GIGO (Garbage in, Garbage out)

According to the Wall St Journal, insurance giant AIG relied upon a computer model to assess the risk of the trillions of dollars of "credit default swaps" it did. "Credit default swaps" are Wall St code words meaning bond insurance. For a premium AIG insured mortgage backed bonds against default. When the real estate bubble popped in 2006, the insured mortgage backed securities began to default, and AIG had to pay them off. The losses on bond insurance completely overwhelmed the earnings from the rest of AIG's insurance business, and requiring a $105 billion bailout by us long suffering taxpayers.
One has to wonder how senior management at AIG was gullible enough to beleive any kind of computer model could predict the default rate of mortgage backed securities. How can a computer program know the true value of the mortgaged property, keep up with the fluxuation of the real estate market, know the equity in the property and understand the borrower's ability and willingnes to make the monthly payments on time? Short answer, it cannot, and the managers that OK'ed the deals were totaly clueless. Probably all a bunch of MBA's.

If an arm is worth $10 million, what's a leg go for?

A young woman suffered a horrible medical condition. Injection of a drug caused a dreadful infection of her arm, so severe the arm had to be amputated. She sued. She sued everybody in sight, including the maker of the drug. She won in Vermont state courts. The drug maker appealed to the US Supreme Court, claiming that they had complied with all the FDA's rigorous requirements for drug approval, testing, labeling, and good manufacturing practice.
The drug maker has a point. They manufactured a product in accordance with all the rules, and there are plenty of rules. Should they, their employees, and their stockholders be penalized for doing the right thing? Only the Supreme Court can know.
It's terrible for a young woman to loose her arm, but does this justify taking money from a company that did everything the rules demanded?

It's almost over. Thank the good Lord for that

The news media are completely locked onto poll numbers. That's all they report, in between clips of McCain and Obama giving their stump speeches. Everything else in the world is on hold until the election is over.
I think McCain can do it. The poll numbers show strength, and the difference between the two is less than the error in the polls for this January's NH primary. The polls projected an Obama win by 5%, actually Hillary won by 5% which means the polls were off by 10%. And surely Obama has to have scared a lot of voters by now. Think tax hikes, Iraq defeat, and turning a stock market crash into the second great depression.

Mastery of the trivia

WMUR TV sponsored debates between Sununu and Shaheen, Horn and Hodes, and Buckley and Shea Porter, the NH Senatorial and US representative candidates. I watched them all. Arggh.
Sununu spoke well, made good points and supported them. I gained a knowledge of what Sununu would do in office.
The rest of them were terrible. They used the statewide TV exposure for vague generalities, spectacular accusations of obscure misdeeds and platitudes. Republican Jennifer Horn failed to point out Paul Hode's complicity in the Fannie-Freddie disaster that caused first the housing market crash ans second the stock market crash. Shaheen sounded like she was campaigning against Bush, who isn't standing for re election, rather than for US Senator from New Hampshire. Hodes came across as a middle aged weasel. Shea Porter and Buckley did themselves no good.

The tax man cometh.

I hear Obama and McCain each claiming that their tax plan will be better than the other guy's tax plan. Unfortunately the US personal income tax is so complex and loaded with gotcha's and loopholes that nobody knows what will happen, no matter who wins. All we taxpayers can figure is the man who wants to spend more will raise taxes more. So far, Obama is miles ahead on the spending front. He plans to offer free health insurance to everyone. That's gonna cost so much it will bankrupt the country.
All of Obama's tasty goodies will have to be paid for some how. Once a federal goodie is offered , it can never be revoked, so each of Obama's pricey goodies will burden us taxpayers for ever and ever. We will have to pay for them somehow, taxes, borrowing, or just plain printing the money, none of which is good for the economy.
Obama's goodies mean taking money away from industry, investment, research and development and just consuming it.

Will a one hour speed bump save the market?

The Dow is down 400 points and the market has only been open for 20 minutes. There is talk about a one hour timeout of trading should the market drop 1100 points. Will just one hour allow enough time to reset all the computers (which sell when the market drops) and reset the investors who will be in solid panic mode?

Alternative Energy subsidies

Interesting NYT article here. Apparently nuclear energy enjoys a $1.59 per Megawatt hour subsidy where as wind and solar get $20 per Megawatt hour. Let's see, I pay $160 per Megawatt hour up here. So the 1% subsidy doesn't make much difference. The $20 for wind and solar seems a bit much, especially as neither wind nor solar goes into my car or my furnace, my big energy costs.
What does hurt is the green anti nuclear stand. I'm still paying off the damage they did to the Seabrook nuclear plant back in the 1970's. "Stranded cost recovery" right on my electric bill every month, thanks to the Clamshell Alliance. Plus a whopping big share of the cost of a nuclear plant is the humungous pile of paperwork the greens have saddled the industry with.