Opinion

The Great Debate

Insider traders are still trying to get it right

Sylvester Stallone once told an interviewer about advice he got from Carl Icahn when they were discussing investments. “The dumbest guy on Wall Street is smarter than you,” Icahn warned him. “Keep your money in the bank.”

The stories behind the scores of insider trading convictions since 2007 make me think Icahn might have been wrong.

Three more Wall Street types were busted this week for running an insider trading scheme that spanned five years and involved over a dozen corporate secrets. Their modus operandi — passing information from lawyer to middleman to trader — was almost identical to the one used by Matthew Kluger, Kenneth Robinson, and Garrett Bauer, who were arrested in 2011.

In a cinematic twist on detection avoidance, the middleman in this week’s case destroyed evidence by eating the Post-it notes and napkins on which he wrote company names, according to the criminal complaint. Apparently this didn’t work any better than the throwaway phones Kluger, Robinson, and Bauer used when they attempted to avoid detection.

The Kluger/Robinson/Bauer case might be worth some study for the next group of guys who want to cheat honest investors and not get caught.

The serious costs of weak CIA oversight

In her angry broadside at the CIA on the Senate floor last week, Senator Dianne Feinstein (D-Calif.), the Senate Intelligence Committee chairwoman, said, “I have grave concerns that the CIA’s search … may have undermined the constitutional framework essential to effective oversight of intelligence activities or any other government function.”

She is right.

Congress has the constitutional authority to do robust oversight of executive branch activities.

Lost in the noise about who spied on whom in this continuing fight between the Senate Intelligence Committee and the CIA over release of a massive report on interrogations, is the history behind the skirmish.

Reaching for a deal on Crimea

There is a disturbing air of inevitability in Western capitals surrounding Russia’s annexation of Crimea. A growing consensus views this scenario as a rough analogy to  Moscow’s recognition of Georgia’s breakaway regions of Abkhazia and South Ossetia after the 2008 war — perhaps more severe, but still manageable.

Such complacency is misplaced, however. The consequences of the annexation of Crimea are not manageable. The moral high ground we currently occupy isn’t worth it.

Despite Russian President Vladimir Putin’s triumphalist speech on Tuesday, the United States and the European Union should not assume that Crimea is lost. Instead they should be working overtime to prevent annexation.

Executive orders: Part of the framers’ grand plan

President Barack Obama has used his executive authority to stop deporting undocumented immigrants who had been brought to the United States as children. The administration has also announced that it will stop requesting mandatory minimum sentences for low-level, non-violent drug offenders.

Obama is now using executive orders and other unilateral exercises of executive power to advance his agenda rather than wait on Republicans in Congress.

The GOP has grown increasingly outraged by the president’s actions. House Republicans last week passed the “Enforce the Law Act,” part of a continuing campaign to label any action by the president as “executive overreach.” House Speaker John Boehner (R-Ohio) earlier this year felt the need to “remind” the president that “we do have a Constitution.”

How to trust BP again

The Environmental Protection Agency is allowing BP to once again bid on new leases in the Gulf of Mexico — which could happen as early as Wednesday.

As a condition of lifting its ban, the E.P.A. last week issued 53 pages of requirements for the company, which now must create a beefed-up code of conduct for employees; establish a zero tolerance policy for retaliation against whistleblowers; train senior leaders in ethics, and dole out bonuses related to issues like safety and environmental sustainability.

But BP had much of that in place before the 2010 Deepwater Horizon disaster, which killed 11 people and spilled millions of gallons of oil into the Gulf of Mexico. During my time as a manager of policy development at BP (which ended in 2008), I had to certify every year that I complied with the company’s code of conduct. I used the company hotline when I thought a manager was behaving inappropriately, and was impressed by how my complaint was handled.

from Anatole Kaletsky:

Janet Yellen’s moment

When Janet Yellen chairs her first meeting of the Federal Open Market Committee Tuesday and Wednesday, she will be presented with a once-in-a-generation opportunity that even her predecessors in the world’s most powerful economic position have rarely enjoyed.

Not only can Yellen alter the guidance on interest rates with which the FOMC has been steering global financial markets. Beyond that she could do something far more profound and exciting: transform an entire generation’s way of thinking about economics, market forces and the role of government in achieving and maintaining prosperity.

To start with the obvious, Yellen will almost certainly change or simply abolish the unemployment “threshold” of 6.5 percent announced early last year as a reference point for the FOMC to start considering the possibility of higher interest rates -- perhaps setting a threshold of 5 percent or so. More radically, she could supplement the objective of lower unemployment with a range of other indicators that will need to improve before the Federal Reserve even considers any monetary tightening: for example, accelerating gross domestic product growth; strengthening productivity trends and eliminating the excess capacity in many industries that is now discouraging investment, hiring and productivity growth, as well as holding down corporate pricing power.

Putin’s imperial hangover

President Vladimir Putin’s impulsive incursion into Ukrainian territory has left Russia more isolated than at any time since the Cold War. Predictably, the European Union and the United States have loudly objected. More to the point, however, no country has rallied to Russia’s defense.

Such deafening silence reflects the degree to which Putin’s thinking is out of step with the modern world. With this action, Putin has revealed himself to be an imperial thinker in a post-colonial world.

Putin grew up at a time when Russia was the unquestioned center of a communist empire that had managed to suppress national challenges for decades. So while the rest of the world was dismantling their empires and transforming colonies into nations, the Soviet Union retained its empire until 1991. Putin — as the leading representative of the last Soviet generation — acquired the mindset of Russia’s natural hegemony and never accepted the post-Soviet republic’s place in the expanding community of nations.

from Reihan Salam:

How to fix higher education

America’s elite higher education institutions are the envy of the world. Foreign students flock to the oldest and wealthiest U.S. research universities to take advantage of resources that are unparalleled, thanks to the deep pockets of many centuries’ worth of captains of industry.

Yet when we consider the post-secondary institutions that educate the typical American high school grad, we see a very different picture. While the share of Americans who enroll in higher education has grown substantially in recent decades, graduation rates have been stagnant.

Community colleges promise an affordable education to millions of students, but they often fail to offer the courses students need to complete a degree in a reasonable amount of time. Public colleges and universities churn out graduates who are forced to take jobs that don’t actually require a four-year post-secondary education. Most private non-profits do the same, and they’re also notorious for charging obscene tuition that their graduates can scarcely afford. And private for-profits, which have grown enormously by taking on some of the hardest-to-accommodate students, stand accused of loading up their students with debt without offering them marketable skills.

from Jack Shafer:

The jumbo coverage of Malaysia flight MH370

When a big story breaks, my news digestion knows no satiety. Earthquake, assassination, invasion, bank run, political campaign, celebrity court case, sport scandal or a drunk stubs his toe on the Lower East Side -- I can handle anything the press swarm sends at me.

So unlike Fox News press reporter Howard Kurtz ("It’s too much with too few facts," he said last week of the saturation reporting by his former network, CNN, about Malaysia Airlines Flight MH370), I can handle any "over"-coverage the news machine chooses to throw my way. By handle, I usually mean avoid, but on a story like MH370, I desire the sort of coverage that could fill the Indian Ocean, which I did not know until last week had an average depth of 2.5 miles.

That fact was only one of the scores of news nuggets I've chewed and swallowed since the airliner was reported missing on March 8. While I'm aware that the flight's fate, its back story, and repercussions will have no impact on my life, and that there aren't enough degrees of Kevin Bacon to connect me to 95 percent of the missing passengers, I have clawed my way through stories and even stayed up at night to learn about transponders, the different kinds of radars, the stolen passport business, the number of air strips within MH370's flight range that could have accommodated a landing, general Malaysian political incompetence, Southeast Asian geography, satellite telemetry, international relations, black boxes, the workings of the Malaysian criminal justice system, the Andaman Islands, life raft locator radios, search technologies, air navigation and more. One measure of my devotion to this story is that I even watched an oceanographer talk on Charlie Rose about the missing aircraft.

To punish Putin, help Ukraine

Sunday’s referendum in Crimea and provocative Russian troop maneuvers have raised the Ukraine crisis to new heights.

Congress has expressed strong support for Ukraine and condemned Russia’s seizure of Crimea. Unfortunately, some on Capitol Hill are pushing ideas that would do little to punish Moscow while undercutting U.S. and NATO security interests. Congress needs to be smart in how it seeks to help Ukraine and punish Russia.

A whirlwind has engulfed Ukraine since former President Viktor Yanukovich fled Kiev on February 21 and the Russian military occupied Crimea one week later. In response, Democrats and Republicans have backed Ukraine, called for Moscow’s international isolation, and supported steps to assure NATO allies in Central Europe.

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