Scragged

Happy Money and the Spirit of Capitalism

Guest Editorial — Thu, 02 Sep 2010 15:10:00 GMT

All the hand-wringing about how the government has to step in and create jobs makes it pretty clear that neither our chattering classes nor our leadership elites have any clue how businesses operate.

Vince Lombardi, late coach of the Green Bay Packers, enjoyed considerable success in a highly competitive business. He was a great believer in fundamentals. When his team played unacceptably, he'd often say, "Gentlemen, you played poorly. Let's get back to fundamentals. This," and he'd hold one up, "is a football."

In that spirit, let us consider two fundamental axioms of capitalism and of making money. An axiom is defined as self-evident truth, something so obvious that you don't need proof once you hear it, but which you probably won't figure out on your own.

These business axioms were taught me by my first boss. I was extraordinarily blessed to have a boss who could explain these facts of economic life so clearly. I've tried to base my work on these two simple ideas ever since, and these axioms have contributed mightily to whatever success I've enjoyed.

My business enlightenment happened one morning in 1966 shortly after I started work at IBM in Poughkeepsie. I asked a question that indicated global ignorance as new employees often do. My question showed that I had no idea what was going on, so my boss said, "Come in my office, there's something I must explain to you," and in we went.

Please remember that this five-minute explanation of what life's all about which has served me so very well since 1966 came about because of three things:

I asked a question. It was an ignorant question, but I asked it anyway.
My boss was willing to take the time to explain.
I listened to the answer, remembered it, and acted on it.

Asking and Learning

There's nothing wrong with asking questions on the job. The more you learn, the more you can help, and most bosses realize that. Just remember the answers so you don't ask the same question over and over, that gets annoying.

Anyway, my boss sat me down on one side of his desk and he sat down on the other side. He leaned toward me and opened his eyes wide and said "Young fellow, why doesn't your paycheck bounce?"

Talk about getting my attention! There was nothing he could have asked that could have gotten me more interested-he was talking about my pay! For you bosses who have to answer questions or sometimes give information when your people haven't asked, remember that it's good to tie information about the job to payroll if you can-talking about money is always interesting.

My boss answered my question with a question. That made me think and helped me remember. This is good rabbinical teaching technique; Jesus did it. When a man asked, "What shall I do to inherit eternal life?" Jesus replied "What is written in the Law?" (Luke 10:25-26)

I knew you needed money in your bank before you can write checks. When my boss asked why my paycheck didn't bounce, he was asking me to explain how IBM got money, and I didn't know. How did IBM get money?

I stammered something, and he said, "It's like this. IBM isn't the government; we can't print money or force people to give us tax money at gunpoint, we have to earn it. Your paycheck doesn't bounce because our customers send us checks that don't bounce. As a matter of company policy, we want customers to send us money because they sincerely feel we earned the money by helping them make money, not just because the contract says they gotta send money. We want only happy money here at IBM. If a customer's not happy with our product, we return the money, no matter how bad it hurts."

He went on to explain, "Look, our salesmen don't call on companies that don't have money, that's a waste of time. Our prospects have money, we check that before we go. The trick is to persuade them that they want our products more than they want the money. If they want the money more, they keep the money, we lose the sale, and you're out of a job. But if they want our computer more than the money, they give us the money and we can pay you. That's hard because everybody likes money a whole lot. Being more wonderful than money isn't easy, but that's what we have to do to eat."

I began to understand. Light was shining through the cracks! Enlightenment felt so wonderful that I remember everything he said. "Let's talk about you. We hired you because we want the work you do more than we want the money we pay you. If we didn't want your work more than we want your pay, we'd keep the money, we wouldn't pay you, and you'd be out of a job. Your challenge is to be sure that your work is more wonderful to us than the money we pay you every single day.

"Do you want to get paid more? Of course you do. That's easy - all you have to do is make your work more wonderful to IBM, and IBM will take care of you, I promise you. "

"Let me tell you how to make your work more wonderful. We design computers that are so wonderful customers will want them more than money. We want you to help us make our products more wonderful so we can raise the price and get more money. I don't mean raise the price through stealing, I mean raise the price because the product's really better. Help us get more money from our customers. You take care of customers, customers take care of IBM, and IBM can afford to take care of you. It's really that simple."

The clouds rolled back, the sun shone through, I understood capitalism. IBM didn't pay me, customers paid me, IBM just handled the money. Remember, employees, your boss doesn't pay you, customers pay you, the boss does you the favor of collecting the money.

I also understood that nothing happens unless it's more wonderful than money. When you buy anything, you want it more than you want the money; if it were not more wonderful to you than the money, you'd keep the money and nothing would happen.

People buy houses from builders because they want the houses more then they want the money. People buy Big Macs because they want the burgers more than they want the money.

Hard times are when there isn't much money. That makes money more wonderful so people hang onto it. In tough times, McDonald's has to drop prices to keep their burgers more wonderful than the money.

If you want to earn a million bucks, I'll tell you how. If you can make burgers more wonderful so McDonald's can raise prices just a nickel in every store without losing sales, that'll be worth millions to McDonald's, and they'll take care of you, they really will.

Remember the twin blade razor? Gillette sold a few, earned a buck or two? The man who invented that razor works for Gillette. They gave him a raise and told him he could keep his job forever even if he never did another lick of work, he'd paid his dues. He'd been so wonderful they didn't need any more work from him ever again.

That's the secret of getting paid a lot-be worth a lot. You're worth a lot if you bring your boss a lot of money. [The AIG traders were paid big bonuses because they'd earned their bosses a lot of money - ed] I've always tried to make the most money for my boss I could. I have to add value to survive and if I want to prosper, I have to add a lot of value.

The Axioms of Money

What are the axioms? Everything must be worth more than money, and you better make sure that the money you take in is happy money. If you aren't worth more then your pay, you're gone. If you don't keep your boss happy to pay you, you may be gone even if you're worth your pay. So here are the axioms, write 'em down, they'll serve you well:

Be more wonderful than money.
Take only happy money.

Wonderfulness and Job Creation

What's that go to do with the lack of job creation? It's simple-our government is making it harder and harder for employees to be wonderful enough to cover the cost of having them on the payroll.

Scragged recently discussed Sally who works at Bogen Communications in New Jersey. Sally thinks of her cost to Bogen in terms of her salary which is $59,000. She thinks that if she can generate $59,000 worth of wonderfulness, Bogen will be happy to keep her on the payroll, but she's wrong.

As Mr. Fleischer, the President of Bogen, explained, it costs Bogen $74,214 in direct costs to keep Suzy on the payroll - 1/3 of which is government-imposed costs which makes it that much harder for Sally to generate enough value to stay employed. Instead of $59,000 worth of wonderfulness, Sally's on the hook for $74,214. But that's not all.

There's her share of the rent, utilities, and other costs of having an office. That usually runs between 10% and 20%, call it 15%. If we add that in as her boss does, Sally has to be worth more than $85,000 just to break even.

That's not enough: Sally also has to help generate a profit. The only way Sally can generate wonderfulness is to help Bogen sell more.

In any profitable business, everybody has to help generate sales. The only real product of any business is collectible invoices; every activity, including cleaning toilets, mopping floors, manufacturing, research, bagging groceries, and handling accounts payable must be organized toward the goal of generating as many collectible invoices as possible.

Bogen has 44% gross margin. That means that for every dollar they take in, making the goods cost 56 cents, leaving 44 cents out of every sales dollar with which to meet other expenses and hopefully give stockholders a profit.

Sally has to generate $85,000 worth of wonderfulness to stay on the payroll. Given that each dollar of sales gives Bogen 44 cents with which to cover indirect costs, Sally has to be responsible for generating more than $193,000 worth of sales just to break even. If her presence means that Bogen can sell $193,000 worth of product that they couldn't sell without her, she's covered her costs ($193,000 times .44 is $85,000). Unless she facilitates more sales than that, she's gone.

That's how bosses who expect to stay in business think about hiring - can this person generate enough wonderfulness, that is, new sales, to be worth more than the total cost of having him or her around? Alternatively, can this employee cut costs elsewhere enough to cover the same amount? If so, a job is created; if not, it isn't.

It's not quite that simple, of course, in that the accounts payable clerk isn't directly connected to sales, but if vendors don't get paid, the factory runs out of parts and sales stop. Accounts payable is an essential function for facilitating sales and the accounts payable staff had better do their part. This is how bosses think. It also explains why the A/P clerk usually gets paid less than a salesman: yes, the job has to get done, but as long as it does get done, it may as well be as cheaply as possible.

Wonderfulness and the Obama Recession

The Obama administration plans to increase energy costs, payroll taxes, the cost of providing health care, increase regulation, and do any number of other things which will increase the cost of doing business. Anything that increases business costs means that employees have to be more and more wonderful to keep their jobs.

Given that bosses have no way to gauge how wonderful a new employee will have to be, how can they make sensible hiring decisions? They can't, so they don't hire.

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The Lesson of Iraq

Petrarch — Wed, 01 Sep 2010 15:11:00 GMT

So, Obama has finally fulfilled one of his campaign promises: at long last, we are out of Iraq.

There may be a few caveats: it's only our combat brigades that have left, and the 50,000 troops still remaining could probably put forward a fair bit of combating should they be called upon to do so. But lo! the Commander in Chief has decreed that the War Is Over, and So It Is.

That means it's time for the post-mortem. What lessons have we learned?

The cynics among us will say, none! But even though the American people or our leaders may not have actually learned anything, there is a fundamental lesson of longstanding geopolitical importance that the Iraq war has now conclusively demonstrated:

If you as an enemy of America can outlast the current president, you won't get defeated. At worst, there'll be a draw; if you're lucky, you'll win.

America: Getting Bored Since 1950

The problem is, as a nation modern America has a ludicrously short attention span. Other societies think in terms of generations, millennia even; most Americans can hardly remember last year.

This is reflected in our wars. Since at least the Civil War, every war we've ever fought has begun with expectations of being over in a couple of months. When - shock! horror! - the war extends into a handful of years, the disappointment and finger-pointing becomes extreme. Lincoln nearly lost the White House when he couldn't nail the South down by the end of his first term.

Yet by historical standards, a four-year war is lightning-quick. European history is full of things like "The Thirty Years' War", "The Hundred Years' War", and of course the Crusades which went on and off for several centuries. What's more, most of these wars never really resolved the issue that originally set them going; the issues explored in the Crusades are the source of a good deal of violence to this very day, the better part of a thousand years later.

For all the mass slaughter of the World Wars, we've kind of been spoilt: those issues got resolved but good. Hitler, Mussolini, and Tojo are gone. The Kaiser is gone. The Austro-Hungarian Habsburg empire is gone. The Ottoman Empire is gone, or at least it seemed to be for quite a while.

When, in stark contrast, the Korean War wound up more or less as it began, America was indignant. Vietnam ended worse than it started. The relatively minor conflicts in Grenada, Panama, and Yugoslavia don't seem to have accomplished much either.

What's the result? After a short time of gung-ho enthusiasm upon embarking on a war, Americans get bored. They want to get back to their regularly scheduled shopping. It's a historically-unprecedented marker of just how enormously rich and powerful America is, that most people actually can ignore the conflict and get on with life.

Meanwhile, our soldiers bravely fight on. They are unquestionably the finest soldiers in all of human history, with by far the best equipment, and many of the most skilled leaders on the ground.

Are their high-level leaders worthy of them, though? We have yet to see a plausible-sounding strategy to turn either Iraq or Afghanistan, much less the rest of the Middle East, into anything remotely resembling something we'd like to see. Instead, we are presented with the unedifying spectacle of Americans dying to defend a regime that normally Americans would die to destroy.

This is not the way President Bush meant for it to turn out. He applied Colin Powell's wise doctrine of declaring a limited goal - deposing the Taliban - and tried to apply all the resources required to accomplish it until a Democratic Congress stopped providing them.

Unfortunately, mere regime change is not enough; you have to change the culture on the ground too. After Germany surrendered, the Allies instituted an extensive deNazification program to dig out that evil ideology root and branch. Ex-Nazis were removed from positions of power; refugees from Germany and Austria who'd fled Hitler returned in British uniform to administer governance; and ordinary Germans had their noses rubbed (sometimes literally) in the horrors of the Holocaust. As a direct result, modern Germany has become as peaceful and tolerant a nation as anyone could wish.

The barbarism of Saddam Hussein is widely known and most Iraqis are glad to see him gone, but de-Baathification has not proceeded anything like as effectively. Disbanding the Iraqi army seemed like a good idea at the time, but unlike Germany, we did not station millions of occupying troops in Iraq. The result was an ongoing insurgency where we could neither provide security nor thoroughly root out evildoers of the past.

The heroism of Gen. Petraeus and Bush's "surge" may have pulled our chestnuts out of Iraq's fire, but nobody would compare Iraqi governance today to that of West Germany in the late 1950s.

The opinions, hatred, strife, and evil beliefs that allowed Saddam to rule with an iron fist are still prevalent in Iraq today, and it is highly plausible to imagine a return to dictatorship there. Yet the only way of preventing it - millions of occupying troops for decades to come - is never going to happen.

The situation in Afghanistan is even worse. George W. Bush, though portrayed by the liberal media as a far-right extremist, was actually almost as politically correct as they; he refused to place the blame for 9-11 where it rightly belongs, upon the evil ideology and teachings of Islam. As a result, although the Taliban were removed from power, Afghanistan is still run by bigoted religious radicals who oppress anyone who doesn't do as they do - and our soldiers are defending them!

How can a free nation take root in such polluted soil? It can't, and we aren't willing to do what needs to be done to cleanse the evil that led to 9-11.

A Job Worth Doing, Is Worth Doing Well

Our modern technological world has made us all used to getting everything we want instantly. Should the desire to purchase almost anything strike you, you can probably go out and buy one today. At worst, you order it online and it's on your doorstep tomorrow.

Americans expect the same in the geopolitical realm, but this is not possible. You cannot change hearts and minds overnight. Nazi Germany and militaristic Japan were the product of centuries of culture; it's really quite amazing that a mere half-century seems to have solved the problem. The barbarism of Islam goes back much, much further. How could anyone think a few years will do the job?

Yet no new American president has run and won on a platform of continuing an existing war.

If a president starts a war, he can win re-election on a promise to finish the job, as did FDR and George W. Bush.

Come the end of a second term and a Constitutionally-mandated new president, "a plan to end the war" is the only way to get to the Oval Office. It doesn't matter if the war needs to be fought longer; Americans figure that a term or two is plenty.

So we return to Colin Powell's wisdom: know how to get out of a war before you get into it. Alas, nobody has figured out a way to get out of the Global War on Terror. A war only ends when the loser admits they've lost, and the hundreds of millions of would-be terrorist Muslims worldwide are very far from that point.

How can we get them to that point? We'd better figure out a way, and commit to giving the job as much time and energy as required. America may not be interested in this war, but hordes of violent Muslims are devoutly interested in bringing their war to us.

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Petrarch is a contributing editor for Scragged. Read other Scragged.com articles on Iraq, war, Islam and Afghanistan

Does Church Keep Black Women Single? - 2

Lee Tydings — Tue, 31 Aug 2010 13:39:00 GMT

Scragged writers pay close attention to reader comments because we learn more from disagreement than from agreement. Sometimes a question reveals that we weren't as clear as we should have been. When the first article in what is now becoming a series pointed out that men pursue women because every man knows in his heart that a woman can give him a taste of the joys of heaven, we received this comment:

Good article, but when you say "Every man knows in his heart that a women can give him a taste of heaven right here on earth" I think you're wrong. I'm assuming your talking about sexual pleasure, which is a wonderful earthly thing but highly doubtful to be present (or anything remotely like it) in the afterlife.

That insightful comment goes to the heart of what's gone so badly wrong with so many modern marriages. The article said that men and women ought to marry with the goal of giving to the other party rather than getting. Plainly we didn't sufficiently emphasize this point: Biblical teaching holds that God expects a husband and a wife to serve each other all their days.

It's hard to serve another person whose sins and shortcomings are as evident as those of the person to whom you're married, but married people can console themselves with the thought that in doing what God expects, they're serving God. A marriage prospers when each party serves God by serving the other.

Obstacles to Marriage

The earlier article was a reaction to a relationship consultant's claim that women who attend church won't date men who don't attend church and thereby limit their choice of mates. This is true, but not bad - in fact, limiting the choice of mates to well-qualified ones is a very good idea, as any number of unhappy ex-wives (or single mothers) could tell you.

We see no reason why a woman would want to marry a man who wasn't willing to take on the obligations which the Bible assigns husbands, but that isn't the biggest problem women have finding husbands. Every man knows men who've been badly hurt by their relationships with women. This makes men reluctant to open their hearts to women, and that's the main problem a woman has in settling into a satisfactory relationship with a man.

She has leverage, however, in that a man knows she can give him the joys of heaven if she's inclined to do so - regardless of precisely what you feel those particular joys to be. If she explains how she plans to do that and explains what she'll need from him in order to give him the joy he expects, she may stand out from the crowd enough for him to marry her. And if not, well, is that such a bad thing? Why would a sensible woman marry a man who isn't interested in her plan to give him joy?

Commands To Married Women

Everybody has the right to choose the minimum requirements of their potential mates. It's only natural that the religious would consider religious teachings when making that most important of life decisions.

Unfortunately, the Christian divorce rate is not that different from the secular ones. If a woman has decided that she wants to obey the Bible's teachings, she should be more aware of the obligations marriage would place on her.

Nevertheless let every one of you in particular so love his wife even as himself; and the wife see that she reverence her husband. Ephesians 5:33

Even as Sara obeyed Abraham, calling him lord: whose daughters ye are, as long as ye do well, and are not afraid with any amazement. I Peter 3:6

The Bible teaches a woman to honor and obey her husband - "obey" was part of the traditional marriage vows - and call him Lord, which is the equivalent of saying "Yes, sir" today.

Wives, submit yourselves unto your own husbands, as it is fit in the Lord. Colossians 3:18

Titus 2:3-6 commands older women to teach younger women how to love their husbands. This command has two startling implications:

A) Women don't naturally know how to love their husbands; and

B) Men are pretty much the same in their needs and desires.

There is no similar command for men to teach younger men because women are far more different from each other than men are. A man has to spend hours in open heart-to-heart talk with his wife to learn what pleases her. What pleases the older woman's husband will probably please the younger woman's husband, which is why it's possible to teach a woman how to love a man.

How to Give the Joys of Heaven on Earth

As our commenter implied, from a man's point of view, the heart of marital happiness begins in bed. Plenty of secular sex therapists would say the same, but the Bible goes further into the emotional underpinnings which are of great concern to women.

The comment described sex as a "wonderful earthly thing," which it is. The problem is that modern American society has debauched the physical joining of man and women, applying very negative words such as f**k and s***w to what God intended to be a powerful force to hold husband and wife together through the strains of life. What is the difference between a man f**king his wife, s***wing her, and making love to her? The physical act is the same; the difference lies in the man's attitude toward his wife.

This is explained clearly in the Song of Solomon. The wife states three times that she belongs to her husband. The third time in 7:10, she rejoices that "his desire is toward me." Song 8:2-3 explains how she handles his desire - she encourages him to make love to her; most men would stand up and cheer at the idea.

Movies such as the James Bond series give the impression that women are eager to have sex, but real men find that most real wives are considerably less interested in sex than they are. The Song of Solomon is a picture of a woman who is so much in love with her husband that she wants to give herself to him, not so much because she's interested in sex itself, but because she knows it makes him happy.

Having his wife give up her immediate wants to make him happy makes a man very happy. A man can get some pleasure by taking a woman who's not in the mood, and many do. They have to grow up a bit to realize that real joy in a woman comes when she gives herself to him out of love instead of just letting him take her out of lust.

Belonging to a Man is Hard

The Bible teaches that God made women for men:

For the man is not of the woman: but the woman of the man. Neither was the man created for the woman; but the woman for the man. I Corinthians 11:8-9

Many unchurched women are surprised to hear that, and certainly bra-burning feminists find the thought horrifying; but it is nevertheless true in the biological sense, and the religious one as well if you're so inclined. Women are made for men, and there's little they can do about it. God designed women so that most women have a strong desire to hang around with a man.

It's hard enough for a woman to belong to her husband and submit to him as the Bible teaches, particularly in this day of women's lib. If a woman gets involved with a man who isn't honorable, whose leadership she can't respect, it will be even more difficult. That's a good reason to restrict her dating pool to worthy men.

This is a part of marriage that doesn't get much talk because it's no longer politically correct. The Bible says in two places (Deu. 21:14, Eze. 22:11) that getting involved with a man humbles a woman. Opening herself to a man whenever he wants her and encouraging him when he hasn't asked tends to wipe out any sense of independence she may have had, gets her emotions bound up in him, and she ends up belonging to him.

The Bible teaches this - the woman in the Song of Solomon declares three times that she belongs to her husband (2:16, 3:6, 7:10). A woman can give a man physical pleasure without loving him or belonging to him, but a husband's joy comes from having his wife give herself to him out of love and because he appreciates her so much that she likes belonging to him.

What of the Man?

A lot of men think that having a woman belong to him would be truly wonderful and wonder what's the problem? Why won't their wives do as they expected when they got married?

They forget that God intended that a man should also belong to his wife. Two of the three passages in the Song have the woman rejoicing that her husband belongs to her. He tells all her friends that she's "but one" (6:9), which means that he doesn't even see any other women. That's why she can be so confident that his desire is towards her - she's the only woman in the world as far as he's concerned.

The Song of Solomon shows a man relating to his wife in detail. He praises little things about her including the shape of the roof of her mouth, no doubt having explored it at some length. This shows her that he's paying attention to her and opening his heart to her. Opening his heart to her out of love when he's not in the mood to talk gives his wife as much joy as he receives when she opens herself to him when she'd rather do something else.

The Bible Tells How To Receive Joy on Earth

The Song shows a husband who is made happy because his wife likes belonging to him. This wasn't clear enough for most men, however, so the New Testament fills in a bit more detail:

Husbands, love your wives, even as Christ also loved the church, and gave himself for it; Ephesians 5:25

How did Christ love the church? He died for it. A man is supposed to dedicate his life to serving, nourishing, and cherishing his wife. The Greek work translated "love" is agapao, which is not an emotion, it's an act of will. Agapao means serving the other person's best interests. The Bible says that the husband is the head of the wife, but after Jesus washed the disciples feet, He told them that Christians were not to lead by command as others did, but to lead by serving.

But Jesus called them to him, and saith unto them, Ye know that they which are accounted to rule over the Gentiles exercise lordship over them; and their great ones exercise authority upon them. But so shall it not be among you: but whosoever will be great among you, shall be your minister: And whosoever of you will be the chiefest, shall be servant of all. Mark 10:42-44

If a husband desires to lead his family, he has to serve them; the more he wants to lead, the more he should serve. A Christian husband is commanded to lead his wife by serving her. This works only if the wife is willing to follow.

If am an obeys the Bible's commands by praising his wife, appreciating his wife, and serving his wife, he'll make it make it more likely that his wife will enjoy belonging to him.

The Joys of Heaven

The major joy of heaven is that Christians spend eternity in a close relationship with the person Jesus Christ. The major (though far from only) punishment of hell is that the sinner spends eternity cut off from all relationship to God. The joy of heaven is based on a permanent, unconditional relationship to God, the punishment of hell sunders that relationship.

The joy of marriage is based on a life-long unconditional relationship between husband and wife; the marriage relationship is supposed to be a picture of the relationship between Christ and His church. Thus, the joy a wife gives her husband by truly enjoying his joy when she gives herself to him and the joy a husband gives his wife by truly enjoying her joy when he gives himself to her, mimic the joys of heaven.

Mark 12:25 implies that there probably won't be sex in heaven as we think of it today, but there will be relationship. Lovemaking and conversation are expressions of the relationship between husband and wife and represent the highest form of giving between husband and wife in this life.

The Bible teaches that Christians have to die to themselves in order to be one with Christ:

Wherefore, my brethren, ye also are become dead to the law by the body of Christ; that ye should be married to another, even to him who is raised from the dead, that we should bring forth fruit unto God. Romans 7:4

This passage is one of many which emphasize the way that marriage illustrates the relationship between Christians and Christ. Christ gave His life to sustain the relationship between Himself and His people; Christians who are willing to die to their former lives receive joy in Christ. Similarly, the only way husband and wife can belong to each other as God expects is for each party to die to their individual selves and become one in marriage. Both husband and wife must give their lives to sustain their relationship; that gives them joy in each other.

Christian women, and Christian men for that matter, are well advised to limit their dating to people who understand and agree with God's view of marriage. Otherwise they are expecting two totally different things and are doomed to critical disappointment. This is no way to start off what is supposed to be a life-long relationship.

So to return to the original topic: yes, churchgoing women who expect their mates to be equally devout are, indeed, limiting the dating pool. Many churches have far more single women as members as they have men; on its face, this could be a serious problem. But the writer forgets one important point: religious membership is not static. If a Christian woman is not finding enough men already attending church, there is another alternative: go out and convert some - for many is the man who has had his life changed and improved by the love of a good woman.

Read the original article on Scragged.com

Lee Tydings is a guest writer for Scragged.com. Read other Scragged.com articles on marriage and Christianity

Computers Plug and Play - Hospitals Plug and Pray

Will Offensicht — Mon, 30 Aug 2010 14:16:00 GMT

Simple, avoidable mistakes can be fatal in the high-tech world of modern hospitals. The New York Times reports:

Thirty-five weeks pregnant, Robin Rodgers was vomiting and losing weight, so her doctor hospitalized her and ordered that she be fed through a tube until the birth of her daughter.

But in a mistake that stemmed from years of lax federal oversight of medical devices, the hospital mixed up the tubes. Instead of snaking a tube through Ms. Rodgers’s nose and into her stomach, the nurse instead coupled the liquid-food bag to a tube that entered a vein. [emphasis added]

The human blood system isn't designed to have food injected into it. Although it probably wouldn't do all that much harm to inject food into a tube carrying urine out of the body, having food injected into her bloodstream killed Mrs. Rodgers.

Many hospital patients are hooked to clusters of clear plastic tubes carrying away their urine, putting food in the stomach, giving air to the lungs, sampling blood or putting drugs in the bloodstream. These tubes all look alike, so it's easy to get them mixed up. Nobody knows how many people are killed through this sort of error because such mistakes are rarely reported.

Various standards groups have been arguing since 1996 that the tubes ought at least to be made in different sizes or colors so that hospital staff would be less likely to make mistakes. These proposals have been stalled by the medical industry and by quirks in the FDA regulations.

FDA regulations require that a new device be approved if the manufacturer can prove that it works exactly in the same way as the old one. It doesn't matter if the old device has been shown to be unsafe, the fact that it was approved sets the standard for new devices. Mimicking something existing is no big deal, so many different companies offer the same standard tubes.

If a manufacturer wants to make significant improvements, the approval process starts over from the beginning which adds enormously to development cost and risk. This makes manufacturers reluctant to make improvements.

The FDA is reassessing its approval process and is considering creating a list of dangerous devices which should not be used as models for future devices, but their rules stand for the moment.

Mark E. Brager, a spokesman for AdvaMed [a California trade association of medical device manufacturers], said the agency’s current device approval process “has an excellent safety record, facilitates medical innovation and has served patients well for more than 30 years.” The organization fears that “proposed changes could, if implemented the wrong way, result in delaying patient access to improved medical technology.”

Mr. Brager didn't bother to point out that the practice of approving devices which are modeled after existing devices retards innovation and helps keep other companies from competing with established manufacturers via new ideas. Competition, after all, might drive down prices.

Neither the aviation industry nor the nuclear power industry tolerate situations where tubes carrying incompatible substances such as blood and food or oil and gasoline could be interconnected at all, but none of the main players in the medical industry seem to care - progress has been minimal since the issue was raised seriously in 1996.

It's Not Just Medical Tubes

To be fair, the computer industry, which is supposedly the poster child for market-driven innovation, hasn't always gotten it right either. People who remember computers of 20 years ago will recall that the keyboard plugged in via a 1/2" round connector and there were no mice or networks. There was only the keyboard and the power cord and you couldn't possibly get them mixed up. When mice came along, they were treated as serial devices like printers and plugged into rectangular connectors on serial cards, again there was no possibility of plugging them in wrong. When networks came along, the network cable always plugged into a unique connector too.

Once it was decided that all computers needed mice, the main computer board was rejiggered to have the keyboard and mouse connect directly via two little round PS-2 connectors. They were identical in that it was physically possible to plug the keyboard into the mouse hole and vice versa, which usually wouldn't work if not damage the electronics.

Manfuacturers color-colded the connections, which helped, but isn't a complete solution when you're trying to snake cables through a dimly-lit jungle behind your desk.

The computer people finally got it right - USB keyboards and mice can plug into identical connectors and the computer figures out which is which while network, power, and the monitor have their own unique connectors. We're finally back to where we were decades ago.

Unfortunately, medical folk can't do that - they can't redesign the blood system so that it can handle food, for example. The medical device people will have to solve the problem the old-fashioned way and specify different sized, shaped, and colored connectors for each incompatible type of tube.

The fact that they're having difficulty doesn't necessarily mean that they're incompetent - it took the computer people a while to get their connections right - but the fact that there's been essentially no progress for 20 years shows that the players have managed to insulate themselves from accountability. When a customer plugged the keyboard into the mouse hole and the computer wouldn't work, at a minimum, the manufacturer had to pay the cost of a call to the 800 number and if something fried, had to replace the unit. This cost money, so they had an incentive to fix the problem as rapidly as possible.

The FDA has no incentive to change their rules any time soon because the bureaucrats are never even criticized when their rules lead to deaths. They've got a study going, but it's taken almost 20 years and they aren't close to being able to keep tubes apart. Like most agencies, the FDA is punished for major failures by being forced to suffer a massive budget increase.

The trial lawyers can't touch the tube manufacturers - all the tubes come with warning leaflets which tell hospital staff not to put food in the blood stream. When utterly fatigued health care staff foul up, the hospitals can prove that they've trained them over and over not to do that, no liability there.

The situation is likely to persist for quite some time because none of the players have any reason to fix the problem. Until Obamacare kicks in and fixes all these problems, then, you'd best be very alert whenever anyone injects anything into a tube that's connected to you. You're the only one who really cares.

Read the original article on Scragged.com

Will Offensicht is a staff writer for Scragged.com and an internationally published author by a different name. Read other Scragged.com articles on medicine, doctors, FDA and regulation

Does Church Keep Black Women Single? - 1

Lee Tydings — Fri, 27 Aug 2010 14:39:00 GMT

CNN reports that an orthographically-challenged relationship advice columnist named Deborrah Cooper claims that Christian beliefs are keeping devout Christian women single and lonely.

Cooper, who is black and says she is not strictly religious, argues that rigid beliefs constructed by the black church are blinding black women in their search for love.

A Yale University study showed that 42% of of African-American women in the United States were unmarried. CNN quoted Cooper as saying:

"Black women are interpreting the scriptures too literally. They want a man to which they are 'equally yoked' -- a man that goes to church five times a week and every Sunday just like they do," Cooper said in a recent interview.

"If they meet a black man that is not in church, they are automatically eliminated as a potential suitor. This is just limiting their dating pool."

The CNN article presents the view that women limit their chances for marriage when they follow Christian teachings about the sort of people with whom to associate. This would seem to be a truism: after all, isn't it fairly common for religions to teach that you should hang out with other people who believe the same way that you do? One wouldn't expect to hear a preacher of any stripe commending single ladies to chase after Richard Dawkins or Christopher Hitchens.

A much more interesting question is: practically speaking, what difference does it make? During the Presidential campaign, Mr. Obama declared that he never head his pastor Jeremiah Wright say anything negative about America in 20 years attending his Chicago church. Most Americans have never so much as set foot in Wright's church, yet millions of them are more familiar with his anti-American views than his own most famous parishioner.

We can infer that lots of American Christians don't pay much attention to whatever's coming out of their preacher's mouth, much less what the Bible might say about dating, but what if a woman actually decides that she wants to follow Christian teaching in her life? If she regards the Bible as commands from God, how are she and her husband commanded to conduct themselves?

What the Bible Expects from Men

The Bible teaches that a husband is supposed to provide for his wife:

But if any provide not for his own, and specially for those of his own house, he hath denied the faith, and is worse than an infidel. I Timothy 5:8

Is it wrong for a woman to expect her husband to provide for her so that she can take care of their home and their children? Is it wrong for a woman to decide that she wants to be a keeper at home? Given that a large proportion of black men are in no position to obey this passage or have no desire to support anyone, not even themselves, is it unreasonable for black ladies to exclude them from their dating pool?

Marry to Get; Marry to Give

Today, many people seem to marry in order to get something from their spouses, whether that be money, sex, companionship, status, or something else. In its rawest form, that doesn't work well, as neither men nor women like to be taken advantage of - society looks down on "gold-diggers" and "gigolos." The traditional romantic idea is that someone should marry to give to their mate. You can't float your own boat in marriage; the only one who can float your boat is your spouse.

Throughout Western culture, the expectation has for centuries been that a man should be ready to give his life to save his wife; we all know the Birkenhead Drill of "Women and children first!" heard as the Titanic went down. God doesn't generally expect a man to die for his wife, but God expects a man to live his life one day at a time to support, nourish, honor, cherish, and serve her.

In passages that could alternatively cheer or quail the hearts of feminists, the Bible teaches that a wife is an undeserved gift of God:

Whoso findeth a wife findeth a good thing, and obtaineth favor of the LORD. Proverbs 18:22

What's wrong with a devout, Bible-following woman expecting to be treated as the undeserved, gracious gift from God her holy book says she's supposed to be? That sort of attitude is actually good for her husband: being treated as God's gift makes any woman happy, and the happier she is, the happier she can make her husband.

Live joyfully with the wife whom thou lovest all the days of the life of thy vanity, which he hath given thee under the sun, all the days of thy vanity: for that is thy portion in this life, and in thy labor which thou takest under the sun. Ecclesiastes 9:9

Suppose a woman believes that God intends her to be His gift to her husband. Should she settle for a man who doesn't see her as God's gift to him? Suppose she believes that the Bible teaches that husband and wife shoud belong to each other and be faithful to each other. Should she settle for a man who insists on straying or on devouring pornography?

What if she's really thought about what God told Eve after Eve had eaten the forbidden fruit?

Unto the woman he said, I will greatly multiply thy sorrow and thy conception; in sorrow thou shalt bring forth children; and thy desire shall be to thy husband, and he shall rule over thee. Genesis 3:16

Suppose that she believes that God multiplies sorrow to women by giving them more sensitive emotions than men have. Shouldn't she want a man who'll speak gently to her, try not to hurt her feelings, and stop doing things that hurt? Realistic women recognize that if a woman has a man in her life, she'll seek to please him. A man needn't command to rule a woman, her desire to do things his way often suffices. Shouldn't she want a man who appreciates her trying to make him happy and praises her for it? As a practical matter, a woman can't please a man unless he's willing to talk to her enough for her to learn what makes him happy. It helps a lot if he's willing to spend the effort to learn what makes her happy, of course.

What's a Woman To Do?

The Economist explained the black woman's dilemma by pointing out that the mass incarceration of black men reduces the pool of eligible mates:

IMAGINE that the world consists of 20 men and 20 women, all of them heterosexual and in search of a mate. Since the numbers are even, everyone can find a partner. But what happens if you take away one man? You might not think this would make much difference. You would be wrong, argues Tim Harford, a British economist, in a book called “The Logic of Life”. With 20 women pursuing 19 men, one woman faces the prospect of spinsterhood. So she ups her game. Perhaps she dresses more seductively. Perhaps she makes an extra effort to be obliging. Somehow or other, she “steals” a man from one of her fellow women. That newly single woman then ups her game, too, to steal a man from someone else. A chain reaction ensues. Before long, every woman has to try harder, and every man can relax a little. [emphasis added]

Not unsurprisingly, most women of any color or religion are reluctant to date ex-convicts. This makes a difference when one black man in three can expect to spend time behind bars at some point in his life.

Ex-convicts aside, what if a Christian woman wants to be treated as God's gift to her husband? She can't really up her game in the sense in which the Economist means it:

When there are six women chasing one man, “It’s like, what are you going to do extra, to get his attention?” Some women offer sex on the first date, she [an unmarried black doctor] says, which makes life harder for those who prefer to combine romance with commitment.

Since it appears that most women think in terms of having uncommitted sex or in paying more of the bills to up her game and stand out from the crowd, a woman who wants to be treated as a treasure as opposed to a disposable toy has to declare herself. Before accepting a date, she could say, gently but firmly, “Before you spend any money on me, you should know that I’m looking for a husband. I’m not looking for fun; I want to get married. I’m not saying you have to agree to marry me before we go out at all, but I want you to agree that the purpose of being together is to decide whether you and I should get married. God made me to be a treasure for some man. If you aren’t that man, fine, we can part friends, but I’m not a toy. I don’t want a man to play with me; I want a man to stay with me.” As Ms Cooper points out, this attitude is going to limit the pool potential suitors pretty harshly, but a woman needs only one man.

Why Marry At All?

Every man knows in his heart that a woman can give him a taste of the joys of heaven right here on earth; that's why men pursue women so strongly. Every man also knows that most men who get involved with women end up with the punishments of hell rather than the joys of heaven; that makes men reluctant to commit themselves. That reluctance to grow up and commit is really what a woman's fighting - how can she convince a man that she'll bring him joy instead of the sorrow most men receive?

Given that a man knows the down-side of letting himself fall in love with a woman, stating up front that she wants to be God's treasure for her husband ought to get any serious man's attention because if she's telling the truth, he'll receive the joys he expects. Unless she's had a chance to talk to a savvy older women, she won't know exactly what it means to be a man's treasure, but every man knows exactly what it means.

If a man isn't interested in a woman who wants to be God's treasure for him, she's better off not getting involved with him at all. Experience shows that it is better to stay single than to enter into a miserable relationship which is doomed to failure from the start.

Anyone with the slightest familiarity with the wretched misery of the modern dating scene, to say nothing of today's astronomical divorce rate, will know to take any advice from modern dating columnists with a very, very heavy dose of salt. The church has it right - marriage works well when a man nourishes, cherishes, and serves his wife as God's undeserved gift to him and she acts like God's gift to him. Anything less simply doesn't seem to work.

Fortunately, women don't need to find dozens of eligible men - or men dozens of women, for that matter. All it takes is one, as long as it's the right one. Perhaps what Ms. Cooper needs is a little more patience, something else that her more devout sisters probably hear about in church from time to time.

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Lee Tydings is a guest writer for Scragged.com. Read other Scragged.com articles on marriage, crime and employment

Dr. Laura Punches A Tar Baby

Hobbes — Thu, 26 Aug 2010 15:15:00 GMT

ABC News reports:

Usually, she gives advice. But after broadcasting a five-minute-long rant in which she used the N-word 11 times, Dr. Laura Schlessinger is now on the receiving end...

Schlessinger ignited a firestorm of criticism after Media Matters posted audio from a Tuesday conversation she had with a black female caller. The caller was complaining about her white husband's friends and their use of the N-word. In response, Schlessinger said:

"Black guys use it all the time. Turn on HBO and listen to a black comic, and all you hear is n****r, n****r, n****r. I don't get it. If anybody without enough melanin says it, it's a horrible thing. But when black people say it, it's affectionate. It's very confusing.

When the caller said she couldn't believe Schlessinger was "on the radio spewing out" the N-word, Schlessinger said she "didn't spew out" the N-word and repeated, "n****r, n****r, n****r is what you hear on HBO."

She then criticized the caller, saying "Don't take things out of context. Don't NAACP me."

Their conversation ended there. Schlessinger offered an epilogue to her audience: "If you're that hypersensitive about color and don't have a sense of humor, don't marry outside of your race."

We are not fans of the N-word; in fact, it is banned from Scragged (so, commenter, use **s or expect deletion.) The last thing we want to hear when we turn on the radio is foul putrescence - which, as Dr. Laura alluded to, is why we don't listen to the rap stations.

No, this isn't a free-speech issue; nobody is suggesting that Dr. Laura should go to jail or that the government should throw her off the air, which is where the First Amendment would get involved.

It's a matter of taste and decency. With her customary inimitable directness, Dr. Laura stabbed a dagger straight into the heart of the issue: If something is rude, crude, and socially unacceptable, it is so for everyone; and if not, then not. To say that what you're allowed to say or do depends on your race as all too many liberals claim is nothing less than racism, pure and simple.

America has sadly become used to rampant racism throughout the media and the dominant culture wherein favored groups are permitted to say and do things that members of disfavored groups would be pilloried or exiled for saying or even thinking. Black rappers can call people "crackers" and worse without fear of censure; here, we have Dr. Laura using an equivalent insult, not aimed at anyone at all but merely as an example, and people are all but throwing rocks at her.

Black people, to be specific - and one has to wonder if they even read what they write before they post it. Listen to this shaking display of naked racism which goes entirely unchallenged:

When will white people just accept the fact that black folks can use the N-word, but they cannot. Why is this such a complicated life rule for them?

Why are white folks so intent on rationalizing their use of the word? You can't use it, period. Get over it.

We don't have to explain why you can't say it, we don't have to defend our use of it and we don't have to tolerate you saying it. You just can't.

Let's try it in terms which that bigoted author might understand: We don't have to explain why white people can call black men of any age "boy." We don't have to defend our use of it, we just can, period - get over it. Now how does that sound?

Evil Communications Corrupt Good Manners

Of course the race-baiters on the left are throwing around racism charges willy-nilly; that's their sole stock in trade. Far more disturbing is when people generally considered to be conservative make the same mistake, as witness Kathleen Parker's utterly wrongheaded column in the Washington Post:

Dr. Laura's stated point was that since blacks frequently use the N-word, whites should be able to as well. She was correct that the word gets lots of exercise -- and her use of it was in the prosecution of that point. Even so, the N-word stands alone as too injurious for whites to use, period. Everyone knows this.

When blacks use it, they are reclaiming the word, robbing it of its power to intimidate by making it their own. The same spirit was behind Eve Ensler's "Reclaiming C---" in "The Vagina Monologues." Used by a man against a woman, the word is vile and threatening. Used by women among women, it becomes something else. Silly, if you ask me, but benign. [emphasis added]

Only someone who has spent far too long marinating in the polluted Ganges-esque intellectual waters of the mainstream establishment could even compose a paragraph as transparently fatuous as this, much less put it forward with a straight face as an actual argument. The use of a dirty word in a filthy "artwork" of pseudo-intellectual pornography somehow not merely justifies its use there but elsewhere too? You might as well argue that because various exotic sexual acts were "artfully" depicted in Debbie Does Dallas, that makes them equally appropriate for the streets of Dallas. The demeaning acts equally with the demeaning words are equally verminous no matter where they appear nor by whom they are used; anything else is rankest bigotry and illogic.

Dr. Laura's Overlooked Landmine

In all the furor over Dr. Laura's point about the N-word, nobody is talking about something else she said which is even more inflammatory while also being true.

When an African American caller asked her for help in dealing with what she considered racist remarks by friends and family of her white husband, Schlessinger mocked her as being hypersensitive and repeated the offending N-word several times... Dr. Laura repeatedly interrupted, even suggesting that the woman shouldn't have married outside her race if she was going to be so thin-skinned. [emphasis added]

Everyone with eyes to read or ears to hear knows perfectly well that vast numbers of blacks do, indeed, use the N-word with great frequency. Some whites do as well. Some whites are also racists; so are some blacks. Everyone also has a family member who is not really fit for polite company, don't we? Is it any surprise that Dr. Laura's black caller had encountered a racist buried in her husband's family tree? It would be interesting to hear the opinions of the black woman's family regarding her white husband, but nobody dared share those.

Of course you need to expect potential problems when you marry outside of your culture - of which race is only one variable. Would we rationally expect things to go swimmingly around the family table if a feminist married a Saudi Arabian sheikh? How about a vegetarian and an Argentinian? This doesn't mean such unions should be illegal, but only a fool would be as sanguine as when two childhood sweethearts that grew up together get hitched.

In America, we are all supposed to be Americans first and foremost. The last fifty years have seen a concerted effort to drive us apart instead of unifying us - celebrating "multiculturalism" and "diversity" instead of one unitary common culture we all share, or ought to share. The more different we become, the more fault-lines and strife there will be; the Democratic party has specialized in exploiting these conflicts to increase its own power and wealth. Is Dr. Laura the villain for pointing out obvious but painful truths?

No. While she wrestles with the tar baby, we wish her every good fortune and persistence. A sticky and nasty mess this may be, but it's long past time someone took it on. Please don't retire from the field, Doctor; we'll need your harsh but effective medicine for many years to come.

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Hobbes is a staff writer for Scragged.com. Read other Scragged.com articles on Dr. Laura Schlessinger, racial diversity and racism

The SEC Gums New Jersey

Will Offensicht — Wed, 25 Aug 2010 15:00:00 GMT

Having been criticized at length for not catching Bernie Madoff or any number of other financial scam artists, the Securities and Exchange Commission was rewarded for its failures by being given a vast array of new powers and a large budget increase by the recent 1000+ page financial "reform" act. You'd think that they'd be out there putting the bite on evildoers right and left.

Indeed, the intrepid porn-loving investigators at our SEC leaped into action against the forces of evil - but ended up biting no one, thereby bringing a whole new meaning to the term "gumshoe." Reuters reports:

U.S. regulators said on Wednesday they charged New Jersey with securities fraud for not disclosing to municipal bond investors that it was underfunding its pensions.

New Jersey, the first state ever hit with securities fraud charges by the Securities and Exchange Commission, agreed to settle the case without admitting or denying the findings, the SEC said. The state was not required to pay any civil fines or penalties, but ordered to cease and desist from future violations. [emphasis added]

When any would-be borrower wants to sell bonds or any other security to anyone else, they fall under SEC regulations. The SEC is supposed to make sure that the borrower tells the truth about the conditions surrounding the proposed loan. The idea is to help investors decide whether the interest rate being offered is enough to offset the risk that the loan might not be paid back.

There is a huge body of rules about "material facts" that must be disclosed and "immaterial facts" that need not be mentioned. The basic rule is that any business, city, or any other organization wanting to borrow money is required to tell the truth about what other obligations they have that might make it hard to pay back the new loan they're trying to sell.

A government entity, like any other borrower, is supposed to talk about significant outstanding obligations so that prospective lenders can make an informed decision whether to invest or not. Forcing prospective lenders to tell the truth is supposed to fight fraud. Reuters went on to tell us what had happened:

New Jersey offered and sold more than $26 billion of municipal bonds in 79 deals between August, 2001 and April, 2007, according to the SEC.

The offering documents "created the false impression that the Teachers' Pension and Annuity Fund (TPAF) and the Public Employees' Retirement System (PERS) were being adequately funded, masking the fact that New Jersey was unable to make contributions to TPAF and PERS without raising taxes, cutting other services or otherwise affecting its budget," the SEC said. [emphasis added]

New Jersey isn't alone in lying to investors, as it turns out:

U.S. states face a total shortfall of at least $1 trillion in their funds for employees' pensions and retirement benefits, according to a report released by the Pew Center on the States in February. The report found that states did not save for the future or manage costs well, but they also typically expect an 8 percent return on investments. [emphasis added]

Many states aren't putting money aside to cover state employee pensions and they're making wildly optimistic assumptions about the rate of return on the inadequate investments they have set aside. It's pretty clear that various people who work for the State of New Jersey lied like rugs in asking people to lend them money.

When you apply for a mortgage, you're supposed to be honest about your income and about any other debts you owe, or at least you were until the government got into the home lending business. In theory, lying to a bank about your income to get a loan is fraud which can get you into big trouble.

Even the New York Times, generally all in favor of providing money for government spending by any means necessary, was disappointed in the outcome:

... Nor did the S.E.C.’s order name any individual state officials, nor the bond underwriters and other professionals whose job it was to vouch for the state’s financial statements. New Jersey’s largest bond underwriters during the period in question include Citigroup, J. P. Morgan Securities, Morgan Stanley, Bank of America, Merrill Lynch, Goldman Sachs and Barclays Capital.

The commission said that from 2001 to 2007, New Jersey claimed to have money set aside in a “benefit enhancement fund” as part of a “five-year plan” to pay for new benefits for teachers and general state employees. In fact, the fund was an accounting illusion and no such money was available. [emphasis added]

The SEC didn't name any of the state employees or point out that the organizations that underwrote the bonds were also supposed to make sure that the loan prospectus told the truth.

“Yes, they charged the State of New Jersey with fraud, but there’s no price paid here,” said Lynn E. Turner, a former chief accountant for the S.E.C. who helped with the pension investigation in San Diego. “There’s no fine, and no accountability on the part of any individuals.”

Without accountability there's no reason for state employees to tell the truth.

Contrast this "we promise not to do it again" attitude towards a massive misstatement of the state's financial condition with how the SEC treated two minor players at Bear Sterns. Instead of asking them not to do whatever they were supposed to have done again, the SEC brought criminal charges against them. Fortunately, the jury didn't buy it:

Not so fast, this Brooklyn jury declared. "The entire market crashed," one juror explained. "You can't blame that on two people."

As a practical matter, there's no difference between a state falsely claiming that they're getting an 8% return on their pension fund and Bernie Madoff telling investors he's getting 10% on their money. Both sets of liars are trying to put over the same sort of fraudulent Ponzi scheme.

So why, given their experience with Madhoff, didn't the SEC actually put the bite on the people who made false statements? Why were they content with a toothless promise that New Jersey wouldn't do it again? If they didn't want to go after state employees, they could go after the Wall Street types who'd signed up to the lies. Has the SEC suddenly become toothless? Or is that part of a larger process by which our society is becoming more and more tolerant of fraud?

Timothy Geithner was approved as Secretary of the Treasury - overseeing, among other things, the IRS - in spite of cheating on his income taxes, even though as an experienced banker and financial wizard he ought to know better.
Rep. Charlie Rangel hasn't even been censured for not paying his income taxes even though as the head of the committee that writes tax legislation he ought to know better.

Is the SEC telling us that honesty in government circles has become obsolete? Both the Times and Reuters reported that New Jersey's fraud started under a Republican administration in 2001 and continued through two Democratic administrations. This can't be a purely partisan phenomenon even though the most famous crooks who've gotten off have been Democrats, because the SEC also ignored wrongdoing by Republicans in this case. Maybe it's becoming acceptable for government employees to squeeze out all they can and act as they please regardless of the law.

If that's how things are, we're in trouble, and progressively more of it as the word gets around.

Read the original article on Scragged.com

Will Offensicht is a staff writer for Scragged.com and an internationally published author by a different name. Read other Scragged.com articles on regulation, fraud and SEC

Liberty and the Right to Lie

Petrarch — Tue, 24 Aug 2010 14:08:00 GMT

News of today's latest judicial atrocity comes to us from Politico:

In a major First Amendment decision Tuesday, the U.S. Court of Appeals for the 9th Circuit struck down a federal law making it a crime to falsely claim a military honor or decoration... Judge Milan Smith, writing for colleague Thomas Nelson, said the law went too far, even though many legal experts view deliberately false speech as unprotected by the Constitution. [emphasis added]

So, to the ephemeral Constitutional "right" to privacy, "right" to murder your unborn child, and pending "right" to "marry" someone with whom you are inherently biologically and physically incompatible can be added a right to lie through your teeth. Used-car dealers and politicians, rejoice!

Except that in this case, the judge is right, and the moralizers are wrong. Listen to the judge's written opinion:

We have no doubt that society would be better off if Alvarez [the defendant, a proven liar] would stop spreading worthless, ridiculous, and offensive untruths. But, given our historical skepticism of permitting the government to police the line between truth and falsity, and between valuable speech and drivel, we presumptively protect all speech, including false statements, in order that clearly protected speech may flower in the shelter of the First Amendment. [emphasis added]

There are a whole host of things that are morally wrong and reprehensible to the point that all decent and reasonable people should avoid and look down upon then, and yet which government has no business policing. Most Americans of all political stripes would agree that adultery is wrong, for example, but do any of us want the police breaking down bedroom doors and hauling adulterers off to prison or to be stoned to death? No.

Not a crime in progress.

How about lying? The judge's ruling shines a powerful spotlight on the problem: if lying is a crime, then the government gets to decide what is a lie. Anyone with a pulse in the last couple years knows that our political arena is constantly criss-crossed with accusations of lying, from Rep. Joe Wilson vs Obama on down to the meanest pundit.

Do we really want the government to be in the business of deciding who is lying, as a general rule? We've just seen an example of why that's a bad idea, when California Judge Walker ruled that six thousand years of societies arranging marriages around a man and a woman and considering homosexual relationships to be "something else" at the very best, was nothing more than a bigoted, biased, and bogus lie. If that's the way the government distinguishes lies from truth, they have no business going there.

There are some situations where lying is and ought to be illegal: lying to the court, for example. We call this perjury, obstruction of justice, and contempt of court. You can also go to jail if you con money out of someone by lying to them; this is fraud by deception or some other form of consumer fraud.

In normal daily life, though, people lie all the time. Alvarez claimed to have military honors he didn't earn; this makes him a dastardly scoundrel. Unless he got money from someone under false pretenses, however, there is no crime here, and the judge's ruling is the right one.

There is such a thing as absolute truth - either Alvarez received the Medal of Honor, or he did not; either Obamacare will change the level of care you're allowed to get or it will not; either taxes will be raised or they will not. Being a free people means that we get to make our own decisions about who is lying and who is telling the truth and hopefully express them at the polls and elsewhere using our other rights of free speech and freedom of the press.

Just because we don't like something someone is doing - just because it's morally wrong, even - making moral failings into crimes generally only makes the situation worse.

That government is best which governs least.

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Petrarch is a contributing editor for Scragged. Read other Scragged.com articles on crime, lies and liberty

The Follies of Mark-to-Market

Will Offensicht — Mon, 23 Aug 2010 13:32:00 GMT

It's a longstanding US Government tradition that when an agency really fouls up, they're punished by being forced to take a massive budget increase. When the CIA and the FBI overlooked the 911 terrorists, their budgets were nearly doubled and a massive new bureaucracy was created in Homeland Security. When the CIA messed up and said that Iran was not producing an atomic bomb, their budget went up yet again.

This happens in other areas too. When the Securities and Exchange commission overlooked the accounting fraud that led to the collapse of Enron, WorldCom, Tyco and other billion-dollar business failures, a new law called "Sarbanes-Oxley," also known as SOX, was passed in 2002. SOX imposed all kinds of new accounting requirements on publicly-traded businesses. It gave the SEC more powers and created a new oversight board to make sure that accountants always did what they were supposed to do.

There has been much debate about how much SOX reduced our international competitiveness by making it cost more to operate a business in the United States. It's certain, however, that costs went up. We have a friend who climbs poles and fixes wires for a power company. Before SOX, they had to account for each bundle of cable ties they used. After SOX, their accountants required them to account for each individual cable tie. These ties cost less than a cent apiece, but they have to be counted and documented individually or the workers get in trouble.

There's another certainty - the extra accounting oversight required in SOX didn't help the SEC catch Bernie Madoff and did nothing to keep Fannie and Freddie from wrecking our financial system.

Despite these unfortunate experiences and the inherent flaws in the very idea of government regulation, congress has passed a 1,000+ page bill adding more and more layers of expense in complying with financial regulations.

Although farmers are already starting to worry that the new rules will make it much more expensive for them to use the futures market to protect themselves from wild swings in the price of agricultural commodities and car dealers are wondering if they'll be able to make auto loans, the actual effects of these new regulations won't be known for years. We've recently seen, however, that the "mark-to-market" rules which were imposed by the SEC were very damaging during the financial crisis.

Regulating Us All The Way to the Poorhouse

There are lots of different ways that companies can report the value of assets they hold. Traditionally, large companies recorded the purchase price of any real estate they owned and carried those assets on the books at that value. This "book value" could greatly understate the value of the company if the land or buildings had gone up in value - just compare the present value of Rockefeller Center with the relative pittance it cost to build - or book value could greatly overstate the value of the company if the assets had gone down in value as has happened to Detroit real estate.

"Mark-to-market" requires that each asset be priced at its "fair market value." Market value can change unpredictably as Judge Learned Hand recognized when he declared, "The market value is what a willing buyer will pay a willing seller on any given day." [emphasis added] It's a great deal simpler to carry an asset at book value, particularly if you have no intention of selling it.

Guessing what you could get for, say, the Chrysler Building in Manhattan or Caesar's Palace in Las Vegas provides much work for accountants and lawyers. Companies naturally preferred to record their assets at book value and avoid all that expensive guesswork, but mark-to-market became part of the U.S. Generally Accepted Accounting Principles (GAAP) in the early 1990s.

As mark-to-market spread, but before it became popular, it offered opportunities for fraud. Part of the Enron scandal involved placing unrealistically high values on assets which were hard to value. This made Enron seem more profitable than it actually was, as assets which had been bought cheaply were given vastly inflated values for bookkeeping purposes.

There's an inherent flaw in mark-to-market - what happens to "market value" when the market is so uncertain that there effectively is no market? Is the value zero at that point?

Mark-to-Market Massacring Banks

Suppose that a small-town bank has issued mortgages on, say, 10 houses. Let's say that these houses are each worth $100,000 so the bank's mortgage portfolio is a cool million dollars.

Now suppose the local auto plant closes, throwing several thousand people out of work. Suddenly, nobody wants to move to the town, so nobody wants to buy houses there. The market for houses has collapsed - those houses can't be sold at all, so their "fair market value" is zero even though people are still living in them.

What about the bank's portfolio? Their mortgages are backed by the value of the houses and the value of those houses has gone down. Nine of the people to whom the bank had loaned money kept their jobs, however, and are still paying on their mortgages. These people wouldn't try to sell even if the market hadn't collapsed - where would they live? 90% of the bank's mortgages are performing in that 90% of the checks are coming in, every single month.

What's the bank's portfolio worth? $900,000 because 90% of the loans are performing? Or zero, because none of the houses which secure the mortgages could be sold at the current moment?

If the bank tried to sell the mortgages, someone might be willing to bet that the real estate market in the town would eventually recover, but they'd pay only a fraction of face value. If the bank would get only 50% of face value if they had to sell the mortgages, their portfolio is worth $500,000. Since they don't intend to sell any of them, however, there's no way to determine actual market value; it's all a series of guesses.

This matters because the bank has borrowed money against these mortgages to make other loans. Having loaned a million dollars to 10 home owners, the bank put up those mortgages as collateral and borrowed $700,000. This is called "leverage."

Loan agreements of this type have what's called a "margin call" clause. Suppose the bank which borrows against its mortgages is required to have a 20% cushion, or margin. This means that the value of the underlying mortgages can't fall below $840,000. If it does, the counterparty who lent the $700,000 no longer has the required 20% margin and can call the loan, demand extra money, or do whatever else the contract calls for. This is known as a "margin call" and it's usually bad news for both parties.

If the value of the mortgage portfolio is based on cash flow, it's still $900,000 because 90% of the buyers are still making their payments. With this valuation, the bank that holds the mortgages is OK because there's still enough margin and its counterparty can't do anything.

If, on the other hand, the portfolio value is based on the underlying mark-to-market value of the houses, it's zero because none of them can be sold at this moment. Valuing the mortgages in this way means that the local bank is in big trouble with its counterparty.

Even if the bank could get 50 cents on the dollar by selling the mortgages, the value is $500,000 and the bank is $340,000 shy of meeting its loan covenant.

To sum up: with mark-to-market accounting, the value of financial instruments can collapse or vanish entirely even if the monthly checks generated by that instrument are still coming. Does this seem sensible or fair? Mark to market sounds sensible and fair, but it has the unintended side effect to literally bankrupt financial institutions overnight before anything bad happens to cashflow.

AIG and Bank Bailouts

This is precisely what happened to AIG. AIG had sold some mortgages and guaranteed their value. When the crash came, the mortgages couldn't be sold to anyone. Their "market value" was very low because there effectively was no market at that moment. AIG's loans were under water because they were in violation of their loan covenants.

The counterparties wanted to be paid. Morgan Stanley, who was owed billions by AIG, had good connections to the US Treasury, so the government spent billions paying off AIG's counterparties at 100 cents on the dollar. This was unusual - when there's a rescue, the counterparties usually have to share some of the pain, but Morgan Stanley's treasury connections were good enough for them to get 100% from Uncle Sap.

What happened in the end? It turns out that AIG had made sound loans: just about all of their mortgages are being paid off to this day. If they could have valued their mortgages on the basis of whether the loans were being paid as opposed to the price they could get if they tried to sell the loans, AIG would not have needed a bailout and all that hoo-hah about paying bonuses to the traders who'd made money for AIG would not have happened.

The problem was that the financial standards did not distinguish between assets such as vacant land which don't generate income and assets such as mortgages which do, they valued assets only on the basis of what they might fetch if they had to be sold. This led to what some have called "mark to make-believe," and it greatly worsened the financial crisis. CNBC quoted the former FDIC Chair William Isaac:

"The SEC has destroyed $500 billion of bank capital by its senseless marking to market of these assets for which there is no marking to market, and that has destroyed $5 trillion of bank lending," he said. [emphasis added]

"That’s a major issue in the credit crunch we’re in right now. The banks just don’t have the capital to start lending right now, because of these horrendous markdowns that the SEC’s approach required."

Although some of the underlying mortgages are in default, of course, the banks had already sold the really bad mortgages to Fannie Mae and Freddie Mac - that is, to the government - and most of what's left are being paid off on schedule. The Wall Street Journal said essentially the same thing:

The most disastrous Bush policy that Mr. Obama is perpetuating is mark-to-market or "fair value" accounting for banks, insurance companies and other financial institutions. The idea seems harmless: Financial institutions should adjust their balance sheets and their capital accounts when the market value of the financial assets they hold goes up or down.

So although banks have twice the amount of cash on hand that they did a year ago, they lend only under duress, or apply onerous conditions that would warm Tony Soprano's heart. This is because they know that every time they make a loan or an investment there is a risk of a book write-down, even if the loan is unimpaired. [emphasis added]

There is debate on just how much of the financial disaster was caused by "mark to make-believe" and what was due to other causes, but it's clear that mark-to-market was of no help either anticipating the crisis or in helping to cure the crisis. It remains to be seen how many brand-new land mines are hidden in the recent 1,000+ page reorganization of our financial system. Based on Congress' track record in regulating businesses, we don't expect anything good.

Read the original article on Scragged.com

Will Offensicht is a staff writer for Scragged.com and an internationally published author by a different name. Read other Scragged.com articles on economics, real estate, regulation, accounting, mark-to-market and Inconvenient Truths

Hurricanes of Color

Kermit Frosch — Fri, 20 Aug 2010 16:12:00 GMT

The invention of modern computers and information systems has created an avalanche of information overwhelming anything we've had in all of human history. What's more, computers are able to process this information in ways that would take lifetimes for a human being to do by hand.

The combination of unprecedented volumes of data with awesome analytical power leads to scientific studies with conclusions that are, well, not obvious. AFP brings us news of something most strange: the color of hurricanes.

A change in the color of the ocean could dramatically impact the number and intensity of hurricanes, according to US researchers...

The main factor is the green tint ocean water takes when there are large concentrations of chlorophyll, a pigment that helps tiny organisms known as phytoplankton convert sunlight into food for the rest of the marine ecosystem.

So what causes red hurricanes?

What difference does this make? Quite a profound one, as it turns out:

Without chlorophyll, sunlight penetrates deeper into the ocean, leaving the surface water cooler. Cold water in turn causes changes in air circulation patterns, forcing strong winds aloft, "which tend to prevent thunderstorms from developing the necessary superstructure that allows them to grow into hurricanes," the researchers said.

How many times have we heard from His Greenness Al Gore that global warming will lead to more hurricanes, because hurricanes are caused by warm oceans? Now we find that this is really an indirect link; the chlorophyll in plankton is a more significant cause of hotter ocean surfaces.

So there's a simple enough solution: get rid of the plankton, and you can eliminate or reduce hurricanes. Right?

Wrong! The Oregonian is on the job:

...We vitally depend upon [phytoplankton]. Out in the ocean, infinite numbers of them produce half the world's oxygen and form the base of the marine food chain. For what it's worth, phytoplankton eat crazy amounts of carbon dioxide, a greenhouse gas. But their numbers are down 40 percent worldwide since the 1950s and may be headed down further. The culprit appears to be rising ocean temperatures associated with climate change. The sea's warming top layer of water, where phytoplankton do their job, increasingly lacks life-sustaining nutrients from the cold deep.

Now, wait a minute here. We have one article saying that the presence of plankton causes ocean warming and thus hurricanes - and then another article saying that global warming is killing off the plankton. By the same token, global warming is supposed to cause worse hurricanes, but if global warming kills off plankton, that'll make the oceans cooler and reduce the number of hurricanes. Are these guys lying? Are they fools?

There is, of course, another answer: We haven't the slightest clue how the Entire Global Climate works; it mostly runs itself and has a myriad of self-balancing feedback mechanisms to keep things within a livable range. By bending over backwards to destroy our economy and lock the climate precisely into its exact position today, we're not only murdering countless millions of people who would otherwise be able to enjoy more well-fed and comfortable lives provided by modern high-energy technology, we're actually taking on an impossible task. We're bankrupting ourselves... for nothing.

Meanwhile, Al Gore has become a billionaire and enjoys all the finer things of life that he'd like to deny the rest of us. Fancy that.

Read the original article on Scragged.com

Kermit Frosch is a guest writer for Scragged.com. Read other Scragged.com articles on hurricane, Al Gore, global warming and research