I’m on leave this year as a Fellow at Harvard’s Berkman Center for Internet & Society. Berkman is an amazing community of people working on important and exciting projects concerning the social and policy aspects of the Internet. In just three weeks of affiliation, I’ve already participated in countless wonderful conversations with people who share my passion for studying digital media and have learned lots about related issues. My main goal for the year is to write a book on Internet use and social inequality. My biggest challenge will be staying focused on that task instead of starting up numerous collaborations with my colleagues given the many areas of overlap in our interests.

Berkman sponsors some great events that are open to the public. This Tuesday evening will be one such event: a talk and reception celebrating the recent release of the book Born Digital by John Palfrey and Urs Gasser. I’m still working on a separate post about the book, but wanted to post a note now given the date of the event. This will be a great opportunity to meet lots of people affiliated with the Digital Natives project upon which the book is based.

As currently proposed this bailout seems like an almost comically bad idea. I encourage all our US readers to get on the phone to their representatives and start bitching Monday morning. I am also very interested to hear what knowledgeable people such as our own dsquared think.

I’m curious. How much music do you have on your computer? I just passed the 75 gig mark. iTunes informs me that is 49.5 days worth. That seems like a lot. But I don’t feel that I have too much. How much does the average blog reader have?

In case you don’t have enough music, I kinda enjoyed Grizzly Bear “Two Weeks” (live on Letterman) – downloadable from Stereogum here.

There are lots of activities going on across the globe this Monday in celebration of One Web Day. What is it, you ask? From the site:

OneWebDay is an Earth Day for the internet. The idea behind OneWebDay is to focus attention on a key internet value (this year, online participation in democracy), focus attention on local internet concerns (connectivity, censorship, individual skills), and create a global constituency that cares about protecting and defending the internet. So, think of OneWebDay as an environmental movement for the Internet ecosystem. It’s a platform for people to educate and activate others about issues that are important for the Internet’s future.

The project wiki has a list of physical locations where events are taking place. NYC is starting early with events going on today, Saturday as well.

OWD also has lots of suggestions for getting involved online.

UPDATE: Here’s an idea for celebrating OWD here at CT. On Monday, I’ll put up a post about one of my favorite Web sites, a Web site that has had real implications for my everyday life. I invite others to think about which Web sites mean a lot to them and to share these on Monday in honor of OWD.

It’s the time of year when I teach Plato’s Meno. As I wisely explain to my students, there are two things that they are going to find off-putting and even incomprehensible about the dialogue. [click to continue…]

At a time when anyone on the cutting edge is talking quadrillions, it seems a bit petty to worry about a $50 billion component of the latest bailout (only $500 per US household!). Modest as it is, the insurance scheme offered to money market funds by the US Treasury provides the opportunity to explain a little bit more about the theory of insurance.

By now, everyone has heard about moral hazard, that is the encouragement to take risky or reckless action that arises when your losses are insured by someone else. Now it’s time meet moral hazard’s evil twin, adverse selection. That’s what happens when the people you are offering to insure already have a pretty good idea whether they are going to collect or not.

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While reviewing this post from 2002, foreshadowing a derivatives crisis like the current one, I found the following:

“At the end of 2002’s first quarter, the notional value of derivatives contracts involving U.S. commercial banks and trust companies was $45.9 trillion, according to the Office of the Comptroller of the Currency’s bank derivatives report. ”

The bulk of the exposure is in interest rate swaps, which are fairly well understood and seem to pose only modest risks in themselves. But there’s still around $1 trillion in more recent derivatives involving securitisation of various kinds of debts. This securitisation is sound only if the credit rating agencies have got their risk assessments right, which in turn requires that the accounts on which those assessments are based should be valid. A few years ago, when the market in debt derivatives was starting up, this assumption seemed safe enough, but now it looks a lot more dubious. The big danger is that defaults in the debt derivatives market could spread to the much larger interest rate derivatives markets.

As an update, the $1 trillion in credit derivatives has exploded to around $50 trillion. While less dramatic in proportional terms, the growth in interest rate swaps is actually more alarming, having reached around $300 trillion in notional values.[1]

It now seems pretty well certain that, as the quote above suggests, the chaos in debt derivatives will shortly spread to interest rate swaps.

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Via Leiter: the NEH is offering substantial grants for faculty to develop courses on “Enduring Questions”:

The [new grant] program, which goes public today, will grant up to $25,000 each for “pre-disciplinary” pilot courses designed to tackle “the most fundamental concerns of the humanities.”

Among the “enduring questions” the endowment hopes the courses will ask: What is the good life? What is justice? Is there such a thing as right and wrong? Is there a human nature and, if so, what is it?

The endowment expects to make up to 20 awards, and $15,000 of each $25,000 grant will be a stipend for the faculty member who designs and teaches the course.

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Leiter says this is “quite bizarre”; being less expressive I’d just say that it’s distinctly odd.

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“Tyler Cowen”:http://www.marginalrevolution.com/marginalrevolution/2008/09/ive-always-want.html points to this “NYT article”:http://www.nytimes.com/2008/09/18/business/worldbusiness/18rescue.html on the international fallout from the current market crisis in the US.

Is the United States no longer the global beacon of unfettered, free-market capitalism? In extending a last-minute $85 billion lifeline to American International Group, the troubled insurer, Washington has not only turned away from decades of rhetoric about the virtues of the free market and the dangers of government intervention, but it has also probably undercut future American efforts to promote such policies abroad. [click to continue…]

So it looks as though the PDs, Ireland’s neo-liberal party, are on the “way to the chopping block”:http://www.irishtimes.com/newspaper/frontpage/2008/0917/1221599424850.html?via=mr. While I disagreed vigorously with most of their policies, I have mildly mixed feelings about this, if only because an uncle of mine was a founding member (and the person who led them up until the disastrous election that precipitated their current state of disrepair). But mostly, I’m posting so that I can link to this wonderful extract from the current leader’s public statement on their future.

Mr Cannon said it was “far from me to pre-empt what that decision might be”. In his opinion, the party had two choices. It could “limp on” into an uncertain future, while elected members were “picked off the edge of the herd like wounded animals”. The other choice was to dissolve so that the party could say: “We have triumphed and in our triumph we are leaving the field with a degree of grace and dignity.”

Far from pre-empting, indeed …

This blog post is a shameless plug for a friend’s book. But I wouldn’t be writing it if I didn’t believe that the book is a tremendous achievement, as well as being a very moving personal document. “Havi Carel’s Illness: The Cry of the Flesh”:http://www.amazon.com/exec/obidos/ASIN/1844651525/junius-20 (“UK link “:http://www.amazon.co.uk/exec/obidos/ASIN/1844651525/junius-21) is published tomorrow by Acumen. It is a philosophical meditation on the nature of and social meaning illness, disease and death. It discusses philosophical and psychological literature, Epicurus, Heidegger and Merleau-Ponty. But it is also a personal memoir, it is about Havi’s experience of being diagnosed with a life-threatening illness, about what that meant for her presence in the world, about how she appeared in the eyes of others, and how she felt she appeared. It is about the encounter with medical professionals and their detached and external perspective on another’s catastrophe; it is about the varied reactions of friends, some of whom couldn’t maintain friendship. It is about how to confront the fact that all your assumptions about how your life is going to go: career, relationships, family, old age, can just be taken away. Havi was diagnosed with lymphangioleiomyomatosis (LAM), a rare disease that affects young women, and for which the progosis is about 10 years from the onset of symptoms. The sufferer experiences a progressive decline in lung-function over that time. Life may be extended by a heart-lung transplant, but that’s, obviously, a difficult business.
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Michael Reiss “has been forced to resign as Director of Education of the Royal Society”:http://www.guardian.co.uk/science/2008/sep/17/evolution.controversiesinscience . Absolutely shocking, in my view. Several of those calling for his head, such as Sir Richard Roberts, made much of the fact that he is an ordained minister. But since at least two FRSs — John Polkinghorne and Bernard Silverman — are also priests, that’s hardly a reason for the Society not to employ him. The RS statement says:

bq. “Some of Professor Michael Reiss’s recent comments, on the issue of creationism in schools, while speaking as the Royal Society’s director of education, were open to misinterpretation. While it was not his intention, this has led to damage to the society’s reputation. As a result, Professor Reiss and the Royal Society have agreed that, in the best interests of the society, he will step down immediately as director of education.”

Well, no, they weren’t “open to misinterpretation”, they were wilfully misinterpreted by those who were always going to be determined to do so, and it shows real spinelessness on the part of the RS that they didn’t back him. As “I blogged a few days ago”:https://crookedtimber.org/2008/09/12/dealing-with-creationism/ , Reiss didn’t call for creationism to be part of the science curriculum, he said (absolutely clearly, _in his original statement_ of his view) that teachers should, as a matter of good pedagogical practice, be willing to engage with students they encounter who come to the class with creationist views. That seems to me to be a perfectly legitimate position for someone concerned with science pedagogy to take. Others may disagree with the substance of his view. That’s fair enough. But to push him out for saying it? Dreadful.

(A list of issues where partisans are only willing to tolerate a simple straightforward and unequivocal expression of the party line (on either side) and will seek to punish deviants: anything touching on religion and education (including this issue); Israel/Palestine; abortion/right to life, ….etc. )

Update: see also James Wimberley “here”:http://www.samefacts.com/archives/britain_/2008/09/fundamentalists.php .

Two days after the US authorities made much of standing firm against calls for a bailout of Lehman, the Fed has announced an $85 billion rescue of insurance company (and large-scale counterparty in all kinds of derivative markets) AIG. There’s none of the ambiguity surrounding Fannie and Freddie in this deal. AIG is not a federally regulated entity, and the insurance subsidiaries are regulated at the state level to ensure their ability to pay out on claims. This is, purely and simply, a case of a speculative financial enterprise that’s too big to fail.

Having reached this point, it’s hard to see how the US can turn back from a massive extension of financial regulation, starting with the derivative markets where AIG got into so much trouble, notably those for credit default swaps (CDS). Along with winding up the affairs of AIG, Lehman and others, the authorities will need to oversee an orderly unwinding of the transactions in these markets which they are now effectively guaranteeing. More generally, it’s time for a partial or complete reversal of the financialisation of the economy that took place after the breakdown of the Bretton Woods system back in the 1970s.

BTW, if you have cash parked in a money market fund, you might want to read this. (Insert disclaimer about financial advice)

UpdateBrad Setser has the same reaction.

A while ago I asked for picture suggestions to advertise a talk I would be giving at the Humanities Center in Madison, and a couple of people asked that I post the text of the talk here. I apologise for the delay, which is not, for once, due to my laziness, but my reluctance to be seen to be breaking the anonymity of peer review. Absurd, really, because it is hard for me to believe that the referees had no inkling of the authors of the relevant manuscript, which manuscript anyway bears a very tangential relationship to the talk, but there you are. That’s all done with (so, I don’t have to feel so guilty about Ingrid’s complaint!), so here it is. I’ve tried to incorporate some aspects of the powerpoint presentation through judicious use of links. Also, bear in mind that it was an informal talk, and it is for the most part written that way. It’s long (4000 words), so it’s all below the fold. It was given in December, hence the two or three seasonal references.

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