Behind the recent bad news lurks a much deeper concern: The world economy is now being driven by a vast, secretive web of investments that might be out of anyone's control.

Lest anyone forget:

The reality is that, despite fears that our children are "pumped full of chemicals" everything is made of chemicals, down to the proteins, hormones and genetic materials in our cells.

1. This thesis seems to run counter to Ben Stein's complaint from yesterday, in which he argues that "market makers" are completely and nefariously in charge of the whole thing, swinging the pendulum at a whim for their own benefit. (To clarify: there is an important distinction between being able to make a particular stock or sector move in one direction or another, and having positive control of "the market.")

2. The author's characterization of the "prevailing assumption" runs counter to the evidence compiled by Eric Janszen, who argues that "The bubble cycle has replaced the business cycle." The author implies that before hedge funds, we understood the mechanisms of the market and were more or less in control of things. How, then, to explain the Asian financial crises of the 90's?

3. Frankly I'm surprised this article appeared in the Globe. Now, the Globe is not NYT or WSJ, or even WaPo or LAT, but this article would have been more at home in the Boston Herald, perhaps printed in Comic Sans. I'm inclined to believe the author is simply plugging his friend's new book. The chattily informal prose is off-putting: "swinging wildly", "slapping together", "booster shot", "building blocks", "sound the alarm", "huge wilderness", "chafe against the restraints", "prying eyes", and so on. I am led to believe those "small-circulation newsletters" he mentions are known elsewhere as "spam." But I have to admit I laughed at the characterization of innovative derivatives as "very sophisticated and chi-chi."

4. The author attempts to explain away Enron as a problem of "nontransparency". Hardly. I suggest he take "The Smartest Guys in the Room" and Gladwell's Open Secrets and revisit this in the morning.

5. He acts as though everything would have been alright if only everyone had been more upfront about all of the dodgy debt they were buying up. Never mind that the risks of issuing adjustable-rate interest-only jumbo loans to the marginally employed were always plainly obvious, even to the most casual observer. He pretends to ignore the fact that speculators built entirely too much new housing, flooding the market.

6. It's like, "Everything is so complicated. We ne... [ Read More (0.1k in body) ]

The black box economy

Pakistani former Prime Minister Benazir Bhutto has been assassinated in a suicide attack.

BBC NEWS | World | South Asia | Benazir Bhutto killed in attack

Quietly, insiders are perusing an obscure paper by Fed staffers David Small and Jim Clouse. It explores what can be done under the Federal Reserve Act when all else fails.

"The kind of upheaval observed in the international money markets over the past few months has never been witnessed in history," says Thomas Jordan, a Swiss central bank governor.

The ECB's little secret is that it must never allow a Northern Rock failure in the eurozone because this would expose the reality that there is no EU treasury and no EU lender of last resort behind the system.

Crisis may make 1929 look a 'walk in the park'

Are We in a Recession?

Six experts assess the current state and forecast the future direction of the American economy.

Here's Morgan Stanley's Stephen Roach:

Home prices are likely to fall for the nation as a whole in 2008, the first such occurrence since 1933.

Here is Laura Tyson, former chair of the Council of Economic Advisors:

The economy faces a vicious downward spiral of foreclosures, declining property values and mounting losses on mortgage-backed securities and related financial assets.

... huge waves of foreclosures will depress the price of residential real estate still further. Plummeting real estate values and escalating foreclosures will cause further losses on mortgage-related securities and will further burden American consumers already dealing with higher energy prices and substantial debt.

Here's the current president of NBER:

There is a substantial risk of a recession in 2008.

More:

Even if the economy avoids a recession, the road ahead will be rocky.

And more:

Easy money, it seems, was an illusion. Society was not so rich as it seemed.

You Can Almost Hear It Pop

It's just before noon on a Thursday morning as I saunter down pit row at Daytona International Speedway and slide into the supportive sport bucket seat of a 2008 Porsche 911 GT2. I fiddle a bit with the seat and steering column adjustments until I'm comfortable, then double-check that my seatbelt is secured. It's hot and humid, but that's not why I'm perspiring - this cold sweat is a sign that my body's survival instincts are on edge, and for good reason. Fortunately, I've received personalized instruction from a quartet of legendary drivers and a complete technical briefing courtesy of Porsche Motorsports engineers, and there's little left to be learned without actually driving the car. I depress the heavily-weighted clutch pedal, muscle the short-throw shifter into 1st gear, bring the revs up, and...

Pinch Us: Autoblog drives the 2008 Porsche GT2 - Autoblog

For three decades Vice President Dick Cheney conducted a secretive, behind-closed-doors campaign to give the president virtually unlimited wartime power. Finally, in the aftermath of 9/11, the Justice Department and the White House made a number of controversial legal decisions. Orchestrated by Cheney and his lawyer David Addington, the department interpreted executive power in an expansive and extraordinary way, granting President George W. Bush the power to detain, interrogate, torture, wiretap and spy -- without congressional approval or judicial review.

FRONTLINE: cheney's law | PBS

As the United States and Iran are locked in a battle for power and influence across the Middle East—with the fear of an Iranian nuclear weapon looming in the background—FRONTLINE gains unprecedented access to Iranian hard-liners shaping government policy, including parliament leader Hamid Reza Hajibabaei, National Security Council member Mohammad Jafari and state newspaper editor Hossein Shariatmadari.

Frontline continues to be worth the hour. This report paints a damning picture of defeat snatched from the jaws of victory in US/Iranian relations mostly due to incompetence. Watch it online.

FRONTLINE: showdown with iran | PBS

While I sat at my desk one day, two of my classmates figured out how to overwrite the entire screen, which seemed kinda naughty at the time. They giggled, did it again, then giggled some more. From curious children, hackers were born.

What Became of the LOGO Programming Language?

This essay is excellent and should be considered required reading. Now it is even more heartbreaking than it was last month, as two of its authors were KIA on Monday.

What soldiers call the “battle space”... is crowded with actors who do not fit neatly into boxes: Sunni extremists, Al Qaeda terrorists, Shiite militiamen, criminals and armed tribes. This situation is made more complex by the questionable loyalties and Janus-faced role of the Iraqi police and Iraqi Army ...

In short, we operate in a bewildering context of determined enemies and questionable allies, one where the balance of forces on the ground remains entirely unclear ...

The War as We Saw It

With a 98% fresh rating on Rotten Tomatoes, King of Kong is a must-see film. Critics call it "improbably compelling, stupendously and wildly entertaining, madly arresting, hilarious and moving, taught, tense, fascinating, rousing, and laugh-out-loud funny."

As Decius said, it's pretty much about how everything everywhere actually works. I saw this on the festival circuit earlier this year; it won the best documentary award at IFF Boston.

Long-time readers of MemeStreams may recall our coverage of Steve Wiebe's new record back in 2003, courtesy of nox. You can still read the article through the Wayback machine:

Mitchell, 37, says he only counts his scores if they're played in a public venue, and he won't say if he can beat his cross-country competitor. He'll only say that he's planning something big and unprecedented in response to Wiebe's win.

If there's one thing to know about Billy Mitchell, it's that he does not disappoint.

The King of Kong