What The Cure Taught Me About Courage

One thing Facebook is good for (other than sucking up your time clicking "ignore" on SuperPokes and Lil' Green Patch requests) is reconnecting with old high school friends, who can either confirm or deny your vague, "did that really happen" memories. The other day an old friend recalled an epic adventure we had involving The Cure, a bus, and bad Mexican food; weirdly enough, it reminded me of some corny but important life lessons.

Just a Little Off the Top

Yesterday Citigroup announced that it had been profitable in January and February and the stock market rejoiced.  Citigroup shares jumped 50%.  But how about their bonds, probably a better measure of what the market really thinks of Citi's chances of surviving?  Answer: not so good.

U.S. bank debt has lost 7.8 percent and yields have jumped to record levels compared with benchmark rates in the past month....The concern among debt holders is reflected in Citigroup’s $789 million outstanding in 7.25 percent subordinated notes due in October 2010, which fell 7 cents today to 70 cents on the dollar and have lost 23.7 cents in the past three weeks.

Italics mine.  70 cents on the dollar, eh?  Basically, this means that Vikram Pandit's cheery memos notwithstanding, the market already figures that either (a) Citi will eventually be forced into some kind of debt-for-equity swap that will slash the value of their claims, or (b) the government will nationalize Citigroup and then decide not to pay off bondholders at par.  This is bad for current bondholders, but Felix Salmon thinks low bond prices will eventually attract the bottom feeders:

Increasingly they're going to start representing significant potential gains for people who are buying at today's levels and hoping to be paid off at par — paid off, that is, essentially by taxpayers. Since those people can be broadly characterized as hedge-fund managers, one can foresee a lot of Congressional pushback if a large number of hedgies start pulling in tens of millions of dollars just by playing the moral hazard trade. Or, to put it another way, it's a lot easier to impose a haircut when a haircut is priced in than when it isn't.

Right.  If hedge funds start buying up Citi's bonds at 70 cents on the dollar, hoping that eventually the bank will be nationalized and its obligations guaranteed by the U.S. government, they've probably got another thing coming.  It's one thing to pay off bondholders who invested years ago in good faith, but quite another to pay off speculators hoping to cash in on a taxpayer bailout.

Still, it's tricky.  After all, how do you tell the speculators apart from the other creditors?  You can't.  So either everyone gets a haircut or no one does.  And if everyone does, nobody quite knows what will happen.  Bottom line: buying Citi bonds at current prices might be a good deal, but only if you have nerves of steel.  Their future is murky indeed.

Ross Douthat

Marc Ambinder reports that the New York Times has hired his Atlantic colleague Ross Douthat as an op-ed columnist.  This is basically to take Bill Kristol's place as their #2 conservative columnist (alongside David Brooks) and it seems like a pretty good choice to me for a couple of reasons.  First, Ross has a fluid, intelligent writing style that's well suited to the 800-word op-ed format.  Second, he fits the post-Bush zeitgeist: he is, at core, a conservative Barack Obama.

What I mean is this: like Obama, he's always careful to acknowledge the arguments of his adversaries and to take them seriously.  Like Obama, he does this overtly and deliberately.  And like Obama, this is mostly for rhetorical effect: both of them use this technique to mask the fact that they rarely change their minds.  They might listen respectfully, but after they're done they go on doing whatever they intended to do in the first place.

This isn't a criticism (I don't change my mind very often either, after all).  In fact, it makes him a more than normally worthy dissenter to the Age of Obama.  His column should make for interesting reading.

Bruno: "F***ing Awesome"

From Ain't It Cool News via Towleroad come the first reviews of Bruno, Sacha Baron Cohen's bigger, badder and oh-so-much-gayer followup to Borat. We've covered Bruno's shenanigans as he terrorized Kansas and punked a former Mossad agent, but apparently those are only the tamest of the antics on display. The movie doesn't come out until July 10 (with the first "official" sneak peak taking place at the upcoming SXSW), but a couple lucky ducks got into early test screenings and sent their thoughts to Ain't It Cool. I hope they're legit, as both reviews were filled with gushing, hyperbolic praise: the first called the film "everything I was hoping for—shocking, jaw-dropping and TOTALLY FUCKING HILARIOUS," while the second managed to quantify Bruno as "10 times sharper, wittier and altogether ballsier" than Borat. Not bad. Apparently the plot revolves around the Austrian fashion reporter character we know and love trying to "make it big":

Yet More Ways to Annoy You

Some joyous news for web surfers today:

The Online Publishers Assn. on Tuesday released several new in-your-face advertising formats designed to be both more obtrusive and interactive.

Twenty-seven top Internet publishers — including the New York Times, CNN, CBS Interactive, ESPN and the Wall Street Journal — say they'll try the supersize ads in an attempt to get the attention of Web surfers who have learned to ignore banners.

....The three new types of ads are the "fixed panel," which looks like part of the page but scrolls up and down as a user does; the "XXL box," in which users can turn pages within the ad; and the "pushdown," which opens to display a larger ad.

In its press release, the OPA optimistically suggests that these stupendous new ads will "help stimulate a renaissance of creative advertising on the Internet."  Maybe so, but I suspect a renaissance of people throwing things at their computer screens is more likely.

But hell, I guess I can't blame them.  I mean, I work for a magazine that relies on web ads for part of its revenue, but I don't care.  I still do everything in my power to block the ads I can and ignore the ones I can't.  I used to unblock ads at motherjones.com, just so I'd know what was going on on my own site, but when our ad server started delivering GE ads that played a soundtrack every time they loaded, I couldn't take it anymore and finally blocked even that.

So I'm part of the problem.  But here's the real question this provokes: does general purpose advertising even work?  It's pretty clear that targeted ads do well: Google ads that are keyed to search queries, for example, or ads in specialty magazines with an audience that's genuinely eager to see what likeminded merchants have to offer.  But how about non-targeted stuff?

In the web world, we have strong evidence that it works poorly: the clickthrough rate on web banner ads is famously anemic.  So what makes us think that nontargeted TV or newspaper ads work?  There are ways to measure this stuff — the old reader response cards in magazines, post-purchase product surveys ("Where did you hear about Cranberry Pepsi Lite?"), and so forth — but they don't work all that well.  For the most part, marketeers do their best to target and then just pray that the rest of their advertising budget is doing some good too.

But in the web we finally have a medium where we can actually quantify the impact of nontargeted ads, and it turns out to be pretty low.  Everyone takes this to be a sign that the web is unusually hostile territory for general purpose advertising, but what if that's the wrong lesson?  Maybe the web is actually typical, and these ads don't really work very well anywhere else either.  Maybe.

A Brief Interview with Ray LaHood

Walking to Wednesday's (mostly uneventful) White House press briefing, I spotted Transportation Secretary Ray LaHood heading from the East Wing toward the Old Executive Office Building. He was by himself. I asked if he had a moment to talk, and he graciously said yes.

I started with substance: light rail. There's money in the stimulus bill for light rail projects, and Prsident Barack Obama has referred to this when pitching the stimulus package. But the White House has not placed much emphasis on this initiative. In general, Obama has (so far) not fully designed or promoted his economic recovery initiative as a bold move to revitalize (and even re-imagine) America's infrastructure. So I asked LaHood how his department would be spending the light-rail money in the stimulus legislation: would it disseminate it widely or use it to move ahead with a few high-profile projects that could draw plenty of public attention? "We will spread it around," he said, noting the stimulus contains about $1 billion for light rail. His department, he said, has a list of about a dozen projects that it will soon send to the White House. Presumably, the White House will weigh in on which project gets what money.

"There's always a fixation on building roads at the Transportation Department," I said, asking "Does the current crisis give you a chance to change that somewhat?"

"Now is the time to change direction," said LaHood, who was a Republican member of the House of Representatives before joining Obama's Cabinet. But, then, he didn't say how fast or--more important--how much.

Next, I turned to politics. "Are you disappointed by your fellow Republicans on the Hill who have been trying to block the president's programs?" He paused for a moment. It looked as if he would say something. He opened his mouth. Then he shut it. A look of reconsideration crossed his face. "I shouldn't comment," he said. "I'm part of the Obama team now. I'm out of the political game."

"But aren't you just a little bit disappointed?" I asked, as coaxingly as possible. "Just a little?" Another pause. "I shouldn't say," he replied. He said goodbye and walked off. And I thought: should I have asked him about Rush Limbaugh?

Chart of the Day - 3.11.2009

According to Gallup, Congress's approval rating went up 12 points last month and another 8 points this month.  At this rate, they might even hit 50% sometime this spring!  Apparently the American public likes the idea of better healthcare for kids, fighting discrimination against women, and stimulus spending to slow the course of the financial meltdown.

It's also worth noting that although most of the increase is due to Democrats being happier with Congress than in the past (no surprise), approval among independents has doubled.  Republicans are still unhappy, of course, but no more so than in the past.  Apparently all that talk radio bloviating about incipient socialism hasn't had much effect even on conservatives.

Stem Cell Polling

Ramesh Ponnuru complains about yesterday's Rasmussen poll on stem cells:

The other day I commented on the poor quality of polling on stem-cell research. I'm afraid that the Rasmussen poll, cited in today's web briefing, is no exception. Here's the question they use: "President Obama has decided to lift the ban on federal funding of embryonic stem cell research. Do you agree or disagree with President Obama’s decision?"

Rasmussen also reports that 40 percent of those surveyed say they have followed the debate "very closely." No estimate is given for the percentage of those respondents who are lying.

I wonder what the problem with the question is supposed to be?  In the past, conservatives have complained when pundits and pollsters talked about "stem cells" rather than "embryonic stem cells," but the Rasmussen question is clear on that point.  Is the problem that "lift the ban" isn't specific enough, since the Bush ban wasn't absolute?  Beats me.  The Rasmussen question is very, very simple and neutral and avoids all the issues in Ponnuru's previous post on the subject, so I'm not sure what the problem is.

But there always seems to be something.  Conservatives seem to be endlessly convinced that the American public would be opposed to embryonic stem cell research if only it was made graphically clear to them that this means embryos are destroyed in the process.  But there's just not much evidence of that.  Most of us know that embryos get destroyed, and most of us don't think that's a big problem.

On the other hand, I sympathize with his closing paragraph.  40% is actually not too unreasonable a figure, but it's remarkable the number of polls that ask very recondite questions and get something like a 90% response rate.  "Do you think American banks are undercapitalized and should be nationalized" will get, say, 50% in favor and 40% opposed, despite the fact that it's a dead certainty that 80% of Americans have no idea what "undercapitalized" means and only a vague notion of what nationalization is.  But the results are taken seriously anyway.

Let's Hear It For Big Government!

We've all got our issues about which we're just plain unreasonable. One of mine is the right wing's vilification of "big government." You might as well try to engage me in a forum on whether the Earth is flat; I will simply get up and walk away from such a pointless conversation. Nothing will convince me that America, or any country, is a group of hearty frontiersmen with no one to blame but themselves if they don't build their own roads, provide their own medical care...oh wait. We're supposed to trust capitalism to do that which we individually can't and religion to take care of the losers. My bad.

As I listen to the latest pathetic jeremiads against the boogeyman of 'socialism,' my eyes just roll and roll. I simply do not trust people who believe we need as little government as possible. Who believe we need just a coupla folks to hand over public resources to corporations gratis, with no pesky bureaucrats whining about not being able to breathe. Who believe that capitalism is always and everywhere rational, so why would corporations contaminate the very resources it needs to exist? And that therefore, there is no global warming. Puh-leeze.

We certainly need better government (a former president comes to mind), but I'm not sure we need less of it. We need government if only to protect us from capitalism; if anyone still believes the profit motive has its limits, I'd like to know what color the sky is in your world. Here's me being unreasonable again: People who want only fifty cents worth of government are people who just don't want to pay taxes. Which makes me sneer because without all this government—roads, cops, telecommunications systems, public schools—we'd all only be able to make fifty cents. Duh. I pay about half my income in taxes (and I don't make even half as much as you think I do). I don't like it, but I'm a patriot, which means thinking now and then about what's best for all of us, not just me. I don't like my money going to people like KBR and Halliburton and AIG; their allegiance is to money and other rich people, and that kind of government we don't need.

Bill Maher summed it up on HuffPo:

"The first responders who put out your fires, that's your government. The ranger who shoos pedophiles out of the park restroom...Recent years have made me much more wary of government...stepping aside and letting unregulated private enterprise run things it is plainly too greedy to trust with."

Take a page from Bill and say it out loud: I'm for big government and I'm proud! Why he lowered himself to 'debate' this ur-knuckle dragger, I don't know, but still...the video of it made me want to stand up and cheer.

Top Marginal Tax Rates Through Time

Next time you hear someone complaining about how the rich shoulder a massive tax burden, point them to the first graph at this FiveThirtyEight post. The top marginal tax rate in this country is at one of the lowest points in the past 100 years.