Archive

February 12th, 2016

Palestinian attacks wound Israel's reputation

    Palestinians' recent attacks on Israelis are, at first blush, not an existential threat to Israel. Horrific as the losses are, the future of the state is not in question.

    Or so it seems. But in a closer look, it appears that this round of violence is costing Israel more than the human toll. As the Palestinians clearly intend, the renewed conflict is doing serious damage to Israel's international standing.

    One of the first indications of this swing in public opinion was a comment by Sweden's foreign minister, Margot Wallstrom, who laid part of the blame for November's terrorist attacks in Paris on Israel. "To counteract the radicalization we must go back to the situation such as the one in the Middle East of which not the least the Palestinians see that there is no future: We must either accept a desperate situation or resort to violence," she said not particularly coherently on Swedish television.

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Financial markets don't work as well as we thought

    One of the big unanswered questions in the finance world is: Do returns reflect risk or mispricing? Defenders of the efficient markets hypothesis say that you can't get higher returns without taking more risk, while behavioral finance says that there are often unexploited anomalies that will let wise, patient, or deep-pocketed investors beat the market without taking on more risk.

    This debate is very relevant to the use of factor models. These models, which are used to design investment portfolios with specific characteristics, have been one of the most successful methods to come out of academic finance in the past 40 years. Most financial institutions, and all of the sophisticated ones, now use factor models to measure their risk. Many also use them to optimize their returns. For example, so- called smart beta investing strategies, one of the most popular investing fads of the past decade, are mostly just the application of factor models. You can also now buy exchange- traded funds that take advantage of a wide array of factors.

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Feminism, Hell and Hillary Clinton

    I’m 51. My health is decent. And while my mother died young, there’s longevity elsewhere in the family tree.

    I could live to see an openly gay presidential candidate with a real chance of victory.

    Will there be a “special place in hell” for me if I, as a gay man, don’t support him or her?

    I can guess Madeleine Albright’s answer. She more or less told women that they’re damned if they’re not on Hillary Clinton’s team.

    I’m still trying to get my head around that — and around Gloria Steinem’s breathtakingly demeaning assertion that young women who back Bernie Sanders are in thrall to pheromones, not ideas or idealism, and angling to score dates with the young bucks in the Sanders brigade.

    That’s right, “Democratic socialism” is a known aphrodisiac: the oyster of politics. There’s nothing like denunciations of oligarchs to put you in the mood.

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A guide for voters torn between Trump and Sanders

    Believe it or not, some voters in New Hampshire and other early-voting states can't make up their minds between Donald Trump, the poll leader among Republicans, and Bernie Sanders, who has a big edge among Democrats.

    The candidates share qualities that are major motivators for voters in this presidential election: outsiderism and freedom from the influence racket that ties lawmakers' hands. Corporate donors, lobbyists and Wall Streeters have no claims on their campaigns. Domineering super PACs have no chains on their souls.

    But there are huge differences between the bombastic billionaire and disheveled socialist. Immigration is a good example. Sure, they agree that the middle class has been dealt a bad hand, and blame porous borders that have let low-paid immigrant workers flow in and displace Americans from good- paying jobs.

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Uber's surge pricing, applied to smoothies

    How could this be: A "healthy casual" restaurant that demands a 35 percent surcharge if customers want just one kind of fruit in their smoothie, rather than a combination?

    At first, I thought I had read the menu item wrong. Surely, the extra $2 was applied if a customer asked for an additional variety of fruit. But no. When I checked the menu again, the restaurant really was asking customers who opted for no fruit diversity to pay more.

    I asked some friends to help me figure this out. They couldn't. So when I went back to the restaurant, I asked several employees. Two expressed surprise; two others suggested that I had misread the menu; and one provided me with the explanation. It makes sense (though it may not be the best outcome for all).

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The governors upend the Republican debate

    No debate so far has reshaped the election like the one in New Hampshire on Saturday night. And nothing the rest of the night equaled the first 10 minutes.

    Chris Christie made a full-frontal attack on Marco Rubio. The New Jersey governor had been needling the freshman senator from Florida, ridiculing him as a fourth-grader looking for his new desk on the Senate floor and calling him the "boy in the bubble." No one would have been surprised had Christie gone too far, but he didn't. Governors do things, senators talk about doing things at hearings and occasionally vote on them. Although Rubio, as Christie pointed out, hasn't even done much voting.

    "You have not been involved in a consequential decision where you have had to be held accountable," Christie scolded him.

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Scorched-earth campaign may cost next president

    There is a red and blue political divide in the U.S. that this election is only exacerbating, with consequences for governing.

    Presidential campaigns are about choices, differences, especially between the parties. The 2016 divide between Republicans and Democrats is more intense and polarizing than usual.

    Two of the leading contenders, Sen. Ted Cruz, on the Republican side, and Sen. Bernie Sanders, who is seeking the Democratic nomination, openly declare that this is a "base" election focused more on bringing out hard-core committed supporters than on trying to persuade more independent-minded folks. Their impressive showings in the Iowa Caucuses -- Cruz won, and Sanders almost did -- reinforce that. And among billionaire Donald Trump's attributes, political consensus-building isn't at the top of the list.

    Even after the New Hampshire primary this week winnows the field, Hillary Clinton will still be the favorite to win the Democratic nomination, and Marco Rubio will be one of the three or four Republican finalists.

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Sanders is late to the revolution on Wall Street

    If there is one presidential candidate who embodies the nation's lingering post-2008 rage at Wall Street, that surely has to be Vermont Sen. Bernie Sanders. No other candidate has argued as strenuously for financial reform, or used rhetoric that so forcefully paints a struggle between the financial industry and the rest of the economy. Whether that narrative is accurate, Sanders' concrete proposals give the impression that he hasn't carefully evaluated the policy landscape.

    Some of the things Sanders is suggesting have largely been done. For example, he recently declared that in its first 100 days, his administration would "create a list of too-big-to-fail banks and insurance companies." Such a list already exists. Under the Dodd-Frank Act of 2010, the Financial Stability Oversight Council -- a branch of the Treasury Department -- must maintain a list of systemically important financial institutions (SIFIs) -- that is, banks, brokerage firms and insurance companies that are considered too big to fail because their collapse would endanger the financial system. So Sanders' proposal is already reality.

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Payday lenders lose their tribal-law loophole

    Can a payday lender's contract require all borrowers' disputes be subject to an arbitration process in which decisions are exempt from federal law? In a decision announced this week with potential consequences for millions of contracts signed every day, the U.S. Court of Appeals for the 4th Circuit has said no. The decision shines a light on a particularly disreputable instance of the generally worrisome phenomenon of payday loans. Its importance, however, touches on broader issues, including the sovereignty of Indian tribes.

    The facts of the case, Hayes v. Delbert, are pretty shocking -- and probably affected the outcome to some degree. James Hayes of Virginia borrowed $2,525 in 2012 from payday lender Western Sky Financial LLC, which transferred the loan to Delbert Services Corp. to service it. The four-year loan had an annual interest rate of 139.12 percent.

    Yes, you read that right. Over the life of the loan, Hayes owed $14,093.12. Although triple-digit interest rates are indeed typical for many payday loans, that's not the shocking part of the story.

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Pay-for-peace proposal isn't a crazy idea

    I know. It sounds totally preposterous. Paying criminals not to commit crimes.

    The D.C. Council unanimously voted for this bananas-sounding plan last week.

    A Hail Mary scheme to cut the increase in the crime rate in the nation's ever-glammier capital would handpick about 50 of the city's most violent, likely-to-regress young offenders and pay them about $9,000 annually to be good.

    This sounds almost like a dystopian Margaret Atwood novel.

    Did the mafia take over the D.C. Council's brains? Because how isn't this an extortion racket?

    And is there retroactive payback for all my law-abiding years in the city? I can use $150,000 just about now. Or maybe I need to go commit a crime so I can get my government payout.

    And what next? Reverse speed cameras that send you checks in the mail for going under the speed limit?

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