Chart of the Day

Here's a fairly astonishing survey from the Pew Global Attitudes folks.  When they polled various countries on their general favorability toward the U.S., attitudes were improved since Barack Obama's election, but for the most part not improved dramatically.  European countries were generally far more favorable toward the U.S. compared to last year, but most of the rest of the world was only moderately more favorable.

But they also asked if respondents were confident that the U.S. would "do the right thing," and the results there were stunning.  With the sole exception of Israel, every single country registered an increase in confidence toward the U.S.  A few of the increases were moderate (Pakistan, Lebanon), but most of them were stratospheric (Egypt, Spain, Canada, Japan, Brazil).

Time will certainly erode this goodwill.  That's just the nature of these things.  But for now, the rest of the world has a spectacularly improved view of how they expect the United States to act on the world stage.  As Dan Drezner says, this is a hard measure of Obama's — and America's — newfound soft power.

I guess everyone knows by now what I think of the idea that Wall Street is going to turn the emissions trading market into the next trillion dollar bubble.  Basically, it seems like about #178 on the list of problems we should be worried about.  But aside from the fundamentals of the thing, one of the reasons I feel this way is that Waxman-Markey has regulation of the carbon market built in.  So what's to worry about?  Here's an update from worrier-in-chief Rachel Morris:

Well, Waxman-Markey had some good language regulating carbon and other energy derivatives....However, in the 300 pages of amendments added to Waxman-Markey just after 3.a.m on the night the bill passed, a few new sentences materialized that placed a big asterisk on those safeguards. The final text now says that the sections of the bill regulating carbon derivatives will be overridden by any derivatives legislation that the House passes later in the year.

Hmmm.  Still, that might not be so bad.  In fact, treating carbon emissions just like any other commodity, and then tightening up the entire market, might not be such a bad thing. Unless, of course, derivatives regulation gets captured by Wall Street shills like Rep. Michael McMahon of Staten Island.  Which, um, it turns out is in the process of happening:

McMahon, Bean and other New Democrats released their proposal for derivatives reform on Wednesday....Their bill would provide regulators with more information about derivatives than they have now, and it would establish an office in the Treasury for oversight of those instruments. But — similar to the proposal advanced by the Obama administration earlier in the year — it only requires standardized derivatives to be cleared, not exchange-traded, and calls for OTC derivatives to be reported to a trade repository, which is far less transparent than an exchange. Their provisions intended to prevent harmful speculation and market manipulation are also less explicit than those offered by Stupak.

Rachel has more in her piece, and it's not all bad news.  There are competing proposals that would be considerably tougher than McMahon's.  What's more, there are still some fundamental reasons to think that carbon trading isn't likely to be a huge gold rush. Still, this is obviously worth keeping an eye on.  There's really no legitimate reason to oppose fairly stringent regulation of carbon emission trading, and anyone who suggests otherwise should be given a very skeptical hearing indeed.

It's time for a new episode of the PinkerCorn show on Bloggingheads.tv. Jim Pinkerton and I discussed President Barack Obama's recent news conference and the prospects for health care reform. When Pinkerton claimed that average Americans are growing skeptical of Obama, I accused him of projecting. We also gabbed about two matters that did not come up at that press conference: the Iraq war and the Afghanistan war. Since the Afghanistan war quickly became "the other war" after George W. Bush invaded Iraq, I opined, it remains insufficiently covered by the media, even though thisis an expanding conflict. (The monthly death toll of US and NATO soldiers is up in Afghanistan.) But you can hear and watch for yourself:

 

You can follow David Corn's postings and media appearances via Twitter.

From the Washington Post:

As Alaska Gov. Sarah Palin prepares for the next stage of her political career, a majority of Americans hold an unfavorable view of her, and there is broad public doubt about her leadership skills and understanding of complex issues, according to a new Washington Post-ABC News poll.

Well, that's our elite-East-Coast-passport-wielding-NASCAR-hating media for you.  They've managed to convince everyone that Sarah Palin doesn't understand complex issues.  It's sad.  When will they ever learn that it's about country?

Happy Friday. Blue Marble-ish news from around the site:

Vacation trumps healthcare: No reform till September, if ever.

Numbers game: If you're 29, is it true that no global warming has occurred in your adult lifetime?

Backwards bill: An Ohio state rep thinks a woman should be required to get written consent from the man with whom she had sex before seeking an abortion.

Late-night climate change: The Waxman-Markey climate bill had some pretty good language regulating the carbon derivatives market. Until someone added a big ol' 300-page asterisk at 3 a.m.

 

Goldman's Billions

Earlier this month Matthew Goldstein of Reuters broke the story of Sergey Aleynikov, a naturalized Russian immigrant who's been charged with stealing trade secrets from Goldman Sachs.  The secret in question was computer code.  In particular, according to the feds, it was 32 megabytes of code that Aleynikov encrypted and uploaded to a UK-owned website in Germany prior to leaving Goldman to go work for a competitor at a much, much higher salary.

And what did this incredibly valuable code do?  Answer: it ran Goldman's high frequency trading operation, and it's drawn attention to the shadowy but wildly lucrative HFT trading sector.

Basically, HFT relies on speed.  Traders buy and sell stock thousands of times a second and their profits rely on being able make their trades slightly before ordinary traders make theirs.  Speed is so important that a key component of HFT — aside from fast computers, big pipes, and rocket science code — is colocation of their servers.  That is, they set up their operations physically close to stock exchange data centers so that trading data has less distance to travel before it gets to them.  A few milliseconds in reduced latency time makes all the difference.  And that's not all: you'll be unsurprised to learn that there's a regulatory loophole that provides HFT traders with yet another advantage over ordinary schmoes. The New York Times provides an example today of how it all works:

It was July 15, and Intel, the computer chip giant, had reporting robust earnings the night before. Some investors, smelling opportunity, set out to buy shares in the semiconductor company Broadcom. (Their activities were described by an investor at a major Wall Street firm who spoke on the condition of anonymity to protect his job.) The slower traders faced a quandary: If they sought to buy a large number of shares at once, they would tip their hand and risk driving up Broadcom’s price. So, as is often the case on Wall Street, they divided their orders into dozens of small batches, hoping to cover their tracks. One second after the market opened, shares of Broadcom started changing hands at $26.20.

The slower traders began issuing buy orders. But rather than being shown to all potential sellers at the same time, some of those orders were most likely routed to a collection of high-frequency traders for just 30 milliseconds — 0.03 seconds — in what are known as flash orders. While markets are supposed to ensure transparency by showing orders to everyone simultaneously, a loophole in regulations allows marketplaces like Nasdaq to show traders some orders ahead of everyone else in exchange for a fee.

In less than half a second, high-frequency traders gained a valuable insight: the hunger for Broadcom was growing. Their computers began buying up Broadcom shares and then reselling them to the slower investors at higher prices. The overall price of Broadcom began to rise.

Soon, thousands of orders began flooding the markets as high-frequency software went into high gear. Automatic programs began issuing and canceling tiny orders within milliseconds to determine how much the slower traders were willing to pay. The high-frequency computers quickly determined that some investors’ upper limit was $26.40. The price shot to $26.39, and high-frequency programs began offering to sell hundreds of thousands of shares.

The result is that the slower-moving investors paid $1.4 million for about 56,000 shares, or $7,800 more than if they had been able to move as quickly as the high-frequency traders.

Tyler Durden has been all over this for a while and estimates that HFT might account for as much as a quarter of Goldman's total earnings.  And here I always thought that fixed income trading was where all the money was. Live and learn.

Anyway, HFT has turned into an arms race, but it's an arms race that only the elite are allowed to play.  You and I just get to foot the bill, a tenth of a cent at a time.  Sound familiar?

Time magazine posted a marvelous piece of journalism today on the final days of the Bush-Cheney administration--and the final drama of their administration: Dick Cheney pressuring George W. Bush to pardon Scooter Libby, and Bush, with the backing of most of his aides, resisting Cheney. This was a conflict that threatened to ruin the relationship between Cheney, who wanted to protect the guy who took a bullet for him, and Bush, who didn't want to pardon Libby (after having commuted his prison sentence) because he believed that Libby had indeed lied to the FBI during the investigation of the Valerie Plame leak and feared that a last-minute pardon would taint his presidency (as did President Bill Clinton's out-the-door pardon of fugitive financier Marc Rich). It's a telling tale, and it shows that Cheney, by the end of the administration, was isolated and off in a world of his own.

In response to the Time article, Cheney released a statement declaring Libby "an innocent man" and noting that Libby was not the source of the leak that outed Valerie Plame Wilson as a CIA officer. But Cheney had it wrong: Libby was convicted not for leaking but for lying to the FBI agents. That lie came when Libby did not tell the agents that he had learned about Valerie Wilson's CIA position from Cheney. Instead, Libby had told the investigators that the late Tim Russert was the person who first informed him about Valerie Wilson's CIA connection; Russert testified at the trial that he could not have told Libby any such thing because he hadn''t known about Valerie Wilson's CIA position until after it became public knowledge. Even Bush acknowledged the validity of the jury's verdict when he wiped out Libby's jail time, arguing that this particular sentence (30 months) was excessive. The Cheney statement seemed to indicate the ex-veep doesn't understand the Libby case--or that he's willing to obfuscate facts to defend his former chief of staff.

Cheney is good for business--my businesss, at least. I was invited to go on Hardball to discuss the Time article and Cheney's response. And Chris Matthews does enjoy talking about Cheney. Here's what happened:

 

You can follow David Corn's postings and appearances via Twitter.

The United States' involvement in Afghanistan is growing deeper and more costly--30 US soldiers have died there since the start of July, making it the deadliest month since the US invasion in 2001. Vice President Joe Biden was probably right when he said in a radio interview on Thursday that the war is "worth the effort." Still, now is a good time to better understand exactly why it has been so hard to turn Afghanistan into a more peaceful place. A new book by two US journalists explores some less well-known historical explanations.

In 1981, Elizabeth Gould and Paul Fitzgerald were the first US journalists to enter Afghanistan after the Western press corps had been expelled from the country a month after the 1979 Soviet invasion.  The footage that they shot for CBS News painted a far different picture of the occupation than had been portrayed in the US media. Yet they say that the story that Dan Rather aired that spring buried the most important revelations--a problem that they've seen with US media coverage of Afghanistan ever since. In January 2009, they published "Invisible History: Afghanistan's Untold Story," a book that Selig Harrison, the Washington Post's former South Asia bureau chief, calls "a much needed corrective to five decades of biased journalistic and academic writing about Afghanistan that has covered up the destructive and self-defeating US role there." Mother Jones spoke with Gould and Fitzgerald last month.

Mother Jones: In your view, what do most people not understand about the US government's early involvement in Afghanistan?

Paul Fitzgerald: In the major media, you get the story about a Soviet invasion. What you don't get are all the politics and motivations that were behind that.

Elizabeth Gould: When the Soviets crossed the Afghan border, President Carter exclaimed that this was the greatest threat to peace since the Second World War. The claim was that the Soviets were running out of oil and this was their first step to the Persian Gulf to get our oil. So that became the mantra.

MJ: So when did a different explanation catch on?

Kevin's usually optimistic about health care reform on odd-numbered days, but the news out of Congress is a little sour today. Voila, 4 sweet story recommendations for your Thursday news chaser:

1) Apocalypse Ciao: When the economic Rapture comes, will collapsitarians be the chosen ones?

2) Hippie, put your clothes on. California doesn't want to see your naughty bits at the beach anymore.

3) A zombie meme returns: Vaccines still don't cause autism. But you wouldn't know it from the comments on this article.

4) The Going Galt movement protests Obama with a collective shrug.

And what the heck, 5) A video of Amy Poehler hearting on Mother Jones with Sarah Silverman and a few other very funny ladies.

Laura McClure hosts podcasts, writes the MoJo Mix, and is the new media editor at Mother Jones. Read her investigative feature on lifehacking gurus in the latest issue of Mother Jones.

Hey, Laura again. Kevin's usually optimistic about health care reform on odd-numbered days, but the news out of Congress is none too cheery at the moment, as you know. So, consider these 4 story recommendations your reform news chasers for the week:

1) Apocalypse Ciao: When the economic Rapture comes, will collapsitarians be the chosen ones?

2) Hippie, put your clothes on. California doesn't want to see your naughty bits at the beach anymore.

3) A zombie meme returns: Vaccines still don't cause autism. But you wouldn't know it from the comments on this article.

4) The Going Galt movement protests Obama with a collective shrug.

And what the heck, 5) A video of Amy Poehler hearting on Mother Jones with Sarah Silverman and a few other very funny ladies.

Laura McClure hosts podcasts, writes the MoJo Mix, and is the new media editor at Mother Jones. Read her investigative feature on lifehacking gurus in the latest issue of Mother Jones.