Saturday, September 27, 2008

Paulson Plan One Week Later

Larry Kudlow argues the Paulson plan is good for the economy, good for the financial markets, and good for taxpayers.
I don't think a lot of folks understand this win-win scenario. Let me repeat: The taxpayers own the bonds the Treasury buys; the taxpayers own the cash flows generated by the bonds; the taxpayers own the profits when the bonds are sold; and the taxpayers benefit when the profits and cash flows are used to pay-down government debt.

The troubled assets purchased by the Treasury right now are likely to be very under-priced because of the chaotic and frozen market conditions. But over time, through monthly cash-flow payments or through loan sales, taxpayers will get all their money back and in great likelihood a handsome profit.

The troubled assets are underpriced because they're troubled. They're based on bad loans. Many of them have or will default unless the borrowers get some kind of relief.

Thus there's no guarantee that those assets will appreciate as Kudlow predicts. Of if they do appreciate, it will be because the Democrats in Congress get their way and vote a huge subsidy for the foolish homeowners that bought more house than they could afford. Either way, there's a decent chance the Paulson plan will in fact result in a government bailout for someone: Wall Street, unwise borrowers, or both.

Wednesday, September 24, 2008


When Sec. Paulson first introduced the $700 billion bailout package, critics focused on the lack of oversight. But in the days since, all we've heard from Congress is complaints about executive compensation and home mortgage assistance.

It seems very odd to me that the same people who created this mess out of shortsightedness are now the ones responsible for fixing it. These are the same hacks that made it possible for Fannie and Freddie to run uncontrolled. They blocked any meaningful GSE reform. They also blocked any regulation of the derivatives market, for fear such regulation would impact the GSE's. Now they want to prop up all those homeowners that buried themselves in risky mortgages.

And lest we forget, these are the same legislators that thought they could prevent future securities scandals with Sarbanes-Oxley.

Can we please get back to the serious issues? Like oversight on the biggest government bailout in world history?

Tuesday, September 23, 2008

Further Adventures with Struts 2

I'm in the process of reading Struts 2 in Action, by Brown, Davis, and Stanlick. Found this little gem on page 54:
In this section, we're going to introduce the ActionSupport class, a convenience class that provides default implementations of the Action interface and several other useful interfaces, giving us such things as data validation and localization of error messages...The framework doesn't force you to use this, but it's a good idea to use it when learning the framework. In fact, it's pretty much always a good idea to use it unless you have reason not to.

The Struts 2 project just doesn't get it. Why must I implement an interface in order to get data validation and i18n? Or more specifically, why aren't these features modeled as services that can be injected, rather than interfaces which must be stubbed?

Seriously, why must an action implement ValidationAware? Struts 2 has added support so I can name my action methods anything I want, why can't they do the same for the validate() method? This principle can also be applied to the error messages: they can be retrieved dynamically from various getErrors() and getMessages() method.

It looks to me like Struts 2 is trying to glom onto Spring's IoC buzzwords without actually adhering to the underlying principles. Of course, if they actually adhered to dependency injection and convention-over-configuration, they'd be pretty much identical to SpringMVC.

Monday, September 22, 2008

More McCain Train Wreck

Sen. McCain has announced his choice to replace SEC chair Chris Cox: Andrew Cuomo. Ay chihuahuah.

(h/t Kausfiles)

The Impending McCain Train Wreck

Sen. McCain is ratcheting up the rhetoric on illegal immigration. In Pennsylvania today, McCain said...
I believe we have to have a commitment -- because it's a national-security issue as well as an economic issue as well as a humanitarian issue that we enact comprehensive-immigration reform.

Nothing about "securing the borders first". He apparently thinks Sarah Palin is enough to win the support of anti-illegal-immigration conservatives. More importantly, he's still demagoguing the anti-illegal position as being anti-immigration:
This nation is stronger for the infusion of fresh blood and vitality that has come to this country in wave after wave," he said. "Everyone that has come to this country has enriched this nation, including our Hispanic citizenry.

Only the bigots are saying we should stop all immigration from Central and South America. And there just aren't that many bigots. The real opponents of comprehensive-immigration reform are those who worry about the effects of a lawless border. These opponents agree that uncontrolled borders are in fact a major " well as a humanitarian issue." But they argue that the way to solve it is to solve it, by enhancing border security and improving immigration policy and procedures. Sen. McCain wants to ignore the problem. He wants to make the problem disappear by granting amnesty to the millions of illegal immigrants in the country now, but without securing the borders to insure the problem doesn't repeat itself in a few years.

UPDATE: In an interview with Univision, Sen. McCain promised to introduce comprehensive immigration reform on his first day in office as President.

To paraphrase Gov. Palin, what should we make of a candidate who promises his party he'll secure the borders first, and then tells Univision he'll push his original comprehensive reform on day one?

(h/t Kaus)

Thursday, September 18, 2008

Disaster Entitlement

On the way home I listened to an NPR story on Bolivar Peninsula. Several hundred residents remain on the peninsula after Hurricane Ike all but obliterated their town. They're afraid the government won't let them return to their property later.

The story takes pains to mention that some of the residents are living on land originally settled by their parents in 1920. That would be eleven years after the great 1909 hurricane killed 600 people in the same area.

Why do these people want to return to this property? Yes they've been through a horrible experience, but do they not realize that, if they stay, sooner or later they'll get hit by another tropical storm, and then another, and another?!

More importantly, why are we spending federal dollars to underwrite their decision? If they want to choose a "coastal" way of life, that's entirely their choice. But why do federal taxpayers have to pay for it?

McCain and Short Selling

Sen. McCain says he'd fire SEC chief Christopher Cox for having "betrayed the public's trust" (WSJ).

Fair enough. In hindsight there seem to be plenty of steps that could have been taken to eliminate risk in the sub-prime and derivatives markets. But that's not what's got McCain angry:
Sen. McCain said the SEC allowed abusive short-selling, or bearish bets on a company's stock, to turn "our markets into a casino."

Sen. McCain also criticized Mr. Cox for eliminating a trading rule that acted as a speed bump to prevent short-seller from pounding a stock. The rule, known as the uptick, said traders could only place short-sales following a higher bid in a stock price. The SEC eliminated the rule in July 2007, and market participants have been urging the SEC to reinstate the rule ever since. Mr. Cox has said the rule is ineffective today since markets have changed since it went into effect around the Great Depression.

Short selling didn't cause the current crisis. Yes it's hurt, and it's probably a good idea to reign it in, but we already have rules on the books for dealing with it. Chairman Cox is right, reinstating the uptick rule won't materially affect the credit markets, which is what's causing the failures at Bear, Lehmann, Merrill, and Morgan. But as always short-selling is a convenient target when times are bad, and Sen. McCain apparently believes he can get a political bounce from aggressively attacking both Chairman Cox and the bears.

McCain also supports creation of a Resolution Trust Corp-like entity to isolate the bad paper currently clogging financial markets. First suggested by Brady, Ludwig, and Volcker yesterday, it sounds like a plausible solution. What's not clear is whether he agrees this entity should be temporary, lasting long enough to resolve the current crisis and then disbanding, or whether he favors a new permanent agency with broad regulatory power.

Once again, he sounds like a johnny-come-lately. Never mind that Sen. Obama has been every bit as much blind-sided by this week's events, I kind of expected Team McCain to keep more of a level head. Talking tough about short selling and (possibly) proposing huge new federal bureaucracy right in the middle of a crisis doesn't recommend his economic expertise.

Tuesday, September 9, 2008

Coolness and Inexperience

Richard Cohen of WaPo wants to know why Sen. Obama doesn't attack Gov. Palin's inexperience head-on:

[Everyone knows] McCain picked someone so unqualified she has been hiding from the media because a question to her is like kryptonite to what's-his-name. But did Obama say anything like that? Here are his exact words: "Well, you know, I'll let you ask John McCain when he's on ABC." Boy, Palin will never get over that.

Personally I think Sen. Obama is smart. He knows he doesn't have any more significant experience than Gov. Palin. If he got too aggressive with these attacks, he'd be exposed to the exact same type of attacks from Sen. McCain. Those attacks haven't stuck until now, largely due to Sen. Obama's charisma. But once he gets aggressive, the charisma doesn't work as well.

Here's what I don't get: Sen. Obama can see his weakness, why can't his supporters?
(h/t RCP)

Thursday, September 4, 2008

Action-based Web Frameworks

I'm in the process of grokking Struts 2. It's basically what I remember in Struts 1, with the addition of some nice features like annotations.

But I'm struck by the clunky action-view configuration. Yes annotations help, but why does Struts still want to map action results to views at all? Should this be a programming rather than a configuration issue? Consider the following trivial Struts example (taken from Starting Struts 2):
class MyAction {
public void String execute() throws Exception {
if( myLogicWorked() ) {
return "success";
} else {
return "error";

The result strings ("success" and "error") then need to be mapped to specific views. Here's how it'd be done in struts.xml:
<action name="my" class="com.fdar.infoq.MyAction" >
<result name="error">error.jsp</result>

Contrast this with the Grails/Rails "convention instead of configuration" philosophy:

def myAction = {
// do stuff

Grails automatically maps myAction to myAction.gsp. If the result of my action requires a different view, I simply program it that way:

def myAction = {
// do stuff
render( view:"someOtherView.gsp")

I guess the Struts team thinks it's a good idea to keep the action-view mappings in configuration. But I don't know why. I can't ever imagine a non-programmer diving into struts.xml to remap application flow. It seems like an unnecessary complication.