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Chart of the Day: Another Sign That Dodd-Frank Is Working

| Wed Feb. 3, 2016 12:25 AM EST

Via Matt O'Brien, this chart from JP Morgan shows financial sector leverage over the past few decades. As you can see, leverage skyrocketed during the Bush era, which contributed to the 2008 financial meltdown, and then plummeted shortly thereafter. Then it flattened out for a couple of years, and under normal circumstances it probably would have started to climb again when the economy began to recover. Two things stopped it: Dodd-Frank and Basel III, both of which mandated higher capital requirements and thus lower overall leverage levels. This has reduced Wall Street profits but made the banking system safer for everyone.

In other words: financial regulation FTW. Nothing is perfect, and Wall Street is doing everything it can to undermine Dodd-Frank during the rulemaking process, but if it accomplishes nothing except encouraging less leverage it will have done its most important job.

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These Charts Show How the US Is Failing Syrian Refugees

| Tue Feb. 2, 2016 8:36 PM EST
Syrian women wait in line to receive winter aid at the Zaatari refugee camp in Mafraq, Jordan, on January 20.

The United States and some other rich nations need to step up their game when it comes to helping millions of Syrians fleeing their country's brutal civil war, according to a new study released this week by international aid group Oxfam.

Since 2011, about 250,000 people have been killed and 11 million more have fled from their homes amid fighting between the government of Syrian President Bashar al-Assad and the country's rebel groups. On Thursday, the United Nations is co-hosting a conference in London to raise money for Syrians who have been affected by the crisis.

Ahead of that conference, Oxfam crunched some data to figure out how much the United States and other rich countries donated in 2015—and whether, based on the relative size of their economies, they gave their "fair share" of the $8.9 billion total that Oxfam says was needed. For many of the countries, Oxfam found, the answer to that second question was a resounding no. The United States, for example, donated $1.56 billion in aid last year, more than any other country. But with the world's biggest economy, its "fair share" contribution should have been more than $2 billion, according to Oxfam—and it only gave 76 percent of that. Russia and France, which have also been deeply involved in Syria's civil war, were relatively stingy, too. By contrast, Kuwait, a smaller country, gave 554 percent of its fair share by donating $313 million in aid.


Oxfam also evaluated whether countries have pledged to take in their fair share of Syrian refugees—again, based on the size of their economies. Oxfam has called on rich countries to resettle at least one-tenth of refugees living in Syria's neighboring countries—about 460,000 people—by the end of 2016, but notes that to date they have only collectively offered to resettle 128,612 people. Since 2013, the United States has agreed to take in only 7 percent of what Oxfam deems to be the country's fair share of refugees.

Here's the Myth Donald Trump Might Ride All the Way to the White House

| Tue Feb. 2, 2016 7:39 PM EST

Bruce Bartlett has written a new paper that examines the role of "reverse racism" in the rise of Donald Trump. Bartlett touches on a number of topics—e.g., changing demographics, partisan realignment, the media promotion of race as an in-group marker—but the cornerstone of his narrative is a simple recognition that fear of reverse racism is deep and pervasive among white Americans. Here's the basic lay of the land from a bit of research done a few years ago by Michael Norton and Samuel Sommers:

As you can see, everyone agrees that racism was endemic in the '50s, and everyone agrees that it has improved since then. But among whites, a majority believe racism against blacks has improved so much—and reverse racism against whites has intensified so much—that today there's actually more bias against whites than against blacks.

The Norton-Summers study doesn't break down racial views further, but it's a safe guess that fears of reverse racism are concentrated primarily among political conservatives—encouraged on a near daily basis by talk radio, Fox News, and Republican politicians. Given this, it's hardly any wonder that Trump's barely coded appeals to racial resentment have resonated so strongly among Republican voters. Trump himself may or may not have any staying power, but his basic appeal is rooted in a culture of white grievance that's been growing for years and is likely to keep growing in the future as white majorities continue to shrink. No matter what happens to Trump himself, he's mainstreamed white victimhood as a political force to be reckoned with for the foreseeable future.

Ted Cruz Took a Position on Fireworks Legalization in Iowa to Win 60 Votes

| Tue Feb. 2, 2016 3:56 PM EST

Do you ever feel like a plastic bag, drifting through the wind, wanting to start again?

Then you probably voted for Ted Cruz. Bloomberg's Sasha Issenberg has the most intriguing analysis of the Texas senator's victory in last night's Iowa caucuses, explaining how Chris Wilson, the Cruz campaign's pollster and director of analytics, carved up the state's eligible voters into 150 different categories with a borderline spooky precision. No issue was too small for the Cruz campaign—not even the legalization of fireworks sales, which are currently illegal in Iowa:

When there was no way that a segment could be rolled up into a larger universe, as was the case with the sixty Iowans who were expected to make a priority of fireworks reform, Cruz's volunteers would see the message reflected in the scripts they read from phone banks, adjusted to the expected profile of the listener. A Stoic Traditionalist would hear that "an arbitrary ban of this kind is infringing on liberty," as a messaging plan prepared by Cambridge Analytica put it, while Relaxed Leaders are "likely to enjoy parties and community celebrations, such as the 4th of July, and thus a fun-killing measure of this kind is unlikely to sit well with them."

But here's the best part:

Unlike most of his opponents, Cruz has put a voter-contact specialist in charge of his operation, and it shows in nearly every aspect of the campaign he has run thus far and intends to sustain through a long primary season. Cruz, it should be noted, had no public position on Iowa's fireworks law until his analysts identified sixty votes that could potentially be swayed because of it.

And it's true—fireworks reform might not be a big issue among Iowa voters, but it does look like a real pain to celebrate America's independence if you live in Des Moines, a healthy two-hour drive from the nearest place to purchase fireworks legally. If you didn't know what Iowa looked like, you could draw a near-perfect outline of the state just by connecting the dots of all the fireworks retailers on its borders seeking business from Hawkeye State fireworks enthusiasts:

Google Maps

The reasons why Cruz prevailed go well beyond his campaign's microtargeting. Maybe Trump should have considered spending real money, or investing in a better ground game himself, or—I'm reaching here—conducting his life in a way that didn't thoroughly alienate the evangelical voters who comprised two-thirds of the electorate. But Cruz has proven that he's a candidate who knows what he's doing.

Ted Cruz's College Roommate Can't Stop Talking Smack About Him

| Tue Feb. 2, 2016 3:45 PM EST
Ted Cruz celebrates his Iowa victory.

Craig Mazin is on a Twitter roll.

His antipathy for his former Princeton roommate, Ted Cruz, has made him a public sounding board for Cruz haters and fun seekers, and a target for the senator's supporters. "I would rather have anybody else be the president of the United States," Mazin told the Daily Beast. "Anyone. I would rather pick somebody from the phone book."

Plenty of Cruz fans tweet at Mazin to take issue with his mini-diatribes or, since Monday, to gloat over their candidate's victory in Iowa. But Mazin politely gives as good as he gets. Here are his relevant exchanges from the past 48 hours or so. (Click the links for more context.)

Donald Trump Lost the Iowa Caucus. Now He’s Whining on Twitter.

| Tue Feb. 2, 2016 11:54 AM EST

This is such an awesome bit of whining from Donald Trump that I felt I had to share it. I think we need a new word for this. Trump+whining = Twining. Or Trump + griping = Triping. Or something. Maybe figure out a way to add the concept that he's actually a winner even when he's objectively a failure. That might take some kind of German construction, though.

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Clinton Beats Sanders, 50-50

| Tue Feb. 2, 2016 11:34 AM EST

I'm not much of a horse-race guy, but it sure seems like the horse race is now key to the future of the Democratic primaries. The problem for Bernie Sanders is that he has an obvious structural disadvantage—superdelegates are almost 100 percent Clinton supporters—as well as a problem in the states following New Hampshire. So he needs to follow up his good showing in Iowa with electrifying results in New Hampshire.

But he can't. He started opening up a big lead in New Hampshire at the beginning of January, and the polls now have him 20 points ahead. To generate any serious shock waves he'd have to win by 30 or 40 points, and that's just not in the cards. Obviously anything can happen, but at this point it looks like Sanders wins in New Hampshire; it's entirely expected and ho hum; and Clinton then marches implacably on to the nomination. It's hard for me to see a likely scenario in which anything different happens.

Boring Mortgages Are Too Boring For Wall Street—Again

| Tue Feb. 2, 2016 10:56 AM EST

Liar loans are back!

These mortgages, which are given to borrowers that can’t fully document their income, helped fuel a tidal wave of defaults during the housing crisis and subsequently fell out of favor.

Now, big money managers including Neuberger Berman, Pacific Investment Management Co. and an affiliate of Blackstone Group LP are lobbying lenders to make more of these “Alt-A” loans....Many of these loans come with interest rates as high as 8%, compared with an average of about 3.8% for a typical 30-year fixed-rate mortgage.

....There has also been a rebranding effort: Most lenders prefer to call these products “nonqualified mortgages” due to the stigma attached to the Alt-A category. By backing these loans, money managers said they would reach an underserved corner of the housing market: Borrowers who have good credit but might be self-employed or report income sporadically.

Naturally, everything is different this time around. Everyone is being careful. It's just a small piece of the market. Borrowers have to produce some documentation. So don't worry: things are going to be fine. Wall Street knows what it's doing. No need to concern your pretty little heads about this.

Ted! Ted! Ted!

| Mon Feb. 1, 2016 11:45 PM EST

Here are tonight's big messages as we all fondly say "Goodbye, Iowa":

  • Ted Cruz: I will have the shortest name of any president in history.
  • Marco Rubio: Benghazi!
  • Donald Trump: Finishing in the top ten is a great victory.
  • Jeb Bush: I have a short name too. And hey, I beat Carly.
  • Republican Party: We count votes a lot more efficiently than those loser Democrats.
  • Hillary Clinton: A win is a win. Let's get out of here.
  • Bernie Sanders: Hmmm. Maybe we're not that tired of Hillary's emails after all.
  • Democratic Party: We may be slow, but we make up for it with a stereotypically cumbersome and complex voting process.

Iowa is historically so unpredictive of anything that I honestly didn't have a lot of interest in tonight's results. I was mainly curious about how Donald Trump would somehow spin his second place finish as a victory. The answer, it turned out, was to drone on about how "they" told him to skip Iowa because he wouldn't even break the top ten. I assume this is the same "they" who repeatedly told Marco Rubio that he was too much of a schmuck to win. Whoever "they" are, they've been busy.

And now on to New Hampshire, a state inexplicably in love with Donald Trump. What's that all about, anyway?

UPDATE: The photo above is from season 4 of Buffy the Vampire Slayer. The name of the episode is "Goodbye, Iowa."

Meet the Only Jeb Bush Supporter at His Caucus

| Mon Feb. 1, 2016 11:24 PM EST
Jeb Bush supporter Kramer Howell, left, and John Kasich supporter Collin Stephens. After voting for Bush and Kasich at a caucus at Drake University in Des Moines, the two headed over to Hillary Clinton's rally on the campus.

Kramer Howell was the only voter in his precinct to caucus for Jeb Bush Monday night.  

"I'm the lone Jeb supporter," said Howell, a senior at Drake University who voted in Republican precinct caucus 45, located on his campus in Des Moines, Iowa. "I was the only one."

That means the woman who spoke on Jeb's behalf did not even vote for him. "Her pitch was basically, 'He's a good guy,'" Howell said. "It was like the least rousing speech I've ever heard." No one even spoke on behalf of Trump or Kasich.

In all, 47 voters showed up at this caucus, with Marco Rubio dominating and Ted Cruz coming in second.

Oddly, the person who spoke on behalf of Ben Carson kept referring to him as Bernie Sanders. "He went on this really incoherent tangent about gay marriage," said Howell. "He didn't seem like the brightest guy."