Domestically for health care and internationally for Google’s action to change its position in the Chinese market. Because Google is redirecting google.cn to their unfiltered Hong Kong site, I thinking it a bit early to be making the bold claim that Google has withdrawn from China completely. Especially considering that Hong Kong is a part of the larger People’s Republic of China. It will be interesting to see how both of the situations play out over the coming weeks and months, with health care passed and Google taking a serious step towards leaving the Chinese mainland.
In Pennsylvania your laptop display watches you. Personally I though that in the design meeting where they decided to start locating web cameras where they are on laptops that someone would have mentioned Orwell… [Boing Boing] [Slashdot] [Class Action Filing]
Two things coming out of Groundhog’s Day.
First: Toyota Damage Control and Diagnosis
As Toyota begins to shift parts to dealers to address the gas pedal acceleration problem, another accelerator problem may have been found by veteran engineer and Apple co-founder Steve Wozniak. The new problem affects cruise control on his 2010 Prius which hasn’t been recalled. Whereas the recalled vehicles suffering unexpected acceleration are receiving a physical solution, the new issue found by Wozniak is reported by him to likely be a software problem and he can replicate it under certain conditions. [Explanation on Gizmodo] [Update on Gizmodo]
Falling in line with Toyota’s public relations effort that began earlier this week to initiate damage control Toyota has decided to borrow his car for a week to put it through tests. [Jalopnik]
This incident highlights the cautions that need to continue to be taken as we continue to use electronics in places where in the past mechanical systems were in place. When Toyota first issued an advisory on unexpected accelerator issues in September the proposed problem was pedals getting caught in carpet, in the more recent recall it seems that most of the speculation I have encountered revolved around friction in the parts somewhere along where the pedal attaches to, and now in this as of yet not recalled vehicle the problem is in the software running the electronics connected to the pedal.
Complex systems are hard to troubleshoot. It is a shame this problem lacked a more graceful and safer way to fail.
Second: Illinois Primary
With a close Governor’s race on both Democratic and Republican tickets, if you voted in the primary today then your vote probably counted. With the hairsplittingly thin margin on the Democratic ticket though citizens of Illinois can likely count on the strife between Quinn and Hynes to continue for a while as Hynes threatens a recount. Until the situation is resolved expect the next several months to be like the last several where the person governing and the person sending the checks to fund acts of governance keep playing chicken with state funding for agencies and state supported institutions. (Disclaimer: I am employed by Southern Illinois University which is supported by state funds)
If it wasn’t such a close election I might have posted on the above image. [NASA]
In a post last April put forward a case for considering more responsible ways of using information in markets. I would like now to address a problem that stems from Gramm-Leach-Bliley which may have played a larger role in the current market collapse than problems of information, the lack of necessary interdependence between different financial institutions that arose out of cross sector integration.
When Gramm-Leach-Bliley repealed the restrictions from Glass-Steagall which prevented several different types of financial institutions from merging, each class of which performed different market functions, it removed and important barrier which served to assist in preventing bad transactions and toxic securities. That barrier was the need to do business with other institutions to accomplish certain kinds of transactions. The merging of differing types of financial players into single businesses allowed internal transactions to take place which created securities that would not have been created had these securities had to have been created through the cooperation of several different businesses.
The collateralized debt obligations and mortgage backed securities which precipitated the crisis would have been much more difficult to craft had the transactions necessary to create then been made to go through outside firms rather than being crafted in house before being released for purchased by other firms. The necessity of dealing with an outsider to have individual mortgages and other debts repackaged makes it harder to include bad debts in the final securitized amalgamation of debt, because the other firm isn’t going to want to buy something that it can’t make money on.
Both parties to a transaction enter that transaction because they are under the impression that they are getting a good deal. The adversarial element that comes from the possibility of a transaction offering a lopsided benefit makes caution a virtue in deciding which transaction to enter. The diminished amount of trust involved in doing a transaction with an outside entity offers a check that isn’t present when a firm can produce a finished product internally.
The problem is one of balance. Trust is what allows transactions to happen in a market economy, but caution is what allows for any level of market stability. The relations between different players on the market or lack thereof are the problem the meaningful stability related reforms are going to have to address as cleanup continues of the current financial mess and the economy migrates towards a more pleasant equilibrium.
I have decided to move the whole site over to WordPress for a more uniform look across the site. As become better acquainted with WordPress the look and feel of the site may change tremendously from what it is now, and some of the content I have yet to move over should gradually return. In time images will be placed into posts missing them, 301 redirects will fix broken permalinks, and missing posts may be recovered.
