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Financial Risk-Taking Tied to Testosterone

| Tue Sep. 30, 2008 12:19 AM EDT

800px-Testosterone_structure.png No kidding. A new study finds that higher levels of testosterone correlate with financial risk-taking behavior. A Harvard study assessed men's testosterone levels before participation in an investment game, and found those whose testosterone levels were more than one standard deviation above the mean invested 12 percent more than the average man in a risky investment.

A previous study had already proved that men are generally more likely than women to take investment risks. Another demonstrated that male stock market traders experienced greater profits on days their testosterone was above its median level. The Harvard study, forthcoming in Evolution and Human Behavior, was the first study to directly examine, and find a relationship between, testosterone and financial risk-taking.

So, should the Congressional bail-out include estrogen replacement therapy for financially foolish CEOs?

For those interested in the details of the study…

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The Money Behind the Bailout Vote

| Mon Sep. 29, 2008 8:47 PM EDT

According to Maplight.org, House members who voted for the bailout received 54 percent more money from banks and securities firms than members who voted against it. The nonpartisan campaign finance watchdog group has also broken down the average donation from those sectors, based on lawmakers' bailout stances and party affiliations:

All House Members//// Average Amount Received
Voting Yes................................$231,877
Voting No..................................$150,982
Democrats
Voting Yes................................$212,700
Voting No..................................$107,993
Republicans
Voting Yes................................$273,181
Voting No..................................$181,688

Republicans who opposed the bill are thought to have done so because they're rabid free market ideologues. So why hasn't the Street showered these guys with money in the past? Were they actually pro-regulation? (I doubt it). Are they simply marginal members of their party? Or is pure free market evangelism scary even to Wall Street? My bet's on the last one, but I'd be happy to be proven wrong. (Also, money might not explain everything)

The other interesting detail in these numbers is the small difference in donations to anti-bailout Republicans compared to pro-bailout Democrats (only about $30,000). It's not that Wall Street doesn't like free marketers; it's just a bit wary of anything in the extreme. Or to put it another way, it practices risk aversion at the ballot box. Just not enough of it; obviously, that GOP stock ain't so hot now.

Did Swing District Congressmen Doom the Bailout?

| Mon Sep. 29, 2008 4:45 PM EDT

Numbers maven Nate Silver looks at how electoral prospects affected votes on the bailout:

Among 38 incumbent congressmen in races rated as "toss-up" or "lean" by Swing State Project, just 8 voted for the bailout as opposed to 30 against: a batting average of .211.
By comparison, the vote among congressmen who don't have as much to worry about was essentially even: 197 for, 198 against.
...among 26 congressmen NOT running for re-election (almost all of whom are Republicans), 23 voted in favor of the bill, as opposed to 2 against and one abstaining.

There's a huge chance the bailout doesn't work; there's very little chance it makes everything better. As a result it's way, way safer for Congressmen in tight races to vote against the thing.

That said, I do believe there was genuine ideological opposition to the bailout on the left of the Democratic Party and the right of the Republican Party. A host on CNBC postulated that this was a revolt of the Republican rank-and-file who had been told, for many years, that their desire for fiscal conservativism would have to take a back seat to the GOP leadership's spending priorities. I think there's some real truth to that.

No Bailout

| Mon Sep. 29, 2008 4:18 PM EDT

NO BAILOUT....The bailout bill has failed. Two-thirds of the House GOP caucus — primarily the lunatics in the Republican Study Committee, I assume — voted against it. I have a feeling we might now get a bunch of emergency nationalizations whether we like it or not.

Our current financial crisis has never been explained well to the public because (a) it's mind-bogglingly complex and (b) even the experts don't entirely know what's going on. And the Paulson plan was never sold well because (a) the initial draft was indefensible and (b) the theory underlying it was uncertain and complicated. So Lou Dobbs and his brand of populist yahooism won out instead.

I don't know what happens next. Hopefully we'll get another bite at the apple, but with Congress adjourning and elections approaching, action is only going to get harder, not easier. In the meantime, I guess we just have to pray that all the Chicken Littles like me are worrying too much.

On another note, an upcoming debate whose main attraction is the possibility of Sarah Palin melting down amusingly is suddenly less appealing than it used to be. I'm not really in the mood for bread and circuses right now.

After $700 Billion Bailout Collapses in the House, GOP Mounts an Absurd Blame Game

| Mon Sep. 29, 2008 4:08 PM EDT

It took only a few minutes for the blame game to begin. Moments after the House failed to pass the $700 billion bailout plan, the Republican leaders--who could not produce the expected number of Republican votes for the legislation--came before the cameras with an explanation for the bill's collapse: a speech Nancy Pelosi gave.

House minority leader John Boehner (R-Ohio) told reporters that prior to the 228-to-205 vote everything was hunky-dory. Then the House Speaker delivered a "partisan speech" before the floor vote began. This, Boehner said, "poisoned our conference and caused a number of members we thought we could get to go south." Representative Eric Cantor, a member of the Republican leadership, held up a transcript of Pelosi's speech and decried her "failure to lead."

What did Pelosi say that was so heinous? Here are some portions from the text that was issued by her office:

Mission Creep Dispatch: Catherine Lutz

| Mon Sep. 29, 2008 3:14 PM EDT

lutz.jpg As part of our special investigation "Mission Creep: US Military Presence Worldwide," we asked a host of military thinkers to contribute their two cents on topics relating to global Pentagon strategy. (You can access the archive here.)

The following dispatch comes from Catherine Lutz, anthropologist at Brown University's Watson Institute for International Studies, author of Homefront: A Military City and the American Twentieth Century, and editor of the upcoming book The Bases of Empire: The Global Struggle Against US Military Posts.


Welcome to Guam, USA

"Guam, USA" is the tagline on the western Pacific island's license plates. It resonates with the fact that fully one-third of Guam's territory is occupied by US military installations, from the giant Anderson Air Force Base in the north, to the Naval Magazine, where deadly ordnance is stored, in the south. For there is nothing more American, in many ways, unfortunately, than a place bristling with weapons and soldiers.

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Olmert on Israeli Security

| Mon Sep. 29, 2008 2:57 PM EDT

OLMERT ON ISRAELI SECURITY....Laura Rozen points to a remarkable volte-face from Israel's outgoing prime minister:

Prime Minister Ehud Olmert said in an interview published on Monday that Israel must withdraw from nearly all the West Bank as well as East Jerusalem to attain peace with the Palestinians and that any occupied land it held onto would have to be exchanged for the same quantity of Israeli territory.

....He said traditional Israeli defense strategists had learned nothing from past experiences and seemed stuck in the considerations of the 1948 Independence War. "With them, it is all about tanks and land and controlling territories and controlled territories and this hilltop and that hilltop," he said. "All these things are worthless."

He added, "Who thinks seriously that if we sit on another hilltop, on another hundred meters, that this is what will make the difference for the State of Israel's basic security?"

....On Iran, Mr. Olmert said Israel would act within the international system, adding, "Part of our megalomania and our loss of proportions is the things that are said here about Iran. We are a country that has lost a sense of proportion about itself."

I wonder what Sarah Palin thinks of this? I especially wonder after reading this.

Limiting CEO Pay

| Mon Sep. 29, 2008 2:15 PM EDT

LIMITING CEO PAY....Henry Blodget says the provisions of the bailout plan limiting CEO compensation are "toothless":

The plan ostensibly prohibits golden parachute payments to CEOs and other "C-level" execs at bailed-out companies. However, it really only prevents payments on severance deals that are struck AFTER the bailout (specifically, it prohibits these deals completely). There is nothing about cancelling the severance payments that the executives are ALREADY contractually entitled to. What this means in practice is that bailed-out companies will have trouble hiring the best talent...because why would you work at Bailed Out Company A when you could go across the street and get a fat severance deal? It also doesn't mean the companies can't pay their CEOs $500 million a year. IN ADDITION: There's another absurd section that makes all compensation above $500,000 for the three highest paid employees at the company not tax-deductible for the company. This is LUDICROUS. It means the company can pay the executives anything it wants and that the penalty for this will be exacted on the company and its shareholders. (Unless we're mistaken, Americans are furious that CEOs make $50 million a year for running companies into the ground, not that the $50 million is tax deductible).

Unfortunately, this sounds about right to me. Sometimes symbolic stuff like this can be important, but it's symbolic nonetheless. The plain fact is that there's very little in this bill to genuinely limit executive compensation, and probably very little that could have been in the bill. It's better than nothing, but only barely.

Owning the Debate

| Mon Sep. 29, 2008 2:00 PM EDT

OWNING THE DEBATE....Ezra Klein on the Paulson rescue package:

One point Paul Krugman makes here is that the terms of the bailout were sharply constrained by the political strategy chosen by the Democrats. When Pelosi and Reid decided that this bill would not go through without Republican votes because Democrats would not be demagogued for cleaning up the mess caused by deregulation, they took more sharply liberal options like nationalization off the table.

That's true, but I think I'd make a different political point. Henry Paulson unveiled his plan on Friday the 19th, and that was when the frame of the debate was set. And that frame was: purchase of troubled assets. At that point, virtually no one had so much as mentioned large scale nationalizations as a potential solution to the banking crisis. It just wasn't on the public radar screen.

Now, maybe that wouldn't have mattered. Maybe our current political coalition wouldn't have been willing to consider it regardless. But virtually everyone agreed that action needed to be taken quickly to prop up the financial markets, and under circumstances like that there's simply no chance of popping up at the last minute with a huge new proposal and thinking it has any chance of passing. If large-scale nationalization was really the preferred solution among liberal activists, the time to start pushing it was before Paulson and Bernanke introduced their bill. Doing it in the middle of last week, and then complaining that it didn't get seriously considered, displays a failure of vision on the left, not from its congressional leadership.

McCain the Patriot: "Country First or Obama First"

| Mon Sep. 29, 2008 1:46 PM EDT

John McCain put the choice rather directly during a campaign rally on Monday afternoon when he declared, "Country first or Obama first." In other words, there is only one way a true patriot can vote--and Obama does not love his country as much as McCain does. Anyone care to argue that such an argument is not a scoundrel's refuge?