If you want to have your heart break, I mean really break into a million jagged pieces, read WaPo's hideous piece on parents who forget their kids in cars where they die horribly while Mom types 200 feet away.

Think it could never happen to you? Before I had kids, I would have been quite sure my answer would be not just no, but HELL no! But pizza chefs have done it. Rocket scientists have done it. People who spent years and hundreds of thousands of dollars on foreign adoptions have done it. Two kids later, I have to admit—yeah, it cudda happened to me. Thank god they're too big and too noisy now for that particular mistake. But God knows which other mistakes could easily befall even the best of us. So why are bloodthirsty DAs going after parents?

We're not talking here about parents who intentionally leave kids in cars so they can get their hair done and shop unencumbered. They are criminals and deserve punishment. We're talking about people who, almost entirely, had some change in the routines of their over-stressed lives and simply, honestly, forget their child was in the car. The piece is extremely well done and well researched, so check it out and resolve to look into every back seat you pass this summer. But prosecuting these folks for murder? It's not like there's any deterrent factor at play here. Good thing juries are composed of humans and not ambitious lawyers trying to make names for themselves.

Here's all it took for one jury to do the right thing. The attorney didn't put the mom on the stand because she refused to grovel and whimper in public. He played the 911 tape instead.

The tape is unendurable. Mostly, you hear a woman's voice, tense but precise, explaining to a police dispatcher what she is seeing. Initially, there's nothing in the background. Then Balfour howls at the top of her lungs, "OH, MY GOD, NOOOO!"

Then, for a few seconds, nothing.

Then a deafening shriek: "NO, NO, PLEASE, NO!!!"

Three more seconds, then:

"PLEASE, GOD, NO, PLEASE!!!"

What is happening is that Balfour [the mom] is administering CPR. At that moment, she recalls, she felt like two people occupying one body: Lyn, the crisply efficient certified combat lifesaver, and Lyn, the incompetent mother who would never again know happiness. Breathe, compress, breathe, compress. Each time that she came up for air, she lost it. Then, back to the patient.

After hearing this tape, the jury deliberated for all of 90 minutes, including time for lunch. The not-guilty verdict was unanimous.

These parents have suffered enough.

35 Counties Account for 50% of Foreclosures

USA Today points out that, last year, just 32 counties accounted for one half of all foreclosures in the United States. Those counties are outlined in red below. Even among them, there are some areas that are worse than others: "Eight counties in Arizona, California, Florida and Nevada were the source of about a quarter of the nation's foreclosures last year."


And yet, California is, on average, the happiest state in the nation. Weird how things work. (H/T The Electoral Map)

More Losses

Here's your chart of the day, courtesy of McClatchy:

America's five largest banks, which already have received $145 billion in taxpayer bailout dollars, still face potentially catastrophic losses from exotic investments if economic conditions substantially worsen, their latest financial reports show.

Citibank, Bank of America, HSBC Bank USA, Wells Fargo Bank and J.P. Morgan Chase reported that their "current" net loss risks from derivatives — insurance-like bets tied to a loan or other underlying asset — surged to $587 billion as of Dec. 31. Buried in end-of-the-year regulatory reports that McClatchy has reviewed, the figures reflect a jump of 49 percent in just 90 days.

Meanwhile, the Wall Street Journal reports that U.S. officials are "examining what fresh steps they might need to take to stabilize [Citibank] if its problems mount, according to people familiar with the matter."  This is in case Citi "takes a sudden turn for the worse," which, they say hearteningly, "they aren't expecting."  Good to hear.

Quants

Dennis Overbye has a piece in the New York Times today about "quants," the geeks and nerds who have converged on Wall Street in recent years and tried to use mathematical models to outsmart the market and generate vast sums of risk-free cash for their employers.  I've read a bunch of stories in this genre, and most of them have something in common that's always slightly puzzled me.  See if you can guess what it is based on these excerpts from Oberbye's piece:

Emanuel Derman....left particle physics for a job on Wall Street...."it had the quality of physics"....forerunner of the many physicists and other scientists who have flooded Wall Street....physics Web site arXiv.org....“My Life as a Quant: Reflections on Physics and Finance”

....Asked to compare her work to physics....There are a thousand physicists on Wall Street....Physicists began to follow the jobs from academia to Wall Street in the late 1970s....Lee Smolin, a physicist at the Perimeter Institute for Theoretical Physics in Waterloo....J. Doyne Farmer, a physicist and professor at the Santa Fe Institute.

....“I think physicists should go back to the physics department and leave Wall Street alone”....Eric R. Weinstein, a mathematical physicist....Nigel Goldenfeld, a physics professor at the University of Illinois....too many physicists on Wall Street.

Did you figure it out?  What's the deal with physicists?  They always seem to be at the center of these stories, but the fundamental tool of the quants is math.  So why not mathematicians instead of physicists?

Overbye suggests a couple of possibilities.  #1 is the glut theory: "Physicists began to follow the jobs from academia to Wall Street in the late 1970s, when the post-Sputnik boom in science spending had tapered off and the college teaching ranks had been filled with graduates from the 1960s. The result, as Dr. Derman said, was a pipeline with no jobs at the end."

#2 is the affinity theory: "The Black-Scholes equation resembles the kinds of differential equations physicists use to represent heat diffusion and other random processes in nature. Except, instead of molecules or atoms bouncing around randomly, it is the price of the underlying stock."

Those both sound plausible, if incomplete, so here's another thing to think about.  Even among the number crunching set, physics has a reputation as the most aggressive, male dominated branch of geekdom: only 14% of physics PhDs are women, the lowest of any of the sciences.  (Math is pretty male dominated too, but pales compared to physics: 29% of math PhDs are women.)  If the first thing that "aggressive and male dominated" reminds you of is the big swinging dick world of high finance, give yourself a gold star.  Call this the testosterone theory: physicists are attracted to Wall Street because they like the atmosphere.

Any other theories?  Leave 'em in comments.

Happy 50th, Barbie

I never got into Barbies. I did once babysit for a little girl who liked to pretend her Barbies were going out on dates to a restaurant called the Sweetheart Date Residence, a dining experience that always ended the same way: Barbie and Ken tried to order something awesomely romantic, like steak or spaghetti, but all the waiter would bring them was a big bowl of dirt. Which he then poured over their heads. Poor Barbie and Ken could never catch a break.

Banal though my own Barbie memories may be, the famously disproportionate plastic princess holds a special place in most ladies' hearts. Yesterday was Barbie's 50th birthday (an event NY Times op-ed contributor Porochista Khakpour excellently refers to as "cougarrific"). To mark this milestone, the Times offered not one, but (at least) two Barbie-themed bits: the aforementioned Op-Ed, "Islamic Revolution Barbie," which is actually a really nice little memoir of how the dolls didn't help the writer transition from her childhood in Iran to adolescence in the States. The best part her description of Sara and Dara, the Muslim equivalents of Barbie and Ken:

Van Jones To Be Green Jobs Czar?

Word has it that environmental advocate Van Jones is going to be offered a position in Obama's cabinet. Not sure yet exactly what it'll be; some say green jobs czar, but Grist's source says that's "an overstatement."

Title aside, Jones has the necessary chops: He founded the green jobs nonprofit Green for All, and what with all his recent speaking gigs, book tours, and buzz, he's got the connections. When we interviewed Jones last year, he talked about government's role in creating a green economy:

MJ: How do we get to the tipping point where the rules change. Does it have to come from the very highest levels?

Yet More on AIG

Here's an odd new twist on the AIG situation.  ABC News has gotten hold of a memo AIG wrote a few days ago arguing that the Treasury needed to provide it with additional bailout funds because a failure of the company "would cause turmoil in the U.S. economy and global markets, and have multiple and potentially catastrophic unforeseen consequences."

No surprise there.  It might even be true.  But what's odd is where they say the problem is centered.  Not in AIG's high-flying CDS business, with all those counterparties demanding their billions of dollars in payouts, but in the stodgy old life insurance business:

The systemic risk is principally centered in the “life insurance” business because it is this subsector that has the greatest variety of investments and obligations that are subject to loss of value of the underlying investments....Over the past decade, the voluntary termination rate on individual policies declined remarkably (to six percent by 2007) as consumers could obtain liquidity from numerous other sources.

A significant rise in surrender rates — inspired by consumers’ needs for cash or because of rumored or real failure of insurance companies — could be disastrous. Because of widespread loss of liquidity, the industry would struggle to raise adequate cash to meet surrender requests. A “run on the bank” in the life and retirement business would have sweeping impacts across the economy in the U.S....State insurance guarantee funds would be quickly dissipated, leading to even greater runs on the insurance industry.

The claim here is that a weak economy has already left strapped consumers with fewer places to obtain traditional loans, which in turn means that people are increasingly likely to cash in their life insurance policies in order to scrounge up a bit of ready cash.  That's bad enough, but if AIG were to fail — or if there were even a rumor of failure — everyone would start lining up to cash in their policies at once.  This would cause a panic and customers of other insurance companies would start lining up too.  Since reserves aren't big enough to pay off everyone at once, this would cause massive, cascading failures in the entire life insurance business.

There's plenty more in the memo about the global catastrophe that would accompany an AIG failure, but it's mainly in bullet points and doesn't provide much backup for their claims.  So I don't have any good way to judge whether or not it's true.

But the life insurance claim is a new one on me, so I thought it was worth passing along.  I'll be very interested indeed to hear the reaction to AIG's "run on the bank" claim from people with experience in the business.

Bailing Out the Counterparties

As we all know by now, AIG wrote hundreds of billions of dollars worth of credit default swaps that it now has to make good on.  And since the U.S. government has bailed out AIG to the tune of $150 billion or so, that means that taxpayer cash is being used to pay off a lot of those bad bets.

But do we really want our money being used to pay off AIG's clients?  Maybe not, says Noam Scheiber:

As the Journal notes, the payments arise because AIG has to post collateral every time the bonds it insured take a hit....That's scary, because as the economy continues to deteriorate, all those bonds AIG insured are going to keep deteriorating, too, and AIG will have to keep posting collateral. Which means the taxpayer, assuming we don't let AIG collapse, is going to have to keep forking over cash.

It does seem like it's time to start triaging here. That is, the government needs to start figuring out which financial institutions can afford to get stiffed by AIG (by which I mean which ones won't go under if they get stiffed), and start stiffing them. You obviously want to do it in a careful and orderly way so as not to freak out the financial markets.

I'm open to persuasion here, but this actually sounds like the worst possible way to address the counterparty problem.  Our dilemma, as Scheiber implies, is that if AIG's counterparties don't get paid, some of them might go under themselves, and then we end up with a cascade of bankruptcies.  But his solution is a cure worse than the disease.  Do we really want the U.S. government deciding that certain counterparties get paid and others don't, and doing it on the fairly arbitrary basis of stiffing the ones it thinks can best afford to be stiffed?

Not only does this send precisely the wrong signal — if you managed your investments well you're first in line to get shafted — but it's practically guaranteed to be unfair.  Do U.S. counterparties get preference over foreign counterparties?  Does payment depend on who fibs the best about their financial condition?  Do we really want to prop up our worst banks in such an opaque fashion?  If we're going to do that, shouldn't we just do it honestly and either give them money outright or else nationalize them?

A better way, surely, would be to figure out a way to pay off creditors based on class.  The most senior can expect 90 cents on the dollar, others will get 80 cents, and some will get nothing.  Or maybe everyone gets paid off in full.  But in any case, everyone in each class gets the same deal.  This is a system everyone is used to from ordinary bankruptcy proceedings, and it's generally viewed as fair and equitable.  Surely that's the way to go if you don't want to freak out the financial markets.

Obama: Soup Nazi...or Worse?

I think it's fair to say we're going to see some really bad editorial cartoons in the next few years. Rampaging chimpanzees that may or may not be stand-ins for President Obama are just the start. The latest attempt to lower the bar comes from Mike Lester of Rome, Georgia's News Tribune, who has spent the last few weeks in a Santelli-like state, depicting Obama as a Marxist Colonel Sanders and a redistributionist soup Nazi. Now he's gone and created this doozy:



Wow. Lester seems familiar enough with the corollaries of Godwin's Law and the New York Post episode to have avoided drawing a direct Hitler-Obama analogy. See, he drew some Nazi who doesn't even look like Hitler—maybe it's Goebbels in sunglasses! And the Donkey Supreme Leader whipping up subprime mortgage holders into a frenzy of genocidal, expansionist bloodlust? That must be Harry Reid. Besides, a pro like Lester would never intentionally compare Obama to a crazy, megalomaniac mass murderer...

...or would he? Answer after the jump.

Video: Yeah Yeah Yeahs - "Zero"



Commenters raked me over the coals last week for daring to give a lukewarm review to the new Yeah Yeah Yeahs album, the electro-inflected It's Blitz, so I figured I'd make it up to them by posting the just-released video for lead single "Zero." The driving, new wave-y track is a highlight of the album, for sure, and the video is worth watching just to see Karen O get all spiffied up in her spiked gloves, plastic dress and leather jacket and then go all Chrissie Hynde on top of a car. By the way, apparently due to the wide availability of the album's early internet leak, the official digital release of It's Blitz has been moved up from April 13 to tomorrow. Other reviews, by the way, have been slightly more positive than mine: while I was kind of in the 6/10 zone, Paste gives the album 72/100, and The Observer hopes it will catapult the band into "the big leagues." I'm totally down with that.