2010 - %3, March

Spousal Abuse Spiking

| Tue Mar. 30, 2010 8:00 AM EDT

I recently arrived in Portland for a talk at Mercy Corps, and though my host tells me that the city’s strongest association is with roses, it feels more like my own personal Domestic Violence Awareness Town.

The first thing I thought of when I touched down was this stupefying stat I’d read: A few months ago, 18 people died in domestic violence incidences in less than 30 days here. That would be just one piece of an alarming trend in rising domestic violence rates—not that domestic violence statistics haven’t always been consistently alarming.

Then I was doing some unrelated Internet research, and somehow landed on this page for an "assault and family violence attorney" containing such offensive and flip copy—

A domestic violence assault charge could be the result of a single violent outburst, one high-stress incident, or the retaliation of a malicious spouse. Whatever the reasons for you being so accused, we can help you favorably resolve your criminal case and move forward after a domestic violence or assault charge.

—that I was left torn between my certainty that we put way too many people in prison for way too long and an intense visceral desire to not let wife-beaters out of jail to walk around in the world, ever.

Then, also totally unrelatedly, someone posted on my Facebook page the United Nations Foundation stat that "One of every three women in the world faces violence, coercion, or abuse as part of her everyday life—and more than 70% of women will experience violence in their lifetime." And my host also reminds me that it’s naïve for me to find it hard to believe that, for example, there were 59 DV deaths in Wisconsin last year. And the Facebook post comes with a link pleading that people should "Tell your representatives in Washington today that ending violence against women needs to be a real priority."

Jesus. And how.

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Do We Test Geoengineering? (Asilomar Dispatch 3)

| Tue Mar. 30, 2010 7:30 AM EDT

For years, climate scientists have used computer modeling rather than field tests to predict the likely effects of certain geoengineering methods—like whitening clouds or dispersing sulfur particles into the upper atmosphere to reflect the sun's rays back into space. But at last week's Asilomar International Conference on Climate Intervention Technologies, researchers were divided over whether models are enough.

In one corner was Alan Robock, a professor at Rutgers University who has spent most of his career modeling the climate-cooling effects of volcanic eruptions—which spew sulfur dioxide into the upper atmosphere. Indeed, it was knowledge gained from the 1991 eruption of Mount Pinatubu in the Philippines (here's a pdf of one of Robock's papers) that inspired one of the more controversial geoengineering schemes. Robock says that one recent Russian eruption he is studying put more sulfur in the atmosphere than any scientific team would likely deliver. "So why do we have to actually do tests?" he asks.

Delaware and Tennessee Win the 'Race to Consensus'

| Tue Mar. 30, 2010 6:21 AM EDT

Delaware and Tennessee will receive the first slice of the Obama administration's $4 billion "Race to the Top" education innovation fund, the administration announced Monday. The winning states edged out presumed front-runners like Florida and Louisiana—states that submitted equally reform-minded applications that were not as popular with teachers' unions.

The Department of Education gave Delaware's proposals the highest overall rating in the competition, and the tiny state will take home the $107 million it asked for. Second-place finisher Tennessee will receive about $500 million, leaving $3.4 billion available to states who participate in the competition's second round. Independent reviewers gave the winners' applications high marks for promoting accountability standards, implementing data systems to track student achievement, and pushing for charter school growth. 

Georgia placed third in the competition, followed by Florida.  Louisiana came in 11th place out of the 16 finalists announced earlier this month.

On Monday, Secretary of Education Arne Duncan played down the importance of broad "stakeholder support," calling it one of many factors that contributed to the finalists' total scores. But while Delaware and Tennessee boast nearly complete teachers union approval of their proposals, Florida's largest teachers union urged members to rebuke its application, and fewer than half of Louisiana's districts supported the state's plan.

We're Still at War: Photo of the Day for March 30, 2010

Tue Mar. 30, 2010 5:00 AM EDT

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US Army Staff Sgt. Gerald Frushon, right, and Pvt. Samuel Lima, provide security during a school assessment in Wesh, Afghanistan, on March 16, 2010. Photo via the US Air Force photo by Tech. Sgt. Francisco V. Govea II.

What's Our Real Trade Deficit With China?

| Mon Mar. 29, 2010 11:53 PM EDT

Is our trade deficit with China exaggerated? The Wall Street Journal reports on the difference between accounting for the entire value of finished goods that are imported from China vs. only the value-added of the goods imported from China:

A study by the Sloan Foundation in 2007, for example, found that only $4 of an iPod that costs $150 to produce is made in China, even though the final assembly and export occurs in China. The remaining $146 represents parts imported to China. If only the value added by manufacturers in China were counted, the real U.S.-China trade deficit would be as much as 30% lower than last year's gap of at $226.8 billion, according to a number of economists.

At the same time, the U.S. trade deficit with Japan would have been 25% higher than the $44.8 billion reported last year, because many goods that China and others export to the U.S. contain parts purchased in Japan.

....But it is a tough nut to crack. Economists can look up, for example, that China exported 52,176 metric tons of screws, bolts and nuts to South Korea in 2009, according to Global Trade Information Services, a consultancy based in Geneva. But they can't trace those pieces to figure out if they wound up in exported products.

Experts also don't agree on what should be considered an intermediate good. Should the imported fuel used to power the factory be counted? What about the consultant flown in from London?

More at the link.

Quote of the Day: Sarkozy on Healthcare

| Mon Mar. 29, 2010 7:58 PM EDT

From French President Nicolas Sarkozy, speaking today at Columbia University:

Welcome to the club of states who don't turn their back on the sick and the poor....The very fact that there should have been such a violent debate simply on the fact that the poorest of Americans should not be left out in the streets without a cent to look after them ... is something astonishing to us.

Sarkozy was something of a darling of the right when he was first elected, thanks to his support of laissez-faire economics and general embrace of American values. But the financial collapse of 2008 turned him into something of a regulatory hawk, and now there's this. I'll bet the American right doesn't think much of him anymore.

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Where the Real Action Is

| Mon Mar. 29, 2010 7:45 PM EDT

Our story so far: on Friday I was chatting with Felix Salmon about leverage and capital requirements in the financial system, and we agreed that most of the action on this was taking place on the international stage. But because it's largely done behind closed doors, there's very little reporting on what progress is being made. Today, though, Bloomberg's Yalman Onaran sneaks in a bit about international standardmaking in a long story that's mostly about U.S. financial reform:

Looming over discussions about liquidity are rules proposed in December by the Basel Committee on Banking Supervision, a 35-year-old panel that sets international capital guidelines. The new framework would require banks worldwide to hold enough unencumbered assets to meet all of their liabilities coming due within 30 days. That amount, called the liquidity coverage ratio, could be used to offset cash outflows during a panic. Banks would also have to maintain a “net stable funding ratio” of 100 percent, meaning they would need an amount of longer-term loans or deposits equal to their financing needs for 12 months, including off-balance-sheet commitments and anticipated securitizations.

The Basel committee, which is collecting comments on the proposed rules through April 16, would establish clear definitions of liquid assets and funding needs, rather than leave those determinations to the banks. It would also set new capital requirements. The committee expects to complete its work by the end of the year and implement the regulations by the end of 2012.

The liquidity rules would reduce the annual profit of Bank of America Corp. by $1.5 billion and of Citigroup by $1.2 billion, JPMorgan estimated in a Feb. 17 report.

Bank analysts and executives say the proposals won’t be implemented in their current form. The rules are “too restrictive and we believe they could ultimately be watered down,” Barclays Plc said in a Feb. 8 report. Societe Generale SA’s Severin Cabannes has been telling investors the Basel regulations will likely be weakened, according to investors who have met with him.

As background, the original Basel standards were adopted in 1988 after more than a decade of work. They set capital standards for the banking industry and were only so-so from the start. The followup Basel II standards, which allowed banks a lot of leeway to use their own internal measures of risk, were a disaster — mainly because they allowed banks a lot of leeway to use their own internal measures of risk. So now we're on to Basel III. In English (sort of), the new standards would require banks to maintain adequate liquidity even assuming they lost all their overnight repo financing and had their balance sheet degraded via ratings downgrades. They'd also require banks to rely less on repo financing in the first place by increasing the portion of their asset base that has to be funded either by retail funds or by loans of greater than one-year maturity. Beyond that, Basel III would set new capital standards and (presumably) tighten up the requirements so that banks don't get to use their own models for estimating the risk of various asset classes. Felix comments:

The Basel rules are important, and they take a long time to coalesce into something acceptable to all the main players — especially the US, whose abundance of small banks makes it wary of rules which are generally designed for much bigger institutions. It's entirely foreseeable that the Basel committee's self-imposed 2012 deadline is going to come and go. But if and when the rules go into effect, they're going to have much more force than anything coming out of Congress or Treasury. So keep an eye on them: if they get diluted significantly from their present form, that's a bad sign.

Well, if Onaran is correct and "bank analysts and executives" are already saying the new rules are DOA and need to be watered down, then we have a bad sign right from the get-go. What's more, a lot still depends on just who these rules apply to — regulating the shadow banking system is crucial here — exactly how the rules are worded, and how quickly they get taken up by the major financial players around the world — none of which is clear yet. The big fight, I think, will be between those who want fairly blunt and primitive rules and those who want complicated, nuanced rules. The former helps keep the system stable. The latter helps banks figure out ways to outwit the rules and make more money.

So stay tuned. Given that Congress appears very unlikely to establish blunt rules of its own, this is where the action is.

Is Iraq's Allawi a Murderer?

| Mon Mar. 29, 2010 4:54 PM EDT

As Mother Jones reported last week, the political future of Iraq didn't get any clearer with the results of its early-March parliamentary elections. One surprise, though, was the strong showing of ex-prime minister Ayad Allawi, a former strongman for Saddam Hussein's Ba'ath Party who had forged an alliance of secular Sunnis and Shiites. Allawi's Iraqi National Accord gained 91 seats, a "thin plurality" that was two seats better than the current prime minister, Nuri al-Maliki, and his Shiite coalition. As regional expert Juan Cole noted today, it's unlikely Allawi has an easy path to resuming his old position, but he's clearly become—once again—a heavy player in Iraqi politics.

All of which makes it worth asking: Is Ayad Allawi a stone cold killer?

RNC "Investigating" Sex Club Romp

| Mon Mar. 29, 2010 3:49 PM EDT

The Daily Caller, as we like to say in this business, buried the lede. I mean, so what if higher-ups in the Republican National Committee may or may not have been talking about arranging for a private jet for RNC chair Michael Steele. Who would be surprised? The Tea Partiers? They already think the mainstream GOP is out of touch.

Equally unsurprising but a lot more fun was the revelation of FEC expense reports showing that the RNC had dropped cash on a bondage club where the strippers simulate real live lesbians! And this for the Party of No Gay Sex, of no gay marriage, of no gays in the military, of no sex of any kind outside marriage.

The Caller mentioned it in passing:

Once on the ground, FEC filings suggest, Steele travels in style. A February RNC trip to California, for example, included a $9,099 stop at the Beverly Hills Hotel, $6,596 dropped at the nearby Four Seasons, and $1,620.71 spent [update: the amount is actually $1,946.25] at Voyeur West Hollywood, a bondage-themed nightclub featuring topless women dancers imitating lesbian sex.

Details, man! We need details.

The Daily Beast had a few: "The RNC denies that Steele himself visited the club, saying that it was "a reimbursement made to a non-committee staffer. The RNC is also investigating the claim."

I'll bet they're investigating. In any case, the Beast also mentioned that the expense report was filed by one Erik Brown—who is about to become a little less obscure—for a couple of weeks at least.

The DNC is loving it, according to the Baltimore Sun's Maryland Politics blog:

The Democratic National Committee is having a field day Monday at the expense of its cross-town rivals at the RNC—or the "Risque National Committee," as the Dems put it in one of the blizzard of e-mailed releases they are sending out.

The RNC also claimed the Daily Caller piece was "riddled with misleading information and inaccuracies." But Steele & Co. didn't deny reimbursing the expense for "meals" at Voyeur West Hollywood. In fact, according to a Washington Post blogger, the RNC now wants its money back.

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Cap and Trade is Dead. Long Live Cap and Trade!

| Mon Mar. 29, 2010 3:46 PM EDT

Last week, John Broder penned a piece in the New York Times on the "demise of cap-and-trade," since mention of it has been almost completely axed from the Senate discussions. Lindsey Graham (R-SC) also reiterated his belief that it's dead and gone. "It’s been beaten to death," he said, adding, "I think it’s an idea that needs to die."

In reality, the death of cap and trade is mostly rhetorical. The bill that Graham, John Kerry, and Joe Lieberman are expected to introduce next month will still include a cap on major emitters and a trading component, though it's likely to be more limited than the House-passed bill. So Graham can keep declaring it dead, even if that doesn’t really mean all that much in practice.

Actually, the term "cap and trade" died a while ago. In the debate over the House bill, it was rarely discussed, apart from Republicans slamming it as "cap and tax." In the previous Senate bill offered by Kerry and Sen. Barbara Boxer, they dropped the phrase in favor of "Global Warming Pollution Reduction and Investment program."

What’s interesting is how politically undesirable "cap and trade" has become in recent months. What happened to make cap and trade politically toxic in Washington in just the nine months since the House passed its version of the policy? Broder posits that the term "was done in by the weak economy, the Wall Street meltdown, determined industry opposition and its own complexity." Those are factors, yes, but I think Robert Stavins of Harvard’s Kennedy School has a better reading. He concludes, basically, that the problem wasn't the phrase or even the idea itself:

But the most important factor--by far--which led to the change from politically correct to politically anathema was the simple fact that cap-and-trade was the approach that was receiving the most serious consideration, indeed the approach that had been passed by one of the houses of Congress. This brought not only great scrutiny of the approach, but--more important--it meant that all of the hostility to action on climate change, mainly but not exclusively from Republicans and coal-state Democrats, was targeted at the policy du jour — cap-and-trade.
The same fate would have befallen any front-running climate policy.

This argument puts Graham, Kerry and Lieberman's contortions to convince us that a) cap and trade is dead and b) their proposal offers something totally different in a new light. The problem isn’t the language; it’s that the American public still isn't convinced that climate change is a problem that urgently needs to be acted upon, or that any of Washington’s proposed solutions are viable. That’s where the real change needs to happen—not in the rhetorical packaging.