LIBOR-ing through the bailout!

The London Interbank Overnight Rate (LIBOR) is supposed to be the definitive proof as to whether the credit markets are unfrozen. Over and over again, we have seen LIBOR touted as the bellweather for our “bailout” program. Give the banks enough money, the mantra says, and they will start lending to each other again. Once they do, credit markets will open up, and all the economic problems we are currently facing will go away. Business will be able to get loans again, consumers will be able to get loans again, and companies will be able to go into bankruptcy because they will be able to get debtor in possession financing again as they restructure. LIBOR will thus go up, because banks will be willing to lend to each other again. In other words, LIBOR is a performance measure for the functioning of the bank and bank to business lending portion of global financial systems.

I know a few things about performance measurement – it’s one of two non-scientific things I do as part of my job. Measuring how a system of discrete things, entities, people or agencies is working is not easy, and it does not lend itself well to the export of performance measurement schemes from one sector to another. Just ask any federal agency that is required to measure efficiency in terms of the increase in X units/percent of _________ created/enhanced/performed/completed for $Y Million under the federal PART rating scheme.

So when LIBOR was talked about as a performance measure to see if the bailout was working, I jumped on it. Granted, many of the best measures will be long term (like how well do banks do in keeping away from what we now call toxic mortgages), but in the short term, LIBOR seems better then the stock market.

All good things, right? Then why is LIBOR down around 29 % of its value 18 months ago? We’ve pumped $250 Billion into the banking and finance sectors since Congress authorized the bailout – which should have opened up credit markets and gotten lending going again. But it hasn’t. LIBOR’s wild ride between the collapse of Fannie Mae and Freddie Mac, and Treasury Secretary Paulson’s announcement that toxic assets won’t be bought proves it. And then, along come the auto makers to beg for what are essentially bridge loans to get them through tough times so they don’t have to declare bankruptcy. Add to that the CITIbank bailout proposed today, and I expect to see it go even lower based on its performance over the last two years.

So what does all this mean? Well, I think it means that the Treasuries plan NOT to buy toxic assets, but prop up failing financial institutions with toxic securities (or their underlying assets) is going to be a dismal failure. CITIBank is failing because it can’t get rid of it’s bad debt without writing off so much money that it will loose what little place it has in world financial markets. GM is failing for many reasons, but it floors me that GMAC’s mortgage unit (which I believe it sold off a few months ago) is not being pointed to as the money sucking leech that brought the company down. And like it or not, those toxic securities are still on the books of a number of banks, hedge funds, and other financial institutions. And as long as they are, LIBOR won’t go back up no matter how much money Treasury pumps into the system.

You see, while it may have surprised Alan Greenspan, it doesn’t surprise me that each bank put its survival and its profits ahead of the survival of the whole sector. They still are, mostly because no one – not Treasury, not Congress, not their corporate stockholders – is exacting a price from these banks for their bad decisions. Granted, those decisions were often made in response to policies run forth by both political parties over the last 15 years. But it is still no excuse. There is no moral hazard when you deregulate an industry or related industries, and then loan them money to cover for losses from taking advantage of those decisions.

So what to do? First, let’s keep measuring performance by LIBOR. IT shows a true picture (or as true as we can get) of how the financial system is functioning. And let’s get federal auditors going on sorting out those toxic securities. If we spent some of the bailout money to temporarily detail the thousands of federal auditors and contracts and financial specialists to review the books of each and every financial institution (and gave them IT support), my guess is that we would know in 3-4 months who owns what, and which debt is good and which debt is bad. Then the feds could help those with bad debt restructure. Those who just made bad decisions, failed to plan for the future, or entered into contracts that no longer work? We have courts and judges to handle that.

Updating my Universe

AFter being away to do some real world things - like paint my living room and watch election returns, I'm now firmly back to more blogging. Hopefully I'll be able to get my production up here, as well as the othe rplaces I guest blog.

Meanwhile, I've added three new connections to my list of Other People I Like. I have to confess that I am not a fan of long blog rolls on a blog. I know folks who have lots of time - or get paid - to read and respond to lots of other bloggers. I'm not one of them. So I keep my blog rolling to a minimum, and I select sites to add that I really like and that I actually interact with.

So First, let me introduce Progressive Conservative. PC is one of the few right leaning blogs I read for one simple reason. While PC and I disagree, he is always civil to me, welcoming of my interaction, and willing to start from the stand point that liberals and conservatives have differences of policy, but aren't bad people. I encourage you to read his stuff.

Second, but no less important is The Science Cheerleader. Darlene was actually a cheerleader, is now a science advocate, and also makes a great lunch companion. She is really involved in actions to increase citizen involvement in science, and I can't wait to see what she tunrs up.

Next, I add Glenn Greenwald over at Salon.com. Yes he's liberal, but he's also civil and forthright.

Finally, I have linked to a particluar post from "From so small a beginning." Its author summarizes the need for science literacy far ebtter then anyone else I have seen.

Check these folks out. Read what they have to say, and think about it. Your world will be enlarged, I guarantee it.

Let's go to the numbers!

Over at More Grumbine Science colleague Robert G. has an excellent discussion of precision in data, and how it can often be driven too far. This is an especailly prescient thing for us scientists types to pay attention to in an election season, especially sinmce we get bombarded more an dmore by "figures" and "numbers" that purport to tell us somethign about this or that candidate.

Excess precision, and manipulation of statistics, gets all the more interesting when you read Darrell Huff's How to Lie With Statistics. I owe Robert a huge Hat Tip for that one as well, though if you blow by his first paragraph, you'll probably miss the reference.

After reading the little tome, and surviving a graduate minor in statistics along the way to my M.S., I have to admit taht I'm having a lot of fun with statistics this campaign. I leave it to others to dig into the facts - I just don't have that kind of time. INstead, I'm focusing on looking hard at the analyses of the numbers, and making sure that when I hear inaccuracies bandied about, I correct them. I also strive to tell folks why a number i sincorrect, becuase I'm firmly convinced that too few Americans are sophisticated enough to figure out the methodological twists themselves. Of course, having said that, I'm sure I'll be accused of being a liberal elitist.

Take, for instance, the often repeated and analysed claim that Sen. Obama voted to raise taxes 94 times. By now, many outlets have noted that the vote tally actually consisted of 23 votes against tax cuts, 7 votes to raise taxes on wealthy individuals or corporations, and 17 other votes were on 7 bills, mostly to amend them in one way or another. Bottom line - yes tehre wer e94 votes, but no, they don't add up to 94 seperate actions to raise taxes.

How is this lying with statistics you ask? Well, for starters, we are never told what the universe of Sen. Obama's votes is. Lookign it up through Google, we find that since taking office, the Senator has had the chance to vote on 1299 actions befor ethe Senate. He has, interestingly, missed 314 of those. That percentage, interestingly, didn;t get very big until Q2 of 2007 - once the Presidentail campaign began in earnest. So even if we looked at the "94" votes as separate legislative actions (which they are not), they would only be 7.23% of Sen. Obama's record. Worse yet, fo the 94 votes in question, 24.5 % were against tax cuts, which means that 1/4 of the time Sen. Obama was being . . . . wait for it . . . . . a Democrat who believes in taxing people for the services they enjoy from the federal government. How sad that Republicans, supposedly the "Conservative" arm of our political system, still think that forcing people to pay fo rthe services they are provided makes you a "tax and spend" liberal.

My point in all this is that modern campaigns are amazing whizzing machines at chruning out numerical assaults on opponents. Sure, out of context, 94 votes to "raise taxes" wounds bad. But when you get into the numbers, and you do some further testing, they tend to break down. Sort of like Huff's story about the "average Yale Man" making $27,000. huff's point - which Ithink you should read in his book, is that without knowing whether "average" refers to the mean, the median, or the mode, you can't really tell what that $27,000 actually means. Sounds a lot like the numbers game the campaigns are playing, and getting away with.

Well, I tried . . .

to blog regularly that is, but I don't seem to be making it. I suspec that lack of regular blogging occurs . . . regulalrly . . . mostly because we all have these pesky lives to live. Mine has been increasingly busy of late, but now that I'm sequestered away from home for a week - and thus not distracted by so may other pressing needs - I hope you will stay tuned for more output.

The Face of Modern Science?

Elsewhere at the Intersection, Sheril has spent a lot of time writing about women in science, both from her professional perspective, and as an observer of the opportunities and challenges she and her sisters deal with. In a similar vein, Darlene challenged readers of the Science Cheerleader to tell her, and us, whether the U.S. is still a technological leader.

Against this backdrop, the Chronicle of Higher Education released its annual almanac issue on 29 August 2008. Known for its insider stories of success and challenges in university and college campuses, the Chronicle is not normally on the reading radar of most Americans.

That’s a shame, because if it was, Americans would know that American universities and colleges granted 594,065 Master’s degrees in the 2005-2006 academic year (the reporting year for this issue), along with 56,067 Ph.D.s The statistics don’t tell us how many of those went to American citizens, or to folks who stay in the U.S. after they finish their studies. But for the sake of argument, we’ll say that a majority probably do. Of that total, 356,169 women took Master’s degrees (59.95%), and 27,433 of the Ph.D.s were to women (48.93%). Not too shabby if you ask me.

How does this break for science? I pulled together the breakdown below to split out a few major disciplines that are easily recognizable as science or aligned with science:

Biological/Biomedical Science: 8681, MS; 57.9%, Female ; 5775 Ph.Ds, 49.2% Female.

Engineering : 30,989 MS, 23.2% Female; 7,396 Ph.D, 20.1% Female.

Physical Science/science technology: 5,922 MS , 39.8% Female ; 4,489 Ph.D , 29.98% Female.

Obviously, several interesting things fall out of this summary. First, the science related categories are fairly broad, and so there are very few of them. Second, we are turning out a lot of people with advance degrees in engineering fields. While it can be good in terms of Darlene’s question about innovation and technological leadership, it may not be so good for understanding the impacts of human actions on our environment. Finally, while women are making great strides biological and biomedical science, they are still in the minority in the physical sciences and engineering. I have to wonder what that says about America’s perspectives on climate (which is a physical science), and on the many engineering disciplines that keep our bridges up, our roads open, our buildings standing and our AC systems in top shape. I’m not saying that men can’t still contribute to these areas in new and innovative ways. I am saying that those disciplines are loosing something by not attracting more women.

Ok, fine you say, what do we do about this? Any solution has to start with girls (like my daughters) who are still in grade and middle school. They have to be exposed to folks like Danica McKeller, the Nerd Girls, and even Sheril, so they know that science and math are cool. Then we have to call them to the board, and we have to challenge them in their academics. At the same time, we have to recognize that, because women are not men, their perspectives, conclusions, and innovations won’t look or sound like they came from a man. And we as a society need to make that ok.

83 days and counting

Hat tip to my friends at the Intersection - linked to your left, for this one. Astrophysicist urges presidential science debate

Passing the torch - NOAA's fleet moves forward

This week in Seattle, NOAA has both closed a chapter in its operation of science vessels and opened a new chapter in both ship operations and ocean exploration. The closing regards the decommissioning of the R/V John N. Cobb. The Cobb wa sthe oldest of NOAA's research vessels, and the last one with a wooden hull. I have a soft spot in my heart for wooden boats, as my long time readership of Wooden Boat magazine will no doubt attest.

I had the pleasure of walking her decks when I lived in Seattle. Her lines were sweet, and you could actually smell the fish oil and the salt air in all her spaces. The Cobb was an important part of NOAA's long history of fish science studies in Alaska every summer, as well as Puget Sound. Her crew are understandably saddened that she is now tied up permanently, but their many memories and many contributions will not soon be forgotten.

Across town, however, NOAA commissioned its newest ship, the Okeanos Explorer. The Explorer will now ply the seas to help unlock the mysteries of our deepest, darkest places. This is an entirely new mission for NOAA - one not driven by laws, lawsuits or Cogressional pork. For a few cool videos, see this link and this one (click on the title "Seattle Ship Will . . . ").

Sojoin me in thanking the Cobb and her crew for their service, and welcoming the Okeanos to the Nation's ocean fleet. It should be a great ride.