Dennis Edwall

First money market fund in 14 years to drop below $1 per share From Bloomberg: Reserve Primary Money Fund Falls Below $1 a Share (Update4) By Christopher Condon Sept. 16 (Bloomberg) -- Reserve Primary Fund became the first money-market fund in 14 years to expose investors to losses after writing off $785 million of debt issued by bankrupt Lehman Brothers Holdings Inc. The fund, whose assets plunged more than 60 percent to $23 billion in the past two days, said the Lehman losses forced the net value of its assets below $1 a share, known as breaking the buck. Reserve Primary, the oldest money fund in the nation, fell to 97 cents a share and redemptions were suspended for as long as seven days. Money-market funds are considered the safest investments after cash and bank deposits, and Reserve Primary's losses come as confidence in financial markets has been shaken by the collapse of subprime mortgages, the failure of 11 U.S. commercial banks and Lehman's bankruptcy yesterday. The only other money- market fund to break the buck was the $82.2 million Community Bankers Mutual Fund in Denver, which liquidated in 1994 because of investments in interest-rate derivatives. "This is uncharted territory,'' said Peter Crane, president of Crane Data LLC in Westborough, Massachusetts, which tracks money-market funds. "That's certainly a stunner.'' Reserve Primary, run by closely held Reserve Management Corp. in New York, held $785 million in Lehman Brothers commercial paper and medium-term notes. The fund's board revalued the Lehman holdings as worthless effective 4 p.m. New York time, the company said today in a statement. Spokeswoman Ming Lee Hatch said she couldn't immediately comment on whether the company planned to secure credit to support the fund or wind it down. Investors who requested redemptions by 3 p.m. today will get all their money back. Standard & Poor's lowered its principal stability fund rating on the company's Primary Fund and Reserve International Liquidity Fund Ltd. to `Dm' from `AAAm' because of their exposure to Lehman Brothers. S&P also placed nine other Reserve Funds on its credit watch list, it said today in a statement. Carl Lantz, an interest-rate strategist in New York at Credit Suisse Securities USA, said the fund's failure "exacerbates some of the flight-to-quality into Treasuries.'' Crane said Reserve Management probably was unable to prop up the fund before halting redemptions because it lacked the backing of a large institutional owner. "Reserve just didn't have the deep pockets to buy troubled securities out,'' he said. Boston-based Evergreen Investment Management Co. said yesterday it had secured support from Wachovia Corp., its parent, to protect three money-market funds from losses linked to debt issued by Lehman. The funds' Lehman holdings totaled $494 million. Money-market funds, which are regulated in the U.S. by the Securities and Exchange Commission, strive to preserve a $1 a share net asset value, meaning that investors can always get back their principal, as well as interest earned by the fund on its investments. They are required to hold debt that matures in 13 months or less, with a weighted average maturity of 90 days or less. The securities must have top short-term corporate debt ratings. U.S. money-market mutual-fund assets were $3.58 trillion as of Sept. 10, just below their peak of $3.59 trillion set a week earlier, according to the Investment Company Institute, a Washington-based trade group. "The company and its counsel apprised staff of the fund's situation earlier today and discussions between staff and the company and its counsel are continuing,'' Andrew J. Donohue, director of the SEC's investment management division, said in a statement. "SEC examiners are on-site at the fund to monitor activities.'' ICI President Paul Schott Stevens released a statement attempting to bolster investor confidence in money-market funds. "The fundamental structure of money-market funds remains sound,'' he said in the statement. ``These funds are subject to strict regulation governing credit quality, liquidity, diversification and transparency.'' Federal Reserve spokesman David Skidmore declined to comment. Bruce Bent, chairman of Reserve Management, often said the best money-market funds should be "boring.'' He derided other funds that invested in securities linked to subprime mortgages and other risky debt. Reserve Management's assets rose 95 percent in the year ending June 30 to $125 billion, as investors sought safety from falling equity markets. Banks and other institutional investors accounted for 65 percent of total assets. To contact the reporter on this story: Christopher Condon in Boston at ccondon4@bloomberg.net -Dennis

Barbara, that was beautiful.

Michael, <<I like those three categories. I wonder what his standard is for assigning something into one. I wasn't able to discern it from that list. He elaborates in quite a bit of detail, but the answer in a nutshell is generally accepted principles of science. I do like this paragraph of his that immediately follows the examples: "Since these categories .... are fuzzy it is possible for them to be moved and reevaluated with changing evidence. Indeed, all of the normal science claims were at one time in either the nonscience or borderlands science categories. How they moved from nonscience to borderlands science, or from the borderlands to normal science (or how some normal science claims slipped back into the borderlands or even into nonscience), is one of the most important aspects of the study of the history and philosophy of science." Shermer is best when he sticks to science.

I find myself less impressed with Shermer the more I read. Here's another example, this time from his book The Borderlands of Science. In the introduction he has a discussion of what he calls his Boundary Detection Kit, consisting of three sets which he calls normal science, borderlands science, and nonscience. Some examples of normal science (on the science side of the boundary): evolution, quantum mechanics, Big Bang cosmology, etc. Some examples of nonscience (on the nonscience, pseudoscience, or nonsense side of the boundary): creationism, astrology, Big Foot, UFOs, etc. Some examples of borderlands science (in the borderlands between normal science and nonscience): theories of consciousness, SETI, grand theories of economics (objectivism, socialism, etc.), etc. Wow -- for him to put objectivism and socialism together on equal footing in economics -- I expected better from him than this. (It does not appear that he discusses the matter anywhere else in the book; at least, the word objectivism is not in the index.)

I recently started reading the book "Why People Believe Weird Things" by Michael Shermer (2002). Shermer is well known in the skeptical world, being the founding publisher of Skeptic magazine (www.skeptic.com) and the director of the Skeptics Society. He has written quite a few books, but this is the first one of his that I am reading. In this book he has a chapter, "The Unlikeliest Cult: Ayn Rand, Objectivism, and the Cult of Personality." He summarizes the history of Rand and Objectivism, beginning with The Fountainhead and continuing through the growth NBI years, the Rand-Branden split, etc. I found this summary to be generally a fair assessment. As the following will show, Shermer seems to be a sympathetic critic. (Also see the TNI interview at http://www.objectivistcenter.org/ct-1852-M_Shermer.aspx.) After he finishes his Rand/Objectivism summary, he makes these two valid points: "This analysis, then, suggests two important caveats about cults, skepticism, and reason. One, criticism of the founder or followers of a philosophy does not, by itself, constitute a negation of any part of the philosophy. .... Two, criticism of part of a philosophy does not gainsay the whole. " (italics original) The final four paragraphs of the chapter are worth quoting at length: "I have read Atlas Shrugged, as well as The Fountainhead and all of Rand's nonfiction works. I accept much of Rand's philosophy, but not all of it. Certainly the commitment to reason is admirable (although clearly this is a philosophy, not a science); wouldn't most of us on the face of it, agree that individuals need to take personal responsibility for their actions? The great flaw in her philosophy is the belief that morals can be held to some absolute standard or criteria. [my emphasis] This is not scientifically tenable. Morals do not exist in nature and thus cannot be discovered. In nature there are only actions - physical actions, biological actions, human actions. Humans act to increase their happiness, however they personally define it. Their actions become moral or immoral only when someone else judges them as such. Thus, morality is strictly a human creation, subject to all sorts of cultural influences and social constructions, just as other human creations are. Since virtually every person and every group claims they know what constitutes right versus wrong human action, and since virtually all of these moralities differ from all others to a greater or lesser extent, reason alone tells us they cannot all be correct. Just as there is no absolute right type of human music, there is no absolute right type of human action. The broad range of human action is a rich continuum that precludes pigeonholing into the unambiguous rights and wrongs that political laws and moral codes tend to require. "Does this mean that all human actions are morally equal? Of course not, any more than all human music is equal. We create hierarchies of what we like or dislike, desire or reject, and make judgments based on those standards. But the standards are themselves human creations and cannot be discovered in nature. One group prefers classical music over rock, and so judges Mozart to be superior to the Moody Blues. Similarly, one group prefers patriarchal dominance, and so judges male privilege to be morally honorable. Neither Mozart or males are absolutely better, but only so when judged by a particular group's standards. Male ownership of females, for example, was once thought to be moral and is now thought immoral. The change happened not because we have discovered this as immoral but because our society (thanks primarily to the efforts of women) has realized that women should have rights and opportunities denied to them when they are in bondage to males. And having half of society happier raises the overall happiness of the group significantly. "Morality is relative to the moral frame of reference. As long as it is understood that morality is a human construction influenced by human cultures, one can be more tolerant of other human belief systems, and thus other humans. But as soon as a group sets itself up as the final moral arbiter of other people's actions, especially when its members believe they have discovered absolute standards of right and wrong, it marks the beginning of the end of tolerance, and thus reason and rationality. It is this characteristic more than any other that makes a cult, a religion, a nation, or any other group dangerous to individual freedom. Its absolutism was the biggest flaw in Ayn Rand's Objectivism, the unlikeliest cult in history. The historical development and ultimate destruction [sic] of her group and philosophy is the empirical evidence that documents this assessment. "What separates science from all other human activities (and morality has never been successfully placed on a scientific basis) is its commitment to the tentative nature of all its conclusions. There are no final answers in science, only varying degrees of probability. Even scientific "facts" are just conclusions confirmed to such an extent that it would be reasonable to offer temporary agreement, but that assent is never final. Science is not the affirmation of a set of beliefs but a process of inquiry aimed at building a testable body of knowledge constantly open to rejection or confirmation. In science, knowledge is fluid and certainty fleeting. That is at the heart of its limitations. It is also its greatest strength." I think that Shermer's criticism is generally valid when the target is the True Believer types within Objectivism. However, his contention that morals cannot "be held to some absolute standard or criteria" goes too far, and undercuts his response to the question, "Does this mean that all human actions are morally equal?" of "Of course not." Shermer's last paragraph is an excellent description of how science ideally works. For some reason I cannot understand, he believes that the identification of morals cannot be deduced using a similar process, that "morality [cannot be] successfully placed on a scientific basis." I believe that his supposed justifications such as "Morals do not exist in nature....", "morality is strictly a human creation, subject to all sorts of cultural influences and social constrictions....", and "Morality is relative to the moral frame of reference." are insufficient. In a narrow sense, it is true that "morals [cannot be] held to some absolute standard" just as the same is true in science where "There are no final answers...." (last paragraph of Shermer). But we can use the same tools of logic combined with values derived from human life qua man to help us define our moral compass. Properly understood, there is such a thing as absolute moral standards.

I don't see Michael as trying to ingratiate himself. I see him acting on an impulse of thoughtfulness and kindness. I see him as having been moved by a sense of empathy for others who are trying to piece together an understanding of the world. I see him trying to right what he perceives to be an injustice in social interactions. He is acting on a vision of people as psychological beings before religious/philosophical beings. At least, this is my read. So what if Christianity and Objectivism cannot be integrated on a fundamental level. We all hold conflicting perspectives of existence at one time or another. We can be in situations where we think one thing rationally and our "gut" tells us something else. Or we can maintain that there is no such thing as bodies without physical extension, and no disembodied actions, on one hand, while committing ourselves to the idea of point particles and singularities on another. The best answer is not always to choose one over the other. It is not just a matter of choosing between thesis and antithesis. There is much to be gained from a striving for synthesis. This is one way people, and their perspectives, evolve. Objectivism and Christianity are fundamentally contradictory. Growing up I always thought a scientist who believes in God was a contradiction in terms. But I now get how people can hold different frames of reference, different orientations of consciousness, to process different types of information. Owning one perspective and disowning another doesn't work. The struggle to integrate has psychological value. At the end of the struggle, what does it matter to us if they end up Christian or Objectivist, some paradoxical mix that operates differently according to context, or some new synthesis that takes principles from each. They are psychological beings who have grown through the process. Is it possible that Objectivism could be missing something? Is it possible that someone might experience existence through the lens of Objectivism and conclude: This does not capture everything I experience or everything I am? Is it possible to conclude Ayn Rand missed something fundamental to life? Is it possible she did not identify all the important aspects of the psyche? I would say it is not only possible, it is a fact. Perhaps, for a Christian, there is something captured by their experience of Christianity that is not captured in Objectivism, but is an important part of who they are. Would it not then be the case that holding onto both Christianity and Objectivism is an attempt to find integration in themselves? And wouldn't it be worth the effort to strive for some form of synthesis between the those principles they find important in each way of viewing the world? One example of what is missing from Rand's philosophy is the importance of empathy. The nature and value of empathy plays no role in Objectivism. In fact, Objectivism could be described as a philosophy that grew out of, and attracts, those whose psychology has disowned empathy. Or it requires the disowning of empathy to practice it consistently. Empathy is the very thing that I have suggested motivated Michael. That such experiences and expressions of empathy run contrary to Objectivist sensibilities may have played a role in some reactions to Michael's post. So too might they have played a role in the misunderstandings of his motives. Empathy plays a very important role for a lot of people. It plays a very important role in Christianity. Wouldn't it be worth while, even from an Objectivist perspective, if a Christian, who spent time trying to integrate Objectivism with Christianity, ended up accepting the principles of Objectivism but modifying it to include an understanding of the value and place of empathy? Or is Objectivism a closed system that could not allow such evolution? Paul Paul, I found your post (#78) very perceptive. Thank you for it. We should remember that the hardware of the brain is far from perfect, allowing contradictory functioning on semi-independent levels. I see that you understand this. -Dennis

In related news, see below for a report on 3 to 4.3 billion barrels of technically recoverable oil here in the continental U.S. Should give us a little more breathing room. http://www.usgs.gov/newsroom/article.asp?ID=1911 3 to 4.3 Billion Barrels of Technically Recoverable Oil Assessed in North Dakota and Montana’s Bakken Formation—25 Times More Than 1995 Estimate— Released: 4/10/2008 2:25:36 PM Contact Information: U.S. Department of the Interior, U.S. Geological Survey Office of Communication 119 National Center Reston, VA 20192 Clarice Nassif Ransom 1-click interview Phone: 703-648-4299 David Ozman 1-click interview Phone: 720-244-4543 Reston, VA - North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation. A U.S. Geological Survey assessment, released April 10, shows a 25-fold increase in the amount of oil that can be recovered compared to the agency's 1995 estimate of 151 million barrels of oil. Related Podcasts 3 to 4.3 Billion Barrels of Oil in North Dakota and Montana download Download directly | Details podcast icon itunes icon or subscribe by e-mail. Technically recoverable oil resources are those producible using currently available technology and industry practices. USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources. New geologic models applied to the Bakken Formation, advances in drilling and production technologies, and recent oil discoveries have resulted in these substantially larger technically recoverable oil volumes. About 105 million barrels of oil were produced from the Bakken Formation by the end of 2007. The USGS Bakken study was undertaken as part of a nationwide project assessing domestic petroleum basins using standardized methodology and protocol as required by the Energy Policy and Conservation Act of 2000. The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest "continuous" oil accumulation ever assessed by the USGS. A "continuous" oil accumulation means that the oil resource is dispersed throughout a geologic formation rather than existing as discrete, localized occurrences. The next largest "continuous" oil accumulation in the U.S. is in the Austin Chalk of Texas and Louisiana, with an undiscovered estimate of 1.0 billions of barrels of technically recoverable oil. "It is clear that the Bakken formation contains a significant amount of oil - the question is how much of that oil is recoverable using today's technology?" said Senator Byron Dorgan, of North Dakota. "To get an answer to this important question, I requested that the U.S. Geological Survey complete this study, which will provide an up-to-date estimate on the amount of technically recoverable oil resources in the Bakken Shale formation." The USGS estimate of 3.0 to 4.3 billion barrels of technically recoverable oil has a mean value of 3.65 billion barrels. Scientists conducted detailed studies in stratigraphy and structural geology and the modeling of petroleum geochemistry. They also combined their findings with historical exploration and production analyses to determine the undiscovered, technically recoverable oil estimates. USGS worked with the North Dakota Geological Survey, a number of petroleum industry companies and independents, universities and other experts to develop a geological understanding of the Bakken Formation. These groups provided critical information and feedback on geological and engineering concepts important to building the geologic and production models used in the assessment. Five continuous assessment units (AU) were identified and assessed in the Bakken Formation of North Dakota and Montana - the Elm Coulee-Billings Nose AU, the Central Basin-Poplar Dome AU, the Nesson-Little Knife Structural AU, the Eastern Expulsion Threshold AU, and the Northwest Expulsion Threshold AU. At the time of the assessment, a limited number of wells have produced oil from three of the assessments units in Central Basin-Poplar Dome, Eastern Expulsion Threshold, and Northwest Expulsion Threshold. The Elm Coulee oil field in Montana, discovered in 2000, has produced about 65 million barrels of the 105 million barrels of oil recovered from the Bakken Formation. Results of the assessment can be found at http://energy.usgs.gov. For a podcast interview with scientists about the Bakken Formation, listen to episode 38 of CoreCast at http://www.usgs.gov/corecast/. USGS provides science for a changing world. For more information, visit www.usgs.gov. Subscribe to USGS News Releases via our electronic mailing list or RSS feed. **** www.usgs.gov **** Links and contacts within this release are valid at the time of publication.

Michael, Thanks for your thoughtful post on Lovins and RMI. I have not read the book, but I did watch the video and read the Executive Summary. I am a scientist, and sympathetic to worry about the mess we have gotten ourselves into with oil dependency. But I think the solution is not so easy as he would have others believe. If it was, I would think that the major auto makers would be beating a path to his door to hire him to do what he says. If building a cheap, fuel efficient, lightweight, carbon composite car is practical and would sell to the masses, then let him try it. The fastest way to convince people he's right is to start doing it one step at a time, not just theorize. His economics ought to be much more persuasive now with the price of oil where it is than several years ago when the video was made, and yet, what has changed? Economics tells us that people modify their behavior based on prices, but in this case it seems like adaptation is slow, both for people and corporations. We got ourselves into this problem slowly, and I think it will be a slow process to get ourselves out. Longer than just one or two generations. He pays lip service to profits, but no doubt wants to use the coercive power of government to help achieve his goals, because he knows that without that, there is no hope. An example is his "feebates." How do you get people to conserve and be more efficient, to make a smaller carbon footprint? Not as easy as he thinks! One beef I have is the people where I work who are so lazy or are so totally lacking in any kind of concern that they will not even push a button right in front of them to turn off a CRT monitor that they might use for a few minutes every few days, instead just preferring to leave the thing on 24/7. How do you change that kind of mentality? Do you think that that kind of person would go out of his way to operate a more fuel efficient car? It may sound like a little thing, but there are millions of these kind of people, but it all adds up. [And what a contrast to the eco-freak kind of person who cares more about the welfare of the brown, spotted toad fly (or whatever) than his fellow human beings.] Lovins seems to think (unless I read him wrong) that the developing countries like China will be smarter than us. I don't think so. They will have some advantages of technology that we did not have, but nevertheless, basically they will develop with the same heavy reliance on fossil fuels just like we did. Because that's the cheapest way.

Hi Angie, Very interesting, thank you for sharing your story. Unfortunately, there must be a great many parents who are not so much into religion that they go to church every week, pray outloud at meals, etc., but who, nevertheless, believe that their young children should and need to be indoctrinated into the teachings of the Church. I'm glad that your parents were not that way. Dennis

Charles, I really enjoyed your story. Thanks very much for sharing. Dennis

I have fantasized about how it would be to grow up with Objectivist parents without religious indoctination. Or not even Objectivist parents, just without the religion. Yes, religion for a youngster can provide some good as a moral compass, but I think the harm far outweighs the potential good, which of course can be provided in other ways not religious. I wish I had not grown up with religion. It profoundly affects a child's development and leaves a permanent impression that can never be completely undone. For better or for worse, who I am today was affected by what happened 50-58 years ago, even though my reasoning self has rejected religion for the last 40 years. Congrats to all you parents out there who have kept religion away from your children. Dennis