The Hipsterfication Of America

by Linton Weeks, NPR

The hotel lobby in Franklin, Tenn., has an ultra-urban loft-esque feel — exposed air ducts, austere furniture and fixtures, music videos projected onto a flat panel. Everywhere there is lava-lampish aqua and amber lighting.

Sale racks near the front desk display chargers for iPods and BlackBerrys and a variety of snacks, including Cocoa Puffs and Red Bulls. Every room features a media box for digital video and music.

Welcome to Aloft, a hipster hotel on the outskirts of Nashville.

Nearby are Plato's Closet, a recycled-clothing store where hipsters shop, and Which Wich, a sandwich shop — touting its "edgy, magnetic environment" — where hipsters eat.

On the streets of Franklin and Nashville and almost every town throughout America now, hipsters scuttle by on scooters, zip around in Zipcars or Smart cars, roll by on fixed-gear bikes or walk about in snazzy high-top sneakers and longboard shorts. They snap Instagram photos of each other — in black skinny jeans and T-shirts with funky epigrams like "If You Deny It, You Are A Hipster" — and turn the pix into iPhone cases. They buy cool-cat snuggle clothes at American Eagle and down-market monkey boots at Urban Outfitters. They drink cheap beer, listen to music on vinyl records and decorate their lairs with upcycled furniture.

What's funny is that people who aren't hipsters generally express distaste for them and those who appear to be hipsters hate to be identified as such. Everybody hates hipsters ... especially hipsters.

They follow indie bands and camp out at Occupy movements. They work as programmers and shop clerks, baristas and bartenders. They are gamers and volunteers, savvy entrepreneurs and out-of-work basement dwellers.

In case you haven't noticed, hipsters — and those who cater to them — are everywhere. And that really galls some hipsters.

The Ironic Hipster

"Hipster culture is omnipresent," says Peter Furia, a founder of Seedwell Digital Creative Studio in San Francisco. "It dominates fashion, music and lifestyle. It crosses borders of ethnicity, socio-economic status and sexual preference — something that we haven't seen since the boom of hip-hop culture."

Furia's studio is producing a documentary-style Web series, American Hipster — for its nascent YouTube channel — that will debut in April 2012. "What's funny is that people who aren't hipsters generally express distaste for them and those who appear to be hipsters hate to be identified as such. Everybody hates hipsters ... especially hipsters. And the ironic part is that hipsters' opposition to pop culture has become pop culture."

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Photo: Mike Blake/Reuters /Landov

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The Probability of Your Existence: Basically Zero

by Juliana Breines

At some point after first learning about the birds and the bees as a child (possibly after watching the opening credits of Look Who's Talking or thinking too hard about the implications of Back to the Future), it occurred to me that I could have easily been someone else. Had my parents not happened to meet when they did, and happened to conceive at the moment they did, with a specific pair of egg and sperm, I wouldn't be here. Apart from being a minor existential crisis, this realization made me feel incredibly lucky. Out of an infinite number of possible people, I was one of those who got a chance at life.

I recently came across a lovely (if statistically questionable) visual demonstration of one person's attempt to approximate the odds that each of us came into the world and exist as we are today. It incorporates probabilities ranging from our parents' first encounter to our unbroken line of ancestors to the emergence of the first single celled organism, concluding with the following analogy:

The probably that we as unique individuals came to be is equivalent to "the probability of 2 million people getting together each to play a game of dice with trillion-sided die. They each roll the dice, and they all come up with the exact same number - for example, 550, 343, 279, 001. The odds that you exist at all are basically zero."

From a psychological perspective, this realization may induce a sense of awe. In a seminal paper, Dacher Keltner and Jonathan Haidt define awe as an emotion that is characterized by vastness (perceiving something that is much larger than the self, physically or psychologically) and by a need for accommodation (a struggle to comprehend something that does not easily fit into existing ways of seeing the world). The double rainbow guy of youtube fame, for example, is clearly in a state of awe (and probably also on drugs).

Awe can be elicited by interpersonal experiences, such as being in the presence of a powerful leader, or having an encounter with God or the supernatural, by physical experiences, such as witnessing a beautiful sunset or a natural disaster, or by cognitive experiences, such as trying to comprehend a grand theory (or an idea as seemingly simple as one's own existence). Research on awe suggests that it involves both a feeling of personal smallness and a sense of connectedness with something larger than the self. Awe-prone individuals (those who tend to have their minds blown more often than most) were found to define themselves as belonging to more universal categories (e.g., "an inhabitant of the earth").

In addition to feeling awe-struck by the near impossibility of your existence, you may also feel another emotion that has attracted the attention of psychologists in recent years - gratitude. Reflecting on near misses can increase happiness and appreciation, as Amie discusses in a previous post. So with Thanksgiving approaching, why not include on your list of things to be grateful for the fact that, against all odds, you and your loved ones made it into the world in the first place.

Keltner, D., & Haidt, J. (2003). Approaching awe, a moral, spiritual, and aesthetic emotion Cognition & Emotion, 17 (2), 297-314 DOI: 10.1080/02699930302297
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Photo: thomasje

Austerity Alternatives

by George Zornick, The Nation

On the eve of some decision by the supercommittee—or no decision and painful automatic cuts—this is a time to remember the other ideas out there for balancing the budget. There are plenty of credible and thoughtful plans out there. Granted, they are not politically viable at the moment, given the Republican Party’s control of the House of Representatives, and its ability to stop virtually anything in the Senate—not to mention the six votes it controls on the supercommittee.

But to listen to most media coverage of the deficit debates—and too often, the rhetoric thrown about by Republicans and some Democrats—one comes away thinking the only way to get the fiscal house in order is via “entitlement reform” and deep domestic spending cuts, along with higher taxes and fewer loopholes.

But this just isn’t so. For example, the Congressional Progressive Caucus crafted a “People’s Budget,” which eliminates the deficit within ten years while creating a $31 billion surplus—all while protecting valuable programs like Medicare, Medicaid and Social Security. You can read the entire budget here (PDF), a one-page summary here (PDF), and an outside analysis by the Economic Policy Institute here (PDF).

Here are some of the plan’s features. On taxes:

Ends the recently passed upper-income tax cuts and lets Bush-era tax cuts expire at the end of 2012 Extends tax credits for the middle class, families and students Creates new tax brackets that range from 45 percent starting at $1 million to 49 percent for $1 billion or more Implements a progressive estate tax Eliminates corporate welfare for oil, gas and coal companies; closes loopholes for multinational corporations Enacts a financial crisis responsibility fee and a financial speculation tax on derivatives and foreign exchange

On healthcare:

Enacts a healthcare public option and negotiates prescription payments with pharmaceutical companies Prevents any cuts to Medicare physician payments for a decade

On defense:

Responsibly ends our wars in Iraq and Afghanistan to leave America more secure both home and abroad Cuts defense spending by reducing conventional forces, procurement and costly R&D programs

The key theme of this plan is to put investment and job creation up front, while protecting the programs that many Americans rely upon for their economic well-being during a recession. Even Bill Clinton, no flaming liberal, called the plan “the most comprehensive alternative to the budgets passed by the House Republicans and recommended by the Simpson-Bowles Commission.”

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Forever Green

[ed. Very sweet interview with the Green One himself.]

by Emma Barker, The Daily

He has had decades of success — if not ease — being green. But Kermit the Frog is known to keep his personal life close to his little collar.

His celebrity has been free of public scandal — no affairs, no drug-fueled hotel trashings, no anti-Semitic (or anti-human) slurs. Nothing too notable — aside from his stunningly successful career itself, and a very public, somewhat masochistic, cross-species relationship with a pig.

With a new movie opening Wednesday, Kermit is riding high — and available for a rare interview. Despite his docile demeanor, I was nervous when I emailed Kermit, now 56, a question about his late friend, Jim Henson. Was it a touchy subject? And, more importantly, can Kermit type? I kept it simple: Describe your friendship. But my worry was misguided.

“I’m not exactly sure what Jim did, but whatever it was he really moved me,” Kermit wrote back. “Whenever I needed someone to lend a hand or give me a lift, Jim was there. Jim was so filled with great ideas. He loved to have fun, and he made everyone believe that absolutely anything is possible. Most of all, he wasn’t afraid to roll up his sleeves and make dreams come true.” Then, “I love him and I miss him.” After Henson’s death in 1990, Kermit shied away from the public eye.

Now he is back, bigger than ever, in the loosely autobiographical “The Muppets,” a new take on the 1979 “The Muppet Movie.” Kermit is shown living out his retired years in a dusty, gilded mansion, complete with the likenesses of Kermit and Miss Piggy smiling from a high, electric fence. In the movie he acts tired, coming back to show business with the groan of getting out of a warm bed in the winter.

The turbulence and certain stress of working with “these crazy Muppets” since just after he lost his tail doesn’t show on Kermit’s face. He kicks his feet with a youthful exuberance and his wide, slightly crossed eyes pinch at the corners just a bit more than when he was still a collarless young frog. The frog’s mental fatigue shows only barely through the bright felt, like a mellowed Keith Richards.

Fozzie Bear, who is taller than Kermit and, unlike his best friend, generally wears at least one item of clothing, emailed me about the night he met Kermit. “I was working as a stand-up comic at the El Sleezo. I wasn’t doing much standing-up, but I was doing a lot of ducking and cowering in fear. Kermit walked in and liked what he saw — I don’t know if he liked my act or my ability to avoid injury, but from that moment on we were together, like brothers.” He continued on their special bond: “It was like I’d known him my whole life. He understood what I was trying to do — to become the world’s funniest stand-up comic bear — and he believed that I could do it. That’s what makes Kermit so special to me. Oh, and I also noticed that he was very green and still dripping wet from the swamp.”

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Ten Las Vegas Secrets

by Rick Lax, Guardian

If you want to gamble but don't know anything about gambling, play craps. More specifically, play craps and bet the PASS LINE. It's easy: you put your money on the table and somebody rolls the dice. If everybody starts cheering, you've won. If everybody gets quiet, you've lost. It's the closest thing to a 50/50 bet you're going to find (except for the DON'T PASS LINE. But if you play that, it'll piss the other players off). Head to O'Sheas, where the low-stakes craps tables practically pour out onto the strip, and where, if you crap out, you can take your final $20 and play beer pong against a team of just-turned-21 frat guys from Ohio State. Tell them you went to college at the University of Michigan – see what happens!

The Cosmopolitan is the newest and swankiest hotel on the Strip. It's the one that looks like the Wynn, if the Wynn were bedazzled by Liberace. As long as you're gambling away your hard-earned cash, you might as well do it alongside the pretty and the powerful. Oh, and if you're gambling at the Cosmo on a Friday, Saturday or Monday night, do it at a table below the elevator that leads up to Marquee, the hottest club on the strip; this is the best people-watching spot in Vegas. More affordable people-watching destinations include Kokomo's Lounge at Mirage and the coffee shop at Wynn.

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Bank of America's New Campaign

 [ed.  Feel free to puke.]
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Los Lobos

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G.E. Bringing Good Things to Life

by John McCormack, Weekly Standard

General Electric, one of the largest corporations in America, filed a whopping 57,000-page federal tax return earlier this year but didn't pay taxes on $14 billion in profits. The return, which was filed electronically, would have been 19 feet high if printed out and stacked.

The fact that GE paid no taxes in 2010 was widely reported earlier this year, but the size of its tax return first came to light when House budget committee chairman Paul Ryan (R, Wisc.) made the case for corporate tax reform at a recent townhall meeting. "GE was able to utilize all of these various loopholes, all of these various deductions--it's legal," Ryan said. Nine billion dollars of GE's profits came overseas, outside the jurisdiction of U.S. tax law. GE wasn't taxed on $5 billion in U.S. profits because it utilized numerous deductions and tax credits, including tax breaks for investments in low-income housing, green energy, research and development, as well as depreciation of property.

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Image: Forbes.com

Cargotecture

by OpenBuildings, The Atlantic

It is estimated that two million empty shipping containers are sitting idle at any given time. Given that, cargotecture, or the adaptive reuse of these giant steel shells, sounds like a remarkably obvious idea: It is sustainable; it creates original and surprising architecture; and there are time-saving, manageability, and module organization advantages as well.

The term cargotecture was coined by HyBrid Architecture of Seattle around 2004 to describe any system built entirely or partially from ISO shipping containers. It's a broad definition. Containers are so versatile that they can be exposed and incorporated into the exterior of a building or construction project, or they can be hidden away, used merely as a structurally strong prefab element. And, if they're used for a temporary project, shipping containers can easily be re-recycled into a new structure.

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Photos: Graft Architects: Platoon Kunsthalle; Mesarchitecture: Sky Is The Limit Observatory

Crowds R Us

by Ian Leslie, Intelligent Life

Shortly after the popular uprising that led to the establishment of the Paris Commune in 1871, the politician Georges Clemenceau recalled witnessing a riot: “Suddenly a terrific noise broke out, and the mob which filled the courtyard burst into the street in the grip of some kind of frenzy…All were shrieking like wild beasts without realising what they were doing.” For those who followed the English riots of 2011, the terms are familiar. On television, in newspapers and comment threads, the rioters were repeatedly likened to animals in the grip of a primitive frenzy, induced not by drink or drugs but by another culprit: the crowd.

Crowds, we are often told, are dumb. They obliterate reason, sentience and accountability, turning individuals into helpless copycats. Commentators on the riots offered different explanations but most agreed that crowd psychology was part of the problem. “The dominant trait of the crowd is to reduce its myriad individuals to a single, dysfunctional persona,” wrote the novelist Will Self in the New Statesman. “The crowd is stupider than the averaging of its component minds.” The violence was said to have spread like a “contagion” through the crowd, facilitated by social media. For those who wanted to sound scientific, the term to drop was “deindividuation”: the loss of identity and moral responsibility that can occur in a group. But do crowds really make us more stupid?

Earlier this year, the world watched a crowd bring down an autocratic government, by the simple act of coming together in one place, day after day, night after night. Egyptian protesters created a micro-society in Tahrir Square, organising garbage collection, defending themselves when they needed to, but otherwise ensuring the protest remained peaceful. As well as courage, this took intelligence, discipline and restraint. Few international observers accused the crowd in Tahrir Square of being dysfunctional, or of turning its members into animals. The Tahrir protesters also used social media, but rather than calling for a ban, as some in Britain did after the riots, people wrote eulogies to the liberating potential of Twitter. It seems that not all crowds are bad. But when bad things happen, the crowd gets the blame.  (...)

John Drury, a psychologist at Sussex university who studies crowd behaviour, believes that the idea that crowds induce irrational behaviour and erase individuality just isn’t supported by the evidence. First, most crowds aren’t violent. The crowd in the shopping mall or at a music festival is usually calm and ordered. Even crowds that include conflicting groups, as at football matches, are more likely to be peaceful than not. Second, even when crowds do turn violent, they aren’t necessarily irrational. In the 18th century England was afflicted by food riots. If ever there was an atavistic reason to riot, that was surely it. But the historian E.P. Thompson showed that the riots took place not when food was at its most scarce but when people saw merchants selling grain at a steep profit; the rioters were motivated by a rational sense of injustice rather than the “animal” drive of hunger.

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Picture credit: Lorianne DiSabato (via Flickr)

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That Droning Sound

by Michael Scott Moore, Miller-McCune

A county north of Houston made news in Europe at the end of October by taking delivery of a new “weaponizable” drone, a squat remote-controlled helicopter called a ShadowHawk that can fire Tasers or beanbags at people on the ground. Police in Montgomery County say the drone would chase drug smugglers or escaping criminals. Alarmed Europeans wondered if some aspect of drone warfare — so far a problem only for terrorists and other strangers in poor and distant countries — had come home to the First World.

“In the end the police have the same consideration as the military,” writes a columnist at Telepolis, a tech website in Germany, “namely that using drones in risky situations can keep personnel out of danger.”  (...)

But an armed police drone would be new. Montgomery County Sheriff Tommy Gage says his ShadowHawk won’t carry weapons, but the drone’s manufacturer, Vanguard Defense Industries, boasts that it’s strong enough to carry a shotgun or even a grenade launcher. The most relevant weapon for chasing fugitives might be the beanbag launcher. Its ammunition, though, isn’t called a beanbag; it’s a “stun baton.”

“You have a stun baton where you can actually engage somebody at altitude with the aircraft,” said Michael Buscher, chief of Vanguard Defense, told Homeland Security News Wire. “A stun baton would essentially disable a suspect.”

Hold on — robotic flying machines trying to whack American citizens with beanbags? Has anyone thought this through?

Small-plane pilots argue that more drones in the air could lead to accidents, precisely because drones fly blind. A cop on the remote control will point his camera almost anywhere besides the direction of the flying craft. “Pilots said police controllers may not be able to see and avoid other aircraft in the area during a sudden police emergency,” writes the Homeland Security Wire, citing a 2008 report from the Government Accountability Office.

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Photo: vanguarddefense.com

Alasdair Lindsey.  Hayle in Winter
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Friday Book Club - Boomerang: Travels in the New Third World

[ed.  I haven't read this yet but enjoy just about everything Michael Lewis writes.  This is a great review not only for its description of his book, but for a better understanding of current events raging through Europe.]

by John Lanchester, NY Review of Books

Most people with a special interest in the events of the credit crunch and the Great Recession that followed it have a private benchmark for the excesses that led up to the crash. These benchmarks are a rule of thumb, a rough measure of how far out of control things got; they are phenomena that at the time seemed normal but that in retrospect were a brightly flashing warning light. I came across mine in Iceland, talking to a waitress in a café in the summer of 2009, about eight months after the króna collapsed and the whole country effectively went bankrupt under the debts incurred by its overextended banks. I asked her what had changed about her life since the crash.

“Well,” she said, “if I’m going to spend some time with friends at the weekend we go camping in the countryside.”

“How is that different from what you did before?” I asked.

“We used to take a plane to Milan and go shopping on the via Linate.”

Since that conversation, I’ve privately graded transparently absurd pre-crunch phenomena on a scale from 0 to 10, with 0 being complete financial prudence, and 10 being a Reykjavik waitress thinking it normal to be able to afford weekend shopping trips to Milan.

Many people all over the world went nuts on cheap credit in the years of the boom—a boom that was in large part built on an unsustainable spike in personal and governmental debt. Michael Lewis has already written a very good book, The Big Short, about the mechanics of the crash, by casting around for people who didn’t just foresee it, but who made huge bets that it would happen, and profited vastly when it did.¹

Boomerang is about what he has come to see as the larger phenomenon behind the credit crunch: the increase in total worldwide debt from $84 trillion in 2002 to $195 trillion now. The thesis is that “the subprime mortgage crisis was more symptom than cause. The deeper social and economic problems that gave rise to it remained.” It is these deeper problems that are dominating economic news at the moment, and led to the desperate measures announced at the European summit on October 27 and to the aborted Greek plan to hold a referendum that followed. The G20 Economic Summit of November 3–4 was dominated by discussion of the Eurozone crisis, but ended with no coherent plan in view, and none has emerged since. Boomerang tells the story of how we got here, and in the course of doing so gathers together an extensive arsenal of data at the top end of my 0–10 Reykjavik waitress scale: the fact that Greek railways have €300 million in other costs; the fact that the Californian city of Vallejo spent 80 percent of its budget on the pension and pay of police, firemen, and other “public safety” workers; the fact that between 2003 and 2007, Iceland’s stock market went up ninefold; the fact that in Ireland, a developer paid €412 million in 2006 for a city dump that is now, because of cleanup costs, valued at negative €30 million.

Lewis has noticed something important about these excesses: that the precise details of how people ran amok varied from culture to culture. Cultural and historical faultlines were exposed by the boom, and behavior varied accordingly.

The credit wasn’t just money, it was temptation. It offered entire societies the chance to reveal aspects of their characters they could not normally afford to indulge. Entire countries were told, “The lights are out, you can do whatever you want to do and no one will ever know.” What they wanted to do with money in the dark varied. Americans wanted to own homes far larger than they could afford, and to allow the strong to exploit the weak. Icelanders wanted to stop fishing and become investment bankers, and to allow their alpha males to reveal a theretofore suppressed megalomania. The Germans wanted to be even more German; the Irish wanted to stop being Irish. All these different societies were touched by the same event, but each responded to it in its own peculiar way.

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‘Vassals’ in Congress Do Lobbyist Bidding

by Jack Abramoff, Bloomberg

As I built what became the nation’s largest individual lobbying practice -- with 40 employees at its peak -- I remained the only lobbyist in the firm who had not previously worked on Capitol Hill. Former Congress members and staff are everywhere on K Street, the lair of the lobbying world. Why? Because they have access.

That access was crucial to our lobbying efforts. If we couldn’t get in the door, we couldn’t present our client’s case to decision makers. Hill veterans also had expertise. They knew the Byzantine legislative process and how to make it work for clients. Access and expertise: That’s how the great lobbying machines work.

But that’s not all.

I had many arrows in my lobbyist quiver to endear our firm to Congress: two fancy Washington restaurants that became virtual cafeterias for congressional staff, the best seats to every sporting event and concert in town, private planes at the ready to whisk members and staff to exotic locations, millions of dollars in campaign contributions ready for distribution. We had it all. But even with these corrupting gifts, nothing beat the revolving door.

During my time lobbying, I found that the vast majority of congressional staff I encountered wanted to get a job on K Street. And why not? Their jobs on the Hill were only as secure as their boss’s re-election prospects. Even then, they were never certain when they would encounter an office purge. The other side of the rainbow -- K Street -- was heavenly. Salaries were much higher. Perks were abundant. And lobbying is a growth industry, no matter which party is in office. As young staff members got married and had children, making the jump to K Street was often on their minds.

As I cultivated relationships on the Hill, or as the firm’s lobbyists transformed their congressional friends into champions for our clients, I noticed the staff members craved a job on K Street far more than a fancy meal or a Washington Redskins ticket.

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Illustration by Andy Rementer

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Too Bad Not to Fail

[ed.  Also, if you're up for a good scare: The next financial crisis will be hellish, and it's on the way (Forbes).]

by William J. Quirk, American Scholar

In “Babylon Revisited,” F. Scott Fitzgerald’s 1931 short story about the aftermath of the 1929 Wall Street crash, Fitzgerald makes the point that such collapses are slips in morality as much as financial failures. Charlie Wales, the story’s emotionally fragile hero, returns to Paris in a desperate effort to regain custody of his nine-year-old daughter. “I heard that you lost a lot in the crash,” says the Ritz bartender. Implying his moral lapses, Charlie replies that yes, he did, “but I lost everything I wanted in the boom.” In fact, upper-middle-class people like Charlie hesitated during the first months of the market’s run-up—until early in 1928. That was when they joined the gambling frenzy, and that was when, as John Kenneth Galbraith wrote in The Great Crash, 1929, the “mass escape into make-believe, so much a part of the true speculative orgy, started in earnest.”

Eight decades later, stock-market investors like Charlie had no role in bringing on or profiting from the 2008 financial crisis. This time they stood on the sideline as major financial institutions engaged in a speculative orgy. Guided by no moral compass, the most sophisticated financial players in the world were betting big with one another about interest rates, commodity prices, and whether companies or governments would default.

Until the 1990s, investment banks—the institutions that help corporations and governments raise capital by underwriting and issuing securities—were organized as partnerships. Under that setup, the general partners risked their personal net worth on the solvency of their firms and regulated the bank’s activities with the knowledge that they were liable for any losses. When almost all the partnerships reorganized into corporations, investment banks became, in effect, liability casinos operated by croupiers unbridled by long-term financial responsibilities. The sole object was to maximize day-to-day profits.

Bankers bought and sold something few Americans had heard of before: derivatives. These instruments were hard to define, we were told, yet they were heralded as financial “innovations” designed to minimize risk and were reassuringly referred to as “insurance,” “protection,” or “hedging.” Other strange terms—“tranches,” “mezzanine,” “regulatory arbitrage,” and “repos”—surfaced at the same time.

What are derivatives? They are financial contracts whose value is derived from a security such as a stock or bond, an asset such as a commodity (crude oil, sugar, copper, etc.), or a market index. Derivative is used to cover contracts of many different kinds, some dating back hundreds of years; others, until the 1990s, were unknown to man. Midwestern grain farmers, in the early 19th century, sometimes sold their crops while they were still growing. That is a futures contract, a kind of derivative, the likes of which have been traded on the Chicago exchanges since Civil War times. They are helpful to all parties. Southwest Airlines, for an­other instance, can assure itself the price of jet fuel in the future by entering into a contract—a derivative.

A synthetic collateralized debt obligation (CDO), the subject of the Security and Exchange Commission’s lawsuit against Goldman Sachs this April, is also a derivative. But before you can have a “synthetic” CDO, you have to have an actual CDO. What’s that? Say that a person who is a poor credit risk takes out a mortgage he can’t afford. Thousands of such mortgages are collected into a security—a mortgage-backed bond. Then a number of those bonds are collected into another security. This is a CDO that is sold to investors. A “synthetic” CDO refers to an actual CDO with no underlying asset, meaning, in this case, no mortgages. It is essentially a wager, and, like any bet, it requires two sides: a “long,” who is betting that housing prices will go up, and a “short,” who is betting that housing prices will decline. The short bettor, by means of a credit default swap (CDS), agrees to pay the interest owed to the long bettor. In return, the long bettor agrees to pay the principal of the CDO if it defaults. Goldman was the bookie who put the bets together; Rube Goldberg would have blanched at such a grotesque contraption.

The problems with derivatives are abundant and far-reaching:

• There are no caps on the numbers, which generally are immense—big enough to bring down world markets. The derivatives market is $600–800 trillion—about 10 times the $70-trillion output of the world economy.
• The terms are so complex that they are only dimly understood by the parties entering into them as well as by the regulators who are supposed to police them; in fact, no one knows how to regulate them.
• By putting the economies of U.S. allies in jeopardy, they can too easily undermine American national interests.

September 2008 was when we learned that the big banks were earning most of their profits from dealing in derivatives and, by the way, that the financial statements they were issuing were worthless because derivatives were extensively used to evade accounting, legal, and regulatory requirements. The air of mystery and impenetrable lingo were no help when the banks went bust and put the real economy at so dangerous a risk that the U.S. government committed $23.7 trillion in cash and commitments to bail them out. The bailout was outrageous on its face, even before details about what the banks were doing were made public. Then we learned that the Federal Reserve and the Treasury Department, which are charged with regulating U.S. currency, and the Securities and Exchange Commission (SEC), whose mission is to protect investors and maintain fair, orderly, and efficient markets, hadn’t adequately scrutinized the banks or their derivatives.

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Photo: New York Stock Exchange Advanced Trading Floor, New York, 2001 (Eduard Hueber, courtesy Asymptote Architecture)

In My Father’s Kitchen

by Chris Wallace, Paris Review

I used to joke that I have daddy issues with Jacques Pépin, because it was he who really raised me. My parents divorced when I was a year old and, until I was thirteen, they split custody in every conceivable way. It was my father’s habit to write in the mornings and watch his favorite cooking shows in the afternoon, with a drink, while preparing dinner. On the days I was with him, I watched too. Usually it was Julia Child, or the Frugal Gourmet; later it was Jacques, and then Jacques and Julia. Recipes and technique were like my nursery rhymes and I grew up—“spoiled rotten,” my dad would say—only ever eating perfect pie crust. By the time I was eleven, my knife skills were impeccable, my Caesar salad the best ever (in my family, hyperbole is hereditary). When my mother invited my high school girlfriend and her parents for dinner I served a traditional osso buco and risotto Milanese. It was a success—my culinary coming out party—and one in which my father, who felt he deserved the credit, took particular pride.

As a Depression baby, my father was raised by a generation of people who wouldn’t utter a sound if their hair were on fire. He spent most of his childhood in the kitchen, with the family cook, because he was afraid to go anywhere else in the house. The Wallaces do their suffering in silence. My father’s father, David Frederick Wallace Sr.—Fred, he was called—went off on drinking benders, leaving the family for days at a time. He died of liver failure at just fifty-seven. Fred’s father committed suicide and the family never spoke of it. The thought of my own father having a personal conversation with his mother, or with his grandmother, whom everyone called the Dragonlady, seems impossible—with his Aunt Bess or his uncle, President Harry Truman, outrageous.

In my youth, my father and I continued this tradition, juxtaposing all that quiet with some good old yelling. My father is not small—6' 2'', and a barrel of a guy—and when I was a child he seemed to me a giant out of fairy tales: domineering, mercurial, and remote. I can still remember the terror I felt one night as I searched desperately, in vain, for the car keys as he screamed at me to find them. I, in turn, would try to injure him by attacking his cooking. He’s still heartbroken today from the time when, at ten, I said, “Your food smells better, but mommy’s tastes better.” Even into my adolescence we had little in common. When I got a scholarship to play football in college, my father, the opera fan, wrote in the local paper, “I thought I was going to have a choir boy, but I got a quarterback.”

It wasn’t until twenty-two, in a subterranean Italian restaurant in Cheyenne, Wyoming, on a road trip from Austin to Ogden, that I truly determined to get to know my father.

It was the revelation that did it—my mother breaking the secret that my father was gay. Over what I think was chicken in Elmer’s glue, she just let it slip. They’d been divorced for twenty-one seemingly celibate years. “He hasn’t told you?” she asked. “He told me he’d told you.”

I affected indignation, shock even. But the moment had the resonance of literature—naming something I didn’t know I knew. Later I would go around telling people that it wasn’t a conclusion a son could come to about his father, no matter the evidence. But the evidence, in retrospect, looked substantial: an encyclopedic knowledge of opera—gay; fabulous taste in furniture—also gay; phenomenal talent in the kitchen and a love for luxury and glamour—gay! How could I not know? Though he was less flamboyant in his mannerisms then, it must have seemed painfully clear to onlookers. In fact, it was my recounting of a trip to Fauchon in Paris, to pick up his favored Melange des Isles tricolor peppercorns, that elicited my mother’s revelation.  (...)

The truth was that even as I wanted to harbor a Shakespearean grudge against my father, I was warmed by his accidental revelation. I thought about how he had grown up very alone, in a conservative family during the conservative fifties. How he had no one he could speak frankly to until he met my mother working on the original production of Hair. The day after my dinner at Pastis, I decided to drop by my father’s apartment. I found him on the couch watching Molto Mario. I sat down and joined him. He fixed us drinks, negronis. “Like sitting at Tre Scalini on the Piazza Navona,” he said.

We came to love this great ginger Falstaff, the medium through whom we were reconnecting, as a member of our extended family. He cooked with the same giddiness as my father—dropping in references to Proust, telling stories about visiting markets in Abruzzo or wineries in the Castelli, and stirring our romance for food along with his braising liquid. “Marsala means port of Allah,” he would say, and my father would light up like a four year old. “Isn’t that wonderful?” he’d say, and sip his gin. When the travel edition, Mario Eats Italy, entered the mix, my Dad and I were, as he would say, in hog heaven. Every day Batali cooked in his cliffside villa outside Positano before trooping around the Amalfi coast for lemons the size of grapefruit, glistening crustaceans, and bright, metallic, deep-sea swimmers to cook on the beach.

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