Look, I'm no prude, and my Spanish is lacking, but I do get what "Hay Trampa!" means, and let's just say these grown-ups—captured in this video posted on YouTube-like site LiveLeak.com—won't make my list of potential babysitters. I'm not even sure this takes place in America. But still. Where is it okay to teach kids this young to get busy? I think the moment that struck me most is when one of the adult women presents her rear for the little boy to hump. The posting title, referring to the dance music, dissapprovingly asked: Esto es reggaeton?

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Chart of the Day

Miller-McCune magazine points out today that we'll soon have new CAFE fuel standards.  EPA and the Department of Transportation announced their proposed new rules on Tuesday, and in an effort to find something interesting to say about them I present you with this chart.

Normally, CAFE is a DOT program.  But the Supreme Court recently ruled that EPA was required to regulate greenhouse gases under the Clean Air Act, so now it's a two-agency operation.  EPA's part isn't to directly regulate fuel economy, it's to regulate CO2 — though this largely amounts to the same thing.  Basically, it works like this: you multiply a car's track width by its wheelbase to come up with its "footprint" in square feet.  Then you go to this chart, which tells you how much CO2 it's allowed to emit.  A subcompact, for example, will be allowed to emit no more than 204 grams of CO2 per mile in 2016.  (That's what the technical appendix says, anyway.  The chart seems to be offset slightly high along its entire length.)

The Ninth Circuit Court has had problems with the whole "footprint" idea in the past, but EPA and DOT apparently hope that these new regs will pass judicial muster.  They also hope that car companies won't just build bigger cars, thus doing an end run around the standards.  In fact, here's what they hope the new rules will accomplish:

  • Increase fuel economy by approximately five percent every year
  • Reduce greenhouse gas emissions by nearly 950 million metric tons
  • Save the average car buyer more than $3000 in fuel costs
  • Conserve 1.8 billion barrels of oil

If the fooprint approach works the way it's supposed to, we'll reach a fleet average of 35 mpg by 2016 instead of 2020.  Time will tell.

World Wrestling Entertainment CEO Linda McMahon announced recently that she is poised to lay the smackdown on embattled Sen. Chris Dodd in the 2010 midterm elections. On first glance, this is definitely an uphill battle for McMahon. There are currently no Republican representatives in Congress throughout the northeast and polls show that former Rep. Rob Simmons already has a slight lead over Dodd.

But information released by the Center for Responsive Politics shows that McMahon has a history of donating to Democratic candidates and PACs, a fact that could help her in the mostly blue northeast state. Of the $90,000 she and her husband have contributed since 1989, 51 percent has gone to Democrats. Her top beneficiaries include Dem Mark Warner of Virginia, Obama chief of staff and former Rep. from Illinois Rahm Emanuel, and Dem-turned-Independent Joe Lieberman of Connecticut.

It's looking more and more like the battle for Dodd's seat could be the main event of the 2010 election cycle. And there's no doubt that this video should be used in someone's campaign ad... though I'm not sure whether it would hurt or help McMahon:

On Wednesday, Interior Secretary Ken Salazar announced the end of the Interior Department’s oil and gas royalty collection program. Salazar made his announcement at part one of a two-part testimony before the House Natural Resources Committee. Last week Rep. Nick J. Rahall (D-WV), the chairman of that committee, introduced legislation that would overhaul the existing federal royalty system and create an Interior agency to regulate oil and gas leasing.

Currently, rather than paying in cash for resources extracted from government lands, companies pay federal royalties in comparably valued oil and gas, which the government then sells on the open market. This system, known as Royalty in Kind, is administered by the Minerals Management Service (MMS). Last year, a report compiled by the Interior Department's inspector general found that MMS collections fell far short of their estimated potential revenue and discovered corruption within the agency.

Back in September 2008, Mother Jones’ Josh Harkinson wrote:

So far the grand prize for depravity goes to former RIK manager Gregory Smith, who pitched the oil companies he regulated to do business with his outside consulting firm, slept with two subordinates, and bought cocaine from another RIK employee while on the job (DOJ, where are you?). Of course, last time I checked, there was also an ongoing GAO investigation, four False Claims Act cases pending against MMS in Oklahoma City, and a DOJ investigation of a Virginia-based MMS employee who allegedly traveled to Atlanta to have sex with someone he'd met in a teen online chat room who he thought was a 13-year-old girl.

Salazar’s announcement to overhaul the collection program is no great surprise given MMS’ sex, drug, and bribe-related scandal last year. At the present moment, US drilling regulations consist of a gap-filled web of EPA, BLM, and MMS legislation. The second part of Rahall’s hearing on his proposal is happening now.

Yesterday Senate Majority Leader Harry Reid told reporters that the climate bill may have to wait till next year—which in Senate-speak means it's basically dead till 2010. What did the White House have to say about this? After all, a congressionally approved plan to cut US emissions is key to the success of international climate talks in Copenhagen this December. David Corn asked White House press secretary Robert Gibbs about the delay yesterday at the daily press briefing. And Gibbs couldn't come up with much of a response:

 

News on health, the environment, and climate you may have missed.

Killing Healthcare: You don't need Republicans when Kent Conrad is around.

Lady Justice: Halliburton rape victim will get a day in court, not arbitration.

Bio-fails: The interest in wonder-weed jatropha as biofuel waning, research needed. [Nature]

Private Option: Rep. Tom Price says the public option would cheat private companies.

Peanut Gallery: Energy lobbyists are chuckling as senators try to weaken cap-and-trade.

Pushing Back: Sen. Reid says healthcare bill should come first, climate bill may be pushed to 2010.

Going Broke: Operation Rescue is in fiscal trouble, may shut down. [Feministing]

Price of H2O: What would you do if your water bill went from $13 to $185?

Bored of Baucus: Kevin Drum is getting sick of Baucus posts, but blogs about it briefly.

 

U.S. Army Pfc. Nicholas Weeks plays an Afghan checkers-style game with Nas Nahs, an interpreter, in the Kohi Safi district, Afghanistan, Sept. 6, 2009. Weeks is assigned to the 82nd Airborne Division's Company B, Special Troops Battalion. (U.S. Army photo by Sgt. Teddy Wade.)

Today's must-reads:

  • Five ways to improve the Baucus bill (Ezra Klein)
  • The proponent of one of those five ways talks it up (Sen. Ron Wyden/NYT)
  • The worst policy in the Baucus bill, and possibly in the world (Ezra Klein)
  • Chart comparing Baucus bill's affordability with Massachusetts' plan (Nicholas Beaudrot)
  • Retailers battle credit card fees (WaPo)
  • Court okays Haliburton rape case involving Iraq contractor--which had been blocked partly due to Dick Cheney. (MoJo)
  • Real-life "Norma Rae" dies after battle with insurance company (MoJo
  • "Obama refuses to be their n*****. And it's driving them crazy." (Ta-Nehisi Coates)
  • Are Obama's judges really liberal? (The New Yorker)

I post items like these throughout the day on twitter. You should follow me, of course. David Corn, Mother Jones' DC bureau chief, also tweets. So do my colleagues Daniel Schulman and Rachel Morris and our editors-in-chief, Clara Jeffery and Monika Bauerlein. Follow them, too! (The magazine's main account is @motherjones.)

Interesting news on the missile defense front:

The White House will shelve Bush administration plans to build a missile-defense system in Poland and the Czech Republic, according to people familiar with the matter, a move likely to cheer Moscow and roil the security debate in Europe.

....The Obama administration's assessment concludes that U.S. allies in Europe, including members of the North Atlantic Treaty Organization, face a more immediate threat from Iran's short- and medium-range missiles and will order a shift towards the development of regional missile defenses for the Continent, according to people familiar with the matter. Such systems would be far less controversial.

Will this buy us some goodwill from Russia?  Will it send the Bill Kristol wing of the conservative movement into Munich/striped pants/appeasement hysterics?  I'd say maybe to the first but definitely yes to the second, which all by itself probably makes it worth doing.

Back in the dim past, investment banks were mostly in the business of providing advice and underwriting services to their clients.  Oh, they traded a bit on the side with their own money too, but not a lot.  That was sort of risky, after all.  Better to focus on giving other people advice about what to buy and sell rather than doing it themselves.

But times changed, fixed commissions went away as a guaranteed source of easy income, and proprietary trading started to grow more important.  And why not?  Since investment banks were also market makers, their prop desks had privileged access to streams of information that most investors could only dream of.  Why not use that information instead of letting it go to waste?

So use it they did.  In fact, they used it so voraciously that eventually trading became by far their biggest profit centers.  Basically, investment banks became gigantic hedge funds with a bit of investment banking tacked on to the side.  And that's not all.  By the year 2000, two more things had happened.  First, the Glass-Steagall Act was repealed in 1999, which allowed investment banks to merge with commercial banks.  Second, investment banks had all become public companies, which meant they not only had enormous amounts of capital to invest, but none of their traditionally risk-averse partners were personally liable if they lost it all.

I think you know how this all turned out.  Long story short, they lost it all.  What's more, their losses would have taken down the entire banking system if they hadn't been rescued via massive government intervention.  Along the way, the last of the investment banks technically disappeared, when Morgan Stanley and Goldman Sachs got Fed permission to convert themselves into ordinary bank holding companies.

Given all this, you might wonder if it was such a good idea to let banks engage in proprietary trading in the first place.  Instead, why not limit them to taking deposits, making loans, underwriting stock and bond offerings, giving M&A advice, and so forth?  That's what banks do, after all.

Well, it turns out that Paul Volcker is wondering the same thing:

"Extensive participation in the impersonal, transaction-oriented capital market does not seem to me an intrinsic part of commercial banking," he said in a speech to the Association for Corporate Growth in Los Angeles.

....Mr. Volcker said banks should be banned from "sponsoring and capitalizing" hedge funds and private-equity firms, and said "particularly strict supervision, with strong capital and collateral requirements, should be directed toward limiting proprietary securities and derivatives trading."

He also said collateral and leverage restrictions against the largest non-banking institutions "may be needed."

I like the way this Volcker fellow thinks.  Let banks do banking, protected by federal guarantees, while securities trading is firewalled safely away from the plumbing of the financial system.  And even at that, if your hedge fund or private-equity firm is big enough that it might destroy the world too — think LTCM — it gets regulated as well.

Anybody got a problem with that?