Natural Gas Guru

Cramer Last Night

2012-01-25T09:32:00.000-05:00

http://www.madmoneyrecap.com/madmoney_nightlyrecap_120124_1.htm

This show plus President's speech last night!

Will the Market Continue...

2012-01-12T06:17:00.000-05:00

The age-old question.

The quality of the interviewers and interviewees on CNBC is so much better than in the day. Pisani is good at the end of the day. Cramer is always good and when his tone of voice is a certain way, you should do what he's recommending. His housing call nears this, although if you remember he called the bottom in June of 2010 and was wrong. He's also not good on natural gas.

El-Erian and Bill Gross are excellent.

Looking at the TV programming at Infiniti while waiting on my car, I realize there are a lot of financial programs other than CNBC. Same conclusion being in Manila for six weeks recently -- different versions of CNBC, plus Bloomberg.

So Far This Year

2012-01-12T06:07:00.000-05:00

So Far This Year

100 FFIV, with selling a January 115 call on same; $12 unrealized profit

why FFIV? pin-action from Oracle's earnings report

100 American Tower Corp, no hedge: $392.05 unrealized profit

pin-action from ATT/T Mobile breakup (bought shares in late 2011)

100 Con Ed recently rebought; will sell today: $225.95 unrealized loss
the utility trade is over for the New Year

1 long AAPL February $400 call; 1 short $425 call: unrealized profit $106

a call spread on AAPL is a safe way to bet on AAPL, until it's not

1000 shares AA (Alcoa): $75 unrealized loss

China is shutting down smelters to use the electricity (90% of aluminum is electricity); Alcoa is doing the same; yet the demand for aluminum will remain strong, especially in the US

small realized loss on put spread on GLD: $25
was going the wrong way on this

The New Year

2012-01-09T14:39:00.000-05:00

(c) 2012 F. Bruce Abel

Having lost $11,000 in my trading account in 2011, I feel like a new year gives a blank sheet with ample room for New Year's Resolutions. As in the past I am reluctant to mess it up. So far my positions are hedged to some or all extent. So the daily change in value is small. Plus, being in Manila so long, I am not at all as rabid about following CNBC in live time as this was impossible due to the time difference. This is to the good.

This will be the beginning of my third year of "recent trading" I believe. I re-opened a Schwab account January, 2009, and I began again after the professional traders/investment managers proved incompetent in the crash of 2008-09.

Lots of action each year with no net profits, with one year at break-even and one year of down $13,000. In addition to the loss in 2011 mentioned above.

Nevertheless I do not feel badly, (I also have a growing law practice), considering the difficulties everyone has been having with the market. Yes, a strategy of following Cramer through the whole thing would have recouped from the "losses of 2008-2009," but I didn't have any losses in 2008-2009 as I was not in the market. My wife, however, was, and her advisors suffered along with the general market with her investments.

My trading account varied from $25,000 (first year) to $50,000, with withdrawals as a safeguard from time to time.

More and more of my trading has been "hedged," using paired trades. And less of the spur-of-the-moment variety.

Confessions of a Pattern Day-Trader -- Manila Trading

2012-01-06T09:57:00.000-05:00

(c) 2012 F. Bruce Abel

My readers will have noticed that I have not posted, really, for some time. However, having spent the last six weeks in Manila with daughter Genevieve, and having daughter Becca and her family in Barcelona, I have some peculiar insights into the difficulties and peculiarities of trading when it is day in New York but night in Manila. Also I joined a start-up investment club in Manila with some highly-educated ADB personnel. Two of which are a husband and wife combination who play at the same level of duplicate bridge that Eunie and I play, and who got us into a delightful game on a Saturday. So most of my posts will be devoted to these circumstantial oddities, for a while.

Naked for Pirelli

2011-12-08T00:55:00.001-05:00

Saskia de Brauw of Denmark, for Pirelli 2012 calendar, going for $999 on ebay.

Jon Corzine and MF Global

2011-12-07T17:44:00.000-05:00

Questions to ask Jon Corzine at the hearings this morning (if he doesn't take the fifth):

http://dealbook.nytimes.com/2011/12/07/10-questions-for-jon-corzine/?hp

Otters at Play and Eating...With Others

2011-12-06T20:29:00.000-05:00

http://player.vimeo.com/video/31632284?autoplay=1

Boo in Favorite Chair in Barcelona

2011-12-06T18:38:00.000-05:00

Goldman Sachs and Greece Responsibility

2011-12-05T20:28:00.000-05:00

Last spring: U.S. and European officials are looking into how U.S. investment bank Goldman Sachs Group Inc. may have helped Greece disguise the size of its budget deficit through the use of cross-currency derivatives in 2001.

Wax What?

2011-12-04T01:28:00.002-05:00

http://www.pink-peony.com/en/servicio/29-anal.html

Dov and David

2011-11-23T10:57:00.000-05:00

Dov Seidman on Charlie Rose on Bloomberb in Manila 10:00 pm November 23, 2011. His book "How."
First 1/2 was with David Brooks. Awesome.

Dan Kucera and His Waterlawg Blog

2011-11-18T19:01:00.000-05:00

http://waterlawg.blogspot.com/2011/11/thanksgiving-time-to-give-thanksand-to.html

Beautiful Boo

2011-11-10T10:17:00.000-05:00

You Want a Job, Don't You?

2011-11-10T07:21:00.000-05:00

"You want a job, don't you?"

"It's all word-association and where you come from, Mr. Cain. You're from Happy Valley; I HAVE a Happy Valley. You say poTAto, I say Palo Alto; you say toMAtoe, I say toMAHto.You say Paterno, I say Patino; your team is Seduce-U I think Sandusky; you say McQuery, I say Ceder Point. Let's talk about overtime. Or we'll cross that Tressel when we come to it."

Replacing Lost Passport and Birthdays of Parents

2011-11-09T16:42:00.000-05:00

Catherine Hill Abel

March 14, 1910

Frederick Abel
February 25, 1906

What Happened?

2011-11-09T16:37:00.003-05:00

If you're wondering what happened to the Cursing Mommy column scheduled for today, please don't worry--"How to Make a Festive Holiday Centerpiece Out of Used Coffee Filters and Then Throw It at Your Fucking Husband's Head" will definitely appear next week.

Strictly Local

2011-11-09T07:53:00.000-05:00

I had a hard time trying to figure when the Princeton High School levies would fully-hit our tax bills. Google was no help. Nor was a call to the Board of Education earlier in the week. I finally went to the Board of Education and while I was waiting for someone from the treasurer's office to come out I flipped through a scrapbook of articles on Princeton, mainly sports. I came across the following, copied it in my own handwriting and told the receptionist that I didn't need to speak to anyone else. My notes:

On Election Day

From February 19, 2010 Enquirer

$120 million, 37-yr bond issue @ 3.52 mills would pay for a new high school and middle school. A related 1.45 mill permanent improvement levy would pay for capital improvements. The owner of a $100,000 home would pay an additional $44.40 a year beginning in January, 2011. [$300,000 = $133.20]

When the levy begins, and beginning in 2013, that would grow to $149.28 for a $100,000 home [$447.84 for a $300,000 home]

LikeUnlike · · 13 hours ago · Write a comment.....

.

Hours of Duke Energy Electric Residential Time of Day Rates

2011-11-08T09:44:00.002-05:00

http://www.duke-energy.com/rates/ohio/electric.asp

Aggregation for Glendale -- Don't Sign Up; Get Out; Opt Out!

2011-10-21T11:29:00.000-04:00

Send to babel2@fuse.net or 970 Laurel Avenue, Cincinnati, OH 45246; also send your confidential ID and Password to get into Duke's website.

Bring a copy of your last Duke Energy bill or email it to me for an analysis of the natural gas situation and Glendale’s aggregation price. Even better, go online at Duke and, after giving your password, etc., click on “energy usage & cost details” and run the top 12 months on excel to come up with cost per ccf for the last 12 months,” and bring that.

Aggregation for Glendale -- Don't Sign Up; Get Out; Opt Out!

2011-10-21T10:41:00.003-04:00

On Oct 18, 2011, at 11:10 AM, F BRUCE ABEL wrote:

There will be a presentation Wednesday at 10 am at the Lyceum library.

Bruce

From: F BRUCE ABEL [mailto:babel2@fuse.net]

Sent: Sunday, October 16, 2011 1:04 PM

Subject: Glendale Natural Gas Aggregation Email That Came Around Friday--Stop Everything!

Glendale Natural Gas Aggregation Exposed

Would you distribute this to as many as possible.

This inquiry came from a friend in Glendale in response to the Village Notice of Friday:

Bruce - Goodness, I really hate to bother you w/ this, but I can't make head

> nor tail of our bills.

> Are we on this, do you remember? Do I need to get on it if we're not?

> Think I'd decided to just pay & not worry about it, since you spent a whole

> day on this last year & didn't find anything wrong. Thank you again for

> that...

My answer, some of which I also put on Facebook:

Aggregation can be good, but…the cherry-picking presentation can hurt.

About that “$5.58” and the “$6.18.” Don’t be misled. It’s like taking the highest price and comparing the proposed new set rate to that. There is a lot of "puffing" and misleading going on in this realm so it's not easy to analyze. Towns, not having the in-house expertise, put out the wording (such as below) prepared by the natural gas broker and the misleading is rampant and outrageous. This is a good example of local government gone wild, gambling with the citizen’s money without even knowing it! (Note: The electric aggregation so far worked very well, as I recommended a year ago doing it when I saw that Duke was pretty likely not to lower their electric rates, after first analyzing it with a jaundiced eye.)

And the consequences can be huge to sign up for a fixed contract at such a high price! For a time period that does not even cover November or December, 2001’s usage. Natural gas can be volatile and high when business is booming. But we are years away from returning to the economic environment we had in 2004-2007. Since that time an infinite amount of natural gas has been uncovered in Ohio, Pennsylvania, etc., let alone the Wall Street fiasco.

Signing up for such a high fixed rate can cost thousands of dollars for a big old residential home in Glendale over a given year when one looks back. The real loss will occur next November and December under Glendale’s aggregation program. But even now it’s higher than Duke’s October rate.

Upper Arlington and others in Columbus locked into a “good deal” with Columbia Gas and citizens took a huge hit over the next couple of years, sometimes $600/month during the winter months, when natural gas plunged, as it will do this coming year. Check out “Gearino…Columbia Gas…Columbus Dispatch” on Google. Better, www.citizensutilityboard.org/pdfs/CUBInTheNews/20090503_CD_ARGS.pdf.

• Usually what to do is a guess and the information given to us by the Glendale email isn't worth a crap as I will begin to demonstrate.

• We are less than 15 days from the beginning of the winter heating season and there is little time to get answers! Why such poor planning? Get off the natural gas aggregation if you are now on it. Go back to Duke and clear the air before committing to a competitor again. At least until we can get an impartial analysis.

[I’m going to set up a presentation at the Lyceum Wednesday morning at 10 am (if Cindy gives the go-ahead) and people should bring their last Duke utility bill and a copy for me to work with. And I’ll try to have Don Marshall be there as well. And somebody from Duke and somebody from Duke Retail. Anybody from the Village administration would be welcome but essentially worthless. Having said this we did save some money – not what the blurb this summer stated -- on the electric aggregation which I analyzed a year ago with a jaundiced eye and recommended people go for it. Not so with natural gas, and my prediction proved correct, as implied by the village notice below.]

Some off the top (my commentary) on the Village’s email announcement which appears below my commentary:

• "Beginning January 2012." What does that mean? January USAGE? January's BILL, which would include December's usage? In either case it includes only part of this winter and mainly locks us into rates for next winter, which is way too far into the future.

• What is missing is what Duke's MOST RECENT MONTHLY RATE is and what Duke projects for the next five months. What is given is an irrelevant "price in effect for this year."

• The only "good deal" would be if the negotiated rate is "10% below whatever the Duke rate is each month starting NOW," then it's a good deal.

• Duke's rate will go down more than 10% as the year goes on, and is already, on an apples-to-apples basis, below “$6.10.” (Reminder: “$6.10” is only a shorthand for a certain part of the bill. Do the following before you come to the meeting: divide your total natural gas dollars by total ccf, for the last 12 months. You’ll find that you’ve been paying more than $6.10 for every month; so the “good deal” $5.58 is equally shorthand.) For example, I average 100 ccf for my house and my actual cost per ccf is over $10.

• If you opted out of Glendale’s natural gas aggregation a year ago as I did, I would opt out again, as you suggest.

• If you opted in, you should now go back to Duke Energy, pending further inquiry.

• Remember, the only months of note are usage for November, December, January, February and March. The rest is good ol’ summertime.

> The following is from the village on Friday, circulated by email. It

> -----Original Message-----

> From: Glendale

> Sent: Friday, October 14, 2011 7:14 PM

> To: Glendale Subscriber

> Subject: VILLAGE COUNCIL NEGOTIATES LOWER GAS PRICES

>

> VILLAGE COUNCIL NEGOTIATES LOWER GAS PRICES

>

> The Village Council has negotiated a lower rate for natural gas applicable

> to the Village natural gas aggregation program. Beginning January 2012, the

> aggregation rate for Village residents will be lower by ten percent compared

> to the price that was in effect during this year. The rate for 2011 has

> been $6.18 per 1000 cubic feet and will decrease to $5.58 for next year.

> That means that residents will realize about a $12 per month savings during

> the up-coming winter heating months from what they paid this year. And while

> annual savings have not been as great as originally projected, residents did

> realize lower winter heating bills during this past January and February.

>

> Most Village residents have already joined the aggregation program, but

> those who have not can still enroll at no cost. The rate is fixed compared

> to Duke’s rate that changes monthly. If there are any concerns about the

> aggregation program once a resident enrolls, the customer may leave the

> program at any time without paying a penalty. If a resident is currently

> participating in the aggregation program, then that resident needs to take

> no action to benefit from the lower rate beginning in January.

>

>

>

Natural Gas Aggregation

2011-10-16T21:26:00.006-04:00

Glendale Natural Gas Aggregation Exposed

This inquiry came from a friend in Glendale in response to the Village Notice of Friday:

Bruce - Goodness, I really hate to bother you w/ this, but I can't make head
> nor tail of our bills.
> Are we on this, do you remember? Do I need to get on it if we're not?
> Think I'd decided to just pay & not worry about it, since you spent a whole
> day on this last year & didn't find anything wrong. Thank you again for
> that...

>

My answer, some of which I also put on Facebook:

There is a lot of "puffing" and misleading going on in this realm so it's not easy to analyze. Towns, not having the in-house expertise, put out the wording (such as below) prepared by the natural gas broker and the misleading is rampant and outrageous. This is a good example of local government gone wild, gambling with the citizen’s money without even knowing it! (Note: The electric aggregation so far worked very well, as I recommended a year ago doing it when I saw that Duke was pretty likely not to lower their electric rates.)

And the consequences can be huge as natural gas can be volatile when business is booming. The swings can be in the thousands of dollars for a big old residential home in Glendale over a given year when one looks back.

Upper Arlington and others in Columbus locked into a “good deal” with Columbia Gas and citizens took a huge hit over the next couple of years when natural gas plunged, as it will do this coming year. Check out “Gearino…Columbia Gas…Columbus Dispatch” on Google. http://www.citizensutilityboard.org/pdfs/CUBInTheNews/20090503_CD_ARGS.pdf

• Usually what to do is a guess and the information given to us by the Glendale email isn't worth a crap as I will begin to demonstrate.

• We are less than 15 days from the beginning of the winter heating season and there is little time to get answers! Why such poor planning? Get off the natural gas aggregation if you are now on it. Go back to Duke and clear the air before committing to a competitor again. At least until we can get an impartial analysis.

[I’m going to set up a presentation at the Lyceum Wednesday morning at 10 am (if Cindy gives the go-ahead) and people should bring their last Duke utility bill and a copy for me to work with. And I’ll try to have Don Marshall be there as well. And somebody from Duke and somebody from Duke Retail. Anybody from the Village administration would be welcome but essentially worthless. Having said this we did save some money – not what the blurb this summer stated -- on the electric aggregation which I analyzed a year ago with a jaundiced eye and recommended people go for it. Not so with natural gas, and my prediction proved correct, as implied by the village notice below.]

Some off the top (my commentary) on the Village’s email announcement which appears below my commentary:

• "Beginning January 2012." What does that mean? January USAGE? January's BILL, which would include December's usage? In either case it includes only part of this winter and mainly locks us into rates for next winter, which is way too far into the future.

• What is missing is what Duke's MOST RECENT MONTHLY RATE is and what Duke projects for the next five months. What is given is an irrelevant "price in effect for this year."

• The only "good deal" would be if the negotiated rate is "10% below whatever the Duke rate is each month starting NOW," then it's a good deal.

• Duke's rate will go down more than 10% as the year goes on, and is already below “$6.10.” (Reminder: “$6.10” is only a shorthand for a certain part of the bill. Do the following before you come to the meeting: divide your total natural gas dollars by total ccf, for the last 12 months. You’ll find that you’ve been paying more than $6.10 for every month; so the “good deal” $5.58 is equally shorthand.)

• If you opted out of Glendale’s natural gas aggregation a year ago as I did, I would opt out again, as you suggest.

• If you opted in, you should now go back to Duke Energy, pending further inquiry.

• Remember, the only months of note are usage for November, December, January, February and March.

> The following is from the village on Friday, circulated by email. It

> -----Original Message-----

> From: Glendale

>

Sent: Friday, October 14, 2011 7:14 PM

> To: Glendale Subscriber

> Subject: VILLAGE COUNCIL NEGOTIATES LOWER GAS PRICES

>

> VILLAGE COUNCIL NEGOTIATES LOWER GAS PRICES

>

> The Village Council has negotiated a lower rate for natural gas applicable

> to the Village natural gas aggregation program. Beginning January 2012, the

> aggregation rate for Village residents will be lower by ten percent compared

> to the price that was in effect during this year. The rate for 2011 has

> been $6.18 per 1000 cubic feet and will decrease to $5.58 for next year.

> That means that residents will realize about a $12 per month savings during

> the up-coming winter heating months from what they paid this year. And while

> annual savings have not been as great as originally projected, http://www.wtrg.com/daily/ngspot.gif

A Teacher on Teaching: A Fairy Tale called "Waiting for Superman"

2011-09-29T23:55:00.000-04:00

A Teacher on Teaching: A Fairy Tale called "Waiting for Superman"

Mohamed A. El-Erian

2011-09-24T08:58:00.000-04:00

This guy works for Bill Gross, the best bond market guru and manager. Mohamed is brilliant and is interviewed on CNBC when important crises are afoot.

They don’t have six weeks,” said Mohamed A. El-Erian, chief executive of Pimco, the world’s largest bond manager. He said fear had reached the very core of the 17-nation group that uses the euro currency, with the price of insurance on German debt rising substantially this week.

“The light already is flashing yellow,” Mr. El-Erian said. “They can’t allow it to flash red. You have to give people a vision of what you want the euro zone to look like.”

Walken Interviews Centaur on SNL

2011-09-17T09:24:00.001-04:00

Ten Things

2011-08-29T06:01:00.001-04:00

The deeper meaning to my purchase of 1000 BAC the morning Warren Buffet announced his purchase: it was a day of otherwise huge import in our family, as Doug and Becca and kids were moving to Barcelona. For me to make such a purchase just before taking them to the airport was "a signature moment." We'll see if it works out.

Natural Gas Guru: Ten Things

2011-08-26T08:43:00.000-04:00

Natural Gas Guru: Ten Things

Ten Things

2011-08-26T08:22:00.001-04:00

Warren Buffet stepped up to the plate on Cramer's Item No. 2 yesterday. I "bit" for 1000 BAC at near the high of the day and I'm proud of it, although I sold 500 near the low of the day. Jim defended the bullishness of BAC in his opening segment last night, bashing the short-sellers who dumped on the Buffet deal (from the point of view of BAC). Mainly the Fast Money crowd.

Bath County

2011-08-24T09:15:00.000-04:00

Ten Things

2011-08-24T08:48:00.002-04:00

OK, so we had this tremendously up day yesterday and some of Cramer's "Ten Things" started to turn around. This raises the age-old problem. Since they all have not turned, is this an opportunity to sell????

Review of Ten Things

1. leaders coming back from vacation; ????
2. banks stopping going down; yes except for BAC, which is Blodget's and everybody else's short sale as a proxy for european banks which cannot be shorted anymore.
3. tech's seasonal slump has to end. On examination of this one it appears the calendar is the only determinant, as this happens in the last week of September.
must be more mergers and acquisitions;
4. must be more mergers and acquisitions; not that I heard about yesterday, but I was laser-tagging with Owen and his friends yesterday.
5. must be lower stock and gold prices; yes as to the latter only. So Cramer is saying "Sell this rally."
6. Europe must step up its game; certainly rumblings out of German principals on this one.
7. Brent crude must go below 100; no help yesterday.
8. China must stop raising rates; don't know. How find out?
9. Europe says we'll stick with a VERSION of the euro, not the euro; stay tuned, not yet.
10. must be some stock leadership. where was the leadership yesterday? techs and most banks probably.

Ten Things

2011-08-23T08:28:00.003-04:00

Cramer has done this before and it is good as a trading guide. Last night he listed ten things or concepts that had to happen that would make the market good to invest in again. It is not yet posted, so I will now go down into the barn room and look at it on TIVO and then replicate it here.

When he did this before he didn't wait until all of his list was satisfied before he became bullish again, as I recall.

Based on the ten things we have a ways to wait.

Being old, I can remember only one -- gold going down three straight days. (It is down this morning in pre- trading.)

OK, here are the 10:

1.   leaders have to come back from vacation;
2.   bank stocks have to stop going down;
3.   tech's seasonal slump has to end;
4.   must be more mergers and acquisitions;
5.   must be lower stock and gold prices;
6.   Europe must step up its game;
7.   Brent crude must go below 100;
8.   China must stop raising rates;
9.   Europe says we'll stick with a VERSION of the euro, not the euro;
10. must be some stock leadership.

Wow! is gold going down or what? dn 2.91 as I type (GLD, that is, which is 1/10th of real gold).

Through a Screen Brightly

2011-08-21T10:07:00.000-04:00

Borrowing in Retirement

2011-08-15T07:23:00.000-04:00

http://www.nytimes.com/2011/08/14/realestate/borrowing-in-retirement-mortgages.html?hp

Cramer Last Night

2011-08-10T05:26:00.000-04:00

His shopping list last night:

So what's on our diversified dividend shopping list, after we've had this incredible crack in the stock market?...

Cramer's Diversified Dividend Play #1:

Consolidated Edison, Inc.

Dividend Yield: 4.7%

Cramer's Diversified Dividend Play #2:

Enterprise Products Partners LLC

Dividend Yield: 6%

Cramer's Diversified Dividend Play #3:

Verizon Communications, Inc.

Dividend Yield: 5.8%

Cramer's Diversified Dividend Play #4:

Bristol-Myers Squibb Co.

Dividend Yield: 4.9%

Cramer's Diversified Dividend Play #5:

Darden Restaurants, Inc.

Dividend Yield: 3.7%

Cramer's Diversified Dividend Play #6:

Kimberly-Clark Corporation

Dividend Yield: 4.4%

Cramer's Diversified Dividend Play #7:

International Paper Company

Dividend Yield: 4.4%

Very Important

2011-08-09T08:10:00.000-04:00

The following is a repeat citation of a very, very important piece presented to Congress last year. Deals with Countrywide and, more important, the nuts and bolts of the mrtgage crisis.

http://financialservices.house.gov/Media/file/hearings/111/Levitin111810.pdf

Duke Time of Day Bill for July 2011 Usage

2011-08-09T07:56:00.000-04:00

Scoring for Card Game of 500

2011-08-07T12:28:00.001-04:00

http://www.pagat.com/euchre/500.html

Scoring

A cumulative score is kept for each team, to which the score for each hand is added or subtracted. The scores for the various contracts are as follows:

Tricks    Spades Clubs Diamonds Hearts No Trumps Misere

Six           40         60           80      100             120

Seven     140       160         180      200             220

                                                                         Misere 250

Eight       240      260         280      300            320

Nine       340      360         380      400            420

Ten        440      460         480

                                                                      Open Misere 500

                                                   Ten 500 520

S&P's $2 Trillion Error Didn't Change Rating Cut Decision - CNBC

2011-08-06T08:08:00.001-04:00

S&P's $2 Trillion Error Didn't Change Rating Cut Decision - CNBC

S and P is a ass.

American Energy

2011-08-05T10:44:00.002-04:00

Baby Makes it to Low-Lying Tree

2011-07-18T08:06:00.002-04:00

by Rebecca Abel Worple

A close escape from a black snake, which had been lying in wait. In the Floating Boathouse (see Canada on this blog). So a fishing net and cupped hands relocated the bird as shown. Not sure what happened to the other three babies.

Do it!

2011-07-15T06:28:00.000-04:00

Go to "Rebecca Worple" at the bottom of this blog.
Click on it.
Then "galeries"
Then "when I grow up"

Do it!

Yesterday Morning at Pte au Baril, Ontario

2011-07-14T06:34:00.003-04:00

by Rebecca Abel Worple

Brooks -- The Unexamined Society

2011-07-10T08:03:00.004-04:00

Op-Ed Columnist

The Unexamined Society

By DAVID BROOKS

Published: July 7, 2011

http://www.nytimes.com/2011/07/08/opinion/08brooks.html

Over the past 50 years, we’ve seen a number of gigantic policies produce disappointing results — policies to reduce poverty, homelessness, dropout rates, single-parenting and drug addiction. Many of these policies failed because they were based on an overly simplistic view of human nature. They assumed that people responded in straightforward ways to incentives. Often, they assumed that money could cure behavior problems.

The intellectual, cultural and scientific findings that land on the columnist’s desk nearly every day.

Fortunately, today we are in the middle of a golden age of behavioral research. Thousands of researchers are studying the way actual behavior differs from the way we assume people behave. They are coming up with more accurate theories of who we are, and scores of real-world applications. Here’s one simple example:

When you renew your driver’s license, you have a chance to enroll in an organ donation program. In countries like Germany and the U.S., you have to check a box if you want to opt in. Roughly 14 percent of people do. But behavioral scientists have discovered that how you set the defaults is really important. So in other countries, like Poland or France, you have to check a box if you want to opt out. In these countries, more than 90 percent of people participate.

This is a gigantic behavior difference cued by one tiny and costless change in procedure.

Yet in the middle of this golden age of behavioral research, there is a bill working through Congress that would eliminate the National Science Foundation’s Directorate for Social, Behavioral and Economic Sciences. This is exactly how budgets should not be balanced — by cutting cheap things that produce enormous future benefits.

Let’s say you want to reduce poverty. We have two traditional understandings of poverty. The first presumes people are rational. They are pursuing their goals effectively and don’t need much help in changing their behavior. The second presumes that the poor are afflicted by cultural or psychological dysfunctions that sometimes lead them to behave in shortsighted ways. Neither of these theories has produced much in the way of effective policies.

Eldar Shafir of Princeton and Sendhil Mullainathan of Harvard have recently, with federal help, been exploring a third theory, that scarcity produces its own cognitive traits.

A quick question: What is the starting taxi fare in your city? If you are like most upper-middle-class people, you don’t know. If you are like many struggling people, you do know. Poorer people have to think hard about a million things that affluent people don’t. They have to make complicated trade-offs when buying a carton of milk: If I buy milk, I can’t afford orange juice. They have to decide which utility not to pay.

These questions impose enormous cognitive demands. The brain has limited capacities. If you increase demands on one sort of question, it performs less well on other sorts of questions.

Shafir and Mullainathan gave batteries of tests to Indian sugar farmers. After they sell their harvest, they live in relative prosperity. During this season, the farmers do well on the I.Q. and other tests. But before the harvest, they live amid scarcity and have to think hard about a thousand daily decisions. During these seasons, these same farmers do much worse on the tests. They appear to have lower I.Q.’s. They have more trouble controlling their attention. They are more shortsighted. Scarcity creates its own psychology.

Princeton students don’t usually face extreme financial scarcity, but they do face time scarcity. In one game, they had to answer questions in a series of timed rounds, but they could borrow time from future rounds. When they were scrambling amid time scarcity, they were quick to borrow time, and they were nearly oblivious to the usurious interest rates the game organizers were charging. These brilliant Princeton kids were rushing to the equivalent of payday lenders, to their own long-term detriment.

Shafir and Mullainathan have a book coming out next year, exploring how scarcity — whether of time, money or calories (while dieting) — affects your psychology. They are also studying how poor people’s self-perceptions shape behavior. Many people don’t sign up for the welfare benefits because they are intimidated by the forms. Shafir and Mullainathan asked some people at a Trenton soup kitchen to relive a moment when they felt competent and others to recount a neutral experience. Nearly half of the self-affirming group picked up an available benefits package afterward. Only 16 percent of the neutral group did.

People are complicated. We each have multiple selves, which emerge or don’t depending on context. If we’re going to address problems, we need to understand the contexts and how these tendencies emerge or don’t emerge. We need to design policies around that knowledge. Cutting off financing for this sort of research now is like cutting off navigation financing just as Christopher Columbus hit the shoreline of the New World.

A version of this op-ed appeared in print on July 8, 2011, on page A23 of the New York edition with the headline: The Unexamined Society.

Comment 119:

Thank you David Brooks. In the spirit of this wonderful Op Ed piece, I submit this and hope this works: Read "The Beggar" submitted by Lisa B. Youngclaus for the Yale 50th Reunion Book "1000 Voices" a month ago. This written by her husband Bill Youngclaus III, class of '61, whose career was in advertising, a month before his death in 2006.

A black man tugged at my sleeve,

       asking for some change

I was startled to be so close to him, a man

       I had rejected many time before, but

from a distance.

       I had always shrugged no, implying

that I had no change

       Which of course we both knew was a lie.

But this time this close, I could see he

       was not so old,

And his smell, while not fresh was clean.

       His eyes caught mine while I fumbled

In my own crumpled pocket.

       My eyes stuck to his, seeing a time

when he was cared for by another's

       caution:

don't do that my love, watch out my

       darling.

And he would laugh oh so hard know-

       ing he was loved,

Attended to, and he would slap his

       mamma's face

In mock discord, waiting for the hug

       that would

Surely come. And then, and then...I

       don't know.

Something painful probably happened

       followed

By worse, and then worse even still,

       until he arrived

Here to tread on other's mercy, his only

       hope

That I, and others, change their minds.

Recommended by 4 Readers

Dan Kucera and His Waterlawg Blog

2011-07-09T08:42:00.000-04:00

A good friend, classmate at college and law school, and one of the funniest writers, Dan Kucera, was at our 50th reunion. I discovered he has a blog http://www.waterlawg.blogspot.com/. It is well written and humorous. I have added it to my short list of worthwhile blogs.

American Energy

2011-06-28T16:45:00.000-04:00

Derivatives Cloud the Greece Analysis

2011-06-27T08:01:00.000-04:00

So the one question I would ask CNBC, etc.: "Why do credit default swaps even exist now????"

http://www.nytimes.com/2011/06/23/business/global/23swaps.html?scp=1&sq=derivatives%20cloud&st=cse

One Side of the Natural Gas Story

2011-06-27T07:50:00.000-04:00

http://www.nytimes.com/2011/06/27/us/27gas.html?src=recg

Gravel -- Missing Page 66

2011-06-25T10:27:00.001-04:00

Gravel -- II Next Three Pages

2011-06-25T10:13:00.001-04:00

Gravel by Alice Munroe in This Week's New Yorker -- I

2011-06-25T10:05:00.003-04:00

[ed note: Page 66 that is missing here is added at end of third posting above.]

Back in The Day Lawyers and Accountants Did...What???

2011-06-19T10:31:00.003-04:00

http://www.nytimes.com/2011/06/19/opinion/19everson.html?_r=1&src=rechp

Smart Metering and Poles

2011-06-19T08:56:00.000-04:00

Sometime during the week a subcontractor for Duke Energy knocked on the door wanting to clear brush from a pole so that they could put up a piece of electrical equipment that would enable Duke to read my time-of-day meter wirelessly.

Jimmy Rogers Interviewed by Dylan Ratigan!

2011-06-19T08:49:00.002-04:00

http://jimrogers-investments.blogspot.com/2011/06/video-greece-is-bankrupt-protect.html

[from Wikipedia] Rogers was born in Baltimore, Maryland and raised in Demopolis, Alabama.[1][3] He started in business at the age of five by selling peanuts and by picking up empty bottles that fans left behind at baseball games. He got his first job on Wall Street, at Dominick & Dominick, after graduating with a bachelor's degree from Yale University in 1964. Rogers then acquired a second BA degree in Philosophy, Politics and Economics from Balliol College, Oxford University in 1966.

In 1970, Rogers joined Arnhold and S. Bleichroder. In 1973, Rogers co-founded the Quantum Fund with George Soros. During the following 10 years, the portfolio gained 4200% while the S&P advanced about 47%.[4] The Quantum Fund was one of the first truly international funds.

Duke Time of Day Bill for May 2011

2011-06-10T09:49:00.001-04:00

William Paul Youngclaus III -- Yale '61

2011-05-30T07:48:00.001-04:00

Memory -- In Anticipation of Yale '61 50th Reunion

2011-05-29T15:13:00.002-04:00

http://www.youtube.com/watch?v=bs3GwstHZuQ&feature=related

William Paul Youngclaus III -- Yale '61

2011-05-27T07:43:00.001-04:00

Cramer's New List -- Before the Market Will Rally

2011-05-24T08:03:00.000-04:00

#1 Suggestion

First, I wish Greece would just default already. It's so inevitable. If this happened, think about it, we could rethink this whole process. Let some of these European banks that own too much of this bad government debt go out of business. They never raised the capital that our banks did anyway. It's time for Europe to take the medicine, and get with the program. We all will survive this default. But this finger-in-the-dike nonsense must end once and for all. A failure of imagination. Come up with a two-tier currency. I don't care. Let's move on.

#2 Suggestion

Second, I wish the federal government would force the exchanges here to raise the margin rates on oil. All the President has to do is suggest... and believe me, the exchanges would cave. You could send oil prices down to $85 in a nanosecond. I wish I could guarantee something, but I'll tell you something, this would happen... And then what would happen? Gasoline, down to $3.25. An immediate spending impetus for the whole country. Recharge the nation.

#3 Suggestion

Third, I wish China would recognize that the inflation side of things isn't as important right now. They just had a bad industrial number that came out last night. The slowdown... they're engineering a slowdown... Maybe enough is enough, central bank. The whole commodity complex is collapsing. The Chinese seem a little oblivious. Love those guys, but come one. The world needs your help.

#4 Suggestion

Fourth, I wish the US government would take advantage of these incredibly low long-term interest rates and refinance its debt, so that we don't have to worry about the IMF someday coming here, because we can't roll over our short-term paper. That is the current Grecian problem. The Treasury Secretary could be a hero for this. He seems to be willing to sacrifice long-term considerations for short-term borrowing costs. I know. I've heard him say it. $200 billion. You know what? A small price to pay, versus having the IMF here. Come on, Tim, you're better than that. I know you are. You're one of the good guys.

#5 Suggestion

Fifth, I wish that we could recognize the opportunity that the glut of natural gas in this country represents... an opportunity to choke off OPEC by forcing trucks to switch from diesel fuel to liquefied natural gas.

#6 Suggestion

Sixth, I wish stocks would just get where they have to go... to levels where the values are so obvious that they would have to be taken. That would require them to become accidental high yielders, giving people a chance to earn some income while they own stocks. Hey, you know something? It's already starting to happen. Have you seen where Nucor, the great steel company, is? It now yields 3.5%. Most stocks have further to fall, and endless bidding up of the staples... it's now beyond reason. I mean, come on.

#7 Suggestion

Seventh... oh here's a tough one... I wish the underwriters who started a social media bubble last week, with their ridiculous under pricing of LinkedIn, would be castigated by the SEC. The SEC always takes a handoff approach to this stuff. It was so obvious that this moronic deal would cause another bubble, that I know it made me feel much more negative about stocks than I like. Believe me, there's nothing inevitable about the social media bubble. We are not doomed to repeat the mistakes of the dot-com era. It can be stopped. Come on, government. Get your hands dirty. Get involved. You're involved with the bank and mortgages. Get involved with underwriting before it's too late, and the whole dot-bomb process begins again, ruining the asset class that is stocks, even more than it already is.

#8 Suggestion

Eighth, I wish people would stop trashing Ben Bernanke. He is single-handedly keeping the financial system afloat, against an onslaught of foreclosed properties that are crushing the banks' balance sheets. Bernanke's been the best Fed Chairman of our lifetime. Give the guy a break.

#9 Suggestion

Ninth, I wish that a bunch of these stocks that trade in triple digits would just split already. Look, I know splits are totally cosmetic... that they create no real value. But I have to tell you, these stocks are being viewed as targets of opportunity for short sellers, and they are also the easiest ways for managers to raise money. A simple split would make their stocks more stable, and accessible to homegamers before they're driven out of the game entirely.

#10 Suggestion

Finally, I wish the President would come home and say to congress, no recess until you raise the debt ceiling and agree to some big spending cuts. We have a chance, right now as a nation, to assert ourselves as the world's most financially stable place. If we could only reach some sort of major debt agreement, the world is ours to win.

The bottom line...

▼ ▼ ▼ ▼

How outrageous is my wish list... as outrageous as it is common sensical... Everybody in this market knows that every one of these open-ended issues, and the problems they are causing for stocks. And until they are resolved, we can't rally. It's too bad, because we could easily take out the highs, if we got all 10 of these points. Then again though, this asset class has no supporters in Washington these days. So don't hold your breath. I say let the market come down until we get some of these points resolved. And then find yourself in a great situation, and great shape, to take advantage of the aftermath.

Tech Tips -- Pogue

2011-05-19T06:21:00.001-04:00

http://www.nytimes.com/2011/05/19/technology/personaltech/19pogue.html?ref=business

Tech Tip -- Don't Pay For Antivirus Program Again

2011-05-18T23:10:00.001-04:00

¶ You don’t have to pay for antivirus and anti-spyware software, year after year. Microsoft offers a perfectly good free security program. http://www.microsoft.com/en-us/security_essentials/default.aspx

Jim Cramer Hits an All-Time High

2011-05-18T16:45:00.001-04:00

(c) 2011 F. Bruce Abel

This article on Jim Cramer is just "ok," providing a modicum of new information, such as that he divorced The Trading Goddess, which I had deduced by his repeated references of life of "Friday night drinking drinking cheap scotch on the dirty linoleum floor" and other comments about his weekends and life.

The article does not give Cramer the praise that his portfolio deserves, as its performance is sensational. But there are "flaws" in his nightly presentation theory -- a little slippery about whether he called this correction or that one, etc. Such problems are inherent in what he is doing. I have never really made money "following" him, due to psychological factors that I think everybody feels.

Cramer says he is a Democrat but when he was on CNBC with Kudlow (pre Mad Money) he was pretty Wall Street/Republican-line, I thought.

http://www.nytimes.com/2011/05/15/magazine/jim-cramer-hits-an-all-time-high.html?hpw

First "Hot Air" Entry For Awhile

2011-05-18T08:01:00.000-04:00

Imagine your breakfast and lose ten pounds!

http://www.nytimes.com/2011/05/18/dining/treats-without-calories-imagine-that.html

Random Notes

2011-05-11T13:16:00.007-04:00

Randum notes of May 11, 2011 copied or spiked:

Loan Limits Effect on Counties

http://www.nytimes.com/interactive/2011/05/11/business/20110511housingCounties.html?ref=business

Modern Life on Tobacco Road

Foremost Ins. Co. v. Rudolph

In May of 2010, Cynthia lived in a 1996 Fleetwood mobile home located in Lowndes County, Alabama near Highway 80. Cynthia lived with four of her eight children: Emily (age 19), Karmen Rudolph (age 18), Jacora Brown (16), and Fantavia Brown (14). Emily's two daughters, Alivia (age 4 months) and Alkera (age 2), also lived in the mobile home.

Cynthia earned some income from gambling either with her own money or with other people's money.1 [*6] She earned about $10,000 from gambling in the year before preceding May of 2010. She also sold food such as hamburgers and chicken strips from an unlicensed concession stand near the mobile home. She earned about $400 a month doing so. Cynthia's friends Rick Graham ("Graham") and Roosevelt Williams ("Williams") financially assisted Cynthia and her family. In fact, Graham gave Cynthia and her daughters the mobile home in which they lived.2 As of May of 2010, Cynthia had outstanding federal tax liens against her for $18,213 for 2004; $29,496 for 2003; and $2,120 for 1998.

1 In 2007, Cynthia hit a $1,000,000 jackpot while gambling. She purchased cars, a boat, an excavator, her concession, new televisions and appliances and her concession stand before a man with whom she had been romantically involved disappeared with $800,000 of the money. Cynthia did not file an income tax return for 2007, nor did she pay income taxes on the jackpot. The IRS is pursuing her for taxes she should have paid on her winnings in 2007.

2 There is some conflict in the testimony about legal title to the mobile home. Emily testified that the title for the mobile home was in her name jointly with Graham. Cynthia seemed [*7] to indicate that it was in the name of Emily alone Emily and her sisters, but that Graham intended the mobile home to be used by Cynthia and her daughters. There is also some conflicting information in the record about the ownership of the land on which the mobile home was located. Emily claims Graham gave it to her along with the mobile home. Graham indicates that he continues to own the land but did not charge Cynthia and her children to reside in the mobile home on his land.

Emily has never been employed. She received only $358 a month in food stamps. In 2010, she had several outstanding debts which were in the collection process. The total sum owed on these debts exceeded $14,000.

For several months, Emily did not have insurance on the mobile home. When Emily's younger sister Karmen started a job as a Census Worker, Emily decided to obtain insurance on the mobile home. On April 12, 2010, Emily called Foremost to obtain insurance on the mobile home. Foremost took her application and payment over the phone. Emily asked when the policy would be effective. The Foremost representative told her that it could be effective that day if the payment was made over the phone. Emily and Karmen [*8] arranged for the initial payment to be taken out of Karmen's bank account.

Foremost issued a policy providing insurance of $80,000 on the mobile home, $43,000 for personal property within the home, and $15,000 for other structures. Foremost has identified several policy provisions that are key to the resolution of this motion. Those provisions are as follows:

SECTION 1 - Insured Perils

We insure risk of direct, sudden and accidental physical loss to the property described in Coverage A - Dwelling, Coverage B - Other Structures and Coverage C - Personal Property unless the loss is excluded elsewhere in this policy.

* * * *

Doc. 18 at Ex. A- 1.

On the afternoon of May 11, 2010, the mobile home burned. At the time of the fire, the mobile home was unoccupied. Cynthia was nearby at the concession stand. Two of Emily's younger sisters had come home from school and taken Emily's children on a walk to a nearby store. Emily put a load of clothes into the dryer. Rather than going to her mother's nearby concession stand, Emily decided to drive to the White Hall Triple Spot Restaurant, which was located five or ten miles away, to pick up a cheese hamburger. When Emily left, she made sure she locked the mobile home.

A relative of hers, Tracy Smith ("Smith") was working on the brakes of his car nearby, and she told him she was going to get some food. After Emily left the mobile home, Smith did not see anyone enter or leave the mobile. Smith heard a smoke alarm sounding inside the mobile home. He looked [*10] into the mobile home and saw fire. He tried to extinguish the fire by breaking out a window and spraying water from a hose. He also called 911. A man who was passing by stopped to help Smith try to stop the fire. The fire department arrived and extinguished the flames. The mobile home was rendered a total loss.

When Emily returned from picking up her cheese burger, she saw the fire department, ambulance, and many cars near her mobile home. She realized her mobile home was on fire. It is not clear who contacted Foremost to report the fire and make a claim, but it is clear that someone informed Foremost about the fire and that both Cynthia and Emily had dealings with Foremost relating to the insurance claim for the loss of the mobile home and its contents. Both Emily and Cynthia indicated that they did not know how the fire had started.

Foremost issued a number of checks to Emily to pay the family's emergency living expenses after the fire. Foremost also began to investigate the cause and origin of the fire. It hired Troy Ammons ("Ammons"), a Certified

Etc., etc., etc.

[they -- Cynthia and Emily -- lost]

Foremost Ins. Co. v. Rudolph, 2011 U.S. Dist. LEXIS 49551 (D. Ala. 2011)

Duke Energy Bill For April Usage

2011-05-10T08:19:00.000-04:00

Great Interactive Chart Case Shiller Home Price Indices

2011-05-01T08:42:00.000-04:00

http://www.standardandpoors.com/indices/sp-case-shiller-home-price-indices/en/us/?indexId=spusa-cashpidff--p-us----

Comments on NYT Article Today -- Read!

2011-04-29T16:12:00.002-04:00

7.

joe

NY

April 29th, 2011

11:48 amThe credit default swaps market didn't used to exist! Okay? And the global financial world functioned very well without it. Was dramatically safer, in fact. It is simply impossible to make the argument that giving big banks the ability to secretely bet against bondholders serves any essential purpose. But the important thing to remember is that those bets would no longer be attractive or valuable if transparency was required.

Louise Story has done some tremendous work on this subject, but I strongly take issue with the description of the OTC derivatives market as a "corner" of the financial world. At $600 trillion, it dwarfs all other activity. Major players in this market have trading floors as big as football fields devoted entirely to derivatives. It's not a corner, it's the whole house, and it is rotten to the core.

I'm glad the European Commission is saying these things. Political leaders and regulators in America, the epicenter of derivatives activity, should be saying this. But there is no such thing as transparency and safety in this casino. The OTC market would not have grown into the cancerous beast it became if there had been transparency all along. You cannot have a game of poker if everyone has to show their hands from the start. The market is DEPENDANT on secrecy and danger because it is gambling, not risk management, for crying out loud. It also became massively popular because it was such a profitable way to predate on less sophisticated counterparties, entire countries, sometimes. It is also institutionalized tax evasion and accounting fraud. If you bring it into the light, you kill its purpose.

It is also a gross misrepresentation to say that derivatives only "added to the panic during the financial crisis". Derivatives directly CAUSED the financial crisis! They took down Bear and Lehman and Merrill and AIG and Greece and Iceland and Ireland, and countless others, just as they had devastated or destroyed LTCM, Japan, Russia, Mexico, Argentina, Orange County, Barings, Sumitomo and others in years past.

Read Steinherr and Partnoy and Das and a host of others.Recommend Recommended by 13 Readers

Bachus and Sewers and Interest Rate Swaps

2011-04-24T06:54:00.001-04:00

http://www.nytimes.com/2011/04/23/opinion/23nocera.html?scp=3&sq=birmingham&st=cse

To Clear Temporary Files on Mom's Computer

2011-04-23T06:32:00.002-04:00

"start"
"control panel"
"internet options"
etc.

Farkas is Willing -- From NYT

2011-04-23T06:30:00.000-04:00

http://www.nytimes.com/2011/04/22/business/22norris.html?scp=1&sq=mortgage%20conviction&st=Search

Tech Tips -- Not All Homeowners Insurance is the Same

2011-04-21T14:08:00.002-04:00

http://bucks.blogs.nytimes.com/2011/04/21/not-all-homeowners-policies-are-alike/?hp

Here’s one example: The standard contract insures a home against risk of “direct physical loss to property,” he noted. But some insurers have altered that language to say “sudden and accidental” direct physical loss to property. (His paper doesn’t identify which specific insurers use the language, he said, because he wants to focus on changes regulators should make.) Such wording, he said, might be used to deny claims for vandalism or from a threat that grew over time — say, an old tree that weakens and eventually falls on a house. It’s conceivable, he said, that the language could be used to deny claims for theft on the grounds that the loss wasn’t “accidental.”

May 11, 2011: I checked my homeowners policy with Cincinnati Insurance Company and they are in the "good guys" camp. At least I am 90% sure, without reading the 40+ other pages plus the second document which is the June 2001 addendum carefully.

RX From the Cursing Mommy

2011-04-18T08:30:00.002-04:00

One year anniversary of this:

http://natgagu.blogspot.com/2010/04/trapped-by-facts-of-case.html

Natural Gas Drilling Has its Own Problems

2011-04-12T09:29:00.002-04:00

http://www.nytimes.com/2011/04/12/business/energy-environment/12gas.html

Duke Time of Day Bill for March 2011

2011-04-11T17:24:00.001-04:00

Tech Tips -- Stripping Formats From a Word Document

2011-04-07T07:16:00.002-04:00

http://gadgetwise.blogs.nytimes.com/2010/07/02/tip-of-the-week-stripping-formats-from-a-word-document/

Tech Tips -- Cut and Paste and the Sjpike

2011-04-07T07:14:00.000-04:00

http://gadgetwise.blogs.nytimes.com/2011/04/07/qa-supersize-cut-and-paste-in-microsoft-word/?src=twrhp

Dear Eunie

2011-03-24T13:01:00.001-04:00

Happy Birthday Quotes

Stan Chesley

2011-02-25T07:16:00.000-05:00

This from the Wall Street Journal

By DIONNE SEARCEY

A groundbreaking plaintiffs' attorney should be disbarred for bilking clients out of millions of dollars in the settlement of a 1998 diet-pill lawsuit, a Kentucky judicial official said.

Trial Commissioner William L. Graham's recommendation Tuesday that Stanley Chesley be stripped of his law license in Kentucky marks the latest legal twist following the suit filed by people who had taken fen-phen over the drug's alleged health risks. The suit ended in a $200 million settlement paid by drug maker American Home Products.

Stanley Chesley's attorneys plan to appeal a recommendation that he be disbarred in Kentucky.

Fee fights among plaintiffs' lawyers involved in the case began early on, and the Kentucky Bar Association was called to investigate alleged misrepresentations about the settlement. Two plaintiffs' attorneys eventually received prison sentences for defrauding clients, and the judge who handled the case stepped down from the bench.

American Home Products faced numerous federal and state suits over the drug, which was later banned for causing heart-valve problems. The company was eventually acquired by a company now part of Pfizer Inc. A Pfizer spokesman didn't respond to a request for comment.

Judge Graham accused Mr. Chesley of defrauding plaintiffs out of about $7.5 million in fees.

Mr. Chesley's actions were essentially "a cover-up of thievery," Judge Graham said in a report that demanded the return of the money. "His callous subordination of the interests of his clients to his own greed is both shocking and reprehensible," Judge Graham wrote.

Mr. Chesley's attorneys said they planned to appeal to the Kentucky Supreme Court, which will make a final determination on the commissioner's recommendation. The attorneys cited a federal probe of the case, which didn't result in charges against Mr. Chesley. "His findings are directly contrary to the findings of federal authorities, who fully investigated this case and never considered Mr. Chesley a target of their investigation," they said in a statement.

The trial commissioner's report accused Mr. Chesley of muscling into fen-phen litigation under way in Kentucky's Boone Circuit Court and strong-arming attorneys into sharing fees with him in exchange for his "expertise" in handling class actions.

The more than 400 plaintiffs weren't notified, at least initially, of Mr. Chesley's involvement nor were they ever told he had reached an agreement with their attorneys to share in 21% of attorneys' fees in the settlement, according to the report.

Mr. Chesley later convinced Boone Circuit Court Judge Joseph Bamberger to boost attorneys' cut to 49% of the total settlement in a February 2002 clandestine meeting in the courthouse jury room, according to the report. Clients weren't told of the new arrangement. And Mr. Chesley received an additional $4 million payment out of the fees, which Judge Graham said amounted to a bonus for securing such a big cut for his colleagues.

Mr. Chesley wound up being paid more than $20 million in fees, when his agreement called for him to earn roughly $12 million, the report said.

Mr. Chesley said he didn't recall the meeting with the judge, according to the report. Judge Bamberger, the trial judge who resigned, had testified he never would have approved the fees had the lawyers told him about prior fee arrangements.

Mr. Chesley, of Cincinnati, rose to fame in legal circles after representing families of those who died in the 1977 Beverly Hills Supper Club fire in Kentucky. In what was a new tactic, he filed suit against more than 1,000 defendants, most of them companies that had sold supplies or services to the club, eventually securing nearly $50 million in settlements and court awards. His strategy became a blueprint for how plaintiffs' attorneys pursue mass torts—gathering large numbers of plaintiffs and casting a wide net for potential defendants.

Duke Energy Bills

2011-02-24T06:19:00.000-05:00

http://www.puco.ohio.gov/puco/index.cfm/apples-to-apples/duke-energy-ohio-apples-to-apples-chart/

This finishes the winter heating season and it looks like Duke's natural gas charges do in fact beat the aggregation option, as I predicted.

Stan Chesley

2011-02-24T06:01:00.001-05:00

(c) 2011 F. Bruce Abel

There are two huge stories in my lifetime eminating from Cincinnati impacting my interests and crossing my practice: the law and business. One of them is Stan Chesley and what he accomplished/accomplishes. Being a trial lawyer I am jealous. For large cases there just wasn't anybody else on the plaintiff's side and the world knew it.

But give the man his due! I was discussing the case yesterday with a co-counsel and he said: "I saw him argue in federal court in favor of class action status and without any written legal authority all he did was say, 'Well in Utah I caused the court to do this and in New Jersey [I caused the court] did that.'"
And I said, "Yeah that's the point. When he spoke the judge knew that he was the master of this field and that he could rely on what Stan said."

The man just took the air out of the room for the rest of the plaintiffs' trial bar. So be it. I wish I were he.

And his wife is the best federal judge around.

The other story: Carl Lindner.

Tech Tips -- Beware of Hot Spots

2011-02-18T08:27:00.001-05:00

New Hacking Tools Pose Bigger Threats to Wi-Fi Users

Published: February 16, 2011

You may think the only people capable of snooping on your Internet activity are government intelligence agents or possibly a talented teenage hacker holed up in his parents’ basement. But some simple software lets just about anyone sitting next to you at your local coffee shop watch you browse the Web and even assume your identity online.

“Like it or not, we are now living in a cyberpunk novel,” said Darren Kitchen, a systems administrator for an aerospace company in Richmond, Calif., and the host of Hak5, a video podcast about computer hacking and security. “When people find out how trivial and easy it is to see and even modify what you do online, they are shocked.”

Until recently, only determined and knowledgeable hackers with fancy tools and lots of time on their hands could spy while you used your laptop or smartphone at Wi-Fi hot spots. But a free program called Firesheep, released in October, has made it simple to see what other users of an unsecured Wi-Fi network are doing and then log on as them at the sites they visited.

Without issuing any warnings of the possible threat, Web site administrators have since been scrambling to provide added protections.

“I released Firesheep to show that a core and widespread issue in Web site security is being ignored,” said Eric Butler, a freelance software developer in Seattle who created the program. “It points out the lack of end-to-end encryption.”

What he means is that while the password you initially enter on Web sites like Facebook, Twitter, Flickr, Amazon, eBay and The New York Times is encrypted, the Web browser’s cookie, a bit of code that that identifies your computer, your settings on the site or other private information, is often not encrypted. Firesheep grabs that cookie, allowing nosy or malicious users to, in essence, be you on the site and have full access to your account.

More than a million people have downloaded the program in the last three months (including this reporter, who is not exactly a computer genius). And it is easy to use.

The only sites that are safe from snoopers are those that employ the cryptographic protocol transport layer security or its predecessor, secure sockets layer, throughout your session. PayPal and many banks do this, but a startling number of sites that people trust to safeguard their privacy do not. You know you are shielded from prying eyes if a little lock appears in the corner of your browser or the Web address starts with “https” rather than “http.”

“The usual reason Web sites give for not encrypting all communication is that it will slow down the site and would be a huge engineering expense,” said Chris Palmer, technology director at the Electronic Frontier Foundation, an electronic rights advocacy group based in San Francisco. “Yes, there are operational hurdles, but they are solvable.”

Indeed, Gmail made end-to-end encryption its default mode in January 2010. Facebook began to offer the same protection as an opt-in security feature last month, though it is so far available only to a small percentage of users and has limitations. For example, it doesn’t work with many third-party applications.

“It’s worth noting that Facebook took this step, but it’s too early to congratulate them,” said Mr. Butler, who is frustrated that “https” is not the site’s default setting. “Most people aren’t going to know about it or won’t think it’s important or won’t want to use it when they find out that it disables major applications.”

Joe Sullivan, chief security officer at Facebook, said the company was engaged in a “deliberative rollout process,” to access and address any unforeseen difficulties. “We hope to have it available for all users in the next several weeks,” he said, adding that the company was also working to address problems with third-party applications and to make “https” the default setting.

Many Web sites offer some support for encryption via “https,” but they make it difficult to use. To address these problems, the Electronic Frontier Foundation in collaboration with the Tor Project, another group concerned with Internet privacy, released in June an add-on to the browser Firefox, called Https Everywhere. The extension, which can be downloaded at eff.org/https-everywhere, makes “https” the stubbornly unchangeable default on all sites that support it.

Since not all Web sites have “https” capability, Bill Pennington, chief strategy officer with the Web site risk management firm WhiteHat Security in Santa Clara, Calif., said: “I tell people that if you’re doing things with sensitive data, don’t do it at a Wi-Fi hot spot. Do it at home.”

But home wireless networks may not be all that safe either, because of free and widely available Wi-Fi cracking programs like Gerix WiFi Cracker, Aircrack-ng and Wifite. The programs work by faking legitimate user activity to collect a series of so-called weak keys or clues to the password. The process is wholly automated, said Mr. Kitchen at Hak5, allowing even techno-ignoramuses to recover a wireless router’s password in a matter of seconds. “I’ve yet to find a WEP-protected network not susceptible to this kind of attack,” Mr. Kitchen said.

A WEP-encrypted password (for wired equivalent privacy) is not as strong as a WPA (or Wi-Fi protected access) password, so it’s best to use a WPA password instead. Even so, hackers can use the same free software programs to get on WPA password-protected networks as well. It just takes much longer (think weeks) and more computer expertise.

Using such programs along with high-powered Wi-Fi antennas that cost less than $90, hackers can pull in signals from home networks two to three miles away. There are also some computerized cracking devices with built-in antennas on the market, like WifiRobin ($156). But experts said they were not as fast or effective as the latest free cracking programs, because the devices worked only on WEP-protected networks.

To protect yourself, changing the Service Set Identifier or SSID of your wireless network from the default name of your router (like Linksys or Netgear) to something less predictable helps, as does choosing a lengthy and complicated alphanumeric password.

Setting up a virtual private network, or V.P.N., which encrypts all communications you transmit wirelessly whether on your home network or at a hot spot, is even more secure. The data looks like gibberish to a snooper as it travels from your computer to a secure server before it is blasted onto the Internet.

Popular V.P.N. providers include VyperVPN, HotSpotVPN and LogMeIn Hamachi. Some are free; others are as much as $18 a month, depending on how much data is encrypted. Free versions tend to encrypt only Web activity and not e-mail exchanges.

However, Mr. Palmer at the Electronic Frontier Foundation blames poorly designed Web sites, not vulnerable Wi-Fi connections, for security lapses. “Many popular sites were not designed for security from the beginning, and now we are suffering the consequences,” he said. “People need to demand ‘https’ so Web sites will do the painful integration work that needs to be done.”

Take the Time to Read This From Krugman

2011-02-17T23:44:00.000-05:00

Op-Ed Columnist

Willie Sutton Wept

By PAUL KRUGMAN

Published: February 17, 2011

There are three things you need to know about the current budget debate. First, it’s essentially fraudulent. Second, most people posing as deficit hawks are faking it. Third, while President Obama hasn’t fully avoided the fraudulence, he’s less bad than his opponents — and he deserves much more credit for fiscal responsibility than he’s getting.

About the fraudulence: Last month, Howard Gleckman of the Tax Policy Center described the president as the “anti-Willie Sutton,” after the holdup artist who reputedly said he robbed banks because that’s where the money is. Indeed, Mr. Obama has lately been going where the money isn’t, making a big deal out of a freeze on nonsecurity discretionary spending, which accounts for only 12 percent of the budget.

But that’s what everyone does. House Republicans talk big about spending cuts — but focus solely on that same small budget sliver.

And by proposing sharp spending cuts right away, Republicans aren’t just going where the money isn’t, they’re also going when the money isn’t. Slashing spending while the economy is still deeply depressed is a recipe for slower economic growth, which means lower tax receipts — so any deficit reduction from G.O.P. cuts would be at least partly offset by lower revenue.

The whole budget debate, then, is a sham. House Republicans, in particular, are literally stealing food from the mouths of babes — nutritional aid to pregnant women and very young children is one of the items on their cutting block — so they can pose, falsely, as deficit hawks.

What would a serious approach to our fiscal problems involve? I can summarize it in seven words: health care, health care, health care, revenue.

Notice that I said “health care,” not “entitlements.” People in Washington often talk as if there were a program called Socialsecuritymedicareandmedicaid, then focus on things like raising the retirement age. But that’s more anti-Willie Suttonism. Long-run projections suggest that spending on the major entitlement programs will rise sharply over the decades ahead, but the great bulk of that rise will come from the health insurance programs, not Social Security.

So anyone who is really serious about the budget should be focusing mainly on health care. And by focusing, I don’t mean writing down a number and expecting someone else to make that number happen — a dodge known in the trade as a “magic asterisk.” I mean getting behind specific actions to rein in costs.

By that standard, the Simpson-Bowles deficit commission, whose work is now being treated as if it were the gold standard of fiscal seriousness, was in fact deeply unserious. Its report “was one big magic asterisk,” Bob Greenstein of the Center on Budget and Policy Priorities told The Washington Post’s Ezra Klein. So is the much-hyped proposal by Paul Ryan, the G.O.P.’s supposed deep thinker du jour, to replace Medicare with vouchers whose value would systematically lag behind health care costs. What’s supposed to happen when seniors find that they can’t afford insurance?

What would real action on health look like? Well, it might include things like giving an independent commission the power to ensure that Medicare only pays for procedures with real medical value; rewarding health care providers for delivering quality care rather than simply paying a fixed sum for every procedure; limiting the tax deductibility of private insurance plans; and so on.

And what do these things have in common? They’re all in last year’s health reform bill.

That’s why I say that Mr. Obama gets too little credit. He has done more to rein in long-run deficits than any previous president. And if his opponents were serious about those deficits, they’d be backing his actions and calling for more; instead, they’ve been screaming about death panels.

Now, even if we manage to rein in health costs, we’ll still have a long-run deficit problem — a fundamental gap between the government’s spending and the amount it collects in taxes. So what should be done?

This brings me to the seventh word of my summary of the real fiscal issues: if you’re serious about the deficit, you should be willing to consider closing at least part of this gap with higher taxes. True, higher taxes aren’t popular, but neither are cuts in government programs. So we should add to the roster of fundamentally unserious people anyone who talks about the deficit — as most of our prominent deficit scolds do — as if it were purely a spending issue.

The bottom line, then, is that while the budget is all over the news, we’re not having a real debate; it’s all sound, fury, and posturing, telling us a lot about the cynicism of politicians but signifying nothing in terms of actual deficit reduction. And we shouldn’t indulge those politicians by pretending otherwise.

Smooth as Silk -- Another Good Brooks Piece

2011-02-15T06:54:00.000-05:00

Op-Ed Columnist

The Experience EconomyBy DAVID BROOKS

Published: February 14, 2011

...“The Great Stagnation,” has become the most debated nonfiction book so far this year. Cowen’s core point is that up until sometime around 1974, the American economy was able to experience awesome growth by harvesting low-hanging fruit. There was cheap land to be exploited. There was the tremendous increase in education levels during the postwar world. There were technological revolutions occasioned by the spread of electricity, plastics and the car.

But that low-hanging fruit is exhausted, Cowen continues, and since 1974, the United States has experienced slower growth, slower increases in median income, slower job creation, slower productivity gains, slower life-expectancy improvements and slower rates of technological change.

Cowen’s data on these slowdowns are compelling and have withstood the scrutiny of the online reviewers. He argues that our society, for the moment, has hit a technological plateau.

But his evidence can also be used to tell a related story. It could be that the nature of technological change isn’t causing the slowdown but a shift in values. It could be that in an industrial economy people develop a materialist mind-set and believe that improving their income is the same thing as improving their quality of life. But in an affluent information-driven world, people embrace the postmaterialist mind-set. They realize they can improve their quality of life without actually producing more wealth.

For example, imagine a man we’ll call Sam, who was born in 1900 and died in 1974. Sam entered a world of iceboxes, horse-drawn buggies and, commonly, outhouses. He died in a world of air-conditioning, Chevy Camaros and Moon landings. His life was defined by dramatic material changes, and Sam worked feverishly hard to build a company that sold brake systems. Sam wasn’t the most refined person, but he understood that if he wanted to create a secure life for his family he had to create wealth.

Sam’s grandson, Jared, was born in 1978. Jared wasn’t really drawn to the brake-systems business, which was withering in America. He works at a company that organizes conferences. He brings together fascinating speakers for lifelong learning. He writes a blog on modern art and takes his family on vacations that are more daring and exciting than any Sam experienced.

Jared lives a much more intellectually diverse life than Sam. He loves Facebook, YouTube, Wikipedia and his iPhone apps. But many of these things are produced outside the conventional monetized economy. Most of the products are produced by people working for free. They cost nothing to consume.

They don’t even create many jobs. As Cowen notes in his book, the automobile industry produced millions of jobs, but Facebook employs about 2,000, Twitter 300 and eBay about 17,000. It takes only 14,000 employees to make and sell iPods, but that device also eliminates jobs for those people who make and distribute CDs, potentially leading to net job losses.

In other words, as Cowen makes clear, many of this era’s technological breakthroughs produce enormous happiness gains, but surprisingly little additional economic activity.

Jared’s other priorities also produce high quality-of-life gains without huge material and productivity improvements. He practically defines himself by what university he went to. Universities now have nicer dorms, gyms and dining facilities. These improvements have not led to huge increases in educational output.

Jared is very health conscious and part of a generation that has spent much more on health care. This may help Jared lead a vibrant life in retirement. But these investments have had surprisingly little effect on productivity or even longevity.

For Sam, income and living standards were synonymous. But for Jared, wealth and living standards have diverged. He is more interested in the latter than the former. This means that Jared has some rich and meaningful experiences, but it has also led to problems. Every few months, new gizmos come out. Jared feels his life is getting better. Because he doesn’t fully grasp the increasingly important distinction between wealth and standard of living, he has the impression that he is also getting richer. As a result, he lives beyond his means. As Cowen notes, many of our recent difficulties stem from the fact that many Americans think they are richer than they are.

Jared is also providing much less opportunity for those down the income scale than his grandfather did. Sam was more hardhearted, yet his feverish materialism created more jobs.

Jared worries about that. He also worries that the Chinese and others have a material drive that he and his cohort lacks. But he’s not changing. For the past few decades, Americans have devoted more of their energies to postmaterial arenas and less and less, for better and worse, to the sheer production of wealth.

During these years, commencement speakers have urged students to seek meaning and not money. Many people, it turns out, were listening.

Another Good Anticipatory Piece -- On Viewing Reagan

2011-02-15T06:40:00.000-05:00

Reagan and RealityBy BOB HERBERT

Published: February 14, 2011

Early in Eugene Jarecki’s documentary, “Reagan,” you hear the voice of Ronald Reagan saying, “Someday it might be worthwhile to find out how images are created — and even more worthwhile to learn how false images come into being.”

Indeed. The image that many, perhaps most, Americans have of the nation’s 40th president is largely manufactured. Reagan has become this larger-than-life figure who all but single-handedly won the cold war, planted the Republican Party’s tax-cut philosophy in the resistant soil of the liberal Democrats and is the touchstone for all things allegedly conservative, no matter how wacky or extreme.

Mr. Jarecki’s documentary does a first-rate job of respectfully separating the real from the mythical, the significant from the nonsense. The truth is that Ronald Reagan, at one time or another, was all over the political map. Early on, he was a liberal Democrat and admirer of Franklin Roosevelt. Reagan’s family received much-needed help from the New Deal during the Depression.

It is well known that Reagan was the head of the Screen Actors Guild. And though he was staunchly anti-Communist, he did not finger anyone when he appeared before the rabid House Un-American Activities Committee. But Mr. Jarecki learned that at the height of the Red Scare, Reagan had been secretly cooperating with the F.B.I. He was registered officially as Informant T-10.

No less than other public figures, Reagan was complicated. He was neither the empty suit that his greatest detractors would have you believe nor the conservative god of his most slavish admirers. He was a tax-cutter who raised taxes in seven of the eight years of his presidency. He was a budget-cutter who nearly tripled the federal budget deficit.

The biggest problem with Reagan, as we look back at his presidency in search of clues that might help us meet the challenges of today, is that he presented himself — and has since been presented by his admirers — as someone committed to the best interests of ordinary, hard-working Americans. Yet his economic policies, Reaganomics, dealt a body blow to that very constituency.

Mark Hertsgaard, the author of “On Bended Knee: The Press and the Reagan Presidency,” says in the film, “You cannot be fair in your historical evaluation of Ronald Reagan if you don’t look at the terrible damage his economic policies did to this country.”

Paul Volcker, who served as chairman of the Federal Reserve during most of the Reagan years, commented in the film about the economist Arthur Laffer’s famous curve, which, incredibly, became a cornerstone of national economic policy. “The Laffer Curve,” said Mr. Volcker, “was presented as an intellectual support for the idea that reducing taxes would produce more revenues, and that was, I think, considered by most people a pretty extreme interpretation of what would happen.”

Toward the end of his comment, the former Fed chairman chuckled as if still amused by the idea that this was ever taken seriously.

What we get with Reagan are a series of disconnects and contradictions that have led us to a situation in which a president widely hailed as a hero of the working class set in motion policies that have been mind-bogglingly beneficial to the wealthy and devastating to working people and the poor.

“It is important that we stop idolizing our public figures, lionizing them,” said Mr. Jarecki, in an interview. He views Reagan as a gifted individual and does not give short shrift in the film to Reagan’s successes in his dealings with the Soviet Union and other elements of what Mr. Jarecki called “the positive side of Ronald Reagan.” The film also has interviews with many Reagan stalwarts, including James Baker and George Shultz.

But when all is said and done, it is the economic revolution that gained steam during the Reagan years and is still squeezing the life out of the middle class and the poor that is Reagan’s most significant legacy. A phony version of that legacy is relentlessly promoted by right-wingers who shamelessly pursue the interests of the very rich while invoking the Reagan brand to give the impression that they are in fact the champions of ordinary people.

Reagan’s son, Ron, says in the film that he believes his father “was vulnerable to the idea that poor people were somehow poor because it was their fault.” A clip is then shown of Ronald Reagan referring to, “The homeless who are homeless, you might say, by choice.”

“Reagan,” an HBO documentary, will be shown on Presidents’ Day to U.S. military personnel on the American Forces Network. It will be available soon in theaters and home video release. It is an important corrective to the fantasy of Reagan that has gotten such a purchase on American consciousness.

Another Krugman Worth Studying -- Eat Your Seed Corn!

2011-02-15T06:31:00.000-05:00

This puts us on top of the problem which will be occupying Congress for the next month. Its long-term effects are overwhelming, and it is articles such as this that point the lie to talk radio.

Eat the FutureBy PAUL KRUGMAN

Published: February 13, 2011

On Friday, House Republicans unveiled their proposal for immediate cuts in federal spending. Uncharacteristically, they failed to accompany the release with a catchy slogan. So I’d like to propose one:

Eat the Future.

I’ll explain in a minute. First, let’s talk about the dilemma the G.O.P. faces.

Republican leaders like to claim that the midterms gave them a mandate for sharp cuts in government spending. Some of us believe that the elections were less about spending than they were about persistent high unemployment, but whatever. The key point to understand is that while many voters say that they want lower spending, press the issue a bit further and it turns out that they only want to cut spending on other people.

That’s the lesson from a new survey by the Pew Research Center, in which Americans were asked whether they favored higher or lower spending in a variety of areas. It turns out that they want more, not less, spending on most things, including education and Medicare. They’re evenly divided about spending on aid to the unemployed and — surprise — defense.

The only thing they clearly want to cut is foreign aid, which most Americans believe, wrongly, accounts for a large share of the federal budget.

Pew also asked people how they would like to see states close their budget deficits. Do they favor cuts in either education or health care, the main expenses states face? No. Do they favor tax increases? No. The only deficit-reduction measure with significant support was cuts in public-employee pensions — and even there the public was evenly divided.

The moral is clear. Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.

How can voters be so ill informed? In their defense, bear in mind that they have jobs, children to raise, parents to take care of. They don’t have the time or the incentive to study the federal budget, let alone state budgets (which are by and large incomprehensible). So they rely on what they hear from seemingly authoritative figures.

And what they’ve been hearing ever since Ronald Reagan is that their hard-earned dollars are going to waste, paying for vast armies of useless bureaucrats (payroll is only 5 percent of federal spending) and welfare queens driving Cadillacs. How can we expect voters to appreciate fiscal reality when politicians consistently misrepresent that reality?

Which brings me back to the Republican dilemma. The new House majority promised to deliver $100 billion in spending cuts — and its members face the prospect of Tea Party primary challenges if they fail to deliver big cuts. Yet the public opposes cuts in programs it likes — and it likes almost everything. What’s a politician to do?

The answer, once you think about it, is obvious: sacrifice the future. Focus the cuts on programs whose benefits aren’t immediate; basically, eat America’s seed corn. There will be a huge price to pay, eventually — but for now, you can keep the base happy.

If you didn’t understand that logic, you might be puzzled by many items in the House G.O.P. proposal. Why cut a billion dollars from a highly successful program that provides supplemental nutrition to pregnant mothers, infants, and young children? Why cut $648 million from nuclear nonproliferation activities? (One terrorist nuke, assembled from stray ex-Soviet fissile material, can ruin your whole day.) Why cut $578 million from the I.R.S. enforcement budget? (Letting tax cheats run wild doesn’t exactly serve the cause of deficit reduction.)

Once you understand the imperatives Republicans face, however, it all makes sense. By slashing future-oriented programs, they can deliver the instant spending cuts Tea Partiers demand, without imposing too much immediate pain on voters. And as for the future costs — a population damaged by childhood malnutrition, an increased chance of terrorist attacks, a revenue system undermined by widespread tax evasion — well, tomorrow is another day.

In a better world, politicians would talk to voters as if they were adults. They would explain that discretionary spending has little to do with the long-run imbalance between spending and revenues. They would then explain that solving that long-run problem requires two main things: reining in health-care costs and, realistically, increasing taxes to pay for the programs that Americans really want.

But Republican leaders can’t do that, of course: they refuse to admit that taxes ever need to rise, and they spent much of the last two years screaming “death panels!” in response to even the most modest, sensible efforts to ensure that Medicare dollars are well spent.

And so they had to produce something like Friday’s proposal, a plan that would save remarkably little money but would do a remarkably large amount of harm.

Wall Street's Dead End

2011-02-14T12:37:00.000-05:00

This article caught my fancy. Why? See the first bolded paragraph.

Wall Street’s Dead End

By FELIX SALMON

Published: February 13, 2011

THE stock market has been big news in recent days. Last week’s report that Deutsche Börse, a giant German exchange, intends to buy the New York Stock Exchange, creating a company worth some $24 billion, arrived shortly after the Dow broke the 12,000-point barrier for the first time since before the financial crisis.

These developments drew headlines because they seemed to exemplify significant trends in the American economy. But look at America’s stock exchanges more closely, and there’s less to them than meets the eye. In truth, the stock market is becoming increasingly irrelevant — a trend that threatens the core principles of American capitalism.

These days a healthy stock market doesn’t mean a healthy economy, as a glance at the high unemployment rate or the low labor-market participation rate will show. The Tea Party is right about one thing: What’s good for Wall Street isn’t necessarily good for Main Street. And the Germans aren’t buying the New York Stock Exchange for its commoditized, highly competitive and ultra-low-margin stock business, but rather for its lucrative derivatives operations.

The stock market is still huge, of course: the companies listed on American exchanges are valued at more than $17 trillion, and they’re not going to disappear in the foreseeable future.

But the glory days of publicly traded companies dominating the American business landscape may be over. The number of companies listed on the major domestic exchanges peaked in 1997 at more than 7,000, and it has been falling ever since. It’s now down to about 4,000 companies, and given its steep downward trend will surely continue to shrink.

Nor are the remaining stocks an obvious proxy for the health of the American economy. Innovative American companies like Apple and Google may be worth hundreds of billions of dollars, but most of them don’t pay dividends or employ many Americans, and their shares are essentially speculative investments for people making a bet on how we’re going to live in the future.

Put another way, as the number of initial public offerings steadily declines, the stock market is becoming little more than a place for speculators and algorithms to compete over who can trade his way to the most money.

What the market is not doing so well is its core public function: allocating capital efficiently. Apple, for instance, is hugely profitable and sits on an enormous pile of cash; it is thus very unlikely to use its highly rated stock to pay for any acquisitions. It hasn’t used the stock market to raise money since 1981, and there’s a good bet it never will again.

Meanwhile, the companies in which people most want to invest, technology stars like Facebook and Twitter, are managing to avoid the public markets entirely by raising hundreds of millions or even billions of dollars privately. You and I can’t buy into these companies; only very select institutions and well-connected individuals can. And companies prefer it that way.

A private company’s stock isn’t affected by the unpredictable waves of the stock market as a whole. Its chief executive can concentrate on running the company rather than answering endless questions from investors, analysts and the press.

There’s much less pressure to meet quarterly earnings targets. When the stock does trade, the deals can be negotiated quietly, in private markets, rather than fall victim to short-term speculation from the high-frequency traders who populate public markets. And companies love how private markets allow them to avoid much of the regulatory burden of being public.

That burden comes largely from the Securities and Exchange Commission, which was created in the wake of the 1929 stock-market crash to protect small investors. But if the move to private markets continues, small investors aren’t going to need much protection any more: they’ll be able to invest in only a relative handful of companies anyway.

Only the biggest and oldest companies are happy being listed on public markets today. As a result, the stock market as a whole increasingly fails to reflect the vibrancy and heterogeneity of the broader economy. To invest in younger, smaller companies, you increasingly need to be a member of the ultra-rich elite.

At risk, then, is the shareholder democracy that America forged, slowly, over the past 50 years. Civilians, rather than plutocrats, controlled corporate America, and that relationship improved standards of living and usually kept the worst of corporate abuses in check. With America Inc. owned by its citizens, the success of American business translated into large gains in the stock portfolios of anybody who put his savings in the market over most of the postwar period.

Today, however, stock markets, once the bedrock of American capitalism, are slowly becoming a noisy sideshow that churns out increasingly meager returns. The show still gets lots of attention, but the real business of the global economy is inexorably leaving the stock market — and the vast majority of us — behind.

Felix Salmon is the finance blogger at Reuters.

Calvin Trillin Quotes

2011-02-14T07:58:00.002-05:00

http://thinkexist.com/quotes/calvin_trillin/

Sleep -- Why We're Always Tired

2011-02-14T07:40:00.000-05:00

In fact, writes Ekrich, before artificial light allowed for a later bedtime, people used to sleep in two shifts: the “first sleep,” with a break for ale or sex (or both – it’s Friday, my liege!), and then the “second” sleep until morning.

Duke Time of Day Bill for December 2010 -- Page One Only

2011-02-12T09:49:00.002-05:00

Reading Today's Duke Energy Bill

2011-02-09T08:00:00.001-05:00

First, I am on Time of Day rates. As an experiment. Second, remember that Rider FPP includes charges for all kwh, not just on-peak.

Separating the 24-lb Paper From the 7-lb Purrer

2011-01-21T08:22:00.003-05:00

http://2.bp.blogspot.com/_2FY0Ayie_N8/TA4he8f2X7I/AAAAAAAABvE/h4nmLyLDgXg/s1600/Harlamert+graduation+001.jpg

Reading in the Tub on a Cold January Day

2011-01-21T08:19:00.001-05:00

We're 1/2 Way Through The Dead of Winter

2011-01-21T08:15:00.002-05:00

http://natgagu.blogspot.com/2007/06/three-more-months-of-daily-normals.html

Two NYT Articles-Opinion Pieces on the Joint Commission

2010-12-18T17:23:00.002-05:00

Krugman and Nocera.

Paul Krugman

How naïve we were. We should have realized that the modern Republican Party is utterly dedicated to the Reaganite slogan that government is always the problem, never the solution. And, therefore, we should have realized that party loyalists, confronted with facts that don’t fit the slogan, would adjust the facts.

Which brings me to the case of the collapsing crisis commission.

The bipartisan Financial Crisis Inquiry Commission was established by law to “examine the causes, domestic and global, of the current financial and economic crisis in the United States.” The hope was that it would be a modern version of the Pecora investigation of the 1930s, which documented Wall Street abuses and helped pave the way for financial reform.

Instead, however, the commission has broken down along partisan lines, unable to agree on even the most basic points.

It’s not as if the story of the crisis is particularly obscure. First, there was a widely spread housing bubble, not just in the United States, but in Ireland, Spain, and other countries as well. This bubble was inflated by irresponsible lending, made possible both by bank deregulation and the failure to extend regulation to “shadow banks,” which weren’t covered by traditional regulation but nonetheless engaged in banking activities and created bank-type risks.

Then the bubble burst, with hugely disruptive consequences. It turned out that Wall Street had created a web of interconnection nobody understood, so that the failure of Lehman Brothers, a medium-size investment bank, could threaten to take down the whole world financial system.

It’s a straightforward story, but a story that the Republican members of the commission don’t want told. Literally.

Last week, reports Shahien Nasiripour of The Huffington Post, all four Republicans on the commission voted to exclude the following terms from the report: “deregulation,” “shadow banking,” “interconnection,” and, yes, “Wall Street.”

When Democratic members refused to go along with this insistence that the story of Hamlet be told without the prince, the Republicans went ahead and issued their own report, which did, indeed, avoid using any of the banned terms.

That report is all of nine pages long, with few facts and hardly any numbers. Beyond that, it tells a story that has been widely and repeatedly debunked — without responding at all to the debunkers.

In the world according to the G.O.P. commissioners, it’s all the fault of government do-gooders, who used various levers — especially Fannie Mae and Freddie Mac, the government-sponsored loan-guarantee agencies — to promote loans to low-income borrowers. Wall Street — I mean, the private sector — erred only to the extent that it got suckered into going along with this government-created bubble.

It’s hard to overstate how wrongheaded all of this is. For one thing, as I’ve already noted, the housing bubble was international — and Fannie and Freddie weren’t guaranteeing mortgages in Latvia. Nor were they guaranteeing loans in commercial real estate, which also experienced a huge bubble.

Beyond that, the timing shows that private players weren’t suckered into a government-created bubble. It was the other way around. During the peak years of housing inflation, Fannie and Freddie were pushed to the sidelines; they only got into dubious lending late in the game, as they tried to regain market share.

But the G.O.P. commissioners are just doing their job, which is to sustain the conservative narrative. And a narrative that absolves the banks of any wrongdoing, that places all the blame on meddling politicians, is especially important now that Republicans are about to take over the House.

Last week, Spencer Bachus, the incoming G.O.P. chairman of the House Financial Services Committee, told The Birmingham News that “in Washington, the view is that the banks are to be regulated, and my view is that Washington and the regulators are there to serve the banks.”

He later tried to walk the remark back, but there’s no question that he and his colleagues will do everything they can to block effective regulation of the people and institutions responsible for the economic nightmare of recent years. So they need a cover story saying that it was all the government’s fault.

In the end, those of us who expected the crisis to provide a teachable moment were right, but not in the way we expected. Never mind relearning the case for bank regulation; what we learned, instead, is what happens when an ideology backed by vast wealth and immense power confronts inconvenient facts. And the answer is, the facts lose.

A version of this op-ed appeared in print on December 17, 2010, on page A39 of the New York edition.

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Explaining the Crisis With Dogma

By JOE NOCERA

Published: December 17, 2010

I’m talking about that odd 13-page “report” issued on Wednesday by the four Republican members of the Financial Crisis Inquiry Commission. The F.C.I.C., of course, is the 10-member, supposedly bipartisan panel that was created by Congress last year and charged with examining the root causes of the financial crisis.

After a year and a half of hearings, including questioning over 800 witnesses, reviewing millions of pages of documents, and spending some $6 million in taxpayers’ money, its final report is due to be delivered in a month.

Except that in Washington these days, there is no such thing as bipartisan. On every major issue facing the country, Democrats and Republicans have competing narratives. Why should anyone expect anything different when it comes to the origins of the financial crisis?

Although commission members had long made a show of trying to work collaboratively, there was always a fair amount of underlying tension. Some of that tension had to do with the internal dynamics of the commission — the general sense of chaos, for instance, and the supposedly autocratic style of its Democratic chairman, Phil Angelides.

But more recently, it has had to do with the growing tug of war between the commissioners over which financial crisis narrative would win out. The Republican minority, fearing their view would get short shrift, pre-emptively put forward a CliffsNotes version of their theory of the case. In other words, they responded to a report that hasn’t even yet been written, much less read and voted on by the members.

Is there such a word as “presponse?” Perhaps we should coin it to describe what took place this week at the F.C.I.C.

It would all be pretty laughable if it didn’t have serious consequences. But it does. First, with the commission’s Republican members having now issued this public, partisan smoke signal, the final product, no matter how rigorous, will be inevitably dismissed as a Democratic document. As a result, it will have little impact and, once Bill O’Reilly has finished mocking it, will be consigned to the dustbin of history. By creating this partisan rift, the Republicans have succeeded in tarring the entire enterprise.

That is a genuine shame. When the commission was formed last year, there were high hopes that it could act as a modern-day Pecora investigation — which rooted out Wall Street corruption in the wake of the crash of 1929, and helped create the political groundswell for such key reforms as the Glass-Steagall Act. That investigation was led by Ferdinand Pecora, who held the country spellbound through some two years of nonstop investigations. Clearly, this effort isn’t going to come close to that one.

“I think we can officially stop comparing these guys to the Pecora Committee,” said Michael Perino, author of an engaging recent book about Pecora, “The Hellhound of Wall Street.” Mr. Perino added, “It is disparaging to Pecora.”

The second consequence is even more important. Next year, the House of Representatives will be in Republican hands. High on the agenda for the new majority is its own version of financial reform. The Republicans hope to minimize the impact of the Dodd-Frank bill while at the same attacking — and fixing — what they see as the “true” culprit of the financial crisis.

To fix a problem, though, it helps to know what the problem is. The F.C.I.C., with all those witnesses and documents, could have really helped here. But the paper released by the commission’s Republicans this week reads as if they couldn’t be bothered. It simply reiterates longstanding Republican dogma that could have been written without a $6 million investigation. None of which bodes particularly well for the next two years of “financial reform.”

The problem the Republicans want to fix is the two government-sponsored entities, Fannie Mae and Freddie Mac. Without question, Fannie and Freddie need fixing. A week before Lehman Brothers collapsed in September 2008, both entities were so troubled that they had to be taken over by the federal government. Since then, the G.S.E.’s, as they’re called in Washington, have cost the taxpayer around $150 billion in losses, far more than, say, the American International Group.

They have also, though, served a critical purpose. With the private mortgage market essentially broken, virtually every mortgage made in America, postcrisis, has required a guarantee from Fannie, Freddie or the Federal Housing Administration. With the banks unwilling to make mortgage loans on their own, you simply cannot buy a house in America today without Fannie and Freddie’s help.

The F.C.I.C. commissioner who has complained loudest about Fannie and Freddie is Peter Wallison, a former Reagan-era Treasury official who for the last two decades or so has been a fellow at the conservative American Enterprise Institute. Long before it was popular to criticize Fannie and Freddie, they were Mr. Wallison’s bugaboo. Back then, he was a lonely — indeed a brave — voice arguing that the enormous portfolios of mortgages of the G.S.E.’s — combined with their quasi-governmental status — created systemic risk.

He was right about this, though it’s worth nothing that his precrisis prognosis of Fannie and Freddie’s ills was wrong in a number of key ways. Like most Fannie and Freddie critics at the time, he believed the risk they posed was interest-rate risk, rather than credit risk, which is what actually brought the two companies low. He also argued that Fannie and Freddie were consistently ignoring their mission to help make affordable housing available to Americans.

Madoff Son

2010-12-17T17:28:00.000-05:00

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BMO Buys Midwest Bank for $4.1 Billion

Mark Madoff's Name a Burden Too Big to Bear

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December 16, 2010, 9:56 pm Legal/Regulatory
The Madoff Scandal

Mark Madoff’s Name Became Too Big a Burden to Bear

By DIANA B. HENRIQUES and PETER LATTMAN

Getty Images

Mark Madoff in 2005, at his father’s firm in New York.

Jin Lee/Bloomberg News

Bernard L. Madoff.Last Friday, the publisher of a promising real estate newsletter called Sonar Report rose before dawn, scoured the news to gather items for that day’s edition and, at 9:04 a.m., sent it out to his e-mail subscribers.

Unknown to almost all of his subscribers, that publisher was Mark David Madoff, the older son of the convicted swindler Bernard L. Madoff.

Less than 24 hours after sending his e-mail, he hanged himself in his downtown Manhattan apartment, leaving behind a life of burdens and blessings.

The blessings appeared to be sustaining him, even on that final day, according to those closest to him. They recall a man who was patiently building a new business, talking regularly with close friends, spending time with his wife and four children and, even in the last hours of his life, walking his dog, an affectionate Labradoodle.

But behind that screen, the burdens of life as Bernie Madoff’s son — the continuing suspicion from the public, the harsh accusations in numerous lawsuits, and his exile from the world of Wall Street — were steadily becoming unsustainable.

“The pressure of the last two years weighed on him enormously,” said a person who had remained close to him since childhood. “He was deeply, deeply angry at what his father had done to him — to everybody. That anger just seemed to feed on itself.”

The burden had eased as the public’s fierce interest in the case seemed to fade, this person said. But the spate of lawsuits filed last week by the Madoff trustee included a troubling one against his children and “cases against a lot of smaller people, many of whom he knew, some of whom were relatives,” the person continued. “It reopened the wounds. It must have just been more than he could bear.”

Mark Madoff, 46, had also been named in at least nine lawsuits that sought to recover millions of dollars in damages and muddied his professional reputation, friends said. And he was troubled by news articles that repeatedly — and, according to his lawyers, falsely — portrayed him as being under criminal investigation for some role in his father’s epic crime.

Most frustrating of all, this person said, was the fact that neither he nor anyone who knew him could publicly defend him. “There were all these comments from the trustee about how he was an incompetent boob, and to have all the people who knew otherwise muzzled by their lawyers — it was very, very hard.”

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258 CommentsNo one in the financial world, the only world where he had ever worked, would publicly risk giving a job to a Madoff.

He understood how tainted his identity had become. His wife, Stephanie, had applied to the court this year to have her last name and that of her two children changed to “Morgan.”

The Madoff name appears nowhere on the corporate records for Sonar Report. Its address is a U.P.S. store near his home, where he stopped in regularly to collect the mail. He concealed his role as founder and editor of the newsletter from everyone except family and a few close friends.

At least eight of his faithful friends were willing to talk about his failed struggle to stay on course, but none wanted to be identified for this article out of respect for the family’s privacy or concern that they would become the next target of what one called “the crazies” who circle around everyone in the Madoff saga.

Shame at being a Madoff shook the foundation of Mark Madoff’s lifelong identity, a close friend said.

“He had always been so proud of his name and being the guy who was Bernie Madoff’s son,” the friend said. “And then afterwards all anyone ever saw in him was that he was Bernie Madoff’s son.”

The media attention, which only intensified after Mr. Madoff’s suicide, prompted his family to decide to cremate his body and not hold a funeral. A private memorial service was held at an undisclosed location on Thursday.

An Unwelcome Spotlight

Mark Madoff and his younger brother, Andrew, had become accidental celebrities the day their father was arrested. The day before, the two brothers had reported to law enforcement that their father had confessed that his investment business was “one big lie,” a multibillion-dollar Ponzi scheme he had been running for years.

Bernard Madoff pleaded guilty and is serving a 150-year sentence in a North Carolina federal prison. His investors have cash losses estimated at $20 billion, but the wealth supposedly held in their accounts when the fraud collapsed totaled $64.8 billion. Mr. Madoff had not been in touch with his father or his mother, Ruth, since the fraud was exposed two years ago.

Mark Madoff had struggled visibly in the year that followed his father’s arrest. In October 2009, his wife reported him missing when he went out for a walk after a marital spat and did not return for many hours, according to a person familiar with the incident. Police ultimately traced him to the Soho Grand Hotel. According to the person who has been close to him since childhood, he sought counseling after that episode and seemed to have steadied himself.

The unwelcome spotlight returned to the Madoff family as the second anniversary of his father’s arrest approached. According to several friends, Mr. Madoff had expressed anger and frustration with the media coverage, especially articles he saw on the eve of his death that suggested federal prosecutors were continuing to scrutinize him and his brother. Their lawyers have said that neither Mark nor Andrew has been notified by prosecutors that he is the target or subject of a criminal investigation.

The renewed media attention and incessant litigation had weighed on Mr. Madoff, say his friends. But a close friend who spoke with him on Friday said his concern over the anniversary coverage didn’t seem out of the ordinary.

“There was nothing from the discussion that suggested he thought this was some big event,” the friend said. “It seemed like this was the same old news coming up again.”

Mr. Madoff and his brother were raised in Roslyn, N.Y., on Long Island. “He was the gorgeous blond boy that most guys envied for his good looks and most girls wanted to go out with, or at least flirt with,” wrote Brett Cantor Harris, a schoolmate, on her blog the day of his death.

After graduating from the University of Michigan with a degree in economics, Mr. Madoff moved to New York and joined his father’s company, Bernard L. Madoff Investment Securities. He worked in the firm’s legitimate market-making and proprietary trading arm. The unit, which was run by the younger Mr. Madoff and his brother, was distinct from his father’s sham money-management business and was a formidable success on Wall Street for decades.

Mr. Madoff married his college sweetheart, moved to the wealthy suburb of Greenwich, Conn., and had two children. He got divorced and married his second wife, the fashion executive Stephanie Mikesell. They had two children and settled in Manhattan’s SoHo neighborhood. He kept a residence in Greenwich and also owned a waterfront home on Nantucket.

After his father’s fraud was exposed, Mr. Madoff’s spending was constrained and subject to supervision by the bankruptcy trustee. But before then, his senior position at a stock-trading powerhouse had afforded him a luxe lifestyle.

Mr. Madoff earned $29.3 million over his last eight years at the firm, according to a lawsuit filed against him by Irving L. Picard, the bankruptcy trustee seeking to recover money for the fraud’s victims. He also benefited from his father’s bogus investment advisory business, taking at least $17 million more from his family’s accounts than he deposited, the lawsuit asserted. It sought to recover at least $67 million from Mr. Madoff individually, and more than $130 million from the other Madoff family executives at the firm.

In the complaint, filed in October 2009, Mr. Picard described Mr. Madoff’s compensation as “astronomical,” and accused him and his brother of being “completely derelict” in their duties and responsibilities at the firm.

Mr. Madoff took great pride in his career and was deeply hurt by Mr. Picard’s accusations, friends say. The firm’s market-making business employed about 120 people and traded tens of millions of shares a day, according to a presentation by Lazard, which helped the Madoff trustee sell the business last year.

Mark and Andrew Madoff also ran the firm’s proprietary trading business, which they started in 1997 and which was liquidated last year. That business earned approximately $270 million over 11 years and substantially outperformed the overall market, according to the Lazard profile.

Mr. Madoff had always seemed sensitive to criticism and tended to take his grievances too much to heart, said one family friend and business associate. “That’s why I never believed he knew about the fraud,” this person said. “He was always a nervous wreck. He could never have stood it — keeping a secret like that would have torn him apart.”

Against that history, his behavior the last week of his life did not ring any alarms with those in regular contact with him.

They never expected how the week would end.

Final Messages

Police pieced together his final messages after seizing his computer and mobile phone, though his lawyers promptly protested and those devices were returned to his family this week.

According to the police reports, at about 4 a.m. on Saturday, Mr. Madoff sent two e-mails to his wife, Stephanie, who had taken their 4-year-old daughter to visit Disney World in Florida on Wednesday, Dec. 8, leaving their 2-year-old, Nicholas, in her husband’s care.

One of his e-mails said, “Please send someone to take care of Nick.”

Another said: “I love you.”

He also wrote his lawyer, Martin Flumenbaum. That message said: “Nobody wants to believe the truth. Please take care of my family.”

When Stephanie Madoff saw her husband’s messages, she called her stepfather in New York and asked him to go immediately to the family loft on Mercer Street in Lower Manhattan.

Her stepfather, Martin London, arrived just before 7:30 a.m. and found Mr. Madoff’s body hanging from a black dog leash attached to a metal beam in the living room ceiling.

There was no evidence of a struggle in the tidy, well-kept apartment, police said. But there was wrenching evidence of Mr. Madoff’s suicidal determination.

A snapped vacuum cleaner cord was suspended from the same metal beam, and a noose fashioned from that cord was on a table nearby. A second leash was attached to the beam, but there was no sign that it had been used in a suicide attempt, according to a person familiar with the investigation.

The victim’s son was found unharmed in the apartment, as was the family’s dog, Grouper.

The discovery horrified Mr. Madoff’s friends, who felt he had been weathering the storm of the last two years and was slowly rebuilding his life.

An avid athlete, he had made plans in recent weeks for future ski trips with friends. He had visited his older son at a Western college. He had kept routine appointments — including one the Friday afternoon before his death.

Mr. Madoff had no illusions that he could get work in the securities industry again, according to the person close to him since childhood, but he did work hard in the last two years “to maintain the network of relationships he had in the industry.”

A close friend, a financial services executive, offered Mr. Madoff a desk at his downtown offices where he could make calls and set up meetings to get back on his feet professionally.

Mr. Madoff did some quiet consulting work and about a year ago began sending out the Sonar Report. It was a one-man operation. He would wake at 4 a.m., search the Internet for real-estate related news and compile the newsletter himself, according to a close friend.

At first, he sent the newsletter free to attract a following. After about six months, he began asking $20 a month.

An introductory note to new subscribers said the Sonar Report was produced by “a new firm” and was “looking to expand our subscriber base.”

It is unclear how many people were paying for the Sonar Report. In May, Mr. Madoff told a friend that he had 1,000 people on his mailing list.

A lawyer who advised Mr. Madoff on copyright issues related to the newsletter said that the focus of their conversations was always on the long-term viability of the venture. Mr. Madoff was hopeful that the business model was “scalable” and newsletters could be developed for other industries that weren’t widely covered, the lawyer said.

Sonar Report has not appeared since Friday.

“Is it not in business anymore?” asked an executive at a large real estate brokerage firm on Tuesday, after a reporter inquired about the newsletter Mr. Madoff had published anonymously. “I haven’t gotten anything from them this week.”

Al Baker, Susanne Craig, Elissa Gootman and Nelson D. Schwartz contributed reporting.

Mark Madoff’s Sonar Report

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258 Readers' CommentsPost a Comment »All CommentsHighlightsReaders' RecommendationsRepliesOldestNewest of 11Next 1.

Cris Ranston

Elmhurst, NY

December 17th, 2010

7:16 amI just read that Mark Madoff, the eldest son of Bernard Madoff, was found dead in his apartment in New York. It looks like a suicide, but who can tell?

His father was given a 150 year sentence to serve in a Federal Penitentiary after Mark turned him along with evidence that his father apparently supplied.

Within minutes of the announcement I read horrible responses to the tragedy.

Whatever Bernard Madoff did was no call for a death sentence for his son.

Time and the actions of the Federal Government have shown that his behavior was no different than that of the major banks and stockbrokers of New York.

The one difference between them and Bernard Madoff was that he called it off.

Timothy Geithner was rewarded for his role and he is now the Secretary of the Treasury.

The CEO of Bloomberg Financial Services is now Mayor of New York.

Bernard Madoff is in Butner Federal Correctional Complex in North Carolina.

The Federal government is helping the people he stole from get it back so they can lose it again.

We pay for all these losers to win.

This nation is failing every test put to it.

We await in this season the birth of Jesus and a renewal of promise and good will, peace on earth.

At the time of his death as Jesus hung on the cross He said to the thief beside him, “ “Truly I tell you, today you will be with me in paradise.”

Recommend Recommended by 36 Readers 2.

Outraged

Oakland

December 17th, 2010

7:16 amHow incredibly regrettable.

I wish he had ignored the public (us) and lived to be an old man.

Enough with the Madoff saga. The guy's in jail. Will the "victims" stop punishing this family? I've had enough. Now it's taken a life.

He was a father. Husband. Self-sufficient. Friend.Recommend Recommended by 92 Readers 3.

ar

Greenwich

December 17th, 2010

7:16 amBefore the scandal broke, he seemed very much like a guy in denial.Recommend Recommended by 15 Readers 4.

cutny

11238

December 17th, 2010

7:17 amSorry he had to end his life this way. I would think he would spend the time to clear his good name, if he had one.Recommend Recommended by 16 Readers 5.

SKV

New York, NY

December 17th, 2010

7:17 amYes, yes ... blessings, struggle, friends, anger, frustration, etc.

What he didn't do was GIVE THE MONEY BACK.

He had $67 million of other people's money. He didn't give a cent of it back.

Zero sympathy.

Stephanie Mikesell/Madoff/Morgan -- give other people their money back.Recommend Recommended by 163 Readers 6.

Tkovacs

Chicago

December 17th, 2010

7:17 amThis is rather unfortunate. What exactly is sonar report?Recommend Recommended by 2 Readers 7.

Andrew

Philadelphia

December 17th, 2010

7:17 amIt's worse than a tragedy, but I guess at the end of the day, the sins of the father shall be visited on the son...Recommend Recommended by 15 Readers 8.

reader

richmond, CA

December 17th, 2010

7:17 am

There needs to be a serious investigation into this. Not a ho-hum, the stress got to him. It's very likely he was killed to keep him quiet. As the son of the master, we have to assume that he probably knew where the billions were stashed and the bodies were buried.

Notice that the suicide notes were all electronic -- no handwriting that could confirm the messages came from Mark. A two year old son and he kills himself. Yeah, right.Recommend Recommended by 60 Readers 9.

Allison

Sausalito, Calif

December 17th, 2010

7:17 amHow terribly sad.Recommend Recommended by 23 Readers 10.

ScottG

Chicago, IL

December 17th, 2010

7:18 amI must say, this is an incredibly well-done story. I really had not heard much about Mark Madoff until his death, but reading this story you can really understand and feel his frustration and despair. It's very, very sad.

What's eerie is that I just read a book by Al Capone's niece, "Uncle Al Capone," and what she describes in that book is very similar to what Mark faced: the younger relatives of a notorious criminal faced with the impossible task of escaping his toxic shadow. In fact, the author's father also killed himself when she was a child. The parallels are fascinating.Recommend Recommended by 52 Readers 11.

mary stuart

new york, ny

December 17th, 2010

7:18 amOnce Marc Madoff found out that all the money his Daddy gave him was

made through fraudulent activity, he should have returned it. But he didn't and the law suits were pending for him to give up his assets which were given to him but acquired illegally by his father and he didn't want to give them up or his life style. Did anyone ever think

that Mark Madoff could not live with himself because he could not come to terms with his own "greed" for holding on to his possessions which should be given back to all the folks who lost their money. Even if he did not commit the crime of fraud, he was partially guilty for holding on to the possessions illegally obtained by his father.

His deed was a very selfish act.Recommend Recommended by 130 Readers 12.

AJY

New York, NY

December 17th, 2010

7:18 amI've seen so many horrible comments made about this man, I just wanted to be the first here to chime in with how sad of a story it really is...the man died for his father's sinsRecommend Recommended by 73 Readers 13.

bob

chicago

December 17th, 2010

7:18 amAs someone who has been touched by suicide (my mother died that way), this story is devestating. If his wife, children and friends read this, my thoughts are with you. I am so very sorry for this terrible loss. Recommend Recommended by 98 Readers 14.

Katherine in PA

Philadelphia, PA

December 17th, 2010

7:18 amWhat Bernie Madoff did for so many years was absolutely abhorrent, but this is just the saddest story. While everyone can be furious with the father, why did so much rage have to be leveled at the sons? There's something very tawdry about Picard's behavior and I wish he had kept this entire affair on a less personal level - assail the crimes, assail Bernie Madoff, but reserve judgement on other family members until there is proof of their complicity. This is also a reminder to all of us that words can cut to the bone and we should mind our tongues. Cruel words are never forgotten - they are etched on our souls.Recommend Recommended by 80 Readers 15.

samuel d kouame

New York and Accra, Ghana

December 17th, 2010

7:18 amSad to hear this. He seemed to be a great guy who worked hard to establish his reputation to see it crumble with the misdeed of his father. As a society we need to stop indexing people for the mistake of others. May he find eternal peace. I hope the best for his kids and his wife.Recommend Recommended by 34 Readers 16.

mm

dallas

December 17th, 2010

7:19 amAn unbelievably sad story. No parent should be forced to preside over the death of their child. To cause it .... unimagineable.Recommend Recommended by 39 Readers 17.

aaron

rochester,ny

December 17th, 2010

7:19 amMaybe the media will take this as a lesson to wait until someone is convicted or, at a minimum, charged before relentlessy printing allegation and defamatory articles? We, and the media, have long forgotten innocent until proven guilty....Recommend Recommended by 41 Readers 18.

blackentourage

Long Beach,ca

December 17th, 2010

7:19 am"Less than 24 hours after sending his e-mail, he hanged himself in his downtown Manhattan apartment, leaving behind a life of burdens and blessings."

He hanged himself? Does this publication even utilize the style guide? Smh. It is a shame though this young man felt the need to take his own life, that is never the answer. Even though is favor is a very corrupt man who stole billions destroying the futures of millions, i wouldnt wish the lose of a son on anyway. Recommend Recommended by 5 Readers 19.

Marcel Duchamp

Maine

December 17th, 2010

7:20 amHe could have given up The Money and started all over - but The Money hung him.Recommend Recommended by 84 Readers 20.

TerryO

New York

December 17th, 2010

7:20 amA very sympathetic article about a middle-aged man who should have known better -- and who should have/may have known what his father was doing. And if he did not know, then it must have been a blind decision -- more comfortable than discovering the truth. Mark Madoff's pain and his painful death is very very sad. Being raised in a dysfunctional, amoral, over-the-top self-indulgent family didn't help him learn how to be a man with conscience and responsibilities owed by the haves to the 'have nots'. (Like, how many yachts, how many houses, does one family need?) And why does the media still treat him as a boy who got lost rather than a man who joined the team? I'm guessing he thought death now was better than a possible life in jail. Frankly, I'd make the choice he did.Recommend Recommended by 61 Readers 21.

Beaver

Chicago

December 17th, 2010

7:20 amThis article contains information that might help a reader understand "why?", but it doesn't give any information about "why then?" and "why in that place?" AS usual, suicide leaves the rest of us feeling helpless, confused, and really sad. An adult friend of mine recently committee suicide inexplicably after what seemed to be a normal day. However, my friend had been taking Lexapro AND Ambien. There is some evidence that in very rare cases these drugs, alone or in combination, can trigger suicidal thoughts in depressed individuals. It would be useful to know what drugs Mr. Madoff was taking that night. It might explain why that sudden and determined late night/early morning plunge while a helpless child slept in the next room. One father betrays his son, and that son turns around and betrays his own little son. The message a child takes from a parent's suicide is that the parent didn't think the child was worth living for. This is all a terrible story. I would like the cold comfort of thinking that a pill turned an innocent victim and good father into a dead man in this own home.Recommend Recommended by 39 Readers 22.

james

vermont

December 17th, 2010

7:20 amNot buying it

He lived in a 6 million dollar loft

Bought with money gained illegally

it strains credulity to believe he did not know or

Did not suspect

I think he, the bother and ruth knew

It boggles my mind that he still lived in luxury

While others were wiped out by his father

I have zero sympathy for him

They file criminal charges against bernies secretary

But not the children or wife

If he had one ounce of shame he would have given his ill gotten gains up to the victims

Recommend Recommended by 119 Readers 23.

EV

New York, NY

December 17th, 2010

7:20 amWe are asked to believe he knew nothing was amiss, but he withdrew $17m more than he deposited.Recommend Recommended by 89 Readers 24.

no sympathy

USA

December 17th, 2010

7:21 amWould a Madoff with a clear conscience kill himself? I think not.Recommend Recommended by 47 Readers 25.

olliejoseph

nyc,ny

December 17th, 2010

7:21 amWHAT IS THE NY TIMES THINKING? this is such a lightweight, fawning article that i am amazed it was published. words like "faithful friends", " legitimate market-making" business," college sweetheart" , "even in the last hours of his life, walking his labradoodle", are so bogus and sympathetic. this guy was a crook and a son of a crook, and a brother of a crook. he hung himself like a coward before he dealt with his crimes while his two year old slept n the next room. why was his wife at disneyworld if he was so despondent about his father's two year anniversary of public reproach.? the guy was a coward and a crook, who came from a family of crooks. i wouldn't be surprised if his mommy told him to kill himself to get sympathetic media attention. Recommend Recommended by 141 Readers of 11 Next

Social Science Palooza - NYTimes.com

2010-12-07T02:14:00.000-05:00

Social Science Palooza - NYTimes.com: "These studies remind us that we are strange, complicated creatures — deeply influenced by primordial biases and our current relationships. But you don’t have to settle for my summaries of these kinds of studies. Go to the National Affairs Web site, where there are links to Kevin Lewis’s daily batch of studies. A day without social science is like a day without sunshine."

Jamie Dimon: Becoming Too Big to Save -- Creating Fiscal Disaster

2010-12-04T05:40:00.000-05:00

The Baseline Scenario

Posted: 03 Dec 2010 05:47 AM PST

By Simon Johnson

In Sunday’s New York Times magazine, Roger Lowenstein profiles Jamie Dimon, head of JP Morgan Chase. The piece, titled “Jamie Dimon: America’s Least-Hated Banker,” is generally sympathetic, but in every significant detail it confirms that Mr. Dimon is now – without question – our most dangerous banker.

Mr. Dimon is not dangerous because he is in any narrow sense incompetent. On the contrary, Mr. Dimon is very good at getting what he wants. And now he wants to run a bigger, more interconnected, and more global bank that – if it were to fail – would cause great chaos around the world. Lowenstein writes,

“Dimon has always been unusually blunt, and he told me that not only are big banks like JP Morgan (it has $2 trillion in assets) not too big, but that they should be allowed to grow bigger.”

The problem with very big banks is not that they are “too big to fail,” in the sense that it is physically impossible for them to fail. It is that they are so large and therefore so connected with each other — and with all aspects of how the modern economy operates — that the failure of even one such bank would cause great damage throughout the world.

Lehman Brothers had a balance sheet of around $600 billion when it failed. Its collapse helped trigger the worst financial crisis and deepest recession since the 1930s. Imagine what would happen if JP Morgan Chase – even at today’s scale – were allowed to go bankrupt.

Dimon is brilliantly disingenuous on this key point.

“No one should be too big to fail,” he tells me. And J. P. Morgan? “Right,” he says. “Morgan should have to file for bankruptcy.”

But Dimon himself argued, in a November 2009 op ed in the Washington Post, that regular bankruptcy is not a feasible option for megabanks. Instead he eloquently advocated the creation of a special resolution mechanism for big banks – an update and expansion of the powers that the FDIC has long used to handle the orderly failure of small and medium-sized banks with insured retail deposits.

“Creating the structures to allow for the orderly failure of a large financial institution starts with giving regulators the authority to facilitate failures when they occur. Under such a system, a failed bank’s shareholders should lose their value; unsecured creditors should be at risk and, if necessary, wiped out. A regulator should be able to terminate management and boards and liquidate assets. Those who benefited from mismanaging risks or taking on inappropriate risk should feel the pain. We can learn here from how the Federal Deposit Insurance Corp. closes banks. As with the FDIC process, as long as shareholders and creditors are losing their value, the industry should pay its fair share.”

Unfortunately, the resolution authority that ended up being created by the 2010 Dodd-Frank financial reform legislation does not cover JP Morgan Chase because Dimon’s bank operates so extensively outside the US (30% non-US in its current business, on its way to 50%, according to Lowenstein). There is nothing in the current resolution mechanism or the broader powers of the Financial Stability Oversight Council that enables the relevant authorities to implement the orderly winding down of a cross-border bank, like JP Morgan is today or Lehman was in 2008.

And there is no prospect of any kind of inter-governmental agreement to put in place a process for imposing orderly and foreseeable losses on the creditors to cross-border bank. In fact, the Basel Committee of bank regulators, which has jurisdiction in this matter – and which Dimon praises in the NYT interview –has definitely decided not to take up the issue.

JP Morgan Chase is already Too Big To Fail. If it were to threaten failure, the government would face a terrible choice: provide some form of unsavory bailout, i.e., fully protecting creditors; or risk the outbreak of a Second Great Depression. While the executive branch pondered these alternatives, there would be global financial panic.

But that is not the worst of our worries. Jamie Dimon is apparently dead set on ensuring JP Morgan Chase becomes even larger, in part by expanding its operations in emerging markets in India, China, and elsewhere.

As Ireland and other European countries have recently discovered to their horror, Too Big To Fail banks that want to expand globally can grow so large that they become Too Big To Save. “Too Big To Save” means that the government wants to save the bank – e.g., by providing a blanket guarantee, as the Irish did in October 2008 – but that creates such a large liability for the state that it pushes the entire country into insolvency.

JP Morgan Chase is well on its way to becoming Too Big To Save. Through expanding overseas, it effectively bypasses the weak controls we still have in place on bank size (no bank is supposed to have more than 10 percent of total retail deposits). Experience in Europe is that this strategy can enable individual banks to build balance sheets that are larger than the GDP of the country in which they are based – in the UK, for example, the Royal Bank of Scotland had a balance approaching 1.5 times the size of the British economy. And then it failed.

If JP Morgan Chase were to reach the equivalent size in the US, it would be a $20 trillion bank. Perhaps that would take a while, but JP Morgan Chase soon at $4 trillion or $8 trillion is easy to imagine.

Dimon argues that banks becoming bigger is the natural outcome of market processes. He is completely wrong – as Thomas Hoenig, president of the Kansas City Fed explained in a NYT op ed this week:

“These firms [big banks] reached their present size through the subsidies they received because they were too big to fail. Therefore, diminishing their size and scope, thereby reducing or removing this subsidy and the competitive advantage it provides, would restore competitive balance to our economic system.” (See also this news coverage on Hoenig’s views.)

Or listen to Gene Fama – the father of the modern “efficient markets” view of finance. He told CNBC that Too Big To Fail banks are “perverting activities and incentives”, giving big financial firms,

“a license to increase risk; where the taxpayers will bear the downside and firms will bear the upside.”

Or read the recent letter to the Financial Times by Anat Admati and other top names in academic finance (here’s the version of their text on the Stanford website). They could be speaking directly of Dimon and his views in the NYT piece when they say:

“Many bankers oppose increased equity requirements, possibly because of a vested interest in the current systems of subsidies and compensation. But the policy goal must be a healthier banking system, rather than high returns for banks’ shareholders and managers, with taxpayers picking up losses and economies suffering the fall-out.” (See also Professor Admati’s follow up letter to the FT this week, further blasting the views of top bankers and their acolytes; see this link for a version not behind the FT wall: latest letter.)

Jamie Dimon’s job is to make money for his shareholders and even he has struggled – the bank’s stock price is only roughly where it was when Dimon took control in 2004. He really believes that the answer to his stock price doldrums is to make JP Morgan Chase bigger and more complex. In effect, he wants to load up on risk – hoping that this will pay off for him, his employees, and (presumably) his shareholders, and really not caring much about who bears the downside risk.

Lowenstein mentions at various points that Dimon was a protégé of Sandy Weill, but he neglects to remind us that Weill in his heyday espoused many of the same ideas that Dimon stresses in the interview. Weill believed there were great synergies between commercial and investment banking (and insurance). Weill was convinced that bigger was undoubtedly better both for shareholders and for society. He was wrong on all counts, as explained by Katrina Brooker in the NYT earlier this year,

“The dream, the mirage has always been the global supermarket, but the reality is that it was a shopping mall,” says Chris Whalen, editor of The Institutional Risk Analyst, of Citi’s evolution over the last decade. “You can talk about synergies all day long. It never happened.”

Sandy Weill, of course, built the modern Citigroup, which effectively collapsed – in spectacular fashion – in 2008-09, and which had to be rescued by the government at least twice. What was Citigroup’s balance sheet at the time? It was just over $2 trillion, roughly the size of JP Morgan Chase today. And Citigroup was (and is) extremely global – doing business in more than 100 countries.

Jamie Dimon is intent on building a bank that will surpass all the size and complexity records set by Sandy Weill’s Citigroup.

Whether or not JP Morgan Chase will fail on Jamie Dimon’s watch remains to be seen. He is, without doubt, a relatively careful risk manager in an industry where hubris tends to run amok.

But sooner or later Jamie Dimon will hand over the reins to someone who is decidedly less careful, someone who goes with the groupthink, and perhaps even someone like Chuck Prince, head of Citigroup, who inherited Sandy Weill’s mantle and said – in July 2007,

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

The music had already stopped when he said that.

If the Dimon’s bigger, more global, and greatly interconnected JP Morgan Chase is still dancing next time the music stops, the choice will not be bailout vs. great recession. The real choice will be no choice at all: fiscal disaster through attempted bailout (Ireland), or fiscal disaster through economic collapse (Iceland).

Sargent

2010-11-30T22:09:00.000-05:00

Carnation, Lily, Lily, Rose 1885-6

The inspiration for this picture came during a boating expedition Sargent took on the Thames at Pangbourne in September 1885, with the American artist Edwin Austin Abbey, during which he saw Chinese lanterns hanging among trees and lilies. He began the picture while staying at the home of the painter F.D. Millet at Broadway, Worcestershire, shortly after his move to Britain from Paris. At first he used the Millets's five-year-old daughter Katharine as his model, but she was soon replaced by Polly and Dorothy (Dolly) Barnard, the daughters of the illustrator Frederick Barnard, because they had the exact haircolour Sargent was seeking. Dolly, aged eleven, is on the left; Polly, aged seven, is on the right. A sketchbook at the Fogg Museum, Cambridge, includes Sargent's outline designs for the painting, and two drawings at the Tate (Tate Gallery A00850-1) record the precise poses he required for the girls' profiles.

'The Daily Hunter' blog: To most OSU fans, winning trumps health of 'rivalry' | BuckeyeXtra

2010-11-30T07:27:00.001-05:00

'The Daily Hunter' blog: To most OSU fans, winning trumps health of 'rivalry' BuckeyeXtra: "11-11-1 since 1988 (Cooper's first year)
12-12-1 since 1986
13-13-1 since 1984
14-14-1 since 1982
15-15-1 since 1980
16-15-1 since 1979 (Earle's first year)
16-16-1 since 1978
20-20-2 since 1969 (Bo's first year I think)
32-26-1 since 1951 (Woody's first year)
34-34-2 since 1939
41-41-4 since 1925
44-44-5 since 1919
44-57-6 Overall
0-13-2 1897 to 1918"

The Spanish Prisoner - NYTimes.com

2010-11-29T00:49:00.000-05:00

The Spanish Prisoner - NYTimes.com: "The bad news about America is that a powerful political faction is trying to shackle the Federal Reserve, in effect removing the one big advantage we have over the suffering Spaniards. Republican attacks on the Fed — demands that it stop trying to promote economic recovery and focus instead on keeping the dollar strong and fighting the imaginary risks of inflation — amount to a demand that we voluntarily put ourselves in the Spanish prison."

Did Duke Energy Lower November's GCA Natural Gas Rates Too Low?

2010-11-28T09:04:00.000-05:00

November's GCA was lowered and then December's GCA was raised this week. What goes? With the spot market hovering in the $3 - $4 range for the year, and the futures for December, January and February in the $4 range, and the economy down, why doesn't Duke Energy's GCA reflect some of these low rates as it should?

The reduction for November was seemingly sound. The increase for December doesn't seem so.