Small Victory for Little Guy After Financial Crisis

Thomas FrankThomas Frank wrote an excellent article this last weekend, Finally, Wall Street Gets Put on Trial: We Can Still Hold the 0.1 Percent Responsible for Tanking the Economy. I’ll give you a basic rundown and some thoughts here, but you should read the whole thing. It calls into question the administration’s claims that they couldn’t go after the bankers because “financiers simply could not have committed fraud, since you would expect fraud to result in riches and instead so many banks went out of business.” This is nonsense, of course.

As I have admitted before, I find finance and the whole idea of money to be mystifying. But this is very clear. We know only too well that from the CEOs on down, people at banks were able to enrich themselves in the short run by doing things that were bad for the banks in the long run. Of course, because the administration has shown so little interest prosecuting the bankers, it’s worked out for them in the long term too. And it mostly hasn’t been bad for the banks because the government was there to bail out the whole industry.

As you may recall, after the financial crisis, the conservative narrative was that the problem wasn’t the banks. No, it was those greedy poor people who bought houses they couldn’t afford. It was Rick Santelli’s neighbor who made an addition to his house. It was Freddie and Fannie and Barney Frank pushing “those people” to buy homes they couldn’t possible afford because everyone knows that “those people” don’t have jobs! But as Frank noted, “Sure enough, when taking on ordinary people who got loans during the real-estate bubble, the president’s Department of Justice has shown admirable devotion to duty, filing hundreds of mortgage-fraud cases against small-timers.” When it comes to the people giving out the loans, Mitt Romney could hardly have been more forgiving.

One of these cases of the federal government going after those mean poor people occurred recently in Sacramento. It concerned a “group of eastern European immigrants” who bought houses in 2006. They got what are called “liar’s loans” where those applying didn’t have to prove their income. All they had to do was state it on the loan application. The bank would not check. That was the main selling point of the loan:

And lenders so didn’t care back in the bubble days. They invented liar’s loans and blanketed the country with them during the Oughts not because the poors talked them into doing it, or because the liberals in the Bush Administration forced them to do it — on the contrary, the government warned them against issuing these things, just as the government warns us against swallowing arsenic. The reason bankers did it was because liar’s loans were making bankers rich.

The way the government sees it, the banks have been victims in all of this. Of course, there is a case to be made for this. But the banks were not victims of people taking these loans; the banks were victims of their own people who were selling these loans. But the government prosecutors apparently haven’t even considered this. In these cases, they haven’t even talked to the management at the banks. When a federal agent was asked if he was concerned about the conduct of those loaning the money, he replied, “No. I would consider — they’re the victims in this case. That’s how I consider them.” Note how the conduct of Trayvon Martin and Michael Brown are very much of interest to prosecutors.

Regardless, there is this thing in the law that states that fraud must be “material.” That means that it has to have been part of the decision process. So if you told your loan officer that you never cheated on your wife when you had, that would not be material because it wouldn’t be part of deciding if you got the loan. Well, with these “liar’s loans” it is clear that the banks didn’t care if the borrower was telling the truth or not. They were going to give out the loan because they were going to make money regardless.

Using this fact, the defendants were acquitted of the fraud charges. It’s very good news. And now other people are going to use the same defense. The problem, however, is that there are many (probably most) judges who won’t even allow the behavior of the banks to be considered in the trial. These are poor people: we can’t allow them to get away without punishment! And dragging the behavior of the rich bankers through court will be so unfair! But this is at least a little bit of great news.

Of course, the Obama administration has no intention of easing up:

Have no fear. The government is on the case. They’re going to track down people who lied on a loan application in the last decade and go after them. Unrelenting pursuit of the people at society’s bottom.

A Small Part of “Tangled Up in Blue”

Tangled Up in BlueThe last couple of days I’ve been listening to Bob Dylan’s Blood on the Tracks while I work out. Almost every song on it begs for interpretation. It is Dylan at his most gothic. It is also probably my favorite album of his, although I probably listen more to his more fun albums like Highway 61 Revisited. But there is a reason I’ve been pushing Blood on the Tracks on myself: I’m trying to figure it out!

For some time, I’ve been wanting to write an article about the meaning of “Lily, Rosemary and the Jack of Hearts.” But I must admit that certain parts of the song elude me. Admittedly, they are details. What is most important is the thematic arc of the song. It is about Rosemary and her quest for redemption. And most of what I’ve read about the song is just nonsense. But I dare say that Dylan wrote the song explicitly to bring out the crazy theories. Much of it is left intentionally vague. But I can explain the basic story and perhaps I will do that some day soon.

Right now, I want to discuss another song on the album, “Tangled Up in Blue.” That’s another mysterious song. Or at least, the version on that album is mysterious. I don’t think he’s ever done the song the same way twice. You can see the various versions of the lyrics on Other Versions Of Tangled Up In Blue. It contains four different versions. I can’t say that they clear things up. He’s playing around with perspective and it is never clear if there are two or three characters. He says, “I lived with them on Montague Street…” Is “them” the woman and the man she was married to or the women and the man who helped her out of a jam? I could argue both cases.

The most evocative part of the song is the verse in the strip club:

She was working in topless place
And I stopped in for a beer
I just kept looking at the side of her face
In the spotlight so clear
And later on when the crowd thinned out
I was just about to do the same
She was standing there in back of my chair
Said to me, “Don’t I know your name?”
I muttered something underneath my breath
She studied the lines on my face
I must admit I felt a little uneasy
When she bent down to tie the laces… of my shoe
Tangled up in blue

I love those first four lines: they are so sweet. He is love. He’s in a strip club, yet it is her face that that he is focused on. Again, it isn’t clear in the song whether this is because he has known her or it is just love at first sight. She says, “Don’t I know your name?” This could mean she recognizes him, or it is just a pickup line. In other versions, she says, “What’s your name?” and “It ain’t no accident that you came” and even “What’s that you got up your sleeve?” So it’s hard to argue one way or the other. But I like to think that she approaches him because he’s different: he wasn’t checking out her curves.

The last four lines before the refrain are just plain funny. You can just imagine a bare chested woman bending down in front of the flustered narrator. But it too is rather sweet, indicating more maternal feelings than anything. This is, in fact, the verse that makes me think the whole song is about a love triangle of the kind in Sophie’s Choice — with the narrator silently pining for the heroine. That may be giving the story too much credit, but it is what works for me.

The remainder of the verse consists of two lines that I just love, “And later on when the crowd thinned out; I was just about to do the same.” He takes a macro-scale metaphor of a crowd as a liquid and applies it to the micro-scale. And thematically it is very strong, implying that the narrator might just fade away. Of course, we know what he means: he was just about to leave. But it is a wonderful way to say it.

The great thing about songs is that you really can make them your own. When I analyze them, I normally find much more positive meanings than most people. That’s true of “Ode to Billie Joe” and “Marlene on the Wall” and even “Rapture.” Although I don’t think I’m inclined to take as many liberties with most songwriters. But Bob Dylan begs for it. It is a big part of his genius.

Church: What Is It Good For?!

Christian UniversalistDigby brought my attention to a Pew Research Center poll, Shrinking Majority of Americans Support Death Penalty. This isn’t exactly news. But the report contained a graph on the attitudes of different kinds of religious people. The bottom line: white Christians really like the death penalty — whether Protestants or Catholics, they have higher approval than the population as a whole. Black and Latino Christians, however, are just the opposite — they support the death penalty at much lower levels than the population as a whole.

I shouldn’t be surprised that American Catholics should go against the Church on this issue. American Catholics go against the Church on pretty much every issue you can name, most notably same sex marriage, abortion, and most of all, birth control. Protestants are so fractured that it is impossible to say what they are supposed to believe. But it is safe to say that religious people believe what they want and don’t give a lot of thought to what their churches claim.

Although I am a staunch opponent of the death penalty, the fact that Christians don’t listen to their churches is largely a good thing. We don’t want angry Christian mobs stoning adulterers. But the whole thing makes me wonder what people are getting from their churches. As I’ve written about excessively, popular religions are shockingly useless at answering ontological questions. So that leaves them only with the churches’ moral teachings. And on that front, most Christians have apparently decided that their churches are equally useless.

What is especially interesting here is how people make moral decisions based upon their life experiences. I don’t believe for a moment that white Americans are more vindictive than black Americans. But for most white Americans, police abuse of power is not really a thing. The worst they need worry about is an officer giving them a speeding ticket. What’s more, white Americans are less likely to have much direct experience with the milieu in which poverty leads to desperation and desperation leads to violence.

This is a good thing to remember the next time a Christian asks you how a civilization can have a moral code if it isn’t given from God. The truth is even Christians don’t have a moral code given by what they think is the word of God. Even those who take their holy books very seriously have to deal with contradictions. And what they always do in these circumstances is pick whatever belief feels right to them. And that is what we all do. So what exactly do people get from their churches, synagogues, and mosques?

I think religious people get one thing: a sense of community. And this has obvious good aspects. Humans are social animals and we can only survive by working together. But there is a bad side to this. The same things that bind us together also tear us apart from those outside the group. This is one of the problems with the New Atheist movement: people spend most of their time dumping on believers. And the same thing happens among the believers. This is why I’m so fond of the universalists. Are they a religious group or just an open minded collection of people who like potlucks? Regardless, even they have their limits. We couldn’t have a society if some things weren’t outside acceptable bounds. And people ranting Fox News talking points can ruin a good potluck.

Update (8 September 2014 7:47 pm)

In an article today, Scalia’s Utter Moral Failure: How He Destroys Any Claim to a Superior System of Justice, Digby quoted the devout Catholic justice:

While my views on the morality of the death penalty have nothing to do with how I vote as a judge, they have a lot to do with whether I can or should be a judge at all. To put the point in the blunt terms employed by Justice Harold Blackmun towards the end of his career on the bench, when he announced that he would henceforth vote (as Justices William Brennan and Thurgood Marshall had previously done) to overturn all death sentences, when I sit on a Court that reviews and affirms capital convictions, I am part of “the machinery of death.” My vote, when joined with at least four others, is, in most cases, the last step that permits an execution to proceed. I could not take part in that process if I believed what was being done to be immoral.

See what I mean? When his church says “Same sex marriage is wrong!” he’s on board because he’s a bigot and that’s what he wants to believe. When his church says “Thou shalt not kill!” he’s not on board because it isn’t what he wants to believe. He is a vile man who history will judge very harshly. And he knows it.

To Read Jonathan Chait, Or Beat My Head Against the Wall, That Is the Question

Jonathan ChaitWow was I excited when I saw that Jonathan Chait had written a new article with a promising title, Why the Worst Governments in America Are Local Governments. Chait was been writing a lot about Education Reform recently, an issue he knows little about. So this sounded great, especially since for years, I have been harping on the nonsense about local government always being better. In fact, it is usually local governments that are most abusive and corrupt.

But Chait decided to partake of a healthy dose of false equivalence with an argument so facile it barely occupies a single dimension. Chait claimed that after Ferguson, “The problem, Democrats and Republicans concurred, was militarized police.” Really?! Because I don’t remember that. I remember Rand Paul going on about it. And I remember some liberals talking about it as one of many problems. But that was it. As is sometimes the case, Chait was really stretching to make his “I am the great centrist!” argument connect. And that was his second sentence!

After pointing out the “Orwellian monstrosity” in Ferguson, where the government bleeds the poor dry with fines as a way to fund the government, he went on to equate it to small minded politicians in cities who won’t agree to increase zoning or get rid of licensing requirements for barbers or dental hygienists.[1] There are a couple of problems with this. First, of course: they really aren’t equivalent. What is going on in Ferguson (and to one extent or another, everywhere) is not nearly as bad as disallowing people to start barber shops in their apartments.

Second, what liberals are against getting rid of these laws? Unlike the “local is always better” argument on the right, there is not widespread agreement about these policies on the left. I’ve been talking about housing density and stupid regulations for a long time. As a small businessman myself, I hate all the stupid regulations that are far more of a burden on me than they are on larger businesses. I especially hate inventory taxes, which have made me completely stop selling things like books and computer equipment. I know a lot of liberals haven’t figured out some of this stuff yet. But it is largely because they are too focused on cops shooting kids in the street.

Another thing is that Chait was swinging wildly in the article. Although licensing and housing do add to inequality, they are minor parts of it. The major aspects of inequality are due to systemic policies at all levels of government that take from the poor and give to the rich. Allowing anyone to start their own barber shop is a good idea, but it would simply redistribute money among people who are relatively poor. It would do nothing about the major inequality that is at the very top of the income scale. What Chait has offered is similar to conservatives saying that inequality is all about education. It isn’t. And allowing more people to be barbers or dental hygienists isn’t going to revolutionize our macro-economy.

What’s more disappointing about Chait’s article is that he’s just using Ferguson as an excuse to push his pet policy changes. He noted that licensing requirements exist because they protect people who are already in a particular field. But he made no mention of why Ferguson is effectively running a con on its poorest citizens: because they just won’t raise taxes. This is just a way of taking the local taxes that are generally pretty flat and making the poor pay far more than their fair share. These kind of fee and penalty based systems exist because it would never fly to have such an outrageously regressive tax.

I’m really beginning to wonder if it is even worth reading Jonathan Chait anymore. Over the last month, he seems determined to claim some kind of middle ground of practical-libertarianism. But as in this article, he doesn’t provide any details. There’s a lot more to changing the barber profession than licensing! But instead, it’s just, “Yeah, those Republicans are bad; but look at the Democrats!” And there are any number of other columnists I already avoid for that reason. I read the better conservative writers. I don’t need someone who is trying to thread the needle without trying very hard.


[1] Chait apparently doesn’t know any more about dentistry than he does education. The major cost premium with hygienists is not their licensing, it is that they have to work under the “supervision” of a dentist. But it shows a shocking lack of understanding of what hygienists do to think that the job is equivalent to cutting hair. If you aren’t going to have licensing requirements for hygienists, I don’t see the need for licensing requirements for dentists. And, in fact, I don’t see the need for licensing requirements for dentists. But I doubt Chait would agree, and regardless, that would never happen because dentists have lots of money. It is typical of what Chait calls “modern Democrats” to do this kind of surface level analysis that will end in — Get ready for a big surprise! — more competition added to a market except where it might hurt the profits of the already rich.

Marin Mersenne

Marin MersenneOn this day in 1588, the great intellectual Marin Mersenne was born. He was a mathematician, philosopher, theologian, scientist, and most of all, music theorist. But what was most important about him was how he built relationships. He was friends and correspondents of some of the greatest minds of his time including: Étienne Pascal (father of the more famous Pascal), Constantijn Huygens (father of the more famous Huygens), René Descartes, and Galileo Galilei. Those last two, he spent a lot of time and energy defending. He also put together the Académie Parisienne, which was a direct predecessor of the Académie des Sciences and the Royal Society.

Marin Mersenne’s greatest work was Traité de l’harmonie Universelle, for which he earned the moniker “father of acoustics.” It deals with string vibrations and how they relate to tone. This was something Mersenne spent a lot of time on. He also developed the physics of spring oscillations.

One of his many great contributions to knowledge is his early study of what have become known as the Mersenne primes. These are prime numbers that are of the form 2 to the n power minus one. For example, 3 is the first Mersenne prime because 2 to the power of 2 minus one is 3. These are extremely rare. Only 48 of them have ever been calculated. The 48th one is an enormously large number that my spreadsheet died trying to create:

M = 2257,885,161 − 1 ≈ 3 × 10619

Just to be clear, that’s a 3 followed by 619 zeros! But here is something really interesting: if n is not prime, then Mn is not prime either. The funny thing about Mersenne, however, is that he put together a list of the Mersenne primes up to n=257. But he screwed up. He included n=67 and n=257, which are not prime. And he didn’t include n=61, n=89, and n=107 — all of which are prime. But I don’t blame him. That’s tedious work!

In addition to his direct contributions to knowledge, he translated a tremendous amount of work, especially that of Greek mathematicians. He also helped Galileo translate a number of his works. Basically, Mersenne was a very valuable guy to have around during an intellectual revolution.

Happy birthday Marin Mersenne!