Daily Archives: July 28, 2011

How To Get Rich With Risk Mismanagement

I am now reading the book Proofiness: The Dark Arts of Mathematical Deception by Charles Seife. It mines similar ground to the book Bad Science: Quacks, Hacks, and Big Pharma Flacks that I have previously written about.  I can see that this book is going to be a goldmine of examples that is  different from the  goldmine of examples in the other book.

The nugget I just came across was in reading the Risky Business chapter.

Every few years, tremendous cases of risk mismanagement extract money from average citizens and put it into the hands of the wealthy. Whether it’s the savings and loan scandal or Enron or the subprime mortgage crisis, the end is always the same. The people who are willing to lie about risks make themselves very rich, and the taxpayer suffers the consequences.  Even if one or two of the malefactors  wind up in jail, there are always many more who make themselves much better off at others’ expense and never suffered any serious consequences.

In fact this chapter is almost a handbook on how to get rich with risk mismanagement.  Having read this might make me a better investor, more able to recognize risk mismanagement when I see it.  I urge every honest person to read this chapter and every dishonest person to stay away from it.

Wouldn’t it be paradise if this knowledge also made our government regulations more cognizant of this repeated pattern?  Unlikely however, as the risk mismanagers have financial control of our politics where the laws to control this would have to be made.

Pelosi: Boehner’s Plan Is A Jobs Killer

Finally someone on the Democrat’s side use the key words. The Republican’s plan is a jobs killer. I have been trumpeting the idea all over this blog for weeks if not months that the jobs killer is the failure to get rid of the Bush tax cuts for the wealthy. Pelosi doesn’t say it in quite that way, but she’s close enough for starters.

Considering how much air time Mitch McConnell (minority leader in the Senate) gets, I wonder why we haven’t been hearing more from Nancy Pelosi (minority leader in the House) all along. From the time she was Speaker Of The House, it has been apparent that she is the only one in a leadership position on the Democratic side that has the guts to say what needs to be said.

The Money Melodrama in Washington

The article, The Money Melodrama in Washington, by Richard Reeves starts with the following premise:

Stating the obvious: Politicians know politics; that’s their business. Business is not their business, and any discussion about American presidents and economics has to begin with this discouraging word: American politicians, with a very small number of exceptions, don’t know anything about economics.

That is also one of the main contentions of my political blog here.

I think Reeves makes a common mistake in the following sentence:

In Washington, during the deficit debates for the past few weeks, politicians are guessing—as I think most economists and pundits are—and they seize on almost any deficit idea that sounds good at the time.

Politicians are guessing which is the right direction to go, cuts or tax increases for the wealthy.  I think most economists are guessing about a different matter.  They are guessing the size of the debacle when the politicians choose the well known wrong road.  Only diehard economists like the ones at the Chicago School of Economics dispute the fact that cutting spending and continuing the massive shift of wealth distribution to the wealthy is the road to ruin.

Unfortunately, President Barack Obama in the typical politician’s lack of knowledge of economics does not know how far out of the mainstream are his economics advisers from the Chicago School of Economics.  That is why Obama and the Right Wing are competing for setting the goal of how far down the wrong road we should go.

“Congressman Peter King Is An Asshole” Keith Olbermann

According to the above video, Congressman Peter King is getting people of his own kind, as he might classify them, killed in Norway, but that isn’t going to stop him. We wonder how Al-Qaida and the Taliban can kill their own people and consider it to their political advantage. The right wing nutters seem to have picked up another stupid tactic from the people we supposedly oppose.

More Proof That the Republicans Aren’t Serious About Fiscal Discipline

I got a kick out of the short piece in U.S. News & World Report by Brad Bannon, More Proof That the Republicans Aren’t Serious About Fiscal Discipline. Brad avoids any sugar coating with statements like the following:

Three weeks ago, GOP Speaker John Boehner walked away from the president’s proposal to reduce the deficit by more than $4 trillion. To be fair to the lame duck speaker, Boehner actually accepted the president’s compromise offer before he rejected it. But when the speaker ran back down Pennsylvania Avenue with his tail between his legs after his White House meeting, his boss Rep. Eric Cantor read him the Riot Act and the speaker backed down before the Tea Party caucus backed over him.