided links to various types of music and video available free on the Web. 
I created a page that summarizes those various links --- http://www.trinity.edu/rjensen/music.htm

Scary:  The Third Jihad (30-minute video) --- http://video.google.com/videoplay?docid=-864522917532871834

Glenn Beck Explain's What's Wrong With Obama's Stimulus Program (video) --- http://www.thehopeforamerica.com/play.php?id=249

Mathematics Illuminated --- http://www.learner.org/courses/mathilluminated/

The Dynamic Earth --- http://www.mnh.si.edu/earth/main_frames.html

Folger Shakespeare Library --- http://folger.edu/index.cfm 

Nixon Tapes (multimedia) --- http://www.nixontapes.org/

Taking Liberties (U.K. history) ---  http://www.bl.uk/takingliberties

Tulia, Texas (video from PBS) --- http://www.pbs.org/independentlens/tuliatexas/

ALL 44 PRESIDENTS MORPH INTO EACH OTHER.--- http://www.flixxy.com/presidents-morphing.htm

Salsa:  Watch this 87 year old woman dance --- http://www.youtube.com/watch?v=dkHvRCp3z5A
Also at http://bolstablog.wordpress.com/2009/01/29/salsa/

NFL Fantasy Files: The Best Players --- http://www.youtube.com/watch?v=NHH-6ZQktRQ
I think this is a warning to not always trust video evidence in court.

News Item from Carnegie Mellon University
Carnegie Mellon University professor and alumnus Randy Pausch continues to create an enduring legacy around the world. Because of your past interest, we wanted to make sure you knew about a new “NFL Films Presents” segment featuring Randy talking about one of his childhood dreams — playing in the National Football League. The video (following a commercial)  is available to view online at:
Please also watch for it over the coming months on networks such as ESPN and the NFL Network.

Jensen Comment
My tribute to Randy can be found at http://www.trinity.edu/~rjensen/tidbits/2008/tidbits080415.htm

Free music downloads --- http://www.trinity.edu/rjensen/music.htm

TheRadio (my favorite commercial-free online music site) --- http://www.theradio.com/
Slacker (my second-favorite commercial-free online music site) --- http://www.slacker.com/

Gerald Trites likes this international radio site --- http://www.e-radio.gr/
Songza:  Search for a song or band and play the selection --- http://songza.com/
Also try Jango --- http://www.jango.com/?r=342376581
Sometimes this old guy prefers the jukebox era (just let it play through) --- http://www.tropicalglen.com/
And I listen quite often to Soldiers Radio Live --- http://www.army.mil/fieldband/pages/listening/bandstand.html
Also note
U.S. Army Band recordings --- http://bands.army.mil/music/default.asp

Saving Folk History, One Recording At A Time --- http://www.npr.org/templates/story/story.php?storyId=99372779
Hyman's treasures include recordings of Jim Bowles and Harold Hausenfluck — both fiddlers, from Kentucky and Virginia, respectively. Their music is called "old-timey." It's what came before bluegrass.

Composers like Eisler and Matthus experimented within the tradition of Bach and Mozart --- http://www.npr.org/templates/story/story.php?storyId=99814511

Carlo Ponti Jr.: Classical Music For All --- http://www.npr.org/templates/story/story.php?storyId=99826016

Old Westerns (Statler Brothers) --- http://objflicks.com/thoseoldwesterns.htm

Bob Jensen listens to music free online (and no commercials) --- http://www.slacker.com/ 

Photographs and Art

Doris Ulmann Photograph Collection (rural South and Appalachia) --- http://boundless.uoregon.edu/digcol/ulmann/index.html 

University of St. Andrews Photographic Archive --- http://special.st-andrews.ac.uk/saspecial/

Paul Smith's Typewriter Art Gallery --- http://www.paulsmithfoundation.org/main_gallery.html

Destruction in Gaza --- http://www.npr.org/multimedia/2009/01/gaza_01_22/gallery2/index.html

The Collector's Gallery (Fine Canadian Art) --- http://www.collectorsgalleryofart.com/dynamic/artist.asp?artistid=173&categoryid=

From The Scout Report on January 23, 2009

TinEye Reverse Image Search 0.4 --- http://tineye.com/login 

TinEye is essentially a reverse image search engine that allows users to submit images in order to find out where it came from, how it is being used, if modified versions of the image exist, or to find higher resolution versions. The site includes a FAQ area and a demonstration video. Visitors will need to sign and create a password, and afterwards they will be able to use the search engine. This version is compatible with computers running all operating systems.

Message from Paula

Did you see what they did on CNN?

They asked people at the inauguration to send pictures to them by cell phone (while they were at the inauguration). After they had (?) hundreds, they used some new technology – a really advanced computer – entered all the pictures individually, and the computer pulled them all together like a jigsaw puzzle. And get this: the image was 3-D. The monitor was a flat screen as big as a dining room tabletop. The guy who demonstrated this only had to move his finger around on the “tabletop” to zoom in, zoom out, and look at the scene from any angle!

Here is what Microsoft did to produce similar, combined pictures:

You have to download a Microsoft viewer, Photosynth, to see the 3-D pictures.


Also zoom in and out of the high resolution picture at http://gigapan.org/viewGigapanFullscreen.php?auth=033ef14483ee899496648c2b4b06233c
Here is how it is done --- http://snipurl.com/megapixelphoto       [www_davidbergman_net] 

Online Books, Poems, References, and Other Literature
In the past I've provided links to various types electronic literature available free on the Web. 
I created a page that summarizes those various links --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm

Folger Shakespeare Library --- http://folger.edu/index.cfm 

SOURCETEXT.com (with much emphasis on Shakespeare) A home for specialized, reason-provoking texts that appeal to the eternally curious and to those who value wit and character --- http://www.sourcetext.com/ 

Taking Liberties (U.K. history) ---  http://www.bl.uk/takingliberties

Good Bank, Bad Bank by Dr. Seuss --- http://thereformedbroker.com/2009/01/29/good-bank-bad-bank-by-dr-seuss/

From The Scout Report on January 23, 2009

Codex Sinaiticus [Macromedia Flash Player] http://www.codexsinaiticus.org/en/ 

The Codex Sinaiticus is certainly one of the most important books in the world, and this delightful website provides users with a way to view the book in its entirety. The goal of this project is "to reunite the entire manuscript in digital form and make it accessible to a global audience for the first time." The project partners include The British Library, the National Library of Russia, St. Catherine's Monastery, and Leipzig University Library. First-time visitors may wish to click on the "About" area to learn more about the document's tremendous significance (among other things, it includes the oldest complete copy of the New Testament) and to read answers to several frequently asked questions about the Codex Sinaiticus. Anyone with an interest in conservation, digitization, and transcription will want to check out the "About the Project" page. Here they will find information about all of these subjects, and information about translations of the Codex. Finally, visitors will obviously want to head on over to the "See The Manuscript" area. Here they can read a side-by-side translation of each page, zoom in and out on the Codex, and even browse around by passage.


Free Online Textbooks, Videos, and Tutorials --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks
Free Tutorials in Various Disciplines --- http://www.trinity.edu/rjensen/Bookbob2.htm#Tutorials
Edutainment and Learning Games --- http://www.trinity.edu/rjensen/000aaa/thetools.htm#Edutainment
Open Sharing Courses --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI

Engineers first noticed Spirit's peculiar behavior on Sunday. The rover had radioed to say that it had received its driving commands for the day, but strangely, it had not moved. While NASA says that this can happen for a number of reasons, the rover also failed to record its day's activities to its nonvolatile memory--storage that is retained even when the rover is powered off. The next day, the team asked the rover to determine its orientation by locating the sun. Spirit found the sun, but it inaccurately reported its location.
Brittany Sauser, "Mars Rover Behaving Oddly:  After five years of roving the Red Planet, Spirit's unusual behavior has its operating team worried," MIT's Technology Review, January 29, 2009 --- http://www.technologyreview.com/blog/editors/
Jensen Comment
Although 2001Space Odyssey was a snapshot of the future that misjudged the date, it's interesting to finally study how Hal, a super computer, evolved with human emotions (insanity?). Hal's great grandfather may be the main computer on the presently strange-acting Mars rover named Spirit. Did anybody ever ask how lonely solitary confinement can be for five years? Would this be less of a problem if we had both Mr. and Mrs Spirit touring about on Mars at the same time? Did anybody stop to think that machines eventually need companions? Would we even consider putting a man other than George W. Bush all alone on Mars for five or more years?

Catch & Release
Obama's wildlife strategy extended to the war on terrorism

Metropolitan Police humiliated at the hands of Muslim demonstrators in London (Video) ---
The guys in yellow coats are wearing the appropriate color. They are reminiscent of the U.K. naval crew that surrendered their warship at the drop of a hat to the Iranian gunboats.

A devout Muslim, who is devoutly against terror, explains what the West faces, and how dangerous things really are- and why. As an American Muslim against terror, he presents a dark scenario (video) --- http://blip.tv/play/AdmXMI6nSg

Bound for Broadway
An al Qaeda affiliate in Algeria closed a base earlier this month after an experiment with unconventional weapons went awry, a senior U.S. intelligence official said Monday. The official, who spoke on the condition he not be named because of the sensitive nature of the issue, said he could not confirm press reports that the accident killed at least 40 al Qaeda operatives, but he said the mishap led the militant group to shut down a base in the mountains of Tizi Ouzou province in eastern Algeria. He said authorities in the first week of January intercepted an urgent communication between the leadership of al Qaeda in the Land of the Maghreb (AQIM) and al Qaeda's leadership in the tribal region of Pakistan on the border with Afghanistan. The communication suggested that an area sealed to prevent leakage of a biological or chemical substance had been breached, according to the official.

Eli Lake, "Al Qaeda bungles arms experiment Biological or chemical weapons," Washington Times, January 20, 2009 ---

Don’t look now, but Keith Olbermann’s synapses are misfiring again. The background: former Gitmo prisoner Said Ali al-Shihri, who was released in 2007, has received a plum promotion. He’s now an al-Qaeda leader in Yemen. According to Olbermann’s latest lunacy, al-Shihri was innocently skipping through the desert picking flowers when he was detained. Only after being unfairly imprisoned did he begin working his way up international terrorism’s corporate ladder. “But perhaps the real question is,” the Olbermaniac said, “Since we never tried him, never found him guilty, and the Bush administration set him free, what if he wasn’t a terrorist in the first place but we turned him into one by sending him to Gitmo?” While we’re pondering “what ifs,” what if Olbermann remembered to take his meds every night.
I Hate the Media, January 28, 2009 --- http://www.ihatethemedia.com/
Watch Olbermann's defense oif Said Ali al-Shihri and judge for yourself --- http://www.msnbc.msn.com/id/3036677/#28820188
Also see more details at http://en.wikipedia.org/wiki/Said_Ali_al-Shihri
Olbermann has laid the groundwork for blaming Republicans for creating fundamentalist Islamic terrorists. Gitmo is where we should send the Republican leaders over the past eight years and make them bow at sunset and sunrise toward the new Washington DC.

Iranian President Mahmoud Ahmadinejad called for "profound changes" in U.S. foreign policy on Wednesday, including giving up support for Israel, during an address to thousands of people in the western city of Kermanshah. President Obama on Tuesday, in an interview with Arabic television, called for more dialogue with Iran to express difference and see "where there are potential avenues for progress."
"Ahmadinejad Demands Apology for U.S. 'Crimes'," Fox News, January 28, 2009 --- http://www.foxnews.com/story/0,2933,484105,00.html
Jensen Comment
At least we now know what Iran will demand in negotiations with President Obama. I wonder what Iran will offer in return?

The Taliban told U.S. President Barack Obama on Tuesday that his plan to close Guantanamo Bay prison camp was a "positive step" but peace was only possible if he withdraws U.S. forces from Afghanistan and Iraq. The Taliban, toppled in the 2001 U.S.-led invasion of Afghanistan, also told the new president that sending more troops to Afghanistan "and the use of force against the independent peoples of the world, has lost its effectiveness" . . . " He must completely withdraw all his forces from the two occupied Islamic countries (Afghanistan and Iraq), and to stop defending Israel against Islamic interests in the Middle East and the entire world," the Taliban message said.
"Taliban say Guantanamo closure 'positive step'," Reuters, January 27, 2009 --- http://www.alertnet.org/thenews/newsdesk/LR340030.htm
Jensen Comment
The Taliban also promises to stop throwing acid in the faces of young girls and women if they cease trying to learn how to read and write.

Scary:  The Third Jihad (30-minute video) --- http://video.google.com/videoplay?docid=-864522917532871834

President Obama warned Republicans to stop listening to Rush Limbaugh if they want to get along with his administration. “You can’t just listen to Rush Limbaugh and get things done,” he said to Republican leaders attending a White House meeting to discuss his bloated $1 trillion economic stimulus package. Too many people listen to Rush, the new president thought to himself. After we’re done redistributing everyone’s income, we’ll start redistributing Limbaugh’s radio listeners.
"Obama wants to crush Rush," I Hate the Media, January 24, 2009 --- http://www.ihatethemedia.com/obama-wants-to-crush-rush
Also see http://newsbusters.org/blogs/tim-graham/2009/01/24/obama-tells-congressional-gop-turn-rush-limbaugh-show-will-media-notice
Democrats Launch Petition Against Rush Limbaugh After Firing Back at Obama --- http://www.foxnews.com/politics/first100days/2009/01/27/dems-launch-online-petition-rush-limbaugh/

A few quick facts about Wall Street bonuses. The pretext for the political outrage was the New York comptroller's report this week on the aggregate data for bonuses in 2008. That "irresponsible" bonus pool of $18 billion was for every worker in the New York financial industry, from top dogs to secretaries. This bonus pool fell 44% in 2008, the largest percentage decline in 30 years. The average bonus was $112,000; bonuses typically make up most of an employee's salary on Wall Street. The comptroller estimates that this decline will cost New York State $1 billion in lost tax revenue and New York City $275 million. Both city and state may have to announce layoffs.
"'Idiots' Indeed," The Wall Street Journal, January 31, 2009 --- http://online.wsj.com/article/SB123336371503735447.html?mod=djemEditorialPage
Jensen Comment
Although this puts our bonus contempt somewhat in a new light, it also does not lesson opinion that John Thain the other crooks who declared themselves multi-million bonuses are one of the reasons that America now despises Wall Street. Actually Thain wanted a $10 million bonus while captain of his sinking ship (Merrill Lynch).
Bob Jensen's threads on outrageous executive compensation --- http://online.wsj.com/article/SB123336371503735447.html?mod=djemEditorialPage

John Alexander Thain (born May 26, 1955) was the last chairman and chief executive officer of Merrill Lynch before its merger with Bank of America. Thain was designated to become president of global banking, securities, and wealth management at the newly combined company, but he resigned on January 22, 2009. Bank of America lost confidence in Thain after he failed to tell the bank about mounting losses at Merrill in late 2008. The Associated Press identified him as the best paid among the executives of the S&P 500 companies in 2007. On December 8, 2008, Thain gave up on pursuing a controversial bonus of $10 million from the compensation committee at Merrill.[2] Thain also decided to accelerate payments of bonus to employees at Merrill, giving out between $3 billion and $4 billion using money that appeared to come directly from the $15 billion Bank of America and Merrill Lynch had received from US government taxpayers (via the Troubled Assets Relief Program). Thain has additionally become infamous for spending $1.22 million in corporate funds to decorate his office, even as he was asking the government for a bailout of his troubled company.
Quoted from Wikipedia *** http://en.wikipedia.org/wiki/John_Thain
Thain has since been fired by Bank of America and has agreed to pay for over $1 million spent redecorating his new office.
My question is how Bank of America could buy Merrill without audit verification of Merrill’s 2008 losses and cash flows --- these should've never been a surprise to Bank of America unless Bank of America was plain stupid about accounting. The final settlement price at a minimum could've been contingent on an audit of 2008 earnings.

Added Jensen Comment
I've never been a big fan of Merrill Lynch after repeated disclosures emerged about the repeated frauds instigated by employees of Merrill in the 1990s. Just do a word search on "Merrill" and note the number of frauds that are documented, not the least of which is the Orange County massive derivatives instruments fraud --- http://www.trinity.edu/rjensen/FraudRotten.htm

The New York Times Co.'s efforts to complete the sale of its Midtown headquarters took on greater urgency yesterday after Moody's Investors Service joined Standard & Poor's in downgrading the troubled newspaper company's debt to "junk" status. Moody's move is expected to sharply impact the Times Co.'s ability to raise debt, as companies with junk ratings often find it prohibitively expensive to borrow capital through traditional channels. The rating agency cut the Times Co.'s rating to Ba3 from Baa3, saying that crumbling advertising revenue will continue to put "significant downward pressure" on the company's cash flow.
Keith J. Kelly, "NY TIMES DEBT JUNKED BY MOODY'S," New York Post, January 24, 2009 --- http://www.nypost.com/seven/01242009/business/ny_times_debt_junked_by_moodys_151582.htm

The stimulus bill currently steaming through Congress looks like a legislative freight train, but given last week's analysis by the Congressional Budget Office, it is more accurate to think of it as a time machine. That may be the only way to explain how spending on public works in 2011 and beyond will help the economy today. According to Congressional Budget Office estimates, a mere $26 billion of the House stimulus bill's $355 billion in new spending would actually be spent in the current fiscal year, and just $110 billion would be spent by the end of 2010. This is highly embarrassing given that Congress's justification for passing this bill so urgently is to help the economy right now, if not sooner. And the red Congressional faces must be very red indeed, because CBO's analysis has since vanished into thin air after having been posted early last week on the Appropriations Committee Web site. Officially, the committee says this is because the estimates have been superseded as the legislation has moved through committee. No doubt.
David Obey, "The Stimulus Time Machine That $355 billion in spending isn't about the economy," The Wall Street Journal, January 26, 2009 --- http://online.wsj.com/article/SB123292987008414041.html?mod=djemEditorialPage

Evidence suggests that Bernard Madoff, the “prominent” Wall Street operator and former chairman of the NASDAQ stock market, had ties to the Russian Mafia, Moscow-based oligarchs, and the Genovese organized crime family. And, as reported by Deep Capture and Reuters, Madoff did not just orchestrate a $50 billion Ponzi scheme. He was also the principal architect of SEC rules that made it easier for “naked” short sellers to manufacture phantom stock and destroy public companies – a factor in the near total collapse of the American financial system.
Mark Mitchell, "Strange Occurrences and a Story about Naked Short Selling," Deep Capture, January 27, 2009 ---

The main reason Brandeis University is selling its valued art collection
"It’s like a one-two-three punch: the economy tanks, they overbuilt at the peak of the market and their largest donor was hit dramatically by the Madoff scandal,” said Mark Williams, a Boston University senior lecturer who specializes in risk management and has studied Brandeis’s finances. Among the biggest donors to Brandeis are the philanthropist Carl Shapiro and his wife, Ruth. Carl Shapiro and his family foundation had losses of $545 million in Madoff’s alleged Ponzi scheme, according to the Boston Globe.
Forwarded by Caroline Becker
"Brandeis to Sell All (over 6,000 pieces) of Its Art," by Scott Jaschik, Inside Higher Ed, January 27, 2009 --- http://www.insidehighered.com/news/2009/01/27/brandeis
Jensen Comment
The meltdown of the stock market also clobbered the $700 million endowment of Brandeis University. It is not clear what, if any, of the University's endowment recovered from the Madoff fund before the fraud was disclosed ---

Watching Illinois Gov. Nosferatu (the walking politically undead) continue his media blitz on ABC's "The View" on Monday was like watching an old cheesy horror flick—"The Brides of Dracula." (snip) As he sat with the women of "The View," the Illinois Senate began the final act of the impeachment. Democrats are certain he's become infected and deadly, and so they'll amputate in a matter of days.
John Kass, "A comedy for some; for us, a horror show," Chicago Tribune, January 27, 2009 ---
Jensen Comment
It's not that Blago is an honest politician. The problem is that he's too stupid to be good at his craft. I wonder if he's ever heard the adage:  "If you're deep in the hole, stop digging! His lack of humble apology just may get him prison time."
Watch Blago on The View --- http://www.youtube.com/watch?v=mbs8uw22DKM

I really liked Blago when he schmoozed with the media out in front of his modest Chicago house and then went jogging in the snow with no body guards in sight. That was after Blago had, for several weeks, been sending invisible obscene gestures toward the Daley Machine that he wasn't about to be a team player and appoint a new senator without getting something in return for his ownself. Blago showed he had no respect for a fundamental rule of Illinois politics: The Mayor of Chicago outranks the Governor. Chicago mayors don't go to jail. But Blago is in line to be the fourth governor in modern times (after Kerner, Walker and Ryan) to go from the governor's house to the Big House. He might have some interesting things to say on his way there. So when Blago jogs without a body guard, he's a warrior. I like him for that. Mafia Sam "Momo" Giancana was shot seven (7) times in the head with a small caliber pistol inside his Oak Park home back on June 19, 1975, before he was scheduled to testify before a Senate committee. The Chicago Police were stationed outside his house protecting him. I especially like Blago because he made Rahm Emanuel disappear for awhile. Did you notice that? As soon as it was announced that Rahm and Rod had a conversation about who would replace Obama (of course they would), Rahm went into stealth mode and became invisible to the media. No trailing reporters, except that one that found him on a family outing. No microphones in the face. No Rahm. Out of sight/out of mind.
Lee Cary, "Why I Like Blago," American Thinker, January 27, 2009 --- http://www.americanthinker.com/2009/01/why_i_like_blago.html

Given the increasing frequency of 10% to 15% dips in sea ice forecast over the next century by the climate models the team used, Jenouvrier and colleagues predict that the number of Pointe Géologie penguins will plummet from 3000 to 400 breeding pairs. Finding a new home isn't an option, says Jenouvrier, because the penguins have to stick to the coast--and in that part of the continent, it's solid land to the south. "Their conclusions for the Pointe Géologie colony are reasonable, in fact, optimistic considering the state of our present world," says penguin expert Gerald Kooyman of the Scripps Institution of Oceanography in San Diego, California. Still, penguin lovers shouldn't despair just yet. Kooyman notes that many of the 400,000 or so emperor penguins in Antarctica live farther south, where it's colder and sea ice may behave differently. "Are emperor penguins as a species in trouble?" he asks. "I don't think so." And sea ice geophysicist Stephen Ackley of the University of Texas, San Antonio, says that even the Pointe Géologie penguins may be okay, as he doesn't think the climate models are accurate enough to predict what sea ice will do. According to the models, "we should have already seen a decline of sea ice in the 1990s," he says. Instead, "we're seeing an increase. ... I have to be skeptical about how well they can predict the future."
Helen Fields, "Death March of the Penguins?" ScienceNOW Daily News, January 26, 2009 ---  http://sciencenow.sciencemag.org/cgi/content/full/2009/126/2

Beleaguered Citigroup is upgrading its mile-high club with a brand-new $50 million corporate jet - only this time, it's the taxpayers who are getting screwed. Even though the bank's stock is as cheap as a gallon of gas and it's burning through a $45 billion taxpayer-funded rescue, the airhead execs pushed through the purchase of a new Dassault Falcon 7X, according to a source familiar with the deal.
Jennifer Gould Keil and Chuck Bennett, "Just Plane Despicable," New York Post, January 26, 2009 --- http://www.nypost.com/seven/01262009/news/nationalnews/just_plane_despicable_152033.htm
Jensen Comment
After Citi's executives pay themselves millions in bonuses they'll need a fast way to get out of town. Eventually because of the adverse publicity, Citigroup cancelled the order for this new luxury jet aircraft. Fortunately, there are hundreds of almost new used corporate jets coming on the market.

John Thain is the guy that looks like a Clark Kent doll you saw grinning from page one of your paper Friday morning. Thain was just fired by Bank of America because the square-jawed executive demanded a $30 million bonus after losing $5 billion in just three months at the bank's Merrill Lynch unit. In addition, Thain spent over a million dollars redecorating his office while, at the same time, the U.S. Treasury was bailing out his company with billions in aid. Thain's office re-do included the installation of a $35,000 toilet bowl. Thain was robbed.
Greg Polast, "Why an a$$hole is always in charge," Suicide Girls, January 23, 2009 --- http://suicidegirls.com/news/politics/23528/

The Secret Lives of Philosophers

"Are Philosophers Really Lovers Of Wisdom?" Simoleon Sense, February 2, 2009 ---

I’ve always been interested in becoming an academic philosopher. My interest is so profound that I even majored as one during undergrad, only to quickly switch to Psychology & Neuroscience. Here’s an article brought to my attention by a friend and philosopher.
 Click Here To Read About The Secret Lives Of Philosphers

Article Introduction (Via Philosopher’s Net)

Although academics will hardly raise an eyebrow about this “open secret”, it comes as a surprise to many others to learn that many philosophers, in fact an increasing number by my lights, are little devoted to the love of wisdom. In only a merely “academic” way do they aspire to intellectual virtue. Even less often do they exhibit qualities of moral excellence. On the contrary, many philosophers, or what pass as philosophers, are, sadly, better described as petty social climbers, meretricious snobs, and acquisitive consumerists.

I blush a bit now to confess that part of what drove me into philosophy in the first place was the naive conviction that among those who call themselves lovers of wisdom I would find something different in kind from the repugnant and shallow brutalism of the worlds of finance, business, and the law to which I had suffered some exposure in Ronald Reagan’s America.

Article Excerpts (Via Philsopher’s Net)

“Instead, I’ve found that the secret lives of philosophers are more often than not pre-occupied with status and acquisition.”

“Like debutantes at the ball, philosophers now often spend much of their time dropping names, gossiping, promoting their connections, hawking their publications, passing out business cards and polishing their self-promotional web sites.”

“Attitudes toward material consumption are not, I’m afraid much better. Philosophers seem to pepper their conversations more and more with remarks about the perks or bonuses they receive – how much money they have available for travel, what sort of computer allowances, how big their research grants are.”

“All of this suggests a philosophical culture that imitates the business world not only in its emphasis on product (publication) but also in its adopting the criteria and trappings of professional success characteristic of commercial life.

Conclusions (Via Philosopher’s Net)

“One implication of this little secret is that professional philosophers have become less and less egalitarian in their view of education.”

“Finding philosophers devoted principally to the love of wisdom and to sharing it broadly has become, as Spinoza said of all excellent things, as difficult as it is rare.”

Click Here To Read About The Secret Lives Of Philosphers

The following are included in Bob Jensen's listing of free online videos and tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#Tutorials

Gateway to Philosophy --- http://www.bu.edu/paideia/index.html

Teach Philosopy 101  --- http://www.teachphilosophy101.org/
This site presents strategies and resources for faculty members and graduate assistants who are teaching Introduction to Philosophy courses; it also includes material of interest to college faculty generally. The mission of TΦ101 is to provide free, user-friendly resources to the academic community. All of the materials are provided on an open source license. You may also print as many copies as you wish (please print in landscape). TΦ101 carries no advertising. I am deeply indebted to Villanova University for all of the support that has made this project possible.
John Immerwahr, Professor of Philosophy, Villanova University

Ask Philosophers --- http://www.amherst.edu/askphilosophers/


  • This site puts the talents and knowledge of philosophers at the service of the general public. Send in a question that you think might be related to philosophy and we will do our best to respond to it. To date, there have been 1375 questions posted and 1834 responses.

    Philosophy Talk (Audio) --- http://www.philosophytalk.org/


    Accounting Professors are the Least Hot Business Professors (according to students)
    Just in case you didn't notice, Finance professors were rated as the hottest among the business disciplines (and accounting was rated least hot). So if you're deciding between a PhD in Finance and Accounting, if you want hotter colleagues, choose Finance, but if you want to look better by comparison, go with accounting.
    The Unknown Professor, Financial Rounds Blog, January 29, 2009 --- http://financialrounds.blogspot.com/

    Although the Financial Rounds Blog has a lot of tongue in cheek, caution should be seriously noted about electing to go into a finance doctoral program. Demand for finance graduates may be down for a long, long time which, in turn, will affect the demand for new PhD graduates in economics and finance. But I've not seen anywhere that the demand for accounting PhD graduates will be relatively low for the long haul (apart from the short term budget crises colleges are having these days that in many cases has frozen virtually all hiring). In fact, a lot of undergraduate finance majors may be shifting over to accounting, thereby creating more need for accounting professors.

    Apart from short term hiring freezes, the number of new PhDs in accounting is greatly in short supply such that it's probably better to consider job opportunities and to lower expectations about being rated as hot on campus --- http://www.trinity.edu/rjensen/theory01.htm#DoctoralPrograms

    What disciplines on campus have the hottest professors?

    Answer --- Click Here

    "Attractiveness, Easiness, and Other Issues: Student Evaluations of Professors on RateMyProfessors.com," by James Felton Central Michigan University, Peter T. Koper, John Mitchell, and Michael Stinson, SSRN, July 2006 --- http://papers.ssrn.com/sol3/papers.cfm?abstract_id=918283

    What criterion emerges as the single most important criterion for professorial ratings on RateMyProfessor.com?

    Grading. Grade inflation has been heavily impacted by the rise in the use of required teaching evaluations for performance and tenure evaluations --- http://www.trinity.edu/rjensen/assess.htm#RateMyProfessor

    Bob Jensen's threads on grade inflation are at

    If median grades for each course are made publically available on the Internet, will students seek out the high grade average or low grade average courses?
    Examples of such postings at Cornell University are at http://registrar.sas.cornell.edu/Student/mediangradesA.html

    Hypothesis 1
    Students will seek out the lower grade average courses/sections thinking that they have a better chance to compete for high grades.

    Hypothesis 2
    Students will seek out the higher grade average courses/sections thinking that particular instructors are easier graders.

    However, when Cornell researchers studied about 800,000 course grades issued at Cornell from 1990 to 2004, they found that most students visited the site to shop for classes where the median grade was higher. Plus, professors who tended to give out higher grades were more popular. Students with lower SAT scores were the most likely to seek out courses with higher median grades.
    "Easy A's on the Internet:  A surprising Cornell experiment in posting grades; plus a look at recent research into ethical behavior, service charges, and volunteer habits," by Francesca Di Meglio, Business Week, December 11, 2007 ---

    In a striking example of unintended consequences, a move by Cornell University to give context to student grades by publicly posting median grades for courses has resulted in exactly the opposite student behavior than anticipated.

    Cornell's College of Arts & Sciences originally set up a Web site in 1997 where median grades were posted, with the intention of also printing median class grades alongside the grade the student actually received in the course on his or her permanent transcript. Administrators thought students would use the information on the Web site to seek out classes with lower median grades—because, they reasoned, an A in a class that has a median grade of B-minus would be more meaningful than say, an A in a course where the median was A-plus.

    Course Shopping Leads to Grade Inflation

    However, when Cornell researchers studied about 800,000 course grades issued at Cornell from 1990 to 2004, they found that most students visited the site to shop for classes where the median grade was higher. Plus, professors who tended to give out higher grades were more popular. Students with lower SAT scores were the most likely to seek out courses with higher median grades.

    This "shopping" in turn led to grade inflation, Vrinda Kadiyali, associate professor of marketing and economics at Cornell's Johnson Graduate School of Management, one of the authors, explained in an interview. The study, which is undergoing peer review, has not yet been published.

    So far, however, the university has posted the median course grades only on the Internet and has not yet put those grades on transcripts. According to an article in the Cornell Daily Sun, the school will start posting the grades on transcripts in the spring. School officials were not immediately available for comment.

    The research team hopes the school follows through on its plans. "That will allow Cornell to hold itself to a higher standard because it lets potential employers know where students stand relevant to other students," says Kadiyali.

    The presence of the median grade data is well-known to students but less well-known to faculty. The researchers themselves were prompted to do the study when one of them learned of the Web site from a student questioning grades in her course.

    Kadiyali says the formula the researchers used to come to these conclusions could easily be applied to Internet teacher rating sites, such as ratemyprofessors.com. It's something educators should consider, she adds, to find out how these posts affect the decision-making of students and, thus, professors and their courses.

    Jensen Comment
    The problem is that, in modern times, grades are the keys to the kingdom (i.e., keys unlocking the gates of graduate studies and professional careers) such that higher grades rather than education tend to become the main student goals. A hundred years ago, just getting a degree could open postgraduate gates in life because such a small proportion of the population got college diplomas. With higher percentages of the population getting college diplomas, high grades became keys to the kingdom. In many colleges a C grade is viewed as very nearly a failing grade.

    At the same time, formal teaching evaluations and teacher rating sites like ratemyprofessors.com have led to marked grade inflation in virtually all colleges. The median grades are often A, A-, B+, or B. The poor student's C grade is way below average. Just take a look at these course medians from Cornell University --- http://registrar.sas.cornell.edu/Grades/MedianGradeSP07.pdf

    December 19, 2007eply from a good friend who is also a university-wide award winning teacher

    I'm not for easy grading, but I also wonder some about this study. Could it be that the MORE EFFECTIVE instructors are also easier graders and vice versa? I have no idea, but I'd like to see a control for this variable.

    And God help us if a professor is popular! What an awful trait for an educator to have!


    December 20, 2007 reply from Bob Jensen

    Dear Jeez,

    The terms "easy grader" and "easy grading" are probably not suited for hypothesis testing. They are too hard to precisely define. Some, probably most, "easy graders" counter by saying that they are just better teachers and the students learned more because of superior teaching. In many cases, but certainly not all cases, this is probably true. Also, it is almost impossible to distinguish easy grading from easy content. Students may learn everything in a course if the course is easy enough to do so.

    Instructors will also counter that they are ethical in the sense of scaring off the poor students before the course dropping deadlines. Instructors who snooker poor students to stay in their courses and then hammer them down later on can show lower median grades without punishing better students with C grades. Fortunately I don't think there are many instructors who do this because they then face the risk of getting hammered on teaching evaluations submitted by the worst students in the course.

    Easy grading/content is a lot like pornography. It's probably impossible to precisely define but students know it when they shop for easier courses  before registering. It may be possible to a limited extent to find easy graders in multiple section courses having common examinations. For example, I was once a department chair where our two basic accounting courses had over 30 sections each per semester. But even there it is possible that all instructors were relatively "easy" when they put together the common examinations.

    It is widely known that nearly every college in the U.S. suffers from grade inflation. Only an isolated few have been successful in holding it down. College-wide grade averages have swung way above C grades and in some instances even B grades. It is typical any more for median grades of a college to hit the B+ or A- range, and in many courses the median grade is an A.

    The Cornell study sited above covering 800,000 course grades (a lot) did not identify easy graders. It identified courses/sections having higher median grades. Higher median grades may not signify easy grading or easy content, but students seem to know what they are shopping for and the Cornell study found that students do shop around for bargains. My guess is that the last courses left on the shelf are those with median grades in the C range.

    Bob Jensen

    Bob Jensen's threads on grade inflation are at http://www.trinity.edu/rjensen/assess.htm#GradeInflation

    Controversial Advice for Potential Doctoral Students in the Humanities

    Jensen Comment
    To the extent that professors mislead prospective doctoral students about the academic job market, the following article is somewhat appropriate. However, it may make too much of the career motivation of humanities doctoral students. Many humanities doctoral students are seeking to become researchers, writers, and just plain scholars irrespective of the rather dismal (highly competitive) professorial job market for doctoral graduates in humanities. Some graduates hope to be supported by spouses while they pursue a "career" in research and writing. Some hope to pursue learning for learning sake even if they have to be under placed in terms of actually making a living such as being a literary scholar while having to teach second grade in an elementary school. I truly respect people who pursue scholarship, research, and writing passions apart from having to earn a living doing something else. May the fruits of their dedication pay off in many ways other than money, and if they also pay off in money I say congratulations!

    The biggest problem with the academic job market in humanities and social science is that it's somewhat snobbish. Given that hundreds of PhDs might apply for a given tenure track opening in the humanities or social science division, colleges sometimes are inclined to weight doctorates from prestigious universities more heavily, especially the Ivy League-level universities. In the professional schools, the most prestigious universities often trade their own doctoral graduates, but for the most part doctoral graduates from most any regionally accredited university or college generally have good shots for top jobs.

    "Graduate School in the Humanities: Just Don't Go; It's hard to tell young people that universities view their idealism and energy as an exploitable resource," by Thomas H. Benton, Chronicle of Higher Education, January 30, 2009 ---

    Nearly six years ago, I wrote a column called "So You Want to Go to Grad School?" (The Chronicle, June 6, 2003). My purpose was to warn undergraduates away from pursuing Ph.D.'s in the humanities by telling them what I had learned about the academic labor system from personal observation and experience.

    It was a message many prospective graduate students were not getting from their professors, who were generally too eager to clone themselves. Having heard rumors about unemployed Ph.D.'s, some undergraduates would ask about job prospects in academe, only to be told, "There are always jobs for good people." If the students happened to notice the increasing numbers of well-published, highly credentialed adjuncts teaching part time with no benefits, they would be told, "Don't worry, massive retirements are coming soon, and then there will be plenty of positions available." The encouragement they received from mostly well-meaning but ill-informed professors was bolstered by the message in our culture that education always leads to opportunity.

    All these years later, I still get letters from undergraduates who stumble onto that column. They tell me about their interests and accomplishments and ask whether they should go to graduate school, somehow expecting me to encourage them. I usually write back, explaining that in this era of grade inflation (and recommendation inflation), there's an almost unlimited supply of students with perfect grades and glowing letters. Of course, some doctoral program may admit them with full financing, but that doesn't mean they are going to find work as professors when it's all over. The reality is that less than half of all doctorate holders — after nearly a decade of preparation, on average — will ever find tenure-track positions.

    The follow-up letters I receive from those prospective Ph.D.'s are often quite angry and incoherent; they've been praised their whole lives, and no one has ever told them that they may not become what they want to be, that higher education is a business that does not necessarily have their best interests at heart. Sometimes they accuse me of being threatened by their obvious talent. I assume they go on to find someone who will tell them what they want to hear: "Yes, my child, you are the one we've been waiting for all our lives." It can be painful, but it is better that undergraduates considering graduate school in the humanities should know the truth now, instead of when they are 30 and unemployed, or worse, working as adjuncts at less than the minimum wage under the misguided belief that more teaching experience and more glowing recommendations will somehow open the door to a real position.

    Most undergraduates don't realize that there is a shrinking percentage of positions in the humanities that offer job security, benefits, and a livable salary (though it is generally much lower than salaries in other fields requiring as many years of training). They don't know that you probably will have to accept living almost anywhere, and that you must also go through a six-year probationary period at the end of which you may be fired for any number of reasons and find yourself exiled from the profession. They seem to think becoming a humanities professor is a reliable prospect — a more responsible and secure choice than, say, attempting to make it as a freelance writer, or an actor, or a professional athlete — and, as a result, they don't make any fallback plans until it is too late.

    I have found that most prospective graduate students have given little thought to what will happen to them after they complete their doctorates. They assume that everyone finds a decent position somewhere, even if it's "only" at a community college (expressed with a shudder). Besides, the completion of graduate school seems impossibly far away, so their concerns are mostly focused on the present. Their motives are usually some combination of the following:


    • They are excited by some subject and believe they have a deep, sustainable interest in it. (But ask follow-up questions and you find that it is only deep in relation to their undergraduate peers — not in relation to the kind of serious dedication you need in graduate programs.)



    • They received high grades and a lot of praise from their professors, and they are not finding similar encouragement outside of an academic environment. They want to return to a context in which they feel validated.



    • They are emerging from 16 years of institutional living: a clear, step-by-step process of advancement toward a goal, with measured outcomes, constant reinforcement and support, and clearly defined hierarchies. The world outside school seems so unstructured, ambiguous, difficult to navigate, and frightening.



    • With the prospect of an unappealing, entry-level job on the horizon, life in college becomes increasingly idealized. They think graduate school will continue that romantic experience and enable them to stay in college forever as teacher-scholars.



    • They can't find a position anywhere that uses the skills on which they most prided themselves in college. They are forced to learn about new things that don't interest them nearly as much. No one is impressed by their knowledge of Jane Austen. There are no mentors to guide and protect them, and they turn to former teachers for help.



    • They think that graduate school is a good place to hide from the recession. They'll spend a few years studying literature, preferably on a fellowship, and then, if academe doesn't seem appealing or open to them, they will simply look for a job when the market has improved. And, you know, all those baby boomers have to retire someday, and when that happens, there will be jobs available in academe.


    I know I experienced all of those motivations when I was in my early 20s. The year after I graduated from college (1990) was a recession, and the best job I could find was selling memberships in a health club, part time, in a shopping mall in Philadelphia. A graduate fellowship was an escape that landed me in another city — Miami — with at least enough money to get by. I was aware that my motives for going to graduate school came from the anxieties of transitioning out of college and my difficulty finding appealing work, but I could justify it in practical terms for the last reason I mentioned: I thought I could just leave academe if something better presented itself. I mean, someone with a doctorate must be regarded as something special, right?

    Continued in article

    "The Relevance of the Humanities," by Gabriel Paquette, Inside Higher Ed, January 22, 2009 --- http://www.insidehighered.com/views/2009/01/22/paquette

    The deepening economic crisis has triggered a new wave of budget cuts and hiring freezes at America’s universities. Retrenchment is today’s watchword. For scholars in the humanities, arts and social sciences, the economic downturn will only exacerbate existing funding shortages. Even in more prosperous times, funding for such research has been scaled back and scholars besieged by questions concerning the relevance of their enterprise, whether measured by social impact, economic value or other sometimes misapplied benchmarks of utility.
    Public funding gravitates towards scientific and medical research, with its more readily appreciated and easily discerned social benefits. In Britain, the fiscal plight of the arts and humanities is so dire that the Institute of Ideas recently sponsored a debate at King’s College London that directly addressed the question, “Do the arts have to re-brand themselves as useful to justify public money?”

    In addition to decrying the rising tide of philistinism, some scholars might also be tempted to agree with Stanley Fish, who infamously asserted that humanities “cannot be justified except in relation to the pleasure they give to those who enjoy them.” Fish rejected the notion that the humanities can be validated by some standard external to them. He dismissed as wrong-headed “measures like increased economic productivity, or the fashioning of an informed citizenry, or the sharpening of moral perception, or the lessening of prejudice and discrimination.”

    Continued in article

    Bob Jensen's threads on higher education controversies --- http://www.trinity.edu/rjensen/HigherEdControversies.htm

    Is this a vulnerability that PwC should've discovered in advance under its Sox Section 404 responsibility?

    What I found scary is that this terrible malignant code was only discovered "by chance." Technology has made our business firms, hospitals, transportation systems, power grids, food chains, water systems, etc. extremely vulnerable to destructive computer codes that can crash entire systems. This event at Fannie Mae serves as a wakeup call to install more backups and safer human interfaces in internal controls.

    "Ex-Fannie Mae worker charged with planting computer virus," by Freeman Klopott, Washington Examiner, January 29, 2009 ---

    A fired Fannie Mae contract employee allegedly placed a virus in the mortgage giant’s software that could have shut the company down for at least a week and caused millions of dollars in damage, prosecutors say. Rajendrasinh Makwana, an Indian citizen, was indicted Tuesday on computer intrusion charges. The former Gaithersburg resident is out on $100,000 bail, court documents said.

    Makwana was fired from his contract position at Fannie Mae on Oct. 24 for changing computer settings without permission from his supervisor, FBI agent Jessica Nye wrote in a sworn statement. He had worked at Fannie Mae for three years as a computer engineer at the Urbana offices, where he had full access to all of the federally created mortgage company’s 4,000 servers. Before leaving work Oct. 24, Makwana allegedly tried to hide a code in server software that was set to activate the morning of Jan. 31, the agent wrote.

    “Had this malicious script executed, [Fannie Mae] engineers expect it would have caused millions of dollars of damage and reduced if not shutdown operations at [Fannie Mae] for at least one week,” Nye wrote. “The total damage would include cleaning out and restoring all 4,000 of [Fannie Mae’s] servers, restoring and securing the automation of mortgages, and restoring all data that was erased.”

    A spokeswoman for Fannie Mae declined to comment.

    According to Nye’s statement, a senior computer engineer discovered the virus Oct. 29. The malicious code was hidden after a blank page, and “it was only by chance” that the senior engineer scrolled down and found the virus, Nye wrote. The engineer locked down Fannie Mae’s servers to determine whether other viruses were hidden inside and where the virus had come from, Nye wrote. Only about 20 Fannie Mae employees and contractors, including Makwana, had access to the server where the virus was stored.

    An Internet Protocol address was eventually linked to Makwana’s company-issued laptop, Nye wrote. He was arrested Jan. 7.

    The virus was set to execute at 9 a.m. Jan. 31, first disabling Fannie Mae’s computer monitoring system and then cutting all access to the company’s 4,000 servers, Nye wrote. Anyone trying to log in would receive a message saying “Server Graveyard.”

    From there, the virus would wipe out all Fannie Mae data, replacing it with zeros, Nye wrote. Finally, the virus would shut down the servers.

    Continued in article

    Jensen Comment
    Among other things, this could really mess up the PwC audit trail. One of the risks of technology is that even enormous databases are now vulnerable relative to days of old when one disgruntled person could not come so close to bringing down an enormous company.

    What I found scary is that this terrible virus was only discovered "by chance."

    January 30, 2009 reply from Jagdish Gangolly [gangolly@CSC.ALBANY.EDU]


    This would be a fascinating case to discuss in an auditing class.

    It also would be a fascinating case to discuss in an AIS class IF the students have a good understanding of the unix operating system, unix tools, and shell scripting. I would definitely use it at Albany since our AIS students do have that background.

    I am attaching the complaint and a supporting affidavit filed at the court in Maryland. This should be plenty of reading for a 20 minutes or so of a lecture in an AIS class.

    The disgruntled contract employee was fired, but his privileges were not terminated. One must wonder where was the sysadmin or what (s)he was smoking. The one-blank-page trick was discovered by a diligent person (Nye).

    The attached complaint gives details of the modus operandi of the intrusion. It is a fairly simple set of scripts to write, and I think one of our better AIS students could have written them with some work.

    The DCExaminer talks about a virus placed in the system. There was no such thing. It was a much simpler thing.

    The important thing for us is to teach the students the importance of ethics and good behaviour if they are to avoid being the guests of the US Government.


    Scott Bonacker forwarded the following link:

    "IT Worker Indicted For Setting Malware Bomb:  At Fannie Mae IT contractor deployed highly malicious script before his administrative rights were terminated," by Tim Wilson, Dark Reading, January 29, 2009 ---

    A former IT contractor at Fannie Mae, angry at being terminated in October, has been thwarted in his attempt to crash all 4,000 servers at the mortgage services institution and wipe out all of their data.

    According to a report from the U.S. Department of Justice, a federal grand jury in Maryland has indicted Rajendrasinh Babubhai Makwana, a contractor working at Fannie Mae's Urbana, Md., facility, for transmitting a malicious script to the company's servers.

    The malicious code, which was set to execute on Jan. 31, was designed to propagate throughout the Fannie Mae network and destroy all of the company's data, the DoJ says.

    According to court documents, Makwana -- who was employed by OmniTech, a third-party contractor that handles server administration for Fannie Mae -- was censured by management on Oct. 10 after unintentionally distributing a server script without authorization. The documents suggest the mistake was so egregious that Makwana probably knew he would be fired, although his administrative rights were not revoked until hours after his official termination on Oct. 24.

    Apparently, Makwana had been busy before he was kicked off the system. On Oct. 29, five days after Makwana had left the company, a senior Unix engineer found a malicious script buried in a legitimate script that validates the storage area network connections among the company's 4,000 servers every morning at 9 a.m. A page break had been inserted between the malicious script and the legitimate script, making it less obvious.

    The malicious script was set to execute multiple tasks, all of them bad. First, it would wipe out all of the passwords on the servers, effectively locking administrators out. Then it would build a list of all servers that contained Fannie Mae data and wipe out all of the data, replacing it with zeros. This would also destroy the backup software on the servers, making the restoration of data more difficult because new operating systems would have to be installed on all servers before any restoration could begin, the court documents say.

    The script would also remove all "High Availability" software from any critical server, the complaint continues. Then it would power off all servers, disabling the ability to remotely turn on a server. After the second run-through, the script would remove all of the files on the current host and try to zero out the root file system.

    "Had this malicious script executed, [Fannie Mae] engineers expect it would have caused millions of dollars of damage and reduced, if not shut down, operations at [Fannie Mae] for at least one week," the complaint says. "If this script were executed, the total damage would include cleaning out and restoring all 4,000 [Fannie Mae] servers, restoring and securing the automation of mortgages, and restoring all data that was erased."

    Makwana faces a maximum sentence of 10 years in prison. He had his initial appearance in federal district court on Jan. 6, following the filing of the complaint. Arraignment is scheduled for Jan. 30, 2009.

    Industry experts warn that such exploits may become more common as the economy forces companies to lay off an increasing number of employees. Enterprises should be careful to terminate all data and administrative access rights for the affected employees before they have the opportunity to act in retribution, the experts warn.

    Human Error is Still the Big Risk in Design and Application
    "Google’s Internet search service malfunctioned for nearly 55 minutes Saturday morning, upending users around the world with search results that carried false safety warnings and Web links that did not work. The company acknowledged Saturday that all searches produced links with the same warning message: “This site may harm your computer.” Clicking on any of the links led to an error message stating that the desired site could not be reached.

    Liz Robbins, "Google Error Sends Warning Worldwide," The New York Times, January 31, 2009 --- http://www.nytimes.com/2009/02/01/technology/internet/01google.html?_r=1&hp
    Jensen Comment
    I missed this big Google malfunction, but I wonder how many students and faculty decided to fill the time by visiting the campus library. Would zero be a good estimate? Most probably migrated to Yahoo or some other search engine.

    What this once again illustrates is how fragile our information systems have become. Google won't disclose how many servers it has online, but suppose it is over a million. That would mean that a million servers and over 100 million people were put on hold because some dope hit the wrong switch. I guess it's good thing that the earth's spin is not computer controlled!

    Computer Purchase Timing:  2009 is the Year of New Windows, Mac, and Palm Operating Systems

    Windows 7 may leave Vista in the dust, but Vista makes switch to Windows 7 much easier
    It will be complicated to leap from XP to Windows 7

    But there are some downsides to Windows 7. First, you will only be able to directly upgrade Vista computers to the new version. People still using Windows XP will need to perform a more cumbersome multistep process. Microsoft is working on a method to help XP owners preserve all their data during this process.
    "Even in Test Form, Windows 7 Leaves Vista in the Dust," by Walter S. Mossberg, The Wall Street Journal, January 29, 2009 --- http://online.wsj.com/article/SB123258632983004629.html

    This will be a big year for new operating systems. Apple plans a new version of its Macintosh operating system, to be called Snow Leopard. Palm plans an all-new smart phone operating system called Palm WebOS. But the new release that will affect more users than any other will be Windows 7, the latest major edition of Microsoft's dominant platform.

    Microsoft hasn't announced an official release date for Windows 7, but I would be surprised if it wasn't available to consumers by this fall. The company has just released the first public beta, or test, version of the software, and I've been trying it out on two laptops. One is a Lenovo ThinkPad lent me by Microsoft with Windows 7 already installed, and the other is my own Sony Vaio, which I upgraded to Windows 7 from Windows Vista.

    Personal Technology columnist Walt Mossberg provides a preview of the coming Microsoft Windows 7 operating software, which he says offers significant improvements over the unpopular Windows Vista. I won't be doing a full, detailed review of Windows 7 until it is released in final form, but here's a preview of some of the main features of this new operating system and some of my initial impressions.

    In general, I have found Windows 7 a pleasure to use. There are a few drawbacks, but my preliminary verdict on Windows 7 is positive.

    Even in beta form, with some features incomplete or imperfect, Windows 7 is, in my view, much better than Vista, whose sluggishness, annoying nag screens, and incompatibilities have caused many users to shun it. It's also a serious competitor, in features and ease of use, for Apple's current Leopard operating system. (I can't say yet how it will compare with Apple's planned new release, as I haven't tried the latter.)

    In many respects, Windows 7 isn't a radical shift from Vista, but is more of an attempt to fix Vista's main flaws. It shares the same underlying architecture, and retains graphical touches like translucent Window borders. But it introduces some key new navigation and ease-of-use features, plus scores of small usability and performance improvements -- too many to list here.

    The flashiest departure in Windows 7, and one that may eventually redefine how people use computers, is its multitouch screen navigation. Best known on Apple's iPhone, this system allows you to use your fingers to directly reposition, resize, and flip through objects on a screen, such as windows and photos. It is smart enough to distinguish between various gestures and combinations of fingers. I haven't been able to test this feature extensively yet, because it requires a new kind of touch-sensitive screen that my laptops lack.

    But even if your current or future PC lacks a touch screen, Windows 7 will have plenty of other benefits. The most important may be speed. In my tests, even the beta version of Windows 7 was dramatically faster than Vista at such tasks as starting up the computer, waking it from sleep and launching programs.

    And this speed boost wasn't only apparent in the preconfigured machine from Microsoft, but on my own Sony, which had been a dog using Vista, even after I tried to streamline its software. Of course, these speed gains may be compromised by the computer makers, if they add lots of junky software to the machines. Windows 7 is also likely to run well on much more modest hardware configurations than Vista needed.

    The familiar Windows taskbar is more customizable and useful in Windows 7. The program icons are larger, and can be "pinned" anywhere along the taskbar for easy, repeated use. There are also "jump lists" that pop out from the icons in the taskbar and start menu, showing frequently used or recent actions.

    View Full Image

    Associated Press A screenshot shows several application windows on the desktop of the Beta version of the Microsoft Windows 7 software. Windows 7 also cuts down on annoying warnings and nag screens. Microsoft notifications have been consolidated in a single icon at the right of the taskbar, and you can now decide under what circumstances Windows will warn you before taking certain actions.

    Compatibility with hardware and software, which was a problem in Vista, seems far better in Windows 7 -- even in the beta. I tried a wide variety of hardware, including printers, Web cams, external hard disks and cameras, and nearly all worked fine.

    I also successfully installed and used popular programs from Microsoft's rivals, such as Mozilla Firefox, Adobe Reader, Apple's iTunes, and Google's Picasa. All worked properly, even though none was designed for Windows 7.

    But there are some downsides to Windows 7. First, you will only be able to directly upgrade Vista computers to the new version. People still using Windows XP will need to perform a more cumbersome multistep process. Microsoft is working on a method to help XP owners preserve all their data during this process.

    Continued in article

    Jensen Comment
    I'm still hot under the collar about the vulnerability of Windows to malware. Each year I get closer to buying a Mac out of dirty Windows frustrations.

    What are some of the pop-up advertisements to avoid at all times?
    What Bob Jensen found out the hard way that legitimate adware programs often fail in permanently deleting an adware Trojan virus!

    "How to Stop Operating-System Attacks Ads for DriveCleaner, WinFixer, Antivirus XP, Antivirus 2009 and others pop up on PCs all the time, but the software may be fraudulent or ineffective. Also: Mac users need security updates, too.," by Andrew Brandt, PC Magazine via The Washington Post, January 29, 2009 --- http://www.washingtonpost.com/wp-dyn/content/article/2009/01/27/AR2009012701528.html?wpisrc=newsletter&wpisrc=newsletter

    A legitimate malware remover--one that independent testing has objectively demonstrated to be effective--should be able to deal with the immediate problem of an adware program that won't let you remove it. Check your security software to see if it will do the trick. But the real fix may be concerted government action: Late last year the Federal Trade Commission asked a federal court to stop some perpetrators of this type of scam. It may be that prison terms or massive fines are the only useful deterrents.

    Bob Jensen's threads on computer and networking security are at http://www.trinity.edu/rjensen/ecommerce/000start.htm#SpecialSection

    Google's Rumored New Cloud Computing GDrive

    "Google's Rumored GDrive May 'Kill' the PC, Fox News, January 25, 2009 --- http://www.foxnews.com/story/0,2933,482761,00.html

    Google's rumored "GDrive," a service that would enable users to access their PCs from any Internet connection, could kill off the desktop computer, The Guardian has reported.

    The GDrive, unconfirmed by Google, is reported to launch this year, with tech news sites calling it the "most anticipated Google product so far."

    The Google drive would shift away from Microsoft Window's operating system, in favor of "cloud computing," where storage and processing is done in data centers. Users would no longer have to rely on their computers' powerful hard drives.

    Home and businesses have been turning toward web-based services, such as e-mail — including popular services Hotmail and Gmail — and photo storage, such as Flickr and Picasa. Users would no longer have to worry about their hard drives crashing, since data would be saved on the Web, and can be accessed from any machine.

    With the GDrive, a PC would be a device acting as a portal to the Web, enabling users to think of their computer as software rather than hardware.

    Google refused to confirm the GDrive, but acknowledged the growing demand for cloud computing.

    "There's a clear direction ... away from people thinking, 'This is my PC, this is my hard drive,' to 'This is how I interact with information, this is how I interact with the web,'" said Dave Armstrong, head of product and marketing for Google Enterprise.

    Chronology of Windows Operating Systems --- http://www.islandnet.com/~kpolsson/windows/win2000.htm

    Windows 7 (Blackcomb/Vienna) is the next scheduled version of Windows --- http://en.wikipedia.org/wiki/Windows_7
    Whereas Windows 7 will not be a radical departure from Windows Vista, Google's cloud computing GDrive may force some radical changes in MS Office networking.

    Rumors are circulating that there will be a new version of MS Office in Fall of 2009, but Microsoft seldom meets rumored schedules in such matters.
    You can read more about MS Office at http://en.wikipedia.org/wiki/MS_Office
    A free major competitor called Open Office has gotten better over the years --- http://en.wikipedia.org/wiki/Open_Office
    Also note Google Docs --- Click Here

    January 27, 2009 reply from David Fordham, James Madison University [fordhadr@JMU.EDU]

    Bob, "cloud computing" does indeed appear to be the way things are going. I remember several years ago at the AIS Educator's Conference seeing a demo of a company in NC that was selling a surprisingly-well-done "web-based" accounting package and everyone was buzzing, 'Why didn't someone think of this before?'. Of course, as you point out, issues still remain, but I believe we are moving in this direction.

    Unlike some others, I am not too uncomfortable with the Confidentiality and the Integrity pillars of the InfoSec triad when it comes to web-based services (for all except the most attractive of targets, that is). I believe the majority of the web is a lot more safe than many people give it credit for (although I quickly admit nothing is totally safe!).

    What I am most uncomfortable with, however, is the Availability component. Less than 72 hours ago, for example, a major portion of our valley's new $21 million emergency communication system went down, and the critical 911 service we've relied on for many years suddenly no longer worked for several HOURS, requiring people to look in the phone book and dial a 7-digit phone number to get a fire truck or amublance or policeman. As Scotty on Star Trek once said, "the more complicated the machinery, the easier it is for something to gum up the works." Having been a self-contained ham radio operator for over 30 years, I can't begin to count the dozens of times we've been called up to provide backup communications where the local or even regional communications infrastructure has failed, been knocked out, or is overwhelmed for any of a number of reasons ranging from disasters to a mouse chewing through a cable to a custodian spilling a mop bucket. A small brush fire recently kno! ! cked out power for a day and phone service for almost 3 days near my sister's home in Georgia last month. The more dependent we become on infrastructure, the more we suffer when it "goes away", even for a short time. (That's why I've always owned a generator, and keep a little gas, water and food stored for emergencies.)

    However, in spite of my concerns about availability (and others' concerns about access and integrity) I do believe the self-contained computing paradigm is going the way of subsistence farming. While problems won't be totally 100% overcome, they will (and mostly have been) addressed to the point where this is fast becoming a workable model. I wouldn't call it a revolution as much as a logical evolution.

    My wife is a computer repairman. Over the past few years, she has seen her business morph from 90% hardware problems and 10% software problems, to only 10% hardware and over 90% issues with software... issues with installation, corruption, malware, operating system conversions, version incompatibilities, driver conflicts, missing install CD's, adware, etc. There's no doubt that heavy computer users are getting irritated at the hassles their computers give them, even though hardware has become far more reliable. Going back to a "dumb terminal" model, with intuitive software interfaces (e.g., standardization and consistency and stability of design across time) will be a huge improvement over the mess we have today.

    One huge question in my mind is the authentication issue. The safety of the mainframe came in its "virtual machine" design whereby a user "logged on" and was given specific permissions. The internet needs to abandon its love of of "anonymity" and come up with an acceptable way of authenticating users reliably (a la the credit card companies requiring you to activate your card via your home phone using the callerid infrastructure). Once the authentication hurdle is overcome, a lot of other issues automatically disappear. This is why I'm such a fan of biometrics, especially now that the sampling techniques are being perfected to protect against spoofing and counterfeiting.

    Ahhh, progress. And the joys of being old enough to remember back when....

    January 27, 2009 reply from George Wright [geo@LOYOLA.EDU]

    > Once the authentication hurdle is overcome, a lot of other issues
    > automatically disappear. This is why I'm such a fan of biometrics,
    > especially now that the sampling techniques are being perfected to
    > protect against spoofing and counterfeiting.

    Yes, but.... To quote Bruce Schneier, biometrics are unique, but they're not secret. They're OK for local authentication, but risky in the cloud. A fingerprint reader on your PDA is good security, but using one to access your accounting system on the other side of the country (or world) is risky.

    Spoofing and counterfeiting aside, a biometric (fingerprint scan, voiceprint, palm print scan, physiognomy scan, etc.) is ultimately nothing but a number. The minutiae of your fingerprint is converted to a hash code that is a database key. I can intercept the number. I can steal the database.

    Schneier says, "Biometrics are easy, convenient, and when used properly, very secure; they're just not a panacea."

    See http://www.schneier.com/blog/archives/2009/01/biometrics.html




    More Floating on Google Clouds
    "Taking Gmail Offline:  An experimental new feature makes the Web application feel more like desktop software," by Kate Greene, MIT's Technology Review, January 27, 2009 --- http://www.technologyreview.com/blog/editors/22533/?nlid=1725&a=f

    Gmail users will soon no longer need an Internet connection to access their inboxes and write and send messages. Within the next few days, in an ongoing push to bring cloud computing to the masses, Google will introduce a new experimental feature in Gmail Labs called Offline Gmail. This feature synchronizes email from a user's computer with Google's servers when she's online and still provides the looks and feel of Gmail when she's offline. It relies on Gears, a downloadable piece of software that synchronizes and caches data for Web applications like Google Docs and Calendar.

    From Google's blog post:

    Once you turn on this feature, Gmail uses Gears to download a local cache of your mail. As long as you're connected to the network, that cache is synchronized with Gmail's servers. When you lose your connection, Gmail automatically switches to offline mode, and uses the data stored on your computer's hard drive instead of the information sent across the network. You can read messages, star and label them, and do all of the things you're used to doing while reading your webmail online. Any messages you send while offline will be placed in your outbox and automatically sent the next time Gmail detects a connection. And if you're on an unreliable or slow connection (like when you're "borrowing" your neighbor's wireless), you can choose to use "flaky connection mode," which is somewhere in between: it uses the local cache as if you were disconnected, but still synchronizes your mail with the server in the background. Our goal is to provide nearly the same browser-based Gmail experience whether you're using the data cached on your computer or talking directly to the server.

    According to the post, Google employees have been using the feature for quite some time, which isn't surprising as most new features get test driven by Googlers long before they are released to a wider audience. For a glimpse of future of computing, it's helpful to look at the habits of Google employees.

    Of course, the cloud computing push isn't unique to Google. Adobe offers AIR, a platform to turn Web applications into software that feels as if it's running on a computer's hard drive. And Microsoft, for its part, is trying to make an operating system that plays well with the cloud.



    How do scholars search for academic references?

    Scholarpedia --- http://www.scholarpedia.org/article/Main_Page

    PLoS One --- http://www.plosone.org/home.action

    Google Scholar --- http://scholar.google.com/
    Not to be confused with Google Advanced Search which does not cover many scholarly articles --- http://www.google.com/advanced_search?hl=en

    Google Knol --- http://googleblog.blogspot.com/2007/12/encouraging-people-to-contribute.html

    Google Research --- http://research.google.com/

    One Million University of Illinois (Free) Books to be Digitized by Google --- http://www.cic.uiuc.edu/programs/CenterForLibraryInitiatives/Archive/PressRelease/LibraryDigitization/index.shtml
    Google Digitized Books --- http://books.google.com/advanced_book_search?q=Accounting
    For example, key in the word "accounting"
    Then try "Advanced Managerial Accounting"
    Then try "Joel Demski"
    Then try "Accounting for Derivative Financial Instruments"
    Then try "Robert E. Jensen" AND "Accounting"

    The University of Illinois at Urbana-Champaign announces the availability of a newly-digitized collection of Abraham Lincoln books accessible through the Open Content Alliance and displayed on the University Library's own web site, as the first step of a digitization project of Lincoln books from its collection. View the first set of books digitized at: http://varuna.grainger.uiuc.edu/oca/lincoln/

    Microsoft's Windows "Live Search" or  "Academic Search" ---

    Amazon's A9 --- http://a9.com/-/search/advSearch 

    The University of California's eScholarship Repository has recently exceeded five million full-text downloads, according to the university
    The eScholarship Repository, a service of the California Digital Library, allows scholars in the University of California system to submit their work to a central location where any users may easily access it free of charge. The idea is to ease communication between researchers. Catherine Mitchell, acting director of the CDL publishing group, says the number shows that both content seekers and creators have embraced the service, allaying concerns among researchers that others wouldn't contribute to the repository.
    Hurley Goodall, Chronicle of Higher Education, January 16, 2008 --- http://chronicle.com/wiredcampus/index.php?id=2667&utm_source=wc&utm_medium=en

    Beginning October 23, 2003, Amazon.com offers a text search of entire contents of millions of pages of books, including new books ---

    How It Works --- http://snurl.com/BookSearch 
    A significant extension of our groundbreaking Look Inside the Book feature, Search Inside the Book allows you to search millions of pages to find exactly the book you want to buy. Now instead of just displaying books whose title, author, or publisher-provided keywords that match your search terms, your search results will surface titles based on every word inside the book. Using Search Inside the Book is as simple as running an Amazon.com search. 

    Soon to be the largest scholarly library in the world:
    Google Book Search --- http://books.google.com/advanced_book_search 

    Answers.com --- http://www.answers.com/

    Carnegie Mellon Libraries: Digital Library Colloquium (video lectures) --- http://www.library.cmu.edu/Libraries/DLColloquia.html


    Encyclopaedia Britannica to let readers edit content
    Encyclopaedia Britannica, the authoritative reference book first published in 1768, is to let readers edit its entries, it said Friday, as it battles to keep pace with Internet resources like Wikipedia. From next week, visitors to the publication's website, Britannica.com, will be able to submit proposed changes to editors, who will check them and make alterations if they think they are appropriate. Users whose suggestions are accepted will then be credited on the site, the firm said in a statement. Gorge Cauz, president of the US-based firm, insisted that the publication was not trying to be a wiki -- a collection of web pages which allows users to edit content -- like Wikipedia . . . But some technology commentators say the step is a doomed attempt to preserve Britannica's subscription-based business model in the face of the challenge from Wikipedia, which is free. The Times reported that while Britannica.com attracts 1.5 million visitors per day, Wikipedia attracts roughly six million.
    , January 23, 2009 --- http://www.physorg.com/news151938162.html
    Jensen Comment
    Whereas full text is available on Wikipedia for fee, Encyclopeaedia Britannica only provides full text to paid subscribers. Subscriptions are about $70 per year and a complete bound set is $2,000. Britannica is more reliable for accuracy on topics covered, but Wikipedia overwhelms Britannica in terms of millions upon millions of more topics covered. A scholarly approach might be to first look up a topic in Wikipedia and then try to authenticate it in Britannica, but this will only work for topics covered in Britannica. Also Wikipedia has millions upon millions of "discussion" commentaries that vastly widen the perspectives covered on many topics.

    How Scholars Search --- http://www.trinity.edu/rjensen/Searchh.htm#Scholars

    Sharing School of Business of the Week --- https://mitsloan.mit.edu/MSTIR/IndustryEvolution/Pages/default.aspx

    "MIT's Management School Shares Teaching Materials (Cases) Online," by Steve Kolowich, Chronicle of Higher Education, January 27, 2009 ---
    Click Here

    Though some business schools charge for the “case studies” they develop as teaching aids, the Massachusetts Institute of Technology announced today that it is making a set of teaching materials available free online.

    MIT’s Sloan School of Management has unveiled a set of case studies, videos, interactive teaching tools, and teacher’s notes on a new Web site called MIT Sloan Teaching Innovation Resources --- https://mitsloan.mit.edu/MSTIR/IndustryEvolution/Pages/default.aspx

    The announcement comes eight years after MIT created its OpenCourseWare project, which makes instructional materials for courses available online for free.

    What distinguishes the new site, according to JoAnne Yates, deputy dean for programs, is that whereas OpenCourseWare allows visitors to browse a linear series of resources and notes for a specific course, the management-school’s site allows them to search for specific “teaching artifacts”—e.g., case studies or simulation models—that might be applied to any number of courses. Those artifacts will be searchable by concept or business problem, like sustainability.

    Bob Jensen's threads on open sharing universities (most all of the most prestigious universities in the U.S.) are at http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI
    Jensen Comment
    MIT actually shares materials from hundreds of courses. The materials are entirely free online. Although other universities are now more sharing with videos of all course lectures online, MIT spearheaded the Open Knowledge Initiative that led to such open sharing.

    MIT's Open Courseware Home Page --- http://ocw.mit.edu/OcwWeb/web/home/home/index.htm

    MIT OpenCourseWare (MIT OCW) has formally partnered with three organizations that are translating MIT OCW course materials into Spanish, Portuguese, Simplified Chinese, and Traditional Chinese --- http://ocw.mit.edu/OcwWeb/Global/AboutOCW/Translations.htm

    Dropping a Bomb on Accreditation
    The most provocative vision for changing accreditation put forward at Tuesday’s meeting came from Robert C. Dickeson, president emeritus of the University of Northern Colorado. Dickeson’s presentation was loaded with irony, in some ways; a position paper he wrote in 2006 as a consultant to Margaret Spellings’s Commission on the Future of Higher Education was harshly critical of the current system of accreditation (calling it rife with conflicts of interest and decidedly lacking in transparency) and suggested replacing the regional accrediting agencies with a “national accreditation foundation” that would establish national standards for colleges to meet. Dickeson’s presentation Tuesday acknowledged that there remained legitimate criticisms of accreditation’s rigor and agility, noting that many colleges and accrediting agencies still lacked good information about student learning outcomes “40 years after the assessment movement began in higher education.”
    Doug Lederman, "Whither Accreditation," Inside Higher Ed, January 28, 2009 --- http://www.insidehighered.com/news/2009/01/28/accredit

    Dickerson's 2006 Position Paper "Dropping a Bomb on Accreditation" --- http://insidehighered.com/news/2006/03/31/accredit

    Bob Jensen's threads on accreditation and assessment are at http://www.trinity.edu/rjensen/assess.htm

    "2 Universities' Plagiarism Policies Look a Lot Alike," by Thomas Bartlett,  Chronicle of Higher Education, January 28, 2009 --- http://chronicle.com/daily/2009/01/10350n.htm?utm_source=at&utm_medium=en

    In 2007, after several high-profile plagiarism scandals, Southern Illinois University released a 17-page report on how to deal with the issue. The report includes a lengthy definition of plagiarism, explaining exactly what does and does not merit the dreaded "p" word.

    One problem: That definition appears to have been plagiarized.

    The 139-word definition used in the report is nearly identical to the definition adopted by Indiana University in 2005. Here, for example, are passages from each definition, explaining what constitutes plagiarism:

    Southern Illinois: "... directly quoting another's actual words, whether oral or written; using another's ideas, opinions, or theories; paraphrasing the words, ideas, opinions, or theories of others, whether oral or written; borrowing facts, statistics, or illustrative material; and offering materials assembled or collected by others in the form of projects or collections without acknowledgment."

    Indiana: "1. Directly quoting another person's actual words, whether oral or written; 2. Using another person's ideas, opinions, or theories; 3. Paraphrasing the words, ideas, opinions, or theories of others, whether oral or written; 4. Borrowing facts, statistics, or illustrative material; or 5. Offering materials assembled or collected by others in the form of projects or collections without acknowledgment."

    In other passages, just a few words of some sentences have been changed. For instance, Indiana University's policy says: "What is considered 'common knowledge' may differ from course to course." Southern Illinois's report changes the end of the sentence to "subject to subject."

    Uncertain Authorship

    So how, when writing a report on plagiarism, did Southern Illinois manage to lift much of the content without citation?

    The chairman of the committee that put the report together, Arthur M. "Lain" Adkins, said he didn't know. Mr. Adkins, who is the director of the university's press, acknowledged that the language is "very similar" but wasn't convinced that his committee had done anything wrong. "It could be a coincidence," Mr. Adkins said. "Any definition by nature is going to be close to another definition."

    While the report was signed by all 10 members of the committee, that particular section of the report was, according to Mr. Adkins, "most likely" written by R. Gerald Nelms, an associate professor of English at Southern Illinois at Carbondale. Mr. Nelms has been quoted as a plagiarism expert by publications like The Wall Street Journal.

    Mr. Nelms said he wasn't sure if he was responsible for that definition and didn't know why the language would be almost exactly the same. "If there are any similarities," he said, "my suspicion is they are coincidental."

    Both men said they did not believe that anyone on the committee had intentionally copied the definition. Mr. Adkins said he didn't remember any mention of Indiana's policy during the committee's discussions.

    Indiana adopted the current version of its plagiarism policy in 2005, well before Southern Illinois issued its report. Pamela W. Freeman, an associate dean of students and director of the office of student ethics and antiharassment programs at Indiana University at Bloomington, has been involved in writing the university's polices on topics like plagiarism for 15 years.

    "I don't think it would be the norm to verbatim use it without citing it," said Ms. Freeman.

    Her response after hearing the two policies read aloud was simply, "Wow."

    In fact, Indiana's policy has been cited elsewhere. Case Western Reserve University's School of Dental Medicine uses (and credits) Indiana's definition as part of its policy on academic integrity. The Web site Scriptovia.com, which allows students to share class notes, also includes Indiana's definition and conspicuously cites the university.

    Previous Problems

    In recent years, Southern Illinois has had more than its share of plagiarism cases. In 2006, the chancellor of the Carbondale campus was asked to step down after it was discovered that portions of a strategic plan he wrote for Southern Illinois had been taken from a strategic plan he helped write for another university (The Chronicle, November 9, 2006).

    The following year it was revealed that the president of the system, Glenn Poshard, had copied large sections of his 1984 dissertation without citation (The Chronicle, September 10, 2007). A university committee deemed the copying "errors and mistakes" rather than plagiarism (The Chronicle, October 12, 2007).

    Continued in article

    Bob Jensen's threads on plagiarism and cheating are at http://www.trinity.edu/rjensen/plagiarism.htm

    Jensen Comment
    This reminds me of an incident where a student turned in a totally plagiarized term paper in once of my courses. He was also the CEO of a very small company. My student was not a plagiarist in one sense of the word plagiarism, although he was a plagiarist in another sense of the word plagiarism. He'd simply assigned one of his employees to write the term paper. My student submitted the term paper as his own work without knowing that it was plagiarized. I felt so sorry about having to give him a F grade and report the incident to the Vice President for Academic Affairs at my university. Later I found out that he fired the plagiarizing employee, and a short time thereafter the small corporation evaporated into thin air.

    If Madoff's stock trades were faked for 28 years, where did the cash come from to pay some investors?

    Larry Brown's Ponzi hypothetical is now turning into Ponzi reality

    Madoff made off with $50 Billion!
    Where did it go?
    Who will pay it back?

    A Tale of Four Investors
    Forwarded by Dennis Beresford

    Four investors made different investment decisions 10 years ago.  Investor one was extremely risk averse so he put $1 million in a safe deposit box.  Today he still has $1 million.  Investor two was a bit less risk averse so she bought $1 million of 6% Fanny Mae Preferred.  She put the $15,000 she received in dividends each quarter in a safe deposit box.  After receiving 40 dividends, she recently sold her investment for $20,000 so she now has $620,000 in her safe deposit box.  Investor three was less risk averse so he bought and held a $1 million well diversified U.S. stock portfolio which he recently sold for $1 million, putting the $1 million in his safe deposit box.  Investor four had a friend who knew someone who was able to invest her $1 million with Bernie Madoff.  Like clockwork, she received a $10,000 check each and every month for 120 months.  She cashed all the checks, putting the money in her safe deposit box.  She was outraged to learn that she will no longer receive her monthly checks.  Even worse, she lost all her principal.  She only has $1,200,000 in her safe deposit box. She hopes the government will bail her out.

     Lawrence D. Brown
    J. Mack Robinson Distinguished Professor of Accounting
    Georgia State University
    December 18, 2008


    "Madoff 'Victims' Do Math, Realize They Profited," SmartPros, January 2009 --- http://accounting.smartpros.com/x64396.xml

    The many Bernard Madoff investors who withdrew money from their accounts over the years are now wrestling with an ethical and legal quandary. What they thought were profits was likely money stolen from other clients in what prosecutors are calling the largest Ponzi scheme in history. Now, they are confronting the possibility they may have to pay some of it back.

    The issue came to the forefront this week as about 8,000 former Madoff clients began to receive letters inviting them to apply for up to $500,000 in aid from the Securities Investor Protection Corp.

    Lawyers for investors have been warning clients to do some tough math before they apply for any funds set aside for the victims, and figure out whether they were a winner or loser in the scheme.

    Hundreds and maybe thousands of investors in Madoff's funds have been withdrawing money from their accounts for many years. In many cases, those investors have withdrawn far more than their principal investment.

    "I had a call yesterday from a guy who said, 'I've taken out more money then I originally put in, but I still had $1 million left with Madoff. Should I file a $1 million claim?'" said Steven Caruso, a New York attorney specializing in securities and investment fraud.

    "I'm hard-pressed to give advice in that situation," Caruso said.

    Among the options: Get in line with other victims looking for restitution. Keep quiet and hope nobody notices. Return the money. Or hire a lawyer and fight to keep profits that were probably fraudulent.

    No one knows yet how many people will emerge as net winners in the scandal, but the numbers appear to be substantial. Many of Madoff's long-term investors have, over time, cashed out millions of dollars of their supposed profits, which routinely amounted to 11 percent to 15 percent per year.

    Jonathan Levitt, a New Jersey attorney who represents several former Madoff clients, said more than half of the victims who called his office looking for help have turned out to be people whose long-term profits exceeded their principal investment.

    "There are a lot of net winners," he said.

    Asked for an example, Levitt said one caller, whom he declined to name, invested $1.8 million with Madoff more than a decade ago, then cashed out nearly $3 million worth of "profits" as the years went by.

    On paper, he still had $4 million invested with Madoff when the scheme collapsed, but it now looks as if that figure was almost entirely comprised of fictitious profits on investments that were never actually made, leaving his claim to be owed anything unclear.

    Other attorneys report getting similar calls.

    Under federal law, the court-appointed trustee trying to unravel Madoff's business can demand that people who profited from the scheme return some or all of the money.

    These so-called "clawbacks" are generally limited to payouts over the last six years, but could still amount to big bucks for some investors.

    When a hedge fund run by the Bayou Group collapsed and was revealed to be a Ponzi scheme in 2005, the trustee handling the case sought court orders forcing investors to return false profits. Many experts anticipate a similar process in the Madoff case.

    Applying for the aid could give the trustee evidence he needs to initiate a clawback claim. On the other hand, investors who ignore the letter would most likely forfeit any chance of recovering lost funds.

    No matter how they respond, it may only be a matter of time before investors wiped out in the scandal turn on those who unknowingly enjoyed the fruits of the fraud.

    "The sharks are all circling," Caruso said.

    Some hedge funds that had billions of dollars invested with Madoff are already going through years worth of records, trying to figure out which of their investors withdrew more than they put in.

    That data could be used by the fund managers to defend themselves against lawsuits, or go after clients deemed to have profited from the scheme and get them to return the cash.

    The future is equally cloudy for investors who cashed out entirely before Madoff's arrest.

    Continued in article

    All Reported Trades in Madoff's Investment Fund Were Fakes for 28 Years:  How could the "auditors" not be complicit in the Ponzi fraud?
    "BERNIE'S FAKE TRADES REGULATORS: NO TRACE OF MADOFF STOCK BUYS SINCE 1960s," by James Doran, The New York Post, January 16, 2009 --- http://www.nypost.com/seven/01162009/business/bernies_fake_trades_150467.htm

    The mystery surrounding Bernard Madoff's alleged $50 billion Ponzi scheme deepened further yesterday after the securities industry's watchdog said there was no evidence that the accused swindler ever traded a single share on behalf of his clients, suggesting financial irregularities going back to the 1960s.

    Officials at the Financial Industry Regulatory Authority, known as FINRA, told The Post that after examining more than 40 years' worth of financial records from Madoff's now-defunct broker dealer, there are no signs that Bernard L. Madoff Investment Securities ever traded shares on behalf of the investment-advisory business at the center of the scandal.

    The startling findings contradict statements that Madoff's advisory clients received showing hundreds, if not thousands of trades, completed by the broker dealer every year.

    "Our investigations of Bernard Madoff's broker dealership showed no evidence that any shares were ever traded on behalf of his investment advisory business," a FINRA spokesman said, adding that the regulator has looked at Madoff's books going back to 1960.

    Ira Lee Sorkin, a Madoff lawyer, declined to comment.

    Madoff was arrested last month after his sons said their father had confessed to them that his investment-advisory business was a Ponzi scheme that had bilked $50 billion out of wealthy friends, vulnerable charities and universities. Madoff remains free on $10 million bail.

    While his advisory business is at the center of the scandal, all signs point to Madoff's broker dealer being a legitimate business that traded shares wholesale on behalf of investment banks, mutual funds and other institutions.

    Madoff was previously vice chairman of FINRA's predecessor NASD. He was also a member of the Nasdaq stock exchange, where he served as chairman of its trading committee.

    Richard Rampell, a Florida-based certified accountant who counts as clients several of Madoff's victims, said his review of dozens of statements supports FINRA's findings.

    "Everything I saw on those statements told me that Madoff was clearing his own trades," he said. "There was no third party mentioned on any of those statements."

    Steve Harbeck, CEO of Securities Industry Protection Corp., the outfit overseeing the Madoff bankruptcy to ensure clients get some sort of compensation, said his findings are similar to FINRA's.

    "I do not have any evidence to contradict that," he said. "This is an amazing story that something like this could have gone on undetected for so long."

    Harbeck added that he believed Madoff has been defrauding clients for at least 28 years. "I have seen evidence to that end and I have nothing to contradict it," he said.

    If Madoff's stock trades were faked for 28 years, where did the cash come from to pay some investors?

    The definition of a Ponzi scheme depends upon new investors paying cash to distribute to earlier investors --- http://en.wikipedia.org/wiki/Ponzi
    This almost eliminates the amount of $50 billion Madoff stole that can be recovered for the latest investors in his investment fund.

    Bob Jensen's fraud updates are at http://www.trinity.edu/rjensen/FraudUpdates.htm

    Why Madoff's Hedge Fund Could Be Audited by Non-registered Auditors
    We all know that Bernie Madoff's brokerage firm was audited by an obscure 3-person accounting firm that is not registered with the Public Company Accounting Oversight Board.  This was permitted because the SEC exempted privately owned brokerage firms from the SOX requirement that firms are audited by registered accountants.  Floyd Norris reports, in today's NY Times, that the SEC has now quietly rescinded that exemption.  As a result, firms that audit broker-dealers for fiscal years that end December 2008 or later will have to be registered.  However, under another SOX provision, PCAOB is allowed to inspect only audits of publicly held companies.  NYTimes, Oversight for Auditor of Madoff.
    "Why an Obscure Accounting Firm Could Audit Madoff's Records," Securities Law Professor Blog, January 9, 2008 ---

    "Audit: More Bad Accounting in Veterans Health Care," AccountingWeb, January 23, 2009 --- http://accounting.smartpros.com/x65142.xml 

    Two years after a politically embarrassing $1 billion shortfall that imperiled veterans health care, the Veterans Affairs Department is still lowballing budget estimates to Congress to keep its spending down, government investigators say.

    The report by the Government Accountability Office, set to be released Friday, highlights the Bush administration's problems in planning for the treatment of veterans that President Barack Obama has pledged to fix. It found the VA's long-term budget plan for the rehabilitation of veterans in nursing homes, hospices and community centers to be flawed, failing to account for tens of thousands of patients and understating costs by millions of dollars.

    In its strategic plan covering 2007 to 2013, the VA inflated the number of veterans it would treat at hospices and community centers based on a questionably low budget, the investigators concluded. At the same time, they said, the VA didn't account for roughly 25,000 - or nearly three-quarters - of its patients who receive treatment at nursing homes operated by the VA and state governments each year.

    "VA's use, without explanation, of cost assumptions and a workload projection that appear unrealistic raises questions about both the reliability of VA's spending estimates and the extent to which VA is closing previously identified gaps in noninstitutional long-term care services," according to the 34-page draft report obtained by The Associated Press.

    The VA did not immediately respond to a request for comment.

    In the report, the VA acknowledged problems in its plan for long-term care, which accounts annually for more than $4 billion, or 12 percent of its total health care spending. In many cases, officials told the GAO they put in lower estimates in order to be "conservative" in their appropriations requests to Congress and to "stay within anticipated budgetary constraints."

    As to the 25,000 nursing home patients unaccounted for, the VA explained it was usual clinical practice to provide short-term care of 90 days or less following hospitalization in a VA medical center, such as for those who had a stroke, to ensure patients are medically stable. But the VA had chosen not to budget for them because the government is not legally required to provide the care except in serious cases.

    The GAO noted the VA was in the process of putting together an updated strategic plan. Retired Gen. Eric K. Shinseki, who was sworn in Wednesday as VA secretary, has promised to submit "credible and adequate" budget requests to Congress.

    "VA supports GAO's overarching conclusion that the long-term care strategic planning and budgeting justification process should be clarified," wrote outgoing VA Secretary James Peake in a response dated Jan. 5. He said the department would put together an action plan within 60 days of the report's release.

    The report comes amid an expected surge in demand from veterans for long-term rehabilitative and other care over the next several years. Roughly 40 percent of the veteran population is age 65 or older, compared to about 13 percent of the general population, with the number of elderly veterans expected to increase through 2014.

    In 2005, the VA stunned Congress by suddenly announcing it faced a $1 billion shortfall after failing to take into account the additional cost of caring for veterans injured in Iraq and Afghanistan. The admission, which came months after the department insisted it was operating within its means and did not need additional money, drew harsh criticism from both parties.

    The GAO later determined the VA repeatedly miscalculated - if not deliberately misled taxpayers - with questionable methods used to justify Bush administration cuts to health care amid the burgeoning Iraq war. In Friday's report, the GAO said it had found similarly unrealistic assumptions and projections in the VA's more recent budget estimates submitted in August 2007.

    Continued in article

    Bob Jensen's fraud updates are at http://www.trinity.edu/rjensen/FraudUpdates.htm

    Too-Fat Tails Lead to All Sorts of Troubles in Life
    The Value at Risk (VaR) Model of Investment Risk --- http://en.wikipedia.org/wiki/VaR

    "In Plato's cave," The Economist, January 24, 2009, pp. 10-14 --- http://www.economist.com/specialreports/displaystory.cfm?story_id=12957753


    Almost as damaging is the hash that banks have made of “value-at-risk” (VAR) calculations, a measure of the potential losses of a portfolio. This is supposed to show whether banks and other financial outfits are being safely run. Regulators use VAR calculations to work out how much capital banks need to put aside for a rainy day. But the calculations are flawed.

    The mistake was to turn a blind eye to what is known as “tail risk”. Think of the banks’ range of possible daily losses and gains as a distribution. Most of the time you gain a little or lose a little. Occasionally you gain or lose a lot. Very rarely you win or lose a fortune. If you plot these daily movements on a graph, you get the familiar bell-shaped curve of a normal distribution (see chart 4). Typically, a VAR calculation cuts the line at, say, 98% or 99%, and takes that as its measure of extreme losses.

    Tail spin However, although the normal distribution closely matches the real world in the middle of the curve, where most of the gains or losses lie, it does not work well at the extreme edges, or “tails”. In markets extreme events are surprisingly common—their tails are “fat”. Benoît Mandelbrot, the mathematician who invented fractal theory, calculated that if the Dow Jones Industrial Average followed a normal distribution, it should have moved by more than 3.4% on 58 days between 1916 and 2003; in fact it did so 1,001 times. It should have moved by more than 4.5% on six days; it did so on 366. It should have moved by more than 7% only once in every 300,000 years; in the 20th century it did so 48 times.

    In Mr Mandelbrot’s terms the market should have been “mildly” unstable. Instead it was “wildly” unstable. Financial markets are plagued not by “black swans”—seemingly inconceivable events that come up very occasionally—but by vicious snow-white swans that come along a lot more often than expected.

    This puts VAR in a quandary. On the one hand, you cannot observe the tails of the VAR curve by studying extreme events, because extreme events are rare by definition. On the other you cannot deduce very much about the frequency of rare extreme events from the shape of the curve in the middle. Mathematically, the two are almost decoupled.

    The drawback of failing to measure the tail beyond 99% is that it could leave out some reasonably common but devastating losses. VAR, in other words, is good at predicting small day-to-day losses in the heart of the distribution, but hopeless at predicting severe losses that are much rarer—arguably those that should worry you most.

    When David Viniar, chief financial officer of Goldman Sachs, told the Financial Times in 2007 that the bank had seen “25-standard-deviation moves several days in a row”, he was saying that the markets were at the extreme tail of their distribution. The centre of their models did not begin to predict that the tails would move so violently. He meant to show how unstable the markets were. But he also showed how wrong the models were.

    Modern finance may well be making the tails fatter, says Daron Acemoglu, an economist at MIT. When you trade away all sorts of specific risk, in foreign exchange, interest rates and so forth, you make your portfolio seem safer. But you are in fact swapping everyday risk for the exceptional risk that the worst will happen and your insurer will fail—as AIG did. Even as the predictable centre of the distribution appears less risky, the unobserved tail risk has grown. Your traders and managers will look as if they are earning good returns on lower risk when part of the true risk is hidden. They will want to be paid for their skill when in fact their risk-weighted returns may have fallen.

    Edmund Phelps, who won the Nobel prize for economics in 2006, is highly critical of today’s financial services. “Risk-assessment and risk-management models were never well founded,” he says. “There was a mystique to the idea that market participants knew the price to put on this or that risk. But it is impossible to imagine that such a complex system could be understood in such detail and with such amazing correctness…the requirements for information…have gone beyond our abilities to gather it.”

    Every trading strategy draws upon a model, even if it is not expressed in mathematical symbols. But Mr Phelps believes that mathematics can take you only so far. There is a big role for judgment and intuition, things that managers are supposed to provide. Why have they failed?

    "In Defense Of Value At Risk (VaR) And Other Risk Management Methods," by Suna Reyent, Seeking Alpha, January 19, 2009 --- http://seekingalpha.com/article/115339-defending-var-but-you-still-need-common-sense

    In the beginning of the month, New York Times Magazine published an article by Joe Nocera called “Risk Mismanagement” that created quite a stir in the blogosphere and beyond. Despite the watering-down of certain aspects related to risk management tools, as well as the diversity with which these tools are applied practice, the article was a success because of the buzz it created as well as the ensuing debate.

    The article portrays a debate over value at risk methodology between well-known practitioners of VAR and the critics of the methodology led by Nassim Taleb. It is hard not to get carried away with Mr. Taleb’s tabloid-like descriptions of VAR as a “fraud” and its practitioners as “intellectual charlatans.”

    I love how the debate is construed. The premise is that value at risk and other valuation models (such as Black-Scholes) assume normal distribution of asset returns. Okay, they do that in their most primitive forms, but let’s just accept the oversimplification as a fact for a moment because the debate would hardly exist in this simplistic form if we didn’t go along with the show here.

    This is where our hero Mr. Taleb, an experienced options trader no less, emerges to the public mainstream to inform all of us ignorant folks that asset returns do not follow a normal distribution! The horror! The painful realization that this stuff continues to be taught in business schools! All that wasted class time learning statistics!

    It is fair to say that this assumption will mislead naïve market participants about the nature of their risk exposures as “Black Swan” events happen a lot more frequently than suggested by Gaussian distributions. The problem is, almost anyone in finance already knows that asset prices are not normally distributed, and many practitioners build models or apply extensions to existing ones in order to take this into consideration.

    I decided to give a little background on value at risk in order to get the points across that I feel strongly about. Since I teach VAR in the classroom as part of a risk management curriculum, I feel it is best to give some preliminary information.

    A Primer On Value At Risk

    Depending on the confidence interval chosen, value at risk, in its simplest form, exists of applying a one-sided test to figure out the loss that a portfolio may weather in a given time period. For instance, a 95% daily VAR of ten million dollars indicates that a portfolio is likely to lose at most that amount of money 95% of the time, or once a month assuming 20 trading days in a given month. At the same time, it displays the LEAST amount of money that the portfolio can lose 5% of the time. I appreciated it when Mr. Nocera mentioned this in his article prepared for general readership. As VAR is unable to tell us about what kind of a loss we should expect in that tail of 5%, the limitation of this metric if taken as gospel becomes apparent even to the untrained eye.

    More on the tail risk later. But first, I would like to talk about three established ways of calculating value at risk for one asset and analyze the current risk management crisis within this framework:

    Analytical VAR – “Misunderestimating” Risks

    Otherwise known as variance-covariance method of calculating the value at risk, this is the well-known method of calculating VAR and the easiest one to apply. It assumes a normal distribution of returns. All it takes to calculate VAR is a standard deviation, which represents the “volatility” of the asset as well as a mean, which is the expected return on the same asset.

    This is the VAR that Mr. Taleb seems to conveniently focus on, because it will indeed underestimate the risk at the tails of a negatively skewed or a leptokurtic distribution.

    Stock markets in general exhibit negative skewness, which means that the distribution of returns will exhibit a long tail (a few extreme losses) to the left side. They also exhibit leptokurtosis, which means that both tails of the distribution are fatter than implied by normal distribution.

    So we could go nuts over how wrong the normal distribution assumption is, and apparently people do. But we should also be very concerned over how sensitive this measure is to the standard deviation as well the mean, both of which are subject to change as markets change especially in the light of the current crisis.

    Historical VAR – Good As Long As Future Resembles Past

    This method does not need any assumptions about the distribution of returns and is certainly superior to analytical VAR because it is not parametric. The more data there is, the better the measurement. Historical data will exhibit characteristics such as skewness or kurtosis as long as the asset itself exhibits these qualities as well.

    Assuming 250 trading days in a given year, in order to measure the 95% daily VAR you need to rank the returns from worst to best and pick the greatest return among those that correspond to the bottom 5% of returns. So the worst 12th return (or you could interpolate between the 12th and13th worst return, since 250 divided by 20 is 12.5, but since VAR itself is an approximation, why bother?) will tell you the maximum percentage loss 95% percent of the time, or the minimum percentage loss 5% of the time. Multiply the loss by your portfolio value and you get the neat VAR value in terms of dollars.

    Moreover, the majority of investment houses use historical VAR as the basis for measurement as it is a clear improvement over the analytical VAR. You do not need return assumptions or standard deviation values to come up with this value.

    Historical VAR calculations replace parametric assumptions with historical data. This means that if you had positions in mortgage derivative securities and started the year 2007 with models that were built around data of the previous two years encompassing the “peaceful” periods of 2005 and 2006, you would soon be awakened to a world where your VAR measures no longer reflected the reality of the marketplace. Note that such limitations of VAR as an all-encompassing risk measure were visible to any professional who understood risk management models as well as the limitations of historical data that went into them.

    As Mr. Nocera’s article conveys, this is precisely what Goldman Sachs (GS) did. When it became obvious that the mortgage markets had changed in fundamental ways and aggressive positions in these securities started bringing in gigantic losses (as opposed to reaping the usual gigantic profits on the back of the ever-rising housing market), the team decided to limit its risk exposure by “getting closer to home.”

    I don’t think the article conveys what “getting closer to home” really means. Let me use day trading as an example here. In day trading terms, this means that when your positions start showing huge losses at the end of the day, you accept “defeat” and take your losses as opposed to trying to ride them in the hope that the market will come around. So instead of wishing for market to make a comeback to recoup losses, you close out your open positions, take your losses and go home. Then you go back to the drawing board to strategize for the next day given the new reality of the marketplace.

    Of course, looking retrospectively, the decision to limit exposure and take losses as opposed to trying to ride them in the expectation of a housing market turnaround has been the right decision to make. However, as we have seen with many other bubbles, managers do not have the incentive to make the sound trading decisions, nor do they have the incentive to listen to their risk managers as long as they get a huge piece of profits made during the ride and the taxpayer ends up holding the bag when the market finally blows up.

    We have seen this movie over and over again. What surprises me is the heavy blame put on models for not reflecting “reality,” whereas those in charge knew that the mortgage bubble was collapsing, they had many opportunities to get rid of their huge exposures to the derivatives securities, but they chose not to do it most likely because of expectations of a market turn around. This is trading 101. If you try to ride your losses, you may make comebacks, but you will eventually blow up.

    Now the next episode features critics who tell us that the “models” have been faulty and wrong. Hence the conclusion that value at risk is an erroneous and misleading measure, not to mention a “fraud.”

    Ladies and gentleman, we found the “fraud” haunting the trading floor on the street, and it is not a human being: Shame on you, VAR and other risk management tools! Of course, we can blame the car manufacturers for the accident: the car’s faulty speedometer, or its lack of an apparatus to show us the bumps on the road ahead. But why is the culture that is reticent to blame the drunk driver who was clearly intoxicated with the thrill of making green?

    These “models” are as guilty as the “accounting” that was used with a sleight of hand to conceal what was really going on behind the curtains during the Enron debacle and others. Of course, given the mathematical complexities of models, the quantitative brainpower needed to understand some of them, and the assumptions required in creating a map of your territory, there is more of an opportunity to either blame the models or to pretend that you didn’t understand them when things turned sour.

    As I ventured with this essay, hoping to make my points within the value at risk framework featured in textbooks, I will move on to the third methodology used in calculating the measure.

    Monte Carlo Simulation – Anything Goes, But More Of An Art Than Science

    Monte Carlo Simulation is especially useful in calculating risk exposures of assets that have either little historical data or whose historical data is rendered irrelevant due to changing economic conditions that affect both the price of securities and the way these securities interact with each other in a portfolio. Also, historical returns of assets with asymmetric payoffs or returns of derivative securities that interact with variables such as interest rates, housing prices, and the like will not reflect the future when factors that influence the return of the security change as the economic climate shifts.

    Continued in article

    Bob Jensen's threads on VaR are at http://www.trinity.edu/rjensen/acct5341/speakers/133glosf.htm#VaR

    Bob Jensen's threads on the banking crisis --- http://www.trinity.edu/rjensen/2008Bailout.htm

    RPI's President Got a 36-Acre Second Home
    While Stanford University's President Got a Scandalously Expensive Shower Curtain

    "Camp Jackson," by Jack Stripling, Inside Higher Ed, January 26, 2009 --- http://www.insidehighered.com/news/2009/01/26/rpi

    University presidents are often criticized for excessive compensation, but Shirley Ann Jackson is taking heat for a benefit that may place her in a class all her own. Jackson, president of Rensselaer Polytechnic Institute, is taking heat for her high pay, and a notable perk: a second home in the Adirondacks, provided by RPI in addition to her presidential residence. Inside Higher Ed surveyed all 26 private institutions within the Association of American Universities, and officials with 25 of those colleges confirmed that their presidents are not provided a second residence. The University of Chicago was the only institution not to respond, but Chicago’s 2006 Form 990 only mentions a single home provided to the president.

    While RPI is not a member of the AAU, the elite cohort of research universities surely constitutes the institute’s aspirational peer group.

    Jackson’s $1.3 million compensation makes her one of the highest-paid private university presidents in the country, and her generous perks have drawn particular scrutiny as the university faces financial challenges. RPI recently laid off 80 of its more than 2,100 employees, and Jackson’s Adirondacks home, first reported on by The Albany Times Union, has emerged as a symbolic structure of inequity.

    “We’re kind of upset,” said Brian Dolan, an RPI student who has led a petition drive for Jackson to decrease her pay. “It seems like it would be easy enough for her to cut a few of her luxuries, because she certainly has them, to help a few people maintain their livelihood here.”

    Jackson declined an interview request, but RPI issued a statement about the second home, which the college purchased for $450,000, the Times Union reported. The home sits on 36 acres, a tract of land roughly one-third the size of Camp David.

    “The purchase of this property was funded entirely by a restricted gift by a donor to the Institute,” William Walker, an RPI spokesman, said in an statement e-mailed to Inside Higher Ed. “The gift by the donor was given specifically to purchase this property. The Board of Trustees has made it available to the president as a retreat, and as a facility to host high level official activities, at her discretion.”

    The chair and vice chair of the board did not return calls for comment.

    Jackson has for many years been a prominent figure in government and academic science. She serves on many panels related to science and technology policy, and she was appointed in 1995 by then-President Clinton to serve as chair of the U.S. Nuclear Regulatory Commission.

    Jackson has also been heralded for her fundraising prowess, securing a $360 million unrestricted gift to RPI in 2001 and regularly landing major donations.Yet she has been a controversial figure on the Troy, N.Y. campus, where a no confidence vote in Jackson was only narrowly defeated in 2006. While the measure did fail by a six-vote margin, it revealed simmering tensions about Jackson’s leadership, and growing objections to her generous compensation.

    On Smithsonian Board, Jackson Heard Similar Criticism

    Criticism of executive compensation levels should be nothing new to Jackson, who has been a member of the all-volunteer Board of Regents of the Smithsonian Institution since 2005. In the summer of 2007, an independent panel criticized the Smithsonian regents in a report for failing to recognize the lavish spending practices of Lawrence Small, the former Smithsonian director who resigned amid an accounting probe. An audit of the institute uncovered a string of unauthorized expenses, including charges for chartered jet travel and a trip to Cambodia for Small’s wife.

    Dean Zerbe, who aided Sen. Charles Grassley’s investigations into the compensation of college chiefs and other spending practices on university campuses, said he was surprised Jackson would accept a presidential retreat, particularly given her work with the Smithsonian.

    Continued in article

    Bob Jensen's threads on higher education controversies are at http://www.trinity.edu/rjensen/HigherEdControversies.htm

    "College Debate Teams to Face Off in Second Life (Virtual World), by Jeffrey R. Young, Chronicle of Higher Education, January 23, 2009 --- http://chronicle.com/wiredcampus/index.php?id=3571&utm_source=wc&utm_medium=en

    Watch the video at

    College debate matches can be physically intense — with participants rattling off arguments at top speed and gesturing dramatically. So it will be interesting to see if a debate contest can work in Second Life, the virtual world.

    This week Stephen Llano, the director of debate at St. John’s University, in New York, announced what is billed as the first tournament debate held in Second Life. It will take place on February 4 at 8 p.m. Eastern Time in the university’s virtual campus (shown here). A two-person team from St. Johns will go head-to-head with two students from the University of Vermont. The topic will be whether or not colleges should limit tenure for professors.

    The event will not be an official competition, but if it goes well, it could lead to virtual matches in the future that would count toward tournament scoring, said Mr. Llano.

    He said the technology could be particularly helpful in letting students compete against teams in other countries. “Not everyone gets a chance to travel internationally to debate against universities all over the world,” Mr. Llano said. “We could have some international debate online where people could stay at home and particpate in an international debate at very low costs.”

    He said he was not sure how well the technology would work. The plan is to use a voice-chat feature of Second Life so that competitors can hear each other. Meanwhile, the participants can use their cartoon-like virtual characters, or avatars, to gesture to emphasize their points.

    Mr. Llano said Second Life was chosen for the event over other types of online chat environments because so many colleges have built virtual campuses there. In the past, some debates have been held online using Web cams rather than virtual worlds like Second Life, he said.

    Bob Jensen's threads on Second Life virtual worlds, including applications in accounting education and research are at http://www.trinity.edu/rjensen/000aaa/thetools.htm#SecondLife

    Google closed down Lively --- http://www.lively.com/goodbye.html

    "Colleges Get Poor Grades on Teaching Web Fundamentals," by Josh Keller, Chronicle of Higher Education, January 28, 2009 --- Click Here 

    Colleges do a poor job preparing students for careers designing Web sites or for related positions in Web development, often because they teach out-of-date curricula and fail to hire instructors with recent experience in the field, according to a survey of top Web designers and developers.

    The survey, “Teach the Web,” was culled from interviews with 32 prominent Web designers and developers. Many of them said that colleges often forgo teaching the fundamentals of making Web sites in favor of teaching narrow skills like Flash and Photoshop, leaving students unprepared for getting a job.

    “I know many good people are trying, but I’ve yet to see anyone come out of a university program knowing what they’d need to know in order for us to hire them,” said James Archer, chief executive of Forty Agency, a branding firm. “Most of the time, they’ve been brought a long way down the wrong path.”

    The author of the survey, Leslie Jensen-Inman, an assistant professor of art at the University of Tennessee at Chattanooga, wrote in A List Apart magazine that instructors at colleges must do a better job keeping up with the fast-changing standards of the Internet. She encouraged Web-design professionals to do more outreach to local colleges and offer discounts to educators at professional training and networking conferences.

    Other recommendations to colleges from the survey: require students to do internships; revise course content more frequently; and drop requirements that instructors must have a graduate-level degree to be hired.

    "U. of Central Florida Associate Dean Faces Fraud and Theft," by Charles Huckabee, Chronicle of Higher Education, January 28, 2009 --- Click Here

    Charges An associate dean at the University of Central Florida is facing fraud and theft charges after he allegedly charged $40,000 worth of home electronics to a university-issued credit card and tried to conceal the purchases from the university, The Orlando Sentinel reported.

    The newspaper said Jamal Nayfeh, associate dean of the university’s College of Engineering, turned himself in at a local jail this afternoon and was expected to be released after posting bond.

    A university spokesman, Grant Heston, said Mr. Nayfeh was suspended with pay this month after auditors discovered the purchases, made in December. The arrest affidavit says that Mr. Nayfeh gave the auditors an “altered receipt to make it appear that non-taggable business related items were purchased … rather than a home-entertainment system.”

    According to the Sentinel, Mr. Nayfeh’s annual salary as associate dean is $181,000.

    Bob Jensen's Fraud Updates are at http://www.trinity.edu/rjensen/FraudUpdates.htm

    Has an accounting, finance, or business professor ever been sued by a university for patent or copyright royalties?

    "U. of Missouri Sues a Professor in Dispute Over Royalties, by Charles Huckabee, Chronicle of Higher Education, January 28, 2009 --- Click Here

    The University of Missouri is suing one of its professors in an intellectual-property dispute, the Associated Press reported.

    In a lawsuit filed on Monday in the U.S. District Court in Kansas City, Mo., the university accuses a professor of chemical engineering, Galen J. Suppes, and his business partner of depriving the university of an undetermined amount of royalty income on inventions that it says they developed in laboratories at the institution’s flagship campus, in Columbia.

    The partner, William R. Sutterlin, received his doctorate at Columbia and worked there as postdoctoral fellow, but is no longer affiliated with the university.

    Mr. Suppes told the Associated Press that he and Mr. Sutterlin had formed a company to commercialize their work on fuel-cells and other fuel-related technologies because he thought the university had a poor track record in pursuing patents on professors’ research. He said university officials had shown no interest in his efforts until he “informed them that royalties had been paid.”

    The lawyer who has been handling the case for the university did not respond to the news service’s request for comment today.

    While university lawsuits against their own professors are uncommon, there are precedents. Purdue University, Yale University, and the University of Massachusetts have filed similar complaints, and universities in general have become more aggressive in recent years in trying to stop professors from taking their ideas “out the back door” and commercializing their inventions themselves.

    Jensen Comment
    I know that a few universities require the royalties for textbooks written by faculty employees. But I don't know that there's ever been a legal dispute over such royalties. Textbook writers probably just avoid those universities. There's a gray zone where a professor might write drafts of textbook chapters at a royalty hugging university and then change jobs before signing on with another university.

    "Predicting Breakdowns A new system that monitors the health of vehicles could save money and lives," by Brittany Sauser, MIT's Technology Review, January 29, 2009 --- http://www.technologyreview.com/computing/22030/?nlid=1729&a=f

    Most new vehicles are studded with hundreds of sensors that collect raw performance data. While beneficial, such information can only be interpreted by the manufacturer or dealer and is usually only read after the car breaks down. Now researchers at Rochester Institute of Technology (RIT) and Lockheed Martin, a security company in Bethesda, MD, have developed a monitoring system that can better assess the health of a vehicle and can alert drivers to any potential problems.

    The system uses a network of embedded smart sensors that are strategically located near automotive components that are prone to problems. The information is sent wirelessly to a central command center, where it is automatically analyzed by software. The monitoring system is similar to OnStar, an in-vehicle security, communications, and diagnostics system built by GM. But Nabil Nasr, assistant provost and director of the Center for Integrated Manufacturing at RIT, says that the system goes "far beyond" anything commercially available by predicting "future health or failures."

    The project is part of a $150 million contract between Lockheed Martin and the U.S. Marine Corp, which is equipping up to 12,000 military vehicles with the new technology. The system can assess the health of military vehicles before they are sent on missions so that commanders can know if a vehicle is up to the task. "It could save money and lives, and extend the lifetime of equipment," says Nasr.

    The technology has also been tested in a public-transit bus at the Rochester Genesee Regional (RGR) Transportation Authority for the past 18 months. Eight months ago, a spinoff company called LIBAN formed to develop the technology for commercial fleet vehicles.

    The system uses standard sensors--such as temperature, vibration, and electronic sensors, as well as customized smart sensors--to monitor a vehicle. The sensors are placed near different components on the vehicle, such as the transmission, alternator, and drivetrain. "Most systems on the market today are just reporting fault codes coming out of the engine-control module. We are looking at data from individual components to get better details . . . and to predict future conditions," says David Chauncey, CEO of LIBAN.

    The data from the sensors is processed by an onboard computer system that analyzes the information. That data is sent at regular intervals to a control center via a cellular network, satellite, or private data network, depending on the customer. "Every vehicle is an intelligent, potential source of information, and we have the technology to make the data useful; we just need to develop communication protocols and standards so we can build the infrastructure to share information, beyond just the manufacturers and dealers," says Kirk Steudle, director of the Michigan Department of Transportation (MDOT), which just announced a partnership with Michigan International Speedway to create an open testing environment for cross-brand vehicle communication.

    Continued in article

    Form the Scout Report on January 30, 2009

    ReminderFox 1.9 --- https://addons.mozilla.org/en-US/firefox/addon/1191 

    For those times when you need to remember an important birthday (aren't they all important?), a paper due date, or a special occasion, ReminderFox 1.9 can be of great assistance. The application was designed for users who don't want to run a whole calendar application, but they still want to be kept alert about various happenings and such. This version is compatible with all operating systems.

    OpenOffice 3.0.1 --- http://www.openoffice.org/ 

    Open Office is a fine choice for those looking for an alternative to some of the other commercial word processing software packages. This latest version of OpenOffice includes several new templates for professional writers, weblog publishing, and a tool that will help users export documents for functionality with Google Docs. This particular version is compatible with all operating systems.

    John Updike, Critic and Author, Dies At Age 76 Pulitzer Prize-Winning Author John Updike Dies at Age 76 [Real Player] http://www.npr.org/templates/story/story.php?storyId=99942825 

    Remembering Updike http://www.newyorker.com/online/blogs/books/remembering-upd/ 

    For better or worse, John Updike produced a nearly endless stream of work

    John Updike: This I Believe [Real Player] http://www.npr.org/templates/story/story.php?storyId=99919409 

    Invisible Cathedral: A Walk Through the New Modern http://www.newyorker.com/archive/2004/11/15/041115crat_atlarge 

    Updike Desert Comix http://harvardlampoon.com/?q=node/266 

    Hub Fans Bid Kid Adieu http://www.baseball-almanac.com/articles/hub_fans_bid_kid_adieu_article.shtml 


    Free online textbooks, cases, and tutorials in accounting, finance, economics, and statistics --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks

    Education Tutorials

    Tutors from the United Kingdom
    January 23, 2009 message from Mark Smith [tutors@tutorhunt.com]

    Hi Bob,

    I was wondering whether you would like to link to my site http://www.tutorhunt.com  from your page?


    We provide a completely free service both tutors and students to locate each other, and think it would be a useful resource for your readers.

    Thank you for your consideration.

    Kind Regards,


    January 23, 2009 reply from Bob Jensen

    Hi Mark,

    I added your link as requested to http://www.trinity.edu/rjensen/Bookbob2.htm#EducationResearch

    It would be nice if you added accounting, and finance topics to your following categories, although these are covered somewhat under the topic headings Business Studies and Economics. Since only U.K. tutors are listed, this will be of limited use to U.S. students of business, accounting, and finance where there are significant differences in course content.

    Art | Basic Skills | Drama | English | French | German | Geography | History | Media | Music | Politics | Psychology | Religious Studies | Sociology | Spanish

    Astronomy | Biology | Business Studies | Chemistry | Computing | Economics | General Science | Maths | Physics


    Bob Jensen's threads on general education tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#EducationResearch

    Engineering, Science, and Medicine Tutorials

    Essentials of Geology --- http://www.wwnorton.com/college/geo/egeo/welcome.htm

    MIT OpenCourseWare: Introduction to Geology --- Click Here

    Global Canopy Programme (geology and climate) --- http://www.globalcanopy.org/

    Marine Mineral Studies --- http://www.mms.gov/SandAndGravel/MarineMineralStudies.htm

    The Dynamic Earth --- http://www.mnh.si.edu/earth/main_frames.html

    Bob Jensen's threads on free online science, engineering, and medicine tutorials are at --- http://www.trinity.edu/rjensen/Bookbob2.htm#Science

    Social Science and Economics Tutorials

    Gateway to Philosophy --- http://www.bu.edu/paideia/index.html

    Teach Philosopy 101  --- http://www.teachphilosophy101.org/
    This site presents strategies and resources for faculty members and graduate assistants who are teaching Introduction to Philosophy courses; it also includes material of interest to college faculty generally. The mission of TΦ101 is to provide free, user-friendly resources to the academic community. All of the materials are provided on an open source license. You may also print as many copies as you wish (please print in landscape). TΦ101 carries no advertising. I am deeply indebted to Villanova University for all of the support that has made this project possible.
    John Immerwahr, Professor of Philosophy, Villanova University

    Ask Philosophers --- http://www.amherst.edu/askphilosophers/


  • This site puts the talents and knowledge of philosophers at the service of the general public. Send in a question that you think might be related to philosophy and we will do our best to respond to it. To date, there have been 1375 questions posted and 1834 responses.

    Philosophy Talk (Audio) --- http://www.philosophytalk.org/

    American Social History --- http://www.dlfaquifer.org/home 

    Ohio's Digital Resource Commons http://drc.ohiolink.edu/

    Tulia, Texas (video from PBS) --- http://www.pbs.org/independentlens/tuliatexas/

    International Indian Treaty Council --- http://www.treatycouncil.org/

    Nixon Tapes (multimedia) --- http://www.nixontapes.org/

    Taking Liberties (U.K. history) ---  http://www.bl.uk/takingliberties

    Open University: The Politics of Devolution (Open University Course) ---  http://openlearn.open.ac.uk/course/view.php?id=2545

    Reversing the Decline: An Agenda for U.S.-Russian Relations in 2009 --- 

    Debating Our Destiny --- http://www.pbs.org/newshour/debatingourdestiny/index.html

    Bob Jensen's threads on Economics, Anthropology, Social Sciences, and Philosophy tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#Social

    Law and Legal Studies

    International Indian Treaty Council --- http://www.treatycouncil.org/

    Bob Jensen's threads on law and legal studies are at http://www.trinity.edu/rjensen/Bookbob2.htm#Law

    Math Tutorials

    Mathematics Illuminated --- http://www.learner.org/courses/mathilluminated/


    Bob Jensen's threads on free online mathematics tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#050421Mathematics

    History Tutorials

    Doris Ulmann Photograph Collection (rural South and Appalachia) --- http://boundless.uoregon.edu/digcol/ulmann/index.html 

    Reversing the Decline: An Agenda for U.S.-Russian Relations in 2009 --- 

    Bob Jensen's threads on history tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#History

    Debating Our Destiny --- http://www.pbs.org/newshour/debatingourdestiny/index.html

    International Indian Treaty Council --- http://www.treatycouncil.org/

    Nixon Tapes (multimedia) --- http://www.nixontapes.org/

    Open University: The Politics of Devolution (Open University Course) ---  http://openlearn.open.ac.uk/course/view.php?id=2545

    Gateway to Philosophy --- http://www.bu.edu/paideia/index.html

    Folger Shakespeare Library --- http://folger.edu/index.cfm 

    Arden: World of William Shakespeare --- http://swi.indiana.edu/arden/gi_specs.shtml

    SOURCETEXT.com (with much emphasis on Shakespeare) A home for specialized, reason-provoking texts that appeal to the eternally curious and to those who value wit and character --- http://www.sourcetext.com/ 

    Taking Liberties (U.K. history) ---  http://www.bl.uk/takingliberties

    Furness Image Collection (Shakespearian theatrical productions) ---  http://imagesvr.library.upenn.edu/f/furness/

    Tulia, Texas (video from PBS) --- http://www.pbs.org/independentlens/tuliatexas/

    University of St. Andrews Photographic Archive --- http://special.st-andrews.ac.uk/saspecial/

    Australia Dancing --- http://www.australiadancing.org/

    From The Scout Report on January 23, 2009

    Codex Sinaiticus [Macromedia Flash Player] http://www.codexsinaiticus.org/en/ 

    The Codex Sinaiticus is certainly one of the most important books in the world, and this delightful website provides users with a way to view the book in its entirety. The goal of this project is "to reunite the entire manuscript in digital form and make it accessible to a global audience for the first time." The project partners include The British Library, the National Library of Russia, St. Catherine's Monastery, and Leipzig University Library. First-time visitors may wish to click on the "About" area to learn more about the document's tremendous significance (among other things, it includes the oldest complete copy of the New Testament) and to read answers to several frequently asked questions about the Codex Sinaiticus. Anyone with an interest in conservation, digitization, and transcription will want to check out the "About the Project" page. Here they will find information about all of these subjects, and information about translations of the Codex. Finally, visitors will obviously want to head on over to the "See The Manuscript" area. Here they can read a side-by-side translation of each page, zoom in and out on the Codex, and even browse around by passage.


    Also see http://www.trinity.edu/rjensen/ElectronicLiterature.htm  

    Language Tutorials

    Bob Jensen's links to language tutorials are at http://www.trinity.edu/rjensen/Bookbob2.htm#Languages

    Music Tutorials

    Australia Dancing --- http://www.australiadancing.org/

    Dance Teacher Magazine --- http://www.dance-teacher.com/

    Science of Music: Exploratorium's Accidental Scientist --- http://www.exploratorium.edu/music/index.html

    The Visual Dictionary --- http://www.infovisual.info/

    Science of Music: Exploratorium's Accidental Scientist --- http://www.exploratorium.edu/music/index.html

    Hear HERE!: The Royal Philharmonic Society --- http://www.hearhear.org.uk/

    Great Conversations in Music [multimedia] --- http://lcweb2.loc.gov/diglib/ihas/html/greatconversations/great-home.html 

    Bob Jensen's links to online music tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#050421Music
    Bob Jensen's liniks to online music --- http://www.trinity.edu/rjensen/music.htm

    Updates from WebMD --- http://www.webmd.com/


    "Fewer Calories = Better Brains? A trial in humans suggests that calorie restriction can boost memory," by Courtney Humphries, MIT's Technology Review, January 27, 2009 --- http://www.technologyreview.com/biomedicine/22023/?nlid=1722

  • Cutting calories has been shown to increase the life span of some animals and protect them from signs of aging and disease. Although some humans have been eager to adopt a low-calorie diet to see similar results, so far, there is relatively little evidence that calorie restriction has the same benefit in people. A new study from researchers at the University of Münster, in Germany, adds new evidence in favor of cutting calories: older adults who reduced calories for three months fared better in memory tests. The results, published in Proceedings of the National Academy of Sciences, offer the first evidence that calorie restriction could prevent age-related mental decline in humans.

    The study's subjects ranged from normal weight to overweight, so cutting back calories did not necessarily translate into severe weight loss; instead, it allowed many subjects to reach a healthier weight. Mark Mattson, a neuroscientist at the National Institutes of Aging, who was not involved in the study, says that it "adds to considerable evidence from animal and human studies that high calorie intake is not only bad for your heart, but it's bad for your brain."

    Agnes Flöel, lead author of the study, says that most evidence for the benefits of a low-calorie diet in humans comes from long-term epidemiological studies, such as one on an aging population in Okinawa, Japan. But ongoing trials testing the effects of calorie restriction in humans have not yet produced definitive findings. These include the U.S.-government-funded CALERIE study, which follows adults ages 25 to 50 on a calorie-restricted diet. "Animal experiments suggest that both calorie restriction and modified fat intake could be beneficial for the brain," Flöel says.

    The new trial tested reducing total calorie intake, as well as boosting the ratio of unsaturated fat over saturated fat, which is thought to help brain function. A group of 50 healthy older adults with an average age of 60 were divided into three groups: one group was counseled to follow a calorie-restricted diet; another increased the proportion of unsaturated fat over saturated fat in their diets; and the third group had no dietary changes. Flöel says that the subjects in both interventions received dietary counseling and an individualized plan for modifying their diets. Those in the calorie-restricted group were advised to reduce their food intake by about 30 percent without changing the proportions of nutrients in their diet. Subjects reported lowering their typical intake by anywhere from 200 to 1,000 calories per day. Not every person in the calorie-restriction group was able to cut calories by 30 percent, but overall, the subjects in the group lost weight, supporting their own reports that they were eating less.

    Continued in article

    "A Digital Health-Care Revolution:  Twenty billion dollars might finally turn the U.S. health-care system digital," by Emily Singer, MIT's Technology Review, January 28, 2009 ---  http://www.technologyreview.com/biomedicine/22026/?nlid=1725

    The more wired the hospital, the better off its patients: there are fewer deaths and complications, and lower bills. That's the conclusion of a large study of Texas hospitals released earlier this week. Unfortunately, only a small percentage of hospitals and doctors' offices in the United States are wired, and the country lags far behind other developed nations in implementing such systems. However, legislators and health-technology specialists hope to change that with a $20 billion cash influx, part of the U.S. government's proposed stimulus bill.

    Dubbed the Health Information Technology for Economic and Clinical Health Act (HITECH), the plan would encourage doctors and hospitals to use electronic record-keeping and ordering systems by providing $18 million in incentives through Medicare and Medicaid reimbursements. Starting in 2011, physicians who show that they are "meaningfully" using health IT would be eligible for $40,000 to $65,000, and hospitals would be eligible for several million dollars. The incentives would be phased out over time, with penalties in place by 2016.

    The bill allocates $2 billion over the next two years for planning and training, including ensuring that new programs adhere to specific interoperability standards. That will be crucial in making certain that data can be transferred between different medical centers and physicians, and that doctors are schooled in how to incorporate electronic record keeping and other technologies into their practices. It would also strengthen privacy and security laws to protect the growing amount of personal medical information that will become electronic.

    Currently, less than a quarter of physicians in the United States are using electronic health records (EHRs). The stimulus spending should help overcome two of the major barriers to adoption: lack of funding and misaligned incentives, says John Halamka, chief information officer and dean for technology at Harvard Medical School. Currently, doctors must invest time and money to implement EHR systems, but it's the insurers and payers who ultimately benefit, thanks to a reduction in unnecessary tests and medications.

    The $20 billion boost will be a huge leap for an industry that has seen little government spending. According to a 2006 study, the United States spends 43 cents per capita on health-care IT, compared with the $193 per capita spent in the United Kingdom. The entire health-care IT industry had an estimated budget of $26 billion in 2008, says Halamka. He reckons that the bill could create 50,000 new IT jobs. "We're not talking about MDs or PhDs," says Halamka. "I think we can take tech professionals and train them in health care within the next two years."

    Forwarded by Auntie Bev

    Ramblings of a Retired Mind

    I was thinking about how a status symbol of today is those cell phones that everyone has clipped onto their belt or purse. I can't afford one. So, I'm wearing my garage door opener. I also made a cover for my hearing aid and now I have what they call blue teeth, I think.

    You know, I spent a fortune on deodorant before I realized that people didn't like me anyway.

    I was thinking that women should put pictures of missing husbands on beer cans!

    I was thinking about old age and decided that old age is 'when you still have something on the ball, but you are just too tired to bounce it.'

    I thought about making a fitness movie for folks my age, and call it 'Pumping Rust'.

    I've gotten that dreaded furniture disease. That's when your chest is falling into your drawers!

    When people see a cat's litter box, they always say, 'Oh, have you got a cat?' Just once I want to say, 'No, it's for company!'

    Employment application blanks always ask who is to be notified in case of an emergency. I think you should write, 'A Good Doctor'!

    Why do they put pictures of criminals up in the Post Office? What are we supposed to do...write to these men? Why don't they just put their pictures on the postage stamps so the mailmen could look for them while they deliver the mail? Or better yet, arrest them while they are taking their pictures!

    I was thinking about how people seem to read the Bible a whole lot more as they get older. Then, it dawned on me, they were cramming for their finals.

    As for me, I'm just hoping God grades on the curve.

    Forwarded by Col. Bob Booth

    THE YEAR 1908

    This will boggle your mind, I know it did mine! The year is 1908. One hundred years ago. What a difference a century makes! Here are some statistics for the Year 1908 :

    ************ ********* ********* ******

    The average life expectancy was 47 years.

    Only 14 percent of the homes had a bathtub.

    Only 8 percent of the homes had a telephone.

    There were only 8,000 cars and only 144 miles

    Of paved roads.

    The maximum speed limit in most cities was 10 mph.

    The tallest structure in the world was the Eiffel Tower!

    The average wage in 1908 was 22 cents per hour.

    The average worker made between $200 and $400 per year .

    A competent accountant could expect to earn $2000 per year, A dentist $2,500 per year, a veterinarian between $1,500 and $4,000 per year, and a mechanical engineer about $5,000 per year.

    More than 95 percent of all births took place at HOME .

    Ninety percent of all doctors had NO COLLEGE EDUCATION!

    Instead, they attended so-called medical schools, many of which

    Were condemned in the press AND the government as 'substandard. '

    Sugar cost four cents a pound.

    Eggs were fourteen cents a dozen.

    Coffee was fifteen cents a pound.

    Most women only washed their hair once a month, and used

    Borax or egg yolks for shampoo.

    Canada passed a law that prohibited poor people from

    Entering into their country for any reason.

    Five leading causes of death were:

    1. Pneumonia and influenza 2. Tuberculosis 3. Diarrhea 4. Heart disease 5. Stroke

    The American flag had 45 stars.

    The population of Las Vegas , Nevada, was only 30!!!!

    Crossword puzzles, canned beer, and ice tea

    Hadn't been invented yet.

    There was no Mother's Day or Father's Day.

    Two out of every 10 adults couldn't read or write.

    Only 6 percent of all Americans had graduated from high school.

    Marijuana, heroin, and morphine were all available over the counter at the local corner drugstores. Back then pharmacists said, 'Heroin clears the complexion, gives buoyancy to the mind,regulates the stomach and bowels, and is, in fact, a perfect guardian of health'

    ( Shocking? DUH! )

    Eighteen percent of households had at least

    One full-time servant or domestic help..

    There were about 230 reported murders in the ENTIRE ! U.S.A. !

    Now I forwarded this from someone else without typing

    It myself, and sent it to you and others all over Canada & U.S.A

    Possibly the world, in a matter of seconds!

    Try to imagine what it may be like in another 100 years.



    Tidbits Archives --- http://www.trinity.edu/rjensen/TidbitsDirectory.htm

    Click here to search Bob Jensen's web site if you have key words to enter --- Search Site.
    For example if you want to know what Jensen documents have the term "Enron" enter the phrase Jensen AND Enron. Another search engine that covers Trinity and other universities is at http://www.searchedu.com/

    World Clock --- http://www.peterussell.com/Odds/WorldClock.php
    Facts about the earth in real time --- http://www.worldometers.info/

    Interesting Online Clock and Calendar --- http://home.tiscali.nl/annejan/swf/timeline.swf
    Time by Time Zones --- http://timeticker.com/
    Projected Population Growth (it's out of control) --- http://geography.about.com/od/obtainpopulationdata/a/worldpopulation.htm
             Also see http://users.rcn.com/jkimball.ma.ultranet/BiologyPages/P/Populations.html
    Facts about population growth (video) --- http://www.youtube.com/watch?v=pMcfrLYDm2U
    Projected U.S. Population Growth --- http://www.carryingcapacity.org/projections75.html
    Real time meter of the U.S. cost of the war in Iraq --- http://www.costofwar.com/ 
    Enter you zip code to get Census Bureau comparisons --- http://zipskinny.com/
    Sure wish there'd be a little good news today.

    Three Finance Blogs

    Jim Mahar's FinanceProfessor Blog --- http://financeprofessorblog.blogspot.com/
    FinancialRounds Blog --- http://financialrounds.blogspot.com/
    Karen Alpert's FinancialMusings (Australia) --- http://financemusings.blogspot.com/

    Some Accounting Blogs

    Paul Pacter's IAS Plus (International Accounting) --- http://www.iasplus.com/index.htm
    International Association of Accountants News --- http://www.aia.org.uk/
    AccountingEducation.com and Double Entries --- http://www.accountingeducation.com/
    Gerald Trites'eBusiness and XBRL Blogs --- http://www.zorba.ca/
    AccountingWeb --- http://www.accountingweb.com/   
    SmartPros --- http://www.smartpros.com/

    Bob Jensen's Sort-of Blogs --- http://www.trinity.edu/rjensen/JensenBlogs.htm
    Current and past editions of my newsletter called New Bookmarks --- http://www.trinity.edu/rjensen/bookurl.htm
    Current and past editions of my newsletter called Tidbits --- http://www.trinity.edu/rjensen/TidbitsDirectory.htm
    Current and past editions of my newsletter called Fraud Updates --- http://www.trinity.edu/rjensen/FraudUpdates.htm

    Online Books, Poems, References, and Other Literature
    In the past I've provided links to various types electronic literature available free on the Web. 
    I created a page that summarizes those various links --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm

    Shared Open Courseware (OCW) from Around the World: OKI, MIT, Rice, Berkeley, Yale, and Other Sharing Universities --- http://www.trinity.edu/rjensen/000aaa/updateee.htm#OKI

    Free Textbooks and Cases --- http://www.trinity.edu/rjensen/ElectronicLiterature.htm#Textbooks

    Free Mathematics and Statistics Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#050421Mathematics

    Free Science and Medicine Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#Science

    Free Social Science and Philosophy Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm#Social

    Free Education Discipline Tutorials --- http://www.trinity.edu/rjensen/Bookbob2.htm

    Teaching Materials (especially video) from PBS

    Teacher Source:  Arts and Literature --- http://www.pbs.org/teachersource/arts_lit.htm

    Teacher Source:  Health & Fitness --- http://www.pbs.org/teachersource/health.htm

    Teacher Source: Math --- http://www.pbs.org/teachersource/math.htm

    Teacher Source:  Science --- http://www.pbs.org/teachersource/sci_tech.htm

    Teacher Source:  PreK2 --- http://www.pbs.org/teachersource/prek2.htm

    Teacher Source:  Library Media ---  http://www.pbs.org/teachersource/library.htm

    Free Education and Research Videos from Harvard University --- http://athome.harvard.edu/archive/archive.asp

    VYOM eBooks Directory --- http://www.vyomebooks.com/

    From Princeton Online
    The Incredible Art Department --- http://www.princetonol.com/groups/iad/

    Online Mathematics Textbooks --- http://www.math.gatech.edu/~cain/textbooks/onlinebooks.html 

    National Library of Virtual Manipulatives --- http://enlvm.usu.edu/ma/nav/doc/intro.jsp

    Moodle  --- http://moodle.org/ 

    The word moodle is an acronym for "modular object-oriented dynamic learning environment", which is quite a mouthful. The Scout Report stated the following about Moodle 1.7. It is a tremendously helpful opens-source e-learning platform. With Moodle, educators can create a wide range of online courses with features that include forums, quizzes, blogs, wikis, chat rooms, and surveys. On the Moodle website, visitors can also learn about other features and read about recent updates to the program. This application is compatible with computers running Windows 98 and newer or Mac OS X and newer.

    Some of Bob Jensen's Tutorials

    Accounting program news items for colleges are posted at http://www.accountingweb.com/news/college_news.html
    Sometimes the news items provide links to teaching resources for accounting educators.
    Any college may post a news item.

    Accountancy Discussion ListServs:

    For an elaboration on the reasons you should join a ListServ (usually for free) go to   http://www.trinity.edu/rjensen/ListServRoles.htm
    AECM (Educators)  http://pacioli.loyola.edu/aecm/ 
    AECM is an email Listserv list which provides a forum for discussions of all hardware and software which can be useful in any way for accounting education at the college/university level. Hardware includes all platforms and peripherals. Software includes spreadsheets, practice sets, multimedia authoring and presentation packages, data base programs, tax packages, World Wide Web applications, etc

    Roles of a ListServ --- http://www.trinity.edu/rjensen/ListServRoles.htm

    CPAS-L (Practitioners) http://pacioli.loyola.edu/cpas-l/ 
    CPAS-L provides a forum for discussions of all aspects of the practice of accounting. It provides an unmoderated environment where issues, questions, comments, ideas, etc. related to accounting can be freely discussed. Members are welcome to take an active role by posting to CPAS-L or an inactive role by just monitoring the list. You qualify for a free subscription if you are either a CPA or a professional accountant in public accounting, private industry, government or education. Others will be denied access.
    Yahoo (Practitioners)  http://groups.yahoo.com/group/xyztalk
    This forum is for CPAs to discuss the activities of the AICPA. This can be anything  from the CPA2BIZ portal to the XYZ initiative or anything else that relates to the AICPA.
    AccountantsWorld  http://accountantsworld.com/forums/default.asp?scope=1 
    This site hosts various discussion groups on such topics as accounting software, consulting, financial planning, fixed assets, payroll, human resources, profit on the Internet, and taxation.
    Business Valuation Group BusValGroup-subscribe@topica.com 
    This discussion group is headed by Randy Schostag [RSchostag@BUSVALGROUP.COM

    Many useful accounting sites (scroll down) --- http://www.iasplus.com/links/links.htm


    Professor Robert E. Jensen (Bob) http://www.trinity.edu/rjensen
    190 Sunset Hill Road
    Sugar Hill, NH 03586
    Phone:  603-823-8482 
    Email:  rjensen@trinity.edu