Cryptocurrency Arbitrage

Cryptocurrencies have caught fire in recent months as several governments including Japan, China and Russia, have recently announced recognition of Bitcoin, the macdaddy of blockchain currencies. Other relevant events driving interest in fiat alternatives include the Trump presidency and uncertainty it has introduced in traditional markets, announcements by more and more businesses such as this one by Alzi that they are accepting the currency as a form of payment.

tl;dr A free tool to help cryptocurrency enthusiasts discover BTC and ETH arbitrage opportunities between 2 popular bitcoin exchanges (Gemini and GDAX). Download
Most recently, the value of Bitcoin and related currencies such as Ethereum has skyrocketed, surging nearly 100% in 60 days.

Clearly past performance is no indication of future gain and interested investors would do well to acquaint themselves thoroughly with the technology.  Bitcoin's recent history notwithstanding, the assets value is subject to extreme volatility.  Entire exchanges have been wiped out in the past few years due to security oversights. Still, money is pouring into the cryptocurrency market at a record pace.  

As with any immature market, the price of a cryptocurrency is somewhat open to interpretation with different exchanges often having significantly different pricepoints. This presents an opportunity to increase profit and to mitigate risk.

Numerous exchanges exist for trading cryptocurrencies and each have very different fee schedules, interfaces and offerings.  Regulation of the exchanges is still evolving, and the projects backing them are hosted on a range of technologies.  It is possible, however, to take advantage of the price differences, essentially creating your own derivative by trading simultaneously on 2 or more exchanges when the prices are significantly different.

Have a look at this chart:

Notice that just before 6 am on May 21, the price for bitcoin (BTC) on several exchanges ranged between 2070.86 and 2422.55.  If one had an account on bitstamp with cash and another on localbtc (not realistic, but for illustration) and purchased 1 bitcoin on bitstamp at 2070.86 and simultaneously sold 1 bitcoin via localbtc at 2422.55, after transaction fees, she would have effectively made an instant profit of about $350.00 or over about 17%. The cash can be redeposited in her bank account from localbtc. The bitcoin can be transferred to her virtual wallet or to a more favorable exchange in about 30 minutes.

In general, the above case is quite rare. localbtc is not an actual exchange but a marketplace connecting local bitcoin traders to people who want to pay cash. bitstamp is located in Slovenia and the cost to transfer funds into the exchange can be significant for those who do not have an account in a European bank.

Still, referring again to the chart above, a number of these exchanges have been established in the United States, Asia, Europe, and Central and South America, so there is usually at least a pair of exchanges that are relatively safe and work efficiently with banks in any region.

For purposes of illustration, let's look at Gemini and Coinbse/GDAX, exchanges that are headquartered in the US and work with North American bank transfers.  Deposits and withdrawals are relatively easy and cheap via ACH from major American banks. At the same time, Coinbase was at 2136.65 while Gemini had BTC at 2049.91. Absent fees, simultaneous sale on Coinbase(GDAX) and buy on Gemini results in, effectively, an instant profit of $84 on a single trade. While BTC appreciated significantly on both exchanges throughout the weekend, the pricing inefficiency provided dozens of opportunities to increase yield with profitable offsetting trades with margins ranging from 1.5% to nearly 6%. 

Now for the bad news. Volatility means that these windows are brief.  There are varying spreads on any exchange that must be taken into account. The trade on either side my not close.  This is not innately harmful, but it takes the system out of balance when the market is moving rapidly in one direction.  

Dealing with the spread means monitoring the order book, not the last sale in real time and basing your trade on the current bid where you place your sell order and the current ask where you buy. If you're quick and if you are willing to shave a few cents against the relevant offers, then it's not difficult to place two trades that will close immediately.  I (and many other folks) have written code to accomplish this in real time, but I've also been successful entering trades manually in several exchanges.

Note that this isn't limited to BTC/USD.  Any currency pair that is traded on two or more exchanges is fair game.  Both GDAX and Gemini offer trading in BTCUSD (Bitcoin-Dollar), ETHUSD (Ethereum-Dollar) and ETHBTC (direct exchange of Ethereum for Bitcoin). There is an inherent advantage in ETHBTC arbitrage in that there is no need to deposit cash if you already have cryptocurrency in both exchanges. It's also easier to balance these accounts as crypto can be exchanged directly between the two exchanges and fees are extremely low (.002%).  ETH transfers between exchanges or to an external wallet take a few seconds. BTC generally takes around half an hour. Cash can be used for purchase immediately but cannot be withdrawn (nor can assets purchased with it) for a few days.

With any pair, you choose which currency you want to reflect your profit in.  If you trade BTCUSD and you want to increase dollars, make sure your orders are for the same amount of BTC.  If you want to increase your bitcoin holdings, set your orders for the same dollar amount.

I've built a spreadsheet to help folks who are interested in experimenting with arbitrage opportunity between two exchanges and seeing opportunities develop in real time. You are more than welcome to download it here: 
http://bit.ly/dt_arbtool

This tool is freely offered for your personal use. I don't guarantee support and I accept no responsibility for your results.  The spreadsheet uses public websocket APIs from GDAX and Gemini. You need not have an account on either exchange to receive realtime quotes. Excel is not an appropriate platform for the development of trading bots. This is simply a tool that utilizes realtime orderbook information supplied freely by the exchanges and displays the bid-ask adjusted margins for 3 currency pairs across 2 popular exchanges.

By default, the queries will refresh every minute. In Excel's data tab, you can refresh on demand, up to 6 times per second, by clicking "Refresh All" button in the ribbon menu.

The colored section reflects 6 possible trades, the available gross profit and the sellside ask and buyside bid for each.

Beneath that is a recommendation which is, essentially, the trade with the best current divergence.

All that need be done is to download the spreadsheet and run in excel (the service requests do not work in Google Sheets, unfortunately).  I have tested in Excel 2016.  You will need to enable editing and external connections for the worksheet when it opens.  There are no macros.  The queries can be viewed in the data tab (view all queries) and are URLS that can be cut-pasted into a browser if you'd like to see them that way.  The data returned by each is in the 6 green and white tables on the left-hand side of the sheet.

If you do decide to download the tool, please drop me a comment below and let me know what you think.

Happy trading!

DT

Cryptocoin Arbitrage Excel Tool

Hello, folks. It's been a while since I've written an article, but today I got inspired to dust off my blog.

With the excitement around Bitcoin and related currencies hitting a fever pitch, I thought I'd play around with some investment techniques.  I'll try to get something together that is a bit more detailed, but I wanted to post an excel tool that demonstrates how to detect arbitrage opportunities given the sometimes enormous differences between varias cryptoexchanges.

It can be downloaded here as a .xlsx file: 

https://drive.google.com/open?id=0B01796tSFP9qbjc1MTVWWnFLUmc

This tool is simply an excel spreadsheet that monitors the order books of two popular exchanges (gemini and GDAX).  

From what I can tell, all the exchanges I have looked at have accessible APIs that work in a fairly similar fashion.

This tool does not require an account on the exchanges. It uses only public APIs to analyze the order books and display the instant gain or loss of equal buy/sell orders on different exchanges.

It further selects the "best" or most profitable transaction and highlights this as its recommendation.

Note that it does not take into account fees, which range as high as .3% on each side.

Note also that cryptocurrency exchanges, while inefficient, do move very quickly. Taking action based upon this recommendation may require some quick typing. I have coded this on other platforms to automate and test the orders, but Excel is inappropriate for this (and orders obviously require account information.)

I'm uploading it prior to finishing my article so that friends in the community can evaluate it and make suggestions.  

Obviously, I'm offering this for folks to use as they see fit and I take no responsibility for your trading results.

Quickstart:  The spreadsheet is developed in Excel 2016 and uses automated calls to the web services API's of two exchanges.  The queries are visible in the Excel Query pane. They are simply url datasources that retrieve real-time order book information for BTCUSD, ETHUSD and ETHBTC pairs. The queries should refresh automatically every minute, but you can go to the "Data" tab in excel and click "Refresh All" for faster updates.

Please let me know what you think.

Additional notes:  

• It doesn't appear to be supported in Google Sheets.  
• 
  
• I used excel 2016 to create it and am unsure if web data connections were available without a plugin in previous versions.

Who's smarter? Red States or Blue States?

I recently observed a twitter slap fight between two partisans over the question of whether red states are smarter than blue states.

This discussion rapidly broke down along the path "look it up yourself", "AHA! so I win!"

 I thought I might take a few minutes and resolve the question, at least for myself. Obviously, the quantification of "smarter" demands that methodology be explained.

The most recent SAT scores breakdown I could easily get my hands on is for 2011 results. I then googled, "Which states are red and which are blue" which led me to a map designating a hard value of each state (plus the District of Columbia) and a binary designation of red or blue based on which way the state voted in the most recent Presidential election.

Combining these two datasets, I got the following table: Mean 2011 SAT Scores by State States are listed by total 2011 SAT Scores

	Mean 2011 SAT Scores by State
	States are listed by total 2011 SAT Scores
	Rank	State	Critical Reading	Math	Writing	Combined	Participation Rate
blue	1	Illinois	599	617	591	1807	5%
blue	2	Minnesota	593	608	577	1778	7%
blue	3	Iowa	596	606	575	1777	3%
blue	4	Wisconsin	590	602	575	1767	5%
blue	6	Michigan	583	604	574	1761	5%
blue	13	Colorado	570	573	556	1699	19%
blue	21	New Mexico	548	541	529	1618	12%
blue	22	Ohio	539	545	522	1606	21%
blue	25	Washington	523	529	508	1560	57%
blue	26	New Hampshire	523	525	511	1559	77%
blue	27	Massachusetts	513	527	509	1549	89%
blue	28	Oregon	520	521	499	1540	56%
blue	30	Vermont	515	518	505	1538	67%
blue	31	Connecticut	509	513	513	1535	87%
blue	32	Virginia	512	509	495	1516	71%
blue	33	California	499	515	499	1513	53%
blue	36	New Jersey	495	516	497	1508	78%
blue	37	Maryland	499	502	491	1492	74%
blue	38	Rhode Island	495	493	489	1477	68%
blue	40	Pennsylvania	493	501	479	1473	73%
blue	42	New York	485	499	476	1460	89%
blue	44	Delaware	489	490	476	1455	74%
blue	45	Hawaii	479	500	469	1448	64%
blue	46	Florida	487	489	471	1447	64%
blue	50	Maine	469	469	453	1391	93%
blue	51	District of Columbia	469	457	459	1385	79%
red	5	Missouri	592	593	579	1764	5%
red	7	North Dakota	586	612	561	1759	3%
red	8	Kansas	590	595	567	1752	6%
red	9	Nebraska	585	591	569	1745	5%
red	10	South Dakota	584	591	562	1737	4%
red	11	Kentucky	576	572	563	1711	6%
red	12	Tennessee	575	568	567	1710	10%
red	14	Wyoming	572	569	551	1692	5%
red	15	Arkansas	568	570	554	1692	5%
red	16	Oklahoma	571	565	547	1683	6%
red	17	Utah	563	559	545	1667	6%
red	18	Mississippi	564	543	553	1660	4%
red	19	Louisiana	555	550	546	1651	8%
red	20	Alabama	546	541	536	1623	8%
red	23	Idaho	542	539	517	1598	20%
red	24	Montana	539	537	516	1592	26%
red	29	Arizona	517	523	499	1539	28%
red	34	Alaska	515	511	487	1513	52%
red	35	West Virginia	514	501	497	1512	17%
red	39	North Carolina	493	508	474	1475	67%
red	41	Indiana	493	501	476	1470	68%
red	43	Nevada	494	496	470	1460	47%
red	47	Texas	479	502	465	1446	58%
red	48	Georgia	485	487	473	1445	80%
red	49	South Carolina	482	490	464	1436	70%

And the winner is....

 

...Red by a significant amount. You may wish to doublecheck my findings as I do live in a Red state (but not one of the ones in the top 25).

 I am, however, a professional data scientist.

 Cheers,

 DT

Can You Hear Me Now?

If you're starving and somebody throw you a cracker, you gonna be like this:
"Goddamn, that's the best cracker I ever ate in my life! That ain't no regular cracker, was it? What was that, a Saltine? Goddamn, that was delicious! That wasn't no Saltine. That was...That was a Ritz! That wasn't a Ritz? God, that was the best cracker I ever ate in my life! Can I have another one, please? Please, one more."

Then you get married, because you think you've found the bomb. Have the same crackers every day for a year. And you roll over one day and be like: "Hey, I just got some regular old crackers."

--Eddie Murphy, "Raw"

Eddie Murphy used to do a bit about crackers to illustrate the profound risks of delayed gratification. Anticipation can temporarily cloud one's judgment making even staples seem extravagant. Mundane necessities and simple pleasures--food, say, or intimacy--are rendered exquisite by the simple fact of their temporary absence. With all worldly pleasures this effect is fleeting. Familiarity, as they say, breeds contempt or at least diminishes our sense of awe and wonder. We quickly forget the anguish of denial and become complacent and comfortable with our gains.

So it has been with the Republicans--and with us. In 1994, after being consigned to the minority for 40 years, they figured out the recipe with the Contract with America and the Gingrich Revolution. Accordingly, Americans hungry for a new direction, limited government and a message of personal responsibility and the accompanying prosperity drank it up. It was a marriage made in heaven. These guys were talking about cutting spending, balancing budgets, increasing private productivity. Not since the new deal had we really tasted crackers this fresh. The Republican party reveled in the attention and the opportunity to effect meaningful change. After so many years in the minority, they'd earned the opportunity to prove their ideas. Life was good--no, great!

Fast forward 12 short years. Republicans who campaigned on balanced budgets and term limits are now lying sideways in the public trough. With control of two branches of government and increased leverage in the third, the great life has become too easy. The revolution has stalled.

To be sure, some seismic historical movements have occurred. Recession, an attack in the homeland, the momentary collapse of the stock market provide moments of astonishing leadership and solidarity. Ruthless regimes are toppled. America wounded roars. The world is briefly united behind her.

But an opposition party fresh out of ideas for all of the last 35 years provides little more than comic relief--certainly no competition or incentive to sharpen the saw. The Republican leadership's attitude of entitlement grows daily--the principles which drove them into office have long since been abandoned in favor of profligate spending and government expansion under the guise of "compassionate conservatism". The will of the people, whose support and praise were at once magical and musical a decade before is drowned out by the instinct for political self-preservation. The party of family values becomes more closely associated with graft and sleaze. Familiarity breeds contempt. Contempt for the people. Contempt for the opposition. Contempt for the ideas and promises that delivered them from minority status.

It turns out, contempt is a two-way street. It's not as if you weren't warned. Your base and the crucial moderate swing voters positively shouted for years: Do something to turn it around! Stop the southern invasion! We'll give you whatever you need to win the war, but you must win! We've already disciplined the democrats, the unions, the billionaires, the church. Beware and police yourselves! It's May, Mr. President. We've been at this a while and we're tired of simply staying the course. We want more than commitment at the microphone. Are you listening? Can you hear us? Eighteen months to go, but you're not up for reelection.

It's September and New Orleans is under water. Yes, the governor and the mayor are incompetent. You knew that two weeks ago. But you're the President and Michael Brown has no plan either. 1800 people are dead, rioting resembles the aftermath of victory in Baghdad, but it's here at home. Why aren't you doing anything? Can't you hear us?

Those men at the border... They're not vigilantes, they're Americans and they're doing your job! We want you to protect us, not offer amnesty and encouragement to criminals. It's May and your approval rating is at 38%. The invaders are marching in LA under foreign colors. It's not acceptable! Can you hear us yet?

School's out! It's June. Gas is $3.35 per gallon in California. Do you know how many times we're reminded of this fact as we drive up the PCH? What are you doing about it? Complaining about minority opposition isn't making much difference. Oh yeah... About DeLay and Abramoff and DeWine. We're not stupid. Can't you talk to these guys or at least condemn the actions when they become public? Can you hear us now? 36%

August. Please stop calling me to ask for money. I gave you money. You gave me no Osama, no resolution in Iraq, but you did support the Senate omnibus handout to Vincente Fox. You've done nothing but let me down. Please ask Ken Mehlman and your wife to stop emailing me at work, too. It's creepy. 34%

October. Glad to hear you're heartened by the surge to 39%. 2 years of generals telling us off the record and republicans on the record that we need more resources in Iraq. Osama's still making videos despite assurances this time last year that he was probably dead. Your own party doesn't want to campaign with you. Are you listening?

November 7. Pearl Harbor day 1 month early. Contempt is palpable. The people are tired of your crackers. A lot of crackers are losing really nice day jobs. Tomorrow Don Rumsfeld will resign. If it's ok tomorrow, why not 60 days ago? We're pissed Mr. President! We've had enough, Mr. Speaker! The good news is, it's not 1974. You're only down a dozen and a half seats, instead of 145. You have 2 years. You won't get much done. No more strict constructionist nominations for you. Tax cuts? Gone. Social Security Reform? We never believed you anyway.

You have 23 months and 29 days to do nothing but listen--very carefully.

We were your base, cracker. Can you hear us now?

DT

Do svidaniya, Mrs. Politkovskaya

I've recently returned from business in Paris.

You see, I love visiting Paris and especially just getting lost in the old bits of town. The insane disrespect for right angles, the narrow streets and the stacked buildings remind me a bit of Boston, only 800 years older still.

One thing certain is that, if you must be alert on Monday morning, you'd best not fly across the pond on Sunday. So it was that I arrived Saturday morning, having slept some on the flight and was well enough rested to venture out Sunday for Mass at Le Cathedral de Notre Dame de Paris. It's a nice change from the services I attend maybe monthly at a less rigorous Parish in North Carolina. At least I am fearless in Paris that the assertion, "The Body of Christ" may be answered with "Dude! Word!" as has been reported in Chapel Hill.

Inside Notre Dame is very old and dark and gray and really, really tall. When mass has ended, once the money's been collected and congregation begins to exit the Maestro pulls most of the stops out on 7800 pipes and punctuates the 1/8th mile walk to the door with organ blasts so profoundly spiritual and just plain loud they remind me most of front row, center at a Blue Oyster Cult show somewhere in upstate New York sometime last century.

But I digress... The first relevant bit of the trip was actually on my way in to the cathedral, or rather just in the front of the church, to the right, where there's this amazing statue of Charlemagne. I've always liked this monument. He's up on his horse, with a couple of pike-wielding footsoldiers at either side. If the pikemen are life-size at about 5 feet tall, then Charlie is represented as having been about 11 feet and 600 pounds of Holy Roman Dynamite with the facial hair that inspired ZZ-Top. Usually, the base of the monument is mobbed with pigeons and resting tourists. This sunday, the pigeons were there, but the tourists on the step around the monument were replaced with a mess of posters, candles and flowers--the aftermath, I guessed, of a midnight candle vigil.

So, the posters told the story pretty well. They were pictures of Anna Politkovskaya, the Russian journalist recently assassinated in Moscow, presumably because of her outspoken objection to some of the thuggish activities of the Russian Military and "Advisors" in Chechnya and to President Putin.

Now, I don't live in a cave (it's more of a dank, dark basement with no windows and a killer broadband connection). I'd heard of Mrs. Politkovskaya in some reports I'd trolled off Drudge or RealClear. I knew about her murder and a series of other contract killings of journalists and dissidents that have tended to become commonplace in free Russia lately. It's just that it was still kind of a footnote for me. It was Russia and their economic and political problems. It seemed to me odd that apparently so many people had been moved to demonstrate on the steps of Notre Dame in Paris about a murder 3000 miles away. But I was alone at the time, so I filed it.

A few days later I met a friend for lunch at the base of the Arc de Triomphe. Now at the base of the Arch there's a memorial with an Eternal Flame and there are always lots of Red and White Flower Arrangements placed by government. The gendarme patrolling the arch never seem to be the jovial sort and they carry impressive machine guns, so as you'd expect there aren't many demonstration posters lying about. Still--enough reminder that I commented to my friend about the odd little demonstration I'd discovered on Sunday. My friend has a clever way of pointing out that I am the ultimate self-obsessed American with a myopic worldview without actually saying the words. "Of course! Anna Politkovskaya has become a hero to all Europe and the demonstrations are meant to be taking place all over the world." Ouch. Embecile! I need a little steak tartare to put on that new shiner. Time to do a little research...

Here's what we knew: the late 80's saw Perestroika became Katastroyka and Boris Yeltsin became the first Russian President after Gorbachev wound down the collapse of the Soviet Union. Yeltsin immediately reinvested much of the Russian treasury into alcohol and prostitution for his personal consumption. Former KGB official and the latest in a series of short-lived prime ministers, Vladimir Putin inherited the job upon Yeltzin's quite sudden resignation from office. During the 90's, while the US foreign policy could be best described as "Trust but mollify", Putin changed the character of Russian Democracy, imposing strict limitations on, for instance, the Press and the Chechens.


During this same period, Ms. Politkovskaya was solidifying her reputation as an anti-government journalist corresponding from 2 Chechen conflicts and commenting extensively on the atrocities in Chechnya and the abuses of power back home in Moscow. So, to your abusive government in the hands of former Communist loyalists and apologists, add a big mouth reporter with a knack for popular criticism. Fold in two measures of an economy so bad that contract killers commonly work for the price of a decent cell phone in Western Europe and it's not hard to see how life can be hard on an uppity journalist.

So, there's been a handful of journalists in Russia that have criticized the government and subsequently been on the losing end of a series of well publicized contract killings. Mrs. Politkovskaya has been the latest and perhaps bravest. She was clearly aware of the attention she received. A number of her colleagues had been perforated over the past several years. Still, she dug in for details and she wrote. They threatened her and she wrote. They blacklisted her and she wrote more. They poisoned her and she kept writing. In August, she foretold her own murder.

She was reportedly working on an investigation of Government torture in Chechnya and was ready to name names. Somebody followed her home from the supermarket and shot her at close range in the chest. This was to send a message. It hurts a lot and isn't instantly fatal. I suspect while she lay there knowing what was happening, the killer walked up and shot her in the head. Mr. Putin has sworn to spare no effort in tracking down the real killer. The killing occurred on October 7, Mr. Putin's birthday.

The demonstrations began on October 8. From her wikipedia entry:

On 8 October, 2006, hundreds rallied in downtown Moscow to protest the murder of Anna Politkovskaya and the recent crackdown on ethnic Georgians.[33] The demonstration was described by the Moscow-based liberal Echo of Moscow radio station as "the largest protest rally of the opposition recently held in Russia."[34]

During the day following information about Politkovskaya's death, there was a demonstration and memorial consisting of 500 people in Moscow, as well as 300 people gathering in St. Petersburg.

A day after the murder more than one thousand people gathered at the Russian embassy in Helsinki, Finland to pay their respects to Politkovskaya (according to Helsingin Sanomat article published on 22.Octoberr, there were about 3000 people). The demonstration was silent, with people holding candles. Two of Politkovskaya's books have been published in Finland as translated editions.[35]

On 10 October, 2,000 demonstrators called Putin a "murderer" during his visit to Dresden, Germany.[36][37][38]

The bits of her writing that I was able to find on the web are fascinating. She was not afraid to mix it up with the big dogs. She calls out Mr. Putin. She identifies officers in charge of war crimes and atrocities by name. It's easy to see why some folks would probably like to have her silenced. It's probably not too hard to narrow down the list of folks who might have called the shots on this one. Their names are in her articles.

It's quite obvious that she was passionate about her work, that she understood the impact she had in life (perhaps not the explosive impact of her death) and that she remained stoic about the consequences:

"My life can be difficult; more often, humiliating. I am not, after all, that young at 47 to keep encountering rejection and having my own pariah status rubbed in my face. But I can live with it."

Do svidaniya, Mrs. Politkovskaya. God keep you. And now that you've left the race, may there always be men and women courageous enough to carry the baton.

Anna Stepanovna Politkovskaya
1958 - 2006
RIP

DT

Who's Country?

Pat Buchanan's new book makes for interesting reading. I'm afraid Mr. Buchanan doesn't do much to persuade--his rhetoric occasionally resembles that of the Klan resurgence or the uglier side of John Birch Society. I'm not so much a protectionist or a White Pride advocate as I am simply concerned about the direction we take when we allow a nation's worth of aliens to exert the sort of political pressure I saw in LA in May.

His historical account is very good reading and, I think, well researched and easily verified. That attrocities were committed by both sides in the Mexica American War is not debatable. That Aztlan never existed is also almost certain. Buchanan's assertion that there were never more than a few thousand Spanish speaking Mexicans in all of California, that their presence never extended to the northern half of the state was new information for me.

In any case, I do suffer from Nationalistic pride (call it patriotism) and I have the sense that, were all of that land to have remained in Mexican hands, it would have been as unproductive as has been the rest of Mexico--to this day a third world nation. California has it's problems, but reextending Mexican rule there will solve none of them.

Ditto Texas. Ditto New Mexico. Ditto Old Mexico, for that matter.

Today Vincente Fox spoke out against the fence. Compared it to the Berlin Wall. Said it would hurt relations between the two countries. But in the end, I'm not convinced our relations are all that good. His government is corrupt or inept or both. His people have a huge advantage in the world in natural resources and beautiful weather, but they remain underemployed and undereducated. Contrasted with India, which 40 years ago had considerably worse economic conditions than Mexico, who has made better use of the decades?

It's telling that Mr. Fox compares a border fence to the wall in Berlin. It tells me that he already thinks (as members of his administration have openly stated) that the Mexico really extends well north of the border. You see, the Berlin Wall divided Germany. The difference is that this fence is not dividing Mexico. It is a border fence. The Berlin wall, Mr. Fox, was built by it's owners to keep people in. Our wall, ineffective as it may turn out to be, is being built to keep people out. We wouldn't ordinarily need to do this if you didn't promote illegal emmigration as a birthright of your unfortunate people.

I want Mr. Fox and everyone else to consider that the United States isn't getting much out of the "relationship". They badmouth us, export their unemployed, undereducated and infirm. Import our dollars and continue to allow drug- and human- trafficking gangs to run the northern border regions. We build factories and refineries. Eventually, they nationalize them. Their military fires across the border on our citizens. They escort drug caravans into our land and have killed our border patrol agents.

We've become the world's lone superpower and most productive economy with precious little assistance from our neighbors who are barely capable of managing their own affairs.

Will the fence work? Not by itself, but it's a symbolic start. Increasing patrols, deploying troops at the border will absolutely reduce the incentive to try to cross. Stepping up enforcement, passing a national Prop187, reserving American entitlements for American citizens and legitimate residents, punishing (with jail time) and penalizing employers who break the rules will break the back of the "reconquista".

Like all big problems, there are things each of us can do, if we care.

For my part, I won't hire Mexicans to work on my property unless I have proof of legal residence and a work visa. I do insist that my contractors show me proper documentation for their laborers and I insist that violations result in monetary penalties--$100 per instance. I may pay 10% more for a roofing job, but I doubt it. It's still a competitive bidding situation. I don't patronize businesses that I believe encourage or hire illegal immigrants. As the housing market softens up a bit, individuals have a great deal of leverage. Why tolerate a contractor bringing criminals onto your property when you don't have to?

Write your congressmen and tell them you like the fence, but it's not enough. 700 miles of fence doesn't adequately cover 2400 miles of porous border. Fences are passive. Tell them to insist on local enforcement and federal support for it. English is really the only language the government needs to provide. Localization of documents, textbooks, signage is costly and a disincentive to assimilate. It takes a government issued photo ID to get on a plane or to buy a cerveza. Counterfeit resistant photographic or biometric voter identification is an idea whose time has come. Also, voting by noncitizens is an assault on this country every bit as serious (and likely much more effective) than a terrorist attack. Make it easier to identify those folks, take their stuff and expel them from the country.

Stand your ground. Do your part (like recycling) to reduce the economic incentive to invade and the invasion will stop. They don't really care much about the land. They want to coopt your lifestyle instead of improving the one in their own country. We just need to make that the considerably more costly option.

Cheers,

DT

How They Can Pay Their Dues

All the President's Men tell us that it's impossible to deport 12 Million criminals back to their homelands. We can't find them to round them all up and there's no way logistically to ship them out. Some of them have been here as productive members of society working at jobs we won't do ourselves, building our homes, picking our crops, cleaning our hotel rooms and caring for our children.

There was some other thing that happened maybe 150 years back where folks were more or less systematically impelled to leave their homeland and travel under wretched and dangerous conditions to this country to do jobs that white people supposedly wouldn't do for inadequate compensation. They didn't call those folks 'immigrants' at the time. Maybe it's best not to look back and draw this comparison. It's a slippery slope and the last time politicians and rich partisans got involved in the rhetoric, 170,000 men died in less than 4 years searching for the way to strike the proper balance.

We set a side a day every year to reflect on the lives of those 170,000 men who took up arms to, depending on who you listen to, stand up for the immigrants of their time or to defend the bigoted patriarchal anachronism that was southern agrarian society. I think the right side won in that struggle. The vast majority of Americans seem to agree. So we sit back on Memorial day and reflect, have a beer, watch a race, plant a flag and hopefully think about those 170,000 and the 1.3 million or so since who died fighting. And I think most of us are glad and proud that our country raised millions of men over the years to fight, bleed and die for our Way.

So, every 30 or 40 years, we seem to see two trends. A wave of immigrants heads this way from some corner of the world where the grass doesn't seem so green. The wave typically comes over with nothing but hope for a better opportunity for themselves and their children. They come. They go to Ellis Island or some other mass processing center to be registered, examined, processed and given access to the country. They go to work. They save. They send some of the money home to their parents and siblings who were not healthy enough or bright enough or bold enough to make the trip. They build communities and make spicy new dishes with inexpensive ingredients. They learn the language. They start families and then... usually... their children intersect with the other trend that seems to occur on a 30 or 40 year cycle. Their children, who have learned the language and grown up in the ethnic neighborhoods and seen their parents working hard all their lives step up. They lay down their hammers and shovels and they answer the call to fight for their country.

This is the generational progression of the immigrants. They come and labor and educate their children. Their children or grandchildren, raised with a decent work ethic and instilled with the unique pride of second and third generation Americans, enter the military where they demonstrate their commitment and learn politics, make a decent wage, send their children to better colleges. Those children and grandchildren, in turn, form the upper middle and upper class. The business leaders and politicians and movers and shakers.

That's the way it was with the asians, the italians, the poles, the germans, the irish, the palestinians and the jews that came to us in the 19th and 20th centuries. They came to sit at the table and, over generations, they found they could get a bigger slice of the pie and that there was still plenty to go around. That's how it was with my family.

This wave of immigrants is different in some respects. I believe they come for similar reasons, that they work hard, that they want good things for their children, that they send money home to those not adventurous enought to make the trip, that they like it here. But they skipped a step. In skipping the Ellis Island step, they've somehow botched the natural order. They haven't assimilated and been allowed to demonstrate their commitment. How can they? Their existence in this country is unlawful. They stay underground, to a certain extent. They don't melt in, they hide.

So the President's men say they've almost paid their dues, and we can't get rid of them anyway, so we should put them on the fast track. They talk about payment of back taxes and lengths of time in country. They make comparisons to speeding tickets and then they say that paying the back taxes amounts to these folks having paid their dues, their debt to society. Ellis Island and recognition by the government isn't how you become an American family. There's something to becoming part of the fabric of this nation that shouldn't be for sale and certainly shouldn't be determined solely on compliance with the tax code. That's obscene.

I don't want people to purchase a pass to the head of the line by paying $9700 to the IRS. It's not meaningful. But once again, we're in that cycle where politicians and wealthy men are extending the opportunity to the nation's less fortunate to take a risk, demonstrate their commitment and raise themselves up through the ranks. I've even heard anecdotes that one need not be a citizen to enlist and join the fight. I've seen at least one story where a young soldier died during the processing of his citizenship, which was awarded posthumously. That's the type of young hero I'm tempted to welcome into the fold. He was buried at Arlington at his mother's request. I hope there are others like him in our military and that they make it home, safe and sound. They'll bring with them skills and discipline and the ability and desire to make something of themselves. Their children will know where daddy (or mommy) stood and will proceed to follow the pattern.

Maybe this wave of immigrants should have access to a fast track solution. Payment of back taxes doesn't work for me. It doesn't assimilate. It doesn't separate the wheat from the chaffe. It doesn't develop leadership and integrity and commitment to the new home. Legal immigrants pay taxes on time and many still return to their countries of origin when their visas expire. That's not commitment. That's commerce. But, I submit that, if an immigrant wishes to take up arms in defense of this country and this culture, then we can roll into the enlistment process a procedure to make up for ducking the turnstiles at Ellis island. If they finish their hitch having served honorably then legal residency and the opportunity for citizenship should be granted, without question. They'll have completed the process, demonstrated their commitment to our country, and assimilated fully and we can ask no more of any American.