Kevin Drum

Big Banks Get Their New Marching Orders From the Fed

| Mon Jul. 20, 2015 2:20 PM EDT

Seven years after the great banking meltdown of 2008, and five years after the passage of Dodd-Frank, the Fed has finally announced new capital requirements for large, systemically important banks that could devastate the financial system if they failed. These new requirements can be met only with common equity, the safest form of capital, and are in addition to the 7 percent common equity level already required of all banks:

J.P. Morgan would face a capital “surcharge” of 4.5% of its risk-weighted assets under the final rule. The other seven firms must maintain an additional capital buffer of between 1% and 3.5%....The size of each bank’s additional capital requirement is tailored to the firm’s relative riskiness, as measured by a formula created by international regulators and the Fed. A bank’s surcharge can grow or shrink depending on changes such as size, complexity and entanglements with other big firms.

....“A key purpose of the capital surcharge is to require the firms themselves to bear the costs that their failure would impose on others,” Fed Chairwoman Janet Yellen said in a written statement prepared for this afternoon’s open meeting. “They must either hold substantially more capital, reducing the likelihood that they will fail, or else they must shrink their systemic footprint, reducing the harm that their failure would do to our financial system.”

Leverage, leverage, leverage. That's the big lesson we should have learned from the Great Meltdown. And the cleanest and easiest way to reduce leverage is to increase capital requirements. This is a good move in the right direction, though it probably doesn't go far enough.

It also applies only to ordinary banks, not to the shadow banking sector—which, in retrospect, appears to have been at least as big a contributor to the financial collapse as conventional banks. But that's a tougher nut to crack. It will probably be a while before we see how the Fed plans to handle that.

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What's Next For Black Lives Matter?

| Mon Jul. 20, 2015 12:58 PM EDT

As you may have heard already, the Netroots Nation gathering in Phoenix this weekend turned into quite the mess. Already suffering from a boycott for choosing the immigrant-unfriendly state of Arizona for this year's gathering, its session with presidential candidates Bernie Sanders and Martin O'Malley was taken over completely by protesters from the Black Lives Matter movement. They chanted, they heckled, they came up on the stage, and both Sanders and O'Malley reacted like deer in headlights. David Dayen has a pretty thorough rundown of what happened here.

I won't pretend to know very much about either the movement itself or how Sanders and O'Malley should have responded. But it did get me curious: What exactly are their demands? Luckily they have a convenient website, and if you scroll down a bit you come to a button labeled "Learn About Our Demands." Perfect. So here they are:

  • We demand an end to all forms of discrimination and the full recognition of our human rights.
  • We demand an immediate end to police brutality and the murder of Black people and all oppressed people.
  • We demand full, living wage employment for our people.
  • We demand decent housing fit for the shelter of human beings and an end to gentrification.
  • We demand an end to the school to prison pipeline & quality education for all.
  • We demand freedom from mass incarceration and an end to the prison industrial complex.
  • We demand a racial justice agenda from the White House that is inclusive of our shared fate as Black men, women, trans and gender-nonconforming people. Not My Brother’s Keeper, but Our Children’s Keeper.
  • We demand access to affordable healthy food for our neighborhoods.
  • We demand an aggressive attack against all laws, policies, and entities that disenfranchise any community from expressing themselves at the ballot.
  • We demand a public education system that teaches the rich history of Black people and celebrates the contributions we have made to this country and the world.
  • We demand the release of all U.S. political prisoners.
  • We demand an end to the military industrial complex that incentivizes private corporations to profit off of the death and destruction of Black and Brown communities across the globe.

At the risk of being yet another clueless white guy, I'd be curious to know how this translates into concrete initiatives. In the case of presidential candidates, the options are legislation, executive actions, more active enforcement of existing laws, and the bully pulpit. In the third bullet point, for example, are they literally asking for a full-employment bill? Or something else?

Anyway, I was curious about their specific demands, so I figured others might be too. Now that I've seen them, I'm still curious about how they expect this to play out. The protest at Netroots Nation probably did little except to benefit Hillary Clinton, who didn't attend and therefore couldn't be caught flatfooted. In addition, all of the Democratic candidates are likely to at least give more frequent shout-outs to racial issues over the next few days and weeks.

But what's next after that?

Uber vs. Taxis: Who Does Better in Low-Income Neighborhoods?

| Mon Jul. 20, 2015 11:45 AM EDT

Does Uber routinely pick up riders in good neighborhoods but avoid those who call in from poor neighborhoods? A new study suggests it doesn't. Mark Kleiman, who played a small role in the study, explains what it found:

The design could hardly have been simpler; we sent pairs of riders to call for taxi service or use an app to summon UberX for travel along pre-planned routes. The riders recorded how long it took....After each ride, the riders switched off; whoever took a taxi last time took an Uber next time. Our riders didn’t know that Uber had paid for the study.

The answer was clear-cut, and consistent across neighborhoods and days: summoning an UberX took less than half as long as calling for a taxi, and the trip cost less than half as much. UberX was also more reliable, with no very long wait times.

Even though Uber had no control over our data analysis or interpretation, the fact that Uber paid for the study makes some skepticism about our results natural and proper. We will happily share our data and methods with other research teams for re-analysis and replication.

It was not possible for a single study in a single city to answer all the relevant questions about ridesharing. Would the same relationship hold in other cities? Would it hold in the small number of very-high-crime neighborhoods we excluded in order to protect our riders? Would it hold after dark?....So this study ought to be the beginning of the scientific effort rather than the end.

This is tentatively good news for Uber. As Mark says, it's a beginning, not the final word in how Uber compares to taxis. They didn't test in high-crime neighborhoods, and obviously Uber's requirement for a smartphone and a credit card automatically precludes the very poor from using their service at all.

Still, an interesting first cut, and it's basically fairly cheap research to carry out. The full report is here.

Oregon Sensibly Votes to Make Oral Contraceptives Available Without a Prescription

| Sat Jul. 18, 2015 11:12 AM EDT

Good news from Oregon:

Oregonians will be able to buy birth control at a pharmacy without a doctor's prescription beginning next year, potentially making the state the first in the nation to allow the practice. The bill was overwhelmingly approved in the state House and Senate and was signed by Gov. Kate Brown last week. It will go into effect at the start of next year.

....A second Oregon law, which passed the 90-member Legislature in a near-unanimous vote Thursday, allows women to obtain a yearlong supply of birth control instead of refilling their prescription every 30 or 90 days.

I know there's some disagreement about this among progressives these days, since prescription birth control is covered by Obamacare and OTC birth control isn't. But I assume Oregonians who want a prescription can still get one, and allowing contraceptives to be sold OTC as well is the right thing to do. That decision should be made solely on safety grounds, not on grounds of political convenience. This is the same argument we make against things like forced ultrasounds for abortion patients, and it's the right one.

The one-year supply is a nice bonus too, based on evidence that women are more likely to use contraceptives regularly if they don't have to make a special trip for a refill every 30 days. All in all, good for Oregon, working hard to retain its spot as one of the sanest states in the Union.

Friday Cat Blogging - 17 July 2015

| Fri Jul. 17, 2015 3:00 PM EDT

A few days ago the Hallmark Channel decided to present us with a showing of kitten baseball. We recorded it, since you never know when a few minutes of zoning out in front of adorable kittens might be just what you need. But it turned out that Hopper was fascinated. She stared at the kittens on the screen, then moved closer, then jumped up on the cabinet to get an even closer look. Unfortunately, the light was bad and I couldn't get any good pictures.

The next day I tried again in the morning light. But this time Hopper was busy with other feline priorities, while Hilbert, who had sat around like a furry, bored medicine ball the night before, suddenly took over. He couldn't take his eyes off the screen. And that's how you see him today, staring avidly at an orange-and-white kitten on the television. Now that's cat TV.

Do You Live in a Fuck State or a Shit State?

| Fri Jul. 17, 2015 2:26 PM EDT

The Guardian reports today on the latest work of Jack Grieve, a professor of forensic linguistics at Aston University in the UK, aided by research from Diansheng Guo and Alice Kasakoff of the University of South Carolina and Andrea Nini, of Aston University. Their research topic is this: how do people swear in different US states? Only a British newspaper could publish this, since American newspapers would never allow such family-unfriendly swill in their august pages. Hell, I may be stretching things by doing it at Mother Jones.

You can click the link for the full rundown, but you'll be interested to know that "fuckboy" is one of the fastest rising words of 2014. It's apparently popular in the mid-Atlantic region and in California starting just north of where I live—which explains why I've never heard of it.

In any case, here's a sample of Grieve's linguistic maps. On the left are states where "fuck" is especially popular, and on the right are states where "shit" is especially popular. California is clearly a fuck state, which fits with my observations of a lifetime. Of course, you also have some states—mostly in the polite Midwest—that don't use either, and some—mostly the coastal areas from South Carolina up to New Jersey—where they really like them both. Fascinating, no? Certainly more interesting than the old soda-pop-coke chestnut.

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More Pluto! Troughs, Hills, and Pitted Surfaces!

| Fri Jul. 17, 2015 1:44 PM EDT

Here's the latest from Pluto, a hi-res image of the Sputnik Plain, which should be enough to get Republicans seething. From NASA:

In the latest data from NASA’s New Horizons spacecraft, a new close-up image of Pluto reveals a vast, craterless plain that appears to be no more than 100 million years old, and is possibly still being shaped by geologic processes. This frozen region is north of Pluto’s icy mountains, in the center-left of the heart feature, informally named “Tombaugh Regio” (Tombaugh Region) after Clyde Tombaugh, who discovered Pluto in 1930.

....Scientists have two working theories as to how these segments were formed. The irregular shapes may be the result of the contraction of surface materials, similar to what happens when mud dries. Alternatively, they may be a product of convection, similar to wax rising in a lava lamp. On Pluto, convection would occur within a surface layer of frozen carbon monoxide, methane and nitrogen, driven by the scant warmth of Pluto’s interior.

So, um, mud drying or lava lamps. Take your pick. Cool picture, though.

Quote of the Day: Mike Huckabee Wants American Wars to Last Ten Days Max

| Fri Jul. 17, 2015 12:20 PM EDT

From noted national security expert Mike Huckabee:

Here is what we have to do: America has to have the most formidable, fierce, military in the history of mankind. So when we have a threat, whether it is ISIS, Boko Haram, Al Qaeda, Hamas, Hezbollah, the Iranians, whatever it is, we make it very clear that we plan to push back and destroy that threat to us. And we won’t take 10 years doing it, we hopefully won’t even take 10 months, it will be like a 10 day exercise, because the fierceness of our forces would mean that we can absolutely guarantee the outcome of this film. That’s how America needs to operate in the world of foreign affairs, and foreign policy.

Damn! If only we'd known this before. If we had taken this stuff a little more seriously, we could have wiped out all these guys in a short series of ten-day bloodbaths. No more Al-Qaeda. No more ISIS. No more Hamas or Hezbollah. Even the entire country of Iran would apparently have fallen to our fierceness in ten days or so. Booyah!

Generally, speaking, I try not to obsess over each and every Idiocy of the Day™, since they fly fast and furious during campaign season. But I have to assume that Huckabee is being more than astonishingly ignorant here. He's also channeling the beliefs of a lot of base conservatives, who figure if we stopped pussyfooting around and spending all our time worrying about PC crap like gay soldiers and whatnot, we could unleash the full might of America and destroy our enemies in a matter of days or weeks. And that would be that.

I wonder how many people are out there who believe this? More than we think, probably. Maybe someone should take a poll.

Our Kids Are Fat, But They Don't Know It

| Fri Jul. 17, 2015 11:31 AM EDT

More kids are overweight today than in the past, but fewer of them realize it:

A team of researchers at Georgia Southern University found an alarming rise in the lack of self awareness among children and teenagers in the United States. Specifically, way more overweight adolescents are oblivious today to the fact that they ought to lose weight than were in decades past—and it's a big problem.

....Adolescents, for instance, are 29 percent less likely to correctly perceive themselves as being overweight than they were almost twenty years ago, according to the study's findings. And the drop-off is the most pronounced among younger children—overweight 12-year-olds are almost 40 percent less likely to understand that they are overweight today.

....Solving the problem isn't as simple as telling people that they're overweight. There's too fine a line between promoting health and facilitating body image issues for that to be the case...."We must be very careful when we, as parents, teachers, or health care professionals, make an effort to correct the misperception among teens," said Zhang. "It has to be a pro-health, not anti-obesity, campaign."

This is the place where I always start to get a little uncertain about the whole fat shaming thing. I take it for granted that overweight people should be treated with normal amounts of respect and shouldn't be harassed about their weight. At the same time, obesity really is bad for you: it's associated with diabetes, joint deterioration, and depression. As a society, we should try to promote healthy weight, but as individuals we should cool it with the fat jokes. This is a difficult combination to pull off.

And it's even more important with kids, since childhood obesity is strongly associated with adult obesity. Unfortunately, it's also harder with kids, since they have less knowledge, less self-control, and less concern with problems in the far future. How do you get them to take healthy weight seriously, but in a way that no one can complain is akin to fat shaming?

Obviously parents have to take a big role in this: if they don't take healthy eating seriously, neither will their kids. Beyond that, I'm not sure. Ideas?

UPDATE: Aaron Carroll coincidentally reminds us today that not all obesity is created equal. Being mildly overweight has very few health implications. It's only being seriously overweight that's truly a problem:

Costs are NOT equally spread over obese individuals. People with class 1 obesity, or those whose BMI is greater than 30 but less than 35, pretty much have no elevated health care costs....The paper further reports that a person who has a starting BMI of 40, and can lose 5% of their weight, might expect to see reductions in health care costs of $2137. But only about 6% of adults have a BMI that high. Losing 5% of weight if you have a starting BMI of 35 would save you $528. Losing that weight if you’re starting with a BMI of 30 would save you $69.

Obviously, being moderately overweight can eventually lead to serious obesity, so it's not something we should just ignore. Still, it's true that the vast majority of those we call obese are only modestly overweight and don't really have any serious health issues because of it. The real goal here is preventing mild overweight from turning into serious obesity.

USA! USA! USA! American Math Prodigies Beat Out China, South Korea

| Fri Jul. 17, 2015 10:44 AM EDT

We are once again the math champs of the world:

The U.S. edged out China by four points, 185-181. South Korea took third place.

The rankings were based on the number of points scored by individual team members on six problems. Students tackle the problems three at a time in 4.5 hour sessions over two days, according to the Mathematical Association of America, the organization behind the American team.

Five U.S. team members won gold medals: Ryan Alweiss, Allen Liu, Yang Liu, Shyam Narayanan and David Stoner. A sixth member, Michael Kural, missed gold by one point, settling for silver.

That's a pretty testosterone-fueled team there. I expect it to launch a thousand tweets about how women just don't have the innate cognitive skills to be good at higher level maths. Three...two....one....go!

There's a college test that's kind of the equivalent of this called the Putnam exam. It's not a team event, you just take it individually. I took it in my freshman year and scored one point. All things considered, I figured that was pretty good since the median score on the Putnam is zero. My one point put me in the top half of all test takers!

It also convinced me that math was not my field. So eventually I ended up a political blogger. That's what happens to people who score one point on the Putnam exam.