2010 - %3, January

April Fools Fail

| Thu Apr. 1, 2010 10:47 AM EDT

Atrios tweets:

hate when cannot tell is something is april fools joke. i hate april fools. bah humbug.

Does anyone else think this has gotten harder over the past decade or so? Or is my memory just failing me? It's not so much that April Fools gags have gotten more sophisticated, it's that the world has gotten so bizarre that even Onion-like gags seem disturbingly plausible. In a world that has people like Michele Bachmann and Steve King serving in the U.S. Congress, how do you top real life?

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Financial Phrases to Beware Of, Part LXXII

| Thu Apr. 1, 2010 10:34 AM EDT

Here is Mike Konczal reading my mind today:

Like "providing liquidity," whenever I hear "competitive disadvantage" as the main reason to not do a sensible financial regulatory related thing I think that there's some real shenanigans going on.

Obviously he's right about the "competitive disadvantage" shibboleth, but it's the other one I really have in mind. It's everyone's go-to excuse for why some arcane bit of financial rocket science is really a good thing: because it "provides liquidity" to the market. Whenever I hear that I reach for my wallet.

Example: if you ask Goldman Sachs about the value of high-frequency trading, in which they co-locate their servers near a stock exchange's servers so they can complete trades in 3 milliseconds instead of the pokier 10 milliseconds required by the dinosaur brokers that you and I have to use, they'll tell you that HFT provides needed liquidity. There are, at a minimum, two problems with that. First: does anyone really think that U.S. stock markets have historically suffered from a lack of liquidity? Stop laughing back there. But you're right: the answer isn't just no, it's hell no. In fact, U.S. equity markets are generally used as textbook examples of the most open, liquid markets ever created on planet Earth.

Second: financial rocket science does often provide additional liquidity. Unfortunately, it doesn't always provide additional liquidity. Typically, it provides liquidity when you don't need it and then scurries away and hides in a corner precisely when you do. Unless there's some underlying reason — or, better yet, some regulation — that gives you a reason to believe that a financial innovation will provide liquidity all the time, even when the market panics, it's useless.

End of rant. You may now go back about your business.

Is Living in the C Street House An Ethics Violation?

| Thu Apr. 1, 2010 10:32 AM EDT

Regular Mother Jones readers will recall the story of "the Fellowship," or "the Family," a secretive fundamentalist Christian group that boasts a large number of prominent politicians as members. In May 2008, we published an excerpt from Jeff Sharlet's bestselling book on the organization. Last year, scandal rocked the Family as Sen. John Ensign (R-Nev.), a member of the group, was caught up in a sordid sex scandal. (Gov. Mark Sanford of South Carolina, who was affiliated with the Family during his time in Congress, also got caught up in a sex scandal.)

Ensign, along with Senators Sam Brownback (R-Kan.), Tom Coburn (R-Okla.), Jim DeMint (R-S.C.), and John Ensign (R-Nev.); and Representatives Mike Doyle (D-Penn.), Heath Shuler (D-N.C.), Bart Stupak (D-Mich.) and Zach Wamp (R-Tenn.), was one of the residents of a house on C Street in Washington, near the Capitol. The so-called "C Street house" is owned by a Family-affiliated group and is a center for Family-related activity.

Now the C Street residents are facing new problems—and this time, they're not related to a sex scandal. An August 2009 article in World magazine about the C Street house revealed that its residents pay around $950 per month to live in the house. In exchange, they don't just get a room—they get housekeeping service, too, and meals are sometimes available. Clergy VOICE, a group of clergy from different faith traditions, thought that sounded fishy, so they did a little digging:

The group surveyed the Capitol Hill rental market and discovered that nearby hotels charge a minimum of $2,400 per month, corporate housing costs a minimum of $4,000 per month and efficiency or one bedroom apartments typically go for at least $1,700 per month. None of these rates include any meals.

It appears that the residents of the C Street house are the beneficiaries of subsidized housing. So Clergy VOICE filed an IRS complaint asking how the subsidy might affect the C Street residents' taxes. On Thursday, Citizens for Responsibility and Ethics in Washington (CREW), a DC good-government group, filed ethics complaints against the house's occupants:

The House and Senate gift rules specifically include “lodging” as a prohibited gift. There are only two exceptions to the ban on accepting lodging: if it is provided by an individual based on personal friendship, or if it is hospitality in a personal residence owned by an individual. Here, because a corporate entity – C Street Center, Inc. – owns the property, neither exception applies. In addition, members may not accept gifts offered to members of Congress because of their official positions. As only members of Congress appear to live in the C Street House, it seems likely that it is because of their positions that they are permitted to live there and are offered below market rent.

CREW Executive Director Melanie Sloan stated, “At a time when so many Americans are losing their housing it is surprising to discover that some members of Congress are lucky enough to have a landlord that charges below market rent for fairly luxurious accommodations – and offers housekeeping and meal service to boot.” Sloan continued, “Rarely does someone – particularly a member of Congress – receive something for nothing, so you can’t help but wonder exactly what these members may be doing in return for all of this largess. Of course, this is the reason the gift ban was enacted in the first place. This situation cries out for an immediate ethics inquiry.”

There's more on this over at CREW's site.

Quote of the Day: The iPad

| Thu Apr. 1, 2010 10:12 AM EDT

From Jack Dorsey, creator and co-founder of Twitter, on Apple's new iPad:

I'm most excited about the potential of being able to get closer to data — to be able to touch data. Being able to use your fingers for every aspect of the experience is something that's really going to change computing.

Seriously? I'm agnostic on the whole tablet computing thing, but surely being able to "touch" an iPad is the least of its attractions. Is there really a widespread feeling out there that our keyboards are getting between us and our data?

UPDATE: RickNAnn tweets: "If you used an iPhone regularly you'd understand, I think." Maybe so! At the moment, though, I barely even use my old dinosaur cell phone for calling people, let alone anything else, so I'm still a couple of steps away from that. I guess I'm waiting for direct brainstem connections to be invented first. Get cracking, scientists.

Oregon Will Fight...for Health Bill

| Thu Apr. 1, 2010 10:10 AM EDT

As MoJo's own Suzy Khimm writes today, the more than a dozen states set to fight President Obama's health care bill in court may not succeed, but there's still plenty they can do to undermine how reform is implemented. Like how states establish insurance exchanges, as the new law requires, which require plenty of supervision and appointees at the state level. Now another state, Oregon, has now joined the states' legal health care battle—but it's on the side fighting for the bill.

Oregon's attorney general, John Kroger, announced yesterday that he's readying a massive defense alongside the state's governor to defend the constitutionality of Obama's health bill. (Both men are Democrats.) "The health care reform cases present some of the most important constitutional issues facing this generation," Kroger said in a statement.

Oregon's defense of health care reform faces stiff opposition from a spate of attorneys general nationwide. The AGs already vowing to fight Obamacare, as opponents call it, hail from Florida, Alabama, Michigan, South Carolina, Nebraska, Pennsylvania, Colorado, Texas, Utah, Louisiana, Indiana, Idaho, South Dakota, and Washington. (All of these states are party to the same suit, filed by Florida AG Bill McCollum.) The Virginia AG has also announced that he'll sue the Obama administration over the health bill as well. One particular piece of the health bill that has these state AGs up in arms is a mandate that all Americans buy medical insurance or pay a fine; the states say this demand violates the constitution's commerce clause, which gives the feds the power to regulate interstate commerce. These states counter by saying insurance contracts aren't commerce, and thus fall under state's regulatory power. Their opposition also stems from states' broader fiscal woes, with budgets already deep in the red and likely to suffer more when required to implement Obama's health care plan.

With Oregon now joining the fray, the fight over Obama's health reform is shaping up to be a bruiser. And don't be surprised to see more states chime in the coming days and weeks.

Rep. Hank Johnson Thinks Guam Could Capsize

| Thu Apr. 1, 2010 9:15 AM EDT

It couldn't have been easy for Admiral Robert Willard, the commander of the U.S. Pacific Command, to maintain a straight face during his completely bizarre grilling by Rep. Hank Johnson (D-Ga.) last week. Willard was testifying before the House Armed Services Committee at a hearing concerning his command's FY 2011 budget. Part of the hearing centered on plans to shift thousands of US troops from Okinawa to Guam. This move is likely to put a serious strain on the tiny island—but not the kind that Johnson is worried about. Take it away, Hank:

My fear is that the whole island will become so overly populated that it will tip over and capsize.

To which Willard, who appears to be stifling a grin, says:

We don’t anticipate that. The Guam population, I think, currently about 175,000, and again, with 8,000 marines and their families, it’s an addition of about 25,000 more into the population.

Earlier, in another cringe-worthy moment, Johnson goes into exhaustive detail about the island's dimensions, eventually posing this question to the admiral: "I don't know how many square miles it is, do you happen to know?"

Willard: "I don't have that figure with me, sir, but I could certainly supply it to you if you'd like."

Since Willard definitely has more important things to do than Google the square mileage of Guam, I'll save him the trouble: approximately 212.

Jon Stewart needs to send Johnson a thank you note. You can't make this stuff up.
 

UPDATE: Johnson, via his spokesman, responds:

“I wasn’t suggesting that the island of Guam would literally tip over,” said Johnson. “I was using a metaphor to say that with the addition of 8,000 Marines and their dependents – an additional 80,000 people during peak construction to the port on the tiny island with a population of 180,000 – could be a tipping point which would adversely affect the island’s fragile ecosystem and over burden its already overstressed infrastructure.

“Having traveled to Guam last year, I saw firsthand how this beautiful – but vulnerable island – is already overburdened, and I was simply voicing my concerns that the addition of that many people could tip the delicate balance and do harm to Guam.”

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Hot Humanitarian: Chris Lin

| Thu Apr. 1, 2010 6:30 AM EDT

Food carts selling gourmet goodies like crème brulee are all the rage in the States. But in the slums of Jakarta, Indonesia, they've long been a popular way to eat on the go. Though the streets of Jakarta are awash in cheap eats, the meals are often lacking in nutrition. Mercy Corps Indonesia recently rolled out food carts stocked with healthy food and gussied up pro bono by the ad firm Saatchi & Saatchi in hopes of reaching hundreds of thousands of undernourished kids.

That's where Chris Lin from the Global Entrepreneurship Lab at MIT's Sloan School of Management comes in. He and three other MBA students went to Jakarta to help Mercy Corps figure out how to make good food cheap (and profitable—these are B-schoolers, after all). Chris is also the first of many humanitarians doing cool work around the globe whom I'll be interviewing here. I talked to him shortly after his return.

Will you give me your elevator pitch for what you were doing?

Mercy Corps Indonesia ran a pilot program to address malnutrition in kids and also to hopefully offer some employment opportunities. A lot of people in Indonesia eat food from street carts, because they don't have kitchens and therefore don't cook. So they found vendors and a nutritionist to make sure their carts offered a well-balanced diet. 

Does the good street food cost the same as regular street food?

We found that the prices were actually pretty comparable—the comparison being instant noodles, which are very popular there, or deep-fried foods. They found four vendors to cook and vend food to mothers to give to their kids, and they've run this program for about five to six months. They wanted help to find a business model that would work so that it could be financially self-sustaining.

How could that happen?

We helped them work through the business structure so that the company they set up would be kind of a franchise system. They will franchise out cooking centers—kitchens, basically—and the kitchens will franchise vendors that they sell food to, and then the vendors will sell food on their own. So there's multiple levels of independent businesspeople: the corporate headquarters, the cooking centers, and then the vendors. What we went through with them was setting up this structure and then setting up the financials, to show that everyone can make a decent amount of money while still serving healthy food to kids and giving employment opportunities to people.

So whoever runs the parent company after Mercy Corps steps out could profit off this venture?

Yeah. That was the idea, to demonstrate that there was a viable business opportunity here. We think it should be attractive not just for a philanthropist but also for someone looking to earn some return.

You're an MBA student. So when you grow up do you want to continue saving the world with math and technology

—and business charts and PowerPoint slides?

That's how I like to imagine the answers that you guys came up with for this.

There were also some intangibles we gave them in terms of more understanding of strategic planning. But the physical thing we gave them was, yeah, an Excel sheet and a PowerPoint deck. Good question, though. I’m still figuring that out. I've always been interested in technology, but I'm still very open to exploring different things and different areas. I would love to continue to do global projects, both from a nonprofit and social justice but also from a corporate side. I think there's a lot of opportunity there in terms of nonprofits helping the business world and the business world helping nonprofits, so would definitely be very open to opportunities like this in the future.

In most poor neighborhoods in the United States, we have tons of crappy food. As you think about making healthy food fast, easy, and cheap, do you see applications for this idea in other countries, like ours?

That's a great question. I definitely see that parallel, but it never came up as a topic. I know Kiva is now doing microfinance in the US, after they were able to really successfully do it internationally.

So if a businesswoman launched this initiative to try to make cheap street food really hot in poor communities and also make it profitable and wholesome, would you be on the consulting team?

[Laughs.] Yeah, I'd definitely love to talk.

Music: The Way of the World (Mose Allison)

| Thu Apr. 1, 2010 6:00 AM EDT

His sleepy voice and bluesy piano seemingly untouched by time, Mose Allison returns with one of the best albums of his career, which has spanned more than a half-century. On The Way of the World, the Mississippi-born sage skewers the pompous and chronicles life's absurdities with the same sly wit that influenced rockers like the Who and the Clash, who both covered Allison tunes. "I know you didn't mean it when you blew us up," he drawls at one point, exuding bemused resignation; "Modest Proposal" (shades of Jonathan Swift) finds him muttering, "Let's start making some sense today." Though Allison is in his early 80s, he still possesses the irreverence of a rookie.

How the States Could Sabotage Health Reform

| Thu Apr. 1, 2010 5:00 AM EDT

The 14 states suing the Obama administration to stop the enactment of health care reform aren't likely to get very far. But though they probably won't succeed in overturning the legislation, they could seriously undermine it. The Affordable Care Act, as the reform bill is known, will create health insurance exchanges, which each state will be responsible for setting up. And reform-resistant state governments will have much opportunity for foot-dragging and spotty regulatory enforcement. 

Under the law, the federal government will establish national regulations for the exchanges—which will enable individuals and small businesses to purchase more affordable coverage in a regulated market—but the states will have the job of creating and overseeing them. As the New Republic's Jonathan Cohn explains:

It requires appointing people to run the exchanges and figuring out how Americans will use them, but it also means preparing to regulate insurers more closely than anybody regulates them now. The law creates minimum standards for what insurance covers and requires insurers to spend most of their money on actual patient care, to name only two obvious changes.The states will have primary responsibility for enforcing these standards.

Once they're established, the state exchanges will need enough people enrolled and enough competition to bring prices down. "In essence, the bill spurs 50 different health reforms," says Anthony Wright, executive director of advocacy group Health Access California. That fact has become clear in the days following the passage of the bill. Some states are trying to roll back reform, while others "are already at work implementing—and improving" it, he explains. For instance, on the same day Obama signed the bill into law, the California state legislature passed legislation to implement one of its immediate provisions to ban "recessions"—that is, the insurance industry practice of retroactively denying coverage to people after they become ill. States will also be responsible for overseeing an unprecedented expansion of Medicaid coverage—a major reform that many state governments have already protested, because they'll be shouldering part of the cost.

VIDEO: How To Fund Haiti's Recovery

| Thu Apr. 1, 2010 4:00 AM EDT

Yesterday in New York, the international donors' conference on Haiti's recovery hopefully helped raise billions of dollars to fund the earthquake-ravaged Caribbean country's redevelopment—on Haiti's own terms. According to reports in the Huffington Post and New York Times, a few main things must be accomplished for Haiti to rebuild itself: Funds must be transferred from NGOs in the country to the Haitian government (regardless of the government's corrupt past), the country must be decentralized, and it must use its own methods and, if possible, resources to regain economic strength. The Congressional Black Caucus recently hosted a conference to review the progress of recovery efforts in Haiti, and panelists continuously repeated these sentiments.

"A democracy cannot be run by NGOs," Rep. Yvette Clark (D-N.Y.) said, after noting that she represented the second-largest Haitian population in the US. She visited Haiti a few weeks ago and assessed the situation there:

What I witnessed on the ground in Haiti was a government made impotent by an overemphasis on the financial contributions to an NGO network, an NGO network that is not accountable to anyone other than themselves or perhaps their boards...many of the NGOs are not even registered with the Haitian government, and so the tracking and transparency that comes from the support mechanisms that they are providing are not made clear. The accountability around the financial support they’ve received is not as clear either, unless they're registered with the US in which case we can track them…

Clark maintained that help from NGOs is not in itself a mechanism to a civil society. "I am advocating for direct financial assistance to the Haitian government. If you make the Haitian government impotent and in the view of its own people unable to provide for them, then democracy is dead."

Clark asked President Obama to pass an executive order to establish a Haitian Enterprise Development Fund modeled after the private equity and venture capital funds financed by US foreign aid. "We need to make sure that the work that we do in Haiti is one that is inspired and is taken ownership of by Haitians in Haiti, so that the development of the civil society is authentically Haitian," she said.

The growing divide between regular Haitians and the NGO workers sent to assist them was also highlighted in a story broadcasted on Al Jazeera English, which is worth watching in full:

 

 

At the CBC forum, Rajiv Shah, a USAID administrator, echoed Clark's concerns. "We absolutely must prioritize a mechanism for managing resources and managing donor engagement that allows for real alignment with the government of Haiti's strategy," he said. "We should all be patient in how we spend those resources...Instead of rushing to do major reconstruction contracts with outside parties, we should take more time, be more deliberate, plan more carefully, and indentify local partners that can implement projects and programs. And use the influx of resources to build their critical capacities that will be necessary for Haiti to have a more vibrant future."

Speaking of that future, Raymond Joseph, Haitian ambassador to the US, announced that "the new Haiti will have to go green." After the earthquake hit the country, Joseph said, traffic lights were still working because they're powered by solar panels. Joseph acknowledged the "astounding solidarity" the world has shown in helping post-quake Haiti, but he cautioned against a do-anything strategy that lacked forethought and national scale.

"It took an earthquake to bring the whole world around Haiti," he said. "One thing that has happened in this earthquake is that it has given us a new idea of how to remake Haiti. Not as the Republic of Port-au-Prince, but as the Republic of Haiti."

Follow Titania Kumeh on Twitter.