The Right is Wrong and the Left is Wronger

How safe is ecommerce?

Everything we do on line is assumed to be secure.  Would we put our banking information, our brokerage account information, file our taxes, make purchases from Amazon and EBay, all online if we weren’t confident of it’s security?  Our unspoken assumption is that the architects of the Internet have made it so that only those who are supposed to be able to read data can in fact read that data and all others cannot.  The problem, from my point of view is that while this was theoretically true in 1998 when the typical person didn’t have at their disposal what would then have been considered a super computer.  Today computers are thousands of times more powerful and storage (which is important for brute force methods of decryption) is millions of times less expensive.  While Moore’s law has been at work over the last 10 years doubling the power and halving the price of computers every eighteen months.  There has been a similar rule (though I have never heard a name for it) at work doubling the capacity and halving the price of hard drives every six months!  All the while, the web browser we all use has been restricted by law to 128 bit encryption.  If you read academic articles on the strength of this encryption from ten years ago, people made statements like,”The sun will burn out before this will be broken”. 

We are working a project to determine if this is true.  The largest 128 bit number is about 3.4 e 38.  With e6 being millions, e9 being billions and e12 being trillions.  You can consider this to be a very large number based upon every day experience.  Problem is, that for computers to count that high and analyze numbers that big, the capabilities are being created where numbers that large are manageable.    We have been working against numbers that were posted by the Clay Mathematics Institute.  The first number 1020030004000050000060000007 was factored by us in 2.5 minutes. (I'm rounding, but you get the point.)  This number is 63 bits long and not too long ago, it would have been considered completely unmanageable.

One of the limitations we found was that the programming languages and the operating system itself had limits, the problem, from a security standpoint, is that programming libraries for arbitrarily large numbers are readily available online.  The Clay Mathematics Institute also posted the following number 51920810450204744019132202403246112884629925425640897326550851544998255968235697331455544257

Is approximately equal to 5.192 e 91 which is significantly larger than 3.4 e 38 that I said was the largest 128bit number

That breaks down into the following factors:
2158122193002952449690243008233157266924190689
24058327474941875553768074062128402939746847713

In binary bits the number is 305 bits...significantly more than 128 bits. It took us about 15 cpu days to factor this number.  We specifically limited ourselves to a couple of mid-range desktops and we overshot 128 bits by fifty or so orders of magnitude so that our results would resemble those achievable by a typical hacker with modest resources, a sophisticated education and too much time on their hands.  It is reasonable to assume that the technology as exists today, for a typical hacker to break 128 bit encryption in about 1 week. Couple this with the fact that the most secure encryption that is available through web browsers is 128 bit and my fear is that online ecommerce is in significant danger.  If not today, then in certainly by 2012 as Moore’s law and the unnamed law about hard drive space continue to chip away at the time required.  I advocate strongly, that we increase the amount of strength in the browser encryption to 512 bits or 1024 bits before 2012.

What is the single most important thing society needs right now?

Some will postulate that what society needs is an end to all religion, others a crisis of large proportion (personally I believe that would cause people to find religion). Some believe that the answer lies in more technology (renewable energy) others that we have more technology than we can use.

I believe we need a common scorecard.

When are the poor well enough off? What is the right amount of carbon dioxide in the atmosphere? What is the “fair” amount of personal resource usage? I've seen people suggest that we need ethical education…I ask, "ethics defined by whom and encompassing what?" Is abortion ethical? Is incinerating 1 Billion Muslims more ethical than becoming one? How can people who are against abortion be for incinerating 1 Billion Muslims?

If we could pull off a common scorecard, then we could be measured against it. The poor had this percentage of world GDP per capita last year and they have this much this year (we are making progress, or not). We have made x progress toward that amount of carbon dioxide which will balance global warming against global cooling (we will have solved the problem in the year XXXX). We have agreed human life is sacred (Muslim and not) and it is ethical to preserve it at any price (or not).

Once we had a common scorecard and knew if we were making progress, then we have to answer the really tough question, "What are we making progress toward?" Simply breeding one increasingly numerous generation after another until we consume the endowment of resources we were granted until we reach a number large enough that the earth cannot sustain our numbers cannot be the right answer.

I propose that we need a framework for the human race similar to Maslow’s hierarchy of needs. In general we have met or can meet most people’s physiological needs. With the elimination of war for most of the Earth’s population, we have secured most people’s security needs. So now we need to work on social needs, esteem needs and self actualization needs.

I suspect that most people would agree to the following five as a good place to start: 1) Life is sacred and should be preserved 2) The pursuit of personal religious belief shall not be infringed 3) Personal property shall not be taken except though a freely agreed to exchange of value 4) One can consume the earth's resources only comensurate with the earth's overall ability to replenish those resources and with respect to one's fraction of the human race 5) The individuals rights end where the next person begins.  There are likely to be numerous additions to this list, but this is a start.

An Open Letter to Candidate Obama

Congratulations on cementing the nomination. In answer to your question, The President has several levers at his disposal which can assist in maintaining America’s competitiveness. Setting the national agenda for higher education, President Kennedy proved that if the vision is right, (go to the moon) many people will choose to become educated in supporting fields (engineering, science)

Setting a reasoned immigration policy. America should welcome immigrants. Not criminals and uneducated immigrants who will swell the ranks of the de facto enslaved, rather those that can contribute more meaningfully. It is counterproductive to welcome migrant farm workers (de facto slavery) and to force foreigners, highly educated at American schools as engineers etc. to go back to their country of origin after graduation.

A reasoned fiscal/monetary policy. Identify and communicate a target exchange rate after identifying a job maximizing rate of export and import. In order to accomplish this, the government must only spend in deficit, that amount commensurate with the target rate of foreign exchange.

A structured and publicized plan for energy independence, such a plan should include three elements increasing supply, decreasing demand and a conscious decision as to the value of the dollar. Increasing supply should include some increase in domestic production. I suggest reducing demand in two ways first increasing the amount of nuclear plants coordinated with non-renewing oil fired plants license to operate. The power plant suggestion is weak in that only 5% of America's electricity comes from oil in the first place.  The second way is a “Manhattan Project” to reward the first company to sell 100,000 alternative fueled vehicles with a $1 Billion bonus. Such a car should meet some minimum criteria: it should carry 2 or more passengers, more than 200 miles on a single recharge/refuel, and accelerate 0-60 in under 5 seconds, with a top speed exceeding 80 MPH, with an average selling price under $30,000.

Such an approach would unleash American ingenuity, jumpstart the alternative fuel vehicle market and reduce carbon emissions substantially. Such a program could be expanded to $50 Billion, $1 Billion for each state that has more than 100,000 such vehicles. This would put 5 Million alternative fueled vehicles on the road in a very short period of time.

Currently half of our trade deficit is due to imported petroleum; this initiative would also reduce the trade deficit and strengthen the dollar. This is the short list, I would be happy to discuss additional ideas with you at your convenience.”

Will the end of the Bush presidency see an upswing in the value of the US Dollar?

The declining of the US Dollar is only driven by the Bush presidency or any US President to the extent that fiscal policy is supportive of a balanced budget and that, only to the extent that the President vetoes spending bills or utilizes the bully pulpit to talk up the economy and down excessive spending.

Given that the US is on a fiat currency there is essentially one element that drives a weak dollar, spending more money than is raised through taxes (deficit spending). In the face of a decision to spend more money than it has, a government must decide how to get more money than it has, and it has three choices: 1) Raise taxes 2) Borrow money through the sale of bonds 3) print more money. If the decision is taken to raise taxes, which will slow growth, then the value of the currency is protected but future taxes that would have been collected from future business activity never materialize because business activity that would have occurred doesn’t. If the decision is taken to sell bonds then interest rates increase because of competition with other investment opportunities, in such a case the currency is protected but the cost of capital for everyone goes up and some business that would have otherwise gone on is again deferred and tax revenue that would have been collected is not. Finally, if the choice is taken to simply print more money, (which has been the choice of the government during Bush’s term of office) then you don’t have to defer future tax revenue because the cost of borrowing doesn’t increase and you don’t have to make the politically unpalatable choice of raising taxes. So to the extent practical you have protected growth. The problem is pernicious though in that, what you have done is to devalue those future earnings because the value of what is earned is paid for in less valuable dollars. (There is a good conversation to be had here about the virtues of living within your means and spending no more (or even less) than you collect in taxes) (There is also a good conversation to be had about whether a weak dollar has been beneficial, particularly to exports) But, once you have taken the decision to spend more than you have collected, then you are faced with a set of unattractive choices.

Had to lay the foundation for the discussion, Bush has not utilized the bully pulpit to talk up the economy or to set a balanced budget priority, he has pursued deficit spending (by not vetoing the prescription drug benefit or the additional spending associated with the Iraq war) so to the extent that those initiatives have contributed to deficit spending he has been responsible for a weak dollar.

I am fairly pessimistic about both candidates. To the extent that you believe that John McCain will reign in deficit spending through the use of the veto, to the extent that he will not support additional deficit spending and to the extent that he will not allow the money supply to expand, the dollar will be stronger under his governance. But I believe John McCain has many friends in the Senate to whom he will enjoy providing handouts. I believe we cannot continue the Iraq war, which he supports, without deficit spending and because he is running from the right, I don’t believe he will raise taxes. Therefore I expect the dollar to continue weakening under his governance.

Same argument holds true for Barak Obama. As a huge government leftist, I believe government spending in an Obama administration will explode (though not in the same areas as McCain). As such he will have to raise money through a tax increase (and/or allow the Bush tax cuts to expire) borrow more money and increase the monetary supply. I believe he will do all three and while weak under both, I believe that to accomplish the priorities he has laid out, the dollar will be weaker under Obama.

What is predictable here is that a weaker dollar will drive higher priced gasoline and the politicians, responsible for the weak dollar will continue to posture about the culpability of "Big Oil" rather than acknoledging that high priced gasoline is primarily due to the weak dollar.

Inflation: Where do we go from here?

If you add up the combination of FED moves (loan window, collateralizing crappy paper, and rate cuts) and Federal Government moves (the great 2008 tax give away and enormous deficits) The combined effect has been to pump about $1 Trillion of liquidity into the market. This is hugely inflationary (Don't believe me? See the price of intenationally sourced commodities during this period gold, oil, platinum).

If people like Nancy Pelosi, who today announced that the current stimulus was insufficient (as if she had a clue) and who wants a follow-on stimulus package. Then we will continue to print fiat money and inflate the price of virtually everything. On the other hand if more rational (and informed) thinking prevails, the government would work to cut spending (reducing deficits), the fed has already indicated that it is done cutting rates for a while and the Republicans have indicated there is no plan for a follow-on stimulus.

It is ironic that the same politicians trying to "help" the problem of gasoline that is too expensive are the ones who caused it by inflating the dollar.  The author of this article seems to have a good grasp. Article from June 26th Christian Science Monitor 

The only question remains in this scenario is once the economy returns to equilibrium, how inflationary was the stimulus already added and will continued deficit spending continue to fuel inflation? While the rest of the scenario I've painted is likely, I view it as unlikely that the Federal Government, that is so addicted to deficit spending will rein that in. Therefore the Fed will be raising interest rates by the end of the year to prevent inflation brought on primarily by deficit spending.”

Do you care about sustainability? Is it the right thing to do or just the latest fad?

“As I've become older and my children have to, I have become more conscious of the type of ethics they are growing up with, within our family and what type of world my generation is leaving them. Is it better or worse than that left us by our parents?

Let me illustrate the first point with an example. We know the fossil fuels are a finite resource. Saudi Arabia estimates their reserves at about 264 billion barrels. The rest of the world is about four times that in proven reserves about 1.3 trillion barrels. Take a stab that there are unproven/unfound reserves of twice that factoring in improved recovery techniques and you arrive at about 2.6 trillion barrels. This sounds like a fantastical amount, the world is swimming in oil, right? Problem is that's all there is and it has to last FOREVER. With 6 Billion people on the planet that's 433 barrels per person. Good for your lifetime? Probably. Good for your 2.3 children's lifetime? Possibly. Good for your grandchildren? Unlikely.

This begs several questions: What do we tell our children and grandchildren when it eventually runs out? We got ours screw you? When do we start to solve the problem? Now when we have time or at the last minute when the results will be truly catastrophic? This is an ethical question about how fairly we treat our fellow man. The right is big on protectin the unborn, this seems and extension of that. 

The earth has a limited resources of hydrocarbons and they can be used for a wide variety of applications. Is buring it the best use? Let me compare the previous example to solar power. True it is more expensive than grid power at this time for everywhere in the U.S. except the most expensive locales. But as fuel prices rise and solar manufacturers achieve better efficiencies and production economies of scale that will change. Best guess is about five year to grid parity.

Regardless, if it were fifty time more expensive the ethical question would still hold. The sun is estimated to last another 5 Billion years. Currently 10,000 x more energy hits the surface of the earth than we need. Solar, nuclear and wind are the only energy resources where can grow capacity (hydro in the U.S. is considered fully developed) and we won't use it all up in a span of decades. In fact, exhaustion of solar and wind won't occur until the sun burns out. These are the only fuels we can use without having guilt about the endowment of resources we leave our children. In my book that makes them the only ethical choice.

The arguments I have just put forward, apply to many aspects of our lives. Other hydrocarbon fules such as coal come to mind. Beyond that fisheries (finding a can of solid tuna at the local grocer is becoming harder and harder) Albacore! When I was a kid that was a junk fish that no one would eat! Come to mind. As a society we have to agree that the maximum rate of usage needs to be no more that the maximum rate of replacement in order to ensure that our grandchildren will have the opportunity to enjoy a tuna shushi. (To each his own)

We are perhaps the first generation to have such a clear and present choice as to the condition of the planet and it endowment of natural resources that we would leave to future generations. Sustainability must not be a fad as it is the only ethical choice for good stewards of a planet that is only theirs in trust.”

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