How did Harvard give us George W. Bush?

"I once told a lie that was this big."
Photo via Shutterstock.

It's an interesting question now that yet another French trader is at the center of an ugly loss. That said, I believe the question needs to be opened up well beyond France, since the problem extends far beyond France. The Wall Street crash that required an industry saving bailout was mostly caused by rich, American men. The French have played their part, but let's not kid ourselves.

The Wall Street trading world is heavily dominated by graduates of the top schools, especially top Ivy League schools. Even the Bank of England's Mervyn King complained a few years ago about the financial industry sucking up all of the smart kids. The reasons for their decision is obvious. No other industry can propel them into big money so quickly. When the game is fixed, as much as it is on Wall Street, who wouldn't want a piece of that action?

So the real question that the AFP should be asking is "what's wrong with the top students that our elite schools graduate and why do we allow cheaters to run these companies?"

In 2008 Jerome Kerviel cost Societe Generale nearly five billion euros ($7 billion at the time), in what the bank described as rogue trades.

Two years later Goldman Sachs paid regulators half a billion dollars amid charges it defrauded investors, with Frenchman Fabrice Tourre at the heart of the scandal.

The "Fabulous Fab", as Tourre described himself, flogged exotic mortgage securities and was accused of misleading customers in the process.

Somewhere along the line, the system is failing the world. In theory, these are the best and brightest both in terms of of education and jobs yet they keep failing miserably. Are the schools overrated and teaching poor values? Is it the banks that corrupt everyone with mega-dollars? Whatever it is, we're making an enormous mistake to keep buying into the brilliance of this elite.

Going full Sarah Palin and attacking the elite is too vague and silly, but at the same time, there also comes a time when we need to stop worshiping the products of the top schools. It was a Harvard MBA that forced tax cuts, and started two wars, that the US couldn't afford. (Romney has an MBA and JD from Harvard too.)  A bit of diversity and fresh air at the top would be a refreshing change after years of failure by the chosen few. Read the rest of this post...

Video: Cute young NBC reporter talks to two old guys

I'm kidding, kind of.  It's really an adorable video.  A young NBC reporter interviews two best friends in their 80s.  It's very cute.

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Dimon & JPMorgan execs ignored warnings of risk

Wall Street via Shutterstock

Of course they did. For starters, let's recognize that the insiders and experts who drooled over Dimon and thought he was a genius at risk were either drunk from his parties or complete idiots. His former chief investment officer who was supposed to be another risk expert was called a "trader at heart" which means she loved risk. Putting a "trader at heart" in charge of risk is asking for trouble and it's an obvious conflict of interest.

The problems that caused the $2 billion and counting loss at JPMorgan are the same as what tripped up other Wall Street banks. When your compensation plans reward high return and don't brutally punish high loss, your team is going to be playing with fire. When management goes along with the game for years - because they're also getting the mega-bonuses and living large - there will always be a problem. Always.

Now that it's coming out that JPMorgan was warned about risky trades since (at least) 2007, can we stop this nonsense of talking about Jamie Dimon and JPMorgan as risk experts? JPMorgan was more lucky than smart. More on the years or risky trading and bullying of risk managers at the NY Times:

In the years leading up to JPMorgan Chase’s $2 billion trading loss, risk managers and some senior investment bankers raised concerns that the bank was making increasingly large investments involving complex trades that were hard to understand, the New York Times reports.

But even as the size of the bets climbed steadily, these former employees say, their concerns about the dangers were ignored or dismissed.

An increased appetite for such trades had the approval of the upper echelons of the bank, including Jamie Dimon, the chief executive, current and former employees said.

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JPMorgan "considering" taking back bonuses after unit loses $2bn

Why are they only considering and not actually doing? The problem on Wall Street has repeatedly been the failure to suffer any consequences from gambles that lose. Nobody on Wall Street ever had to pay back a penny of the bonus money they received for gambles that failed during the initial round of the crisis so what lesson was learned? None.

The banks lost and then gladly accepted lifestyle saving bailouts so they kept doing what they had been doing, knowing that there are never any negative consequences. Congress has too many chumps and politicians who are owned by Big Finance that find this acceptable, so the problem will keep repeating itself until someone steps in.

For Wall Street to truly reform, there have to be painful and serious consequences including clawbacks and perhaps prison terms. Somehow I'm not confident in either but would love to be surprised. Bloomberg:

JPMorgan Chase & Co. (JPM), the biggest U.S. bank, will consider reclaiming incentive pay from employees including former Chief Investment Officer Ina Drew after her unit had a $2 billion trading loss, said two senior executives.

The lender can cancel stock awards or demand they be repaid if an employee “engages in conduct that causes material financial or reputational harm,” JPMorgan said in its annual proxy statement. The company will claw back pay if it’s appropriate, said one of the executives, who asked not to be identified because no decisions have been made.

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Murdoch's former newspaper editor to be charged in UK

Murdoch via Shutterstock

Another week and yet another scandal for Rupert Murdoch's media empire. MSNBC.com:

Rebekah Brooks, the flame-haired former chief executive of Rupert Murdoch's British newspaper arm, will be charged with perverting the course of justice over a phone-hacking scandal at one of the media mogul's papers, British prosecutors said on Tuesday.

If convicted, she could face a prison sentence.

"I have concluded ... there is sufficient evidence for there to be a realistic prospect of conviction," said Alison Levitt, Principal Legal Advisor to the Director of Public Prosecutions in a statement.

The news is a personal blow for Murdoch and also embarrassing for British Prime Minister David Cameron, who was close friends with Brooks and her husband, Charlie Brooks.

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Chicago police purchase ear-damaging weapon

Police via Shutterstock

For a country that defeated the Evil Empire, we should know better than to accept this kind of evil. More on the Long Range Acoustic Device (LRAD) that Chicago just purchased Salon:

“This is simply a risk management tool, as the public will receive clear information regarding public safety messages and any orders provided by police,” Chicago Police spokeswoman Melissa Stratton told the Guardian.

However, during its first outing at a U.S. protest, during the G-20 summit in Pittsburgh in 2009, police blasted non-lethal sound waves from the device as a crowd deterrent. Unlike firing tear gas or swinging batons, deploying the LRAD does not create a dramatic media spectacle; indeed, videos from the Pittsburgh protests capture the LRAD emitting little more than a high-pitched siren. Those within the sound cannon’s range, however, have described immense pain and severe headaches and — in some cases — irreversible hearing damage. LRAD Corp., which produces the weapon for the military and domestic policing, said that anyone within 100m of the device’s directed sound path will experience “extreme pain,” according to Gizmodo.

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Video: Doing the edge walk at Toronto's CN Tower

I think I would do this. Chris says no way for himself. Would you?

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TSA pats-down Henry Kissinger

Kissinger via Shutterstock

To be fair to the TSA, sometimes they get it right.

Kissinger, who will be 89 this month, was spotted on Friday at LaGuardia airport in New York, getting routed to the pat-down line while going through security. Freelance reporter Matthew Cole recognized him — something the TSA agent checking identification did not.

After asking Kissinger his name as he passed through the scanner, the agent sent him to be searched. Kissinger was in a wheelchair, Cole tells us, not because he couldn’t walk, but because, Cole surmised, it was a long walk to the gate. In the search area, Kissinger was subjected to what Cole called “the full Monty” of the usual groping. “He stood with his suit jacket off, and he was wearing suspenders. They gave him the full pat-down. None of the agents seemed to know who he was,” he says.

Finally they caught someone dangerous. Next up, Jamie Dimon. Read the rest of this post...

How gay marriage may just get Obama re-elected

Wedding via Shutterstock

From a piece I penned for the Daily Beast this morning. In this part of the piece I'm talking about liberal frustration with the President the first few years when it seemed he was almost afraid of change.

The turning point for many progressives was the repeal of the military’s “don’t ask, don’t tell” policy in December 2010. While the repeal was obviously a big deal to those of us in the gay community, I was surprised by how many of my straight friends on the left shared our sense of victory and elation, and by those in the media who characterized the repeal as a necessary first step toward Obama’s winning back the left in 2012.

Gay rights switched from being perceived as an albatross around the necks of national Democrats to an issue that could galvanize the party’s base.
In that moment, the conventional wisdom shifted.

LGBT civil rights stopped being a ghettoized issue important only to a small (but noisy) Democratic constituency and started being seen as a core Democratic value.

The Obama campaign now regularly cites DADT among its top first-term achievements—and not just when speaking to gay voters and donors but to the public at large. Gay rights switched from being perceived as an albatross around the necks of national Democrats to an issue that could galvanize the party’s base and, just as important, showcase the president’s courage.

And that’s the second important change that began with the repeal of DADT and was cemented with Obama’s embrace of marriage equality. Barack Obama became a leader in the eyes of a number of doubting Democrats and independents (57 percent of whom back gay marriage).

The president who seemed almost afraid of change became an agent of change. The man we voted for was finally back.

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Hugging the monster: Climate scientists and the C-word (Catastrophe)

UPDATE: A complete list of climate series pieces is available here:
The Climate series: a reference post.

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Global warming photo
via Shutterstock

This post asks two questions:

  ▪ How close are we to catastrophe with global warming?
  ▪ How close are climate scientists to actually saying so?

It's not just about the planet; it's about straight talk about it as well. And it's not just about the facts, but how they make us act.

Hug the monster — let it catalyze you, not paralyze you. What does that mean? Read on. (To jump straight to "What can I do?" click here.)

■ The second question first, about climate scientists, from an excellent ThinkProgress piece called "Hug the Monster: Why So Many Climate Scientists Have Stopped Downplaying the Climate Threat".

The writer, Joe Romm, first quotes an ABC News article:

A few years ago, this reporter heard a prominent climate and environment scientist speaking at a large but off-the-record conference of experts and policy makers from around the world who had gathered at Harvard University’s Kennedy School….

He told us that he and most other climate scientists often simply didn’t want to speak openly about what they were learning about how disruptive and frightening the changes of manmade global warming were clearly going to be for “fear of paralyzing the public.”

That speaker now has an influential job in the Obama administration.

Romm then says, correctly in my view:

Climate scientists have been consistently downplaying and underestimating the risks for three main reasons.

First, their models tended to ignore the myriad amplifying carbon cycle feedbacks that we now know are kicking in (such as the defrosting tundra) [defrosting tundra adds carbon].

Second, they never imagined that the nations of the world would completely ignore their warnings, that we would knowingly choose catastrophe. So until recently they hardly ever seriously considered or modeled the do-nothing scenario, which is a tripling (820 ppm) or quadrupling (1100 ppm) of preindustrial levels of carbon dioxide over the next hundred years or so. ...

Third, as Blakemore (and others) have noted, the overwhelming majority of climate scientists are generally reticent and cautious in stating results — all the more so in this case out of the mistaken fear that an accurate diagnosis would somehow make action less likely.

So climate scientists are quiet for a number of reasons — they missed the feedback amplifiers like defrosting tundra, they didn't model the "do-nothing" scenario, and they're ... scientists, not loudmouth salesman-on-a-bender types.

But that's changing. First, from the ABC article:

Global warming’s “risk to the collective civilization” (meaning global civilization) has been continually spoken of in secret or unofficial or private conversations among engaged climate scientists and government and policy leaders around the world.

Such terms — catastrophe, threat to civilization itself — have been commonplace in carefully worded private discussions among peer-reviewed experts that this reporter and other journalists have often experienced and sometimes engaged in.

And this, by Elizabeth Kolbert:

“It may seem impossible to imagine that a technologically advanced society could choose, in essence, to destroy itself, but that is what we are now in the process of doing.”

(On the other hand, what's a little destruction if daddy gets rich? Price of progress, right?)

"Hug the monster" is mil-speak (heh) for embracing your fear and using it to spur action, not paralysis. Climate scientists are learning to hug the monster — as should we.

■ Now, about that "monster" — what does it look like? I want to go back to an important piece by James Hansen, head of NASA Goddard, that Chris highlighted a few days ago.

It's called "Game Over for the Climate". Real enough? Read on:

GLOBAL warming isn’t a prediction. It is happening. That is why I was so troubled to read a recent interview with President Obama in Rolling Stone in which he said that Canada would exploit the oil in its vast tar sands reserves “regardless of what we do.”

If Canada proceeds, and we do nothing, it will be game over for the climate.

For Hansen, "we" is the American government, meaning Barack Obama. For me, "we" is progressives, meaning actual us.

Now let's look at those numbers again, combining both articles. From Hansen we learn:

The concentration of carbon dioxide in the atmosphere has risen from 280 parts per million [p.p.m.] to 393 p.p.m. over the last 150 years. The tar sands contain enough carbon — 240 gigatons — to add 120 p.p.m.

Tar shale, a close cousin of tar sands found mainly in the United States, contains at least an additional 300 gigatons of carbon. If we turn to these dirtiest of fuels, instead of finding ways to phase out our addiction to fossil fuels, there is no hope of keeping carbon concentrations below 500 p.p.m. — a level that would, as earth’s history shows, leave our children a climate system that is out of their control.

Summarizing Hansen, this is the past and projected concentration of carbon dioxide in the atmosphere:

1860	280 ppm
Today	393 ppm
Adding tar sands	513 ppm
Adding tar shale	640 ppm

I got the tar shale number by scaling up from the tar sands number. If burning 240 gigatons of tar sands carbon adds 120 ppm to the air, burning 300 probably adds 150 ppm.

More numbers from the Hug the Monster article:

[T]he do-nothing scenario ... is a tripling (820 ppm) or quadrupling (1100 ppm) of preindustrial levels of carbon dioxide over the next hundred years or so. In the last 2 or 3 years, however, the literature in this area has exploded and the picture it paints is not pretty (see “An Illustrated Guide to the Science of Global Warming Impacts: How We Know Inaction Is the Gravest Threat Humanity Faces“).

And if that doesn't have your attention, here's a nice picture of what 1000 ppm in the air does to U.S. climate, from "Illustrated Guide" link above:

Click to big. That's weeks per year over 100°F. That red in California is the Central Valley.

What you can do

This is important and we're all grown-ups. Here's what we can do:

• Don't freeze and don't panic. Hug the monster and act.
  
  
• Take progressive responsibilities seriously — which means, understand there's a deadline.
  
  
• And that means, don't be complacent about pressing Obama and the Democratic Party hard after the 2013 election debacle. There are about five deadlines like this in the pipeline, and the Dems are in the way on most of them. We might as well get used to pushing them.
  
  Obama needed a primary in 2011, in my opinion. Every conservative Democrat needs a primary. Every wavering Democrat needs a shot across the bow. Every one. A shot that stings. (I still think Nancy Pelosi needs billboards in her district, even if by persistent freeway bloggers.)
  
  On each of these issue, including the climate, there's not a lot of time left for playing footsie with our social friends, career-building, and list-growing. You can preference careers and organizational lists if you want — just don't say you're committed to progressive values if you do.
  
  
• Remember — serving self and daddy is a conservative value. Serving others is a progressive value (in my opinion). On issues like this, you have to pick.

And do take hope. It's not over, and there are a great many people like us, frustrated but eager to act. We just need a center, a seed. Maybe climate scientists saying the C-word, out loud this time, will be that seed.

UPDATE: If the subject of climate scientists and what they go through interests you, tune into Virtually Speaking tomorrow evening (Wednesday, May 16, 5pm EST / 2pm PST). Click here for the live show, and here for the archived version.

The guest will be Dr. Michael Mann, author of The Hockey Stick and the Climate Wars: Dispatches from the Front Lines. It should be a fascinating discussion.

GP

To follow or send links: @Gaius_Publius
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Pat Robertson says Romney isn't Jesus

Always able to put a smile on my face, that Pat Robertson. From Luke Johnson at HuffPost:

Pat Robertson offered faint praise for Mitt Romney on the "The 700 Club" Monday, while indicating that he is the best alternative to President Barack Obama.

"It looks like the people who were worried about his Mormonism, at least that crowd is diminishing somewhat," said Robertson, 82, after the show aired an interview with Romney. "The question is, if you have two candidates, you don't have Jesus running against someone else. You have Obama running against Romney."

As always, it's not entirely clear what Robertson is even saying. But it doesn't sound like a terribly warm embrace.

I still find it funny that evangelicals who want to remake America into a Christian theocracy are willing to vote for a Mormon who they don't even believe is a Christian (mind you, this crowd doesn't think that Catholics are Christians).  It just goes to show the intellectual and moral and theological bankruptcy of the religious right.  They bash the rest of us for not being Christian enough, and then are willing to overlook a guy they don't think is Christian at all. Read the rest of this post...

Greek debt payment due today

Greece via Shutterstock

The timing of this payment is especially interesting, as Greece is still deadlocked and may have to call another election to settle the government. Add to that the increasing discussions among EU leaders that a Greek departure from the euro is on the table and it gets interesting. Greece has 30 days after today to make that payment but otherwise, it defaults.

From the beginning of this crisis some have suggested the best of the worst cases scenarios was for Greece to default and move on but that was unacceptable for the political class of Europe. They shoved bailouts down the throats of Greece which only added more pain to an already suffering country. It did nothing to help. Now we're back to the discussion that should have occurred years ago.

More on the Greek bailout payment at CNBC:

And at this late hour, there appears to be no decision from Greece on whether those holders will get their money. There is huge internal division about what to do, particularly because Greece is without a government.

Advisors have told Greece not to pay it because they should not reward the hold-outs, especially after Greece made threats to the hold outs during the exchange, saying there would be no money for them.

Additionally, it’s likely a lot of that debt is held by hedge funds that paid only pennies on the euro. If they get paid in full, it could double their investment.

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