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Sunday, May 14, 2017

Review: The Devil's Casino: Friendship, Betrayal, and the High Stakes Games Played Inside Lehman Brothers by Vicki Ward

A fascinating look at the rise and fall of Lehman Brothers, an investment bank that went bankrupt as a result of hubris and wild speculation in the real estate market and the people that rose and fell with it. I have read numerous books about the tragic effects of credit default swaps and other speculative financial “instruments” that, while the market continued to go up, made spectacular fortunes for people who came to believe they could do no wrong.

The author had access to the notes and journals of Joe Gregory (who ironically refused to be interviewed,) the company’s president. He began the journals in 2003 by encouraging executives to write up they perceptions of the history of the firm. He discovered a huge disparity (as any historian could have predicted) in their accounts and abandoned his goal of writing a history. Those piles of notes proved invaluable to the author.

The company, under its CEO Dick Fuld, who had worked his way up and was with them his whole forty year career, developed its own lavish lifestyle. "As a Lehman wife, you raised your kids by yourself. You had your babies by yourself in the hospital. And then you were supposed to be happy and pretty and smiling when there was an event, and you really would have liked to strangle somebody,” a senior executive's wife explained. Executives were told what to wear, what charities to donate to, how to spend their time, it was a nice little capitalistic oligarchy. " Lehman was the last of the Wall Street firms to go casual on Fridays.” They were extremely competitive and cutthroat. That single-mindedness lead Time to labeled Fuld as one of 25 executives in the country most responsible for the collapse of 2008.

Many people blame the catastrophe on the repeal of Glass-Steagal which had prohibited banks from speculating with their customer’s assets. That’s probably overly simplistic and hardly mentioned in this book that focuses more on the personalities than the precise speculative strategies that inevitably ballooned into an unsustainable bubble. All of Wall Street conspired to create more and more ways of loaning money and then turning those high-interest, often sub-prime, loans into ways of betting money. As long as prices went up everything was rosy; the collapse was spectacular.

The section on Paulson and Geitner’s roles in the “bail-out” is quite interesting. It probably won’t change any minds on whether Lehman should have been bailed out, too or not. And that’s probably my biggest complaint. I would have liked to see conclusions from the author (with evidence for or against) for whether it indeed should have been done. But then again, the book was more about Lehman and that would have widened the scope. It’s a fun, breezy, cautionary book about a sad time that hurt a lot of people but probably not those who should have been hurt. It was published in 2010 so don’t expect the longer view which I need to read.

The blame, however, ultimately belongs to all of us. We all want and need the stock market and Wall Street to thrive and support pension funds, etc., without which we would all be in terrible shape. That said, a return to more regulation would be in all our best interests.

And who said the monarchy was dead. It thrives in the business world. Trump should know.

Sunday, May 07, 2017

Review: The Boom: How Fracking Ignited the Energy Revolution and Changed the World by Russell Gold

Russell Gold is a Wall Street Journal reporter whose family had purchased a small Pennsylvania farm as a retreat from Philadelphia.  His parents were approached by an oil company offering them $400,000 plus royalties for the right to drill under their land. Being old time sixties environmentalists they were reluctant but it’s a lot of money and since almost all their neighbors had bought in they figured they might as well. He returns to their story periodically throughout the book to highlight the personal conflicts people have.

Gold provides a riveting account of the development of fracking from its extraordinary technological success to its environmental impacts.  It’s truly astonishing that this intricate technology has resulted in the United States becoming a net energy exporter barely a decade after “peak oil” had been proclaimed. The book mixes technical details with profiles of the major players, often focusing on the financial details, which can’t be easily separated from the evolution of oil drilling.

It’s perhaps ironic, that most of the anti-fracking environmental antagonism comes from geographical areas not affected by the drilling. Larger cities that depend on natural gas and heating, for example, have become hotbeds of anti-fracking activity, yet those people are little affected by the economic and environmental plusses and minuses of the activity except for lower prices for energy.

Some of the allegiances formed to promote fracking are interesting.  The Sierra Club worked with Chesapeake Energy to fight the development of coal plants in Texas and elsewhere, arguing that global warming was a far greater threat.*  That Chesapeake was giving them substantial amounts of money didn’t hurt either, but the environmental group has become split among those favoring just conservation opposed to some realists arguing that it’s better to focus on energy that reduces the carbon footprint like natural gas and nuclear power. Ironically, the shift to natural gas means the U.S., which hasn’t ratified the Kyoto protocols, will come closer to meeting the reduction in carbon emissions than any of the signatories.

Gold says that’s a very good thing and supports fracking (the reason why it’s now spelled that way as opposed to the more technically popular “fracing” is interesting) but notes the industry and regulators need to work on better sealing of the wells which is where most of the problems arise. Surprisingly, there was no mention of fracking-generated earthquakes, although perhaps being published in 2014, the concern had yet to be raised.

No energy generating process is unopposed.  Dams drown villages; mines are dirty and dangerous; transporting fuel in pipelines, ships, and trains risks spills and fires; drilling is obnoxious, wind generators destroy the landscape and kill birds; and nuclear, in many ways the least harmful, suffers from ignorance of new technology and problems of early technology.

A very interesting read.



*Stewart Brand of Whole Earth Catalog fame has embraced GMOs, nuclear energy, and other technologies, arguing that global warming is the greatest threat.  An interesting article detailing his evolution in thinking is http://e360.yale.edu/features/stewart_brands_strange_trip_whole_earth_to_nuclear_power


Saturday, May 06, 2017

Review: The Run of his Life: The People versus O.J. Simpson by Jeffrey Toobin

I remember the intense discussions surrounding the trial and the O.J. trial and the passions it engendered. We didn’t have over-the-air TV at the time (still don’t and don’t care) so we could only follow in the newspapers and on the radio.

Recently we watched the docudrama based on this book. It’s excellent and those participants who are still with us have indicated it’s quite accurate. I’ve always enjoyed Toobin’s books so I looked this one up; it’s spellbinding, providing a lot more detail and background than the TV show ever could.

To those insisting the jury should have found OJ guilty, I reply that the jury saw only a fraction of what TV viewers saw. They were sequestered for close to eight months with no access to TV or newspapers (the section on the jury revolt is entertaining) and of the original 12 seated jurors, only three remained by the end of the trial. I don’t know what would have happened had they run out of alternates and that was close to happening. The jurors were treated like prisoners for the many months of the trial, often being sent out of the court while the lawyers argued over interesting points of law, many times with attendant fireworks. They were not permitted TVs or radios, had their newspapers censored and cut up, had their room keys taken away every night, and were permitted one “conjugal” visit per week with their spouse. Conversations with other jurors were monitored to make sure they didn’t talk of the trial.

Couple all this with the long history of police abuse of blacks in Los Angeles and you have a recipe for the verdict. Toobin sets the stage with a short history of the LAPD. It was another of those unintended consequences where an attempt to do something really good backfired in the long run. In an effort to eliminate the rampant corruption that had become the LAPD, it was separated from the highly political world and redesigned to become a more meritocracy. The LAPD became an entity unto itself, completely unaccountable, very self-defensive, and unfortunately a bastion of white privilege and racism.

Toobin gives a great deal of credit for the verdict (aside from a lot of prosecutorial arrogance and incompetence) to Barry Scheck (one of the early founders of the Innocence Project) on the defense team whose meticulous study of the DNA evidence and development of the complicated almost self-contradictory theory that the LAPD was both incredibly incompetent while being sinisterly brilliant. He worked tirelessly, unlike the more famous lawyers on the team who often seemed more interested in their own careers than their client’s future. Scheck’s theory melded perfectly with Cochran’s race-oriented approach and between the two provided mountains of doubt for the jury to deliberate.*


Ultimately, the question came down to reasonable doubt. A key moment was when Furman pled the fifth when he was asked if he had manipulated the evidence. That alone would supply enough reasonable doubt, not to mention the debacle with the glove, I would have voted for acquittal, too. The trial testimony reeked of reasonable doubt in spite of overwhelming physical evidence of Simpson’s guilt.

Some very amusing phrases by Toobin: “On the night of the murders, the jury learned, Kaelin spent from 7:45 to 8:30 P.M. in O.J.’s Jacuzzi—a marination of almost superhuman duration;” and describing one of the prosecutors as “ a trial lawyer with the stage presence of a voice-mail attendant.”

*A comment on how Schenk’s actions in the Innocence Project and the Simpson trial might appear at odds: “According to Richard Lewontin, a professor of population genetics at Harvard, ‘Unlike most lawyers, Barry and Peter really know what they’re talking about when it comes to the technology. When they’ve defended clients, they’ve done brilliant work in showing the problems with the DNA labs. On the other hand, I have to say, they have no compunction about supporting the technology when it’s useful for the defense. They are defense attorneys—and they’re not always consistent, because they’re defense attorneys.’ “

Thursday, May 04, 2017

The Kansas City Archdioceses and the Girl Scouts

The Archdiocese of Kansas City has embarked on a silly crusade against the Girl Scouts, arguing that the Girl Scouts are somehow allied with Planned Parenthood and therefore not in tune with Catholic values. Fine. Aside from the Catholic tradition of protecting pederasts (see Our Fathers: The Secret Life of the Catholic Church in an Age of Scandal by David France, innumerable other books, not to mention the Ferns report in Ireland that documented widespread sexual abuse by Catholic priests and many other books and articles,) the church has embarked on a path that seeks to force those of different religious persuasions to adopt their view. The Girl Scouts position is clear

One argument is that there is no explicit right to abortion in the Constitution. Explain to me where there is *not* that right. There are plenty of unenumerated rights. That's the whole point of the 9th and 10th amendments. Individuals have every religious right to be against abortion under the free exercise clause, but the establishment clause prohibits government from providing support for any(!) religious belief system. The Catholic Church in recent years (contrary to their stated positions during the anti-Catholic wave when Kennedy was running for president) is trying to force society in general into adopting their anti-sex, anti-abortion, anti-contraception, very narrow religious point-of-view, and trying to get government (read their position in the Hobby Lobby case not to mention Notre Dame's silly argument that was destroyed by Posner in the 7th Circuit) to enforce their religious views. That's a violation of the Establishment Clause.

Another argument is that murder was against the law at the time of the writing of the Constitution. Certainly. But abortion as murder is a relatively recent phenomenon. Even St Thomas Aquinas didn't consider abortion to be murder until the "quickening" of the fetus, something that occurs around the 20th week. (The idea that a fetus could be human before the formation of the cerebral cortex is ludicrous.) "Although Bracton said that abortion of a quickened fetus was homicide, later writers insisted that it could not be homicide at common law. The proposition that abortion cannot be homicide is reiterated by practically every major writer on English criminal law, from William Staunford and William Lambard in the sixteenth century, through Edward Coke and Matthew Hale in the seventeenth century, to William Hawkins and William Blackstone in the eighteenth century. Homicide was agreed to require the prior birth of the victim."* The writers of the Constitution were intimately familiar with those writers. Abortion was an ecclesiastical offense. Don't inflict your narrow religious views on the rest of us. We believe in the free exercise of religion, not the free exercise to practice only one form of religion.

Even more ironically, if the Catholic Church had any sense, they would be supporting Planned Parenthood, which promotes and supports contraception. Preventing pregnancy obviously reduces abortion. If they were really serious about opposing abortion, they would be standing on the street corners handing out condoms.

*Read more: Abortion - Abortion In English Law - Fetus, Quickening, Homicide, and Century - JRank Articles http://law.jrank.org/pages/445/Abortion-Abortion-in-English-law.html#ixzz4g8VDscBJ

Other excellent reading is "Facts of Life: Science and the abortion Controversy" by Harold Morowitz
and The True Meaning of the Establishment Clause