For your viewing pleasure

See the Patently-O post Shaping Nuanced Patent Injunctions: Broadcom v. Qualcomm, discussing a case in which the Federal Circuit "affirmed a permanent injunction against Qualcomm - finding that the district court acted within its equitable discretion and properly followed the injunctive relief guidelines set forth by the Supreme Court in eBay v. MercExchange (2006)."

The post notes: "This decision is insightful in how it moves the proper focus from whether an injunction should issue to the more nuanced issues of how to shape the injunction in a way that best serves the public interest while still protecting property rights."

Hmm, public interest "versus" property rights? How anyone can think patent law is compatible with property rights is beyond me.

We are going to pay for a $700 billion bailout by cutting taxes by $150 billion??

I have a new much cheaper bailout plan: let's take $100 billion, and give an equal share to every member of the House of Representatives who agrees to give half of it away tax-free. Those that have investment bankers on their backs can give it to them; those that want to help people who can't pay their mortgages can give it them. That should get all of them off our backs.

Alternatively, let's revert to the original Poulson plan with an additional clause that the personal taxes of all the economists that signed the letter opposing the bailout will be cut to zero. That should get us off their backs.

We have written an expositional article describing how we got into the current financial mess and what to do about it. Here is the beginning and end of the article:

Everyone knows that the United States faces a serious financial crisis and that the Administration is asking for an astoundingly large sum of money to fix the problem. Fewer may know what economists think about the crisis. Most academic economists - the economists who do not work for companies likely to benefit from the bailout, nor for the President - are opposed to this plan. This large group of experts has wide ranging political opinions, and includes democrats, republicans, and most likely some libertarians. So: why is there a crisis, what is this plan, and why are a large number of academic economists opposed to it?

...

The bottom line, in the immediate future, is this. The Federal Reserve Bank and its sister agencies such as the Federal Deposit Insurance Corporation (FDIC) already have strong tools against a cascading failure of the banking system. They has been using those tools, including advancing credit to banks through the discount window, insuring deposits, and selectively allowing institutions to fail. We have seen isolated bank failures. There will be more in the future. We have not seen good banks fail, nor have we seen cascading failures. We have been given no reason to think anything of the sort is imminent. It is sad to say that despite this the U.S. Government is in a state of panic. Supposedly knowledgeable government officials talk as if ATMs might stop working and firms will not be able to meet their payrolls. This is utter nonsense. To debunk the obvious: Washington Mutual failed Thursday night. Washington Mutual ATM cards continue to function as usual. Individual and corporate bank accounts are federally insured up to $100,000 per bank. The normal process of bank closure does not prevent bank customers from accessing their funds. As to payroll: We do not doubt that some firms of various sizes are going to fail to meet payroll and go bankrupt in the next weeks. It is likely that a few of them would have been able to survive if credit was more widely available at the moment. But most firms do not meet payroll by short-term borrowing. The fact that banks are reluctant to lend to each other does not have much impact on their ability to make short term loans to customers. And so on.

No objective reading of data we have access to indicates anything near as bad as the claims that are being made. It may be that eventually more intervention than the Federal Reserve and Treasury can do without Congressional action will be needed. However, this is not a natural calamity or a war where there will be large and irreparable harm if we do not act immediately. There is adequate time for the public, the Congress, the Treasury and Federal Reserve to think through the alternatives carefully, to monitor the situation with equal care, and if necessary intervene in markets in a way that makes sense.

Public officials, especially the Chairman of the Federal Reserve Board have an obligation to explain these facts and reassure people that they are not in danger of a catastrophic collapse. It is rather unfortunate, then, the opposite seems to be occurring. For example, on September 24 Ben Bernanke declared in front of Congress:

All told, real gross domestic product is likely to expand at a pace appreciably below its potential rate in the second half of this year and then to gradually pick up as financial markets return to more-normal functioning and the housing contraction runs its course. Given the extraordinary circumstances, greater-than-normal uncertainty surrounds any forecast of the pace of activity. In particular, the intensification of financial stress in recent weeks, which will make lenders still more cautious about extending credit to households and business, could prove a significant further drag on growth. The downside risks to the outlook thus remain a significant concern. ...

Over time, a number of factors should promote the return of our economy to higher levels of employment and sustainable growth with price stability, including the stimulus being provided by monetary policy, lower oil and commodity prices, increasing stability in the mortgage and housing markets, and the natural recuperative powers of our economy. However, stabilization of our financial system is an essential precondition for economic recovery. I urge the Congress to act quickly to address the grave threats to financial stability that we currently face. For its part, the Federal Open Market Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.

Roughly speaking he said "things are not too bad, but gradually getting worse, and you better act quickly to give us $700 billion to fix it." The conclusion does not seem to follow. It is not surprising that people imagine that there is far more catastrophic information that he is not telling us. If the Federal Reserve Bank and Treasury in fact have information that things are worse than Bernanke reported they should tell us what it is. Otherwise they should stand up and make it clear that doomsday is not around the corner.

How do you engineer a perfect financial storm? We just witnessed how.

First: the Fed Chairman, the Secretary of the Treasury and the President (BPB, from now on) all go on TV stating that a great disgrace will fall upon the country should Congress not do X. X is, strangely, something that, prima facie, looks very advantageous for people and firms that one would not err too much by characterizing as "close" to BPB.

Second: neither BPB nor their associates, nor anyone supporting X (in particular, not the "friends" that should receive advantages from it) explain what the danger is, how it works, what will cause what and how did we get to this. They insist on the matter being super urgent and dramatic, no discussion please, there is no time. Just to make things look even more dramatic, the future .5(President) (well, make that .3(President)) suggests to suspend the presidential campaign in light of the national emergency ...

Third: during the weekend the anxiety increases amid tense and obscure bargaining among the parties. In the meanwhile, various proposals Y, Z, K, ... (all addressing the same issues as X but less favorable to the "friends") are dismissed outright. It is, BPB keep repeating, either X or nothing. Trust us, we know better.

Fourth: well, we just witnessed it today. In the midst of the panic caused by the refusal of Congress to just "buy X as is", the friends (and possibly also the foes, at this point) of BPB run for cover and the markets collapse (silver lining: price of oil also did). Now the scare is complete, everybody is in panic, and no one understand what is going on and why ... The opening of Asian markets a few hours from now is awaited in great fear. The sense of historic drama is palpable.

Prediction: the plan will be forced down the throat of Congress between tonight and tomorrow. Now something really needs to be done, hence we will do X.

The perfect storm, once again. These guys are skillful, that much I admit.

Since IP causes only about $40 billion or so a year damage to the economy, I hereby withdraw my objections. That amount is obviously trivial, in view of trillion-dollar bailouts, trillion-dollar wars, scores of trillions of dollars of debt. And as for the $80 billion tax-funded innovation prize fund--chicken feed. Let 'er rip!

Now here's a sensible approach!

An Austrian Bailout Plan

by Mark Thornton

Austrian Bailout Package--Part A

1. Suspend Basil II regulations (to at least 4/2/09)
2. Cancel FDIC insurance on all demand deposits after 1/1/09.
3. Increase FDIC premiums on short term time deposits of less than one year.
4. Make interest earned (starting 1/1/09) on bank time deposits and non-governmental, non-agency, and non-authority bonds tax free (not demand deposits and MMMF).
5. Convert Fannie Mae and Freddie Mac's status from conservatorship into receivership.
6. Convert AIG's status from government owned to receivership.
7. Cancel the Primary Dealer Credit Facility (PDCF) and the Term Securities Lending Facility (TSLF) at the end of the announced program (January 30, 2009).
8. Announce that the Federal Funds rate will be allowed to "float" at market rates starting January 30, 2009.
9. Announce that the Federal budget will be prorated beginning with the fiscal year starting 10/1/08 including all defense spending and transfer payments.
10. Restore constitutional monetary status to gold and silver to act as an alternative medium of exchange (no capital gains taxes).

From Wired.com:

U.S. lawmakers approved the creation of a cabinet-level position of copyright czar as part of sweeping intellectual property enforcement legislation that sailed through the Senate on Friday.

Read the whole thing. This follows up David K. Levine's alert here.

You know things are bad when an organization like Public Knowledge is forced to essentially state, "Well, it could have been worse. Let's all be grateful for that."

Who do we have to pay off in the House to kill this monstrosity? Oh, that's right. I forgot. They have already been bought off by the other side...

The current proposal to rescue Wall Street from its follies, all 102 pages of it. Chances are in a document of that length that will be approved in about 12 hours there are some easter eggs. If you have the time to look and spot any, post a comment.

I've now read it in a manner of speaking. It does not seem that different than the original bill. He gets $350 billion with no questions asked which he can do pretty much as he pleases with, with another $350 if he asks and Congress does not veto it within 10 days or 15 days, depending on which part of page 51 you believe. The oversight provisions appear weak with actual oversight being done entirely by the executive branch plus the chairman of the Fed. The congressionally appointed "oversight" committee seems to be limited to writing a report about regulatory reform. The Treasury which has been backstopping money market funds - not a bad idea under the current circumstances - now seems to be prohibited from doing so. There are some modest provisions about CEO compensation, workouts for homeowners, and authorization to operate a security insurance program.

The basic objection to the bill is it is likely to cost a lot of money without accomplishing a great deal. That isn't solved in the details. Beyond that, the bill is surprisingly weak in the details. My interpretation is that this is that Treasury got what they wanted, with a bunch of rhetoric and cosmetic stuff put in so that Congress can say they got the taxpayer a better deal.

Thomson Reuters, maker of the EndNote bibliographic software, is suing George Mason University and the State of Virginia, see Courthouse News (via DigitalKoans). The issue is Zotero, an open source bibliographic tool that appears to rapidly increase its market share, as it is much lighter, platform independent, browser plugable and free. Of course, this is not the official reason, Thomson Reuters rather argues that Zotero developers reversed engineered EndNote to allow Zotero to import EndNote files.

This is a very serious issue for Thomson Reuters. Indeed, its clientele is essentially locked in, as researchers have built their bibliographic databases over the years and cannot export them. With Zotero this is suddenly possible, and they can drop EndNote for another product, including the free Zotero. Thomson Reuters must be especially annoyed as its product has become less and less practical, from what I hear, and very bloated. But customers had no choice but buy new versions. Reminds me of Microsoft products, on which EndNote relies heavily.