Thursday, March 26, 2015

Book Review 343: American Cornball

AMERICAN CORNBALL: A  Laffopedic Guide to the Formerly Funny, by Christopher Miller. 530 pages, illustrated. Harper, $35

The funniest thing about “American Cornball,” which is about broad-gauge American joking in the first two-thirds of the 20th century, is how often Christopher Miller refers to Samuel Beckett, an Irishman who wrote in French and never, so far as I know, paid any attention to America. I didn’t keep count, but he is mentioned at least 20 times, about as often as W.C. Fields.

And Fields is mentioned as much as anyone, as much as the Marx Brothers, Mort Walker or Lucille Ball.

This “encyclopedia of stale humor” is massively erudite about the strangest things. For example, you will perhaps be surprised to know that in an early episode of the newspaper comic of Mickey Mouse that Mickey attempted suicide several times because Minnie rejected him. Also, the oddly involved history of the whoopee cushion.

“American Cornball” is organized by topic, from Absentminded Professors to Zealots, and includes such surprising categories of mass appeal fun as Suicide, Infant Mortality, Flatulence (the longest entry) and Rape.

Miller, a prodigious collector of old postcards showing fat women and watcher of early sitcoms, says he wrote “American Cornball” to be consulted by topic, like other encyclopedias, although it can be read through (as I did it) as a series of little essays on the whys and wherefores of lowbrow humor.

He divides the zeitgeist into broad categories -- an early period of slapstick and violence, followed by increasingly tame jokes (the suburbanization of humor) and ending (for his purposes) in the sort of joke desert of ‘50s conformity.

He has a tendency to use the same examples over and over -- Thimble Theater, Scooby Doo, Li’l Abner, Milt Gross. As result, and because the book is organized by topic and not by practitioner, some notably funny and democratic jokesters are completely absent (Montague Glass, Harry Leon Wilson) or barely mentioned (George Ade, Walt Kelly).

Nevertheless, his selection from a nearly infinite pool of more or less lame material is remarkably comprehensive in theme. I have, somewhere in my library, what may be the funniest book ever published in America, a listing of every scene in every movie in which any portion of an actress’s secondary sexual characteristics were revealed, however fleetingly.

It is good that some people care so much about so little. I could have done with fewer mentions of Henry James (the only writer I know who is more tedious than Samuel Beckett) and more mentions of, say, Ben Hecht (never mentioned at all), but on the whole a fun read.

Wednesday, March 25, 2015

A golden opportunity

For years now, RtO and others in the reality-based community have been calling the Tea Party racist. And just because dozens of party leaders and officials elected with party support kept making coon jokes about Barack Obama.

Well, ha! Mr. Smartypants RtO, now Ted Cruz is running for president, and in an improbable coincidence, the Tea Party's least-favorite former senator and its favorite sitting senator both have American mothers and foreign fathers.

So all the TP has to do to show up the snarky liberals and antiracists is to throw up the same challenges to Cruz's candidacy that it did to Obama's. That will show us.

We'll see.

If they don't, then the world will know the TP is as racist as I've always said. Somebody is going to look bad. Karma is an unforgiving bitch. 

Friday, March 20, 2015

What is Netanyahu thinking?

What is Netanyahu thinking about?

Not about atomic bombs, for sure.

He talks about them, but just like all folks talkin’ ‘bout heaven ain’t goin’ there, he doesn’t think about them.

In 1944, after listening to the report of a brave Polish patriot who had penetrated and then escaped from a German death camp, Justice Felix Frankfurter said, “I cannot believe this.”

Not “I do not believe this,” but cannot.

It’s a common reaction when presented with evidence that is too horrible to contemplate. We see it among people when a relative or neighbor is exposed as a swindler or pedophile; among business owners when it becomes obvious that an investment has been lost.

If Netanyahu had really thought about atomic bombs in Iranian (or, say, Hamas) arsenals, then he would have a strategy to deal with that.

The broad options are few: suasion, sanctions (or a combination of both) or force.

Netanyahu says he does not believe the Iranians would abide by a negotiated agreement, and I believe him. That leaves force.

Once you have chosen force, you must choose what kind and when.

If you were to believe Netanyahu’s speeches, the time was long ago. And, in fact, force has been used, though not decisive force.

A reactor was bombed, although not in Iran (in Iraq in 1981) and the Iranian uranium concentration operation was attacked via cybersabotage (Stuxnet). Neither was more than partially effective.

It is not obvious what degree of force would be effective.

It is not true that Iran could (and has) thwarted use of another air strike by moving its centrifuges underground. Purification of uranium by gaseous diffusion requires immense amounts of electricity, and the power plants are still above ground.

But it is probably true that bombing of Iran’s facilities would cause it to disperse them, which would, probably, require repeated bombing strikes.

It seems unlikely that world opinion would allow such a campaign to continue at no cost to the campaigners.
Occupation would be effective in stopping an atomic program, but the costs would be extremely high.

In any event, and for the same reasons that an endless, intermittent bombardment campaign is not practical, it is not believable that Israel could act alone.

And this is why I am sure Netanyahu has not really thought about the bomb issue. Because if he had, he would be doing something to recruit allies; and he is doing the opposite.

In the 1920s, the Bolsheviks, without allies, had to grapple with the question of whether there could be “communism in one country.” Netanyahu (if he thinks about it, which I doubt) must wonder if there can be “Zionism in one country.”

(My answer is, probably not, not if it is surrounded by 50 million hostile Arabs, but that is a question for another day.)

There is also the flip side of the bomb question: If Iran had a bomb (or several) what could it do with it?

Atomic bombs have not been used in warfare since 1945 because (among other things) it is hard to find targets for them. Especially if the other side has them, too.

It is possible that the Iranian crazies would consider it worthwhile to blanket Israel with bombs (it would take quite a few, because even atomic bombs have small blast footprints) even if that meant one or a few atomic bombs in return -- or, even if no bombs were dropped on Iran, the condemnation of the world.

Who knows? We have people that crazy in the Republican Party in the United States (see, for example, this).

Or maybe Iran could use its bomb for terror and extortion, although that is not how India, Pakistan, Israel and (perhaps) North Korea have used theirs.

It is obvious, though, that Netanyahu has thought of bombs but not really about them. If he had, he would act differently than he has.

Calling out a lying Teadiot

(Is there any other kind?)

Thursday, March 19, 2015

The view from Down Under

This is almost a throwaway line, but worth repeating:

The Panic of 1837 was one of those cyclical catastrophes that occur every few decades to remind the citizens of the United States that wealth isn't created by mass investment in paper promises.
It's from John Bailey in his outstanding "The Lost German Slave Girl."

He got a couple things wrong. First, until the New Deal reforms, the catastrophes came a lot oftener than every few decades. More like every 7 years, with the longest gap 15 years (1907-21).

The reminders haven't worked. The rightwing half of the country will not even acknowledge that these catastrophes happened. (Some go so far as to admire them.)

It is also not true that letting these dips find their own bottoms leads to a stronger recovery in less time. That was not the case after the Panic of '37, or of the others either.

The wasteland of Diogenes

Recently, RtO noticed Barry Eichengreen's dual history of the Great Depression and the Great Recession. Among the important points made by Professor Eichengreen (but not mentioned in my short review) was the role of insider trading in the Great Depression. He gave special attention to insider trading in London.

That was over 80 years ago. Today Bloomberg News has a little story about how

Before the 2008 financial crisis, no one had ever been prosecuted for (insider trading in Britain).
American regulators have done a little better but not much.  While reading this story, you might want to keep in mind that 1) Bush II wanted to turn ALL of your retirement money over to these people; and 2) that the Republicans have argued for over 30 years that regulation of financial markets is a bad thing.

The quarry in the London hunt were small fry. It would take a fool to imagine that more and worse was not being done (and is not still being done) by the grand players. Blomberg marvels that

Rifat and an accomplice made a mere 285,000 pounds on insider dealings — pocket change in the hedge fund world.
This shows an endearing innocence (or else profound stupidity, you choose) about financiers, but we are invited to swallow even worse nonsense:

Operation Tabernula raises many questions, including the big one: just how serious is insider-trading anyway? Some academics question whether U.S. and U.K. regulators should spend so much time and money on these investigations when, for example, few banking executives have been held accountable for the excesses of the mortgage boom. 
Call it the "leave the broken windows alone" theory of policing crime. To sensible people, what it suggests is far more and far more stringent regulation of financial markets: call that the Willie Sutton theory of policing: look for thieves were the money is. Or, if you are of a more literary turn of mind, the "God Bless You, Mr. Rosewater" theory.

In any event, this destroys the light regulation arguments.

I am not saying it would not be a big task:
 According to the FCA, authorities scoured 10 million emails and 110,000 lines of trading data. Sixteen separate raids, involving 143 investigators, were conducted in conjunction with the Serious Organised Crime Agency.
 All to capture fewer than a dozen thieves, whose penalties, so far, have amounted to less than a burglar in Hawaii would get for stealing a television set.

Until bankers and brokers start doing hard time, and lots of it, and until crooked banks and brokerages are shut down and their shareholders are wiped out, you will be robbed.

Friday, March 13, 2015

Video at 11

In 1968, my friend Brown Carpenter and I went to a George Wallace presidential rally in Norfolk, Virginia. Maybe 10,000 people half-filled a football stadium, where we were warmed up by the singing duo of Mona and Lisa (fo' real).

After not too long under a hot sun, Wallace climbed the stage (this was before he was shot) and gave his standard stump speech.  It was well received. A young girl in front of us sighed, as after coitus, "Thank God for George Wallace." But the reaction was merely favorable, not wild.

Except when a television crew would point its camera at a section of the stands. That section then erupted in a violent demonstration. The sections on either side watched quietly, and as soon as the camera turned away the noisy section settled back into something close to torpor.

The television coverage that evening thus gave a misleading impression of what had occurred.

In those days,  teevee cameras were not so common, and while there were home movie cameras available, they were not convenient and the film was expensive. Not every public or semipublic event was recorded by several different people.

Now, we expect to have at least grainy surveillance footage of almost anything. The results can be interesting. Click through also to the Bloomberg example of Cruz in front of a rightwing crowd. 

Sunday, March 8, 2015

Book Review 342: Fooling Some of the People All of the Time

FOOLING SOME OF THE PEOPLE ALL OF THE TIME: A Long Short Story, by David Einhorn. 379 pages. Wiley, $29.95

Timing isn’t the most important element of securities investing, but it is very important. Over the past two decades, few investors have timed things better than David Einhorn, who started Greenlight Capital with under $1 million and today manages about 10,000 times more money.

But as an author his timing was terrible. Since 2002, Greenlight had shorted Allied Capital, a Washington, D.C., based investment company that mostly made loans to small and medium-sized businesses that were 75% guaranteed by the Small Business Administration.

He was betting Allied’s stock price would have to go down because he had detected accounting errors, which could hardly be the result of anything but fraud, in Allied’s Securities and Exchange Commission reports. Further investigation discovered out-and-out fraud in loan originations.

But as Keynes said, “The market can remain irrational longer than you can remain solvent,” and Allied’s stock did not go down.

“Fooling Some of the People All of the Time” is Einhorn’s riproaring account of six years bearing down on Allied. It is as exciting (for people who can get excited about Wall Street) as Michael Lewis’s “The Big Short” and far more useful as a primer on what really smart investors do.

Also what really corrupt companies do.

But Einhorn published his book in 2008, and very soon people were worried about the collapse of Lehman Brothers, which was 100 times bigger than Allied. And then AIG, bigger even than Lehman.

Einhorn did not help his own book by being short on Lehman, too; and when people subsequently thought of David Einhorn it was not as the young guy who made a small killing on Allied but as the whiz-kid who made a big one on Lehman.

In fact, he didn’t make any personal money off Allied because he got into a public dispute with Allied management, which alleged he was maligning a good company for personal gain. Einhorn countered by pledging to turn over any gains to charity.

The real interest of “You Can Fool Some of the People” is that Einhorn, like Harry Markopolos blowing the whistle on Bernie Madoff, could not get anyone to look as closely at Allied as he had. (You should read “No One Would Listen,” Markopolos’s excellent book.)

Not the SEC, nor the SBA, nor brokerage analysts who followed Allied, nor business journalists, nor Allied’s mostly widow-and-orphan stockholders. Not its directors. Hardly anybody listened, although a couple of other savvy investors joined Einhorn in the pursuit of Allied.

They never truly caught up with them. Allied did eventually come close to collapse, but unlike Enron or Madoff, it was taken over by a bigger company (Ares) and its top officers were never punished. (Some small fry in the Detroit branch were convicted of various charges related to phony loan originations.)

Greenlight profited somewhat from its short, but the big losers were American taxpayers.

By 2008 no one had time for a relatively small con game like Allied, but relative does not mean small. Allied was a $4 billion company, and it had raised more than a billion dollars in fresh capital during the period that no one was listening to Einhorn. The amount of taxpayers’ money the SBA lost in fraudulent loans was at least a quarter of a billion dollars, maybe a lot more.

And that is why it is still well worth reading “Fooling Some of the People All of the Time.” (Get the revised edition which carries the story forward from the mistimed original publication.)

If you have a retirement account, do this. Even if you don’t, it’s a great yarn, and although the subtitle calls it a long story, it isn’t. Paper-wasting design tricks make it appear to be 379 pages, but the text is really about 200 pages. 200 tightly-written, thrilling pages, even when you know the outcome.

Con games

The other day, RtO reviewed Barry Eichengreen's "Hall of Mirrors." Although I admire Eichengreen's analysis (there and in other books such as "Exorbitant Privilege") there is one item where we are far apart: business confidence.

Here we go stating again what should be obvious: business confidence is dangerous.

When is business confidence at its highest? Just before a financial collapse.

I rest my case.

Saturday, March 7, 2015

Book Review 341: Traitor to His Class

TRAITOR TO HIS CLASS: The Privileged Life and Radical Presidency of Franklin Delano Roosevelt, by H.W. Brands. 888 pages, illustrated. Doubleday, $35

Near the end of “Traitor to His Class,” H.W. Brands tries to summarize a life that he has barely been able to squeeze into 800 well-written pages:

“It had been a remarkable accomplishment, reflecting a unique bond between the president and the American people. They put their faith in Roosevelt because he put his faith in them. He believed in democracy -- in the capacity of ordinary Americans, exercising their collective judgment, to address the ills that afflicted their society. He refused to rely on the invisible hand of the marketplace, for the compelling reason that during his lifetime the invisible hand had wreaked visible havoc on millions of unoffending Americans. He refused to accept that government invariably bungled whatever it attempted and his refusal inspired government efforts that had a tremendous positive effect on millions of marginal farmers, furloughed workers, and struggling merchants -- the very people who now lined his parade route north.

“Did he get everything right? By no means, and he never claimed he did.”

Only a few presidents came from the mass of “ordinary Americans”: Jackson, Lincoln, Andrew Johnson, Grant, Reagan, Nixon, Ford, Clinton and perhaps Harding. Roosevelt had the most exalted background of any of them, but he also did something that no other president has ever done (or, in modern conditions, could do): He went out among ordinary Americans and talked with and understood them. He did this by driving his little open car around the hamlet of Warm Springs and stopping to talk to farmers and housewives along the road.

It seems pretty clear that these talks re-energized his sympathies during the long, grinding years in the White House; and perhaps the endless venomous attacks from his own class redoubled the effect. At any rate, no president except Lincoln ever showed such true sympathy for the people who elected him.

Brands attributes the extraordinary attitude of Roosevelt to the effects of polio: to the 10-year struggle to recover his mobility. It occurred during a period when his personal life, never happy, was falling apart. Whence came the astounding courage? Brands, thankfully, does not psychoanalyze, he just reports.

One thing I have never understood -- and still do not understand despite Brands’ history -- is how a rural Democrat of no very great accomplishments rose in barely over a decade from unknown to candidate for vice president. Party politics, and especially New York politics, were very different in those days, and Brands does not do much to explicate them. (My understanding of them has been greatly influenced by the autobiography of a Republican contemporary of Roosevelt’s, W. Ward Smith, as presented in a book by his son, the historian Page Smith, “A Letter from My Father.”) 

Roosevelt’s life was so crowded that Brands is able to devote only a small number of pages to each episode. For example, one of the crucial aspects of Roosevelt’s later actions as president was his recruitment of the Brain Trust. But Brands tells us little about that, never even naming all its members.

Nevertheless, “Traitor to His Class” is outstanding in its grasp of the times and of the rather elusive man, and stands as a corrective to the vicious attacks still being made against “that man in the White House” by the economic royalists of the 21st century.

Shop till you're dropped

This would be a really good week for RtO to make fun of the child sacrifices the gun nuts offered to their god, but this is not going to be about toys for tots. If you follow the news at all, you already heard.

But you may not have seen the video from Florida that supposedly shows a successful use of a revolver against a bad guy with a water bottle.

It shows a store owner, who recognizes a customer from a sheriff's alert as a suspected burglar, whipping out his heater and pointing it at the customer's head from about 12-18 inches. The customer was not threatening anybody and he was not armed with anything more lethal than a bottle of water.

Lucky for the store owner -- this is Florida, after all -- that the other customer standing next to the hot and heavy heroism action apparently (and surprisingly -- this is Florida after all) was not packing heat himself. Because instead of reacting to the sight of a bad man with a gun and whipping out his own hogleg for a shootdown, he threw up his hands and backed off.

Under the Zimmermann doctrine -- this is Florida, after all -- he'd have been within his gun rights to shoot first and let god sort 'em out.

No doubt this store owner's stupid and dangerous action will go into the gun nut database as one of the 2,500,000 imaginary annual uses of firearms to protect the (fantasy) lives of frightened Americans.

Thursday, March 5, 2015

Book Review 340: Hall of Mirrors

HALL OF MIRRORS: The Great Depression, the Great Recession and the Uses -- and Misuses -- of History, by Barry Eichengreen, 512 pages, Oxford. $29.95

Santayana said those who do not remember history are fated to repeat it. Marx said history repeats anyhow, first as tragedy, then as farce. Barry Eichengreen says even those who study history are in danger of drawing the wrong conclusions.

And draw them they did in the Great Recession that began in 2007.

It had its farcical aspects, which Eichengreen is not slow to note. Among writers on economics, he is among the most stylish and witty, though without the meanspiritedness of, say, Galbraith.

He draws many valuable lessons, but the big one is that the policymakers of 2008 and since did well to avoid the disasters of the policymakers of 1928-33, but that their success included its own punishment: Because they avoided catastrophe -- settling instead for mere disaster -- they lacked the incentive to move to genuine reform.

He leaves us with this warning: “Thus, the very success with which policy makers limited the damage from the worst financial crisis in eighty years means we are likely to see another such crisis in less than eighty years.”

“Hall of Mirrors” is structured in a way that can be somewhat confusing or intimidating for readers who are not well-versed in the economic history of the ‘20s and ‘30s. He races over some of the incidents that led to the Crash, from time to time relating them to incidents in the 21st century financial collapse. The book is dense with facts, opinions and analysis, and it sometimes takes a second reading to determine whether a statement applies to then, now or both then and now.

And though he tries to keep the thread of the American failures separate from the European failures -- they had their own histories and trajectories -- inevitably they become tangled up at times.

This is financial history, dealing in aggregates, so it pays little attention to industrial or agricultural history. Only rarely does Eichengreen pause to disaggregate an aggregate to point out that not all sectors (or subsectors) experienced the main trends the same way.

This is my biggest disappointment in the book, although doing it differently would have resulted in a volume so big nobody would read it. But ignoring agriculture misses the fact that the Great Depression began for farmers after the harvest of 1921. Industrial production was exploding, so farm output was becoming less and less significant if you look at aggregates (as Eichengreen does). But two in five Americans were dependent on renewable resources (farming, forestry and fishing) before the Great Crash, and so many people are important even if -- as Mitt Romney would say -- they don’t make enough money to bother about.

The New Deal worked. Eichengreen is clear about this. It is a rightwing talking point that it failed, but the numbers show it worked.

Eichengreen, fixated for both crashes on restoring normal output, is critical of those parts of the New Deal that worked against reflation; but there were other things that needed doing. Yes, Social Security was deflationary and tended to delay full recovery, but as Harry Hopkins used to say, “People don’t eat in the long run, they eat every day.”

When it comes to the 21st century crash, Eichengreen firmly lists failure to regulate first: “The crisis taught the United States some hard lessons about the inadequacies of financial regulation, although acting on those lessons was more easily said than done.”

This is inordinately cheerful. No one in the Republican Party learned those lessons, and the Teadiots learned a sort of upside down version. Certainly neither group would endorse the kind of fiscal stimulus that Eichengreen rightly considers bedrock policy in a deflationary crisis.

But, as he notes, even midstream economic thinkers were -- and still are -- mesmerized by the problems of inflation, although these do not exist. (“The dangers to which they pointed were largely illusory,” he writes.)

Only a few residual New Dealers understand that deflation is the problem and that, unlike inflation, it is not easily dealt with by the limited repertoire of remedies that governments and central banks can use. (It is worth mentioning that in ferreting out the causes of the Great Recession, Eichengreen does not assign any weight to the villain that the rightwing is certain caused it: the Community Reinvestment Act. Never even mentions it.)

Instead he fingers the “shadow banking system” that had grown up, especially since the nostrums of Reaganomics began to take hold. These are the insurance companies, hedge funds, special purpose vehicles (off book operations of commercial banks) and the like, which made up nearly two-thirds of nonfinancial credit in the United States at the time of the Crash of ’08.

For Europe, where banks have always been more important, he does finger banks.

He also scolds the moralists, who in each crash and on each side of the Atlantic allowed indignation to trump effective recovery policies.

That, he says, was behind the “single most important” policy mistake in the late crash, the failure to rescue Lehman Brothers.

I would say the single most important policy mistake was Reaganomics, the failure to understand that unsupervised markets fail. Lehman was just an episode.