Mojo - October 2007

Bear Stearns Traders Deserve Rogue Tag

| Fri Oct. 19, 2007 9:14 PM EDT

In the competitive world of hedge funds, it's all about numbers, games, and strategy. But most recently, hedge funds seem to be about crisis. The risky investing by Bear Stearns rogue traders, which skirted established practices and hid true intent from investors, precipitated the global credit crisis and subprime mortgage collapse of late. It has affected families across America whose dream of buying a home came crashing down—entire blocks of towns and suburbs have emptied out.

But the scandal is hitting home for Bear Stearns executives as well. Co-Chief Operating Officer Warren Spector has been fired, and the reputation of the bank may never recover. Yet Ralph Cioffi, the trader who set up these funds, is still on the payroll as an adviser.

Cioffi was able to set up two hedge funds on an extremely shaky foundation because they were getting results. It was a structure that was doomed to crash in any minor downturn in the market, as it was leveraged to the hilt with almost eight times as much money borrowed against what was invested, including $275 million in capital from Barclays. This meant that Barclays had the power to pull its capital from the funds at any time, which would collapse the structure. On top of that, only one percent of the total investment was kept as reserve cash, compared to the usual ten percent that hedge funds keep around for emergencies.

The devastating results of rogue traders are compounded when they are not recognized as such. When they hide under the legitimacy of a major investment bank, the stakes are higher because they are seen as trustworthy and they have more resources at their disposal. If this crash is going to teach traders anything, it should be that their actions resonate beyond the world of the market, their bank, and themselves.

—Andre Sternberg

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That's Why It's Called the Nobel, Not the Noble

| Fri Oct. 19, 2007 8:55 PM EDT

James Watson, a geneticist who won the Nobel Prize in 1962 for discovering the structure of DNA, was suspended this week from his position at the Cold Spring Harbor Laboratory in New York state, after being quoted in the Times of London saying he was "inherently gloomy about the prospect of Africa," because "all our social policies are based on the fact that their intelligence is the same as ours—whereas all the testing says not really."

Even if Watson, who seems believably mortified by his own words, is in fact a horrible bigot, he's far from the only award-winner to have a less-than-illustrious record. Consider Menachem Begin, who won the Peace Prize in 1978 for helping to negotiate the Camp David Accords and who went on, in the 1980s, to authorize Israel's invasion of Lebanon. And then there is the notorious Henry Kissinger, who received the prize in 1973 for his work on the Vietnam Peace Accords, and yet also orchestrated the secret carpet-bombing of Cambodia.

Perhaps this is all fitting somehow, considering that Alfred Nobel was the inventor of dynamite.

Romney Makes His Pitch for the Values Voters: Family! Family! Family!

| Fri Oct. 19, 2007 8:31 PM EDT

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It's Romney Time! The former Massachusetts governor takes the stage to a standing ovation here at the Washington Briefing. Let's go with a quasi-liveblog, shall we?

He starts hammering the family values message right from the beginning. With little prelude, he says, "I think those that know me would say that I am pro-family on every level, from the personal to the political." He then mentions his 45 children and 8,000 grandkids. Wait, it's more like five and 11. But it's high.

Romney is Mike Huckabee's top competitor for the free-floating Brownback votes. His gameplan for winning them: family, family, family. He's been speaking for fifteen minutes already, and it's been nothing but extolling the virtues of family. Apparently, the strength of America's families will determine our place in the "family of nations." (I could have sworn that had something to do with the military-industrial complex. But what do I know? I don't have 45 kids.) Also, "it really is time to make out-of-wedlock birth out of fashion again." So don't buy illegitimate kids for your fall wardrobe.

Speeches of the Living Dead: Santorum, Blackwell, and Gingrich

| Fri Oct. 19, 2007 6:01 PM EDT

It's a real horror show here at FRC's WB. Former senator Rick Santorum came out to slam Hillary Clinton on abortion, former Ohio secretary of state Kenneth Blackwell came out to jabber about civilization or ideas or something, and former speaker of the House Newt Gingrich came out to talk about how Americans support certain things in massive majorities (prayer in schools, the pledge of allegiance, etc.) only be see their near-consensus on these issues overruled by the courts and the elites in Washington. Newt also selectively chose a bunch of historical facts to make it appear the Founders were strong supporters of faith in government. That's been debunked, fortunately.

Newt also thinks we're going to have a sea change in this country, because large swaths of the country can obviously see we're heading to hell in handbasket. I can't warn you about this conservative revolution because my brain is fried. Completely fried. I can hardly type.

And I still have Romney in two hours. Jesus.

Rudy Falls Off Ronald Reagan's Stool

| Fri Oct. 19, 2007 3:31 PM EDT

Anonymous flier being handed out here at the super-Christian Family Research Council's Washington Briefing:

The American Stool
Designed by Ronald Reagan
INSTRUCTIONS
Step 1. Attach stool leg labeled: "Strong Economy"
Step 2. Attach stool leg labeled: "Strong Military"
Step 3. Attach stool leg labeled: "Strong Family"
DO NOT SKIP THIS STEP!
Someone make sure that Rudy gets a copy of this! He lost his!

The back? Completely blank. No one wants to take credit. What is this, South Carolina?

Only Three Shopping Days Left 'Til the War on Xmas

| Fri Oct. 19, 2007 3:29 PM EDT
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The phony war against the "War on Christmas" seems to come earlier every year. Via ThinkProgress, we learn that WorldNetDaily is already pushing its "Christmas-defense kit" to help "ward off the evil spirits of the ACLU grinches." Having just recovered from the War on Columbus Day, I figured I still had a few weeks before I should start dropping the H-bomb (Happy Holidays!). But while secular America sleeps, WND's been busy: It's even reclaimed Turkey Day too.

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Duncan Hunter is a Scary Man

| Fri Oct. 19, 2007 3:15 PM EDT

dhunter.jpeg I'll just say this about Duncan Hunter— the man could not more be hawkish. At one point in his speech here at FRC's Washington Briefing, he promised more preemptive wars without even bothering to explain why or with whom, saying only that they might be necessary. And almost completely out of the blue, he said, "That little country, that little postage stamp called Israel, has stood by the United States on every major security issue in the Middle East. They should not give back an inch of their land." The room absolutely erupted in cheers—one woman literally jumped up and down. I guess I was unaware of how important Israel is to this community. I wonder why no other candidate has mentioned it.

Tort Reform Brings More Doctors to Texas, But Only for Rich People

| Fri Oct. 19, 2007 1:44 PM EDT

In 2003, Texas voters approved a ballot initiative known as Proposition 12 that helped radically restrict state residents' ability to sue doctors or nursing homes that killed or injured them. Insurance company lobbyists had claimed doctors were fleeing the state because of lawsuits and high malpractice insurance premiums, threatening access to care. Proposition 12 was supposed to fix all that. Not only would doctors rush to Texas for its friendly legal climate, but, supporters claimed, obstetricians would move en masse to the 152 poor, rural Texas counties that had no ob/gyn to deliver local babies.

The New York Times recently declared Prop 12 a huge success because doctors (ob/gyns in particular) are supposedly flocking to Texas now that they don't have to worry about getting sued. One thing the Times didn't point out, though, was that the number of those new ob/gyns who've moved to rural, underserved Texas is exactly zero.
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The Texas Observer this month crunched the numbers, and came to the not-so-startling conclusion that while there may be more doctors in Texas thanks to tort reform, virtually all of them moved into the state's richest suburbs, which were already well-stocked with highly paid specialists. As it turns out, doctors don't shun the Texas sticks because of lawsuits but because they'd just rather live closer to Starbucks and their golfing buddies.

Thompson Speaks With Substance. What?

| Fri Oct. 19, 2007 12:56 PM EDT

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In the speech he just gave to the assembled Christian politicos, Fred Thompson bucked the trend by actually laying out some positions and issue ideas. Revolutionary idea for a presidential candidate...

Mixed with a certain degree of pablum (Examples: "We live in the greatest country in the history of the world. Our obligation is to do everything we can to keep it that way." "We must pass good laws. We must stop bad laws."), Thompson took strong positions on the following issues: (1) Unborn babies. (2) Courts. (3) Gays. (4) National debt. (5) "Global conflict with radical Islam."

Those positions were: (1) Save 'em. When Fred Thompson saw the sonogram of his youngest daughter, he knew he could never be anything but pro-life.

(2) Stop 'em. "Too often, it is our judicial branch of government that violates our approved law." (I thought that was called a check and/or balance?) Courts make our social and cultural rules, Thompson argues, and that's just wrong. We need more judges like Chief Justice John Roberts.

(3) Don't let 'em marry. No elaboration needed.

(4) Fight it. We're leaving near-fatal levels of national debt to future generations, who are too young to have a seat at the table during this discussion.

(5) Win it. Duh.

I'll add three things. Because I like numbering, apparently.

More On How The Weak Dollar Jacks Up the Price of Oil

| Fri Oct. 19, 2007 12:40 PM EDT

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Yesterday I blogged on how the weak dollar is responsible for roughly $30 of the $90 a barrel of crude has (so far) topped out at. And I'm being doubted by some in our comment section and on Digg. Today, more confirmation from the folks at Bloomberg:

Crude oil breached $90 a barrel in New York for the first time as the dollar traded near a record low against the euro, enhancing the appeal of commodities as an investment....
"The weak dollar is pushing the price higher,'' said Simon Wardell, energy research manager with Global Insight Inc. in London. ``It's hard to see how this is going to turn around quickly.''...
The U.S. currency fell to $1.4302, from $1.4279 yesterday, and traded at a record low of $1.4319 earlier in the day.
A lower dollar makes oil cheaper in countries that use other currencies. In U.S. dollars, West Texas Intermediate, the New York-traded crude-oil benchmark, is up 46 percent so far this year. Oil is up 35 percent in euros, 40 percent in British pounds and 42 percent in yen.

I rest my case.

And for you yahoos who can't understand how this can be possible when they've always heard that the price of gasoline is so much higher in Europe...We're talking about CRUDE OIL, people. A raw commodity. Refined gasoline is indeed more expensive in Europe, because, largely, European governments choose to tax it to pay for roads and schools and health care and to discourage people from buying ridiculously big cars. Now you can argue about whether that is a good thing or a bad thing, but at least argue over the same issue.