How America Can Rise Again

Is America going to hell? After a year of economic calamity that many fear has sent us into irreversible decline, the author finds reassurance in the peculiarly American cycle of crisis and renewal, and in the continuing strength of the forces that have made the country great: our university system, our receptiveness to immigration, our culture of innovation. In most significant ways, the U.S. remains the envy of the world. But here’s the alarming problem: our governing system is old and broken and dysfunctional. Fixing it—without resorting to a constitutional convention or a coup—is the key to securing the nation’s future.

via How America Can Rise Again – The Atlantic (January/February 2010).

Management Secrets of the Grateful Dead

The Grateful Dead Archive, scheduled to open soon at the University of California at Santa Cruz, will be a mecca for academics of all stripes: from ethno­musicologists to philosophers, sociologists to historians. But the biggest beneficiaries may prove to be business scholars and management theorists, who are discovering that the Dead were visionary geniuses in the way they created “customer value,” promoted social networking, and did strategic business planning.

via Management Secrets of the Grateful Dead – The Atlantic (March 2010).

Does the Web change how we think?

” By flooding us with information, the Internet also “causes more confidence and illusions of knowledge” (Nassim Taleb of MIT, author of The Black Swan), but makes our knowledge seem “more fragile,” since “for every accepted piece of knowledge I find, there is within easy reach someone who challenges the fact” (Kevin Kelly, cofounder of Wired).

Even more intriguing are the (few) positive changes in thinking the Internet has caused. The hyperlinked Web helps us establish “connections between ideas, facts, etc.,” suggests Csikszentmihalyi. “Result: more integrated thought?” For Kelly, the uncertainty resulting from the ubiquity of facts and “antifacts” fosters “a kind of liquidity” in thinking, making it “more active, less contemplative.” Science historian George Dyson believes the Internet’s flood of information has altered the process of creativity: what once required “collecting all available fragments of information to assemble a framework of knowledge” now requires “removing or ignoring unnecessary information to reveal the shape of knowledge hidden within.” Creativity by destruction rather than assembly.

via Your Brain Online | Print Article |

Some in Congress Get Smart on Iran

Beyond smarter sanctions, though, the US needs to start exercising smart power in Iran. This means identifying areas in which our current policies are counterproductive — and getting out of our own way. For example, the world recognized what a crucial role social media services like Twitter and Facebook played in the events in Iran this summer, yet current US sanctions actually prohibit Americans from providing Internet communications software to the Iranian people. Microsoft and Google have both shut down instant messenger services because their programs are enabled by a download not authorized for export to Iran under US law. The same can be said for anti-surveillance software that allows Iranian users to surf the web free of government spying.

Just this summer, the Senate authorized $20 million for the development of software and other programs that allow users in Iran to bypass government censorship and monitoring efforts. But current laws still prohibit an American from sending these programs to Iran!

Did you know that after one of Iran’s most terrible natural disasters — the 2003 earthquake in Bam that killed over 25,000 people — the Iranian government sought advice from American engineers to reinforce thousands of primary schools around the country to make them more earthquake-proof? Sadly, that type of assistance was deemed “dual-use” under US sanctions, and the Americans were barred from making the trip. –Patrick Disney – Assistant Policy Director at the National Iranian American Council

via Patrick Disney: Some in Congress Get Smart on Iran.

How Wall St. Enabled Unsustainable European Welfare States

For all the benefits of uniting Europe with one currency, the birth of the euro came with an original sin: countries like Italy and Greece entered the monetary union with bigger deficits than the ones permitted under the treaty that created the currency. Rather than raise taxes or reduce spending, however, these governments artificially reduced their deficits with derivatives.

In 2001, just after Greece was admitted to Europe’s monetary union, Goldman helped the government quietly borrow billions, people familiar with the transaction said. That deal, hidden from public view because it was treated as a currency trade rather than a loan, helped Athens to meet Europe’s deficit rules while continuing to spend beyond its means.

Instruments developed by Goldman Sachs, JPMorgan Chase and a wide range of other banks enabled politicians to mask additional borrowing in Greece, Italy and possibly elsewhere.

In dozens of deals across the Continent, banks provided cash upfront in return for government payments in the future, with those liabilities then left off the books. Greece, for example, traded away the rights to airport fees and lottery proceeds in years to come. Critics say that such deals, because they are not recorded as loans, mislead investors and regulators about the depth of a country’s liabilities.

via Wall St. Helped Greece to Mask Debt Fueling Europe’s Crisis –

Rap Video Boosts Economist’s Book Sales

Friedrich Hayek, Nobel-prize winning economist and well-known proponent of free markets, is having a big month. He was last seen rap-debating with John Maynard Keynes in the viral video above, (in which Hayek is portrayed as the sober voice of reason while Keynes overindulges at a party at the Fed). His 1944 book, “The Road to Serfdom,” provided the theme for John Stossel’s Fox Business News program on Valentine’s Day.

Hayek, who died in 1992, is also reemerging as a bestselling author. A new edition of Hayek’s seminal book, “The Road to Serfdom,” was published in March 2007 by the University of Chicago Press as part of a series called “The Collected Works of F. A. Hayek,” for which I serve as editor. For over a year-and-a-half, the book sold respectably, at a clip of about 600 copies a month.

But then, in November 2008, sales more than quadrupled, and they haven’t slowed down since. What’s more, the Kindle edition went on sale in late May 2009 and is now the best-selling book that the University of Chicago Press has offered in that format. This would be a pretty good sales record for a contemporary author, but it is nothing short of amazing for a book originally published in 1944, and by an economist, no less.

via The secret behind the hot sales of “The Road to Serfdom” by free-market economist F. A. Hayek – Short Stack.

Cheap Heroin for small-town USA

Farm boys from a tiny county that once depended on sugar cane have perfected an ingenious business model for selling a semi-processed form of Mexican heroin known as black tar.

Users need not venture into dangerous neighborhoods for their fix. Instead, they phone in their orders and drivers take the drug to them. Crew bosses sometimes call users after a delivery to check on the quality of service. They encourage users to bring in new customers, rewarding them with free heroin if they do. Xalisco bosses have avoided the nation’s largest cities with established heroin organizations.

Among the idiosyncrasies of Xalisco dealers is that they generally do not sell to African Americans or Latinos. Instead, they have focused on middle- and working-class whites, believing them to be a safer and more profitable clientele.

A lethal business model targets Middle America –

Don’t Get Giddy About China

There is a Russian proverb that says our fate plays out on the exact path we take to avoid it. This is the story of China in a nutshell. Policy makers have accumulated forex reserves in large part to avoid a balance of payments crisis, and yet the massive reserve accumulation has meant a parallel accumulation of high-powered money and an epic credit expansion over not just the past year, but over the past four or five leading to dangerous asset and credit bubbles manifesting throughout China’s real economy and financial markets.

Chinese policymakers appear to be trying to spur private consumption by building out social safety nets. While better social safety nets are an important and positive development, the fundamental answer for policy makers to improve the allocation of capital (and in so doing to shift China Inc. away from its export/production orientation to a more sustainable consumption driven model) is only going to come from a combination of four key policy initiatives, in order of importance:
·         Interest rate liberalization
·         Exchange rate regime liberalization
·         Major reform liberalization in the service sector, especially in financial / banking sector, which is currently dominated by state players.
·         Liberalization of rural land ownership rules.
None of these is likely to happen soon, unfortunately, given the political reality – even in a one-party country like China – that it is difficult to implement tough-medicine reforms during a period of global economic stress, and this is especially true for President Hu Jintao and Premier Wen Jiabao as the country gets closer to its next leadership transition cycle in 2012.

If I am wrong about the bearish scenario for China above, I think it will be because I am too optimistic. A possible worst-case scenario is that the bursting of China’s credit bubble leads to a second-wave global credit crisis and a freeze in global financial markets no matter what the People’s Bank of China or the US Federal Reserve does to reflate markets – and we get a classic global liquidity trap scenario and a major debt-deflation Great Depression redux.

via Asia Sentinel – Don’t Get Giddy About China.

Allied Mole in 3rd Reich Uncovered

The documents, uncovered in the Churchill Archives in Cambridge and the National Archives, show that Knopf and his sub-agents alerted British Intelligence to German plans for an invasion of Malta in 1942, relayed Rommel’s intentions in North Africa and revealed Hitler’s fatal obsession with capturing Stalingrad on the Eastern Front.

The Führer was “determined to capture Stalingrad at all costs”, Knopf reported. Hitler’s disastrous assault on the Russian city, which led to the destruction of the German 6th Army, is seen as a turning point in the war.

via Uncovered documents reveal spy who fed information on Hitler’s secrets – Times Online.

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