October 15, 2010

Will Mozilo get off easy with SEC?

E. Scott Reckard of the LA Times, who was a leader in reporting on the SoCal-centric subprime scandals, reports that Angelo Mozilo, former boss of Countrywide Financial, is trying to settle with the Securities & Exchange Commision without admitting wrongdoing before his civil trial on stock fraud charges starts Tuesday:
Details of the settlement couldn't immediately be determined, although defendants in SEC cases generally settle them without admitting or denying wrongdoing.

The SEC's lawsuit, filed in June 2009, also accuses former Countrywide President David Sambol and former Chief Financial Officer Eric P. Sieracki of securities fraud. It wasn't clear whether they, too, were close to settling the lawsuit.

Mozilo attorney David Siegel, Sambol attorney Walter Brown and Sieracki attorney Shirli Weiss did not return calls seeking comment. A spokesman for the SEC's enforcement division declined to comment.

Securities fraud expert John Coffee, a professor at Columbia Law School, said a settlement could help Mozilo in fighting other civil cases arising out of the Countrywide collapse.

"Any verdict in favor of the SEC would permit private plaintiffs to free ride on it and utilize those findings in their cases," Coffee said.

A settlement, on the other hand, often doesn't require a plaintiff to admit to any wrongdoing. Coffee said it would allow Mozilo to "deny everything in other litigation."

A criminal investigation of Mozilo remains open, people with knowledge of the probe said. If the SEC case is settled, federal prosecutors will not see how the evidence against Mozilo plays out in a civil trial — which could factor into their decision on whether to bring charges. Criminal charges carry a higher standard of proof.
My reading of the history of the Housing Bubble is that Mozilo was something of a prime mover among corporate tycoons in that his attempt to push Countrywide's share of the mortgage market from 10% to 30% was a key factor. He wasn't just responding to the market, he had a strategic plan to push the market. The only way to get there was to take risks on marginal borrowers. 

There were always marginal firms in that business, but Mozilo wasn't an obvious crook, fool, moonshooter, or small-timer. He'd had a good business record helping build a huge business, but when his boss David Loeb stepped down and Mozilo moved up to CEO, he was overenthusiastic.

My impression is that Mozilo was fairly sincere in thinking these marginal borrowers had been underestimated.
Still, some nine figure fines and some jail time for some big names would help get the incentives less out of whack. The latter is really the only thing that can get through to financiers. Everybody figures the government can't take all your money away, you can always sock enough of it away to live on in luxury, but jail time gets people's attention.

October 14, 2010


This latest national crises over foreclosures, with banks putting a freeze on evictions because of shoddy paperwork, is interesting because most of the examples cited in the newspapers are clearly not injustices against homeowners but merely lawyers seizing on technicalities. For example, the NYT's "From this House, a National Foreclosure Freeze," makes no attempt to say that the lady who has been living in the house without paying a dime for two years has any moral claim to more free housing or that better paperwork handling would have led to any other outcome.

On the other hand, raising the fixed costs of housing transactions by enforcing costly paperwork procedures is probably a good idea in the long run. It would make flipping and, thus, housing bubbles a little less likely.

October 13, 2010

Congratulations to Chile

It's in the tradition of Peru's 1997 rescue of 71 of the 72 hostages  held in the Japanese ambassador's residence by terrorists.Take your time and do it right.

What's the right number of writers?

The question of Who Really Wrote Shakespeare's Plays? got me thinking about the optimal number of writers for different types of writing. 

For example, the recent scientific paper asserting that modern humans had some Neanderthal genes had 56 authors. In other genres, however, one or two people (a writer and an editor, say) does most of the work. In the more show-bizzy types of writing (e.g., movies and musical comedies), writing teams are fairly common, and everybody and his brother chips in bits of business.

For example, my wife was in a dinner theatre production of a Neil Simon play once, so I made up a half dozen new jokes for her, which got just as big laughs as Simon's did. (But this can change over time in a genre: for example, New York playwrights won a lot of legal control away from producers and directors in a 1919 strike. Contractually, I'm not positive we were allowed to alter lines, but I can't imagine an old showman like Neil Simon objecting.)

Thus, it's plausible that quite a few lines in the Shakespearean canon weren't envisioned solely by Shakespeare or Oxford or Bacon or whomever, but were made up by various actors, investors, script doctors, and miscellaneous hangers-on. (We're pretty sure that various minor Shakespearean plays were co-written, but I would guess that even the masterpieces have material invented by others during rehearsals and performances.)

There's some quantitative data available for comparisons across different genres of the amount of teamwork. The Pulitzer Prizes are a good source for comparisons. The Pulitzer Prize for Fiction, first awarded in 1918, has always been won by a lone individual. In contrast, the Pulitzer Prize for Drama has been won by teams of more than one individual 13 times, typically for musicals or comedies (e.g., George S. Kaufman won twice with varying partners). So, Pulitzers for Drama go mostly to individuals, but there are enough exceptions to notice the difference between Drama and Fiction

Pulitzer Prizes won by teams: 
Letters and Drama:
Fiction: 0
Drama: 13
Poetry: 0
General Nonfiction: 2
History: 5 (or 6, if you count one book finished posthumously by another historian)
Biography / Autobiography: 4 (all biographies, I presume)

Commentary: 0
Criticism: 0
Feature Writing: 0
Investigative Reporting: 31 (with the award switching from mostly individuals to mostly teams around 1972, the year of Woodward and Bernstein)

Best Original Screenplay: 23
Best Adapted Screenplay: 21

Comedy: From 1955 to 1978, the award was for an entire series: 19 of 24 times it was won by teams (Carl Reiner won twice as an individual for the Dick Van Dyke Show). In the last 31 years, the award has been for a single episode, with 13 of 31 going to teams.

Drama: 16 of the last 31 (for single episodes) have gone to teams.

A few observations:

- Who knows who really contributed what behind the scenes? For example, it recently emerged that the stripped-down style of the hugely influential short story writer Raymond Carver was more or less invented by his editor Gordon Lish by crossing out most of the sentences in his manuscripts. For the Oscars, the Writers Guild offers a credit-dispute resolution process, in which they'll go through different drafts line-by-line to figure out who gets a statue. Of course, nonwriters can have a huge impact on screenplays. For example, Annie Hall (which won the Best Original Screenplay Oscar for Woodie Allen and Marshall Brickman) was filmed as a murder mystery. Allen's film editor eventually convinced him to cut out most of the plot and patch with  voiceover to turn it into the romantic comedy we know today.

- Dialogue-dominated genres seem to tend toward teams more than prose-dominated genres

- Older genres (e.g., poetry) seem more individualistic than newer genres (e.g., TV writing)

October 12, 2010

"Wall Street: Money Never Sleeps"

 From my column in Taki's Magazine:
A cinematic development I hadn’t expected is Oliver Stone evolving into a director who makes movies that are fair, responsible, and forgettable. His sequel Wall Street: Money Never Sleeps, with Michael Douglas returning as reptilian financier Gordon Gekko, falls squarely into all three categories. ...

Surprisingly, Stone has taken some of the criticism to heart. Thus, his recent history-inspired films have been less contrived than, say, The Social Network. Stone’s 2008 biopic about George W. Bush, W, which used mostly public utterances as private dialogue, plausibly blamed the Iraq War on the younger Bush’s Daddy Issues, something Stone knows all about.

Stone’s new movie fictionalizing 2008’s Great Crash is informative and reasonable, with the conspiracy-theorizing kept to the margins. The financial industry, Stone sagely concludes (echoing his old-fashioned stockbroker father whose 1985 death inspired the first Wall Street), should raise capital for industry, not indulge in speculation.

Yet even the most desperate advertising copywriter wouldn’t adorn a movie ad with the quote “Informative and Reasonable!” in 72-point type. And if Oliver Stone won’t indulge in malicious speculation about Wall Street, to whom can we turn? ...

Money Never Sleeps at least does continue Stone’s practice of middlebrow free association, as if he were perusing Wikipedia on acid. Just as Gordon “Greed Is Good” Gekko’s name is a mashup of the lizard and Gordon Getty, once the richest man on the Forbes 400, Josh Brolin’s handsome villain is called “Bretton James,” an apparent concoction of Jamie Dimon of JPMorgan Chase & Co. and 1944’s Bretton Woods trade conference that set up the IMF and the World Bank, so you know he's rich and connected.

Read the whole thing there.

October 11, 2010

Ask Them

From my new VDARE.com column:
It’s time for Republican candidates to address Hispanic voters directly over illegal immigration.

As a general rule, human beings respond more constructively to being challenged than to being pandered to. Hence, GOP candidates should forthrightly ask for the support of Hispanic voters in opposing illegal immigration.
“My Democrat opponent expects you to vote for him because he assumes that on the issue of illegal immigration, you vote as Mexicans, as Salvadorans, as Colombians, or so forth. In contrast, I expect you to vote as patriotic American citizens because more illegal immigration is bad for American citizens. As President Kennedy said: ‘And so, my fellow Americans: ask not what your country can do for you—ask what you can do for your country.’”

Would this work? Would appealing to Hispanic voters as patriotic Americans rather than as entitled ethnics convert some to voting Republican?

Maybe—maybe not.

But how could it be worse than the Rove rout?

More importantly, a straightforward appeal to Hispanic patriotism would subvert the MSM’s dominant trope that being against illegal immigration is somehow shameful. 

Read the whole thing there.

Two kinds of Italians

From the New York Times:
In the raucous race for governor of New York this year between Andrew M. Cuomo and Carl P. Paladino, an unexpected debate is mesmerizing the Italian-American community and increasingly spilling out into public view: Is the contest shattering long-held ethnic stereotypes or reinforcing them?

The tension has recast a milestone election for the state’s largest ethnic group, which has spent decades battling for political might.

But the two men are starkly different in how they view and express their Italian identity. 
Mr. Cuomo, the Democrat who is the state’s attorney general, prides himself on transcending the image of the unpolished, old-country Italian, and credits his father, Mario M. Cuomo, the former governor of New York, for debunking many of those stereotypes. ...

By contrast, Mr. Paladino, a Republican real estate developer from Buffalo, seems to relish his reputation as an undiluted, street-smart, up-by-the-bootstraps Italian. 
He travels to Italy up to a dozen times a year. He sometimes lapses into Italian. And he developed a habit of greeting associates, Italian-style, with a kiss on the cheek.

Paladino and Cuomo exemplify two quite different but equally stereotypical Italian male personalities, the boisterous Sonny Corleone and the watchful Michael Corleone. This split can be seen in two center-right prime ministers of Italy, Berlusconi and Andreotti (who barely moves his hands when he talks).

The quiet, cautious Italians get less publicity, of course, but remembering them helps you understand things like why the Italian World Cup soccer team is traditionally among the least flashy. They would be extremely satisfied getting out of the first round with a 1-0 win followed by two nil-nil draws.

Henry Kissinger, a close student of stereotypes, cited the more boring Suspicious Peasant version in his 1986 article on how World Cup teams reflect national character:
The Italian style reflects the national conviction, forged by the vicissitudes of an ancient history, that the grim struggle for survival must be based on a careful husbanding of energy for the main task. It presupposes a correct assessment of the opponent's character, paired with an unostentatious and matter-of-fact perseverance that obscures many intricate levels on which the competition takes place. . ...  But once the Italian team has imposed its pattern, it can play some of the most effective, even beautiful soccer in the world -- though it will never waste energy simply on looking good.

Henry Louis Gates on Malcolm Gladwell's family tree

Harvard professor Henry Louis Gates is continuing his series of DNA and genealogical inquiries into the makeup of various celebrities. The usual pattern is that the celebrities turn out to be a little whiter than they had expected. For example, Mexican-American actress Eva Longoria turned out to 70% European, which surprised her because she thought she'd be more like 70% nonwhite.

Now Gates has an article in The Root about New Yorker writer Malcolm Gladwell's genealogy. Gladwell's own discussions of his family tree (English on his father's side, Northwest European, Jewish, and middle class mulatto on his Jamaican mother's side) have always struck me as well-adjusted, without much in the way of Obamaesque self-torment. His affection for both his parents is clear. Growing up in Canada, he had pretty dispassionate opinions on race. He didn't seem to possess an Obama-like realization of the how far you could go in America on being part-black until after he'd already become a star in New York with his first bestseller The Turning Point, at which point he finally grew his Richard Simmons-like 'fro that is the only thing that helps you notice that he's part black.

The last (and best) chapter in Gladwell's recent bestseller Outliers concerns his Jamaican free-persons-of-color family tree. He drew from his family history an innocuous conclusion about how everybody in Jamaica could grow up to be a New Yorker writer if not for the discrimination that his middle class mulatto ancestors practiced by not marrying blacks, but it seems likely that his ancestors drew opposite lessons from their history about the importance of careful mate choice.

So, the only thing Gates can trip Gladwell up on is his pride in there being a slave or two not very far back in his family tree:
In the end, we failed to find a single slave in Malcolm's Jamaican ancestry. What's more, we found a stunning instance of the opposite: black slave owners on the family tree. ...

This means that Malcolm's fifth-great-grandmother, a free woman of color, owned slaves. She even spelled one of them out by name, leaving her slave "Ruthie" to her grandson, Malcolm's third-great-grandfather Benjamin Samuel Levy, another free man of color.

"Oh my goodness," said Malcolm, stunned. "The kind of mental jujitsu you have to go through is quite remarkable. It was a class-based society, and so color was class, class was color. There it is. How far back in her history do we have to go, do we think, to find a slave? Her mother or maybe her grandmother?"

I told Malcolm that we didn't know. Margaret Mullings is as far back along that line of his family as we could go. Her mother, most likely, was not a slave. But beyond that, it is unclear. Obviously, Malcolm descends from slaves at some point in his family tree: every black person in the New World, except for recent immigrants from Africa, did. But his ancestors did not stay slaves for very long. And as soon as they were free and could afford to do so, it appears that they began to buy slaves themselves.

Malcolm quite correctly perceived Margaret's decision to own slaves as a class issue. "I'm assuming it's a way of underscoring your new status," he said. "If you are a member of this special privileged class and you would like to heighten your position and assert your whiteness, having a slave is certainly one sign of doing that, isn't it?"

The answer to that question is, of course, yes. But I also tend to think the issue was perhaps simpler, more crudely economic. Margaret Mullings had a farm; she needed workers, and the workers were slaves. That was the system. Does that let her off the moral hook? No. But it was the system.

It would be interesting to find out how far back in the President's African family tree you'd have to go to find slaveowners.

October 10, 2010

My favorite theory of who wrote Shakespeare's plays

"Another hot debate I remember I was in had to do with the identity of Shakespeare. No color was involved there; I just got intrigued over the Shakespearean dilemma. The King James translation of the Bible is considered the greatest piece of literature in English. … Well, if Shakespeare existed, he was then the top poet around. … If he existed, why didn’t King James use him? … In the prison debates I argued for the theory that King James himself was the real poet who used the nom de plume Shakespeare."
The Autobiography of Malcolm X

Of course, any book involving Alex Haley raises its own issues of authenticity.


I once read a scholarly biography of Shakespeare, which made for an odd experience since we know a fair amount about Shakespeare from property records and the like -- England having enjoyed careful registration of deeds and contracts for many centuries (perhaps more careful, it appears, than in 21st Century America) -- but none of it shedding much light on what we're most interested in: how Shakespeare came to write his plays.

Perhaps not surprisingly, considering the paucity of contemporaneous comment on Shakespeare as a writer, a couple of centuries later various people began to argue that somebody else must have written Shakespeare's plays. As Mark Twain pointed out, there's very little contemporaneous record (at least still remaining) of anybody noticing Shakespeare's retirement or death.

On the other hand, there's even less comment from the early 17th Century suggesting anybody else wrote them.

The truth is that there is always an absolutely colossal amount of popular culture, the vast majority of which is almost quickly forgotten, except for a tiny fraction that stays in a few influential people's minds and comes to form our heritage of high culture.

I suspect it would have been extremely surprising to people in England at the time of Shakespeare's death that 400 years later anybody would be interested in debating who wrote Shakespeare's plays. It's like the joke that drives the plot of Bill & Ted's Excellent Adventure: that a representative of a future civilization has to journey back in time to make sure that Bill & Ted don't have a high school falling out because the heavy metal music of the band they form after high school, Wyld Stallyns, is the basis of all cultural life in the 27th Century.

For another example, think back to the absolutely countless number of funny morning disk jockeys there used to be in America before satellite hook-ups turned local businesses into another winner-take-all industry. What if bootleg recordings of one of them came to be recognized in another generation or two as works of genius? People would wonder why almost nobody had noticed when the great genius disk jockey had been fired.

For example, from age 10 to 13, I thought the funniest guy in the world was the morning man at an underpowered San Fernando Valley radio station KGIL, Dick Whittington, who specialized in zany stunts like announcing that since the Vietnam War was so depressing, America needed to by cheered up by winning a war. Therefore, he led 10,000 listeners on an invasion and conquest of Catalina Island in 1972. And then after a number of years, he quit or got fired, and everybody instantly lost interest, the way most Londoners lost interest in Shakespeare when he retired back to Stratford.

This being the Internet Age, I can quickly find out that there are a few other people out there who have also thought about Dick Whittington in the last 20 years. From them, I can find out that, to my surprise, Whittington appears to be still alive, in retirement on the Central California coast, putatively writing an autobiographical novel. But, for the benefit of the anti-Stratfordians, I can point out that nobody seems to know anything else about Whittington, such as what his real name was, was he Jewish or gentile, straight or gay, how did he survive the Great Hollywood Snowstorm, and so forth?

Do recordings still exist of Dick Whittington's old radio shows? If they do, will our civilization someday come to be based upon them? Will we then have debates over whether he really existed or whether he was just a front man reading rants written for him by more historically significant characters in California  at the time, such as, say, Richard Feynman or Ronald Reagan?

P.S., The corollary of all this is that almost nobody whom we think of as long having not gotten his due was wholly ignored in his own time. For example, Jane Austen's reputation has grown to new and dizzy heights in my own lifetime. Yet, she was by no means unknown in her own. She was a bestselling author, the Prince Regent was an outspoken fan. And then she died, so interest fell off. But a few writers, often the very best, kept reading here and speaking up for her and her reputation endured, then soared in the last few decades. But the point is that rediscovered artists were almost never unknown in their own times. Even Vermeer was a big deal in his prime and during the lost centuries continued to a obsess a narrow lineage of connoisseurs.