I, Lachyrmator

Look at this 54 Series 67mm Flameless CS Expulsion Grenade. There's not a single person in the world who knows how to make this Grenade. A remarkable statement? Not at all.


The aluminium in the casing, for all I know, was mined in China. 
To mine the aluminum to took drills and excavators. 
To build the excavators it took steel. 
To make the steel it took iron ore.


The tip's color, we call black but it is really Oven baked black.
I'm not sure where it comes from but I think it is dyed and baked somewhere in Pennsylvania.


That UN specification 1A2/Y36/S Lever-Lock Lid probably comes from South Africa, where the design isn't even native! It was imported from England by some businessmen with the help of the British Government.


The 2-chlorobenzalmalononitrile? I haven't the slightest idea where it came from; or the blue paint; or the ink that reads Made in U.S.A.; or the time delay fuse that brings it all together.


Literally thousands of people cooperated to make this Grenade; people who don't speak the same language and who practice different religions; who might hate one-another if they ever met
.
When you wheeze and vomit from this Grenade's contents, you are in effect trading a few painful minutes of your time for a few seconds of the time of all those thousands of people. 


What brought them together and induced them to cooperate to produce this grenade? It was no commissar sending out orders from some central office. It was the magic of the price system; the impersonal operation of prices that brought them together to make this grenade so that you could have it shot at you in your democratic quest.


That is why the operation of the free market is so essential, not only to promote productive efficiency, but even more to foster harmony and peace among the peoples of the world.


Influences: 

I, Pencil My Family Tree as told to Leonard E. Read

and

Free to Choose, vol. 1, 1980

and

Controversial Tear Gas Cannisters Made in the USA - CNN

The Middle East and Neocons.

Here's what I want to know (yes, I'm finally asking a question on a blog claiming to be devoted to questions):

Will the neoconservatives try to paint Tunisia (and maybe Egypt and any subsequent revolts) as a victory for their world view?

The idea is: put a functional Arab democracy into the region and the various dictatorships will fall by popular uprising. For some reason democracy magically cancels out fundamentalism and the US is victorious in the war on terror.

While I don't agree with this view, I think neocons may start making these claims. We'll see them claiming the Iraq was was indeed justified in these terms; indeed, it is one of the four reasons Thomas Freedman cited back in 2004 for his continued support of the war.

Here's where things fall apart for the neocons (and we faced a similar possibility in Iraq for a while): Is it still a victory if the democracy empowers the exact people you were trying to eliminate, the fundamentalists. The Tunisian revolution was against a fairly moderate (by regional standards) dictator and happened in part because Kirsten Dunst's his wife's extravagant lifestyle was incompatible with Islamic values.

As Dan Drezner puts it: Which neoconservative impulse will win out -- the embrace of democratic longing, or the fear of Islamic movements taking power?

I looked up from my lunch and saw a fat boy.

I looked up from my lunch and saw a fat boy:
white ear-buds tethered to the tablet he tenderly toted.
Behind him flowed another fat boy and another:
guts spilling the banks of their trousers and endless chins issuing forth from a lipid spring.
Then came the mother's mighty girth surging through the door:
cross hung from a thin gold necklace strung round what now approximated her neck.

I hated her. I hated the boys. I hated their faith and family and everything they stood for.
I hated the burden they would place on me. I hated the negligence and selfishness of their condition.
I hated the tablet and I hated the Longhua suicide factory it came from.
I hated their waste and their soon to be unfinished meals packaged separately and thrown away together long after the bread was broken and dipped and gobbled up.

I could no longer stand their presence.
I threw away the bread-bowl, the plastic cup, the napkin.
I drove away burning long dead life and spitting it out my tail pipes into the sky.

Best This American Life EVER.

It's called Kids Politics.
Intro: cutthroat Chinese elementary school elections
Acts
1: A reenactment of the Grenada invasion at the Reagan Library
2: A girl who loves Glenn Beck and doesn't believe in global warming argues with a scientist.
3: What happens when students get to set all the rules in their own school.

Ok NASA is Cool...

Two videos from a guy who wants to be NASA's PR/Advertisement guy. As one commenter put it: "If this was shown on TV we would probably be exploring space instead of fighting wars."

While I don't understand it, this post is really, really, really important.

Despite the title and the apocalyptic language, Richard Smith and the linked interview with Gary Gorton provide a good overview of the repurchase (commonly called repo but no the same as the guy who takes your car when you miss payments) market and how the shadow banking system works. On top of that, it points to how JP Morgan will end the world through rehypothecation.


I'm going to link a lot of material and none if it is an easy read but some is in layman's terms. Math is hard and I can't do it hence the need to gather context. I'm putting it all here as a reference for myself more than anything else. I also want to apologize to Houston for the long post as I know it irks him (one day my thoughts will look more like i09, today is not that day).


Here's wikipedia and others about some related stuff because the articles aren't written for you and I.
Repurchase Agreement and from Investopedia


Repo 105 and from Zero Hedge: How Lehman Fooled Everyone (Including Allegedly Dick Fuld) And How Other Banks Are Likely Doing This Right Now and the NPR Planet money coverage plus a heplful you tube video about the accounting shenanigans and the official Proceedings Examiner's Report Volume III, Repo 105. Repo 105 is essentially what pushed Lehman into bankruptcy. Once their sources of liquidity dried up they couldn't stay in operation and folded in a matter of days. It triggered the credit meltdown and the market crash of 2008. It led directly to the bailouts and indirectly to McCain's fumbling of the whole matter which cost him the election.


According to the linked Calculated Risk article:
"If JPM pull it off, there will be a big credit multiplier and a big area of Dragon Country for us all to visit. Replaying the ’08 repo crash with 20 rehypothecations rather than 4 gives a system that has $17 trillion of liquidity in it, pre-crash, for every $1 trillion of collateral. Apply the crisis haircuts and $8 trillion of liquidity vanishes. That is Doomsday. All it takes is some solvency doubts; the quality of the collateral makes no difference. Indeed, because of the small starting haircuts, the US Treasuries make a larger contribution to the liquidity loss, if the number of rehypothecations is larger."


I emphasized quality of collateral because a big part of Lehman's repo strategy was to lend riskier collateral at slightly higher rates (it was both profitable and kept bad assets off the books). The kicker was that the riskier collateral was all Mortgage Backed Securities and their slowly customers stopped accepting it after Bear Stearns collapsed. 


The article ends on a mixed note but with some regulatory suggestions:
"So how does one wall off Dragon Country? The ultimate objective must be a UK version of the 1934 Securities Law, which capped rehypothecation quite effectively in the US. Pending that, or as well as, some or all of the following:

• The number of times a given piece of collateral can be rehypothecated is critical. Regulators might consider restricting it.
• Haircuts also matter, especially when they are very small. Regulators might consider increasing the minimum haircut on rehypo’d assets. If haircuts of less than 10% were not permitted, then the credit multiplier could not exceed 10 for any repo collateral, no matter how much rehypothecation there was. If it was 20%, the credit multiplier could not exceed 5.
• Regulators might consider eating some of, or a lot of, JPM’s lunch, by taxing each rehypothecation. The proceeds would build up a fund that provides the liquid assets needed in a crisis…something like an FDIC for repo liquidity.

But I wouldn’t hold your breath; the UK authorities’ response so far suggests that they, like JP Morgan, think unrestricted rehypothecation is a thoroughly good thing. I disagree."