Felix Salmon

Sky News is using YouTube to host their entire “News Corp will block Google” interview with Murdoch — YouTube

Rick Bookstaber has taken a job at the SEC! This must be good news. Until he gets frustrated and quits. — Bookstaber

Charlie Brooker writes the greatest ever Mac vs Windows column — SMH

90% of people who make economic policy fall into demographic groups where unemployment is comfortably below 5% — Economist

When it comes to supporting same-sex equality, 30somethings look more like 50somethings than 20somethings — Yglesias

Ezra Klein on Nancy Pelosi’s prescience — WaPo

Tim O’Brien worried about Andrew Ross Sorkin hurting the NYT’s “credibility” even as he was publishing Ben Stein — NYM

“Animal Art Fair” to debut in London with “a focus on new talent” — Event

Secret copyright treaty leaks. It’s bad — BoingBoing

The 101st thing a waiter should never do: Try to make off with a half-full bottle of great wine — PEHub

Is Rupert trying to get Bing to pay him for exclusive access to his websites? — BoingBoing

Hershey owns rights to the Cadbury name in the US. Could that hobble Kraft’s expansion plans? — Guardian

Have I mentioned lately how much I love Betsy Kolbert? — TNY

Fun with Google Suggest — Slate

“Borrowers who exhibited lower comprehension and less suspicion were more likely to have adjustable-rate mortgages” — SSRN

How an economic crisis is like a stalling aircraft (and employment is like altitude) — Fallows

Thermodynamics shows US chief executives are paid nearly 130 times too much — Justatheory

The Great Australian Internet Race. Carrier pigeon vs automobile vs ADSL. Who will win? — YouTube

Wherein Barry Ritholtz calls Rolfe Winkler “a thinking man’s Felix Salmon” — Ritholtz

Elyssa Pachico has an excellent round up of the No Pago movement in Nicaragua, which is threatening the future of microfinance in that country. While most of the reporting on the issue has been pretty one-sidedly in favor of the microlenders, mass protests don’t rise out of nothing, and in this case the initiating outrage seems to have been the arrest of six people with overdue debts in Jalapa by a lender called Pro Credit.

The fact is that there are good and bad microlenders, and that it’s a statistical certainty, given the number of such lenders in Nicaragua, that a pretty large number of them are bad. (Borrowing cheaply in dollars, lending at high rates in local currency, and acting only with an eye on their own bottom line — standard predatory lending, basically.)

Nicaraguan president Daniel Ortega has failed to condemn the protests, which are surrounded by all manner of rumors. You just knew that Hugo Chávez would be involved somehow:

Complicating matters is the widespread suspicion among No Pago opponents that the real intention behind the movement is to drive MFIs out of business, forcing poor farmers to seek credit through Alba-Caruna, a credit union created by Ortega’s government that is partly responsible for handling aid money from Venezuela. In one strange twist of events, a letter supposedly signed by Omar Vilchez was unearthed last January, in which he promised unwavering support for Ortega’s political initiatives in exchange for dismantling the microfinance industry.

“It is necessary to combat the financial system privatized in 1990, to stop depending on MFIs and banks, so that all can work with the people’s bank, with Alba Caruna, which gives us fair interests rather than usurious ones,” the letter states.
Vilchez has vehemently denied that he ever wrote such a letter, even offering to have his handwriting examined by the police so as to prove that his signature was forged. The leaders of the No Pago movement have repeatedly rejected the accusation that they are working in cahoots with Ortega’s government, asserting that they are independently funded and politically autonomous.

My feeling is that microfinance works best when it’s domestic, autonomous, and where the microlenders are cooperatives owned by their own clients. In general I get suspicious when the lenders and the borrowers come from very different populations, and even more suspicious when they come from different countries. If westerners want to support microfinance, they should do so with grant equity, not through loans: the debt in the organization should be local.

I’m beginning to sniff the beginnings of a backlash against microlending: the NYT, for instance, today covers a pretty minor development at Kiva, which has recently changed its documentation to make it more obvious that its US lenders are supporting microlenders rather than lending directly to borrowers. (But they take the full credit risk of an individual borrower, which is one reason I’m not a huge fan of the Kiva model, except as a way of giving ordinary Americans a real connection to policies and people in far-flung countries.)

Microlending can do good, but it can also do harm. And when tens of thousands of borrowers start threatening their local microlenders, that’s prima facie evidence that something has gone horribly wrong. And that the microlending movement, in the country in question, might have gotten rather ahead of itself.

Good on the AP for FOIAing the details of how cash-for-clunkers played out:

The single most common swap — which occurred more than 8,200 times — involved Ford F-150 pickup owners who took advantage of a government rebate to trade their old trucks for new Ford F-150s. The fuel economy for the new trucks ranged from 15 mpg to 17 mpg based on engine size and other factors, an improvement of just 1 mpg to 3 mpg over the clunkers.

It gets worse:

In at least 145 cases the government reported consumers traded old vehicles that got better than or the same mileage as the new vehicle they purchased. A driver in Negaunee, Mich., traded a 1987 Suburban that got 18 mpg for $3,500 toward a new Silverado pickup that got only 15 mpg. An Indianapolis driver traded a 1985 Mercedes 190 that got 27 mpg for $3,500 toward a new Volkswagen Rabbit that got only 24 mpg.

In at least 15 deals in nine states, owners of large pickups cashed in old trucks for between $3,500 and $4,500 toward new Hummer H3 SUVs that got only 16 mpg.

I think this is safely the worst policy implemented to date by the Obama administration: it has almost nothing in the way of redeeming features. Let’s hope it was some kind of weird aberration.

(HT Hiskes, via)

Bill Black makes mincemeat of the idea that the government can and should keep a top-secret list of systemically-dangerous institutions which are subject to “heightened prudential standards”:

I’ll put aside for a later time discussing the obscenity of proposing that the American people be kept from learning which banks are SDIs and can secretly tap the U.S. Treasury and the Fed for unlimited funds. I’ll also mention only in passing the hilarity of Congress proposing that we can successfully create a super secret society of those, including some members of Congress, who will know which banks are on the list – and will never leak.

Here, I want to emphasize the investor. The drafters have forgotten that the SEC mandates the disclosure of material information to investors. The fact that a bank is on the secret list is extraordinarily important to investors. So, the bill as drafted would create a system in which the banking regulators and Congress must keep the DOUBLE SECRET PROBATION list secret – but the banks must publicly disclose that they are on the list. Of course, it’s possible that the Treasury and the Fed – you remember, the folks that tell us constantly about their commitment to “transparency” – are actually so insane that they will propose amending the securities disclosure laws and destroy the entire concept of mandating that publicly traded companies disclose material information to investors.

Obviously, there would be a stigma involved were a bank to go onto this list. But equally obviously, the whole point of having this list in the first place is that such banks are too big to fail. Which means that the banks’ investors can have some little faith that they managed to make a moral-hazard play instead of simply investing in a bank going down the tubes.

In any case, as Black says, it’s hardly the job of regulators to keep from investors the fact that their bank is looking shaky. Either banks are small enough to fail, in which case there are no systemic problems if lots of investors try to exit at once. Or else they’re too big to fail, in which case it’s the job of regulators to reassure the markets that a backstop exists — rather than to try to keep those markets in the dark. The plan as it stands is just idiotic.

Another great chart from the people at nytimes.com: this one shows how unemployment has risen among various different segments of the population, since January 2007. Here’s what’s happened to the 12-month average employment rate for black men without a high-school degree under 25 years old:

Meanwhile, here’s the chart for white women ages 25 to 44 with a college degree:

In September, Tyler Cowen picked Berlin as his “preferred exile”:

There would be plenty of art and music, lots of smart people to talk to, access to other good locales, and the near-certainty of public order, yet with bearable winters and good health care.

Today, on the 20th anniversary of the fall of the Berlin Wall, he’s not so enthusiastic:

I like spending time in Berlin. But I am never sure I like Berlin itself, West or East. Berlin is Germany being imperial. Berlin is Germany looking toward the east. Today Berlin is Germany pretending it is normal, while not yet having a new identity.

Maybe the change in tone is a function of all the news coverage about Berlin right now, all of it concentrating on the city’s historical importance. But the fact is that for all Berlin is now the capital of the most important country in Europe, it’s still, as its unofficial slogan puts it, arm, aber sexy. (Poor, but sexy.)

I spent four months in Berlin in 2008, and never once did I think of it as “being imperial”. Being grungy is more like it. The most imperial thing in Berlin is the Reichstag, which, after it was wrapped by Christo, was topped by Norman Foster with a transparent dome and opened to the public in as non-threatening and enjoyable a manner as he possibly could. Can Berliners be rude? Yes. But not in an imperial way, more in a sullen way.

Berlin has celebrated mainly itself since the wall went up, and even more so since the wall came down. It was always exceptional in many ways, being divided into quarters given to each of the Allied powers, and being a domicile of choice for young West Germans looking to avoid military service. With the exception of a flurry of construction activity in the early 90s, money has never had much interest in Berlin: it’s much more famous for the Love Parade.

Neither Berliners nor the rest of Germany consider the capital to be particularly German. Instead, it’s a historical anomaly, most of which was literally walled off from the rest of the world for 30 years, and all of which remains a very long way from any other major city. When you’re in Berlin, with its dearth of high-speed rail lines, you don’t feel particularly connected to the rest of Europe: instead, you feel the freedom associated with being distant from the concerns of others. I love the city, and I send it all my love on this special day. Long may it retain its singular character.

Gabriel Sherman has a long profile of Andrew Ross Sorkin, which spends a lot of time talking about Sorkin’s problematic status within the NYT in general and the Sunday Business section in particular. But all big companies have internal politics. What’s interesting is what the story says about the NYT’s devotion, or otherwise, to serving its readers by giving them the information they want.

For instance, here’s Sorkin launching DealBook:

It was a radical idea for the Times. The paper had never aggregated outside news under its flag before, and Sorkin had to convince his skeptical bosses that the paper could point its readers to competitors.

And here’s Sorkin asking a NYT colleague, Tim O’Brien, for information a pair of fellow reporters had FOIA’ed:

“I also told him that my reporters on the piece, Don and Gretchen, would probably be uncomfortable simply handing over documents to him that they had spent a lot of time and energy to find, analyze, and report on,” O’Brien told me by e-mail.

As John Cook notes, this is silly at best:

The grand irony of this flap is that much of it would have been rendered moot had the Times simply done what Sorkin did so effortlessly: Put the documents at issue online… That’s another Timesworld disconnect between the youthful web-focused culture and the old-school diggers—after Van Natta and Morgenson spent months working to get access to the documents, they apparently didn’t think to push their editors to share the originals with their readers.

I’m constantly amazed at the number of stories in the NYT which are based on primary sources the paper refuses to put online. In a tiny handful of cases, revealing the document might endanger a source or otherwise be inadvisable. But there’s no good reason not to publish documents received as the result of an FOIA request.

The NYT tends not to publish documents it uncovers as part of its investigations; one NYT reporter told me once that editors, when asked about the policy, mumbled something about copyright. It’s an untenably old-school approach, and serves mainly to promote turf wars and jealousies. The NYT has the best newspaper website in the world; its reporters should be encouraged to make full use of it.

The WSJ has an interesting Ken Lewis profile today:

If there was a bank executive who seemed to have the mettle to withstand today’s regulatory and market pressures, it was Ken Lewis. The Mississippi native clawed to the top of Bank of America. After succeeding his mentor, Hugh McColl Jr., as chairman and CEO in 2001, Mr. Lewis kept up a blistering pace of acquisitions and tight control of operations at the bank, which expanded to $2.3 trillion in assets from some $620 billion.

But I think this misses a crucial point. Ken Lewis was always a momentum play, as most acquisitive CEOs are. So long as things are going well, they’re going great. But the minute their stock starts dropping and they lose that sense of inevitable global domination, things can fall apart very quickly indeed.

This is partly a function of scales dropping from the board’s eyes, as Carrick Mollenkamp and Dan Fitzpatrick explain. But it’s also a question of character: some CEOs are emboldened when their companies go through a rocky patch, while others are weakened — and Lewis is clearly one of the latter. (John Mack, who famously told Tim Geithner to “get fucked” at the height of the crisis, would be one of the former.)

In other words, Lewis never had the mettle to withstand regulatory pressure, should it ever arise. Other acquisitive CEOs like Sandy Weill are the same way. They’re like central banks intervening in currency markets: they can push regulators to move further in the direction they’re already moving, but they can’t push back once regulators become aggressive. That’s why Weill stepped down, and that’s why Lewis stepped down too.

At least between, say, $3 and $6 per bottle:

Supplying wine to sell at $5, $4, $3 or even two bucks per bottle is not that difficult once you set out to do it. Cheap surplus grapes, cheap surplus wines, low-cost winemaking processes and economies of scale all contribute to extreme value supply. Nope, supply is easy. The challenge, until recently at least, has been selling the stuff.

Studies have repeatedly shown that wine drinkers are influenced by price – but not in the way you learned in Econ 101. A lower price does not always produce more sales because insecure buyers infer quality from price. They assume that higher price means better wine.

I’d like to see some empirical data here, but intuitively it’s at least possible that raising a wine from $3 to $6 per bottle might increase rather than decrease sales. That seems to be changing, as Mike Veseth explains in the rest of the article. But let’s say it holds true here, or once did. This isn’t a case of Veblen goods: drinking a $6 bottle of wine hardly counts as conspicuous consumption. Is there a name for this phenomenon? And is it found elsewhere?

Update: “Fred Engels“, in the comments, makes the excellent point that there’s another place this phenomenon is often found: the stock market, where demand often rises as the price of a stock goes up.

The GAO reports on the TSA. File under “why doesn’t this surprise me”:

TSA lacks assurance that its investments in screening technologies address the highest priority security needs at airport passenger checkpoints. Since TSA’s creation, 10 passenger screening technologies have been in various phases of research, development, test and evaluation, procurement, and deployment, but TSA has not deployed any of these technologies to airports nationwide… Deployment has been initiated for four technologies–the ETP in January 2006, and the advanced technology systems, a cast and prosthesis scanner, and a bottled liquids scanner in 2008… in the case of the ETP, although TSA tested earlier models, the models ultimately chosen were not operationally tested before they were deployed to ensure they demonstrated effective performance in an operational environment. Without operationally testing technologies prior to deployment, TSA does not have reasonable assurance that technologies will perform as intended.

(Via Fallows)