Another front beckons.

U.S. and Mexican officials describe the drug cartels as a widening narco-insurgency. The four major drug states average a total of 12 murders a day, characterized by ambushes, gun battles, executions and decapitated bodies left by the side of the road. In the villages and cities where the traffickers hold sway, daily life now takes place against a martial backdrop of round-the-clock patrols, pre-dawn raids and roadblocks manned by masked young soldiers.

Government:

"It can be traumatic to have the army in control of public security, but I am convinced that we don't have a better alternative."

Citizen:

"I always think it's better knowing that they are out there protecting us, that they are watching over us, when there is nobody else to do it."

As Mexico Battles Cartels, The Army Becomes the Law

Laurence Kotlikoff:

When there is free money on the ground, people on Wall Street figure out ways to pick it up.

From the archive:

There used to be a time if you didn't have money to buy something, you just didn't buy it.

Nassim Nicholas Taleb:

Many hedge fund managers ... are just picking up pennies in front of a steamroller. And sometimes the steamroller accelerates.

Recently:

Revolutionize your heart out. We'll still have this country by the balls.

Scrap the Summers-Geithner plan

Cyber is the new Pakistan.

Cyberspies have penetrated the U.S. electrical grid and left behind software programs that could be used to disrupt the system, according to current and former national-security officials.

Under the Bush administration, Congress approved $17 billion in secret funds to protect government networks, according to people familiar with the budget. The Obama administration is weighing whether to expand the program to address vulnerabilities in private computer networks, which would cost billions of dollars more.

Last week, Senate Democrats introduced a proposal that would require all critical infrastructure companies to meet new cybersecurity standards and grant the president emergency powers over control of the grid systems and other infrastructure.

From the NERC letter:

"Identification and documentation of the Critical Cyber Assets associated with the Critical Assets that support the reliable operation of the Bulk Electric System" necessitates a comprehensive review of these considerations. The data submitted to us through the survey suggests entities may not have taken such a comprehensive approach in all cases, and instead relied on an "add in" approach, starting with an assumption that no assets are critical. A "rule out" approach (assuming every asset is a CA until demonstrated otherwise) may be better suited to this identification process.

Electricity Grid in US Penetrated By Spies

Michael Osinski:

Here's one thing that's definitely true: The software proved to be more sophisticated than the people who used it, and that has caused the whole world a lot of problems.

I was wondering why I was making more than anyone in my family, maybe as much as all my siblings combined. Hey, I had higher SAT scores. I could do all the arithmetic in my head. I was very good at programming a computer. And that computer, with my software, touched billions of dollars of the firm's money. Every week. That justified it. When you're close to the money, you get the first cut. Oyster farmers eat lots of oysters, don't they?

From January:

When I started in the business in risk management a veteran trader drew me a picture of the money river to tell me how everyone got paid.

He drew the river and then in a prime spot, a dam. That's where management was. Then you had sales and trading rank and file down the river a bit, but on the bank dipping their pans in the river. Middle office was behind the river bank dipping in the occasional spill over.

My Manhattan Project

Golumbia:

I argue that we must also keep in mind the possibility of de-emphasizing computerization, resisting the intrusion of computational paradigms into every part of the social structure, and resisting too strong a focus on computationalism as the solution to our social problems.

Peter Norvig:

PowerPoint doesn't kill meetings. People kill meetings. But using PowerPoint is like having a loaded AK-47 on the table: You can do very bad things with it.

Golumbia:

The wave of upbeat "democratization of information" writers seem to look almost exclusively at what one might think of as the "good side" of the web, and in so doing nearly ignore the countervailing tendencies that undermine the movements they champion. These writers also endorse a radical populism that around the world only sometimes aligns itself with democratic social justice.

Freeman Dyson:

I beseech you, in the words of Oliver Cromwell, to think it possible you may be mistaken.

Golumbia:

How do we guarantee that computers and other cultural products are not so pleasurable that they discourage us from engaging in absolutely necessary forms of social interaction? I see the current emphasis on the "social web" as not so much an account of a real phenomenon as it is a reaction to what we all know inside -- that computers are pulling us away from face-to-face social interactions and in so doing removing something critical from our lived experience.

Niall Ferguson:

Chimerica is really the key to how the global financial system works, and has been now for about a decade. Both sides stand to lose from a breakdown of Chimerica, which is why both sides are affirming a commitment to it. The Chinese believe in Chimerica maybe even more than Americans do. They have nowhere else to go.

Golumbia:

It is legitimate and even necessary to operate as if it is possible that computationalism will eventually fail to bear the philosophical-conceptual burden that we today put on it. We have to learn how to critique even that which helps us.

Noam Cohen's friend:

Privacy is serious. It is serious the moment the data gets collected, not the moment it is released.

Golumbia:

For at least one hundred years and probably much longer, modern societies have been built on the assumption that more rationality and more techne (and more capital) are precisely the solutions to the extremely serious problems that beset our world and our human societies. Yet the evidence that this is not the right solution can be found everywhere.

Robert McNamara:

Rationality will not save us.

The Cultural Logic of Computation | Excerpts II

Golumbia:

This book is not about computers. It is instead about a set of widespread contemporary beliefs about computers -- beliefs that can be hard to see as such because of their ubiquity and because of the power of computers themselves. More specifically, it is about the methods computers use to operate, methods referred to generally as computation.

Neal Stephenson:

It wasn't just some silly adding machine or slide rule. Leibniz actually thought about symbolic logic and why it was powerful and how it could be put to use. He went from that to building a machine that could carry out logical operations on bits. He knew about binary arithmetic. I found that quite startling. Up till then I hadn't been that well informed about the history of logic and computing. I hadn't been aware that anyone was thinking about those things so far in the past.

Golumbia:

In a time of the most extreme rhetoric of cultural change -- which does not, at the same time, accompany a concomitant recognition of the possibilities for radical cultural difference -- the need for resistance to the rhetoric of novelty seems especially pressing, not least when such claims are so often based on willful avoidance of the existence of analogous phenomena in the recent historical past. Networks, distributed communication, personal involvement in politics, and the geographically widespread sharing of information about the self and communities have been characteristic of human societies in every time and every place: a burden of this book is to resist the suggestion that they have emerged only with the rise of computers. In a familiar phrase whose import we sometimes seem on the verge of forgetting: the more things change, the more things stay the same.

From the archive:

It is ironic: people don't notice that noticing is important!

Golumbia:

I am convinced that from the perspective of the individual, and maybe even from the perspective of informal social groups, the empowering effects of computerization appear (and may even be) largely salutary. But from the perspective of institutions, computerization has effects that we as citizens and individuals may find far more troubling. Here, computationalism often serves the ends of entrenched power despite being framed in terms of distributed power and democratic participation.

From the archive, on the culture of the new capitalism:

The widespread use of enterprise systems has given top managers much greater latitude to direct and control corporate workforces, while at the same time making the jobs of everyday workers and professionals more rigid and bleak.

The Cultural Logic of Computation | Excerpts I

Lisa Gitelman on David Golumbia's new book:

Golumbia's argument is that contemporary Western and Westernizing culture is deeply structured by forms of hierarchy and control that have their origins in the development and use of computers over the last 50 years. I look forward to pressing this book on friends and colleagues, starting with anyone who has ever recommended The World is Flat to me.

Bill McKibben on Thomas Friedman:

Thomas Friedman is the prime leading indicator of the conventional wisdom, always positioned just far enough ahead of the curve to give readers the sense that they're in-the-know, but never far enough to cause deep mental unease.

You can read an excerpt from the first chapter.

The Cultural Logic of Computation

A Zero Hedge exclusive:

And the conspiracy thickens.

During Jan/Feb AIG would call up and just ask for complete unwind prices from the credit desk in the relevant jurisdiction. These were not single deal unwinds as are typically more price transparent - these were whole portfolio unwinds. The size of these unwinds were enormous, the quotes I have heard were "we have never done as big or as profitable trades - ever".

AIG, knowing it would need to ask for much more capital from the Treasury imminently, decided to throw in the towel, and gifted major bank counter-parties with trades which were egregiously profitable to the banks, and even more egregiously money losing to the U.S. taxpayers, who had to dump more and more cash into AIG, without having the U.S. Treasury Secretary Tim Geithner disclose the real extent of this, for lack of a better word, fraudulent scam.

What this all means is that the statements by major banks, i.e. JPM, Citi, and BofA, regarding abnormal profitability in January and February were true, however these profits were a) one-time in nature due to wholesale unwinds of AIG portfolios, b) entirely at the expense of AIG, and thus taxpayers, c) executed with Tim Geithner's (and thus the administration's) full knowledge and intent, d) were basically a transfer of money from taxpayers to banks (in yet another form) using AIG as an intermediary.

For banks to proclaim their profitability in January and February is about as close to criminal hypocrisy as is possible. And again, the taxpayers fund this "one time profit", which causes a market rally, thus allowing the banks to promptly turn around and start selling more expensive equity (soon coming to a prospectus near you), also funded by taxpayers' money flows into the market. If the administration is truly aware of all these events (and if Zero Hedge knows about it, it is safe to say Tim Geithner also got the memo), then the potential fallout would be staggering once this information makes the light of day.

This wholesale manipulation of markets, investors and taxpayers has gone on long enough.

AIG Was Responsible For The Banks' January & February Profitability

Geoff Mulgan:

To find insights into how the current crisis might connect to these longer-term trends we need to look not to Marx, Keynes or Hayek but to the work of Carlota Perez, a Venezuelan economist whose writings are attracting growing attention.

Perez is a scholar of the long-term patterns of technological change. One implication of Perez’s work, and of Joseph Schumpeter’s before her, is that some of the old has to be swept away before the new can find its most successful forms. Propping up failing industries is in this light a risky policy. Perez suggests that we may be on the verge of another great period of institutional innovation and experiment that will lead to new compromises between the claims of capital and the claims of society and of nature.

If another great accommodation is on its way, this one will be shaped by the triple pressures of ecology, globalisation and demographics.

Obama should be ideally suited to offering a new vision, yet has surrounded himself with champions of the very system that now appears to be crumbling.

The result is that a large political space is opening up. In the short run it is being filled with anger, fear and confusion. In the longer run it may be filled with a new vision of capitalism, and its relationship to both society and ecology, a vision that will be clearer about what we want to grow and what we don’t.

We need to rekindle our capacity to imagine, and to see through the still-gathering storm to what lies beyond.

Mark Twain:

When an entirely new and untried political project is sprung upon the people, they are startled, anxious, timid, and for a time they are mute, reserved, noncommittal. The great majority of them are not studying the new doctrine and making up their minds about it, they are waiting to see which is going to be the popular side.

It is desire to be in the swim that makes political parties.

After capitalism

If you think "Russia" when you hear "oligarchy", think again.

By now, the princes of the financial world have of course been stripped naked as leaders and strategists -- at least in the eyes of most Americans. But as the months have rolled by, financial elites have continued to assume that their position as the economy’s favored children is safe, despite the wreckage they have caused.

Even leaving aside fairness to taxpayers, the government’s velvet-glove approach with the banks is deeply troubling, for one simple reason: it is inadequate to change the behavior of a financial sector accustomed to doing business on its own terms, at a time when that behavior must change.

Only decisive government action -- exposing the full extent of the financial rot and restoring some set of banks to publicly verifiable health -- can cure the financial sector as a whole.

This may seem like strong medicine. But in fact, while necessary, it is insufficient. The second problem the U.S. faces -- the power of the oligarchy -- is just as important as the immediate crisis of lending. And the advice from the IMF on this front would again be simple: break the oligarchy.

Jules Dupuit:

It is not because of the few thousand francs which would have to be spent to put a roof over the third-class carriage or to upholster the third-class seats that some company or other has open carriages with wooden benches ... What the company is trying to do is prevent the passengers who can pay the second-class fare from traveling third class; it hits the poor, not because it wants to hurt them, but to frighten the rich ... And it is again for the same reason that the companies, having proved almost cruel to the third-class passengers and mean to the second-class ones, become lavish in dealing with first-class customers. Having refused the poor what is necessary, they give the rich what is superfluous.

Peter Schiff:

I think things are going to get very bad.

From the recent archive:

After jokingly asking "Time to buy gold, huh?", there was a pregnant pause. Then came the response: "Buy ammunition".

The Quiet Coup