Fresno County Democratic Resources

Democratic Party of Fresno County (Calendar at right has lots of events.)
SJV Democratic club
Our monthly meetings are held on the Third Wednesday at Denny’s 1110 E. Shaw Ave. beginning at 6:30pm
Social and Dinning begins at 6:00pm
Business Meeting begins at 6:30pm – 7:15PM
Program begins at 7:15pm
Adjournment About 8:00pm

Kennedy Club of the San Joaquin Valley
Meets first Saturday of each month at 9 a.m.
Denny’s Restaurant at 141 Abby St., Fresno

Hillary for America (facebook)

The deluge : the Great War, America, and the remaking of global order, 1916-1931 by J. Adam Tooze

I read this book to follow a reading group. It’s a fascinating time that I’ve mostly skimmed over–Diplomacy taught me that WWI was mostly “trench warfare”, which sounded horrific and boring.

The book begins before the US entry in WWI, discussing the leaders of the various Entente powers, their goals and motivations. Initially, Britain, France and Russia are struggling shoulder to shoulder, with Britain taking the lead on financing for the team. Russia’s implosion into civil war in 1917 made things even trickier…

The politics within the three nations (and Germany!) were opaque to me before now, but came alive and were fascinating. Britain’s relations with its colonies are tricky–particularly in India, where Muslim unity with the Hindu majority suddenly undercuts the story Britain’s been telling itself about why it’s needed. Ireland has to be bribed into supporting the war with home rule… it’s so much messier than unthinking “how the empire acts” history sits in my mind.

Wilson is more a hindrance than a help, and comes across as… too ivory towerish? He’s a man of theory, with goals that are perpendicular to the world he’s trying to interact with. His striving to establish peace without victory has some very unfortunate parallels to our intervention in modern day Syria–with a similar damning of the belligerents to longer misery. He swoops in to accept the German armistice, ignoring his allies in the war–and making Germany resent being treated like they lost the war when officially they hadn’t.

The 1920s had been flappers and war profits investigation to me; the international scene, particularly America’s insistence on repayment of the debt their allies had built up defending themselves before the US entered the war, had been much hazier. While I don’t 100% trust his take on China and Japan, there’s a lot more going on along that front than I’d put together. China was divided–differently in different years. The chapter about Chiang Kai-shek’s beginning as Soviet trained and his coup where he purged the communists out of his resistance movement was all new to me.

In fact, everything Russia seemed new. I’d never heard of Brest-Litovsk, had no idea how abject the collapse of the Russia front had been, what the internal politics of the new regime were and how they had to face democratic populists while they were struggling to get established. Similarly, Ukraine and the Baltics seemed quite happy to escape the Russian Bear… if not for long.

Long story short, it’s a good book and I learned a lot. Further, it’s written for interested amateurs–if you want a broad overview of the world almost exactly a century ago, it’s a great place to start.

Liar’s Poker by Michael Lewis

An interesting tale of life inside a big brokerage house, where the strangest behaviors are normal… if you’re a big swinging dick. It’s a weird dip into a very different life, as the author acknowledges.

It’s half a memoir; the classes and story are told from his perspective, but he takes long asides to explain the politics and organization charts that drive the activity. It sounds like the whole organization underwent a tremendous transformation shortly before he arrived, changing from a partnership with strong controls into a corporation. The older people, who’d worked in the partnership environment, stay decent for a while–out of habit and intertia–but the new kids aren’t locked in as partners, making it much less costly to defect.

A great part of the story was about the beginnings of the residential market and its CMOs. They are kissing cousins to the CDOs that featured so prominently in the 2008 crash… but I never heard of CMOs before this book.

It also demonstrates 2 decades early exactly why the brokerage firms resisted listing prices on an index. Back in the early 80s, the Solomon Brothers middlemen were able to take a huge bite–like 5%–out of mortgage trades where only they knew the prices. That lack of transparency helped drive mortgages from an ignored remnant to 40% of the profit in less than 5 years. But, as soon as their rivals had access to the prices [mostly via defectors], the margins collapsed quickly.

The relations he describes makes the movies about Wall Street sound like documentaries, instead of the wild exaggeration for the screen that I’d hoped. It’s an amazing tale, with corruption at hand at every turn. It’s amazing that he was able to avoid enough of the snares to escape… with a hefty bonus, but without permanently taking on the trader’s worldview.

What’s scary is how many of the very same things played out in the 2008 crisis–also driven by “financialized” versions of mortgages sliced into tranches. It’s crazy how much is familiar…

Anyway, well written, with terrifying foresight baked in.

Elie Mystal: I’m With Her… I Guess

I’m With Her… I Guess is basically where I am. It’s not super exciting, but it makes sense to me.

One good bit:

But I don’t understand liberals who hate Hillary Clinton. She is authentic; she is naturally bad at running for office and that painfully shows through at almost all points. But maybe you would be bad at campaigning too if you had been subjected to over two decades of vicious and often contradictory political attacks.

We’ve forced Hillary Clinton to change her hair, her clothes, and her accent. We’ve criticized her for taking too prominent a role during the Bill Clinton administration, then questioned whether being First “Lady” qualified her to run for office. She’s been the most investigated politician since Richard Nixon, yet has never been found to have committed a crime. People have said she has all of the “Clinton baggage” but none of the “Clinton charisma,” which is odd because the “baggage” is her husband cheating on her and the “charisma” is what allows her philandering husband who perjured himself to be loved, while she’s gets called “untrustworthy.”

Rise of the Warrior Cop: The Militarization of America’s Police Forces by Radley Balko

Rise of the Warrior Cop: The Militarization of America’s Police Forces is a good overview of the changes to policing, particularly as it intersects the Castle Doctrine. I’ve learned a lot and found a few congress people who took surprising stands–I want to learn more about them. (Though not enough to actually read a biography about them.)

It does a good job of establishing what the norms used to be–I’ve only lived and paid attention to politics in the era where the parties compete to be “tough” on crime by sending money to police departments and undermining traditional constitutional protections against search, etc.

One of the great strengths of the book is consolidating what’s often a background issue and documenting the changes that have propagated over time. By looking in a focused way, we can see the original predictions (this will be rare, oversight will keep this contained) break down in practice, particularly along the lines of his focus, the castle doctrine. Similarly, some good ideas (encourage community policing via COPS grants) should have worked… but when the money was misappropriated, they caved to militarization instead of risking confrontation with police departments and unions.

The heart of the book, particularly from the 90s on, is about how the drug war justified increasing militarization (drug dealers can afford assault riffles, so police need to be able to engage at even longer ranges; when they wear kevlar, police needs rounds to penetrate kevlar) and increased urgency encouraged no-knock warrants to be served ever more aggressively.

It’s a disturbing world, particularly because swimming against the current works–real community policing, in the examples provided–shows how engagement gets the support needed to solve crime. Unfortunately, the book ends with a note about the shift in recruiting tactics for the last generation. Instead of targeting conciliators and people skilled at managing the tedium of paperwork and bureaucracy, we’ve been recruiting people who want to kick butt to be our police. Reestablishing the traditional “serve the public” instead of “public as enemy” ideas throughout departments is going to be a critical test in the next few years. Once SWAT runs everything, returning to a trust and engagement model may be almost impossible. Several interviews throughout make it clear that as the break doors for the adrenaline rush forces entrench themselves, returning to traditional norms may be difficult. Difficult, but critically important.

Next Game and Discussion: April 10th

Update: Both Kev and Ben canceled, so we’re canceling altogether. Next week wouldn’t have worked for Ben or Kev either, so we’ll discuss this (and hopefully game) on the 24th.

The previous meeting (for April 3rd) didn’t work out. We’ll game as normal this week, but we also need to look into game scheduling changes due to life changes.

Recent key life changes: Ben will be available to game on only the second and fourth weekends of the month. The other weekends he’ll have Emily.
Jennifer’s work now extends to 6pm and often runs over. Should we push the official start time back to 7 pm?
I know there are others; Mike has work and car issues, Kevin is juggling school and work schedules, etc.

So, let’s put our thinking caps on. Do we need to meet less often? Can everyone coordinate their schedule for most Fridays except Ben? If so, do we want to run different games on alternating weeks? Do we think that gaming more often (like adding a Sunday game) is the direction to go?

If you have ideas about a game or campaign for the alternate weeks, and think you’ll have time to run it, let’s talk about it. The previous games we’ve played would be cool to pick back up, though there would be some character additions and subtractions that we’d need to work in.

If you know people who’d love to play, a new game start is the best time to consider expanding or contracting the group.

If you have other thoughts– I’m sure I missed obvious ideas and consequences– chime in by phone, email, or comment. Thanks!

Habeas at Bagram

Hilzoy has a good discussion about Habeas in a War Zone. I found myself nodding along with it throughout– war zones shouldn’t ordinarily have Habeus Corpus, but we shouldn’t be flying people from outside the war zone into it just to dodge the hard parts of international and domestic law.

California Governance

This post talks about organizing a Constitutional Convention for our near ungovernable state. It’s interesting, and an even more dramatic proposal than my posts last year imagined (1, 2). [Reforming the legislature by dramatically amending it via ballot initiative.]

I agree it’s an appealing thought. I also suspect that as soon as they came together it would spiral out of control, with capture by existing interests and the forces of moderation preventing a substantial fix.

Since I scribbled down my original idea, I keep noticing editorials and articles talking about ungovernable California. Our current budget crisis isn’t unique– it happens during most recessions– but it is huge and stubbornly resistant to compromise. I wonder if smaller, less completely ideologically aligned districts would be a successful first step in correcting it.

The financial crisis

This is my very non-technical understanding of why everything blew up. It’s based on articles from Paul Krugman, Tyler Cowen, newspaper reporting about the crisis, and particularly from This American Life episode 365. While it’s doubtless more complex in the details, it’s not really a tricky story and there’s no math. It just takes some time to untangle.

In the beginning

Back in 1999, the Senate votes 95-0 to deregulate CDSes. [CDS= Credit Default Swap]. At the time, this made perfect sense. Why? Well, let’s figure out what a CDS started as.

Let’s say that you have some money in savings but you’re not happy with the interest rate. If you’re very conservative [as an investor], you put the money in Treasury Bills. They don’t pay much interest, but the government has never failed to repay them and they can always print more cash if they have to. You can also put your money in a bank CD, or you can start looking at stocks and bonds.

Bonds are safer than stock– they’re debt, something like IOUs, and you’re paid off first if the company goes bankrupt. Of course, the buisness could go bankrupt and have nothing left at all, in which case your bonds are worthless… but that’s rare.

The CDS was created as a way to insure bonds. If I buy CompanyX bonds, but worry that CompanyX may oneday go bankrupt, I might look for insurance against that small chance. That insurance is a CDS. Basically, I pay FredCorp a little money every month and they promise to pay me if the company issuing the bond can’t pay it. That’s what was going on in 1999 when they decided that these instruments are complex and restricted to financially savvy people, so there’s no harm in deregulating them.

Why would you buy a CDS in 1999?

If I buy CompanyX bonds, I can make more money when they pay out their dividends than if I bought Treasury Bonds. If I’m a little worried that CompanyX might not make it, I can buy a CDS to insure me. It cuts into my profit a little, but if the dividend minus the CDS payment is higher than the Treasury Bond interest, I make a little more and I’m still completely safe. (Well, 99.9%….)

How it developed

It is now 2004 or 2006– sometime later after CDSes mutate in purpose. CDSes are still unregulated, but the CDS market is a lot bigger. It’s hard to tell how much bigger, because CDSes are private trades between companies, not tracked on a regulated exchange. Some people still use CDSes for their original purpose– to make sure their bonds are insured against a company’s collapse. But there’s a new use for CDSes that promises lots of money, though it’s very risky.

The new strategy is to buy CDSes for buisnesses when you don’t own any bonds. So I’m buying “insurance” against a company’s collapse, even though I don’t own anything that company issued. Why do you do this? Well, you can make a lot of money. The following is a paraphrase of the This American Life example that really illuminates this.

I’m Joe’s Hedge Fund, worth $100 million dollars. I tell people that I’m willing to issue CDSes for CompanyX. I get lots of interested people, who say, I’ll take it. They promise to pay me $20 million a year for my insuring their $1 billion of bonds. I’m very happy– I can double my money in five years. Because there’s no exchange, no one knows how many companies I’ve promised to insure, and because there’s no government oversght, I don’t have to have the $1 billion in case of collapse.

Why does Joe’s Hedge Fund do that?

Did you see that Joe’s Hedge Fund could double in value in just five years? As a CEO, that’s awfully tempting… look at all that growth you can report to investors. Besides CompanyX won’t go out of buisness (fingers crossed), so I’m not really at risk. [Particularly if CompanyX is perceived as “too big to fail”, implying the government will step in and keep them afloat anyway.]

Why do you buy the CDS from Joe’s fund?

For $20 million, you could get $1 billion. It’s a bet– if you’re right, you’ll make 50 times what you invested.

Sounds risky!

There are a lot of things that people did to reduce their risk. One common thing was hedging. Let’s continue the example above. Let’s say Joe’s Hedge Fund doesn’t like having a billion dollars hanging over their heads. They can buy a CDS from someone else. If they buy a $1 billion CDS for CompanyX from FredCorp for $15 million, there’s no risk left. Joe’s Hedge Fund is being paid $20 million at the risk of paying out $1 billion– but if they have to pay out the $1 billion, then FredCorp has to pay them $1 billion, which they can just pass on. See, no risk and an easy $5 million a year!

What brought it all tumbling down?

Well, remember the last paragraph of how it developed? No one knows who is insuring what CDS defaults and some people don’t have the money to pay what they’re insuring. [Remember, Joe’s Hedge Fund has only $100 million when they offer the CDS, well short of the $1 billion that they promise to pay.]

Lehman Brothers was an investment bank that has been around since 1850. It made large investments in the subprime mortgages that have been defaulting at high rates. On September 13, 2008 several companies were gathered to see if anyone wanted to buy Lehman Brothers. No one was interested in the company as a whole. The next morning they filed for bankruptcy.

By this time, the CDS market was insuring over $45 trillion dollars– in the ballpark of the world’s yearly production. One company, AIG, happened to have $400 billion of promises to pay if Lehman Brothers defaulted. They didn’t have the cash on hand, which meant that everyone depending on AIG to pay their part was now short what they needed to pay, even if they’d hedged their bets.

It sounds like it just snowballed from there. Each person’s failure to pay (even though they were insured against just this event!) rolled over onto the next person, who also couldn’t pay…

There were other problems that cropped up from Lehman’s failure, including the losses they inflicted on people who were loaning them a day’s funds on the commercial paper market.