“I’m so bored. I hate my life.” - Britney Spears

Das Langweilige ist interessant geworden, weil das Interessante angefangen hat langweilig zu werden. – Thomas Mann

"Never for money/always for love" - The Talking Heads

Friday, March 29, 2002


LI gives way to nobody in his utter contempt for the Bush administration. But you have to give them credit for moving the Middle East a giant step closer to peace. Sending Dick Cheney on his '002 Let's Roll tour apparently so alarmed the governments he visited (there's nothing like madness in a great power to make the satraps nervous) that the Saudis, of all people, have cemented a little peace, love and understanding between the monstrous minions of Hussein and the cold blooded plutocrats of Kuwait:

Attempts to reconcile Iraq and Kuwait at previous Arab summits failed � from the 1990 meeting immediately after the Iraqi invasion when a Kuwaiti sheik famously hurled plates at the Iraqi delegation to last year's summit in Amman, Jordan, when talks again collapsed. The annual gatherings of Arab heads of state were suspended throughout the 1990's because of the sour relations between Iraq and Kuwait. The Beirut meeting showed all the signs of following the usual pattern, with the Kuwaiti minister of state for foreign affairs summoning the press to his suite Monday to declare that Iraq was up to its old tricks.

But the existence of two major regional disputes � the Israeli-Palestinian turmoil and a looming conflict over Iraq � seems to have pushed through a compromise.

In order to avoid being attacked, the Iraqis were willing to be more flexible on Kuwaiti and other Arab demands. The other Arab states were eager to find a way to express their discontent over their perception that the United States is so little involved in the region that it could not even ensure the presence of Yasir Arafat, the Palestinian leader, at the summit."

Remember all those stories about the competence, ah, the admirable competence, of the crew around Bush, in the wake of 9/11? Let's add up the bill: Israel looks like Algeria, circa 1957; Iraq, led by one of the biggest mass murderers of our time, is now being welcomed into the fold of the former plate hurling alliance; the insane missile defense system, which has shown its irrelevance to the current world posture of threats for all to see, is being generously funded once again by the incorrigible folks in the White House (no doubt we would find, if we looked, long cozy meetings between the guys at General Dynamics and Donald Rumsfield's people before the Bushies fired up their Star Wars Defense propaganda machine); Pakistan and India look, more than ever, like two nations on the verge of nuclear war; and Br'er Rabbit, ie Osama Bin Laden, has apparently gone back into the briar patch -- notwithstanding the mythical ability of the US armed forces to see, hear, and know everything. And of course there's the little matter of the out standing anthrax monster, who all the king's horses and all the king's men can't seem to find. Instead, we get the FBI pressing some klutz who treated one of the hijackers for some infection on his leg until the man says, gee, that musta been anthrax. Yeah, right.

LI is a believer in the Reality principle, hard as that faith is to maintain in our present perilous times. So this is what we think: the sheer incompetence of the Coupsters is eventually going to leak through our shining victory over the Taliban. That is, unless they do something right. Like, for instance, catching Br'er Rabbit. Or catching the anthrax guy. Or coming up with some magic in Israel - the longest shot of all. Chance favors nobody in the short term-- and in the long term, to paraphrase Pasteur, "dans les champs de battaille, le hasard ne favorise que les esprits pr�par�s

Thursday, March 28, 2002

This just in from the Times.

Washington, March 27 -- Energy Secretary Spencer Abraham announced today that the Energy Department is renaming itself. "From now on, we will be the Energy Company Department," Mr. Abraham said in a conference call with business journalists. A consortium of energy industries, lead by Kenneth L. Lay and Jeffrey K. Skilling, the former top executives of the Enron Corporation, will oversee a tightening of the newly renamed department. Abrahams conference call was interspersed with his trademark gutsy humor. "Christ," he said, "we weren't even elected. We have to work fast to make sure you guys get some of that ROI in our coup." Abrahams was referring to the offer made by a SATANSPAWN, a limited liability corporation, to swap policy options with the Republican party. In a surprising use of this so far barely tested financial instrument, SATANSPAWN (consisting, reportedly, of 18 top energy CEOS) optioned a "put" on the so called "American energy policy" for $16.6 million, in return for a Stripped Mortgage-Backed Florida Election Security, or SMBFES (commonly called SMURF BALL FESTS by traders). These mortgage backed issues are indexed to two election market options: the value of non-felons erased "accidentally" from Florida voting rolls, and the amortized value of deteriorations among voting machines in the Miami metro area. Guaranteed by the Florida government, Smurf Ball Fests have not been as popular among hedge funds as was first hoped when they were issued in November, 2000.

The decision to rename the department is a welcome clarification of the Bush administration's end of the year projections. The pressure to speed up the Department's restructuring has increased as energy equities have languished this quarter. Analyst Dick Scheiner of Killemandsellem Consulting, said the announcement was expected, but welcome. "Since the coup, the Department has been re-configured away from any long term Eco concerns, but it has not been doing the big things the industry wants. Drags on the overall profit picture during the last five years have included forcing oil companies to pay taxes, to pay at least 5% of the tab on major oil spills, and protecting so called "environmental areas," such as the coast of the US, national parks, and even rain forests. What we are seeing now is a welcome signal that the administration is pushing the "rape of the earth scenario," which has been carefully worked out with more than 100 energy industry executives, trade association leaders and lobbyists, into high gear."

In a related development, Dick Cheney released his first single, "Blow-off da stratosphere, what you say?," on his four CD contract with Interscope records. His spokesman, Orah Reilly, said, 'with all the downtime in the cellar, when like the terrorists were getting all bitchy, DC started scratchin his Lawrence Welks. And it just like totally converged."

Mr Abrahams was credited as a turnround expert when first appointed by Commandante Bush, but since the rocky start of his tenure, many analysts have complained about the pace of change. "What we look at is the rate of species extinction," Mr. Scheiner explained. 'We were looking for a big bounce there. But so far, it has been pitiful -- a bird here, a mammal there. We were hoping for some robust SE in this quarter, frankly." Although the renaming to Energy Company Department is not a major policy change, it does send a signal that the Bush administration is serious about environmental degradation. Still, there are questions over the speed at which Bush can completely overturn democracy and all it stands for, which have depressed the Republican Party's share of energy company contributions to around 85% compared with a 12-month high of 100% in January last year. Democratic spokeswoman Jill Coleburn said that the Democratic Party would consider renaming other departments in a bid to remain competitive in the Policy option market. "We pioneered the Lincoln's bedroom thing, and I don't think the Republicans have anything to tell us about marketing," Ms. Coleburn claimed. "How about this? The Bill Gates Attorney Generals Office? We think it puts a more human face on oppressing the vast majority of the electorate in favor of enriching a few plutocrats, don't you?"

Wednesday, March 27, 2002


Are the hard times over for Burger King? Actually, LI doesn't care. We just wanted to write that sentence, which has a vaguely biz-o-lect sound. Apparently Burger King is suffering the pangs and arrows of outrageous customer dissatisfaction. They've turned against the whopper. Those bastards. Turns out BK is run by a giant British conglomerate -- you never know who owns the toys nowadays -- that also puts out the Smirnoff vodka. The Brits, showing rare good sense, have decided to concentrate on their intoxicant, and find a buyer for the ailing King.

When Limited Inc was a dewy youth, he preferred Burger King to McDonalds and especially to Dairy Queen. The royalty of cheap food -- how it studs the American highways and byways! Basically, LI's preference was swayed by the paper crowns you sometimes got at Burger King. And the shakes. As I remember it, the shakes were better than those plastic-y tasting concoctions you'd get at MacDonalds.

Time has not been kind enough to marry LI off ... Having no children to watch, wide eyed, as the tv shows grotesquely magnified burgers being whisked off grills, thus activating the Pavlovian impulse in the little dears, LI has no reason to return to the foods of yesteryear. Oh, now and then the rare visit to Schlotzky's, but besides that, fast food just isn't in our orbit. Nothing, though, conjures up repulsion like the thought of going into one of those boites and chowing down on the burgers. The LA Times, which has several unintentionally funny stories today (one about a "smear campaign" re Beautiful Mind, accusing the movie of covering up some of the facts about its subject, was particularly amusing -- it quotes Neal Gabler, a Hollywood intellectual whose brain stretches from Variety all the way to the spiritual heights of, say, Alan Toffler -- a giant, in other words, in every way, and a true credit to the industry -- as saying that the campaign, and Russell Crowe's failure to secure an Oscar, was -- well, I must quote the graf:

"I think, in the future, when people are thinking about using biopics, they'll be more cautious on how they use the facts," Gabler said. "I happen to think this is a tragedy. To think we have this new chilling effect. That artists are going to have to be bound by facts. ... Imagine if Shakespeare was bound to the real character in 'Richard III'? If he were alive today, would Shakespeare be called upon to revise that play?"

LI will not gild this lily with comment ), but the BK saga is tops. Here, for your dining and dancing pleasure, are the grafs that particularly amused LI:

"In recent months, Burger King has made its shakes creamier and thicker by adding ice cream. It dressed up the Whopper with larger pieces of lettuce, thicker slices of tomatoes and pickles with a stronger dill flavor.

Mike Aldredge, 36, a Burger King regular for the last 15 years, has noticed the difference. The Costa Mesa resident, who eats at Burger King twice a week, said he liked the new and improved food so much he might easily double his visits.

"This is the best fast food I've ever had," he said, clutching a double Whopper with cheese. "And it's getting better."

However, new products and variety might not be the sales drivers Burger King executives expect. McDonald's much-hyped New Tastes Menu, which rotates new products year-round, has failed to attract hordes of new customers. In a recent national survey, Villa Park restaurant consultant Robert L. Sandelman found fast-food customers ranked cleanliness, taste and food flavor ahead of choice, which placed 11th out of 12 categories."

Question: where did that Mike Aldredge, 36, come from? Was there some kind of casting call? Second question: how much does he weigh? The vision of him, clutching his double whopper with cheese, is going to remain with LI the rest of the day. Sadly enough.

Tuesday, March 26, 2002


Is it only Limited Inc's imagination, or should economists take more of an interest in "small-world" theory, associated with Duncan Watts and Stephen Strogatz?

Yes, my readers roar, in numbers too big to ignore. Read your Watts and Strogantz and sin no more! or something like that.

Well, to explain...

These two wrote a paper a few years ago, in which they tried to find the minimum path length for an undeterminately large network. They called these networks, with their improbably small dimensions, small worlds, after the Milgram experiment that supposedly showed that there are six degrees of separation or less between any two randomly selected people in the world (well, the experiment didn't make a claim that vast, but it has been made since then). The problem, from the perspective of networks, was that most individuals are connected to a cluster of individuals, in which each individual has a high chance of sharing acquaintances. So how do you break out of the cluster to connect to random, unfamiliar individuals? Here's a quote about the system set up by Watts and Duncan from a September, 1998 Physics Today article

"This result is actually quite general," says Watts (who will shortly be moving to the Santa Fe Institute in Santa Fe, New Mexico), "and does not depend on the choice of a ring substrate used in the model. All that is required to generate the small-world phenomenon is a network that is locally ordered (which means simply that two nodes with a mutual 'friend' are significantly more likely to be connected than two randomly selected nodes), and which has a small fraction of long-range shortcuts. The effect also does not depend on the specific nature of the network nodes or connections--only their topology--so the small-world phenomenon ought to arise in all sorts of large, sparse networks."

To check this, Watts and Strogatz examine the length and clustering properties of three real networks: the collaboration graph of movie actors (including approximately 225 000 actors of all nationalities since the start of motion pictures); the power-transmission grid of the western US; and the neural network of the worm Caenorhabditis elegans (the only organism whose neural network is completely known).

As Watts explains, they show that, in each case, the characteristic path length of the network is close to its theoretical minimum (that of an equivalent random graph), yet the clustering coefficient is far from minimal, indicating the presence of significant local order. So all three networks exhibit the small-world phenomenon. "

There is a book coming out in May from Mark Buchanan, Nexus, that not only explains Watts and Strogatz' work, but expands on it, explaining that Watts and Strogatz had stumbled on one form of small world network, and that there is at least one other possible form of small world network. This other form is related to the principle of "the rich get richer" -- that certain individuals are more connected, and by that very fact will become more connected. There is a network form for the fact that wealth is unequally distributed. Among network people, this is known as preferential attachment.

Now here's the question. One of the big rightwing pushes right now is to promote the idea that poverty in the third world is rather a mirage. Or, if not a mirage, caused by ... as you might have guessed, big government. The idea comes from Hernando de Soto, and it isn't quite as silly as it sounds. In two books he has promoted the idea that small, informal vendors and makers and homeowners need a system that recognizes them as free economic agents with capital. That is, if we strip away the onerous bureaucracy and government thievery, we could unleash, in the third world, value that is already there. This, after all, is partly what happened in the French Revolution. Anybody who reads Le Rouge et le Noir is going to have some sympathy with de Soto's point, because Stendhal is very conscious of the effect of liberalism, ie stripping away big guv and its thievish attachments, on the French landscape.

Is the rightwing idea going against the rule of preferential attachment, or seeding it?

Hernando de Soto is being presented to the American public as some kind of third world guru. The NYTimes magazine, last year, presented him as the answer to our dreams (insofar as our dreams involve giving up none of our stuff and not feeling guilty about it). But the earlier image of de Soto wasn't so heroic. Tina Rosenberg wrote a review of The Other Path in the New Republic, in 1991, that pretty much blasted de Soto as an egomaniac and a crony of Fujimori. Here is what she said about de Soto's grand vision:

"To Reaganites, however, the most marketable aspect of The Other Path is what it does not say. It does not talk about helping small businessmen acquire the infrastructure, technical assistance, or capital they need. It does not propose improving education, health care, or other programs that could get Peru's poor off to a better start in life. It does not address discrimination against Indians, which has shut Peru's poor out of many opportunities. Most informals are one rung above beggars. Redefining them as entrepreneurs doesn't cure what made them poor, especially in an economy that has experienced one of the worst declines in modern history. (The informal sector exploded in part because traditional jobs dried up; only 9 percent of workers in Lima earn a salary they can live on.) Not even legal businesses can get credit. But the book asserts that legal reforms alone will suffice to unlock the informal sector's engine of growth. De Soto compared the state to a dying emergency-room patient and told me, "I want to burn down the hospital."

The burning down the hospital phrase has been toned down, lately, and there is a little bit more heed being paid to infusing capital. There is an organization, Trickle Up, which just announced its association with the ubiquitous De Soto. Trickle Up is dedicated to making micro grants to the third world street neediest. Because it promotes the solid virtues of entrepeneurship and self reliance, Trickle Up has become a favorite for conservatives trying to summon up a little chic compassion.

"Grants are made by TUP to selected groups of five or more people after a business plan is reviewed for them by unpaid TUP project coordinators. The maximum grant is $100, and recipients must pledge to reinvest at least 20 percent of their profits in their businesses. In the past ten years, more than 90,000 individuals have participated, 15,000 businesses have been started in 86 countries, and over $7.5 million in profits have been generated from TUP-funded businesses. All of this has been achieved without the involvement of governments, large staffs, or social researchers. By now, you probably see why it's called the "Trickle Up Program." Funds aren't lavished upon government entities in poor countries with the hope that a small portion will somehow "trickle down" to the very poor. The grants go directly to the cagey entrepreneurs of the streets, including those in Port-au--Prince, Haiti.

Now, LI is fascinated with the project here: can beggars become choosers? It all looks very much like... like the 1966 War on Poverty project. One of the oddities of contemporary conservativism is this adoption of sixties forms, from classical rock to agit-prop. Hmm. In any case, LI is going to go further into this issue, this grassroots wealth issue, in another post soon.

Sunday, March 24, 2002


William Easterly. As in, who is William Easterly?

Right now, Easterly is on the screen as the World Bank economist who came in from the cold. He's written a book that points out (for those who haven't seen it) that the World Bank has failed to stave off poverty in the third world. He's being touted in conservative circles as the man who wants to cut aid, and make those third world slacker nations pay their debts on time. His article in Foreign Policy, which supposedly got him in dutch with his bosses (along with the book that came out of it, The Elusive Quest for Growth: Economists' Adventures and Misadventures in the Tropics) is about the second of those two concerns. In it, he makes three of claims:
1. That debt relief is already happening, and in fact has been inscribed in the world system since the early eighties.
2. That the refusal of a nation that has a legitimate "democratic" government to pay back debts incurred by previous military or corrupt governments is a perverse incentive, insofar as the money loaned, at the same time, to "good governments" must be paid back. In effect, we are rewarding bad behavior.
3. That making debt relief conditional on a nation's having a democratic government, or the beginnings of a civil society, creates incentives to make the World Bank and the international lender entities more, rather than less, intrusive in the internal affairs of third world countries.

Now about these claims. Readers know that LI loves nothing better than setting up claims, like ninepins, and bowling them over. Arguing in the oxygen tent -- we take up all the air, you get the fun result.

But seriously, folks. All three of the claims are actually valid only insofar as debt relief is viewed from one side only: that is, from the side of the debtors. Take point 2. To claim that debt relief will send a perverse incentive, insofar as it will tip the parity between the debts of good nations and of 'bad" nations to the side of bad nations, is to ignore the disincentive sent to lender agencies if, in fact, the debts of military dictatorships and the like are voided. The perverse incentives in place, pace Easterly, have really been the other way: given the lack of discussion, or the lack of the organs necessary for discussion, in a military dictatorship, in fact lending agencies have a perverse incentive to loan to these nations. They can better negotiate terms with juntas than with democratically elected governments, and they can better envision the objectives of those loans -- say some unnecessary dam -- rather than the other type of loans -- a medical infrastructure, say. Meanwhile, there is, as we all know, an immense system of kickbacks in place, a system Easterly doesn't even touch on. Take Nigeria. We know that the loans that went to the rebarbative Abacha government. Here's a press release from, of all places, the American embassy to Nigeria:

"Jack A. Blum, an attorney who specializes in controlling bank fraud, government corruption and money laundering, said May 25 that "solving" Nigeria's long-term debt and corruption problem "will take a lot more than conferences on civil society and how to make people more honest."

To solve the problem, he told the Subcommittee on Domestic and International Monetary Policy in the U.S. House of Representatives, "You have to bring criminal justice and recovery of money into play. That is absolutely essential." That, he said, means "getting at the proceeds of corruption, going after the billions (thousands of millions of dollars) that (Former Nigerian Head of State, General Sani) Abacha took and the billions more that prior governments looted from the country."

Blum, who was called to testify on the Nigerian debt and corruption situation, said "Many of those people (who took those public funds) are sitting in London as some of the wealthiest people in England. Those assets cannot be overlooked.... Four billion (four thousand million dollars) with Abacha, $40 billion ($40,000 million) at least since independence," with some estimates running as high as $90 billion."

As a matter of fact, LI has talked to Jack Blum about this issue. We did a piece on money laundering for a magazine, the Globalist, which went funny on us and never paid for the piece. Blum's point is that the experience of Nigeria has been repeated over and over again. It isn't just that a place like Nigeria doesn't have infrastructural projects supposedly justifying the loans that were earmarked for them -- it is that the lending agencies knew, even as they were making the loans, that a significant portion of the money was being kicked back to the West, in the form of transfers to Western banks.

This is an area Easterly, supposedly the boldest and the baddest economist ever to walk away from the World Bank, doesn't even discuss.

Since his book was published eight months ago, one might wonder why he is being profiled, now, in the press. The reason is, he is dear to the Bush administration's heart, endorsing their position on foreign aid. Here are two grafs from his profile in the Washington Post:

"From 1988 to 2001, he was senior adviser to the World Bank's Development Research Group, the in-house brain trust charged with gauging the success or failure of the bank's development efforts around the world. In the process, he's trekked through slums from Karachi to Cairo and wears the good-humored but weary resignation of a lifetime idealist mugged at last by reality.

"He rejects the notion that he's any kind of whistle-blower. He still believes in both the World Bank ("there are a lot of really smart, really committed people there") and aid to developing nations, which he would like to see increased from the current level of $56 billion. In fact, foreign aid has been declining in recent years after peaking at $64 billion in 1991. Although private capital has taken up some of that slack, Wolfensohn has been calling for a $10 billion increase from the bank's member countries in each of the next five years."

Get the "mugged by reality line" -- was it William Krystal who said a neo-conservative was a liberal mugged by reality? Reality, you can be sure, is operating behind this metaphor in a very sooty skin. The American dilemma is, as it has always been, that no matter how elevated the supposed issue of the debate, it is always just one step away from a minstrel show. LI is infinitely depressed about that.