2012 - %3, August

Quote of the Day: You Need to Let Your Kids Fail

| Mon Aug. 6, 2012 1:49 PM EDT

From Madeline Levine, offering some advice on overparenting:

If you can’t stand to see your child unhappy, you are in the wrong business.

The rest of the piece is equally sensible. For that reason, I expect it will get very little attention.

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Chart of the Day: Algobot Wars Now Rule Wall Street

| Mon Aug. 6, 2012 1:10 PM EDT

Felix Salmon passes along this animation that shows the remarkably chaotic growth of high-frequency trading on all of America's various stock exchanges over the past five years (this includes the three exchanges you've heard of plus the dozen others you probably haven't). The basic idea behind HFT is that humans are taken out of the trading equation entirely. Instead, computer algorithms trade stocks directly, executing millions of trades per second and occasionally going crazy, as they did during the Flash Crash of 2010 and then again a few days ago, when an HFT bug cost Knight Capital $440 million in 30 minutes. Felix wants it to stop:

Back in 2007, I wasn’t a fan of a financial-transactions tax; today, I am. And this chart shows better than anything why my opinion has changed. The stock market is clearly more dangerous than it was in 2007, with much greater tail risk; meanwhile, in return for facing that danger, society as a whole has received precious little utility. Are spreads a tiny bit tighter than they might be otherwise? Perhaps. But that has no effect on stock-market returns for long-term or even medium-term investors.

The stock market today is a war zone, where algobots fight each other over pennies, millions of times a second. Sometimes, the casualties are merely companies like Knight, and few people have much sympathy for them. But inevitably, at some point in the future, significant losses will end up being borne by investors with no direct connection to the HFT world, which is so complex that its potential systemic repercussions are literally unknowable. The potential cost is huge; the short-term benefits are minuscule. Let’s give HFT the funeral it deserves.

I agree. The problem with HFT isn't that we know it's dangerous, it's that we don't know anything at all. It's become flatly too complex for even its creators to understand what their creations are doing. Here's an example. The heart of HFT is speed: even the speed-of-light delay can make a difference, so most HFT shops locate their computers as close to the stock exchanges as possible. Even a few milliseconds can make a difference. At least, that's what a company called UNX thought until it moved from Burbank to New York:

This is where the story gets, as [Scott] Harrison put it, weird. He explains: “When we got everything set up in New York, the trades were faster, just as we expected. We saved thirty-five milliseconds by moving everything east. All of that went exactly as we planned.”

“But all of a sudden, our trading costs were higher. We were paying more to buy shares, and we were receiving less when we sold. The trading speeds were faster, but the execution was inferior. It was one of the strangest things I’d ever seen. We spent a huge amount of time confirming the results, testing and testing, but they held across the board. No matter what we tried, faster was worse.”

“Finally, we gave up and decided to slow down our computers a little bit, just to see what would happen. We delayed their operation. And when we went back up to sixty-five milliseconds of trade time, we went back to the top of the charts. It was really bizarre. I mean, there we were in the most efficient market in the world, with trillions of dollars changing hands every second, and we’d clearly gotten faster moving to New York. And yet we’d also gotten worse. And then we improved by slowing down. It was the oddest thing. In a world that values speed so much, you could be slower, yet still be better.”

The problem here isn't that UNX's move failed, it's that Harrison still doesn't know why it failed. Until we do, allowing HFT bots to control our equity markets is just begging for a catastrophe.

And that's where the transaction tax comes in. HFT works by making tiny amounts of money on a huge number of trades. Even a tiny tax, maybe a quarter of a percent per trade, would make HFT unprofitable and would put our markets back in the hands of human beings. Those human beings will still screw up, but at least there's a limit to how fast and how badly they can do it.

Maybe, Just Maybe, the Economy Is Starting to Recover

| Mon Aug. 6, 2012 11:57 AM EDT

Is the economy finally getting better? A friend writes in with some anecdotal evidence: his father, who declared bankruptcy two years ago, got cold called by Bank of America offering him a refi deal. What's more, his brother finally got evicted from his foreclosed house in Riverside. "I've told people that the recession won't end until his creditors evict him," he writes. "His presence in the house was a sign that the house can't be sold. Well, my brother is getting evicted next week."

Karl Smith has some anecdotal evidence too, but he also has some statistical evidence to offer. According to the BLS payroll series on employment, job growth has been pretty flat for the past year (that's the red line). But the household survey tells a different story. From a near stall in June, employment growth has been accelerating steadily for the past year and is now up to nearly 250,000 new jobs per month. So maybe the economy is doing better than we think.

It's worth noting that none of this matters much for the election. If the economy really is poised for takeoff, it will come too late to do Barack Obama any good. For now, this is just something to scratch our chins about.

Mitt Romney Not Such a Great Real Estate Investor

| Mon Aug. 6, 2012 11:18 AM EDT

The LA Times reports that although Mitt Romney may be pretty good at making money in the private equity biz, he's apparently not so good at the real estate investment biz. His La Jolla mansion, the one with the car elevators, hasn't worked out so well for him:

After paying cash for the Mediterranean-style house with 61 feet of beach frontage, [the Romneys] asked San Diego County for dramatic property tax relief....Initially, the Romneys asked that their 2009 assessment, $12.24 million, be reduced to $6.8 million, maintaining that their home had lost about 45% of its value in the first seven months they owned it.

Impressive! A lot of homes here in Southern California lost value during the housing bust, but Romney must be the only guy to lose 45% in the space of seven months. Or to claim he did, anyway. The San Diego County assessor rejected Romney's rather dramatic sob story, and eventually everyone settled on a 29% reduction over the course of three years — though Romney's lawyer still thinks that's a lot higher than the home's current fair market value. I guess mansions on the beach in La Jolla aren't what they used to be.

Romney's Fundraising Juggernaut Tops Obama's for Third Straight Month (UPDATED)

| Mon Aug. 6, 2012 10:11 AM EDT
Mitt Romney.

The Mitt Romney money machine is showing no sign of slowing down.

Romney's re-election effort raised north of nine figures for the second month in a row, raking in $101.3 million in July, his campaign announced Monday. That comes after raising $106 million in June, a blockbuster haul that topped the Obama campaign's June fundraising by $35 million.

The Obama campaign, Obama Victory Fund, and Democratic National Committee said they'd together raised more than $75 million in July. That makes the third straight month in which the Romney campaign, Romney Victory Fund, and Republican National Committee outraised Obama and affiliated Democratic groups.

It's still unlikely that Romney will raise more than Obama, despite the Obama campaign's many emails suggesting otherwise. By the end of June, Obama and affiliated Democratic groups had raised $552 million to Romney and the GOP's $394 million. The Sunlight Foundation's Bill Allison noted that, at the current pace, Romney would have to beat Obama's monthly fundraising total by an average of $39.5 million in July, August, September, and October to come out on top.

That's not impossible. But the chances of Romney pulling that off are slim, especially as less-motivated Democratic donors who've stayed on the sidelines thus far notice tightening polls and finally crack open their checkbooks. What Romney can count on, though, is a sizeable advantage in GOP outside spending by super-PACs and secretive nonprofit groups—a difference that, on Election Day, could prove crucial.

Rebels With a Cause: A Playlist for Your Pet Issues

| Mon Aug. 6, 2012 6:03 AM EDT
Ted Nugent champions guns, freedom, and guns in his ode to the NRA.

Music and politics: A classic combination as reactive as baking soda and vinegar. But like a seventh grader's science fair project, the results are often unoriginal and underwhelming. And while Bono never met a humanitarian crisis he couldn't sweepingly lyricize, there remain too few U2 songs to donate to everyone's off-center activism.

So to satisfy your niche-gripe, we've dug up 10 songs that span the political pet-issue gamut. Hate meat? Love guns? Anti-vaccines? Pro-oil? Whatever it is you're for or against, we've got an anthem for your rallying cry.

1. Aaron Tippin, "Drill Here, Drill Now": If the price of fuel leaves you balking at the pump, country singer Aaron Tippin has a solution: Collude with Newt Gingrich's Big-Oil-pandering political operative and drill, baby, drill!

2. Third Eye Blind, "If There Ever Was A Time": Turns out, cashing in on the most infectious hook of the 1990s doesn’t nullify your 99% street cred. In this syrupy pop-rock jam, front man Stephan Jenkins extols the efforts of Occupy Wall Street, and proves he hasn't lost his knack for irresistible riffs.

3. Isaac Sloan, "We Want the Truth": The Wikileaks album debuted in June and Isaac Sloan, a small-time folk rocker from Utah, had the honor of penning this over-the-top, acoustic ode to the whistleblowing website's fearless leader, Julian Assange. 

4. Ted Nugent, "I Am the NRA": Uncle Ted’s favorite gun is the 10mm STI “Perfect 10” tactical pistol with a high-capacity, 19-round magazine. What’s yours? Get "cock locked and ready to rock" with this brazen, guns-a-blazin’ country-western anthem about freedom, liberty, and the NRA.

5. The Refusers, "First Do No Harm": The Seattle-based band the Refusers makes anti-vaccine music that "defies government propaganda," which is certainly one way of putting it. Celebrate freedom from vaccines and liberation from proven medical science with their foot-tappin' scare-tactics.

6. The Smiths, "Meat is Murder": Got beef with beef? Tell your carnivorous friends how you really feel about the succulent slab of sirloin oozing blood and death on their plates with Morrissey's PETA-approved ballad.

7. First Love, "Game On": As legend has it, Haley and Camille Harris, two homeschooled daughters of an Oklahoma pastor, wrote Rick Santorum this sweeter-than-pie, divinely-inspired campaign jingle in a matter of hours—and just in time for Super Tuesday. Regardless of your opinion on Santorum, First Love, as Mediaite notes, "deftly manages to rhyme 'again' with 'Ronald Reagan.'"

8. Aimee Allen, "Ron Paul Revolution": Rick Santorum wasn’t the only GOP fringe candidate to inspire an excessively optimistic campaign track during a primary season. Ron Paul's legion of followers have written enough songs, like this power-pop battle cry by Aimee Allen, to pump up the Texas congressman for at least a dozen more failed presidential bids.

9. Steve Taylor, "I Blew Up the Clinic Real Good": '80s Christian rocker Steve Taylor got a lot of flack from mainstream gospel-music contemporaries for his satiric swings at religious hypocrites like sleazy TV evangelicals and Bob Jones University (for barring interracial dating among its students). In this quirky and cynical tune, Taylor takes aim at anti-abortion extremists who'd committ acts of terrorism for the pro-life cause; toward the end of the song, he rails that "the ends don't justify the means anytime." 

10. Rankin' Taxi, "You Can't See It, And You Can't Smell It Either": In response to the hemorrhaging crisis at the Fukushima Daiichi nuclear power plant, the worst nuclear disaster since Chernobyl, dancehall reggae artist Rankin’ Taxi, along with a slew of other angry anti-nuke musicians, has taken to the Interwebs to decry nuclear power and its radiactive footprint in this darkly mirthful beat.

Click here for more Music Monday features from Mother Jones.

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Biotech Giants Are Bankrolling a GMO Free-for-All

| Mon Aug. 6, 2012 6:00 AM EDT

The so-called "Big Six" agrichemical companies—Monsanto, Syngenta, Dow Agrosciences, BASF, Bayer, and Pioneer (DuPont)—are sitting pretty. Together, they control nearly 70 percent of the global pesticide market, and essentially the entire market for genetically modified seeds. Prices of the crops they focus on—corn, soy, cotton, etc.—are soaring, pushed up by severe drought in key growing regions. Higher crop prices  typically translate to increased pesticide sales as farmers have more money to spend on agrichemicals and more incentive to maximize yield.

The companies operate globally—and have gained a stronghold in that emerging center of industrial agriculture, Brazil—but the biotech-friendly US is their profit center. They've got a big chunk of US agriculture pretty well sewn up—their GMO seeds dominate our corn, soy and cotton crops, which account for more than 53 percent of US farmland, and have won approval for GMO alfalfa (hay), which accounts for another 19 percent. The vast annual US corn crop—which accounts for 40 percent of the globe's corn most years—is a particular bonanza, not just for GMO seeds but also a stunning amount of insecticides, fungicides, and herbicides.

But two things could mess up the Big 6 here in the US: 1) any delay in the regulatory process for a new generation of seeds engineered for resistance to multiple herbicides; and 2) any major move to require labeling of foods containing GMOs, a requirement already in play in many other countries—including the European Union, China, Japan, and South Korea—and one for which the US public has expressed overwhelming support. Unsurprisingly, the Big 6 are investing millions of their vast profits into forestalling both of those menaces.

From Church to Rock: The Organ as Guitar Amp

| Mon Aug. 6, 2012 6:00 AM EDT

Ben Juday usually repairs electric organs, but these days, he's breaking them apart. The owner of Analog Outfitters in Illinois takes the guts out of old, unwanted organs and recycles them as guitar amps now sold by dealers across the country. 

About a year ago, he noticed that organs beyond repair were just getting chucked. "People burn them, regularly. Electronics and everything," he lamented. So he began tinkering with an abandoned organ, just to see that what he could do, and turned it into a pretty darn good sounding guitar amp. Soon, his recycled amps were being plugged into the instruments of touring musicians such as Kevin Post, the guitarist for country star Blake Shelton.

"It's like if you take a car, and you keep the body and transmission. Everything else you replace," he says about his process. The electronic equipment—including the vacuum tubes, metal wiring, and transformer—are the amp's functional backbone. Wood from the organ is also recut to make the body of the amp. "It's like a puzzle," he says, "It's like playing with Legos when you're kid."

Juday picked up his technical skills on the waysidein the middle of a geography PhD. A physics professor introduced him to vacuum tubes, the old school glass and metal tubes that used to control electric currents in everything from CRT screens to room-sized computers to, yes, electric organs. While vacuum tubes are pretty much obsolete now, their most important modern use is in high-end guitar amps. Amps made with semiconductors are cheaper and lighter, but their sound just doesn't have the color and richness of a tube amp. Juday still consults with his old mentor, whom he calls his "secret weapon." 

Resurrected technology is one part of the recycled amp's sentimental allure, but it's about the music too. A good number of the instruments that come Juday's way are Hammond B3 electric organs, which have a long tradition connecting music from gospel to Radiohead. (Listen for the B3 in Radiohead's "Fake Plastic Trees.") They were also once a popular household instrument before falling out of fashion and ending up abandoned on sidewalks. With these guitar amps, the organ's musical legacy ends up on stage rather than in the trash.

The organs Juday both repairs and deconstructs come with their own varied backstories. He recalls one that had formerly been used in a family carnival act and another in a family polka band. Chicago band Wilco went on an international tour with a refurbished organ from a 90-year-old woman. Connecting history to modern music is part of Analog Outfitters' appeal: vintage organs and old school vacuum tube technologythey're all getting a new voice.

Click here for more Music Monday features from Mother Jones.

Here's Live Coverage of the Mars Rover Landing at 10:31 pm Pacific Time Tonight

| Sun Aug. 5, 2012 9:24 PM EDT

Via BoingBoing, here's a live feed for tonight's landing of the Mars rover Curiosity. The livestream starts at 8:30 pm Pacific time, and the rover is scheduled to land at 10:31 pm Pacific time. More details from BoingBoing here.

Even if you don't care about Mars exploration — in which case, why are you reading this blog? — you should watch anyway. The entire landing process is mind-bogglingly complex, and there's always the white-knuckle, NASCAR-like possibility of total catastrophe. You won't want to miss that even if visiting nearby planets doesn't excite you. Remember: these are your taxpayer dollars at work.

Hooray for Obamacare!

| Sun Aug. 5, 2012 6:52 PM EDT

The New York Times reports that even liberals are now referring to the Affordable Care Act as "Obamacare":

Whether Democrats can change a pejorative into a positive is unclear, but after three years on the defensive, they have resigned themselves to the fact that “Obamacare” has become the popular name for the sweeping social program, and they are trying to spin it in their direction. Particularly since the Supreme Court upheld the law’s constitutionality, Mr. Obama and his allies have tried to take ownership of the term.

“The right created it and spits it out as an epithet; it has that tone, a sneering quality like they’re hanging it around his neck,” said Jeff Shesol, a former White House speechwriter under President Bill Clinton. “But it has so taken hold, it reached that level of saturation that it’s very difficult for Obama or the Democrats to escape it. So why not then try to appropriate it?”

I've always been fine with Obamacare as a nickname, much the same way that Reaganomics is a nickname for supply-side economics. And whether embracing it converts the term Obamacare from a pejorative into a positive depends entirely on Obamacare itself, I think. "Neoconservative" started out as a pejorative term and did just fine when neocons made it into a popular doctrine. Conversely, "welfare" used to be so plainly positive that conservatives urged other conservatives not to use the term. But that changed when conservatives made welfare itself suspect.

Likewise, if ACA eventually becomes popular, then Obamacare will be a positive term. If it fails, then it will fade away. It's that simple.