Previous month:
August 2010
Next month:
October 2010

September 2010

Wall Street: Money Never Sleeps

This one could have been so much better.

Oliver Stone should have kept the hard edge, and lost the weak young protags. Did the suits at Fox think that Michael Douglas would not be able to bring in the youth market? If so, did they actually believe that pixie-faced Carey Mulligan would attract the 17-year-old males?

While the pic never drags, the story is unfocused, with too much filler. Susan Sarandon does a good job with her pointless role, but Eli Wallach is completely wasted. Shia LaBeouf is less than convincing as a Wall Street genius, and his part would have worked much better if the relationship between him and mentor Frank Langella were expanded.

Another poor script, but it's possible that it got ruined during production. For sure, this is one more disappointing sequel.

Read my complete review.

The glycemic index, and why you don't need to worry about it

The glycemic index (GI) is a ranking of carbohydrates on a scale from 0 to 100 according to the extent to which they raise blood sugar levels after eating. Foods with a high GI are those which are rapidly digested and absorbed and result in marked fluctuations in blood sugar levels.

The GI has been promoted as a method to construct a healthy diet, and has been touted to diabetics as a way to control their blood glucose levels. The definite implication is that low GI equals healthy.

The only problem is that the concept is a grotesque oversimplification that has no applicability to the real world. My latest HND article discusses the GI and its limitations.

To calculate the GI, testing of an individual food item is performed on ten healthy subjects, who consume a measured amount of the food. Their blood glucose levels are monitored at frequent intervals over a two hour period. The data is then averaged and the GI for this food is established. However, GI data for a particular food can vary widely from lab to lab.

Those familiar with blood glucose levels will tell you that they can be affected by a host of things, including stress, and any inflammatory processes going on in the body. It is remarkable that even the most basic physiological controls are not done on the subjects, to eliminate confounding factors. Besides, foods, being biologic, are not identical from sample to sample.

The random errors alone could be substantial, and let's not even bother with the systematic errors inherent in the blood glucose measurement itself.

Moreover, even if consistent data on the pure food could be obtained, there are few real life instances whereby a single food item is actually consumed. White bread could have a particular GI, which would be drastically lowered if butter were applied. Depending on the vinegar content and amount of time it has been refrigerated, the GI for potato salad can be affected—and not by a small amount, either.

Finally, low GI does not equate with healthy. There are many decidedly unhealthy foods with a low GI.

It is appalling that so-called scientists are promoting this nonsense. It is long past time that someone exposed the GI for what it is: Just one more diet scam. Read the complete article.

The Town

I'm playing a little catch-up here, since my review has been up since September 21st. The pic was fun to watch, but certainly did not deserve its incredible 94% Rotten Tomatoes rating. Story-wise it was a big disappointment.

While all actioners require a suspension of disbelief with respect to the hero being indestructible, this one requires too much, as it leaks into key story details.

Read my complete review.

Economics vs. Fakeonomics

We post in its entirety an excellent article by Ian Fletcher.


We skeptics of free trade are used to being told, "You don't understand economics." In fact, one major reason I wrote the book Free Trade Doesn't Work was simply to expose, once and for all, that there do exist extremely serious and intellectually reputable arguments, within the confines of accepted mainstream economics, which question free trade. And indeed they exist.

But I've noticed something. We skeptics are often not really struggling against real economics at all. When I pick up a copy of the Wall Street Journal, or Forbes, or The New York Times, or turn on Fox TV or MSNBC, or read papers issued by the libertarian Cato Institute or the Peterson Institute for International Economics, I don't even find economic arguments. I find a mischievous substitute for economics we can call "fakeonomics."

What is fakeonomics? It sounds like economics to the uninitiated. It uses the same language, addresses the same issues, and fills the same logical hole in the national policy discourse. Most people can't tell the difference. But fakeonomics is not the real thing.

How is fakeonomics fake? It tells a story that goes something like this...

Free markets are always right, always and everywhere.

Anyone who doesn't believe this is stupid. Smart people not only understand that free markets are best, they like free markets, because free markets mean opportunities to get rich.

Or maybe they're corrupt. The opposite of free markets is government. Government is always incompetent. It never does anything right. Ever.

Or maybe they're evil. Anyone who doesn't believe in perfectly free markets is a Marxist wannabe or a loser jealous of more-successful people.

Free trade is just free markets applied internationally.

Therefore all smart, good, successful people must believe in free trade.

Unfortunately, fakeonomics is, at best, a crude parody of economics. It is often larded with a thick layer of moral hectoring, courtesy of a certain variety of the American Right which seems to think that economics is its exclusive property, a stick given it by God to beat liberals with. There is even a whole class of people, known as "libertarians," who elevate fakeonomics to the level of an all-encompassing moral ideology. (Their fundamentalist sect is the old Ayn Rand cult, who call themselves "objectivists.")

So let's be clear about one thing: real economics does not support the idea that 100 percent pure free markets are best. Not domestically, not internationally. That's why the U.S. has, like every other developed nation, a mixed economy, with government amounting to about 35 percent (pre-2008; it's spiked since then) of our GDP and various laws, from child labor laws to environmental laws and the SEC, regulating much of the rest.

It's easy to fulminate against this fact in beautiful after-dinner speeches about economic liberty, but the reality is that when in office, even conservative Republicans grasp the necessity of most of these policies—whatever adjustments on the margin they may make.

Surveys indeed show that about 90 percent of economists support free trade. But, and this is crucial, only about 70 percent of them support it without reservation. Economists are, in fact, well aware of a number of problems with free trade, like:

  • Free trade for America is one-sided, with most major foreign economies practicing managed trade of one kind or another.
  • When free trade involves trade deficits, it may be optimal in the short run but is unsustainable over longer time horizons.
  • Even if it increases GDP, it has even stronger effects on income distribution and can thus harm many, or even most, of the people in the economy.
  • The adjustment costs of declining industries—from unemployment checks to the rubble of Detroit—are huge and ongoing.
  • It brings us cheap goods today at the price of building up economic rivals who will take markets away from us tomorrow.
  • It helps dirty industries move from environmentally strict jurisdictions to environmentally lax ones.
  • Even if it is efficient in the short run, efficiency per se has little to do with long-term economic growth.
  • The theory of comparative advantage—which supposedly proves that free trade guarantees win-win outcomes—doesn't hold in the presence of capital mobility between nations.

None of the above is especially new information, though these points are legitimately controversial like anything else. My point here is simply that economics does not grant free trade the blank check many people seem to think it does. Nonetheless, the juggernaut of fakeonomics, which doesn't understand this, rolls on.

The really scary thing about fakeonomics is that it is not just a vulgar version of economics, served up to amuse the audience of Bill O'Reilly's TV show. It is also believed in by people who should know better. Like it or not, fakeonomics is mistaken for real thinking by a disturbingly large number of people with top MBAs, graduate degrees in serious fields, Congressional staffers, et cetera. (I know; my job obliges me to talk to these people all the time, and they tell me so.)

Perhaps it's just laziness on their part, but people who should be taking their bearings from more serious sources—people whose careers depend upon the idea that they have genuine expertise—are drawing their ideas from fakeonomics. These are people who pride themselves on understanding the most sophisticated ideas when it comes to, say, corporate finance, but here they are, relying upon intellectual constructs of a chat-show level of sophistication.

Make no mistake: fakeonomics matters. For one thing, it is the implied theoretical model of current U.S. trade policy. That is to say, if one looks at American trade policy and asks what picture of the economy one would have to hold in order to believe that these policies make sense, fakeonomics is that picture. So whatever sophisticated version of real economics someone like ex-Harvard professor Larry Summers may have tucked away in his head somewhere, when he acts as economic advisor to President Obama, fakeonomics is what he dishes out.

One can, of course, gin up rationalizations bridging the gap between real economics and fakeonomics on any given issue at will. So there's no point confronting people like Larry Summers with the gap between, say, their own theoretical writings and the policies they support in office. If they weren't bright enough to pull off a piece of minor casuistry like that, they wouldn't be where they are in the first place.

Why are the nominally sophisticated so misguided? Because fakeonomics tells them what they want to hear. At bottom, fakeonomics is the ultimate free lunch story. Its seductive message is that we can consume all we want, right now, and never worry about the consequences. "Free" trade translates as "don't worry about" trade. The market forgives all sins.

Unfortunately for this happy fantasy, fakeonomics can only maintain this fantasy vision by systematically ignoring half of economic reality. It is, for one thing, almost exclusively focused on consumption, ignoring the production side of the economy. So it has plenty to say about how cheap imports provide consumers lower prices, but blithely airbrushes out of the picture the way imports deplete our industrial base. Of course, in the long run, nobody can afford imports, however cheap, without the ability to produce something to exchange for them. But that, of course, is the long run, and fakeonomics is about instant gratification and letting the chickens come home to roost in the next administration.

What does all this mean? It means that there are really two targets, for those of us who would criticize free trade. There is economics per se, which tends to be pro-free-trade, but is actually surprisingly well aware of the counterarguments and becoming slowly but inexorably more skeptical. And there is fakeonomics, which is dogmatically pro-free-trade, proactively ignorant of the counter-arguments, and determined to stick its head in the sand.

Shooting at the first target does almost nothing, unfortunately, to hit the latter, which is arguably more important, at least in the short run, for determining real-world policy outcomes. As a result, the first question one must ask, when querying some piece of economic reasoning offered as justification for policy is this: Is it real?

Or is it fakeonomics?

Keeping it real: Food authenticity

My latest HND piece is about food authenticity—not the most exciting topic in the world, but one that should appeal to more than just foodies. After all, most of the knock-offs are done by giant agribusiness, while the genuine items tend to come from smaller, often family-owned companies. Sadly, as current events have shown, our government has seen fit to prop up failed enterprises such as GM, and tends to run away from defending the legitimate claims of the little guy.

It might have something to do with political contributions and unions.

The French lead the way on regional authenticity with their oft-imitated Appellation d'origine contrôlée (AOC), meaning controlled designation of origin. Naturally, the Eurocrats have expanded on this, and have come up with a Europe-wide designation Appellation d'Origine Protegée (AOP).

As you might expect, there have been all sorts of turf battles, and we cover one of the more recent skirmishes, dubbed the "Gruyère War." This one pitted France against Switzerland. Even though the Swiss are famously not members of the EU, they prevailed.

We also touch upon the formerly Golden state of California talking the talk, but not walking the walk on protecting its own food companies, and the importance of regional authenticity to the locavore movement.

Read the complete article.

The fear entrepreneurs are trying to scare you about cosmetics

The easiest way to get media coverage these days is to come up with some prospect—no matter how nonsensical—that is designed to scare people. After all, fear is a great motivator, right?

Amazingly, lack of credentials usually presents no problem to the aspiring fear entrepreneur. If anything, it helps draw more attention, since these con artists come across as real people, not pointy-headed scientists or evil representatives of government or industry.

How else would you explain the media's embrace of two women with absolutely no science or government affairs background, who tell us that the heavily-regulated cosmetics industry is poisoning us, and then goes on to peddle some of the most pathetic "science" we've seen in a long time?

I'm referring to Siobahn O'Connor and Alexandra Spunt, the co-authors of No More Dirty Looks, a work I call a "remarkably uninformed and sophomoric attack on the cosmetics industry" in my latest HND piece.

Apparently, O'Connor and Spunt have taken more than a page from the so-called Campaign For Safe Cosmetics, whereby facts and science are completely unimportant. Instead, the methodology is pure, unadulterated scare tactics. It's easy. Just mention the name of a chemical, and say that it has been "linked to" cancer or birth defects, or whatever.

Don't bother looking for any details on this "linkage," and above all don't mention the most fundamental tenet of toxicology—The Dose Makes the Poison.

It would be tempting to simply dismiss this bilge as unworthy of response, but the sad fact is that far too many people buy into it. Unfortunately, there is no shortage of junk science extant that can be used to support their claims. Moreover, industry is not doing nearly enough to combat this barrage.

To tip the scales a bit, I skewer a few of the duo's most egregious contentions.

Read the article.

Dear FDA: There are much bigger fish to fry than abuse of cough and cold meds

In an earlier posting, we examined the abuse by teenagers of dextromethorphan (DEX or DXM)—a safe and widely used ingredient in many over-the-counter cough and cold medications. We also mentioned that the FDA has scheduled an advisory committee meeting for September 14th to determine if DEX-containing drugs will require stricter purchasing controls.

One of the points made in my related Health News Digest piece was that teen abuse of prescription (rather than OTC) drugs is actually a much bigger problem.

Now, a survey just released by the Center for Medicine in the Public Interest (CMPI) indicates that police officers and high school teachers nationwide believe alcohol and marijuana are the most serious problem substances facing teenagers. In fact, exactly ZERO police officers and only 1 percent of high school teachers cited cough and cold meds as having the greatest impact on teens!

More than that, by a margin of nearly two to one, police officers and high school teachers support educational efforts over reducing accessibility, as a means to address abuse of OTC cough and cold medicines.

It looks as if our FDA—anxious to polish its damaged reputation after the Vioxx, Baycol, Permax, Cylert, and Palladone fiascoes (all of which occurred in the last decade)—is taking the easy way out by catering to the "Save the Children" crowd.

Robert Goldberg, PhD, CMPI vice president, is absolutely right:

"Americans expect to be able to buy cough medicines conveniently at the supermarket or their neighborhood corner store. Overly restricting access to cough and cold products containing dextromethorphan will create more health problems than it will solve, especially during cold and flu seasons. We need to find common sense solutions and invest more resources in education."

A federal policy that will create more problems than it will solve? Imagine that.

Grab more details here.

California's proposed stealth tax increase on nursing home residents is an outrage

It's no secret that the once golden state of California is in deep trouble. To make matters worse, its assemblymen and state senators are so incompetent that the state is currently into its third month of not having a budget.

While Gov. Schwarzenegger has laid down the law on "No new taxes," it becomes a matter of semantics. What if an existing tax that exempted certain individuals will now have that exemption removed? What if the majority of those affected are on fixed incomes?

The criminals in Sacramento think they can pull this off since Mr. and Mrs. Average Voter aren't old, and probably won't hear about it. This sort of thing is what we call a "stealth tax increase."

Welcome to the terrible truth of the once greatest state going rapidly down the tubes. I cover this entire mess in my latest HND piece.

And, just so you won't think I'm exaggerating any of this, here are a couple of links to check out:

Senior Citizen Nursing Home Tax Increase Has No Place In Final Budget Deal

Letter from Senators Wolk and Padilla to Gov. Schwarzenegger

With apologies to 2 Samuel 1:19... Your glory, O California, lies slain upon your high places! How the mighty have fallen!

Read the complete article.

XRF Testing Is Disavowed By The Federal Interagency Task Force On Problem Drywall

An earlier posting covered findings from the Consumer Product Safety Commission, published in May, 2010, that blew the doors off the "science" of X-Ray fluorescence spectroscopy screening of corrosive or tainted (often referred to as "Chinese") drywall.

XRF testing of the drywall is based on the now completely discredited notion that high strontium levels are indicative of tainted drywall. This contention was never supported by any real science, and was merely based on certain observations.

I and many others had objected to this sort of voodoo, and repeatedly challenged proponents to at least proffer a theory as to why strontium should be related to tainted drywall. No such theory was ever proposed.

Finally, tests were done by famed Lawrence Berkeley Labs which conclusively demonstrated that there is no correlation between strontium levels and the amount of corrosive gas that is emitted from tainted drywall. As stated, this data was released last May.

Unfortunately, this was not enough to stop the promoters of XRF home testing, who are charging high fees to give useless reports to hapless and scared homeowners. So, on August 27, the new Interagency Task force—comprised of CPSC, HUD, EPA, and the CDC—released a more aggressive statement on the matter:

Although the Federal Interagency Task Force's study of the elemental and chemical composition of 17 drywall samples has previously shown higher concentrations of elemental sulfur and strontium in Chinese drywall than in non-Chinese drywall, the Task Force now believes that the best and preferred practice for identifying the presence of Chinese drywall in a home does not include the use of strontium as one of the corroborative factors previously set forth by the Task Force.

The Task Force is now removing from the "Step 2" list of corroborating evidence in the Interim Guidance the factor addressing strontium levels in excess of 1200 ppb. The Task Force does not believe strontium has a causative role in the problems reported with the problematic drywall. Furthermore, the Task Force believes it is appropriate to remove the strontium level as a corroborative factor due to the possibility that its use may lead to false-positive results where a homeowner may mistakenly believe their home contains problem drywall.

It is worth noting that the Court in the major federal case on tainted drywall IN RE CHINESE MANUFACTURED DRYWALL PRODUCTS LIABILITY LITIGATION, relating to Germano, et al v. Taishan Gypsum Co, Ltd, et al found in February, 2010 that:

[XRF technology] is not reliable for selective identification of which individual boards are Chines drywall and which are not. This finding is based on data suggesting that the use of the XRF to detect individual sheets of Chinese drywall results in many false readings.

So, let's summarize here...

  • The lead federal agencies involved with the Chinese drywall problem have disavowed the used of XRF
  • The key federal case on this matter has found that XRF is "not reliable."

It can't be any clearer than this. When it comes to XRF for Chinese drywall, put a fork in it, it's done.

Therefore, run—do not walk—from anyone who wants to inspect your house using XRF. The only reliable method at the moment is non-destructive evaluation, whereby the effects of the tainted drywall are observed and evaluated.