Joe Pass

[ed. I once did a summer sound stage setup for Joe Pass. Incredibly nice guy, very humble... one of the truly great ones.]

Ask Polly: I Am Severely Chafed By My Gentle, Compassionate Boyfriend

In my opinion, great relationships between smart, complicated people are only possible when total honesty is in the mix. You won't accept this generous man in your life until you accept your own flaws enough to make them clear to him. You're judgmental and fault-finding. So am I. But you value generosity and gentleness. And you'll learn to tolerate neediness, even as it reminds you of yourself in ways that are uncomfortable. (...)

At the very end of Eternal Sunshine of the Spotless Mind, this exact process begins: Two people who love and hate each other enter this crazy space of shoving it all in each other's faces. I'm sure lots of terrible couples have stayed together a little longer after seeing that movie. But to me, it's one of the most beautiful scenes, one of the truest and rarest expressions of real love that's ever been created. Because when you let someone into your life, there is ugliness and shock and fear and repulsion there. No one likes to admit that. You wonder if you'll be dragged down, dragged into someone else's flaws and messes. You wonder if their weaknesses will take over, if you'll spend the rest of your life tortured by their other-ness, their teensy tiny sounds and smells that fill up your space and sometimes seem to fuck with your good life. For a while, you hate the other person and you hate you and you hate the two of you, together. So inadequate, so insecure, so flinty and pushy and messy and wrong.

To me the moment of truth comes when you say it out loud: Look at me, hating you. Look at you, hating me. Look at us, how gorgeously our flaws match. How gorgeously we collide. Sometimes you have the strength to say these things, and the other person says (or, more often, implies): "No, I don't want you like this. I don't want the truth. I don't accept that I'm a mess. And I don't want to be with someone who is." And also: "Why are you crying? What did I do to deserve this shit?" And also: "If you loved me more, you wouldn't mention that I smell bad, or make weird noises, EVER." I've been there. There's this opportunity for connection, for acceptance, and the other person says FUCK THAT AND FUCK YOU.

Lots of people, LOTS AND LOTS OF FUCKING PEOPLE, really, truly don't want to connect. They just want to do what they do without being challenged or being forced to show up. They want to talk about the easy stuff, keep it light, ignore the trouble, keep the peace, don't look too hard at anything, and don't get too honest. There's another tier, above that: The people who want intimacy, but only on THEIR terms. They want access to an open person, sure, so they can turn that person on and off, like a faucet. Great when they happen to want you, not so great when you need something from them and they can't handle being needed.

But there are a few people who can show up. If they see that you want them to show up, they can show up. If you're present, they will find a way to be present, too. I think that's what you have in this man, even if you aren't quite there yet yourself. You're going to have to work to catch up with him. You should not see him as inferior. You're the one who needs to open your heart more. Because the moment that you look at another human being, and all of his flaws stand out so clearly, and you feel love, love, love? That's a moment of transcendence. That's real love. It's not chasing. It's not dickhead-fairy-dust-created magic. It's not swaggery sureness and photogenic sex. Real love is two flawed people, laughing together at all of their flaws, their gorgeously matched flaws.

by Heather Havrilesky (aka Polly Esther), The Awl | Read more:
Image: Eternal Sunshine of the Spotless Mind

Two Cheers for the New Volker Rule

Three and half years have passed, and the so-called Volcker Rule—which embodies some of the restrictions on banks that its namesake sought—is finally becoming a reality. In 2010, a bare-bones version of Volcker’s proposal was included in the Dodd-Frank financial-reform act. There then followed a seemingly endless process, in which the regulatory agencies sought comments from interested parties, and haggled internally, about how the rule should work in practice. On Tuesday, finally, the Securities and Exchange Commission, the Fed, and three other agencies voted to enact a seventy-one-page version of the regulation, which big banks like JPMorgan Chase, Bank of America, and Goldman Sachs will have to abide by. (...)

Having watched the saga unfold over the past four years—it was in late 2009 that Volcker first made his case to President Obama—I have mixed feelings about the outcome. On the one hand, it is encouraging to see the government reaffirming the basic principle that Volcker espoused. The trading desks of the big banks, in placing big bets on market movements, have been doing something that is far removed from the traditional role of commercial banks: lending to businesses and consumers, and helping clients manage risk. Even the most artful defenders of Wall Street have yet to come up with a convincing explanation for why these proprietary trading activities should benefit from a government safety net.

After such a prolonged delay, it is also reassuring that the political and regulatory system has, finally, reached a resolution. Once the financial lobby realized it couldn’t win the over-all intellectual argument, it settled on a policy of stalling and prevarication, hiring consultants and eminent professors to bombard the regulators with lengthy briefs defending the bank’s activities on an individual basis. At the same time, the banks pushed the regulators to spend several more years gathering information before they actually did anything. (...)

If you spend some time reading the new rule and the nine-hundred-page background paper that the regulators provided, you will find a number of weaknesses in the new regime that the banks will surely seek to exploit.

The ban on proprietary trading still contains a great number of exemptions. It doesn’t apply to government bonds, including those issued by the federal mortgage agencies and by municipalities. If Goldman or Morgan Stanley want to short Treasury securities, or the city of Chicago, they can go right ahead. Also excluded from the restrictions are physical commodities, such as oil and gold, and spot foreign-exchange contracts. (Cue loud cheers on the commodity trading and FX desks at places like Citi and JPMorgan.)

There are also exemptions for market-making, in which the banks build up sizable positions in all sorts of securities, supposedly with the sole intention of having enough on hand to meet the demands of clients and for hedging risks taken elsewhere in the firm. But how can any outsider know whether a given trading desk is buying tech stocks, for example, to anticipate customer demand or to wager on the Nasdaq going up? The new rule fudges the issue, saying banks can build up positions to meet “the reasonably expected near-term demands of clients, customers, or counterparties.” What does “reasonably expected” mean? Your guess is a good as mine.

by John Cassidy, New Yorker |  Read more:

Image: Joshua Roberts/Bloomberg/Getty

The Internet Mystery That Has the World Baffled

One evening in January last year, Joel Eriksson, a 34-year-old computer analyst from Uppsala in Sweden, was trawling the web, looking for distraction, when he came across a message on an internet forum. The message was in stark white type, against a black background.

“Hello,” it said. “We are looking for highly intelligent individuals. To find them, we have devised a test. There is a message hidden in this image. Find it, and it will lead you on the road to finding us. We look forward to meeting the few that will make it all the way through. Good luck.”

The message was signed: "3301”.

A self-confessed IT security "freak” and a skilled cryptographer, Eriksson’s interest was immediately piqued. This was – he knew – an example of digital steganography: the concealment of secret information within a digital file. Most often seen in conjunction with image files, a recipient who can work out the code – for example, to alter the colour of every 100th pixel – can retrieve an entirely different image from the randomised background "noise”.

It’s a technique more commonly associated with nefarious ends, such as concealing child pornography. In 2002 it was suggested that al-Qaeda operatives had planned the September 11 attacks via the auction site eBay, by encrypting messages inside digital photographs.

Sleepily – it was late, and he had work in the morning – Eriksson thought he’d try his luck decoding the message from "3301”. After only a few minutes work he’d got somewhere: a reference to "Tiberius Claudius Caesar” and a line of meaningless letters. Joel deduced it might be an embedded "Caesar cipher” – an encryption technique named after Julius Caesar, who used it in private correspondence. It replaces characters by a letter a certain number of positions down the alphabet. As Claudius was the fourth emperor, it suggested "four” might be important – and lo, within minutes, Eriksson found another web address buried in the image’s code.

Feeling satisfied, he clicked the link.

It was a picture of a duck with the message: "Woops! Just decoys this way. Looks like you can’t guess how to get the message out.”

"If something is too easy or too routine, I quickly lose interest,” says Eriksson. "But it seemed like the challenge was a bit harder than a Caesar cipher after all. I was hooked.”

Eriksson didn’t realise it then, but he was embarking on one of the internet’s most enduring puzzles; a scavenger hunt that has led thousands of competitors across the web, down telephone lines, out to several physical locations around the globe, and into unchartered areas of the "darknet”. So far, the hunt has required a knowledge of number theory, philosophy and classical music. An interest in both cyberpunk literature and the Victorian occult has also come in handy as has an understanding of Mayan numerology.

It has also featured a poem, a tuneless guitar ditty, a femme fatale called "Wind” who may, or may not, exist in real life, and a clue on a lamp post in Hawaii. Only one thing is certain: as it stands, no one is entirely sure what the challenge – known as Cicada 3301 – is all about or who is behind it. Depending on who you listen to, it’s either a mysterious secret society, a statement by a new political think tank, or an arcane recruitment drive by some quasi-military body. Which means, of course, everyone thinks it’s the CIA.

by Chris Bell, The Telegraph |  Read more:

Image: uncredited

Cihangir
via:

Millions of Americans Are Strange

Millions of Americans do strange or extreme things without quite being able to articulate why. Gary can’t quite articulate why he does a lot of things. When George ties Gary to the chair, he promises Gary he won’t get bored. On the phone, George reassures his former lover Allen that their breakup had nothing to do with Allen never wanting to go anywhere or do anything. Allen is an agoraphobic. Agoraphobia is a condition that can be debilitating and affects millions of Americans. Sometimes people from all walks of life can be afraid that if they go out into the throng they might somehow vanish. Millions of Americans disappear every year and are never found and after long periods are presumed dead. Hannah has a suitcase with some clothes and documents and her passport in it under her bed but always decides to wait. Hannah always waits to disappear because she wants to take care of Hank. Hank is a functional alcoholic.

Millions of Americans die each year from complications from alcoholism. Derek is an alcoholic whose favorite cover song is Jeff Buckley’s cover of Leonard Cohen’s “Hallelujah,” and when he gets drunk he sometimes asks Kelly to tie him to a kitchen chair and break his phone and cut his hair. Ramon and Walter are stiff from being tied to chairs for so long. When you are tied to a chair, your arms can be tied in front of you, down at your sides, or behind the chair back, which is the most uncomfortable for the person being tied, but is the most common technique because it is the most difficult to escape from. Frank is a heating and cooling sales rep with an unknowing wife and daughter. Frank pays John to meet him at a hotel when Frank is in town so John can tie him up and leave him alone like that for eight to ten hours. Frank knows John from bumping into him a few times at sales strategies seminars and then talking a little bit over drinks. John lives with his boyfriend, Frederick. Frederick is strikingly handsome. Men who are strikingly handsome have been found to be more financially successful at work than plain or ugly men. Harold is a plain man who invests a lot of money in clothing, including tailored suits, shirts, ties, pocket squares, tie bars and cuff links, as well as shoes and socks. After a period during which formal business wear was on the wane, millions of Americans are returning to suits and ties in an effort to look more polished and confident. James makes an effort to look polished and confident, though he isn’t very successful at it. James lives alone. Millions of Americans live alone. Sometimes this is by choice and sometimes it is because a loved one has died or children have moved out, for example. Sandra lives just with her cats Whiskers and Riley. Both of her children moved out when they went to college out of state, but Jane leaves their bedrooms as they were when her daughters Ella and Ava left because she knows in the current economic climate they may have to return. In the current economic climate, millions of Americans are without jobs. Lisa doesn’t have a job. Lisa went to school for marketing but lost her job when the corporation told its workers it had to make cuts because of the current economic climate. Millions of Americans are suffering due to the current economic climate. Sometimes persons without jobs receive unemployment insurance while they look for new jobs. Jason receives unemployment insurance because he was laid off when the plant closed.

by Nicholas Grider, Guernica |  Read more:

Image: from Flickr via James Cridland

via:

via:

Digital Factory

via

Why "Love Actually" Matters

Once upon a time a bunch of Brits got together to make a little film that Americans would bicker about for more than a decade.

Love Actually was released on November 7, 2003 and we have been arguing about it ever since. Some hate it, some love it; some love it when they're in love but hate it when they're out of love.

The traditional critique of the film goes something like this: "It is a saccharine soulless picture that relies on an emotionally manipulative soundtrack and has nothing to say but somehow takes 136-minutes to say it." Variations of this critique may or may not include, "It is an evil film that tells people who are alone that they will never be happy."

Yawn.

The Atlantic's Chris Orr is more bold: His latest entry into the anti-Love canon requires us to once again, verily and merrily, and with the full weight of history on our shoulders, rise in its defense.

Orr makes a lot of very good points, but his central contention that "Love Actually is the least romantic film ever" is simply insane. I know insane and that's insane. (My insanity credentials? I have seen this movie probably 40 times.)

Orr writes, "Love Actually is exceptional in that it is not merely, like so many other entries in the [romantic comedy] genre, unromantic. Rather, it is emphatically, almost shockingly, anti-romantic."

"Anti-romantic!" Here's the thing: Love Actually is at its most basic level a call to romance. Not to love, necessarily, but to romance.

Also, all of you, everybody, stop comparing Love Actually to most other romantic comedies.Love Actually is only a traditional romantic comedy insofar as it is a film about romance that has humor. It does not have the structure required of the genre. To be honest, if you're going to compare it to any one film you should probably compare it to Crash, the working title of which I'd like to think was Racism, Actually.

If the theme of Crash is "We're all at least a little bit racist deep inside" the theme of Love Actually is "We're all a little crazily romantic deep inside."

Love Actually is, in fact, less a film about love as it is a film about people who think they are in love. Almost all of the stories center around people who either early on, or before the film even begins, figure out they're nuts about someone and then spend the five weeks before Christmas wondering, "What do I do now?" It's a bit like Hamlet but with romantic gestures instead of, you know, death.

Orr thinks it contains "at least three disturbing lessons about love":

"First, that love is overwhelmingly a product of physical attraction and requires virtually no verbal communication or intellectual/emotional affinity of any kind. Second, that the principal barrier to consummating a relationship is mustering the nerve to say "I love you"–preferably with some grand gesture–and that once you manage that, you're basically on the fast track to nuptial bliss. And third, that any actual obstacle to romantic fulfillment, however surmountable, is not worth the effort it would require to overcome."

Let's knock these out quick.

by Ben Dreyfuss, Mother Jones |  Read more:

Image: Universal Pictures 

How Texas Can Save the Endangered Species Act

[ed. If you want a good primer on the nuts and bolts of the Endangered Species Act this is an excellent place to start. That said, the concept of mitigation/conservation banking has been around for a long time, and the problems associated with its use are well known: complexity, uneven administration, subjective valuation, inconsistent application, political manipulation, etc. - along with a good dose of uncertainty: vis-a-vis measuring actual threat to, and recovery of (or lack thereof), the species being targeted (all of which are described in this article). In my experience, these banks are frequently an option of first resort (pay money, extend credits, move on...) when other mitigation approaches might work better. That's because they don't constrain what a developer/landowner actually does with their property, and regulatory battles are defused. There are five approaches to mitigation: avoid, ameliorate, rehabilitate, restore and replace. Mitigation banking typically focuses on only the last - replacing what is lost rather than, say, avoiding an impact to begin with, or rehabitilitating habitat that has inadvertantly been injured. This new system, or crediting exchange, attempts to develop a standardized process for mitigation credits that incorporate all of those components. Should be interesting (academically, at least) to see how the metrics of such a system are developed.]

In 1990, a northern subspecies of the spotted owl was listed as threatened under the Endangered Species Act (ESA), restricting the modification of its habitat across large swathes of the northwestern United States. For the area’s logging communities the results were devastating. In just a few years, perhaps 30,000 logging jobs were lost as a direct result, with whole communities abandoned, mills shuttered, and a way of life gone extinct.

The decision caused a lot of pain and suffering for how much good it did, which turned out to be none at all. The northern spotted owl’s population continued dwindling because, as it turned out, the principal threat to its survival was apparently not habitat loss, but the spread of an invasive species: its cousin, the larger eastern barred owl. The U.S. Fish & Wildlife Service (USFWS) is now considering a plan to start killing the invader in order to protect the northern spotted owl from natural selection. Given the ESA’s own spotty history, one has to wonder whether the pain about to be inflicted on the barred owl is really such a good idea.

The Federal scheme for protecting endangered species suffers from a fatal deficit of good science. The ESA requires USFWS to use the “best available” science, not the best possiblescience—and the meager USFWS budget does not allow it to pursue qualitatively better science in the areas over which it has jurisdiction. As a result of this science deficit, the ESA’s sweeping “takings” of private property without just compensation produce few conservation benefits. Of the 2,000 or so species that have been listed as threatened or endangered over the past forty years, only 28 have been taken off the list as a result of “recovery”, and many of those 28 weren’t really endangered to begin with. The law also creates perverse incentives for landowners and other private parties to destroy high-quality habitat lest one of its species be listed as endangered or threatened and hence constrain uses of the land or cause it to be sequestered by the government. Thus, as in so many other areas, heavy-handed Federal regulation often achieves the very opposite of its intended purpose.

Among the ESA’s many stakeholders, a consensus is developing that the law cannot accomplish its goals of species conservation and economic development without greater reliance on markets. In Texas, a succession of three major species conservation plans over the past decade has shown the potential that a market-based approach could have for species conservation. The foundation of each of these conservation plans is a habitat “exchange” in which the impact to a listed species’ habitat is offset by mitigation measures in another part of its habitat. The logic is similar to that of emissions “credits,” such as the 1990s-era sulfur dioxide trading scheme, or to arrangements in which vertical space for urban construction is traded off among sites (though in the habitat exchange model there is not necessarily a “cap”). The correlation of impact and mitigation is accomplished through a “crediting” system based on a fuller scientific understanding of species requirements than is normally available to USFWS in its determinations, made possible because of greater investment in research by private participants.

For environmental stakeholders, the new approach helps solve several major problems of the current ESA. It removes the unfortunate incentive to hedge against ESA obligations that might arise in the future. It allows for unified conservation management at ecosystem-scale, rather than scattered across patches of habitat, thus increasing the possible conservation benefits. By giving the market a key role in gathering information about endangered species, it creates the prospect of listings and recovery/conservation plans based on much better science than is currently the case. And with “adaptive management” the science continues to improve during the conservation effort. For these reasons, the new approach has been supported by important environmental stakeholders, such as the Environmental Defense Fund.

For economic stakeholders, the new approach also solves major problems. For landowners, it helps turn a potentiality devastating liability into a source of profit that advances conservation goals. If offers the prospect of increased economic opportunities and greater protection for property rights within a more predictable regulatory framework. It allows mitigation efforts to be dynamically tailored to the impact they’re designed to offset, across a range of mitigation options, thereby laying the foundation for an economically rational balancing of costs and benefits.

Some of the ESA’s flaws—such as its heavy-handed impact on property rights—can only be addressed through legislation, and through a much-needed revision in the Supreme Court’s jurisprudence on regulatory takings. And given the complexity of factors that can threaten a species, it may be doubted in many cases whether any conservation scheme would have much effect. For these reasons and others, the ESA should be extensively revised. But in the meantime, habitat crediting exchanges offer a market-based approach that could significantly improve species conservation and economic development within the framework of the existing ESA—provided regulators can resist the temptation to manipulate the system and distort its delicate economics.

by Mario Loyola, American Interest |  Read more:

Image: Larry 1732 on Flickr

Kurt Solmssen, Irmela, 2004
via:

"Your Amazon Drone delivery was unable to be completed because…"
via:

Remembering Computing Pioneer Grace Hopper

Monday’s Google Doodle honors computing genius Grace Hopper on what would have been her 107th birthday, doodling her right where she spent much of her time – at the helm of one of the world’s first computers.

Dr. Hopper, remembered as a great pioneer in computing, as well as in women’s achievements in science and engineering, was born as Grace Brewster Murray on Dec. 9, 1906, in New York City. She married Vincent Foster Hopper in 1930 (he died in World War II, in 1945), and took his name.

Hopper received her PhD in mathematics from Yale in 1934, as one of four woman in a doctoral class of 10, and later taught math at Vassar College, where she had taken her bachelor’s degree.

In 1943, during World War II, she left the college to join the war effort and enlist in the United States Naval Reserve’s Bureau of Ordnance Computation Project at Harvard University. There, she joined a team of programmers working on the Mark I, an electro-mechanical computer 51 feet long, eight feet high, and two feet wide. Its some 756,000 parts weighed more than 10,000 pounds.

At Harvard, Hopper would go on to work with the subsequent Mark II and Mark III computers. She is often credited with coining the term “bug” for a computer malfunction: In 1947, she is said to have tweezed from the Mark II computer an actual moth that had been bugging up the machine, caught between Relay #70 and Panel F. She was also at the forefront of designing computers that would communicate to the user in a language similar to English, not in numbers. The language that she and her colleagues produced, Common Business-Oriented Language (COBOL), is still in use in 2013.

When, in 1982, David Letterman asked her how she knew so much about computers, in order to work with Mark I, her reply was: “I didn’t. It was the first one.”

by Elizabeth Barber, CS Monitor |  Read more:

Image: Google, Inc.

Oily Fish Heads

Nikiski, Alaska - In a chilly building across Cook Inlet from the white pyramid of Mount Redoubt rest a few dozen plastic-lined cardboard totes filled to the brim with an amber liquid. Each chest-high cube holds about a ton of fish oil extracted this summer from the heads of salmon. It’s a product that would have been lost to the Kenai River if Pat Simpson had not recovered it.

Simpson, 49, is a fisherman-turned-entrepreneur who has for the past few summers purchased salmon heads from fish processors who do business here in this small industrial town north of the Kenai River. Using precision equipment made in Europe, Simpson’s team steams and grinds the heads of pink, chum and red salmon to render a product now available in box stores as 90-count bottles of “Wild Alaskan Salmon Oil” gel tablets.

“We sold all our fish oil the first three years (to companies that put it in capsules and sold it to large retailers),” Simpson said at his Nikiski plant, shut down and unheated for the offseason.

Simpson’s venture with his company Alaska Marine Nutrition is part of a dream to enable fish processors in remote places to use the oiliest part of a salmon -- its head -- a portion of the fish prized in other cultures but often returned to the ocean in Alaska fisheries.

Simpson first sensed an opportunity to extract and sell fish oil when he was a boy growing up in Cordova. There, as in many rural Alaska places where commercial fishermen catch salmon, processors kept the high-value fillets but ground up the carcasses and released the slurry back into the ocean. (...)

Simpson grew up working on his father’s tender boats every summer. There, he and his crewmates would motor over to commercial fishing boats, pick up salmon and carry the fish to local processing plants on shore. Sometimes he would travel as far from Cordova as Bristol Bay, a six-day trip. On those trips, he learned his future was not on the decks of boats.

“I’d be lucky if I wasn’t throwing up half of that,” he said of the long run to Bristol Bay. “To be a successful fisherman, you have to be able to work in lousy weather.”

Simpson looked to another passion, computer science. He went to the University of California at San Diego for college. After having success developing sonar devices for the military and the fishing industry, he returned to Alaska, longing to be connected to the industry he knew best. That’s when he saw there might be a niche on the west side of the Kenai Peninsula. Of the more than 200 fish processors scattered throughout the state, only about half of them recover the fish heads and guts. The fishing industry produces and dumps back to the ocean more than 1 million metric tons of fish waste each year.

by Ned Rozell, AK Dispatch |  Read more:

Image: Ned Rozell

John Baldessari, Hitch-Hiker (Splattered Blue)

via:

Chris Bushe, February Light on the River Dee near Mar Lodge
via:

Too Convoluted to Succeed

Why Dodd-Frank won’t prevent another financial crisis.

After Obama became president... it took Congress more than two years to pass Dodd-Frank, named for former senator Chris Dodd of Connecticut and former congressman Barney Frank of Massachusetts, the sponsors of the law in each house. The law takes up 849 pages—that’s more than twice as long as the 407-page stimulus law and only 57 pages shorter than the Obamacare legislation. By contrast, the Sarbanes-Oxley law of 2002—Congress’s post-Enron attempt to fix financial markets—is just 66 pages. Going further back, the Securities Act of 1933—a cornerstone of financial regulation that helped prevent meltdowns for five decades, until financial lobbying began to erode its power—runs just 93 pages. The Glass-Steagall Act, another 1933 law that separated long-term commercial banking from shorter-term investment banking, ensuring that the risk of one activity didn’t infect the other, totaled 53 pages. And even after decades’ worth of amendments, the Securities Exchange Act of 1934 adds up to only 371 pages.

That Dodd-Frank tried to do too much at once is evident not only in its length but also in its mind-numbing complexity and vast scope. Dodd-Frank addresses everything from how to achieve “financial stability” to how to wind down failing firms through an “orderly liquidation authority” to how to regulate derivatives as well as mortgages. Almost as an afterthought, the law creates an enormous new bureaucracy, the Bureau of Consumer Financial Protection. The CFPB, as it’s commonly known, is so potentially consequential that its sponsors should have introduced it as a separate piece of legislation (see “Dodd-Frank’s Protection Racket,” Summer 2012). (...)

Dodd-Frank’s biggest failure is to have perpetuated too big to fail. The cataclysm of 2008 proved that Washington was terrified to let large or complex financial firms go bankrupt. But bankruptcy is a natural, healthy occurrence in a capitalist system. The goal should have been to figure out how to allow these firms to go under. Dodd-Frank’s approach, by contrast, was to make the world safe from bankruptcies, not for them. “Dodd-Frank kills the capitalist system,” says Rosenblum bluntly.

Dodd-Frank’s command-and-control ethos is epitomized by the Financial Stability Oversight Authority, a ten-member regulatory group that will “identify risks to the financial stability of the United States,” “promote market discipline,” and “respond to emerging threats to the stability of the U.S. financial system.” But these three things don’t go together. The FSOC’s work in monitoring the nation’s largest financial institutions contravenes its mandate to ensure market discipline. Why should investors monitor big firms if the government is already doing it for them? “As soon as a financial institution is designated as systemically important” by the FSOC, Dallas Fed president Richard Fisher told the House financial-services committee this June, “it is viewed by the market as being the first to be saved.” The SIFIs—the law’s “systemically important financial institutions”—thus “occupy a privileged space,” Fisher added.

Such privilege makes it exceedingly difficult for free markets to reverse a decades-long trend. In 1990, Fisher notes, the nation’s four biggest banks had $519 billion in assets, or 9 percent of gross domestic product. By 2011, they had $7.5 trillion, or 50 percent of GDP. “We have a structure that is not a free-market structure,” concurs Thomas Hoenig, vice chairman of the FDIC. “It is heavily subsidized”—at least $83 billion annually in artificially cheap borrowing costs, according to a Bloomberg View analysis. Further, if the FSOC misses a big risk and a firm fails because of this oversight, whose fault is that? Congress has ensured that it is the government’s fault just as much as the firm’s—hardly a blow for market discipline. (...)

The law also imposes a burden on large or complex financial firms that contravenes what should be their paramount duty: to protect their own investors from loss. Dodd-Frank mandates not only that systemically important firms protect themselves but also that they protect the rest of the financial system and the economy from “systemic risk.” But as Peirce notes, “no one knows what that is.” If a firm’s bankruptcy triggered a 10 percent stock-market fall, would such an outcome be too systemically risky to accept? The government “should want institutions to think of their own risks,” says Peirce, who previously served as senior counsel to Senator Richard Shelby’s staff on the Senate banking committee. The current approach “sounds very grand and important,” she says, “but what matters is what individual actors are doing.” How can the government expect financial firms that can’t foresee their own future losses to predict the losses of other firms and how they might harm the economy?

by Nicole Gelinas, City Journal |  Read more:

Image: Arnold Roth

via:

Kim Jong Un Consolidates Power

[ed. I've just about finished reading The Orphan Master's Son (which I highly recommend). This mirrors nearly exactly the paranoid and almost Orwellian/Kafkaesque nature of the North Korean regime as depicted in that novel. See also: Public Ouster in North Korea Unsettles China.]

North Korea on Monday acknowledged the purge of leader Kim Jong Un's influential uncle for alleged corruption, drug use, gambling and a long list of other "anti-state" acts, apparently ending the career of the country's second most powerful official.

The young North Korean leader will now rule without the relative long considered his mentor as he consolidated power after the death of his father, Kim Jong Il, two years ago. Jang Song Thaek's fall from the leadership, detailed in a lengthy dispatch by state media, is the latest and most significant in a series of personnel reshuffles that Kim has conducted in an apparent effort to bolster his power.

Some analysts see the purge as a sign of Kim Jong Un's growing confidence, but there has also been fear in Seoul that the removal of such an important part of the North's government — seen by outsiders as the leading supporter of Chinese-style economic reforms — could create dangerous instability or lead to a major miscalculation or attack on the South.

Tensions are still high on the Korean Peninsula following a torrent of threats in March and April by Kim Jong Un's government against Washington, Seoul and Tokyo, including vows of missile and nuclear strikes and warnings that Pyongyang would restart nuclear bomb fuel production.

South Korean intelligence officials said days ago that a purge was likely because two of Jang's aides had been executed last month for corruption. A recent state documentary in the North had all images of Jang removed.

Jang — who is married to Kim Jong Un's aunt, Kim Kyong Hui, the younger sister of Kim Jong Il — was described by state media as "abusing his power," being "engrossed in irregularities and corruption," and taking drugs and squandering money at casinos while undergoing medical treatment in a foreign country. The dispatch also said he had "improper relations with several women and was wined and dined at back parlors of deluxe restaurants." (...)

Opinion has been divided among analysts on what the purge may mean for the future of North Korea. Some analysts believe it shows a weakened Kim Jong Un fending off challengers, but others say it indicates the young leader's growing strength.

"I believe it shows Kim Jong Un is firmly in control and confident enough to remove even the senior-most officials," said Bruce Klingner, an Asia specialist at the conservative Heritage Foundation think tank in Washington.

He added, however: "There is no reason to believe with this latest ouster that there will be a change in North Korean policy; that the Kim dynasty will suddenly turn around its bad behavior."

by Foster Klug, AP |  Read more:

Image: AP Photo, Kyodo News