Thursday, April 30, 2009

HSX: Week of May 1, 2009

Summer is here! At least in the movies. Blockbuster season is about to start! Get your Summer 2009 Blockbuster Warrants!

But first, the weekend. Let's get the small stuff out of the way first, shall we? An indie animated movie called Battle for Terra (TERRA) is being released, and someone's going to lose money. Probably the people who financed it: "indie" and "animation" is usually not a good combination. It's about cute aliens facing evil humans, who are trying to take over their planet. How low are the expectations? HSX didn't even float options. It reached a high this year of H$8.83, and is down today to H$6.49. Oh that's not good. There are some recognizable names in the voice cast, which is not surprising. This is a no-lose deal for someone like Brian Cox or Amanda Peet. They can do the work in just a couple of days, get paid maybe $100,000, and then walk away. Since you can't see them, no one will associate them with it if it's a flop. Not a bad deal. For whoever is making the movie, you can get a decent number of names for a fraction of what Brad Pitt's agent would make on a live action movie. Critics are actually somewhat favorable, with a 58% rating on So maybe there's hope. But maybe not. It is coming out on 3-D, but even kids can see through a gimmick.
Stock: Short

Matthew McConaughney in a romantic comedy - sound familiar? Yes, but: toss in the classic Dickens tale about three ghosts haunting someone to get them to change their ways, and you have "Ghosts of Girlfriends Past" (GHOGP), about one of those guys who loves and leaves 'em and his inability to commit. Quite the high concept we have going here. Maybe not. Stock is at H$48.34. about a buck and a half off the high. Movement has been moderately upward. Jennifer Garner brings some adult sensibility and a touch of class. But she is - quite literally - in the "girlfriend" role. Of course, so are several other actresses, all of whom get to wreak some havoc on Mr. McConaughney. For this movie to work, it has to attract a fair share of women. I'm not so sure on that score. The reviews are not bad - they're terrible. 10% on rottentomatoes? Haven't seen that in a while. The strike price is H$15, which it could crack easily if the stock price is accurate. It needs to make about $18 million to hit the stock. Call is H$4.47, but down. Put is around H$1, also down. The options are clearly following the stock. For this movie to work, it has to attract a certain percentage of professional women, who tend to have a certain degree of sophistication. I think this is the moment when Matthew McConaughney becomes a parody of himself. My guess is that he has jumped the shark.
Stock: Short
Call: Short
Put: Long

And then, of course, we have the movie millions have been waiting for, the chance for so many people to have fun with the X-Men movies again, after the disaster that was X-Men 3. Shudder. Wolverine (WOLVE) tells the story of how the guy with the funky fingers got the way he is. Woo hoo! Sign me up! The stock is trading at $H225, mostly up in recent weeks. Strike price is $H80, right about where it should be. Call is actually down today, but that's because it was above H$9. The put, interestingly enough, is not underwater, but is at H$2.52. Someone's taking some risks. The strike price predicts a stock price of $H216, so they're fairly close. The call predicts a price of about $H240. So, let's see, what does this movie have going for it? A huge fan base from the first movie, a wildly popular movie star, and the first big action blockbuster of the summer. Other than that, not much. One of the main villains is Liev Schreiber, who used to be cast as the sensitive Jewish guy. We're a long way from the days of Woody Allen meeting cute with Diane Keaton. Of course, we're also a long way from the days of Moshe Dayan, so maybe the movies are catching up with the reality of the Middle East. As for the details of this movie: it's at 42% on (as if that matters). How wide is it being released? How wide can you get? Try 4,000+ screens.
Stock: Long
Call: Long
Put: Short

Update Sunday night: It was a good weekend for predictions here at TEQP. I just about nailed everything, except the Put on GHOGP. TERRA was, in fact, a bomb, Matthew McConaughey survived, but not by much, and WOLVE did, in fact, bust wide open. WOLVE dropped by about H$8 on Friday morning, which I usually take as a sign that the stock is going to adjust downwards. This time I stuck with it, and boy am I glad I did - it adjusted up by H$17. Feels good.

And for your viewing pleasure, ladies and gentlemen, the mascot of the University of Michigan:


Obama's first 100 days

Yesterday was President Obama's 100th day in office. It's a nice milestone, but sort of arbitrary. There were lots of articles about it. DailyKos choose some good pictures.

What's important to note about Obama's first 100 days is that he has put in place lots of pieces of a puzzle. The pieces are changes in policy, laws, new people. The puzzle is the new direction America will be going in, the new foundations of our country. Very few of the pieces are fully formed, and they don't fit together yet. But they will. As we reform health care, our economy will get better, which will increase taxes, which will help us balance the budget. As we reduce pollution, we will reduce health care costs. As the economy gets better, crime goes down, which means health costs, again, go down. Allowing over-the-counter sales of the morning-after pill to girls 17 and up will, hopefully, reduce abortion, which will reduce the intensity of the culture wars. Spending more money on public transportation reduces pollution, reduces our dependency on foreign oil, and gives people much cheaper transportation options. Which saves them money, which they can use for more productive uses.

On the foreign policy front, the issues are even more intertwined, sometimes very delicately. Obama went to Turkey. That has implications for our relations with Europe, Iraq, Iran, Israel, Armenia, and Syria. Turkey wants to be part of the EU, but France and Germany object; Turkey shares a border with Iraq, as well as Iran and Syria; Turkey has served as a broker for the Israeli-Palestinian peace process; Turkey disagrees with Armenia about the Armenian genocide. So improving our relations with Turkey has positive implications for all of those parts of our foreign policy. The same is true of Iran, which borders Iraq, Afghanistan, and Pakistan, and is on the verge of developing nuclear weapons.

What makes Obama's agenda great is that the pieces really do fit together. This is in contrast to Reagan. The pieces of the Gipper's ideology did not fit together. He believed in cutting taxes, reducing the size of government, and increasing defense spending. The key difference between Obama and Reagan is that Obama, ironically, is a better capitalist. Obama believes in making society more efficient; Reagan just believed in making money by giving more of it to rich people. There were a couple of key parts of Reagan's agenda that were actually highly inefficient, notably increasing defense spending and increasing the size of the debt. Spending money on defense is inefficient, because most of the money spent doesn't actually do anything. If you spend money on a hospital or a school, you get a return on your investment. If you spend money on a bomber, you don't get an immediate return on your investment, because the bomber doesn't produce anything. Conservatives will argue that the return on your investment from defense spending is the fact of your freedom. We spent billions in WWII, and we got some amazing dividends. We spent trillions of dollars on the Cold War, and the dividend that we got was that we were not annihilated. That's a pretty good dividend. But that kind of infinite return on investment is also a terrible way to judge said investment, because it's infinitely fungible. Which is why there is a huge amount of waste in the Pentagon. Another highly inefficient part of Reagan's agenda was tolerating deficit spending, because that is an inefficient use of capital.

But the most inefficient part of Reagan's agenda, the part that did the most damage, was his conviction that "government is the problem." Reagan restored some of the American people's faith in themselves, with his notion of the "shining city on a hill." But he did the exact opposite with their faith in their government. So problems that could have been solved weren't, and they linger. Talk about inefficiency.

Obama's belief in the ability of government to actually solve problems stands in start contrast to Reagan's cynicism about government. Reagan, ironically, didn't have to worry about his policies delivering on domestic spending delivering a good return on investment, because he didn't think they were going to. As far as he was concerned, government spending on welfare and health care and education were mostly wasteful, so if they didn't deliver a good return, it proved him right. That's one reason he could get away with a less-than-stellar work ethic - he wasn't working to prove that government could work. It was like he had an ideological justification for being lazy. Reagan of course was not the sharpest tool in the shed, even if he wasn't quite as stupid as liberals thot he was at the time. But he laid the ground for the ultimate in intellectually sloppy governance, otherwise known as the George W. Bush administration. There is nothing as inefficient as inept management. Particularly management that is incapable of acknowledging, let alone solving, its own mistakes.

Obama is ideologically committed to working both hard and smart. He has the great advantage of being president in an era when it is actually possible to make government work. He also has the great advantage of following Bush, because all he has to do to make government work better than it did under Bush is to make it work at all. Which means that it will be more efficient. Which creates a virtual circle - as government works better, as the pieces start to fit together, people's faith in their government improves. Which means they will provide it with the resources to work even better.

Not bad for 100 days.

Wednesday, April 29, 2009

Welcome to the party, Arlen!

So Arlen Specter is now a Democrat. Who woulda thunk it. Well, lots of people, actually. Rumors have been swirling for months about how he was going to handle the 2010 election. He was facing a primary challenge from Stephen Toomey, of the Club for Growth, and there was every indication that Specter was going to lose. Lots and lots and lots of people left the Pennsylvania GOP over the last year or so, about 200,000. That leaves a hard core of seriously right-wing people, most of whom don't like Specter. His other options were to retire, run as an independent, and become a Democrat. Apparently he didn't want to retire, which makes a certain amount of sense, since there are several senators older than him (he's 79). There are a couple of independents in the Senate, Bernie Sanders of Vermont, who calls himself a socialist, and Joe Lieberman of Connecticut, who calls himself an "independent Democrat." Sanders can afford to be independent because he was a Representative from Vermont for years, so he's a known quantity there, and apparently Vermonters don't take offense when someone calls himself a socialist. Joe Lieberman, of course, is a special case even among special cases.

If Specter had run as an independent, that would have freed up the Democrats to run against him, and he may very well have lost. Becoming a Democrat means he just about locks up that primary.

I have known of Arlen Specter for most of his Senate career, since I went to school in Pennsylvania in the 80's. I once invited him and Carl Levin to a debate at Swarthmore. I invited Specter because he's a former prosecutor and the Senator from Pennsylvania, and I invited Levin because he graduated from Swarthmore. They both declined, but that was mostly because my invitation was not that well put together. I basically just called each of their offices and invited them - I had no idea of the protocol involved.

I agree with Specter on some things, and I'm not a huge fan of his; he seems to waffle on some things. But his heart is occasionally in the right place, and he has been known to stand up for principle.

He'll be in good company in the Northeast; most of the states that border Pennsylvania have Democrat Senators, and I'm sure he has many friends among Democrats in the Senate.

Once Al Franken is seated, Democrats will have 60 seats, enough to prevent filibusters. This is somewhat symbolic; I don't think Specter will actually change too many votes. But his allegiance is now with Obama, and that counts for something.

Welcome to the party of the future, Senator Specter!

Saturday, April 25, 2009

Investment bankers and educational reform

Some good commentary from Megan McArdle on why we shouldn't hate investment bankers. She also throws in some good advice to investment bankers: don't whine. You are not entitled to being paid millions of dollars a year. And it's not just the people on Wall Street who have to come to terms with reality.

The real problem with investment bankers goes deeper, and is the problem of the entire upper middle class: we have come to believe that complying with the rules produces excellent results as by some natural law. In school, if you do your work, teacher gives you an A. It comes to seem like a sort of a natural law: if you have a good education and work hard, the universe is supposed to reward you. After school, the upper middle class gravitates towards careers with very well defined advancement hierarchies: medicine, law, finance, consulting, where this subtle belief is constantly reinforced

I am very familiar with this problem. I graduated from Swarthmore with a degree in philosophy, and was expecting to be able to just get a job. I have a degree in a very intellectually sophisticated and demanding subject from one of the best schools in the country. Shouldn't I just be able to snap my fingers and presto! get a well-paying, intellectually engaging, emotionally satisfying job? Shouldn't I be able to just send my resume out to a bunch of places and then wait for the job offers to roll in?

Uh, no. I grew up spoiled. Not by my parents, who were very fair and moderate, but by my situation. I'm a heterosexual white male in contemporary America. I took for granted that I would have the nice house and great vacations and all the consumer goods I could want and all that, because that's normal.

Uh, no. It's not normal. It's the product of hard work. Part of my mistake was thinking that education is the key to success. Because that's what we're told: work hard in high school so you can go to a good college, and then you're set. That's the most important thing in being successful: going to a good college.

For many people, maybe it is. And it doesn't hurt. But I think we have confused cause and effect. Many successful people have gone to good schools, so that must be the key to being successful, right? Except that those people got into those schools for the same reason that they were successful. They were smart, competent, hard-working and creative in high school, they were smart, competent, hard-working and creative in college, and then they were smart, competent, hard-working and creative in the real world.

But going to a good school does not guarantee that you will be successful. It just makes it a little easier to get started on being successful. That's it. I have known flaky people with degrees from Harvard and Stanford.

This is something that we as a society have not yet come to terms with. For previous generations, higher education was something that was available to very few people. So people with college degrees were a scarce resource. That made them valuable.

That is no longer the case. Higher education is now much more widely available, so the value of a college degree is now less, as a function of greater availability.

I fell into the trap of thinking that my college education made me special, because I was thinking of it in the terms that had been defined by previous generations. This is not surprising, because the people running the college when I was there were the people from those previous generations. For the people on the Board of Managers when I was in college, Swarthmore was a very special place, because it gave them an education like no one else in their generation had.

So I thot the same would be true for me. I was getting an education that made me unique and special. Except that it didn't. Almost everybody in my high school graduating class went to college and got at least a Bachelor's degree. The one who didn't end up with a BA actually has the coolest job of almost anyone I know - he's a brewmaster at a brewpub, and is doing much better professionally than I am. And he has no student loan debt.

Not everyone in my high school class went on to an elite liberal arts college, but even the ones who went to state schools did really well. Three of my friends went to the University of Michigan. All three have Ph.d.'s (one from Harvard), and all three are successfully pursuing careers in academia.

Megan's friends in investment banking are discovering something that many of us in Generation X have discovered: your college education does not guarantee that you will be successful. All it does is guarantee that you will be able to go to reunions every five or ten years.

Quote of the day (from yesterday)

"It's sad what's happened to the Republicans. They used to be the party of the big tent; now they're the party of the sideshow attraction, a socially awkward group of mostly white people who speak a language only they understand. Like Trekkies, but paranoid."
Bill Maher, in the LA Times. Maher publishes an Op-Ed piece in the LA Times about every six months. They're always good. Love that guy. It's a very good piece, and I could quote more from it, but I will just post one more:

"The thing that you people out of power have to remember is that the people in power are not secretly plotting against you. They don't need to. They already beat you in public."
Except, of course, that Republicans don't think this way because they DID plot in secret, because they knew that what they were doing - warrantless wiretapping, torturing people, abusing the Constitution - were wrong.

Quote of the week

"It is easier to be critical than to be correct."

-From a Chinese fortune cookie I got this week. Love those ancient Chinese sayings!

Obama's First 100 Days coming up!

President Obama will be in office for 100 days very soon. Next Wednesday! Woo hoo! Get ready to party!

Why? Why not? Any excuse for a party is a good excuse in these times. The NY Times outlines the Obama administration's strategy: pretend that it's not a big deal, but feed the press lots of pictures and quotes.

Thursday, April 23, 2009

HSX: Week of April 24, 2009

We are currently in a lull before summer and its attendant blockbusters arrive. It's not exactly a great time for cinema. This week we have three movies with low to middling expectations.

First up is "Fighting," (FGHTN) Channing Tatum and Terence Howard starring in a movie that violates about the ninth or tenth rule of Fight Club: thou shalt not make a bad imitation of Fight Club. It's trading at H$25, just slightly off its high, and up more than H$4 today. That's an interesting sign. The strike price is H$10, which feels on the low side, although not totally unrealistic. The call is at H$1.61, but up 5/8 today. The put is at H$2.91, but down 5/8 today. So we are definitely seeing movement towards the high side of expectations. Critics, no surprise, are not enthralled; it's at 34% on, not that that matters much in a movie like this. It's opening on 2,310 screens, not a bad launch. Mixed signals all the way around, although trending positive today. My bet is that it will come close to the bullseye of the strike price, right around a $10 million opening. Which means I am shorting both options.
Stock: Long
Call: Short
Put: Short
Note: Stock changed to Short on Friday morning.

Next up is a movie about another kind of fighting, this one between women, over a man. No topless fighting here! Beyonce and some other people star in Obsessed (OBSES). Ms. Knowles is a beautiful woman and a fine singer, and, I guess, a decent actress. Not really sure about that last part, but I'm sure she has great screen presence. This one is in roughly the same position as FGHTN; it's up today, to H$51 and change, just barely off its high. It has a solid upward trend. The strike price is H$20, double that for Terence and Channing, but the price issues are similar: the call is under a buck, but slightly up today, while the put is at almost H$5. So we're not feeling quite the same kind of optimism. There are no reviews posted on, which is NOT A GOOD SIGN, because it means that it was not screened for critics. Which means that the studio does not have a lot of faith in it. This is not all that uncommon with cheesy horror movies, but you would expect the studio to show a little more respect and love to Beyonce. It's opening on 2,500 screens, just a few more than FGHTN. The prediction at boxofficemojo's Derby is that Beyonce and Co. will clear $15 million. Movies with African-American stars are often underestimated, but not always. Let's go with $15 million.
Stock: Short
Call: Short
Put: Long

Last, and also with low expectations, is The Soloist (SOLOS), a serious drama (!) about a true story. I know the story, because I read about it while it was happening. It's based a on series of columns by an LA Times columnist named Steve Lopez. He's not my favorite LA Times columnist - I think he can get a little sentimental - but he's good, and he keeps in touch with the city. He's sort of the local color commentary guy. He met a homeless man named Nathaniel Ayers, who turned out to be a former musician at Julliard, rendered destitute and dysfunctional by schizophrenia. It's a semi-inspiring story (I don't know the ending), all the more so because it's cliches come to life. The stock has been dropping like a rock, from a high of H$41 to its current price of H$27. The strike price is H$15, which it very likely will not make. The call is H$1 and something, not terribly surprising, while the put is, also understandably, around H$4. I am actually somewhat optimistic about this movie, mostly because it has a great cast. I think Robert Downey Jr. is an inspired choice to play Lopez, and I think Jamie Foxx is perfect for Ayers. There has been a lot of talk recently about the sorry state of adult dramas, especially since State of Play - featuring three Oscar winners - was handily beaten by 17 Again last weekend. I think the problem with that and Duplicity and The International before it was that they all sounded terribly cliched - thrillers revolving around corporate malfeasance. Who hasn't heard enough about that recently? This, on the other hand, is a very human story. I don't think it will make its strike price, but I think it will surprise. It's at 54% on, with reviews all over the place - some love it, some hate it. It's opening on just 2,000 screens. I think audiences are starved for something like this. I'm going to aim high, at $13 million.
Stock: Long
Call: Short
Put: Short

Lots of uncertainty tonight, so I am going to be sure and check in tomorrow morning.

Update Friday morning: FGHTN and SOLOS are both fairly stable, FGHTN is unchanged, SOLOS is down a half. OBSES, on the other hand, is down more than H$2. I changed my mind on FGHTN, partially because the prediction on' The Derby is $8.5 million. Also, the score on is down to 27%. I just don't see any hook for the audience. OBSES' downward drift confirms my Short. Any movement beyond about H$1 on Friday morning is an indication one way or the other (less than that is just normal trading).

Update Monday night: Boy, have I got to stop underestimating movies I am not interested in. OBSES blew out all predictions, particularly mine, opening at $28 million. I also have to start doing better research. FGHTN, on the other hand, came in pretty much right on target, opening at $11 million, although my short of the stock was slightly off. I aimed too high for SOLOS; it came on the low end of expectations, at $9 million. I got the stock and the put wrong, but at least I got the call right. Amazingly enough, I actually went up one in the rankings, despite losing H$1 million plus on Beyonce.

Monday, April 20, 2009

Quote of the day

This is what happens when you cross over to the "dark side." When you embrace the tactics of those you decry. The law exists to curb the worst instincts of men. Why would anyone think that once those boundaries are crossed, newly erected boundaries will be respected? You can't regulate "the dark side." That's why they call it the dark side. (emphasis in original)

Ta-Nehisi Coates, one of Andrew Sullivan's fellow bloggers at The Atlantic.

Let me repeat that:

You can't regulate "the dark side." That's why they call it the dark side.

I remember when conservatives used to claim to be the party of "law and order." You don't hear that much these days. Whatever happened to that?

Impeach Bybee

One of the authors of the OLC memos laying down the legal justification for torture was Jay Bybee, who is now on the Ninth Circuit Court of Appeals. He was confirmed by the Senate long before anyone had any idea that he had written these memos.

A movement has been building to impeach him. Jerrold Nadler, a Representative from New York (and my old Congressman), is one of the people leading the charge. Good for him. I strongly support this. Nadler is in a position to do something about this. He is chair of the Judiciary Committee's Constitution, Civil Rights, and Civil Liberties Subcommittee. This is one of those moments that I am supremely thankful that the Democrats control Congress. It is also one of those moments that I am thankful that there are Democrats in Congress who are willing to disagree with the Obama administration on this. Daily Kos has, as usual, an excellent post about this, including what is being done at the grassroots level in California.

I do not know whether or not Jay Bybee should be removed from office, because he is innocent until proven guilty. I am not in a position to pass that judgment. But I believe that Congress has an obligation to investigate this issue to the fullest extent possible. The NY Times agrees with me:

After eight years without transparency or accountability, Mr. Obama promised the American people both. His decision to release these memos was another sign of his commitment to transparency. We are waiting to see an equal commitment to accountability.
One of the best things that an impeachment will provide is an opportunity to force legislators to make their positions clear: do you or do you not support the use of torture? I sincerely welcome that debate and that opportunity. There are many good Republicans and conservatives who oppose the use of torture. It needs to be made clear who in the GOP stands where on this issue, so that those who believe in the humane treatment of prisoners can separate themselves from those who believe in vengeance and despicable, unnecessary violence as a legitimate purpose of the government.

Impeach Bybee. It is the very least we can do.

Sunday, April 19, 2009

Notre Dame, Obama, the Roman Catholic Church, USC, and abortion

President Obama has been invited to speak at Notre Dame at their commencement. He will be receiving an honorary degree. That's great. Very nice. Presidents speak at commencements all the time, and receive honorary degrees all the time. Perfectly normal.

Except that Obama supports a woman's right to choose an abortion, which conflicts with the doctrine of the Catholic Church. That's a bummer for some right-wing Catholics, who have stated their opposition. Unfortunately for them, 97% of the graduating class of seniors support giving Obama an honorary degree. Of course, the fact that George W. Bush supports the death penalty, which also conflicts with Catholic doctrine, didn't stop the university from inviting him and giving him an honorary degree.

My favorite part of the debate came in one of the letters to the editor in the NY Times. The letters were in response to an Op-Ed piece by Richard Allen (Reagan's National Security Advisor), who opposes giving the degree to Obama. Notre Dame gave a degree to Reagan when he spoke. Most of the letters disagreed with Allen, for the same reason I just listed. Then there was this letter, from a member of the Notre Dame class of 1958:
Next the traditionalists will want to vet the orthodoxy of Notre Dame’s quarterbacks. Well, maybe not if we’re 11 to zip and U.S.C. is coming to town.
Damn right! Orthodoxy would be out the window in a heartbeat if Notre Dame were playing like the pathetic losers they have been for the past couple of years and one of the best teams in college football were on their way (the USC-Notre Dame rivalry is one of the great rivalries in the country, because they are two of the only large private schools in the country. Neither is a state school, which is unusual for schools of their size. USC plays Notre Dame every season). Notre Dame hates losing to USC. There's a little bit of the Midwest-Southern California rivalry thing going on, too.

So I managed to get Obama, abortion, Ronald Reagan, George W. Bush, the NY Times, and USC football into one blog post! It's a good day.

Obama supports high-speed rail

Good news for fans efficiency in transportation. President Obama endorsed high-speed rail for large chunks of the country.

Money quote:

“Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination,” Mr. Obama said. “It is happening right now; it’s been happening for decades. The problem is, it’s been happening elsewhere, not here.”
That's for damn sure. It always boggles my mind that conservatives, who claim to be such ardent supporters of capitalist values, don't appreciate that high-speed rail delivers on the core capitalist value: it increases efficiency. It is vastly more efficient to travel by rail over short to medium distances than it is to travel by any other means.

There is some good coverage of this over at the California High Speed Rail Blog. The big problem, of course, is how do we pay for it. We really have to raise gasoline taxes. The problem there is that many people who drive long distances, particularly in the West, will see spending money on high-speed rail as something that will never benefit them. For many people, the benefits will come in the abstract; lower gas prices, cleaner air, lower greenhouse gas emissions. That's a classic problem with long-term governmental solutions; the cost is immediate and obvious, the benefit is long-term and abstract.

But there is reason to hope. First, there are many, many people in the Northeast who would love to see this. Those people have a disproportionate degree of influence on this, because the states in the Northeast are so small. There are therefore quite a few Senators who can be counted on to support this.

It's also helpful that Obama made it clear that this proposal encompasses many states, not just the ones in the Northeast. High-speed rail is proposed for every state on the East Coast, almost every state in the South (except Tennessee), and several of the states in the West, including Texas. I have a question about Tennessee if anyone can answer it: would high-speed rail benefit FedEx? It seems like high-speed rail could be used to deliver packages from Memphis to several other cities. Of course, FedEx doesn't have a hub just in Memphis any more. Which raises an interesting question: could high-speed rail be used for light freight, like packages? I have no idea, but I think it would be interesting.

In terms of public support, I am encouraged by the fact that more and more Americans are taking public transportation, particularly in response to the recession. I take it every day. Here in LA, we have plans to expand our subway, and voters passed a funding bill for that purpose last November. The more people take public transportation, the more people are likely to support this idea.

It's also fortunate, in a sad way, that the Big Three are in such bad financial straits right now, because there is no way in hell they are going to oppose this. In that respect, we are lucky, because the biggest losers from something like this would be car companies. And oil companies, but they are such villains in the public mind that if they oppose it, it would probably be a good thing.

On the other hand, building a high-speed rail line from Detroit to Chicago would mean lots of jobs for people in Michigan, which would be great.

This is the very beginning of redefining how Americans travel. This will take decades to implement. But at each stage, there will be more support. After a Detroit-Chicago line is built, few people in Michigan, Indiana, or Illinois will oppose expanding it, and their Senators certainly support it.

The one bummer about this announcement is that it is overshadowed, to an extent, by everything else that Obama is doing, like lifting the restrictions on Cuba, going to Mexico, releasing the OLC memos, etc. But the implications of this decision will last for decades, and then centuries. Long after Fidel Castro is dead, long after the US and Cuba have normalized relations, we will still be working on the railroad.

Saturday, April 18, 2009

For Sale: Texas. Cheap!

Texas is for sale. After the governor, Rick Perry, indicated that he Texans should start thinking about seceding from the United States - because of all the benefits that would bring - someone decided to put the entire state up for sale. On eBay. It can be yours for $99,999,999.00! Oh, wait, that's the latest bid, so you would probably have to push it up to at least $100 million. Still a bargain at twice the price! Dallas alone is probably worth at least $100 million!

Gov. Perry seems somehow oblivious to the irony that the federal government he claims is so oppressive was headed for the last 8 years by one of his predecessors as a Republican governor of Texas. Like I always say, irony is 9/10 of the law.

Friday, April 17, 2009

The torture memos

The Obama administration yesterday released the memos from the Bush administration's Office of Legal Counsel justifying torture.

There is good news and bad news in this development. First, the good news is that Obama did the right thing in releasing the memos with minimal redactions. This is virtually unprecedented in American history. I'm sure that it never occurred to the Bush people that their successor would release these memos. In that respect, Obama is already breaking ground. Makes me proud that I voted for him and campaigned for him.

The bad news is that Obama made it clear that he does not intend to pursue prosecutions of the people who conducted the torture, at least not those who acted in "good faith." Many people on the left strongly disagree with this. Glenn Greenwald wrote an excellent piece for Salon, on the one hand praising Obama for releasing the memos, and on the other hand criticizing him for not pursuing prosecutions. I disagree with Greenwald on one point. He writes that
there wasn't much political gain for Obama in releasing these documents.
I understand why he writes that; the right is strongly critical of him, while the left is just thankful that he did the right thing. I think it does benefit Obama somewhat in the short term, because it shores up his support from liberals. Not that he needed it, but he won't be criticized as much as he would have been if he had stonewalled. In the long term, however, I think Obama benefits substantially, because he has taken a good solid step towards rewarding Americans' faith in their government's ability to acknowledge its errors. Restoring even a tiny bit of faith in democracy is a Herculean task, and for that Obama deserves praise as well.

Andrew Sullivan has been all over this, as he has for years. He has done his adopted country a great service by relentlessly hammering home how despicable the Bush administration was.
Looked at from a distance, the Bush administration wanted to do two things at once: to declare to the world that freedom is on the march, and human rights are coming to the world with American help, while simultaneously declaring to captives that the US has no interest in the law, human rights, accountability, transparency or humanity. They wanted to give hope to all the oppressed of the planet, while surgically banishing all hope from the prisoners they captured and tortured. And the only way they could pull this off is by the total secrecy they constructed and defended. So we had a public government respectful of the rule of law, and a secret government whose main goal was persuading terror suspects that there was no rule of law at all. It is hard to convey just how dangerous this was and is.
What is key to remember at this juncture is that the release of these memos is the beginning, not the end, of the process of restoring the rule of law. I disagree with Obama's decision not to pursue prosecutions of the agents who engaged in torture, but I don't condemn him for it. First, it's not his job; the Presient does not make decisions about who to prosecute, although he clearly has influence. I usually agree with him on reaching out to people who disagree with him. This time, I think he did so not just out of concern for maintaining political peace. He is technically the boss of everyone at the CIA, and those are people you really don't want to piss off. On the other hand, you have to be prepared to piss them off; that's part of the job of the President.

But it's also clear that Obama is not foreclosing all options to hold people accountable. In a sense, I am glad that he is not proposing prosecutions for people who tortured, because I am not sure if that is the best way to hold people accountable for these atrocities. It may or may not be a good idea; I'm not a lawyer, so I don't know. But there are a number of avenues available to us, many outside the executive branch. Nature abhors a vacuum, as does a scandal. Ironically, by foreclosing the option of prosecution, Obama opens the door to many other possible solutions. Congress may appoint a special prosecutor; at the very least, I expect hearings to be held.

One great thing about Obama that I am appreciating more and more is that he has a very deep and abiding faith in both the American people and democracy. In both of these, he is the exact opposite of Bush and Cheney, who had so little faith in either. Obama cannot control what will happen now that these memos have been released, but he does not want to. He has given the American people permission to pass judgment, argue, and decide what should be done.

The worst news that we heard today is that what so many suspected was true; the Bush administration systematically authorized torture. The best news was that we heard about it from the President of the United States.

What was done in secret will be changed by what will be done in the open.

The American people are Obama's great secret weapon.

Thursday, April 16, 2009

HSX: Week of April 17, 2009

Opening this weekend is Zac Efron's attempt to transcend High School Musical, "17 Again," Jason Statham's latest attempt to keep his career going, "Crank 2," and the latest attempt by Hollywood to keep adults coming to serious movies by making movies about nefarious corporate conspiracies "State of Play."

17 Again (SVNTN) sounds like it could be fun, for the right crowd. The stock has moved up nicely of late, hovering in the low 50's, up almost H$5 today. The strike price is H$10 - huh? - absurdly low, if the stock is even remotely accurate. Call is way up, above H$7. Put of course is down about as far as possible, currently at H$0.31. This one looks easy to call.
Stock: Long
Call: Long
Put: Short

"He was dead. But he got better." Not bad for a tagline. In Crank 2: High Voltage (CRAN2), Jason Statham loses his heart - literally. Some Chinese mobsters steal it, and replace it with a battery-powered one, that needs to be jump-started every so often. This movie certainly earns points for creativity of plot. The stock has been floating around in the mid-30's for a while, currently H$35.48, just barely off its high. You know what you're getting with a Jason Statham movie. A B movie with good production values. HSX set the strike price the same as 17 Again, H$10, but the market is not quite as optimistic. Still, the call is at H$4, although it's down today. The put is up today, to just barely above a buck, so the signals suggest about a $13 million opening weekend. Which would be slightly more than the first movie. That's reasonable.
Stock: Long
Call: Long
Put: Short

The most interesting play this weekend is State of Play (STPLY), yet another movie about corporate/political malfeasance and the beautiful people who get tangled in the webs thereof. This stock is dropping like a rock. It's at H$30 as of this writing, down from a high of H$57. Oh boy. HSX was originally optimistic about the strike price, setting it at H$15, back when that made a certain amount of sense. Not anymore. The call is underwater and under a buck, while the put is rising fast, almost at H$4. With this cast (Russell Crowe, Ben Affleck, Rachel McAdams, Helen Mirren), I think it should make $10 million on its opening weekend, but probably not much more than that.
Stock: Short
Call: Short
Put: Long

Update Sunday night: Well, I got 17 Again right, but almost everything else wrong. State of Play looks like it might be a moderate hit, although it didn't make its strike price. Crank 2, on the other hand, crashed. It will probably still make money, because its production budget was probably quite low, but I sure didn't make money on it.

The one good thing to come out of Crank 2 for me was the review in the LA Times, which had some great lines:

"Balanced at the point where conceptual brilliance and pure stupidity meet,"

"But plausibility is not the point. It's more like the enemy."

"Characters like Bai Ling's manic, pidgin-spouting prostitute and Clifton Collins Jr.'s Elvis-obsessed gangster don't flirt with caricature so much as they ravish it, overloading stock stereotypes until they explode"

Great review, by a critic I've never heard of (at least in terms of movie reviews), Sam Adams. Looking forward to more from this guy.

George Will: Stupidest. Column. Ever.

George Will writes what may be his most backwards-looking column ever (which is saying something) today, denouncing Americans for - wait for it, wait for it - wearing jeans.

Yes, you read that correctly. That is not a typo. Apparently this country is going to hell because of denim draping our legs. OMG! He cites an article in the Wall Street Journal which takes the same concern. The author, Daniel Akst, writes what is easily one of the the most inane things I have ever read. He described denim as:

"a powerful force for evil"
And I thot the teabaggers were nutcases. Will's column is riddled with bits of lunacy, starting with this gem. He summarizes Mr. Akst as one who is

summoning Americans to soul-searching and repentance about the plague of that ubiquitous fabric, which is symptomatic of deep disorders in the national psyche.
Mr. Will is apparently unaware that the year is 2009, not 1959. I understand that conservatives believe in preserving tradition, and occasionally vent about the soul-stultifying effects of modern society, but this is beyond absurd. I suppose Bruce Springsteen is doing Satan's work?

Here's another of Mr. Will's damning observations about American society:

Denim is the infantile uniform of a nation in which entertainment frequently features childlike adults ("Seinfeld," "Two and a Half Men") and cartoons for adults ("King of the Hill").
Because, of course, in the golden era of America's past, we were all entertained by adults acting as adults. Mr. Will is presumably unaware of the cultural significance of Charlie Chaplin.

It is not really denim that is Mr. Will's central concern, but the infantile nature of American society. It's not just movies and TV's, of course.

Seventy-five percent of American "gamers" -- people who play video games -- are older than 18 and nevertheless are allowed to vote.
Because, as we all know, pretending to be someone else for the purposes of whacking imaginary bad guys is a sure sign of a retarded adolescence, and an inadequate understanding of the responsibilities of citizenship. Which would seem to call into question the maturity and patriotism of John Wayne.

The hits just keep on coming:

Denim is the carefully calculated costume of people eager to communicate indifference to appearances.
Once again, Mr. Will demonstrates not merely his condescending attitude of contemporary society, but his utter ignorance of it. He is apparently clueless about the wide range of jeans available, including the kind that cost hundreds of dollars because of the intricate designs embroidered on them. I know about these partially because I live in Los Angeles, and believe me, "indifference to appearances" is hardly a defining trait of people in LA.

The problem with uninformed condescension is that it can occasionally backfire. Will cites the Batman movies as a symbol of the childishness to which we all succumb when we fail to maintain decent standards of dress:
In their undifferentiated dress, children and their childish parents become undifferentiated audiences for juvenilized movies
He is also apparently unaware that the last Batman movie was a contender for a Best Picture nomination because it was both an action-adventure movie and a serious adult drama, with one of the best portrayals of a villain ever on film. Juvenile? This is a laughable claim, particularly when you compare last year's Batman to the original TV show. That was deliberately juvenile - it was a show for kids. Dark Knight was not for kids. The Batman franchise has grown up. Something Mr. Will might be aware of it he had actually seen the latest movie. Which, somehow, I suspect he has not.

As for jeans being "undifferentiated." Perhaps for the uninitiated. For people who actually wear jeans - I think the only people I have ever known who didn't wear jeans were my grandparents - there are dramatic differences. I also find the charge of "undifferentiated" somewhat odd, given that it is coming from a white guy in a suit, whose choices of colors for his suits probably ranges from dark gray all the way to dark blue.

So what should we wear?

This is not complicated. For men, sartorial good taste can be reduced to one rule: If Fred Astaire would not have worn it, don't wear it. For women, substitute Grace Kelly.
So after bemoaning the lack of differentiation among people who wear jeans, George Will admonishes us to all adhere to a single standard for dress. Apparently in George Will's ideal America, indvidualism is best expressed by conforming to one idea. No, Mr. Will, I will not be following the model of Fred Astaire, much as I may admire him, for four reasons. First, I'm not sure what Fred Astaire wore. Second, I'm fairly certain that he didn't wear shorts, and that is something of a necessity in Southern California. Third, I have a sneaking suspicion that the styles Mr. Astaire wore are no longer available. And, last, I have the freedom - usually a value held in high esteem by conservatives - to wear what I want to wear. It's almost tragic how clueless this man is.

Finally, Mr. Will, for all his years commenting on politics, still has not learned one lesson: one of the worst things you can do in politics is to conform to your opponents cliched stereotypes. Conservatives have a reputation of being grumpy old white guys who can't deal with all these changes from these obnoxious kids. For a liberal like me, this column is a gift from heaven. Thank you, Mr. Will, for confirming that conservatives are, in fact, exactly what we want people to think they are. Maybe next time you could write a column denouncing the evils of rock and roll?

Conservatives lost these arguments, not years, but decades ago. George Will has not come to terms with something that has been gradually happening since before I was born. I have read enough George Will columns to know that I normally respect his opinion, even when I disagree with it. For all his erudition, for all his eloquent turns of phrase, there is one thing that George Will still cannot do gracefully: admit that his side lost.

Wednesday, April 15, 2009

Did they have Darjeeling at the tea parties?

There were tea parties across the country today. Not the kind with scones and raspberry jam. These tea parties were supposed to remind people of the original Boston Tea Party, the one that started the American Revolution. Except that these people have taxation WITH representation, so it's not clear what the parallel is.

The big liberal blogs have been all over the story all day. Daily Kos provides a comparison with the original. TPM has a great photo gallery of some of the protests. HuffPost had several posts.

The point of all these is to protest taxes and the government in general and Obama. From some of the pictures, these protests attracted a fair people from the fringe of the radical right.

Andrew Sullivan tried to take these protesters seriously. He linked to an incredibly cool graphic of exactly how and on what the federal government spends money. He summed up the salient point well:

it seems odd to describe this as anything but a first stab at creating opposition to the Obama administration's spending plans, manned by people who made no serious objections to George W. Bush's.
. . .
All protests against spending that do not tell us how to reduce it are fatuous pieces of theater, not constructive acts of politics. And until the right is able to make a constructive and specific argument about how they intend to reduce spending and debt and borrowing, they deserve to be dismissed as performance artists in a desperate search for coherence in an age that has left them bewilderingly behind.
It's almost trivial to describe these protesters as whackjobs. Obama is a fascist/socialist? Huh? There were people on the left who used that kind of language to describe Bush. Both Bushes. And they were ignored, particularly the second time around, even though W. was a much worse president than his father. They were ignored because the vast majority of liberals and Democrats - the 99% who are sane, rational people - realized that the crazies tainted the movement. Apparently the right did not learn this lesson.

I'm going to imagine for a moment that these folks are serious about cutting spending. Where have they been for the last 8 years? One of the largest items in the budget is interest on the debt. At the end of the Clinton administration, we were running a surplus. If we had kept doing that, we would have eliminated a huge chunk of the interest we pay on our debt, which would have made cutting taxes or dealing with this financial crisis even easier. Somehow this never comes up.

If these folks really wanted to cut the budget, they would have protested against Bush. But of course they didn't. And now that Obama is in office, with the horrendous problems he inherited from Bush, they're blaming him? Please.

They're angry about government spending, but of course they couldn't protest Bush, because they somehow see themselves as agreeing with him, even though he did the opposite of what they believe in. So Bush pissed them off, but they couldn't protest against him, so they are taking all their anger that was inspired by Bush, and aiming it at Obama.

Can you say dysfunctional?

This feels like one of those moments at a party when someone does something really embarrassing but doesn't realize it, so everyone else pastes uncomfortable smiles on their faces, waits for the moment to pass, and then doesn't say anything. Until maybe a few days later, when there is a hushed whisper here and there. And eventually the person somehow doesn't get invited to quite as many parties. Right now, many, many Republicans are incredibly embarrassed by this spectacle, but they're not saying anything, and they won't for a while. At least not in public. But this will have a strong impact on how many people vote.

What's unfortunate for those mainstream Republicans is that events like the ones today are great networking events. Thousands and thousands of business cards and phone numbers and emails were exchanged at these parties today. Which means that we have not heard the end of the tea partiers. It took many years and several devastating electoral defeats before the Democrats finally dealt with their nutcases. As Sullivan keeps writing, it is going to get worse before it gets better.

Newspapers and the "unique content" problem

Newspapers are in trouble. This we all know. Today, Kos, in his latest post on the topic, looked at how many links to newspapers Daily Kos had over the course of a week. Maureen Dowd interviewed Eric Schmidt, CEO of Google. She's a little nervous about her job.

One problem newspapers face is that they used to (emphasis on the past tense) have a semi-monopoly on news in their geographic area just by virtue of their format. Megan McArdle once pointed out (I think it was Megan) that the NY Times used to know at least two things about their customers. 1, they lived in the NY area. 2, they could afford a daily newspaper. Now the Times reader could be in Bangkok.

Newspapers used to have a huge advantage because they were the only source of news in a particular geographic area that was available almost whenever you wanted it. If you wanted to know if your team won last night, you could listen to the radio, watch TV, talk to someone else, or read the newspaper. Of those sources, newspapers are the only one that is available at any time after you picked it up. Radio and TV broadcast news at a specific time. If you missed any of that day's broadcasts, you were out of luck.

Newspapers also provided a great deal of content for a very cheap price. A newspaper has a lot of content, particularly compared to a radio or TV broadcast. And that content was not available anywhere else. Providing it gave newspapers a sort of monopoly. The only way to avoid that monopolization was for there to be multiple newspapers in a given city.

My grandfather, a small-town lawyer in the Midwest in the 1950's, used to subscribe to the Sunday NY Times. It would arrive on Thursday (even though NY was less than 1,000 miles away) because it took that long for the mail to deliver it. But he still read it, presumably because there was content in there that he couldn't get from any other source (I never talked to him about it, I heard this from my mother).

What newspapers have to do is figure out a way to provide unique content. I subscribe to the LA Times and the Financial Times. The LA Times is convenient (I can read it on the bus into work), but there isn't a lot of unique content. I like some of their columnists, particularly Meghan Daum, but I rarely read the articles on the front page, because I usually already know the story. The LA Times has done a fair amount of innovating in the last few years, but there is still much to do.

But the FT has a nice amount of unique content during the week. At least it's unique for me, because I don't subscribe to another business periodical, like the Wall Street Journal. And it's got global news, which I like.

Where the FT really shines is on the weekend (again, particularly for me), and most newspapers could learn some things about unique content from the FT Weekend. They have columnists that I can't read anywhere else, but who I read religiously. I don't have any particular interest in real estate in London, but I read Secret Agent religiously. I have learned a fair amount about wine from Jancis Robinson. On the back page is Fast Lane, by Tyler Brule, the ultimate jetsetter, and Slow Lane, by Harry Eyres, one of the few people alive who can write about Madonna and Nietzsche at the same time.

The NY Times, of course, has a fair amount of unique content, starting with its columnists. The LA Times has some unique content, like Dan Neil's car column, which is a great read. But it needs better unique content. Which, if you think about it, really should not be a problem. LA is one of the largest metropolitan areas on the planet. There are 88 cities in Los Angeles County. There are multiple mountain ranges in this county. We have a National Forest that has 650,000 acres. This is the world headquarters of the entertainment industry. There are something like 130 institutions of higher education just in LA County. There's no lack of material. Plus, there are several thousand writers who are all on a constant lookout for work.

So here's a new buzzword that will hopefully enter the zeitgest: "unique content." It's not hard to understand. Once upon a time, all newspapers provided it, just by virtue of being what they were. That is no longer the case.

Oh, and that unique content has to be in interesting formats, it can't just be text. The LA Times is doing more interesting things with photo essays, but I still don't think they're doing enough with video, particularly since some of the best cinematographers in the world (and many aspiring camerapeople) live and work here.

Tuesday, April 14, 2009

The next US Senator from Minnesota - Mick Jagger!!!

Is this a great country or what. The guy in this video will soon be the next United States Senator from Minnesota.

hat tip: TPM

Quote of the day

“Clearly, the Obama administration is re-examining US policy towards Cuba,” said Peter DeSchavo, analyst at the Centre for Strategic International Studies. “It would be an understatement to say that the embargo has not achieved what it was supposed to achieve.”

In the FT today.

And that comment is itself a massive understatement.

Academics and policy; Joseph Nye notes a lack of relevance

Joseph Nye, a former dean of the Harvard Kennedy School of Government, writes in HuffPo one of those occasional posts that bemoan the lack of connection between academics and policy (the original OpEd piece is in the WaPo).

This has been a problem for how long now? Years, decades, centuries? Apparently the isolation of the ivory tower is getting worse. No doubt. I am familiar with this dilemma. I spent a fair amount of time and energy as an undergrad wondering if and how my philosophy degree would be relevant to real change in the real world. When I asked my philosophy professors about this, they seemed surprised by the question, as if it hadn't occurred to them. You would think that philosophy professors - of all people - would spend some time thinking about the meaning of their profession.

Nye cites a few trends/suspects for this widening gulf. Mostly, it's because once you're in the academy, you pay more attention to staying in the academy, and less attention to the outside world. Professional advancement within academia depends on impressing other people who are also within it, not the people outside.

That's probably true, but I lay the blame squarely on one facet of academia: tenure. There is one crucial difference between people in academia and people who are actually developing policy in the real world. That difference is that people in the real world are held accountable for how their ideas affect people, and academics are not. People in the real world have to deal with the consequences of their ideas. People in academia do not have to deal with those consequences. People in the real world can be fired if they screw up. People with tenure cannot be fired. If you can be fired because your ideas are wrong, you pay close attention to making sure your ideas are right, which means changing them when those ideas turn out to be wrong. If you are immune from being fired, you have no incentive to paying attention to how your ideas work in the real world. You can be wrong forever, and not pay any price.

This becomes self-perpetuating, because people who want their ideas to be relevant will work for organizations where their ideas will be relevant; think tanks, legislatures, newspapers, magazines, blogs, etc. Andrew Sullivan and Josh Marshall both have Ph.d.'s from Ivy League universities. People who are not as concerned about their relevance will tend to gravitate towards academia, where they can argue amongst themselves to their mutual hearts' content.

I should point out that this applies mostly to the humanities and social sciences. Academics in math, engineering, and the hard sciences are held accountable by their experiments. If a physicists' experiments don't work, he or she has to change his or her mind. I should also point out that my critique is aimed at higher education; I have much more respect for teachers in elementary and high school, who have the very difficult job of teaching. I have a lot of respect for teachers. I'm not a big fan of tenure at that level, either, but I don't think it has the same corrosive effect it does in higher education.

I had an argument about this with a friend who is an academic. My position was that academics are not relevant to society. He came back with "But you're assuming that they should be." To him, whether or not academics are relevant to social change or society in any respect is not an important question. This is a guy who minored in Latin and read ancient Roman poets for fun. He's perfectly happy going to conferences and teaching undergrads. Which is great. We need people to do whatever work he is doing, and I'm sure he does it quite well. The fact that he's perfectly happy with his job has a value in and of itself.

One thing that has changed very dramatically that Nye doesn't seem to notice is that there are vastly more opportunities today for people who are very smart and interested in ideas and want to see those ideas change society for the better. Andrew Sullivan and Josh Marshall are both making a living as bloggers. They both have an impact on politics. There was a time when colleges and universities were bastions of enlightened and progressive thinking, and if you wanted to hang out with smart people, that's where you went. That is no longer the case. So people who want their ideas to be relevant have options that they didn't have even 10 years ago. Which means, of course, that they have even less incentive to go into academia. Previously, they may have gone back and forth between academia and government, as Nye himself did. Now they can just leave academia with their Ph.d.'s and never look back.

I'm not as worried about this as I used to be. If people want to go into academia and argue about absurdly esoteric topics, fine with me. When I think of these people, I am reminded of the description of the earth in the Hitchhiker's Guide to the Galaxy: "Mostly harmless." Every society has people who are smart but confused and misguided. Successful societies come up with a way to deal with these people that keeps them from ruining life for the rest of us. That's one purpose of tenure: academia has become a holding pen for people who are really smart, but basically wrong. As long as they stay there, they are mostly harmless. The rest of us should basically ignore them. This was what went wrong with the Ward Churchill fiasco: people actually started paying attention to him, and he became relevant and then controversial. If we had all ignored him, he would have stayed mostly harmless and basically irrelevant. I say "mostly harmless" because, of course, as an academic, he is teaching students, some of whom might actually take him seriously. This is an unfortunate side effect, but it is tampered by the fact that most students grow out of what they believe in college. It's like the other Churchill (the more quotable one) said: "If a man is not a Marxist at 20, he has no heart. If he is still a Marxist at 40, he has no brain." I'm actually not really sure if that's from Churchill, but it sounds good. And since I'm not an academic, I'm not going to worry about the historical accuracy of my citation. Because, as Oscar Wilde wrote, "Truth is absolutely and completely a matter of style." Not sure about the accuracy of that quote, either, but I think it sounds just as good as the one from Churchill.

For now, then, I'm not going to worry about whether or not there are enough academics in the Obama administration. That's because I am going to judge the Obama administration on whether or not they get the job done. They are held accountable on a daily, if not hourly, basis. Which is why I have much more respect for them than I do for academics.

Obama and Cuba: changing the definition of "normal"

Obama's change of policy towards Cuba will have an immediate practical effect on Cuban-Americans and Cuba. There will be much more contact, visits, and exchanges. Good stuff all around. Politically, it will have an even more dramatic change. What Obama has done is change the defintion of "normal" with regards to our Cuba policy.

We have had the embargo on Cuba for almost 50 years. Most Americans have grown up with it. It's what we're used to - Cuba is off-limits, Castro is a bad guy, etc. People who questioned this policy were not influential, and many of them (me included) felt powerless to change the situation. We were marginalized by the Cuban-American powerbrokers in Miami who are obsessed with Cuba. All of that was "normal."

Not anymore. Now it is "normal" to think in terms of greater openness with Cuba. I'm writing this on the day after Obama lifted the restrictions, and the game is already changing. Matt Yglesias wrote today about the "faulty logic" of the embargo. Yesterday Steve Clemons at TPM pointed out another bit of faulty logic, this time with Obama's move: it allows Cuban-Americans to visit Cuba. Why just Cuban-Americans? We don't set policy in this country on the basis of people's nationalities. Just imagine if only Russian-Americans were allowed to visit Russia during the Cold War. Ridiculous.

So now we have a new "normal." Opening up to Cuba is now part of the political mainstream. Nothing has really changed in the public's mind. There are still a fair number of die-hard anti-Castro fanatics in Miami. Most Americans still favor more openness with Cuba. But now the momentum has shifted. Now we can open the door a few more cracks.

Over the next few weeks and months, we are going to see pictures of Cuban-Americans who are thrilled that they can finally visit their cousins and aunts and friends. We'll see pictures of Cubans with new cellphones. We'll hear about American businesses making money selling Cubans computers. And we'll start to wonder: we can sell these people computers and satellite TVs. Why not medicines? Why not insurance? Why not cars? And then Obama will say, "Sure, let's do that." And the die-hards will still be screaming, but fewer and fewer people will be listening to them.

Monday, April 13, 2009

Levi Johnston, victim?

I've been following the war of words between Levi Johnston and the Palin clan with some voyeuristic interest, but I haven't posted on it, because Talented Earthquake Productions is not a tabloid, thank you very much. Not that others covering this are tabloids - Andrew Sullivan is still on the case, and he's a class act.

But I have to say something, because I am starting to feel something I never thot I would feel.

I am starting to feel sorry for Levi Johnston.

Sarah Palin has been attacking him relentlessly. The guy is a 19-year old kid. He's not the most responsible 19-year-old around, not by a long shot, and I rather seriously doubt we would be friends if I were his age and living in his neighborhood.

But he also is just an average guy who's 19 and got in some trouble with his girlfriend. He sounds like he's been mostly honest about what's went down. Sort of hard not to be honest, since we all know what happened between him and Bristol. He's mostly saying the right things about being a father - he needs to grow up fast, etc.

It might not have been the smartest idea to go on the Tyra Banks show. Not sure I see the logic there, except to generate some publicity for himself.

So he's playing the game, and Sarah Palin is playing the game. Except that he's not much of a game player. He's 19! He's a kid from Alaska who knocked up the governor's daughter. Which, let's be honest, was not the brightest move, either.

But boy does Sarah Palin look like a mean one. This is the father of her grandchild. You would think she would either shut up, or issue some incredibly bland statement. "We regret that Levi Johnston has gone on talk show XYZ, but we believe that a father's presence in the life of a child is important, and we are confident that Levi will be a good father for Tripp." Something utterly innocuous that everyone would ignore.

One question that this episode raises is: how much did Sarah Palin know about what these two kids were doing? From what Levi has said, it sounds like they were sexually active on a fairly regular basis. This pregnancy didn't come about because of a one-time thing. They were in high school. Bristol was living at home. Which means that Sarah Palin either knew about it and ignored it, or she didn't know about it, which means she's a fairly clueless parent. Johnston has said that she probably did know, because "moms are pretty smart." Either way, it doesn't say great things about her as a mother. Unless, of course, Sarah Palin thinks that letting her daughter have sex on a regular basis with her boyfriend is being a good parent. Really kind of doubt that's the case.

I hope Levi Johnston figures out how to be a good father. And I hope Sarah Palin is a good grandmother. But I am going to die laughing if she runs for another office and starts talking about "family values."

Obama lifts Cuba restrictions

President Obama lifted several restrictions on travel and trade with Cuba today. Good for him. It's now possible for Cuban-Americans to travel freely there. It's also possible for them to send money and gifts. And telecommunications companies can sell cellphones, computers, and satellite TVs.

"There are no better ambassadors for freedom than Cuban-Americans.”

- Robert Gibbs, White House spokesman, repeating the obvious truth that Obama articulated during his campaign.

This is pretty much a slam dunk for Obama. He satisfies multiple constituencies - farmers in the Midwest, liberals everywhere, a fair number of Cuban-Americans (at least the ones who are not obsessed with Castro) and other Hispanics. There is very little political risk, and it's a policy which will pay immediate dividends. Lots of people will be thrilled to be able to visit their relatives in Cuba. Some companies will sell more stuff there. I like the categories of things that can be sold under this order: stuff that communicates. That's the best possible way to spread freedom.

There's one minor detail about the NY Times article that I find refreshing and a little humorous. As a mainstream newspaper, they are obligated to provide some balance by acknowledging people who disagree with this policy. Which they do by quoting the two Diaz-Balart brothers, who are both Representatives from the Miami area. Here's what's funny about it: the Times devotes the last paragraph to quoting their press release. That's about the clearest statement the paper can make that it does not take their perspective seriously. It's in the last paragraph. All the Times does is quote their press release. The reporter, Sheryl Gay Stolberg, didn't even bother to call anyone. She just cut and pasted from their press release. Hee hee hee. These people are now marginalized.

Quote of the day

"Even a casual observer can see that much of the damage done in the US by illegal drugs is a result of the fact that they are illegal, not the fact that they are drugs."

-Clive Crook, in his column in the FT, about how badly the war on drugs has failed.

What's notable about this is that this is being published in one of the most mainstream, Establishment publications on the planet Earth, the Financial Times. The writer, Clive Crook, has worked for the British Treasury and The Economist. He has degrees from Oxford and the London School of Economics. Other than royalty, you do not get more respectable and non-hippie than that. This idea - that the "war on drugs" is a spectacular failure - is quickly becoming the majority mainstream opinion, if it is not already. Eventually politicians will catch up.

Crook is also a blogger for The Atlantic (some great blogs over there), and his fellow blogger, Andrew Sullivan, also a highly educated Englishman, has been running an excellent series he calls "The Cannabis Closet." Pretty much every day for about the last month, he has been posting emails from readers about their experiences with pot. Just about every one is from someone who starts out with some variation of "I'm a respectable suburban professional," and then proceeds to tell the story of how and why they smoke pot. I repeat myself: Eventually politicians will catch up.

Sunday, April 12, 2009

Defending rich bankers

I can't believe I'm writing this post, but I have to defend investment bankers. Matt Yglesias wrote a rather unnuanced post (quoted at TPM) about the people who got us into this financial mess with this line:
I was saying that whatever one thought should be done with large financial institutions as a policy matter, surely we could agree that the executives at these institutions are primarily bad people.
He immediately equivocates - a little - by noting that others did not agree with him. So he explains why he thinks these people are bad:

They’re multi-millionaires who want to earn millions more. It’s possible, of course, that Vikram Pandit really does find being a bank executive to be intrinsically interesting. But a good person, who’s primary passion was the life of a bank executive, would be donating the bulk of his massive compensation package to charity. But that’s not what Pandit’s doing. Rather he, like virtually all executives at major firms, is living a life that’s primarily oriented around an ethic of greed.
I must protest. One of my great pet peeves is intellectually sloppy social criticism, particularly from liberals, and this is a prime example. Dear God what an awful generalization. He's dismissing hundreds of thousands of people with a single judgment. And an extraordinarily simplistic one, at that. Yglesias is a good writer, but his ability to turn a phrase fails to mask a seriously underdeveloped argument:

it’s a sign, I think, of a kind of sickness running through American society that we’ve lost the willingness to just say clearly that ceteris paribus greedy behavior is not virtuous behavior. In the spirit of decency, of course, we recognize that none of us are without sin. It would be crazy to try to condemn everyone who’s ever done anything greedy to the gallows. But the fact still remains that greedy behavior is not admirable behavior and that, as Krugman says, it’s very unlikely that the “best” young people were going into finance. And to say that they’re not necessarily good people need not entail that they’re criminals. Simply the fact that the best people are people who aren’t primarily driven by greed. (emphasis in original)
I agree that a shift in our culture's attitude away from worshipping the markets would be a most welcome and healthy change. But let's throw out a couple of counterexamples: Bill Gates and Warren Buffett. Both of them are wealthy beyond belief. Each of them could have stopped accumulating money decades ago and still been billionaires. Both of them have made the decision, as Yglesias thinks they should, to give away the bulk of their fortunes. Gates has dedicated his life to it, and is putting his prodigious talents into his foundation, rather than Microsoft. Before each of them made the decision to give away their money, they could have easily been characterized as insanely greedy for hoarding tens of billions of dollars. But now that they are giving it away, they are models of good citizenry. What has changed? Nothing except time.

What if Bill Gates had stopped accumulating money when he was worth $100 million? Would we think better of him? If he had not made his fortune, he would not have it to give away. If he hadn't made it, that money would be in the hands of others, who presumably would not have had the same incentive to give it away. If one person has $30 billion, he can easily give away $29 billion and still have lots left over. He could give away $29.5 billion and still have lots left over. But if 3,000 people each have an average of $10 million, they will not be giving away $29 billion of that. So, in a perverse way, it's actually better for Bill Gates to make tons of money and give it away. Not that I want to use this argument to justify the extreme accumulation of wealth; there are a fair number of people who don't give away their money and waste it on expensive wines and fast cars.

What I object to here is the ridiculously broad generalization that "greedy behavior is not admirable behavior." Well, yeah, but that's not exactly an original insight. I believe that was outlined in the Ten Commandments. Every society struggles with finding the balance between meeting the needs of the society and allowing individuals to maximize their own self-interest. And every society is in constant danger of losing that balance. And every society occasionally does lose that balance, and either individual initiative is suppressed, or greed is unleashed. We are currently going through a period of reevaluation of that balance, because we lost it. Agreed.

But we are not going to redress this imbalance with these kind of pronouncements that an entire class of employees is "bad." There are dramatic policy changes that we have to debate and enact. I am a big fan of raising top income tax rates and the capital gains tax.

I am also a big fan of changing our culture away from excess greed. I am a big fan of bringing some good old humiliation down on the heads of people who went too crazy on Wall Street. Some of that is going to come in the form of people wielding bludgeons, financial, legal, moral, political, and cultural.

But the best moral arguments require a degree of distinction and discipline largely missing from this post. Yglesias' last line is particularly unhelpful:

the best people are people who aren’t primarily driven by greed.
I worked for an investment bank in New York, Babcock & Brown. This isn't a great time for B&B; its stock was listed in Australia, and has entered "voluntary administration," i.e. bankruptcy. It was hit hard by 9/11 (airlines were big customers). It was very much an investment bank that made money by moving around pieces of paper. I have no idea how much good it did for society by doing so. I do know that they found investment banking intellectually stimulating.

But working for B&B was one of the best experiences of my life. I liked just about everybody there, and they were basically good people. They treated me, a secretary, very well. I would have walked across hot coals for my boss, Joni, who was one of the best managers that I have ever worked for. One of the other best managers I have ever worked for was her boss, Jim. I think I learned more about management there than I would have if I had gone to Harvard Business School. It was, in some respects, a better experience for me than earning my degree in philosophy at the very progressive college I went to, Swarthmore.

So I find the argument that the "best" people do not work in finance particularly unhelpful. Are there "better" people than investment bankers? If our criteria is service to others, then, yes, I would put priests, nuns, and missionary doctors on a higher plane than investment bankers. But we need bankers, and we need good people in finance. And priests, nuns, and missionary doctors need financial professionals (full disclosure: my father is a stockbroker, and some of his clients are missionary doctors). Are there bad people in finance? Obviously. But they are not all bad, and to describe them that way is intellectually and morally sloppy.

I don't like intellectually sloppy social criticism for the same reason that I don't like intellectually sloppy investment banking. Bad ideas can infect dialogue and influence behavior, and whether they are bad ideas on a progressive blog, or bad ideas on a Citibank spreadsheet, they are still bad ideas. Bad investment banking decisions are made by people who let an unhealthy emotion, greed, influence their analysis. Bad political decisions are made by people who let an unhealthy emotion, anger, influence their analysis.

Greed and anger have some things in common; they can both be very effective in the short-term, but highly destructive in the long term. Most importantly, they can both be addictive. Venting righteous indignation can provide an adrenaline rush, just like making millions of dollars can provide an adrenaline rush. This is what Yglesias is doing, and where the danger lies in his argument. He's giving himself permission to pass judgment, with very little nuance or distinction, on hundreds of thousands, if not millions, of people. I don't think he has the right to make that judgment. I know I certainly don't have that right. But he has an incentive to make an intellectually sloppy argument, because by doing so he gives himself permission to vent some righteous anger, and thereby make himself feel good. Focus, Matt, focus. Keep your eyes on the long-term. I think it's perfectly fine to criticize investment bankers as greedy. They are greedy. But no person can be reduced to a single adjective. Calling them bad people, as a class, crosses the line. At least for me. And it crosses the line for both moral and intellectual reasons.

I also dislike sloppy blanket judgments like this because I think they are politically unwise. If your political opponents can take apart your arguments, you lose credibility. This is why I don't like Michael Moore, the documentary filmmaker. I don't think he has much credibility because he is so intellectually sloppy.

There's one detail about investment banking that Yglesias completely fails to mention: most people leave it fairly quickly. I knew several people who worked for JPMorgan or McKinsey or some other high-pressure professional services corporation for a year or two or three right out of college, made a chunk of money, and then went off to do what they really wanted to do with their lives. If you're 23, you can work 80-hour weeks, and someone is willing to pay you enough for you to pay off your student loans really fast, why not? You may be able to do the world a lot more good than if you went straight from college to teaching underprivileged children, but found yourself broke at 35, whereupon you have to take a job that pays you a lot of money. There are many people who work for investment banks, and they do so for a very wide variety of reasons. If your parents are poor immigrants, and you want to be able to provide for them when they are elderly, you have strong incentive to make lots of money quickly. If one or both of your parents are gone, you may need to provide yourself with a safety net. This is a problem with Yglesias' blanket judgment; he's making judgments where none may be justified. Which is ultimately self-emasculating. If you pass judgment on someone who clearly does not deserve it, you may very well end up embarrassed, which is the antithesis of empowering.

There are great policy debates ahead of us. Liberals have a great deal going for us at the moment. Some great leaders, many smart people, momentum, many opportunities to prove ourselves and our ideas. This is a time of crisis, and, as Rahm says, "never waste a good crisis." Resolving these crises will require exceptional intellectual discipline. There are many, many ideas out there about what went wrong and how it can be fixed. We have to careful as we evaluate policy options. We can't overreact. We absolutely must be prepared to admit that we are wrong, because we will be. To be so prepared, we must remember that we are human, and that we are fallible. And we must remember that the same is true of the people with whom we disagree. Investment bankers are human beings, and we must understand them, and treat them, as such. They are not inherently "bad."

Obama on state secrets

TPM has a post about the Obama administration invoking the state secrets privilege in a warrantless wiretapping lawsuit. I don't know enough about the law to really judge it, but this does not look good. Invoking state secrets should be done extremely rarely, if at all. There's a good discussion in the comments about the legality/morality of this. From the perspective of a lawyer in the Department of Justice, it's possible that they are arguing this because they feel that there needs to be someone arguing for this perspective. The logic would be that whether or not the state secrets privilege applies is something that should be decided by the judge, but that the judge won't make a decision on that issue unless someone argues for it. So they have to argue for it, so that it's decided.

On the other hand, one would think that the Administration would actually believe that the state secrets privilege should be invoked, which I would tend to disagree with it. I'm not taking a strong position because it's a complicated enough issue that I would have to really dive into the nitty-gritty details to feel comfortable passing judgment. My inclination is to disagree with Obama (which is almost a relief), but I don't know enough to actually do that.

This bears further watching. It's also possible that the Obama administration wants other people to carry forward the argument that the state secrets privilege should be constrained. That would require legislative action. There is no way that the Obama administration could propose that; they would be crucified by the right. Obama can do many things to enhance transparency and accountability in government, but each move has to be carefully considered. The few conservatives left with any credibility would bitch and moan about weakening the "power of the presidency" if Obama advocated specifically hampering the ability of the president to invoke the right to secrecy. That's a Cheney argument, so it has little credibility, if any, but we don't want to fuel those flames any more.

But if liberals and leftists took this up as a cause, that would be a different story. Of course, it already is a cause, but it's a cause without a specific focus. It would be difficult to pass legislation restricting the state secrets privilege, but it might be possible. That would also give it vastly more power and credibility than if it came from Obama or his administration. And, of course, it's great for liberals to be arguing about it.

An unsettled issue, at best. I will be keeping an eye on it.

Thursday, April 9, 2009

HSX: Week of April 10

Three movies coming out this weekend, but not a lot in the way of quality, or at least seriousness. First up Dragonball Evolution (DRGNB), based on the animated series of the same name. I've only seen a couple of scenes from the series, but I was seriously underwhelmed. The animation is very quality, about as cheap as possible. Scenes largely consist of a character or characters not in some action pose but not actually moving. Only their mouths are moving as they are talking. This is an incredibly easy way to produce animation - copy one cel multiple times, only changing the characters' mouths. Not particularly interesting, in my opinion, but also not that unusual - watch The Flintstones, and you will see something similar. Speed Racer uses the same approach. It works for Saturday mornings. The stock is about as cheap as the animation in the predecessor series, trading at H$20, down from a high of H$58. That's a pretty serious evaporation of hype. It's down H$2 today. The strike price is H$10, which at this point is laughable. The call is sinking fast, as it should. The put is at H$4, a rarity, particularly for a strike price this low. Say goodbye to this Japanese import.
Stock: Short
Call: Short
Put: Long

Next up is Hannah Montana: The Movie (HANNA). I know two things about this movie: Miley Cyrus seems to be a cultural phenomenon with few equals, and I am not going to see it. The stock is trading at H$76, which seems really high, but is right around where it's been for a while. The screencount is 3,118, about what I expect. It would need to make $9,000 per screen to make the price. That's entirely possible. Strike price is H$25, with the call fairly high, above H$6, and the put below H$2 and sinking fast. The call is down almost a buck today, and the stock is down H$3. The Jonas Bros. movie was a major disappointment. I'm not sure Miley is going to live up to the hype. There is much more room on the downside than the upside.
Stock: Short
Call: Short
Put: Long

Last and probably not least is Observe and Report (OBSRV), the second of the year's "mall cop" movies, after Kevin James' "Paul Blart: Mall Cop." That one did extremely well, pulling in well over $100 million. I'm not so optimistic about Seth Rogen's chances. It seems a little dark, and I'm not quite sure where the humor is. Stock is at H$44, down H$2 today, and down from a high of H$60. The strike price is H$15. Call is at H$5, but down. There's a serious imbalance between the price of the stock and the call. It would have to clear $20 million to justify the price of the call, which would mean the price of the stock would be H$54. The put, meanwhile, is only about a buck and a half, but it's up today. My observations lead me to report that this is not looking great.
Stock: Short
Call: Short
Put: Long

Update Sunday night: Well, two out of three ain't bad. This was an unusual week for me: I shorted all the openers. One of those was a mistake: Miley Cyrus is all that, as she opened with $34 million. I was betting against a very high call, which was not a good idea. On the other hand, I also bet against a high call on OBSRV, and that worked out quite well; it only cleared $11 million, well below the strike price. Dragonball Evolution was, as I predicted, a bomb, with a rather disappointing take of just $4 million. I shorted it way back when it was H$48, so I made a bundle off this stinker. The lesson of the week would seem to be that it's a bad idea to bet against Miley Cyrus, but not to worry about betting against a high call. I made H$15 on OBSRV, but lost H$16 on HANNA, and then made H$6 on DRGNB, so it was a positive week overall.