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Watch David Corn Discuss the Beef Between Rand Paul and Dick Cheney

Mon Apr. 7, 2014 5:49 PM PDT

David Corn joined Chris Matthews on MSNBC's Hardball to discuss his latest scoop documenting Rand Paul's accusation that Dick Cheney pushed for the Iraq War so that Halliburton would profit.

David Corn is Mother Jones' Washington bureau chief. For more of his stories, click here. He's also on Twitter.

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OkCupid's CEO Donated to an Anti-Gay Campaign Once, Too

| Mon Apr. 7, 2014 4:00 PM PDT
OkCupid co-founder Sam Yagan

Last week, the online dating site OkCupid switched up its homepage for Mozilla Firefox users. Upon opening the site, a message appeared encouraging members to curb their use of Firefox because the company's new CEO, Brendan Eich, allegedly opposes equality for gay couples—specifically, he donated $1000 to the campaign for the anti-gay Proposition 8 in 2008. "We've devoted the last ten years to bringing people—all people—together," the message read. "If individuals like Mr. Eich had their way, then roughly 8% of the relationships we've worked so hard to bring about would be illegal." The company's action went viral, and within a few days, Eich had resigned as CEO of Mozilla only weeks after taking up the post. On Thursday, OkCupid released a statement saying "We are pleased that OkCupid's boycott has brought tremendous awareness to the critical matter of equal rights for all individuals and partnerships."

But there's a hitch: OkCupid's co-founder and CEO Sam Yagan once donated to an anti-gay candidate. (Yagan is also CEO of Match.com.) Specifically, Yagan donated $500 to Rep. Chris Cannon (R-Utah) in 2004, reports Uncrunched. During his time as congressman from 1997 to 2009, Cannon voted for a constitutional amendment banning same-sex marriage, against a ban on sexual-orientation based job discrimination, and for prohibition of gay adoptions.

He's also voted for numerous anti-choice measures, earning a 0 percent rating from NARAL Pro Choice America. Among other measures, Cannon voted for laws prohibiting government from denying funds to medical facilities that withhold abortion information, stopping minors from crossing state lines to obtain an abortion, and banning family planning funding in US aid abroad. Cannon also earned a 7 percent rating from the ACLU for his poor civil rights voting record: He voted to amend FISA to allow warrant-less electronic surveillance, to allow NSA intelligence gathering without civil oversight, and to reauthorize the PATRIOT act.

Of course, it's been a decade since Yagan's donation to Cannon, and a decade or more since many of Cannon's votes on gay rights. It's possible that Cannon's opinions have shifted, or maybe his votes were more politics than ideology; a tactic by the Mormon Rep. to satisfy his Utah constituency. It's also quite possible that Yagan's politics have changed since 2004: He donated to Barack Obama's campaign in 2007 and 2008. Perhaps even Firefox's Eich has rethought LGBT equality since his 2008 donation. But OkCupid didn't include any such nuance in its take-down of Firefox. Combine that with the fact that the company helped force out one tech CEO for something its own CEO also did, and its action last week starts to look more like a PR stunt than an impassioned act of protest. (Mother Jones reached out to OkCupid for comment: We'll update this post if we receive a response.)

Update April 8, 2014, 12:30 p.m. PDT: OkCupid CEO Sam Yagan provided a statement to the SF Chronicle this morning clarifying the intentions behind his donation to Cannon and his stance on gay rights. Here it is in full:

A decade ago, I made a contribution to Representative Chris Cannon because he was the ranking Republican on the House subcommittee that oversaw the Internet and Intellectual Property, matters important to my business and our industry. I accept responsibility for not knowing where he stood on gay rights in particular; I unequivocally support marriage equality and I would not make that contribution again today.  However, a contribution made to a candidate with views on hundreds of issues has no equivalence to a contribution supporting Prop. 8, a single issue that has no purpose other than to affirmatively prohibit gay marriage, which I believe is a basic civil right.

An American Just Disappeared From a Prison in Yemen, and No One Will Say What Happened

| Mon Apr. 7, 2014 2:00 PM PDT
Sharif Mobley with his daughter

Sharif Mobley—an American accused by the US government of wanting to join Al Qaeda, and by the Yemeni government of shooting a prison guard—has disappeared from the Sana'a prison where he was being held, his lawyer, Cori Crider of the British charity Reprieve, said Monday. Crider believes the Yemeni secret police are holding Mobley in an undisclosed location, and has written to the US Embassy requesting the government's help. "We have not had any news of [Mobley] for 39 days, despite strenuous attempts to locate him," she wrote.

Mobley's is one of the forgotten stories of the war on terror. In early 2010, the New Jersey-born Muslim was living in Sana'a, Yemen's capital. He says he had moved there to study Arabic; US officials have told reporters that he planned to join Al Qaeda. Mobley was running errands one morning, he says, when he was kidnapped by Yemeni secret police, shot in the leg, and held incommunicado, tortured, and interrogated for weeks.

During this time, FBI agents visited and questioned Mobley, leading him to believe that the Yemeni government had arrested him and tortured him on behalf of the US government. (Documents Crider obtained through the Freedom of Information Act in 2012 proved that the US government was aware of Mobley's detention even as US officials were telling his wife they did not know where he was.) Eventually, Mobley tried to escape, and US and Yemeni officials say he shot and killed a guard in the process. He's been held in the Sana'a central prison ever since. His supporters believe that he was a victim of proxy detention—civil libertarians' term for the US government's practice of having allied countries detain suspects the United States doesn't want to arrest and detain itself.

Mobley disappeared sometime between February 27, when Crider's colleagues saw him there last, and March 22, when they visited the prison and discovered he was nowhere to be found. The timing is noteworthy for a couple reasons. The same week Mobley turned up missing, Kel McClanahan, an American lawyer who helped with Crider's FOIA, filed suit in federal court in Washington alleging that the FBI had hacked his emails after he obtained classified documents relating to the case.

Moreover, just before Mobley disappeared, Crider and her team were about to publicize a bevy of US government documents they obtained through FOIA. "I am certainly concerned that this is about someone trying to discourage embarrassing evidence from coming to light," she wrote in an email. "Why move him now? There have been security incidents in the centre of town, but that has been the case before. So all is very odd."

The big question now is whether the US had any connection to Mobley's latest disappearance. It's not so far-fetched. Consider the case of Abdulelah Haider Shaye, a Yemeni journalist who had been accused of associating with Al Qaeda because he had interviewed Anwar al-Awlaki, the now-dead American Al Qaeda propagandist. In February 2011, Yemen was set to release Shaye. But, as Jeremy Scahill reported in The Nation, President Barack Obama intervened personally to prevent Shaye's release. The journalist was held for another two years.

The State Department said it was aware of "reports" that Mobley had been moved but couldn't comment further out of concern for his privacy. A spokesman for the Yemeni embassy said he didn't know where Mobley was, but he'd check.

Update, Wednesday, April 9, 10:15 a.m. EST: Mohammed Albasha, a spokesman for the Yemeni embassy, said Wednesday morning that Mobley is now in the Sana'a central prison, where he was in February. Albasha wouldn't say whether Mobley had been taken elsewhere previously, but added that "legal counsel and relatives and family should coordinate with the US Embassy in Sana'a regarding other matters such as visitation."

Update 2, Wednesday, April 9, 2:00 p.m. EST: Tim Moore, a colleague of Crider's at Reprieve, sends the following statement:

We have yet to receive any official confirmation of the information which you reported from Mohammad al-Basha, regarding Sharif [Mobley]'s presence in the Central Prison. To the contrary, we received a second email from the [US] Embassy last night, in which the representative wrote “We have contacted all the possible locations where he could be held. We have received denials from everyone except the Ministry of the Interior who said they would get back to us. We are sending a diplomatic note out tomorrow and pressing to visit Mr. Mobley... I agree we should be getting official confirmations on his whereabouts and his situation. However none of the officials we contacted feel comfortable giving us a direct answer." So, from our side, we still very much believe Sharif to be out of contact.

You can read Crider's full exchanges with the embassy here and here. Crider said in an email Wednesday that if Mobley is now in the central prison, "they moved him back because of your article."

Here's the letter Crider sent to the US Embassy:

 

This GOP House Candidate Is Running for Office So His Daughter Won't Have to Learn About Evolution

| Mon Apr. 7, 2014 12:48 PM PDT
Congressional candidate Aaron Miller (R-Minn.)

Minnesota Republican congressional candidate Aaron Miller's gripe with Washington is personal. Speaking at the district convention on Saturday, Miller, an Iraq War vet who won the nomination to challenge four-term Democratic Rep. Tim Walz, explained that he was running for office in part to ensure that his daughter won't have to learn about evolution at her local public school. Per the Mankato Free Press:

He also called for more religious freedoms. He repeated his story about his daughter returning home from school because evolution was being taught in her class. He said the teacher admitted to not believing in the scientific theory to his daughter but told her that the government forced him to teach the lesson.

"We should decide what is taught in our schools, not Washington D.C.," Miller said.

Miller has declined to provide any more information to verify his story.

This isn't the first time Miller has recounted this tale—it's a staple of his stump speech. The comments were first flagged by Minnesota blogger Sally Jo Sorensen, who points out that Minnesota's biology standards are set by Minnesota, not DC. Miller has the endorsement of the district's 2012 GOP nominee Allen Quist, a longtime conservative activist in the state who wrote an educational curriculum supplement postulating that "people and stegosaurs were living at the same time."

The first district, which President Obama carried by a point in 2012, is one of just a handful of red-leaning congressional districts represented by Democrats. But Walz, who has been endorsed by the National Rifle Association, remains popular in the district. It probably doesn't hurt that the local GOP keeps nominating candidates like Quist and Miller, either.

Rutgers Athletic Director Wishes Critical Local Newspaper Would Die

| Mon Apr. 7, 2014 11:50 AM PDT

Rutgers University athletic director Julie Hermann told a journalism class that athletes at the school receive plenty of benefits and that it would be "great" if the Star-Ledger, the New Jersey newspaper that just laid off 167 staffers, would die completely, according to a report by Muckgers last week.

When a student in the class said the Star-Ledger might go under, Hermann responded, "That'd be great. I'm going to do all I can to not to give them a headline to keep them alive because I think I got them through the summer." The paper dedicated a great deal of coverage to Hermann after she replaced former AD Tim Pernetti, who resigned last year when it was revealed he allowed men's basketball coach Mike Rice to keep his job after being presented video evidence of Rice pelting his players with basketballs and shouting insults and gay slurs at them during practice. Hermann came with her own baggage—the women's volleyball team she coached at the University of Tennessee 17 years ago wrote a letter to the athletic department accusing her of "mental cruelty," including referring to athletes as "whores, alcoholics, and learning disabled."

Hermann has denied treating her players that way, and in a statement from Rutgers to the Star-Ledger, said she was just speaking to the class "in an informal way and out of the glare of the media spotlight" and "had no knowledge of the impending reorganization of the Star-Ledger." (Hermann's talk, which came before the most recent layoffs were announced, was recorded by a student in attendance.)

The classroom conversation also touched on the college athlete unionization movement. "What of those 1,000 institutions that sponsor college sports—who can sustain the kids unionizing?" Hermann asked the class. "Who can do that? Most of them are barely making it as it is." Hermann, it should be noted, has a base salary of $450,000. She went on to extol the benefits Rutgers athletes are already getting (especially now that that no one is throwing basketballs at them during practice, one assumes):

By the time we go recruit [a football player], sign him, bring him to campus, do all of their care, provide all of their medicine, all of their travel, all of their gear, all the things we've got to provide—by the time we're done with him, here at Rutgers, we've spent over half a million dollars on him minimum…so, technically, what we're providing for them is a value, it's about $100,000. How many of you are going to walk out of here and get jobs that pay you $100,000?

What's amazing is that Hermann's description of what Rutgers provides athletes is the exact legal argument that allowed Northwestern University football players the right to unionize. (Not to mention that one of players' largest grievances is that universities don't "do all of their care," since many health effects from playing football don't crop up until later in life.) And while many recent Rutgers grads may not be pulling in $100,000 salaries, their employers will be paying them in real money—not scholarships, shoulder pads, and concussion treatments.

In Defense of "Flash Boys"

| Mon Apr. 7, 2014 10:45 AM PDT

Felix Salmon reviews Michael Lewis's Flash Boys today, and he's not impressed. I think Salmon's basic criticism is on point: the big problem with high-frequency trading isn't that small investors get ripped off, it's that the system is so complex that literally no one really understands how it works or what kind of danger it poses:

By far the biggest risk posed by the HFT industry, for instance, is the risk of the kind of event we saw during the flash crash, only much, much worse. The stock market is an insanely complex system, which can fail in unpredictable and catastrophic ways; the HFT industry only serves to make it much more brittle and perilous than it already was. But in Lewis’ book-length treatment of HFT, he barely mentions this risk: I found just one en passant mention of “the instability introduced into the system when its primary goal is no longer stability but speed,” on Page 265, but no elaboration of that idea.

HFT cheerleaders like to brag that their algorithms increase liquidity. And that's probably true. The problem is that HFTs don't guarantee liquidity. In fact, it's far worse than that: they displace other sources of liquidity during normal times, but there's a good chance that during a crisis, at precisely the moment when liquidity is most important, HFT traders could suddenly and systematically exit the market because events have outrun the parameters of their algorithms. This could easily spiral out of control, turning a bad situation into a catastrophe.

Is this a real threat? Nobody knows. And that's the problem. HFT is so complex that literally no one knows how it works or how it will react in a crisis. This is not a recipe for financial stability.

Unfortunately, that doesn't make for a very entertaining book, so Lewis instead focuses on the ability of HFT shops to "front run" orders in the stock market—that is, to see bids a few milliseconds before anyone else simply by virtue of having computers that are physically closer to a stock exchange than their competitors. An HFT algorithm can then execute its own order already knowing the direction the price of the stock is likely to go. But even though this isn't the biggest problem with HFT, I do think Salmon is a little too dismissive of it. Here he is on the subject of Rich Gates, a mutual fund manager who discovered he was being front run:

Gates “devised a test,” writes Lewis, to see whether he was “getting ripped off by some unseen predator.”....Gates “was dutifully shocked” when he discovered the results of his test: He ended up buying the stock at $100.05, selling it at $100.01, and losing 4 cents per share. “This,” he thought, “obviously is not right.”

Lewis does have a point here: It’s not right....In Gates’ mind, what he saw was the 35,000 customers of his mutual fund being “exposed to predation” in the stock market. Between them, those customers had lost $40: 4 cents per share, times 1,000 shares. Which means they had lost roughly a tenth of a cent apiece, buying and selling $100,000 of Chipotle Mexican Grill within the space of a few seconds.

But there’s always going to be a nonzero “round-trip cost” to buying $100,000 of a stock and then selling it a few seconds later....But still, $40 for two $100,000 trades is hardly a rip-off. Especially when you consider the money that Gates himself is charging his 35,000 mom-and-pop customers.

When Gates was running his experiments, his flagship fund, the TFS Market Neutral Fund, had an expense ratio of 2.41 percent: For every, say, $100,000 you had invested in the fund, you would pay Gates and his colleagues a fee of $2,410 per year. That helps puts the tenth of a cent you might lose on Gates’ Chipotle test into a certain amount of perspective. TFS trades frequently, but even so, any profits that HFT algos might be making off its trades are surely a tiny fraction of the fees that TFS charges its own investors.

That's true. But the whole point of HFT has always been to skim tiny percentages from a large number of trades. Nobody has ever suggested that individual traders are losing huge amounts of money to HFT shops. Nevertheless, that's no reason to downplay it. In fact, that's one of the things that makes HFT so insidious: it's yet another way for Wall Street players to game the system in a way that's so subtle it's hardly noticeable. This is the kind of thing that permeates Wall Street, and I think Lewis is correct to aim a spotlight at it.

There are plenty of reasons to be very, very wary of HFT. I wish Lewis had at least spent a few pages on the potential instability issues, but let's face facts. Front running is a perfectly legitimate problem to focus on, and it's likely to generate a lot more public outrage than a dense abstract about the possibility of robots causing a financial crash sometime in the dim future. So if you're the rare person who can attract a lot of attention to a legitimate financial danger, it makes sense to write a book that concentrates its fire on the most accessible aspect of that danger. That's what Lewis chose to do, and I don't really have a problem with that.

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Gallup Confirms Further Fall in Uninsurance Rate

| Mon Apr. 7, 2014 9:04 AM PDT

The latest Gallup poll on the uninsured is out, and it shows that the uninsurance rate continues to drop. Using the same 2011-12 baseline I've used before, uninsurance has now dropped about 1.8 percentage points since the rollout of Obamacare. Since the Gallup poll includes everyone, not just the nonelderly, this amounts to about 5.6 million people. However, note that this 5.6 million drop doesn't include sub-26ers who are on their parents' insurance, since that policy change had already taken effect by 2011. Nor does it include the entire late surge in Obamacare enrollment. Add those in and the real number is probably in the neighborhood of 8-9 million. By the end of the year, we should hit 10 million or so.

The biggest declines in uninsurance were among the young, among blacks, and among the low-income. More details at the link.

Read Ronald Reagan's Letter to the Late Mickey Rooney About the Time He Rescued a Dog

| Mon Apr. 7, 2014 9:00 AM PDT

On Sunday, Hollywood actor Mickey Rooney died at the age of 93. He was with his family when he passed away at his North Hollywood home.

"He was a tremendous talent, and someone at 5-foot-tall that everybody looked up to," actor Billy Crystal said on Monday. Rooney had a long, successful career on stage and screen, one that included reigning as the top moneymaking movie star from 1939 to 1942 (his streak came to a halt when he enlisted in the Army). He starred in films such as Love Finds Andy Hardy, alongside Judy Garland, and Breakfast at Tiffany's (in which he—nowadays notoriously so—played a full-throttle Japanese caricature).

Rooney was also a friend of actor-turned-most-powerful-man-in-the-world Ronald Reagan. Below is one of President Reagan's letters to Rooney and his wife Jan, written in 1985. The president invited the couple to a White House dinner. Rooney couldn't make it, and wrote back, "Damn it! It's always when I'm working, but thank goodness that I am." Here is Reagan's reply, in which he writes about the time he and Mickey Rooney met:

Dear Jan and Mickey,

Sorry you can't make it June 12th but you have an ongoing rain check. While we'll miss you we're happy you are working 'cause that means pleasure for a lot of people.

Mickey I'll bet you don't remember the first time we met. The year was 1937 or thereabouts. I was new in Hollywood living in the Montecito apartments. Someone had run over a dog in the street outside. You came in to look for a phone book so you could find the nearest veterinarian and take the dog to him. I figured this had to be a nice guy and I was right.

Nancy sends her best and so do I.

Sincerely, Ronald Reagan

Click here to read another one of President Reagan's letters to Rooney.

Why Are We All So Obsessed With Inflation?

| Mon Apr. 7, 2014 8:36 AM PDT

Paul Krugman brings up a familiar trope this weekend: why is it that everyone is so obsessed with ultra-low inflation, even in the middle of a sluggish economy that would almost certainly benefit from a few years of 4 percent price growth? His answer: rich people are uniquely vulnerable to high inflation, and therefore fear it. And since rich people have tremendous influence on policy—especially economic policy—we've consistently implemented policies dedicated first and foremost to restraining inflation. Tyler Cowen dissents:

We all know that inflation is extremely unpopular with voters.  We also observe that inflation remains extremely unpopular in a variety of northern European economies, which typically have more egalitarian distributions of income (though not always wealth) than does the United States.  In any case the top 0.1 percent in those countries has less wealth per capita than in the U.S. and, at least according to progressives, less political influence too.

....People that wealthy can put their money into hedge funds, private equity, private capital pools, and the like....The very wealthy also have the greatest ability to hedge against inflation using derivatives and commodities, if they do desire....I am not suggesting that the very wealthy are out there pushing for higher inflation. But they are much more protected against such inflation than Krugman’s analysis suggests, and the middle class in protected service sector jobs is more vulnerable than is usually recognized.  There is a reason why 4-6% price inflation has become the new third rail of American politics.

I chalk this up to something a little different: inertia. Practically speaking, I don't think protected service sector workers have a lot to fear from moderately high inflation. They're mostly unionized, and their contracts often include COLA hikes. But I agree that rich people don't have a lot to fear either. Given modern portfolio management, it's not hard to hedge against inflation, especially if you're wealthy enough to pay a good money manager. The elderly are often brought up in this context too, and they probably really do have a certain amount of vulnerability to inflation. But not that much. Social Security benefits are indexed to inflation, and even most middle-class investments (in 401(k)s, etc.) tend to be inflation-resistant, if not inflation-proof.

So what's going on? My take has long been fairy simple: it's mostly due to septaphobia, or fear of the 70s. It's not actually true that the middle class was decimated by the 70s, but a lot of middle-class workers felt hard done by, especially since the price we all paid for the 70s was the traumatic Volcker recession of 1980-81. As for rich people, they really did suffer losses during the 70s as we made our rocky transition from an era of financial repression and fixed returns to our current era of global finance and variable returns. Central bankers belong in this story too: during the 70s, they developed a deep fear of their own inability to control wage-price spirals once inflation got above 2 percent or so. This fear is badly misguided, however: the economy has evolved enormously since the 70s and modern central banks have plenty of tools to fight inflation before it gets out of control. Basically, the 70s are to modern publics what Weimar hyperinflation was to a generation of Germans: a scarring experience that forged a deep and broadly-held fear of inflation of any kind.

There's so much inflation indexing in our modern economy—sometimes explicit, sometimes not—that inflation poses only a moderate threat to the rich. In fact, if I had to choose a class of people who probably should be threatened by inflation, it's the broad working and middle classes. After all, why do so many economists think a higher inflation rate would be good for the economy? Partly because it produces lower real interest rates, and thus stimulates investment. However, it's also because it allows a faster downward adjustment of real wages, since employers can simply let inflation erode wage rates instead of angering workers with deep nominal cuts. And who does that affect? Not Bill Gates.

That said, I don't disagree that, in reality, elite opinion drives much of the inflation fear in the United States and Europe. It's irrational, since the rich benefit from lower middle-class wages and a faster-growing economy, but that doesn't mean it's not real. Phobias are hard to cure.

We're Still at War: Photo of the Day for April 7, 2014

Mon Apr. 7, 2014 7:15 AM PDT

U.S. Army Pvt. David Bryant of the 3rd Squadron 71st Cavalry, 3rd Brigade Combat Team, 10th Mountain Division mans his position behind his M249 Squad Automatic Weapon machine gun at Forward Operating Base Muqar during their mission to the Afghan National Army compound. The Spartans of the 3rd Brigade Combat Team are deployed to Afghanistan as a Security Force Advise Assist Brigade in support of Operating Enduring Freedom. (U.S. Army photo by U.S. Army Sgt. Javier Amador, 3rd Brigade Combat Team, 10th Mountain Division Public Affairs)