What's Fair?

The Vice Chairman of Wachovia Bank retired today and will walk away with a package estimated at $120 million. He has been Vice Chairman for fifteen months, but was CEO of SouthTrust Corp., which was bought by Wachovia for $14 billion, and had been with SouthTrust since 1959. He must have gotten some of the $14 billion for his shares, which should have been enough to compensate him for his years at SouthTrust. I wonder if the Wachovia board that had to approve this deal would be willing to pay part of the compensation out of its own pockets?

Live for today

Despite the view of some that accountants and other financial types are dull people, they can really have an imagination. Take the matter of buying back a company's stock. It's a pretty straightforward deal, right? The company offers to buy 1,000,000 shares at $20. Some people think the cash is worth more than the future prospects of the company and accept the offer. The company wants to improve its earnings per share as well as make a good investment. Over time they eventually buy the 1,000,000 shares. Simple until the financial types who get paid for boosting earnings per share came up with the idea of "accelerated share repurchase" (ASR).

With accelerated share repurchase the company does not buy the shares over time. They make a deal with an investment bank to buy the shares in the open market and pay the bank the $20,000,000 in my example. The problem is it takes time to buy the 1,000,000 shares, time in which the share price fluctuates. If the price goes up, the company pays the investment bank the difference. If it goes down, the investment bank pays the company.

In the meantime, the earnings per share increases and the company looks good on Wall Street, as they don't show on their books that there is a potential liability in this transaction. Full disclosure? Companies that have used this technique include DuPont, Sara Lee, Northrop Grumman and Duke Energy.

Wikipedia takes another hit

It seems that staff members of some members of the House of Representatives spend some of their time checking on how their bosses are represented in Wikipedia. If they don't like it, they change it. In the past six months, staff members have made 1000 changes.

I'm sure that most of the changes make the Representatives look their best. Yes, it's a slam against Wikipedia but it's also a slam against our representatives who are spending our money on updating their biographies and a slam against us for electing these people.

2005 in Review by JibJab

Click here for the most recent video.

Ignoring their own plan

In January FEMA developed a rescue plan for Southern Louisiana. The Interior Department was to play a role in that plan. When Katrina started to be a threat, the people at Interior offered planes, boats, trucks and people to FEMA. Their offer was ignored.

Even if Interior were not part of the plan, why FEMA would reject their - or any - help is beyond me.

A difference in approach

Rice says no more money to Palestine as long as Hamas is in charge, period. Merkel says we'll continue to give money if you change your ways. Is it better to be perceived as unbending or reasonable in the Arab world? Do the people of Palestine care?

A leader of Hamas says they really need the money and will accept monitoring of its spending. Do we believe him? How effectively was the Oil-for-Peace money monitored? How well has the Iraq reconstruction spending been monitored? Why wouldn't he make the assumption that it doesn't matter what he says as they'll be able to do what they want with the money?

That Hamas needs the money is obvious. The West has been supporting the Palestinian economy for years. If we cut off the spigot, will the people rebel against Hamas?

Foreclosures were up in 2005

There were at least 11500 mortgages foreclosed in Massachusetts in 2005. In 2004 there were less than 9000. A 30+ percent rise in the number of people losing their homes is one indication of the craziness of the housing market here. It's also a sign that maybe interest-only, little-money-down, adjustable rate mortgages may not be the way to go when you buy your house.

Democracy on the Move

So far, democracy in the Middle East has led to the Muslim Brotherhood becoming a major force in the Egyptian parliament, Hezbollah winning in the Lebanese elections, the Shiites doing well in Iraq, and, of course, Hamas winning very big in Palestine.

Were these results a vote for terrorism or a vote against a government that did little for the average person? I think, particularly with Hamas, it was the latter - a vote for a hope of a better life with different people in charge. Whether these people can deliver on a national scale is the big question. If they can't, I suspect that they, like most politicians, will look for a scapegoat. In this case, I'd bet that scapegoat will be Israel.

What state is this?

This state has reduced the use of soft drinks in schools, informed parents of their kids' body mass index, given exercise breaks as well as smoking breaks to its employees, paid for preventive health tests, subsidized efforts to quit smoking, gave food stamps which have more value if fruits and vegetables are bought.

The governor, after being diagnosed with type 2 diabetes, lost 110 of his 290 pounds. The governor is a conservative who has realized that a healthier population means lower costs for his state.

I was shocked when I learned that the state was Arkansas.

Wills on Carter

Garry Wills has an interesting review of Jimmy Carter's latest book, "Our Endangered Values: America's Moral Crisis". Wills attempts to show what he sees as the fundamental point of the book: today's Christian fundamentalism is a culture of death. He goes on to write about how this fundamentalism has exacerbated problems in areas such as abortion, gun control, capital punushment, nuclear proliferation and spreading democracy.

In his understanding of Carter's views, Wills claims that a large part of the problem is due to the conflation of politics and religion. There is considerable merit in this analysis, I believe.

A Marriage Made in Heaven

A woman who spent 32 days with 3400 scorpions is marrying a man who spent 24 days with 1000 centipedes. The marriage will be consumated in a coffin. Only in Malayasia?

Hedging Their Bets?

The new king of Saudi Arabia, Abdullah, was in China this week making agreements with regard to oil, natural gas and minerals. He signed five deals while there, all of which appear to be precursors of other deals to bring the two countries closer together strategically, something that has been afoot for almost twenty years. The Saudis appear to be hedging their bets and moving closer toward China and further from us.

The Vineyard Big Story

Probably the most talked about issue in West Tisbury and Martha's Vineyard over the past nine months has been the "Graham" case. I wrote about it last summer. The case has been heard before the Appellate Tax Board and a decision is likely this Spring. However, it is likely that no matter what the decision of the Board, the losing party will appeal.

We had two Special Town Meetings before the Town agreed to pay most of the legal fees incurred in this case. Clearly, this case will impact the upcoming Town election. To date, the Graham side has won the PR war as the Board of Assessors has been fairly silent on the issue other than to state that they are acting in the Town's best interests. And, maybe they are.

One of the parties involved in this matter, Vision Appraisal Technology, which actually does the appraising using their proprietary software, has issued a letter to all of its clients giving its views of the case. They make the point that Graham's case made no mention of sales data or market activity, which I would think are extremely relevant in appraisals. Surprisingly, Graham's expert witness was Graham himself. If these claims are true, I find it hard that the Tax Board could take Graham seriously.

Another peculiar aspect of Graham's position is that he has offered to settle the case and pay his taxes if the Town fires the Board of Assessors and the Principal Assessor and if the Town brings in a new appraisal system. Again, not being anywhere near as wealthy as Mr. Graham, this seems to me as an overly altruistic and paternalistic position to take. But, maybe he can afford to be generous if he gets his way.

Clearly, the fat lady has not yet sung. We'll be hearing more about this matter in 2006 and, probably, beyond.

Not Starting Out Well

Man is a creature of moods. Some days you wake up, look at the newpaper and few of the stories register. Other days, like today, the morning newspaper can make you seriously depressed. In just a few minutes I read three articles in the NY Times that encapsulate the depressing start to this century.

Story #1
Andrew Krepinevich, the fellow who espouses the "oil spot" theory of dealing with our Iraq miseries, has written a fairly lengthy report for the Pentagon with regard to the Army's manpower situation. One of his major conclusions: the Army cannot sustain the pace of troop deployments to Iraq long enough to defeat the insurgency.

Story #2
You may have already read of the latest report by the Special Inspector General for Iraq Reconstruction. It's appropriate that it be issued now when Bremer is going around the country and the tv touting his book which, apparently, absolves him of all errors. Basically, the audit describes a situation where there were neither financial controls or any attempts to see whether contracted work was in fact completed. No one really knows how much money when down the tubes, while the Iraqis to this day are still struggling to get electricity for more than 8 hours a day, or clean water, or the ability to shop without risking death. Would the insurgency have been so powerful if we had used this money properly?

Story #3
This is another example of the Bush administration's dependence on words without any attempt to put these words into action. I'm talking here about Katrina. You remember Bush's speech in the dead square and his promises to rebuild New Orleans.

Even Senator Lieberman is fed up, "There has been a near total lack of cooperation that has made it impossible, in my opinion, for us to do the thorough investigation that we have a responsibility to do". He is referring to the administration's unwillingness to turn over documents about the hurricane or to allow White House officials to testify before Congress or to allow people, like Brown, who had communicated with the White House to testify. How can we prevent a repeat of the disaster if we don't find out what went wrong and why?

Plus, now they are telling Louisiana it has to depend on community development money rather than expect funds from a federally financed reconstruction program. What about all those promises back in September?

The day is not starting well, especially since I'll now start paying my bills.

Let's Get Serious

Robert Rubin, Treasury Secretary under Clinton, has an excellent OpEd in today's Wall Street Journal. The basic message: stop the posturing and the party warfare, re-establish our seriousness of purpose and change policy direction.

Mr. Rubin asks the president to "bring together the leaders of both parties and both houses to make the decisions which are needed for us to move forward and not get swamped by the fiscal realities of the 21st century world". He's calling for the bipartisanship that has vanished in recent years, but was so instrumental in moving this country forward in prior periods of uncertainty and doubt.

He outlines four components that a sensible strategy must include:

1. "Establish sound fiscal conditions for the intermediate term and put in place a real plan to get entitlements on a sound footing for the long term."
2. "A strong investment program - paid for, not funded by increased public borrowing - to promote productivity growth, to help those dislocated by technology and trade, and to equip all citizens to share in our economic well-being and growth."
3. "Pursue an international economic policy that continues global integration, especially multilaterally, and proactively addresses our other international economic interests."
4. "Work towards a regulatory regime that meets our needs and sensibly weighs risks and rewards."

He quotes Business Week - "the deficit morass is due as much to a revenue shortfall as excessive spending" - in repeating the CBO's estimate that 80% of the expected 10-year deficit of $4 to $5 trillion will be the result of the tax cuts of 2001 and 2003. And reminds us that "free lunches are politically appealing, but economically unrealistic".

All in all, Rubin is pleading for our political leaders to do just that - lead. Forget about ideology. We are facing severe problems that require us to rationally evaluate alternatives and summon the will to choose the best alternatives regardless of party or political intentions.

Revenue? Who Cares?

As I've said before, the federal government seems to have a rather cavalier attitude towards revenue. Any budget cutting they've done has focused exclusively on the expense side to the point that one has to believe that they do not know that a budget is a combination of revenue and expense.

In the 1990s the feds realized that oil companies were underpaying the royalties due the government (i.e., us) for oil extracted from government-owned wells and they did something about it. Why they didn't also look at natural gas royalties is probably an interesting story, but they didn't do so. Hence, the current revenue gap - royalties to be paid to the government for natural gas extracted from property owned by the taxpayers. In FY2005 alone the revenue loss has been estimated at $700 million. Who knows what the total loss is!

While part of the problem is due to shenanigans by the companies, another cause is the stupid rules defining the size of the payment. Instead of just saying the payment is x% of the sales price to the ultimate consumer ('ultimate' to negate their selling to an affiliate as they do now), the government allows a series of arcane deductions. Usually, simple is better and this is a perfect example of that maxim.

In line with this administration's inability to hire competent people, the Inspector General of the Interior Department (which is charged with collecting our money) has termed the department's auditing process "ineffective" and is performed by unqualified auditors.

Everybody's looking in the window

Now from Newsweek comes word of two Pentagon spying activities: TALON (Threat and Local Observation Notice) and CIFA (Counterintelligence Field Activity). TALON collects raw information about suspicious activities like antiwar meetings at Quaker meetinghouses. CIFA tracks threats and terrorist plots against the Army in the U.S. like the 10 people who gave out peanut butter and jelly sandwiches at a protest at Halliburton headquarters.

Fortunately, a Deputy Defense Secretary has realized that some TALON reports never should have been compiled. That doesn't make it right but at least there is some acknowledgment of un-American behavior.

I wonder what other agencies are spying on us. It seems a new one comes out of the woodwork every week or so.

Not a bad idea on first reading

As part of the federal education budget there is a new program which will rate the academic rigor of the nation's high schools. The rating will result in grants of $750 to $1300 to low-income college freshmen and sophomores and more to juniors and seniors majoring in mathematics and sciences.

But, what consitutes a "rigorous secondary school program of study"? Since a state will automatically be credited with one high school that has such a program, does 'rigorous program' mean anything?

Also, the program excludes private schools, Catholic schools and home-schooled kids.

And, the federal government will have to become quite involved with a state's education in order to determine the rigor of a program. This flies in the face of a couple of hundred years of local education.

I think it's a good idea but it needs work.

An American Wows London Opera

Joyce DiDonato, a soprano from Kansas, has wowed the London opera world with her performance as Rosina in "The Barber of Seville". Her interview on NPR today shows her persistence, her appreciation of other forms of music and, of course, her voice. She contends - and I think rightly so - that opera is for everybody today, as it was when the greats were writing.

Personal Revival Trust

That's a trust created by someone who is being cryogenically preserved on his death. The trust enables him or her to become his own heir. That is, money is placed in a trust when the person dies. Presumably while he is waiting for medicine to catch up with his wishes of reincarnation, the money builds up. So, when he is back amongst the living, he can enjoy the money he left himself.

If at first

You just have to wonder about some people. Last year I wrote about the stupid law suit between the County Commissioners and the Airport Commissioners here on the Vineyard. This suit has cost the taxpayers of the Vineyard close to $900,000. Now, it looks as though they're gearing up for another court showdown.

This situation arose because the former airport manager left as a result of his needing to sue the county to have his contract enforced. The airport commissioners named a new manager a few weeks ago. Their hiring process was somewhat arcane as they disregarded the advice of the personnel firm they paid $18000+ to and hired the assistant manager. Why they bothered with the personnel firm and spent more of our money boggles the mind.

But, not wanting to be outdone in the stupidity area, the county commission refused to acknowledge the authority of the airport commissioners, despite the ruling in the last case that the airport commissioners had the power to enter into the contract. So, on Tuesday they rescinded the appointments to the airport commision they made last week. This caused other airport commissioners to resign. Now there are two airport commissioners, one of whom is a county commissioner, serving on a board that usually has seven members.

There is a movement here to kill county government, despite the need for some form of regional government here. However, the clowns running the county now have brought it on themselves.

The Prime Minister Acknowledges The Problem

Earlier this week I wrote about one of the major problems in China today and for the past few years: the taking of farmland for industrial purposes and the uproar this has caused in the countryside. Yesterday, the Chinese press reported that Prime Minister, Wen Jiabao, was quite concerned about the problem saying, "We absolutely cannot commit a historic error over land problems". He called the land seizures illegal and acknowledged that it "is still a key source of instability in rural areas and even the whole society".

The problem seems to lie with the national government's inability to control local officials in this matter as the legal system is run by the local Communist party. The leaders realize the time bomb inherent in the widening wage gap between rural and city workers coupled with soaring costs for education and health care. The issue affects almost two-thirds of China's population. They know that the problem has to be resolved. The question is how.

Maybe publicity does help

Gee - and thank God - the Army has ordered $70 million worth of body armor for our troops. Shipments should begin this month, with the order being filled by June. Further, the Army acknowledged that they need still more armor and wil be looking for more vendors to supply it.

Read the whole thing

J. D. Henderson over at Intel Dump has a point by point rebuttal to the Bush position on domestic spying. Henderson's conclusion: "In short, this document confirms many of our worst fears. This president is convinced he has the authority to do whatever he wants, whenever he wants, regardless of the law, because we are at war. "

It's been 45 years

On January 20, 1961, John F. Kennedy was inaugurated as president of these United States. It was a different time and I was a different person. I thought his speech that day somewhat hokey, but, in retrospect, it was more of a good example of an inauguration speech. Of course, the "Ask not" line is now the most remembered. But here's another line that should resonate forty-five years later: "If a free society cannot help the many who are poor, it cannot save the few who are rich."

Eminent Domain - Chinese Style

China's economic resurgence has not been good for all Chinese, particularly those living in rural areas. The gap between the rich urban areas and the poor rural areas is growing. And part of the increase is due to what amounts to takeover of the peasant's lands by the state. Usually, this takeover is aided by greedy local officials. The officials are able to deceive their fellow villagers into signing contracts which ultimately result in the sale of the village lands, the proceeds of which go to the officials not the villagers. Furthermore, since China does not regulate the development of rural land, the farms are usually replaced by factories, power plants, highways, dumps, etc. Thus, the loss of their land often results in villagers having to join the migrant workforce as they can no longer feed themselves from the land.

And land is especially 'sacred' to the Chinese peasant as he was unable to own land until the Communist Party redistributed land after the revolution. Now, it appears as though his land is being given to the rich. But he is not taking it lying down. In 2004 alone there were 74,000 rural uprisings protesting the loss of land. Since then, things have gotten worse and the violence has increased. In Dongzhou recently thirty demonstrators were killed.

Will China eventually find that this type of eminent domain is not in its best interests?

The Vatican Speaks Out Again On Intelligent Design

In November L'Osservatore Romano, the official Vatican newspaper, quoted the director of the Vatican Observatory thusly, "Intelligent design isn't science, even though it pretends to be. Intelligent design should be taught when religion or cultural history is taught, not science." Earlier this week it came out in support of the Pennsylvania decision that intelligent design should not be taught as science. Of course, such statements can't change the mind of the geniuses promoting intelligent design.

Another Peer Review Failure

Now comes The Lancet, a British medical journal, telling us that a report of a cancer study it published last year was false. While the principal author was Norwegian, the five co-authors were American, four from M.D. Anderson in Houston.

The peer review process did not discover that the data was made up. But, worse in my opinion, is the reaction of Anderson. The VP for Research at Anderson laments, "There is no worse feeling in the world" than for a researcher to learn that he has put his name to a paper with fabricated data. My question is did the co-authors not review the study and evaluate the results before signing their name to it. Is the rush to publication such that the researchers don't care what's under their name until the report is found to be a lie?

A Little More Information

Finally, stockholders will know just how much the CEO and other high company officials are being paid in total, as the SEC has voted to require greater disclosure of executive pay. It's too bad it can't also force directors to stop the overpayment of corporate honchos.

Stick it to the working man

Okay, something has to be done to shore up the Pension Benefit Guaranty Corp. (PBGC) and our beloved Congress is proposing some measures to do so. The problem is that a good deal of the changes proposed to strengthen pension plans comes at the expense of the employees supposedly covered by these plans, which, in my naive world, I consider contracts: You work for the company for 30 years and we'll pay you $x a year when you retire. But, like most things in the 21st century, this simple contract is no longer simple and companies such as US Airways, United Air Lines and Bethlehem Steel have walked away from their contracts and left us to pay some of what they contracted with their employees.

As I said, things in the world of defined-benefit pensions have grown quite complex. Congress is proposing that employers with underfunded plans pay more to PBGC. However, like many Congressional actions, this proposal has a reverse side. For example, if the pension plans become underfunded, companies can freeze and, in some cases, revoke benefits. The lump sum a worker thought he'd walk away with may be a heck of a lot smaller than what he bargained for. The benefits of the proposed legislation can also go to companies with well-funded plans: they can take some of their pension money and use it to pay for other retirement benefits.

I wonder what effect this will have on the pensions of the executives who have created this mess.

Trying to prevent fraud

We're all well aware that the practice of peer review in scientific journals does not appear to be working too well. David Dobbs, in yesterday's NY Times, suggests adopting a Wikipedia approach where papers are posted on the web and reviewed not by anonymous, assigned reviewers but by anyone who can access the web site.

Yes, this approach has also gotten some bad press recently, but, overall, Wikipedia's articles are quite good; Nature magazine has found Wikipedia's science entries almost as accurate as Brittanica's. If access to the 'article review' web site is tightly controlled, it's unlikely that the results can be worse than the peer review process.

Another $100 Million Down The Drain

The problem is that the loss is more than money. It's a loss of knowledge about Earth's future. In 1998 Nasa began work on the Deep Space Climate Observatory, a satellite that could continuously monitor what's called the earth's 'energy balance', that is the gap between the amount of the sun's energy that is absorbed by the earth's atmosphere and surface and the amount reflected back into space. The satellite was ready for launch in 2001, but it was never launched; it just sat in storage until recently when NASA scrapped the project because of "competing priorities".

Projects are scrapped all the time. Why is the scrapping of this one important? First of all, it would have been able to look at the earth as an entire planet rather than as a collection of regional views. It was built to collect information on our climate system combining data from the atmosphere, the clouds, radiation and the earth's surface. This is information we do not have now although it is needed if we are to truly understand what is happening with our climate system.

As we non-scientists know, the energy we and all other bits of life get from the sun enables us to live; without it, life would cease to exist here. And, as we also know, the earth is getting warmer and, if the warming continues, we ain't going to be here. It may be that the problem of global warming is due to the rise in so-called greenhouse gases. But it may also be true that it is due to the "energy balance". It is vital that we learn what the cause or causes are. It seems foolish to scrap this project while we are spending money on the international space station, which seems to be more of a toy that a scientifically useful experiment.

DNEXT

Some short movies to make you laugh a little.

Lining up the ducks

Some people at the Washington Post have a memory or are sensitive to some of the PR tactics used by the Bush Administration. Here the administration's annual early forecast of a large deficit is compared to similar predictions for the past few years, i.e., the deficit is going to be x, but when the time comes to actually announce the deficit it has shrunk to less than x due to skillful financial management and sound fiscal policies.

Another Political Trip

Well, Bush did visit New Orleans and pronounced it a great place to visit. He also said that the federal government will build stronger levees. How strong or how soon was not mentioned nor were any practical things talked about, like when or if people will move back, what will happen next month with those in hotels, will the 9th ward be rebuilt, when will enough trailers be in place, when will more than one-third of the hospitals be open, why are only 5% of the schools open, when will more than a third of the food stores open, will the trash and debris ever be picked up.

Reports of his trip sound a lot like his speeches on Iraq - everything's wonderful, trust me. But substance? See me next year.

Transforming the Military

The Strategic Studies Institute of the Army War College publishes some interesting stuff. This month they published a summary of their third conference on Security Transformation, which, in my non-military understanding, means how well the military is adapting to a changing world. While the conference, which was co-sponsored by Harvard's Kennedy School and the National Defense University, was held in November 2004, the thoughts of the defense officials - current and former - and the military gurus who attended the conference are still, I think, au courant. Let's look at some of them.

Stability & Reconstruction
or, S&R in military jargon, is pretty poor. "Astonishingly, we have not found a way to build an effective S&R capability that brings together the necessary elements of organization, resources and operational control." The basic problem is that the Defense Department (DOD) seems to want to go it alone, although they really need the assistance of the State Department (remember their plans for post-Iraq?), the Justice Department, Homeland Security, and Health and Human Services. "Little progress has been made since the last conference where we concluded that a better way is urgently needed for the United States to carry out peacekeeping operations." This failure to work with other agencies also negatively impacts our homeland security capabilities.

DOD Budget Outlook
The participants feel that it is unlikely that the DOD budget will continue to grow. Thus, there won't be the money to pay for some of the planned modernization programs. If that is the case, attention must be paid to the likely benefits of these programs in our changing world.

There has been a fair amount in the press about the Quadrennial Defense Review. The conference participants see this review "as having become a bureaucratic exercise in which the services and other DOD elements work to defend their programs and interests rather than a forum for examining the fundamental basis of the defense posture: the relationship of forces to likely future threats and security missions."

Changing Defense Industry
DOD relies more and more on contractors to manage programs, yet there has been little debate about the merits of this.

Congress is not helping the defense industry - and the defense of this country - by promulgating such policies as buy American, export control rules, limiting the availability of foreign scientists. And DOD's limits on technology transfer are forcing our allies to build their own weapons systems.

You wish our leaders would read some of the things the underlings - and the experts - have to say about the world in which we live.

10% of a company's profit...

goes to paying top executives of the 1500 largest public companies. That's what a recent study by Bebchuk of Harvard and Grinstein of Cornell shows. From 2001 to 2003 the compensation of top executives amounted to 9.8% of the companies' net income; in the period 1993-1995 compensation was only 5% of net income. And the compensation number does not include retirement benefits.

Did the profit of these 1500 companies double between the same periods? I doubt it. Were these top executives well compensated in 1993-1995? You can bet on it.

Democracy is a messy thing

And often you don't want to see it being made.

So it is with the current Alito hearing, if my listening to it for the past hour while running errands is any indication. I heard three Senators question Alito. Only one of them asked relevant questions. The other two seemed to be on a different planet.

We really need better representation at all levels from local to federal.

Interesting little bits about race

Marshall Segall, Professor Emeritus of Syracuse, spoke at the Senior Center today. His contention is that race really does not exist. He travels around the world with an exhibit that argues his point. He made a strong case, but, as usual, I was more fascinated by the oddities he mentioned than his general argument, which does make a lot of sense.

Oddity #1 - in every decennial census that the US has conducted since the 1800s there has been a different list of races from which you can select your own.

Oddity #2 - The word 'Caucasian', which is a virtual synonym for 'white, came about around 1735. A paper written by a student of Linneaus described the most beautiful descendants of an all-perfect, all-beautiful God as Caucasian because, at the time of his writing the paper, a troupe of dancing girls from the Caucasus was touring Germany. In the eyes of this young man, they were the most beautiful humans he had seen; hence, Caucasian.

The Trouble with Harry

Okay, Harry Belafonte has been outspoken before and, as you know, I am not a Bush fan. But, Belafonte went over the line in calling Bush the greatest tyrant and terrorist in the world. Change the name from Bush and this comment could have come from O'Reilly. Will we ever return to a time when opponents were more civil to each other?

10 years and counting

In 1995 the Navy started working on something called the Naval Tactical Command Support System (NTCSS). The system's goal was to more effectively manage ship, submarine and aircraft support activities. Ten+ years and $1 billion later the project is still not complete; in fact it's partially running in about half of the sites where it was intended to work.

Worse is the Government Accountability Office's finding in a recent report that there appears to be little, if any, data that projects a positive ROI for the project. Nor is there any data showing whether the pieces that have been deployed are working as expected. Even if that information were available, the GAO has concerns as to how the system is being developed. This development process has led to the failure of the latest component of the system from passing the testing phase not once but twice in four years.

A good use of our money?

Are Incentives Always Earned?

When it comes to the Department of Defense (DOD) incentives may not always be earned but they are almost always paid. Perhaps, they are not paid in full, but the DOD contractors do get a good piece of the incentive.

The Government Accountability Office (GAO) recently looked at 93 contracts in which DOD offered incentives to the contractor. In general, GAO found that incentive payments did not appear to be connected with the results of the contract. For example, the Comanche helicopter was 41% ($3.7 billion) over the baseline for R&D costs and was late by 33 months; yet, it 'earned' 85% of the possible incentives. The performance under the contract for the F/A-22 Raptor fighter was equally poor - 47% over R&D baseline, 27 months late - yet 91% of the incentive was paid.

In the 93 contracts studied, the GAO estimates that $8 billion in unearned incentives was paid. There are 597 contracts of this type. If the overpayment rate is about the same for all of these contracts, about $50 billion in our funds went down the tubes.

The Great Economy

I was going to write about Bush's speech yesterday about how great the economy is but Hale Stewart at Blogging of the President has said it all for me.

Send Pentagon Procurement People to Iraq

That might get them to do their job - giving our troops the protection they need- a heck of a lot better. In April and in August I wrote about the poor job being done to arm our troops. Today's NY Times reports on a Pentagon study that documents that 300 or more lives could have been saved if better armor had been available.

The armor originally - and in most cases still being - used did not cover shoulders, sides and other areas of the body. In September 2005, almost two-and-a-half years after we started this campaign, the Marines finally started buying armor to cover the sides of our troops. The company building this armor has managed to produce 2200 of the 28,000 sets ordered; at this rate it will take forty months to complete the contract! Some of our soldiers have resorted to buying their own extra armor.

I guess the Marines had some clue that better body armor was needed since they asked for data on wounds back in August 2004. However, they could not come up with $107,000 to pay for the analysis until December. They started getting the analytical data in June 2005. How many Marines died because of poor armor in these ten months?

Protecting our trucks is also a difficult task for our procurement people. The Cougar armored truck which is performing very well in Iraq is being built by a small company that had never mass-produced vehicles. It is now three months behind schedule and the subject of a false-claims case that accuses the company of falsifying records. Armoring all of our Humvees will not happen until June 2006.

But everything is going swimmingly in Iraq as the insurgency is in its last throes.

More PR Bullshit

Just what was this week's meeting of Bush and former secretaries of state and defense all about? Bush talked for all but five minutes. Did he listen at all? Was there an opportunity for anybody else to say or ask anything substantive? Certainly doesn't seem that way. The whole thing seemed to be staged so that CNN etal could fill some time showing photos of the old guys and girl (Albright) entering the White House and create the impression that Bush is willing to listen to others.

Cats in the news

Today's newspaper brings news of two weird incidents involving cats. The first I can understand: a cat rode 70 miles down the Jersey Turnpike while underneath an SUV. The second seems a tad farfetched: a cat in Columbus dialed 911 when his master fell out of his wheelchair and was unable to do anything but ask the cat to dial the number.

All Resources Are Finite

Around 1998 I had to recruit programmers from Russia as I could not find enough talented programmers in North America. It seems as though India is beginning to face a similar problem.

A recent study by McKinsey posits a shortage of 500,000 programmers in India by 2010. A better gauge of the problem is the salaries now being paid. The salary of a project manager has gone from around $12,000 in 2000 to a little over $30,000 in 2004; an entry-level prgrammer who earned $4,000 in 2000 was paid over $6000 in 2004. One Indian company is offering $100,000 salaries to those who have left India for foreign shores. India is losing jobs to Poland and the Philippines.

The problem is not a lack of technology graduates; there are 17,000 colleges and universities in India. The problem is the quality of those 17,000 colleges and universities; it's just not good enough. Some colleges can't afford library books, others don't have enough classrooms. Still others are focused on making money rather than educating their students. The head of Tata, India's largest software company, says, "Unless we drastically look at paradigm shifts in education, we won't get the numbers of workers we need for the future."

India has taken many programming jobs away from the U.S. because of its low salaries and, up to now, good quality. It looks like these advantages may not be as compelling as they once were.

Coming Back?

At the beginning of the 20th century, Hartford was one of the leading cities in the country. At the end of the century, it was one of the worst. I can recall seeing a sign warning about babies falling from buildings as I drove through the city just a few years ago. But, if today's NY Times article is right, things are finally starting to look up for Hartford.

First of all, people - young and old - are moving into downtown Hartford; 1300 new housing units should be available this year. Some 20+ new restaurants have begun to restore a modicum of night life. The new Convention Center is doing better than expected. Cesar Pelli is designing a new science center. The Hilton has reopened. There is no longer a G. Fox or Sage Allen, but maybe new stores will come as the population returns.

It would be great if Hartford does come back. It's just the right size for a great city - large enough to have a significant artistic life yet small enough to be able to walk almost everywhere.

Another small step towards sanity

Michael Chertoff, the Secretary of Homeland Security, announced that some of the department's money will be allocated on the basis of risk. Thus, thirty five high risk metropolitan areas will share $765 million this year. It's not a lot of money, but allocating our money based on risk makes a heck of a lot more sense than allocating it based on Congressional influence.

Some New Year's Resolutions

Gregory Mankiw, who chaired Bush's Council of Economic Advisers, had some surprising New Year's resolutions for economic policy makers:

• Be straight about the budget mess.
• Be unequivocal in support of farm trade.
• Ask farmers to accept the free market.
• Admit that there are some good taxes.

Why wasn't he making the same resolutions when he was in a position of power?

Another war on Christianity

An answer in Sunday's NY Times crossword puzzle got me thinking about another war on Christianity that has been under-reported. The answer was Ped Xcrossing (i.e., pedestrian crossing). Here, you see the infernal letter X being used once more in an anti-Christian fashion as it is replacing 'cross' and we all know that Christ died on the cross.

As I think of it, this war has other faces; school crossing and railroad crossing come readily to mind. But, recalling that the latter is often represented as 'RR Xing', I wonder whether this is also part of a war against railroads.

A sign that things are changing?

Starbucks just won a trademark infringement suit in China. A Chinese company was prevented by Chinese courts from using the Starbucks' trademark. This is the first such judgment. What's next? Protecting intellectual property?

Starting on a downer

I looked at the Long Term Budget Outlook recently put out by the Congresional Budget Office and the outlook is not good in the eyes of this relatively impartial, definitely experienced group. Here are some of their conclusions.

Some very obvious conclusions: We all know that eventually something needs to be done about spending for we old folks as, through Medicare, Social Security and Medicaid, we'll be taking a larger and larger share of the federal budget. Any rational person knows that the unchecked spending binge we've been on will eventually have to be paid for.

Some conclusions we have to be periodically reminded of: Economic growth alone is unlikely to bring our long-term fiscal position into balance. Even if health costs did not grow as fast, we'd still need to raise taxes unless we cut other areas. Cutting spending on defense, education, transportation and other areas will not be enough to make up for the money being spent on we elders unless there is a change in our tax policies.

Not pleasant thoughts on the first day of a new year.