Cab Thought 1/24/15

A democracy cannot exist as a permanent form of government. It can only exist until a majority of voters discover that they can vote themselves largess out of the public treasury.

~Alexander Tytler, historian


Some numbers from a recent report by The Heritage Foundation: (Yes, I know, but these are just numbers.)
In 2014, federal spending reached $3.5 trillion, and the one-year deficit was $486 billion. In other words, 14 cents of every dollar that Washington spent in 2014 was borrowed. Over the past 20 years, federal spending grew 63 percent faster than inflation. Mandatory spending, including Social Security and means-tested entitlements, doubled after adjusting for inflation. Discretionary spending grew by 47 percent in real terms.  In 1965, defense spending was 7.2 percent of GDP; in 2014, it was 3.5 percent of GDP. Social Security, Medicare, and Medicaid make up 77 percent of mandatory program spending in 2014 — and have no budget limits.

A pair of black holes are circling each other less than a light-year apart manifested as a regular flicker in a quasar — a mass of light and energy — in a remote galaxy known as PG 1302-102. When they meet, in a million years or so, they will release as much energy as 100 million of the violent supernova explosions in which stars end their lives, and wreck the galaxy it is in.

We have slightly more jails and prisons in the U.S. -- 5,000 plus -- than we do degree granting colleges and universities. In many parts of America, particularly the South, there are more people living in prisons than on college campuses. (Wash Po)

Who is...Alisa Rosenbaum?

A politician named Chris Deschene was barred from leading the Navajo nation because his Navajo isn’t fluent. It is a tough language to learn. In Navajo there is no such thing as a regular verb, you have to learn by heart each variation of every verb. Plus it has tones. A “click” language of southern Africa typically has not just two or three but as many as dozens of different clicks to master (native speakers have a bump on their larynx from producing them 24/7).  The tones of Chinese are extremely difficult to learn beyond childhood, and truly mastering the writing system virtually requires having been born to it. For English speakers, it seems hard enough that Mandarin Chinese requires you to distinguish four tones to get meaning across, but in the Hmong languages of Southeast Asia, any syllable means different things according to as many as eight tones.  Old English bristled with three genders, five cases and the same sort of complex grammar that makes modern German so difficult for us, but after the Vikings, it morphed into modern English, one of the few languages in Europe that doesn’t assign gender to inanimate objects. Mandarin, Persian, Indonesian and other languages went through similar processes and are therefore much less “cluttered” than a normal language is. All this in an article by John H. McWhorter wondering if we are trending toward more simple, less elaborate languages, languages that tend to be new.

Today silver is $15/oz but three years ago it was as high as $48/oz.

Ukraine's mission to reform its economy and crack down on corruption now boasts 3 non-Ukrainian cabinet members. And now a 4th non-Ukrainian - Estonian Jaanika Merilo - will step up to the plate 'tasked with bringing more foreign investment into Ukraine and improving the country's business climate'. I originally planned to show her picture--many are cheesecake and she looks like a model--and laugh at this appointment until I found her bio: "Over 14 years of investment sector and 18 years of technology sector experience meets passion for investing (venture capital, private equity), technology and economy in Russia, Ukraine and Baltics."

Chinese workers in a stamping press: https://www.youtube.com/watch?v=yL1AgOqnYYE

If you Google the economist Alasdair Macleod, you will get mostly gold bugs. But he has a scary idea: He says that China has been buying gold for twenty years. Initially China probably sought to diversify from US dollars, which was the only trade currency it received in the days before the euro. So they have been hedging the dollar with gold. And the West has been selling it to them. He estimates the Chinese hold more than 30,000 tons versus the U.S. with 8,300 tons.

Kissinger was interviewed by Speigle and said a number of things characteristic of big thinkers used to leadership. He spoke of "ungoverned countries" and the Westphalian Peace Treaty of 1648 as a reference system for world order, as a result of the Thirty Years' War.  "....[the]...treaty was based on the necessity to come to an arrangement with each other, not on some sort of superior morality. Independent nations decided not to interfere in the affairs of other states. They created a balance of power which we are missing today."

Herbalife is using up all its cash AND borrowing money like mad to finance a stock buyback. that sounds like a sophisticated Ponzi.

The drop in the price of oil is going to have an impact on the U.S. economy since a big driver has been shale. According to some, as much as 50% of shale oil is uneconomic at current prices, and the big unknown factor is the amount of debt that has been incurred by cash-flow negative companies to develop resources which will soon become unprofitable at much lower prices (or once their hedges run out).

Golden oldie:
http://steeleydock.blogspot.com/2013/10/monsters.html

VCs poured more than $90 million into Bitcoin-related businesses in 2013 and are on track to invest more than $300 million in 2014 (compared to $250 million invested in internet-related businesses in 1995).

Ayaan Hirsi Awi wrote the books Infidel and Nomad, detailing her journey from Somalia, where as a young girl she actually joined the Muslim Brotherhood. She ended up fleeing to Europe and went on to become a member of the Dutch parliament and an outspoken advocate of Islamic women’s rights. She was integral to Theo van Gogh’s movie on Islamic women. (This past November was the 10^th anniversary of the murder of van Gogh on the streets of Amsterdam by an Islamic radical, who considered the movie an affront to his religion.) Because of her association with the movie, Ayaan has lived with death threats for over 20 years now and is accompanied by serious security everywhere she goes. I did not know she was married to the economist, Niall Ferguson.

Good news. U.S. House lawmakers will receive an hour of ethics training. (Roll Call)

Every once in a while the "purpose" of a corporation emerges as a concern. One idea is maximizing shareholder value. So borrowing money and buying your own stock might qualify. It is not an easy question. Here are two divergent statements of company purpose. The first, IBM:  Lou Gerstner as CEO stated, “Our primary measures of success are customer satisfaction and shareholder value.” In their Roadmap 2010, under Samuel Palmisano, the goal shifted to the primary aim of doubling earnings per share over the next five years. The second, Johnson and Johnson, written by its founder (Robert Wood Johnson) as part of its IPO documentation in 1943: “We believe our first responsibility is to the doctors, nurses and patients, to mothers and fathers and all others who use our products...We are responsible to our employees...We are responsible to the communities in which we live and to the world community as well...Our final responsibility is to our stockholders...When we operate according to these principles, the stockholders should realize a fair return.”

The head of UPMC health system told 60 Minutes, their health care system is the largest employer not just in Pittsburgh; not just in Western Pennsylvania; but in the entire state. (UPMC employs 63,000 people.)To steer his $12 billion organization, UPMC’s CEO gets paid about $6 million per year.

A Puzzle: You are handed two water glasses. The smaller glass can hold exactly four ounces of water, the larger exactly nine ounces. With nothing more than these two glasses and an endless supply of water, your task is to measure exactly six ounces of water. You can fill or empty either glass as many times as you wish. In the interest of conserving water, try to do this in as few steps as possible. What's the best you can do?

Meliorism: noun; 1. the doctrine that the world tends to become better or may be made better by human effort. Meliorism entered English in the late 1800s. It comes from the Latin word melior  meaning "better."

 

What makes a masterpiece, wrote Cyril Connolly, are the following: A love of life and nature; an interest in, mingled with contempt for humanity; and a lack of belief in the idea of progress. It was the idea of progress that burdened us so much, that stimulated our ambition and our hope as well as the inevitable conflicts they created that caused us pain. Really?

The sustainability of fear and paranoia: In June, 1992, at the end of the United Nations Conference on Environment & Development in Rio de Janeiro, Brazil, President George H.W. Bush and the leaders of 177 other nations signed a document known as Agenda 21. It was seen as a  planning paper, a nonbinding statement of intent aimed at dealing with sustainability on an increasingly crowded planet. Alabama has passed a law meant to outlaw any effects of the plan. The legislatures of Kansas, New Hampshire and Tennessee all passed state resolutions condemning it. Glenn Beck recently wrote a dystopia style book using it as the underlying law.

Britain, with a goal of protecting its Indian colonial holdings from Russia, tried to establish authority in neighboring Afghanistan by attempting to replace Emir Dost Mohammad with a former emir known to be sympathetic to the British. This blatant British interference in Afghanistan's internal affairs triggered the outbreak of the first Anglo-Afghan War in 1839. Dost Mohammad surrendered to British forces in 1840 after the Anglo-Indian army had captured Kabul. However, after an Afghan revolt in Kabul, the British had no choice but to withdraw. Sixteen  thousand(!) men, women and children were killed as the British tried to retreat to Jalalabad, Afghanistan.

AAAAAAaaaaaannnnnddddd......a picture of a Civil War soldier: