Women Rock Volunteerism

Somehow, I got hooked on following the voting on CNN's top picks for heroes. My guy didn't win, but I was struck by something: Most of these unbelievably unselfish philanthropists are women. Ordinary, not rich, not well-connected women.

If you want to be humbled by your own paltry efforts, check these visionaries out.

Major League Baseball Catches Outsourcing Fever

Or maybe this is better described as insourcing…

The Pittsburgh Pirates hope Rinku Singh and Dinesh Patel really do have million-dollar arms.
The two 20-year-old pitchers, neither of whom had picked up a baseball until earlier this year, signed free-agent contracts Monday with the Pirates. They are believed to be the first athletes from India to sign professional baseball contracts outside their country.
Singh and Patel came to the United States six months ago after being the top finishers in an Indian reality TV show called the "Million Dollar Arm" that drew about 30,000 contestants. The show sought to find athletes who could throw strikes at 85 miles per hour or faster.

The article notes that when Singh and Patel (picture) first came to the United States and began playing catch, they "were mystified by the concept of gloves and had to be taught not to try to catch the ball with their bare hands." But the article also notes that the pair has athletic experience throwing the javelin, so this will definitely end well.

Searching for Cassandras

SEARCHING FOR CASSANDRAS....Brad DeLong says he was keenly aware of the housing bubble and fully expected it to burst. Me too! But he didn't expect any of the following:

(3) the discovery that banks and mortgage companies had made no provision for how the loans they made would be renegotiated or serviced in the event of a housing-price downturn.

(4) the discovery that the rating agencies had failed in their assessment of lower-tail risk to make the standard analytical judgment: that when things get really bad all correlations go to one.

(5) the fact that highly-leveraged banks working on the originate-and-distribute model of mortgage securitization had originated but had not distributed: that they had held on to much too much of the risks that they were supposed to find other people to handle.

(6) the panic flight from all risky assets — not just mortgages — upon the discovery of the problems in the mortgage market.

(7) the engagement in regulatory arbitrage which had left major banks even more highly leveraged than I had thought possible.

(8) the failure of highly-leveraged financial institutions to have backup plans for recapitalization in place in the case of a major financial crisis.

(9) the Bush administration's sticking to a private-sector solution for the crisis for months after it had become clear that such a solution was no longer viable.

So then: who did expect any/all of this stuff? Commenter macheath offers a few heroes:

Some people saw pieces of it, but were largely ignored or marginalized. Dean Baker was hammering on the house price bubble for years, and several people (including Gary Gensler at Treasury) called for stronger capitalization of Fannie and Freddie, saying their business model was not sustainable, and they were beaten up by Congress, Democrats and Republicans alike. Brooksley Born at the CFTC wanted to start investigating derivatives in the mid-1990s, and was slapped down by Greenspan, Rubin, and Summers, leading to legislation (backed by Summers) to prohibit the CFTC from regulating derivatives.

Is that it? Was anyone else warning us about Brad's seven points back in 2004? Or 2005?

Climate Change in the Himalayas

CLIMATE CHANGE IN THE HIMALAYAS....Joe Romm passes along the news today that Himalayan glaciers are melting faster than anyone has previously predicted. You can add this to Romm's list of other climate change impacts that are happening faster than most climate models predict, including the canonical IPCC models:

This is why climate scientists have been running around with their hair on fire for the past couple of years. It would be nice to think that perhaps our current climate models are too pessimistic; or even that they're right but maybe we'll end up at the low end of the predicted warming ranges; or at worst that the models are right and we'll end up right at the center. But that just doesn't seem to be the case. What it really looks like is that our current models aren't pessimistic enough and that the growth in greenhouse gas emissions is exceeding even the modelers' highest estimates. We are fast approaching a point of no return that will likely kill hundreds of millions of people, destroy much of the world's food supply, and spark resource wars that make Rwanda look like a mild family quarrel. More from Romm here and here on what's happening and what to do about it.

Depends on if you're considering General James Jones, likely National Security Advisor in the upcoming Obama Administration, or Senator Hillary Clinton, likely Secretary of State. Their professional histories send conflicting messages about Obama's intentions in the region. Check out Eli Lake in TNR for more.

Must-Reads on the End of the Bush Administration

There are two great stories out discussing what we should do with all the national security secrets that, if made public, could (1) expose the full extent of the Bush Administration's torture, detention, rendition, and wiretapping programs, (2) make Bush Administration officials vulnerable to criminal prosecution, (3) create a public circus that overshadows the Obama Administration's early actions and spoils a moment of goodwill that Obama wants to exploit, and (4) potentially make our defenses weaker in the war on terror.

Result (1) is obviously a good thing. Is (2)? Even if it comes with effects (3) and (4)? Is there a way to do this that avoids (4) entirely?

Check out the thoughts of Dahlia Lithwick in Slate and Charles Homans in the Washington Monthly. Obama seems interested in establishing a commission that ferrets out the who/what/where/when/why, but doesn't initiate criminal proceedings. That's probably the approach the majority of the country would prefer, but is bound to anger some on both the right and the left.

Quote of the Day - 11.29.08

QUOTE OF THE DAY....From Emile Earles, a Cadillac owner in West Point, Georgia, on buying American:

"You can only be patriotic until you can't afford it anymore."

And this riposte from Eddie Striblin, a salesman at the local GM dealership:

"Let me ask you a question: You ever heard of anybody braggin' on a '57 Honda?"

That's the American car industry in a nutshell, isn't it?

*Chart of the Day - 11.27.2008

CHART OF THE DAY....Via Overcoming Bias, three French researchers surveyed 1,540 people and offered them the opportunity to play a game in which a coin is tossed ten times and they'll win ten euros each time it comes up heads. "The participant is then asked for his/her own estimation, according to his/her experience and his/her luck, of the number of times heads will occur, i.e. how many times (out of ten) he/she thinks he/she is going to win (and get 10 euros)." What do you think is the most terrifying aspect of this survey?

  1. The mean answer was 3.9.

  2. About ten people thought they would win every single toss.

  3. The authors managed to produce a 21-page paper out of this.

The full survey is here. The authors also note that women are more pessimistic than men; old people are more pessimistic than young; and that nearly everyone answers "five" if monetary gain is removed from the question. In other words, people seem to know the odds, they just think the universe is stacked against them. (Or that the researchers are going to cheat. Take your pick.)

The exception, of course, is those ten respondents who think they'll win every time. Here in America, we call those people "investment bankers."

Patching Things Up

PATCHING THINGS UP....Samantha Power, last heard from calling Hillary Clinton a "monster" and then apologizing fulsomely for it, is back:

State Department officials said Friday that Samantha Power is among a group of foreign policy experts that the president-elect's office selected to help the incoming administration prepare for Clinton's anticipated nomination as secretary of state.

....Clinton's office declined to comment on Power's inclusion in the State Department transition, but an official close to the Obama transition team said Power had ''made a gesture to bury the hatchet'' with Clinton and that it had been well-received.

If we accept the conventional wisdom that Obama's choice of Clinton as Secretary of State is a generous gesture meant to help unify the party, then there would be few more forthright ways for Clinton to reciprocate than by nominating Power for some kind of meaningful position at Foggy Bottom. It would be a good sign that those hatchets have been well and truly buried.

Super Senior

SUPER SENIOR....Felix Salmon explains the synthetic CDO market:

Let's start with a simple single-credit synthetic bond....

[Explanation follows, ending with a little bit about the size of the synthetic mortgage backed security market.]

....In fact, most of the synthetic MBS issued were issued by banks which kept the underlying mortgages on their own balance sheet. Rather than put the mortgages directly into a CDO and sell that to investors, they kept the mortgages themselves and bought protection from the CDO. Why did they do that? That's the story of the super-senior tranche, and will have to wait for another day.

What!?! For pity's sake, man, don't keep us in suspense. I want to hear about the super-senior tranche. It's one of those things that I think I understand in a technical sense — sort of the way a blind man understands a sunset — but not in the real-world sense of what people were doing with them and how they got abused so badly. So let's hear it!