More Effective Than Waterboarding: Cookies?

In the week after 9/11, unleashed deep within a Yemeni prison was what might have been the most effective interrogation tool ever devised by the U.S. Government. It could be more powerful than waterboarding, sleep deprivation, naked photos, or barking dogs. It is a monster that resides within almost all of us, a shaggy, blue-haired beast with an uncontrollable urge to devour oven-baked sweets while growling, "Coooookie!"

From Time comes this account of FBI interrogator Ali Soufan's successful attempt to win over  Al-Qaeda operative Abu Jandal, who had been closer to Osama bin Laden than any other terrorist ever captured:

He had no intention of cooperating with the Americans; at their first meetings, he refused even to look at them and ranted about the evils of the West. Far from confirming al-Qaeda's involvement in 9/11, he insisted the attacks had been orchestrated by Israel's Mossad. While Abu Jandal was venting his spleen, Soufan noticed that he didn't touch any of the cookies that had been served with tea: "He was a diabetic and couldn't eat anything with sugar in it." At their next meeting, the Americans brought him some sugar-free cookies, a gesture that took the edge off Abu Jandal's angry demeanor. "We had showed him respect, and we had done this nice thing for him," Soufan recalls. "So he started talking to us instead of giving us lectures."

All hail the Cookie Monster!  Seriously, his brand of monstrousness might be the the only kind we need:

Soufan, now an international-security consultant, has emerged as a powerful critic of the George W. Bush — era interrogation techniques; he has testified against them in congressional hearings and is an expert witness in cases against detainees. He has described the techniques as "borderline torture" and "un-American." His larger argument is that methods like waterboarding are wholly unnecessary — traditional interrogation methods, a combination of guile and graft, are the best way to break down even the most stubborn subjects.

Risk

Economist Gary Gorton has written a 20,000 word paper on the subject of "informationally-insensitive debt" — i.e., ultra-safe investments like federally insured bank deposits.  Ezra Klein boils this down to a thousand words.  I boldly push the boundaries even further:

The morons who inhabit Wall Street thought they had removed all risk from inherently risky investments.  They were wrong.

There!  Twenty words.  That's a compression ratio even greater than Ezra's.  Felix Salmon comments:

Gorton's solution to this problem is to involve the government in all manner of regulation — and insurance — of the securitization market, thereby making [asset back commerical paper] behave much like federally-insured bank deposits. I don't like this solution at all, since it would send the contingent liabilities of the government into the stratosphere, and more importantly would ratify the demand for informationally-insensitive assets by creating trillions of dollars of new ones.

In my view of the crisis, it's precisely the demand for informationally-insensitive assets which is the problem. And we need to get individuals, companies, and institutional investors out of the mindset that they can do an elegant little two-step around the inescapable fact that anybody with money to invest perforce must take a certain amount of risk. If you have a world where people are all looking for risk-free assets, you end up shunting all that risk into the tails. And the way to reduce tail risk is to get everybody to accept a small amount of risk on an everyday basis. We don't need more informationally-insensitive assets, we need less of them.

I agree.  There's a common view that investors in the period up until 2006 were practically drunk on risk, pricing it nearly at zero — but now, after the crash, they've become more risk averse than your grandmother.  They're almost completely unwilling to accept any risk at any price.

I think this view is fundamentally wrong.  What really happened is that in the early part of the decade investors became convinced that they could avoid risk entirely via financial engineering.  They were, in fact, immensely risk averse, but this wasn't obvious because they were buying up every security in sight.  The post-crash flight to quality, it turns out, wasn't really a flight at all.  Modern investors have been afraid of risk all along.

So Felix is right.  The last thing we need is for the government to perpetuate the delusion that financial markets are risk free.  For small retail bank depositors, that's fine.  For the big boys it's not.  They need to relearn the art of genuinely analyzing risk and taking it on knowingly, rather than pretending they can hedge it away under all circumstances.  After all, accurate analysis of risk is essential to the efficient allocation of capital, and efficient allocation of capital is one of the keys to economic growth.  It's time for Wall Street to get back to basics.

Did Obama Need to Win Hispanics?

Elections (and baseball) stat guru Nate Silver kicked off a wide-ranging blogosphere discussion yesterday when he asked whether Republicans can sacrifice the Hispanic vote (presumably by stepping up anti-immigrant, anti-NAFTA rhetoric and bashing Sonia Sotomayor) and still win elections. He said "si pueden":

If you could gain ground in the Midwest or the South by pursing an anti-immigrant, anti-NAFTA, "America First" sort of platform, you really wouldn't be putting all that much at risk by losing further ground among Latinos. Yes, you could make life (much) harder for yourself if you screwed up Florida or put Arizona into play in the process, but it's not a bad strategy, all things considered.

About half the Hispanics in the United States reside in California or Texas, and another 20 percent are in New York, New Jersey or Illinois, none of which look to be competitive in 2012. (Yes, the Republicans could lose Texas, but probably only in a landslide). There just aren't that many Hispanic voters near the electoral tipping point.

On Friday, statistician Andrew Gelman advanced the discussion by analyzing the Latino vote's impact on President Barack Obama's election win. He says "the removal of the Hispanic vote wouldn't have changed the election outcome in any state." Check out the proof.

Quote of the Day

From Will Wilkinson, who'd like to see a libertarian nominated to the Supreme Court but knows perfectly well that Barack Obama is a liberal who will nominate liberals to the Supreme Court:

So I was hoping for a relatively centrist liberal who sees some merit in libertarian arguments, especially about the protection of economic rights. As far as I can tell, there is nothing especially worrying about Sotomayor. She’s obviously super-qualified. And from what I’ve read, she seems like a highly competent, fairly moderate liberal who sticks pretty close to the law (which nobody really likes when they don’t like the law!) and is perfectly willing to side with Republican-appointed judges when that seems to her the right thing to do. What are people going batshit crazy over? I don’t get it. And I really don’t get why many Republicans have taken this opportunity to reinforce the already widespread impression that they are morally odious morons. God, I hate politics.

I feel your pain, Will.  The craziness is coming so thick and fast that I can't even keep up with it.  It makes my brain hurt.

Elizabeth Cheney, who I guess gets to be on television because having actual experts on would be boring, clearly does not have a good grasp of the definition of libel. In this clip from MSNBC, she claims that referring to Dick Cheney and the people who waterboarded terrorist suspects as "torturers" is libelous: 

Europe and Guantanamo

Getting European countries to accept resettlement of Guantanamo prisoners was always going to be a hard sell, but the Washington Post reports that it's recently gotten even harder:

Rising opposition in the U.S. Congress to allowing Guantanamo prisoners on American soil has not gone over well in Europe. Officials from countries that previously indicated they were willing to accept inmates now say it may be politically impossible for them to do so if the United States does not reciprocate.

"If the U.S. refuses to take these people, why should we?" said Thomas Silberhorn, a member of the German Parliament from Bavaria, where the White House wants to relocate nine Chinese Uighur prisoners. "If all 50 states in America say, 'Sorry, we can't take them,' this is not very convincing."

....More trouble emerged when Washington stipulated that the Uighurs would be barred from traveling to the United States.

"If the U.S. says they should come here, but they cannot travel to the U.S., we would have to ask why not?" said a German Interior Ministry official, speaking on the condition of anonymity because of the sensitivity of the negotiations. "Does that mean they are dangerous?"

Good question!  When the time came to actually accept Guantanamo detainees, European countries were always bound to run into more trouble with domestic politics than they anticipated.  But with the American talk radio contingent making it virtually impossible for the U.S. to accept even a small number of the safest detainees ourselves, it's now inevitable that Europeans are going to back off.  You'd have to be politically suicidal to resettle prisoners that the United States has all but tattooed "terrorist."

So now what happens to them? Stay tuned.

The Best "Downfall" Parody Yet

If you are not aware of all internet traditions, you may not know about the "Downfall" parodies. You're missing out. The New York Times explained the phenomon back in October 2008:

On YouTube, we’re in a bunker, and the enemies are always, always closing in. The ceilings are low. The air is stifling. A disheveled leader is delusional.

This is the premise of more than 100 videos on the Web — the work of satirists who for years have been snatching video and audio from "Downfall," the 2004 German movie of Hitler’s demise, and doctoring it to tell a range of stories about personal travails and world politics. By adding new English-language subtitles, they transform the movie’s climactic scene, in which Hitler (played by Bruno Ganz) rails against his enemies and reluctantly faces his defeat, into the generic story of a rabid blowhard brought low.

The problem for "Downfall" artistes, however, is that not everyone likes being parodied, and the targets of such mocking (and the studio that owns the rights to "Downfall") sometimes send takedown notices to YouTube under the Digital Millenium Copyright Act. Parody, of course, is protected by the fair use doctrine in copyright law, but that usually doesn't stop YouTube from following through with the takedowns. It's cheaper and easier to just take down everything that the site receives a DMCA notice for than to review individual claims. Now the heroic Electronic Frontier Foundation has produced the ultimate meta-Downfall parody, in which Bruno Ganz' Hitler tries to send takedown notices for all the Downfall parodies. The result is amusing and informative:

Geek god Lawrence Lessig's new-ish organization, Change Congress, aims to expose and curtail the influence of money in politics. They're not being polite about it. On Thursday, Change Congress accused Sen. Ben Nelson (D-Neb.) of "Good souls corruption"—"legal, even ethical acts that reasonably lead the public to wonder whether it is the merits or the money that is driving this Senator's decision."

In this particular case, Change Congress makes the shocking observation that Nelson's receipt of millions of dollars from insurance and health care interests might call the sincerity of his (now-renounced) opposition to a public health insurance option into question.

Bush v. Gore Lawyers Team Up To Save Journalism

David Boies and Ted Olson are this week's odd couple after the pair teamed up to file a constitutional challenge to California's gay marriage ban Wednesday. The two lawyers made headlines in 2000 when they squared off before the U.S. Supreme Court in Bush v. Gore, with Olson representing Bush and Boies representing Gore. Despite the acrimonious election battle, Boies and Olson aren't mortal enemies. They're lawyers--people schooled in the notion that an adversary is not an enemy.

As such, Olson and Boies are so friendly that last summer they took a bike trip through Italy with Tom Brokaw and media mogul Steve Brill, who, incidentally, is now responsible for another one of their joint ventures: Journalism Online, Brill's new attempt to save journalism by making people pay for it online. Boies and Olson are on the company's board of advisors. But Brill didn't pick the pair for the novelty factor. His legal team suggests that he intends to start the war that newspapers so far have shied away from: forcing Google pay for the news content it now steals for free.
 

The Real Sotomayor Gamble

The New York Times reports:

Judge Sonia Sotomayor’s lucky streak is apparently at least six months long.

A financial disclosure report for the judge, released on Thursday, included this nugget: income of $8,283 for a “Jackpot Game Winning” on Nov. 23, 2008, almost exactly half a year before President Obama tapped her to be on the Supreme Court.

A spokeswoman for the White House said Judge Sotomayor hit it big while gambling with her mother at a casino in Florida.

Impressively lucky, but anyone can win a jackpot game. I'd be more interested to learn whether Judge Sotomayor is any good at poker. President Barack Obama has been known to play.