Another Good Sign from the Obama Administration....

The nomination of Broadway producer Rocco Landesman to head the National Endowment for the Arts...

Why? Because Landesman published a controversial article in the New York Times in 2000 that shows he doesn't shrink from controversy and sticks to his guns. Broadway: Devil or Angel for Nonprofit Theater?; A Vital Movement Has Lost Its Way, reveals an awareness of conflicts between for-profit and non-profit arts organizations--and concludes with a call for vigorous debate...one in which I hope to take part should he be confirmed:

As for the so-called nonprofit theaters, many of the best and most successful ones, like Lincoln Center Theater, Roundabout Theater Company, Manhattan Theater Club, Joseph Papp Public Theater, and the Mark Taper Forum in Los Angeles, produce frequently on Broadway. They are often better at commercial producing than some of us veteran Broadway producers.

But what happened to what used to be called the resident theater movement? What had been a cause seems now to be mostly a marketing campaign. The subsidies that once enabled nonprofit theaters to take artistic risks are now increasingly apportioned according to box office and critical success (not to mention the advancement of multiculturalism).

AT one time, theatrical institutions established their identities according to the ways they chose to serve and advance the art. Playwrights Horizons and the Second Stage Theater are dedicated to the playwright; Steppenwolf in Chicago and the Atlantic Theater Company are identified with particular acting styles; the Goodman in Chicago and the Guthrie in Minneapolis are director-centric, and the American Repertory Theater in Cambridge, Mass., is dedicated to the repertory ideal.

These and other institutions continue to do compelling work, but increasingly the template of success comes from the commercial arena, which is, in the end, not dedicated to the art so much as to the audience. The uber-model for this trend is ''the American Airlines Roundabout Theater,'' whose artistic director, Todd Haimes, saved a bankrupt institution by adapting contemporary, market-savvy, the-audience-is-king techniques of modern corporations. Pleasing the customers, giving them what they want in the form they expect, works for Coca-Cola -- and it works for subsidized theaters, too. Provide a familiar product (a well-known play with a well-known star) in a congenial setting (singles nights, comfortable seating), add a powerful corporate sponsor, and you will have a subscription that is the envy of every theater in America. It would, I suppose, be hyperbolic to say that Todd Haimes has had a more pernicious influence on English-speaking theater than anyone since Oliver Cromwell (and it wouldn't be nice, either, since Mr. Haimes is a personable and honorable man), but it can be reasonably argued that the forces of the marketplace through the years have been just as effective a censor as government edicts.

CHEKHOV wrote that, ''We must strive with all our powers to see to it that the stage passes out of the hands of the grocers.'' Because he wrote this in 1895 he could not have known that the threat would come not from a supermarket chain but from the automobile and airline companies that are now branding our marquees and ''enhancing'' revenues. Is it wrong to succeed? That question, unthinkable now, was a subject of much discussion at Princeton in 1974.

It is disappointing enough that those of us in the commercial theater have long ago abdicated any purchase on sustained artistic enterprise. The idiosyncratic giants of an earlier day have given way, by and large, to syndicates of producers and corporations. Big Broadway successes are more often the product of well-crafted nostalgia brilliantly marketed than of bold and intrepid producing (''Chicago'' and our own ''Smokey Joe's Cafe'' are recent examples). The road presenters poll their audiences' response to various titles and stars before deciding on their seasons. The stakes (read costs) have simply become too high to assume undue risks. There is still a quotient of wonderfully reckless independent producers, but those careers usually don't last long.

And now, in the nonprofit theater, too, the forces of risk control are at work. The managing directors, with their good board relationships, audience development campaigns and marketing strategies, are asserting their clout as the pressures to ''succeed'' increase.

In my hometown, where the artistic director of the St. Louis Rep was challenging audiences and generally causing trouble, the board simply hired their managing director to replace him. In most institutional theaters today the model of, say, the Public Theater, where the artistic director and producer (Joseph Papp, George C. Wolfe) is lord of the manor, is giving way to at least equal partnerships between the artistic and managerial sides.

The planners of ACT II have been advised by consultants that the conference should be ''managed'' with certain objectives and results in mind so that we can have some accomplishments to show for our efforts. No doubt we'll talk about how the commercial producer relates to the nonprofit theater in which he is developing his musical. We'll share insights about labor relations, and we'll talk about a nationwide, 10-cent-per-ticket assessment to finance a national marketing campaign (the beef and milk industry ads were great!).

My fervent hope, however, is that sometime during the conference, lines will be drawn, voices will be raised, someone's integrity will be challenged, and we will remember, if only briefly, that we are different from one another, with opposing, maybe irreconcilable views of what theater should be; that we are essentially unmanageable and that whatever pieties about our common purpose we endorse, there is still a hell of an argument to be had. So far, that session has not been scheduled.

After the pablum and corporate PR of Bush-NEA head Dana Gioia, under whose guidance the arts vanished from national consciousness, arguments of the type suggested by Rocco Landesman (with quotations from Chekhov, no less) are to be welcomed...and so is President Obama's selection of Rocco Landesman to head the National Endowment for the Arts.

AAAARGH: Stop PBS Bureaucrats Before They Kill The Newshour...

Don't like proposed chances to PBS Newshour with Jim Lehrer, as announced by Elisabeth Jensen in the NY Times today...don't like Tom Bettag as consultant, don't like the market research, don't like the collaboration with Frontline...the original concept was to give PBS viewers a seat at one of Perle Mesta's dinner parties--not to duplicate network news or documentaries (originally they banned taped packages). Time for a RESET.

Only thing in the proposal that sounds OK is a return to the dual anchor concept. Personally I think Ray Suarez is the best after Lehrer, followed by Gwen Ifill. Judy Woodruff makes me nervous, and Jeffrey Brown lacks gravitas, IMHO...and what about rotating Kwame Holman or Paul Solman as well?

Link to PBS press release here.

Say it ain't so, Jim...

Joshua Foust on the Firing of General David McKiernan in Afghanistan

From Registan.net:

The Pentagon just announced the surprise replacement of General David McKiernan with Lt. General Stanley A. McChrystal, who commanded JSOC from 2003-2008. The replacement, which comes eleven months into a typically 24-month tour for McKiernan, is very sudden, and potentially indicative of a serious lack of confidence in McKiernan’s abilities by the Obama administration.

LTG McChrystal received much praise for his command of the Joint Special Operations Command, which was credited with the capture of Saddam Hussein in December of 2003, and the killing of Abu Musab al-Zarqawi in 2006. As such, he carried a great deal of clout for his methods in prosecuting what many saw as the somewhat scattered successes of pre-Surge Iraq. Bob Woodward also credits JSOC under McChrystal’s command with lowering violence before and during the Surge.

General McChrsytal carries with him a dark side as well. One unit under his command, the now-notorious Task Force 6-26, which was assigned to find HVTs, or High Value Targets in Iraq, is credited with the ultimate death of Zarqawi. The problem is, along the way they faced accusations of running a secret camp that tortured prisoners, and they were implicated in at least two detainee deaths during torture sessions. Their camp, called Camp Nama, became something of a lightning rod after a “computer malfunction” destroyed upwards of 70% of their records and an investigation into their conduct stalled out.

More relevant to Afghanistan is GEN McChrystal’s involvement in the shameful coverup of Pat Tillman’s friendly-fire death. While he was named among the list of high-ranking military personnel believed to have covered up the circumstances of Tillman’s death, GEN McChrystal was “spared because he had apparently drafted a memo urging other officials to stop spreading the lie that Tillman died fighting the Taliban. He drafted that memo, however, after signing the award for Tillman’s posthumously-awarded Silver Star, the commendation for which claims, in part, that he was leading the charge against a Taliban assault. GEN McChrystal has never clarified why he signed an award for Tillman dying under enemy fire right before begging his colleagues and superiors to stop lying about Tillman dying under enemy fire.

In either case, GEN McChrystal’s appointment is a jarring shift for U.S. Forces in Afghanistan, which are currently transitioning commands between the 101st and 82nd Airborne Divisions. It is unclear what having a Special Operations commander in charge will do the overall country strategy, just as it is unclear what two major changes of commands in a short period of time will do to the current units who are deployed there. As more information becomes available about this, we’ll post updates.

Anecdotal Evidence: `The Precipice On Which We Stand'

Someone I know told me about a stand against vandalism of books that seems to be trendy in museums today, in a blog post called Anecdotal Evidence: `The Precipice On Which We Stand'

Another art museum from which art is banished, another exhibit celebrating the whimsical destruction of books. The Nazis took book burning seriously -- though they surely enjoyed reducing language and thought to ashes -- but I doubt they pretended their desecrations were works of art. We visited the Bellevue Arts Museum for the first time on Friday and saw the usual conceptualist bric-a-brac – a decorated meter maid’s cart, a stack of steel chairs, wall hangings that resembled soiled toilet paper, and “The Book Borrowers: Contemporary Artists Transforming the Book.” The closest thing to art on display was a room hung with quilts.

Thirty-one artists, using books as their medium, have made unbook-like objects – a Buddha head, a recumbent human body, a scale-model of a canyon, a circular object resembling a cross-section of tree trunk, you name it. The poster at the entrance tells us:

“These days much of the reading we do is done on a computer screen, and as we shift towards the digital as our primary means of conveying information, it seems timely to examine the precipice on which we stand.”

You will, of course, note the graceful flow of the prose. We had the echoing galleries to ourselves, except for a sleepy-looking guard. The kids wondered why somebody had wrecked so many books. “You can’t read them now,” our 6-year-old observed, and I wondered if any of the artists had read their books before destroying them, or if they read any books at all. One artist, Casey Curran, betrayed a glimmer of talent. His works, “The Whale” and “Pretence,” reminded us of Joseph Cornell’s boxes. The former includes a wire model of a whale and pages cut from Moby-Dick and pasted into a collage. I noticed the opening of Chapter 108, “Ahab and the Carpenter”:

“Drat the file, and drat the bone! That is hard which should be soft, and that is soft which should be hard. So we go, who file old jaws and shinbones.”

A handsome old copy of Ben-Hur was inlaid into “Pretence,” as well as a horoscope cast for someone born at 9:30 a.m. PDST, on July 9, 1951. Curran’s work showed some wit and draftsman-like care in execution. In the museum gift shop I asked to look at a copy of the catalogue for “The Book Borrowers.” The clerk said they were sold out, more were on order, would I like to put one on hold?

When presumably educated people mangle books and turn them into ugly objects, and other presumably educated people pay money to look at those ugly objects, and critics flatter themselves into appreciating their Duchampian daring, who is left to read books and look at pictures? The museum had on display not a single oil painting, watercolor or acrylic; no still lifes, portraits or landscapes; no figurative or abstract sculptures. Most of the galleries were as empty as the parking garage where we left the car. Is there room for those semi-mythical beasts, the art lover and common reader?

“You can’t read them now,” our 6-year-old observed.

Boston Globe: Goldman Sachs' Massachussetts Settlement Not Good Enough

Scott Van Voorhis of the Boston Globe says Massachussetts' plea deal is letting Goldman Sachs off too cheaply:

Attorney General Martha Coakley has managed to wring $60 million out of Goldman Sachs for its role in subprime mortgage mess.

Ho hum.

I am sure it wasn’t easy, but don’t expect those Wall Street types to be running for cover.
Goldman, like other Wall Street firms, made a lot of money securitizing subprime loans and selling them to investors.

We all know how that worked out.

Anyway, while $60 million may be a lot to most normal people, it’s lunch money on Wall Street
Bloomberg puts it into perspective.

It’s about what Goldman Sach’s fixed-income currencies and commodities division made in a day and half back in 2006, the news service reports.

That same division raked in an astonishing $14.3 billion in revenue that year.

Arianna Huffington: Listen to Cassandra

From the Huffington Post:

And, yes, it's not fun feeling like Cassandra. But remember: Cassandra turned out to be right and the cheerleading Trojans very seriously wrong. And very seriously dead.

The other problem with "the pathological weakness of the financial memory" is that it causes us to forget, along with the Trojan War and the last economic crisis, all the things we could have done with the massive amounts of money we spent bailing out the banks -- things like foreclosure relief, job creation, infrastructure repair, health care reform, and improving education.

It's time to stop pretending that the Wall Street economy is the same as the real economy. The Wall Street economy may be showing signs of life -- thanks to the hundreds of billions we have poured into it -- but the real economy isn't.

"Don't tell me about the stock market," wrote Bob Herbert last week. "Don't tell me about the banks and their perpetual flimflammery. Tell me whether poor and middle-income families can find work. If they can't, the country's in trouble."

And that trouble is only growing worse, even if the media are full of Wall Streeters over the moon because the Dow just went up 100 points.

There aren't going to be reasons for optimism -- or cause for celebration -- unless "the new rules of the game" Geithner promised are moved from the realm of rhetoric to the arena of action. The window for reform is closing.

Wall Street Journal: Growing Friedman-Goldman Sachs Scandal Endangers Federal Reserve

Even though Journal editors appear to be pulling their punches somewhat, today's Wall Street Journal editorial calls for the resignation of Federal Reserve Vice Chairman Donald Kohn, who approved NY Fed chair Stephen Friedman's ethics waiver that permitted him to remain on the Goldman Sachs board and trade their stock. The Journal concludes:

The problem is the politics of all this. Half of the financial world already thinks Goldman runs the U.S. Treasury and Fed, however unfairly. The American public is furious about the bailouts of AIG and banks, engineered by the Fed and Treasury, that have helped the likes of Goldman Sachs. And guess who Mr. Friedman's search committee picked as Mr. Geithner's successor when he left to run Treasury? Another Goldman alum, William Dudley. Yet with all of this in the political air, Mr. Friedman tried to stay in the New York Fed post at least through the end of 2009, and Mr. Kohn granted the waiver. It's hard to imagine a more politically obtuse judgment.

Their behavior has handed a sword to those in Congress who have long wanted to exert more political control over the 12 regional Fed bank presidents. Unlike Federal Reserve governors, the regional presidents aren't appointed by the U.S. President and confirmed by the Senate. They are appointed by their regional bank boards. They nonetheless serve, on a rotating basis, on the Fed's Open Market Committee that sets monetary policy, and the New York Fed president is Vice Chairman of the FOMC. This structure was designed under the Federal Reserve Act of 1913 to help insulate the Fed from political pressure, and it has worked well.

This insulation is especially important now, given how Mr. Kohn and Chairman Ben Bernanke have made the Fed an arm of the Treasury over the last 18 months. The Washington Fed has immersed itself deeply into fiscal policy and recently decided, for the first time since the early 1950s, to directly monetize U.S. debt by buying Treasury securities. Barney Frank would love to get more control over the regional banks to make them more amenable to political pressure as well, and the Friedman flap has given the politicians an opening.

At least Mr. Friedman is gone, but for all the harm he has done to the Fed's political independence, Mr. Kohn should resign too.

Unfortunately missing from this editorial: a demand for an SEC investigation into insider trading at Goldman Sachs and the Federal Reserve of New York...IMHO, necessary to begin to restore some confidence in the system.

More on this story from Robert Scheer at the Huffington Post, here...and Michelle Malkin, here,

A Good Sign from the White House...

The director of White House Military Affairs has resigned in the aftermath of the NYC Air Force One flyover fiasco. I can't remember Bushies or Clintonites doing the decent thing like this (remember Janet Reno "taking responsibility" for Waco but keeping her job?). Let's hope we see more such resignations in future...starting with Timothy Geithner.

FOIABlog: Update on Jarvik v. CIA

From FOIABlog:

Last fall, journalist Laurence Jarvik sued the CIA for a second time (his first suit revolved around a fee waiver). The CIA has now denied the request in full and Jarvik has sought an in camera review by the court. His most recent filings can be found here.

Happy V-E Day!

Wikipedia has the story, http://en.wikipedia.org/wiki/Victory_in_Europe_Day.

Ideoblog: Investigate Friedman's Insider Trading

From Ideoblog:

Friedman says he wasn’t involved in the Fed's decision to give AIG an $85 billion bailout, part of which was used to repay debts to Goldman. Well, maybe. But the rule against insider trading is supposed to be a prophylactic and its application doesn't depend on whether the insider participated in a particular corporate decision.

Even if there’s no problem with Friedman’s initial GS share position, the additional purchases are a different matter, particularly since Friedman never told the Fed about those purchases and never asked for a waiver.

Friedman says he bought the shares because they were “cheap.” What does that mean? In an efficient market, shares are “cheap” only if you know something. What did Friedman know? He bought shares in a bank while he was working for a branch of the agency that was running banking (not to mention the rest of the economy). Could he have known something?

As it turned out, Friedman bought the shares at prices ranging from $66 to $80/share which were trading at $127.08 on Friday, for an accrued gain of $2.7 million.

While Congress and the SEC are investigating those hedge funds, do you think maybe they could find some time for Mr. Friedman?

Text & Legislative History of Hawaii's "Islam Day" Law

I couldn't find this in the news articles on the web, so downloaded the text of HCR 100 from the Hawaiian Capitol webpage to read it without journalistic filters:

HOUSE OF REPRESENTATIVES
TWENTY-FIFTH LEGISLATURE, 2009 H.D.1
H.C.R. NO. 100
STATE OF HAWAII

HOUSE CONCURRENT
RESOLUTION

PROCLAIMING SEPTEMBER 24, 2009, AS ISLAM DAY.

1 WHEREAS, Hawaii is known for the wealth of its cultural and
2 religious diversity and the harmony with which people of many
3 cultures and religions live together; and

4

5 WHEREAS, Muslims constitute an ethnically diverse part of
6 Hawaii's cultural fabric, with around 3,000 practicing members;
7 and
8
9 WHEREAS, the Prophet Mohammad left his house to migrate to

10 Madinah and reached Quba in the vicinity of Madinah on the 12th

11 day of Rabi ul-Awwal according to the lunar calendar, or

12 September 24th according to the Gregorian calendar, thereby

13 marking the birth of Islam; and

14

15 WHEREAS, Islam, a religion with a long and noble history,

16 is the second largest religion in the world, with over one

17 billion followers spread across every continent, and including

18 members of many nations and cultures; and

19

20 WHEREAS, the Islamic world preserved and made original

21 contributions to works of science and philosophy during the

22 Middle Ages when these disciplines were threatened by bigotry

23 and prejudice in other parts of the world; and

24

25 WHEREAS, Islamic artists, scientists, and philosophers have

26 a rich history of contribution to world literature and our

27 collective scientific understanding; and

28

29 WHEREAS, the Islamic faith shares common teachings found in

30 the texts of both Christianity and Judaism, whose followers are

31 respected and considered "People of the Book"; and

HCR100 HD1 HMS 2009-3797

Page 2 100

H.D.1

H.C.R. NO.
1 WHEREAS, Islamic doctrine encourages generosity in its
2 adherents, maintaining that those who possess much have a
3 responsibility to care for those in need; and


4

5 WHEREAS, Islam, along with its monotheistic counterparts,
6 holds that peace is a divine quality and necessary for
7 collective human happiness; and
8
9 WHEREAS, Islam strives for a world-wide community which, in

10 the words of one Islamic poet philosopher, "does not recognize
11 the superficial differences of race, or history, or
12 nationality"; and
13
14 WHEREAS, the United States and countries of the Islamic
15 world hold in common many beliefs and values including concepts
16 of world community and'mutual responsibility; and
17
18 WHEREAS, international understanding and peace, as well as
19 understanding and peace in our local communities, are
20 strengthened by free and open communications among everyone
21 representing various cultural and religious traditions; and
22
23 WHEREAS, the 96th United States Congress officially
M recognized the noble qualities of Islam in a concurrent
25 resolution on October 15, 1979 (SCR 43), honoring the religion's
26 14th centennial; now, therefore,
27
28 BEIT RESOLVED by the House of Representatives of the
29 Twenty-fifth Legislature of the State of Hawaii, Regular Session
30 of 2009, the Senate concurring, that September 24, 2009, shall
31 be known as "Islam Day" to recognize the rich religious,
32 scientific, cultural, and artistic contributions Islam and the
33 Islamic world have made since their founding; and
34
35 BEIT FURTHER RESOLVED that certified copies of this
36 Concurrent Resolution be transmitted to Hawaii's congressional
37 delegation, the Governor, and the Board of the Muslim Association of Hawaii.

HCR100 HD1 HMS 2009-3797

Legislative History:

Hawaii State Legislature
2009 Regular Session
HCR100 HD1
Measure Title: PROCLAIMING SEPTEMBER 24, 2009, AS ISLAM DAY.
Report Title: Islam Day
Description:
Companion: HR79
Package: None
Current Referral: EDT
Introducer(s): BERG, HANOHANO, Belatti
Date Status Text
3/4/2009 H To be offered.
3/5/2009 H Offered
3/6/2009 H Referred to TCI, referral sheet 25
4/8/2009 H Resolution scheduled to be heard by TCI on Thursday, 04-09-09 9:30am in conference room 312.
4/9/2009 H The committee(s) recommends that the measure be deferred.
4/14/2009 H Resolution for decision making on Thursday, 04-16-09 10:00AM in conference room 312.
4/14/2009 H This measure has been deleted from the meeting scheduled on Thursday 04-16-09 10:00AM in conference room 312.
4/16/2009 H Scheduled for decision making on Thursday, 04-16-09 2:00 PM in conference room 423.
4/16/2009 H The committees on TCI recommend that the measure be PASSED, WITH AMENDMENTS. The votes were as follows: 7 Ayes: Representative(s) Manahan, Tokioka, Berg, Choy, Evans, Tsuji, Wooley; Ayes with reservations: none; Noes: none; and 3 Excused: Representative(s) McKelvey, Wakai, Marumoto.
4/16/2009 H Reported from TCI (Stand. Com. Rep. No. 1776) as amended in HD 1, recommending adoption.
4/17/2009 H Adopted as amended in HD 1 with none voting no and Keith-Agaran, Takai excused.
4/17/2009 H Transmitted to Senate.
4/20/2009 S Received from House (Hse. Com. No. 615).
4/21/2009 S Referred to EDT.
4/23/2009 S The committee(s) on EDT has scheduled a public hearing on 04-28-09 2:00PM in conference room 423.
4/28/2009 S The committee(s) on EDT recommend(s) that the measure be PASSED, UNAMENDED. The votes in EDT were as follows: 3 Aye(s): Senator(s) Fukunaga, Baker, Ige; Aye(s) with reservations: none ; 1 No(es): Senator(s) Slom; and 1 Excused: Senator(s) Hee.
5/5/2009 S Reported from EDT (Stand. Com. Rep. No. 1557) with recommendation of adoption.
5/5/2009 S One Day Notice 05-06-09.
5/6/2009 S Report and Resolution Adopted. Ayes, 22; Aye(s) with reservations: Bunda. Noes, 3 (Green, Hemmings, Slom). Excused. 0 (none). Transmitted to House.
5/6/2009 H Returned from Senate (Sen. Com. No. 783).
5/6/2009 H Resolution adopted in final form.

Sponsors BERG & HANOHANO bios:

Lyla B. Berg, Ph.D.

Dr. Berg is the owner of Lyla Berg & Associates, a company that provides consulting, training, and facilitation services on leadership development, effective communication skills, interpersonal relationships, and customer service. Her clients include financial and educational institutions, retail businesses, non-profit organizations, state agencies, and companies engaged in the visitor industry. Lyla integrates Hawaiian values and concepts in her custom-designed sessions with the belief that "thinking with a heart of ALOHA is the avenue to a successful organization." She believes that an organization's performance excellence is linked directly to its human assets and that the long-term prosperity of that organization is directly impacted by how the people of that organization interact with one another in their response to change. (source:http://www.lylaberg.com/index.php?page=biography)


Faye P. Hanohano
4th Representative District
Hawaii State Capitol, Room 303
415 South Beretania Street
Honolulu, HI 96813
phone 808-586-6530; fax 808-586-6531
From the Big Island, toll free 974-4000 + 66530
E-mail rephanohano@Capitol.hawaii.gov
Personal
Born and raised in Pahoa, Hawaii on December 21, 1953
Married to Leslie Kalani Jaime Julian
Education
University of Phoenix - MBA
University of Hawaii at Hilo - BA in Sociology
Hawaii Community College - AD in Political Science
Kamehameha Schools - High School Diploma
Political Office
Hawaii State House of Representatives, 2007 - present
District 4 ( Puna, Pahoa, Hawaiian Acres, Kalapana)
- Assistant Majority Floor Leader
Experience
Retired after 25 years from Kulani Correctional Facility
-Adult Corrections Officer - Acting Captain/Administrative Lieutenant
Former State Secretary-Treasurer of United Public Workers
- Also, negotiation chairperson for Unit 10 contract
DOE Substitute Teacher
Hawaiian Studies Lecturer at HCC
Program Coordinator at Kalani Honua and Honua Hawaii
Elected to the House: 2006 - Present (source: http://www.capitol.hawaii.gov/site1/House/members/Rep4.asp)

NY Fed Chairman Stephen Friedman's "Insider-Type" Trading

From reading Simon Johnson's BaselineScenario blog today it looks like Goldman Sachs' man at the NY Federal Reserve may be guilty of an offense that sent Martha Stewart (among others) to jail. Will he get away with it?:

The idea of a stress test, of course, is to see what goes wrong under pressure. We do this for banks with hypothetical scenarios, but when you go to see the cardiologist you need to step on a treadmill and actually get your heart rate up. The stress test for bankers is very relevant for thinking about our future financial system in three ways:

1.We are now seeing how they behaved during a boom, both in terms of compensation system and insider-type transactions.
2.We can see what happened during a crash and attempted recovery; part of which is about massive taxpayer provided subsidies (do the bankers even have the manners to say thank you?) and much of which is about tilting the playing field towards pre-provision earnings (for which Jan Hatzius of Goldman has the most eloquent exposition).
3.Most interesting, of course, is how bankers think. They regard themselves as entitled to outsized compensation that encourages excessive risk taking. They think that insider trading rules apply to other people. And they are convinced that only they – and their friends – are capable of running government in boom or bust (or in ways that boom leads to bust, at which time you buy low and then recover through large implicit support from the government.)

Really what we have seen over the past two years (a great Freudian slip from the Comptroller of the Currency on NPR last night) is a stress test of our bankers. If you think they basically did fine, then we can go about our business with essentially the same financial system that has developed in the last couple of decades.

If you have concerns about how they behaved and the potential consequences of such behavior down the road, then we need to talk further. The banks passed their stress tests, in part because these were designed by bankers and people friendly to bankers (we could also think about how our regulators have done over the past two years). But are the bankers passing their stress tests?

Also this tidbit, from today's Wall Street Journal profile:

Mr. Friedman preferred to keep a lower profile than Mr. Rubin, leading some analysts to refer to him as Goldman's "Mr. Inside."

The Enron Economy

Our hosts in Chicago screened Alex Gibney's Enron: The Smartest Guys in the Room while we were visiting. I had heard about this 2005 film from my business communication students, who apparently had been required to watch it for ethics training. What struck me about the documentary--which did a good job of capturing the psychopathic leadership and corporate culture of Enron--is that far from being a "wake-up call," Enron seems to have served instead as a model for what followed in American capitalism. Indeed, if the scandal happened today, after "stress tests," one might hear Secretary Geithner arguing for a government subsidy for Ken Lay and his cronies because the company were "too big to fail" (it was the largest energy company in the US at one point). Watching Enron's executives, listening to their voices on tape, I could only think of AIG, Halliburton-KBR, Goldman Sachs, Citibank, Moody's, Madoff, General Motors and the long list of corporate scandals involving bribery, fraud, bonuses, skimming, and corruption of various kinds that festoon our newspapers . Indeed, by comparison with today's crisis, Enron looks like nothing much. And at least the Enron story had a happier ending than we see today: Arthur Andersen went out of business, Enron collapsed and disappeared, Fastow and Skilling were convicted, and Ken Lay may have killed himself...

Why America is Angry Hamid Karzai Picked Mohammad Qasim Fahim

Perhaps because it represents an Afghan tilt towards Russia, and away from the United States (which has been "distancing" itself from Karzai)?

Some hints from Wikipedia's profile of the Afghan official:

Two views exist in regards to Fahim's past, first view holds that Fahim is the son of Abdul Matin from the Panjshir Valley. He is reported to have finished his studies in Islamic Sharia at an Arabic institute in Kabul in 1977. He went to Peshawar, Pakistan in 1978 where upon returning to Afghanistan joined Ahmad Shah Massoud in the Panjshir Valley. With the collapse of the pro-Soviet regime in Kabul in 1992, Fahim was appointed head of KHAD under interim president Sibghatullah Mojaddedi and continued to serve under president Burhanuddin Rabbani. (Bhatia, 2007[2];Brown & Oliver, 2001[3]; also [1][2][3][4][5][6]

The second views holds that, Fahim began his career as a Soviet-trained intelligence officer in the KHAD secret police in the 1970s and 80s, [7] [8] becoming deputy to future president Mohammad Najibullah. Adding that Fahim abandoned Najibullah when his government fell in 1992, and joined the forces of Ahmad Shah Massoud, [9]. In addition, he maintained close ties to Moscow (and also reportedly the Communist Party of Tajikistan)[10]

Palette & Chisel

Walking down Dearborn on our way from the Chicago Historical Society to lunch at the Arts Club of Chicago--after a bitter disappointment in front of a padlocked entrance to the now-shuttered Three Arts Club recommended for its courtyard in our 2006 Rough Guide to Chicago--someone I know and I stumbled across The Palette & Chisel Club, located in a beautiful old townhouse, perfectly preserved, as if in amber, with an art gallery instead of living and dining rooms. Definitely worth a visit. Official description on their website:

The founding members were evening students at the Art Institute of Chicago in 1895. They wanted to paint from the model under daylight, which was rather difficult since most of them worked six days a week and the Art Institute did not offer Sunday programs. Charles J. Mulligan, a member of this group, was an assistant to sculptor Lorado Taft. He was able to persuade Taft to rent the fledgling organization part of his seventh floor studio in the old Athenaeum Building on Van Buren Street in Chicago. Taft was in the habit of maintaining large, ostentatious studios - more to impress prospective clients than from need for such space. Within a short time, the Palette & Chisel membership multiplied.

In 1921, to accommodate their burgeoning numbers, members pooled their money and purchased a three story Italianate mansion at 1012 North Dearborn. It was one of the first buildings to be built in the neighborhood after the great fire of 1871. Founding member Fred Larson and several others guaranteed the mortgage using their own homes as collateral.

Early supporters of the organization included: Charlie Russel, Alphonse Mucha (a leader of the art nouveau movement), William Merrit Chase and George Bellows. Though largely a group of amateurs, the Palette & Chisel quickly began to produce artists with their own singular vision. Walter Ufer, Victor Higgins, and Martin Hennings began their art careers at the Palette & Chisel and later became famous in the West as painters in the Taos School. Later, the Palette & Chisel served as the artistic home of J. Jeffrey Grant, James Topping, Rudolph Ingerle, Eugene Savage and muralist Otto Hake. The first woman member, Ruth Van Sickle Ford, was accepted in 1961.

A contemporary survey of members would include: internationally recognized artist Richard Schmid, who served as president of the Palette & Chisel from 1986-1989; marine painter Charles Vickery; super-realist George Fischer; sculptors Margot McMahon and Patrick McKearnon.

A Chicago Sculpture Album

Saint-Gaudens' Abraham Lincoln:

From the entrance arch to the Chicago Stockyards in the Historical Society Cafe:




And a sign of the times:

Carl Holzman at the Triangle Gallery of Old Town

At the opening of his new show in Chicago, last Sunday, in front of his Sunflowers in a Talavera Pot and Fresh Pasta with Parmesan:

Daniel Pipes: Why I Supported Steven J. Rosen

From DanielPipes.org:

On the other hand, he (along with his AIPAC colleague Keith Weissman) stood accused by the Bush administration of breaching the ominously-named Espionage Act of 1917, and faced criminal charges that could have landed him in jail for years. Although he was not accused of spying, his (and our) opponents reveled in calling him an "accused spy"; and, of course, we worried about the ramifications for us if he were found guilty.

During extensive consultations with the MEF's board of governors, I found a consensus on wishing to bring on board so formidable an analyst in his hour of need mixed with apprehension about the criminal case.

Two developments resolved the dilemma for us in September 2008. Our study of the government's case convinced us of its injustice, shoddiness, arbitrariness, hollowness, and futility. Certain of Mr. Rosen's innocence, the lawsuit against him would not stop us from hiring him.

Second, world events kicked in. Seeing the Iranian drive to get the bomb as the single greatest danger both to the Middle East and to the United States (in the later case, via electro-magnetic pulse), we realized that the outgoing Bush administration would not take steps to stop the Iranian pursuit of nuclear weapons; and that Barack Obama, with his soft approach to Iran, would likely win the election.

Accordingly, the Forum in October 2008 began funding Mr. Rosen to work on ways to stop the Iranian march to nuclear weapons. He is ideal for the job, having begun efforts to stymie Iranian nuclear ambitions fifteen years ago – long before these became a general concern. Working behind the scenes, for example, he initiated efforts to develop leverage over Tehran through graduated economic sanctions by securing two presidential orders in 1995, followed by the Iran-Libya Sanctions Act of 1996 which laid the foundation for all subsequent efforts to bring economic pressure to bear against the Iranian government. He has been active in this arena ever since.

Following the inauguration, the Forum brought Mr. Rosen formally on board as a visiting fellow. In his brief time in this capacity, he initiated a Washington Project with his influential weblog, "Obama Mideast Monitor," and a new publication series called The Policy Forum. Notably, Mr. Rosen's blog started the chain of events that caused Charles Freeman to withdraw his name for consideration as chairman of the National Intelligence Council.

Then, on May 1, came the welcome news that the U.S. Department of Justice dropped its case against Messrs. Rosen and Weissman. In the words of the Washington Post, this decision amounted to "a stunning vindication" for them. Beyond that, it confirms the limits on arbitrary and prejudicial government actions.

Arianna Huffington: Geithner's "Stress Tests" Mean More Insider Trading Scandals

From today's Huffington Post:

The reason is, the banks are using this time to negotiate how much information about their portfolios the hoi polloi will be privy to, and are trying to get the government to reconsider its analyses (which are already iffy, since they are based on the banks' own estimates and on assumptions about the economy - including unemployment rates, and cumulative real estate and credit card losses -- that are hardly stress-inducing). This is the equivalent of a teacher giving a student a look at his grades and allowing the student to try to cut a better deal before report cards are sent home to mom and dad.

It shows how out of whack the power dynamic is when it comes to the administration and Wall Street. In the natural pecking order, regulators are above the regulated. They don't ask for permission. And they certainly are not worried about ruffling any feathers.

But for some reason -- the Wall Street-centric bias of Tim Geithner and Larry Summers, perhaps, or, as Joseph Stiglitz puts it, the government's confusion of "the notion of too big to fail with the notion of too big to be financially reorganized" -- the banks continue to hold the upper hand (see the cramdown debacle).

The delay in releasing the test results also opens the door to potential funny business, with some troubling insider-trading scenarios and a huge payoff, as David Min at the Center for American Progress points out.

We've already seen Goldman Sachs raise eyebrows with its sale of $2 billion in non-government-guaranteed bonds last week -- a move that sidestepped its agreement with the government not to disclose the results of its stress test, instead sending a signal to investors that there was no bad news in the stress test for Goldman. Of course, Goldman's receipt of $10 billion in TARP funds and $29 billion in bonds backed by the FDIC might have something to do with how well it is doing.

Goldman is typical of the banks' have-it-both-ways approach. By announcing its intention to repay the TARP money it received (thus freeing itself from government compensation restrictions) while continuing to issue government-backed bonds, the banking giant is acting like a man who wants all the benefits of being married while still being able to slip off his ring and have an affair anytime he feels the urge.

And then there is the trouble with the assumptions at the heart of the stress tests. As Nouriel Roubini put it: "These are not stress tests but rather fudge tests... The results of the stress tests -- even before they are published -- are not worth the paper they are written on."