My Tech Policy Memo to President-Elect Obama

For my excellent “What’s Shaping the Internet?” class with Professor Michael Nelson, we had to write a 6-page memorandum to either President-Elect Obama, Google CEO Eric Schmidt, or some other organization head, using three main policy points.

I chose to advocate for an innovation commons, a push for open-source government interfaces, and a national identity system.

I posted the memo online at Scribd, which hosts my other academic papers as well.  Scribd is awesome — it embeds papers within Flash so you can see the original format, and also export to PDF or crowdshare it. I would embed it here but WordPress.com doesn’t let you embed most content. =(

Again, READ THE MEMO HERE.

I know that my memo does not have a conclusion. =)  I opted to leave the explanation to the executive summary, so it’s not a proper structure…  Memorandums are sometimes the hardest papers to write, because they need to be very brief, concise, and appealing.  That’s why our program stresses it so much.  But I strayed from it here.  Hopefully the content carries the weak structure.

What the Memo Said

My logic in the memo was that the government should create an innovation- and business- enabling environment by ensuring universal broadband access, net neutrality, a hybrid public commons/privately auctioned spectrum, and increased R&D with clustering through universities and companies.

After we get more people online and collaborating, we can call upon them to help build and inspect open-source applications to allow everyone to interface with the government more efficiently as befitting a digital 21st century.

And finally I called for a national ID system to help unify all the databases, ensure personal privacy and access controls, and allow us to fix our own information and use it better within the government.

The national ID system would use a social reputation system, part of which I’m hoping to create through my start-up, Galapag.us — see the research blog if you haven’t already.

Underground Warblogging

Warblogging died in 2006.  It died when the military and US government decided that ANY servicemember’s content online must be approved through the chain of command, AFTER informing the command that that content MAY exist. (i.e. registering one’s blog even without posting content to it)

The message coming out of Iraq was warped after this decision.  Crowdsourcing what was happening in Iraq and Afghanistan halted.  We had to rely on embeds and independent journalists (Michael Yon continues to be excellent), and of course, brutal, savage terrorist/insurgent attacks to figure out what was really going on.

I attended the senior Yahoo! fellow Gaurav Mishra’s talk at the Institute for the Study of Diplomacy last week, on the subject of citizen journalism/media during the Mumbai Attacks.  You can read about Gaurav’s coverage of the Mumbai attacks on his own blog.  Gaurav talked about how people were now able to report instantly from the scene.

He had me say some words about my own situation, where I had to remove content from my web site to include photos from Iraq and my journal on my deployment to Iraq, after my command found out and I got in heaps of trouble for it.

This “war” is going to be over soon, yet not as quickly as I’d like.  But I guarantee you, when the smoke clears, there will be a TON of stuff coming online written by the troops on what has been happening over there.  That the military said we couldn’t post it online didn’t mean that soldiers weren’t still lying in their hooches, writing long rants on how fucked up or how successful it was over there to their loved ones.  Soldiers, Marines, and others were still snapping photos and taking video of what they saw.  All that stuff is out there NOW, but it is underground.

It will bubble to the surface once all these people feel that it is safe to do so.  You will probably see more books published again.  Few would be worth reading.  But that’s not the point.  The point is that they will have the ability to express themselves again.

About the best we’ve had lately is a book written by a pseudonymous former Army interrogator who decried US torture practices, and a 60 Minutes interview by a pseudonymous former Delta operator who said his team could have had a good shot at killing Osama bin Laden in the early stages of the “war” in Afghanistan.

Pseudonymity, anonymity…both are great ways to circumvent broken systems.

You can also expect revelations, scandals, and investigations to come soon for other related reasons.  The changing of the political appointees and DC guard will bring out exposés on the Bush Administration.  The financial crisis will expose the corruption in Wall Street (like the latest hedge fund/NYC investor scam).  Much of the rot that’s spread as a result of Dubya will get exposed.  I should add that it’s not that the Democrats are not a part of it too — the politicians all had their hand in the till.

The flood of information that people didn’t want you to hear is coming.

[

edit:  Newsweek just did a great story about Thomas Tamm, the guy who gave the New York Times a heads-up on the wiretapping scandal that would later emerge as a collage of different whistleblowers' reports.  People won't be as afraid to report, once the horrible Bush Administration leaves.

My buddy d14n wrote a blog post about Tamm also, and he verified the info on how and where to contribute to the Thomas Tamm Legal Defense Trust.

]

Interesting Economic Datapoints

So I’m done with this semester and I was just watching C-SPAN2, which was covering the Senate vote on the automaker bailout.  The vote failed 52-35 or so.  Dow futures were down -325 around the time of the vote.

I am still cash but am getting a bit more antsy to buy than I was before.  I have an “I know it when I see it” approach to bottoms and tops, so I’m waiting for that feeling again.

But it’s clear that the economic outlook is not good, with record unemployment numbers, commodity and energy shocks, and real bloodshed within the old American industries like media, auto, and finance.  Tech and internet has not been immune, but their companies are still announcing improvements and new products…

AMZN

I bought AMZN at 36.5 one day but got shaken out at the end of the day by climax selling.  Since then, AMZN rallied and touched 54-55 as the market bounced off fresh lows a few weeks ago.  What a pain that was to watch.  The rally came off Obama’s announcement of the next economic team, but it’s unclear whether there’s correlation there.

AMZN should announce the next Kindle soon, and it has been opening up its web services platform up even more.  The next generation of Kindle will suck people like me in to buying digital books (and probably be the last time I buy actual books en masse) and any increase in consumer demand will grease all of AMZN’s cloudy wheels.

TED Spread

The TED spread tracks the spread between inter-bank loans and US treasury bills and is a measure of liquidity in the credit markets — if there’s a high spread, then banks aren’t lending because it costs too much to do so.  Here’s the chart:

After the initial credit shock when Bear Stearns folded in Augustish, 2007, you can see that the spread spiked up to about 200 basis points.  From then, the market stabilized until Septemberish of this year, when all the Fannie, Freddie, Lehman, AIG, etc. crap happened.

The market was on the brink of collapse until the Fed and Treasury decided to do whatever it took along with a massive finance bailout.  Until the public money was sure to flow in, the TED spread spiked up to 450 basis points — essentially no money was flowing anywhere within the private banking sector.

The spread then fell and has stabilized as the market’s continued to sink.  Now 200 basis points seems to be an agreed-upon number, but note that it is only back to where we were after the first credit shocks.  The normal TED spread was well below 100 basis points up until 2007.

In other words, there’s still substantial risk and unwillingness to lend.

[Note:  On Tuesday, Dec. 17th, the Fed cut rates essentially to 0%, which should reduce the usefulness of looking at the TED spread since the Fed is essentially acting like another lender...]

Treasury Bills

On Tuesday, for the first time ever, three-month treasury bill interest rates went negative!  This means that, for a brief period, people were willing to PAY the government to hold their money instead of seeking a return elsewhere.  That is, people didn’t even want a return ON their money; they just wanted a return OF their money!

Later, the government managed to sell $30bil worth of T-bills at 0% interest.  Which is still ridiculous.  Here’s the chart:

From The Sun's Financial Diary

These are rare times…we keep seeing records being broken, aberrances being observed for the first time, red-flag indicators going off everywhere.

Iceland

Iceland’s finance-dominated stock market completely collapsed.  Here’s the chart:

Icelanders are devastated.  There’s pretty much nothing left.  But to add insult to injury, the index, which had been hovering in the 600′s, just plunged down to the 300′s this week after another major bank failed.

Oil

Here’s the thing about oil.  Everyone who’s been predicting peak oil soon and all these ridiculously paranoid and apocalyptic scenarios were made to look like experts over the summer when oil prices spiked to the $140′s and gas hit $4/gallon.  A lot of financial risk management and analysis reports were written up until now, assuming continued high oil prices.

Of course, oil has since crashed.

In other words, these knuckleheads don’t know what they’re talking about, or where oil prices are going next.  The term “black swan”, I should add, really pisses me off.  Geez.  Enough with Taleb!

Certainly the shock of oil prices has everyone rattled.  The instability of prices along with Obama being elected will hopefully be enough to spur long-term energy innovations to get us out of this fucking mess.  The time for US energy independence is now.  Especially if we really believe in protecting national security, not to mention national (and global) stability.

My position on oil is that its days are numbered as the major energy source, but it will still be needed for many products and as one of many sources of energy, even after we’ve converted heavily away from petroleum.

I also do not believe peak oil is soon.  I believe oil bedevils much of our foreign policy and is tied to our adventures with Israel and the Middle East and South America.  I believe we have in our own hands the ability to rid ourselves of these albatrosses.

I believe the chart above correlates extremely well with the “war” in Iraq, starting in 2003.  I am not sure what happened this summer in 2008.  I know that the Status of Forces agreement started hitting Iraqi politics around the same time but the massive oil spike could have been a climax of worldwide fear.  I don’t know.  The Iraq “war” seems to be all but over now that the SOFA passed and Obama is in, and I think oil is pricing that news in.  Oil has always correlated well with foreign wars.

What Next?

It’s amazing what we as Americans are willing to inflict upon ourselves.  All of this is solvable, and we know approximately what the causes are.  Until Obama got elected, we refused to acknowledge it.  Here’s hoping that Obama can translate a good plan into action. But it will be hard to generate political action when so many interests are set against it, even if it means saving our economy.

In the meantime, the economy and financial markets are still a mess, even after a bunch of layoffs have helped companies streamline.  Will those frictionally unemployed turn into structurally unemployed?  With little emphasis on job re-training, and a prolonged recession, one might think so.

Something does not feel right at all out there in my gut, making me suspicious to put my money forth, and we have yet to deal with the next big financial bomb:  consumer credit.  What happens when people, many of whom have lost jobs and have lost a safety net because of Republican idiocy, run out of money to pay back creditors?

[60 Minutes just did a report on the upcoming 2nd mortgage shock:  option arms resets.  They will balloon homeowners' monthly expenses and look to be as bad as the first shock.  Watch the entire video for more.

The light-green reflects the damage we've dealt with already, and the light-yellow and yellow are what's still to come.  Sobering.]