Tag Archives: Wall Street Journal

Cheddar Revolution: Moldy Yet?

Kris Maher and Amy Merrick at WSJ:

Playing a game of political chicken, Democratic senators who fled Wisconsin to stymie restrictions on public-employee unions said Sunday they planned to come back from exile soon, betting that even though their return will allow the bill to pass, the curbs are so unpopular they’ll taint the state’s Republican governor and legislators.

The Republicans rejected the idea that the legislation would hurt the GOP. “If you think this is a bad bill for Republicans, why didn’t you stand up in the chamber and debate us about it three weeks ago?” said Senate Majority Leader Scott Fitzgerald. “People think it’s absolutely ridiculous that these 14 senators have not been in Wisconsin for three weeks.”

The Wisconsin standoff, which drew thousands of demonstrators to occupy the capitol in Madison for days at a time, has come to highlight efforts in other states to address budget problems in part by limiting the powers and benefits accorded public-sector unions.

Sen. Mark Miller said he and his fellow Democrats intend to let the full Senate vote on Gov. Scott Walker’s “budget-repair” bill, which includes the proposed limits on public unions’ collective-bargaining rights. The bill, which had been blocked because the missing Democrats were needed for the Senate to have enough members present to vote on it, is expected to pass the Republican-controlled chamber.

Eric Kleefeld at Talking Points Memo:

A return to Wisconsin at this juncture would appear to give the green light for Walker’s legislation to pass — that is, a win for Walker’s efforts to pass legislation when numerous polls show the state disapproving of Walker, and saying he should compromise. However, at this juncture it is unclear just what is going on.

In response, Miller spokesman Mike Browne released this statement, saying only that they were continuing to negotiate towards an outcome that does not strip the bargaining rights of state workers:

“It is true that negotiations were dealt a setback since last Thursday when Governor Walker responded to a sincere Democratic compromise offer with a press conference. However, Senate Democrats have continued to reach out to the Governor and Republicans through the weekend.

Democrats remain hopeful that Governor Walker and legislative Republicans will, in the near future, listen to the overwhelming majority of Wisconsinites who believe they should come to the negotiating table in good faith to reach an agreement that resolves our fiscal issues without taking away worker rights and without hurting programs that help provide health insurance for working families and prescription drugs for seniors.”

In addition, state Sen. Chris Larson released this statement:

Sen. Miller’s comments are taken out of context in the Wall Street Journal article just released. Dems will return when collective bargaining is off the table. That could be soon based on the growing public opposition to the bill and the recall efforts against Republicans. Unfortunately, the WSJ fished for the quote they wanted, skipping this key step in logic: we won’t come back until worker’s rights are preserved.

State Sen. Jon Erpenbach also told WisPolitics that Democrats are not planning to return. State Sen. Bob Jauch, who has been one of the lead negotiators, also said of Miller’s comments: “I think he’s speaking the truth that at some point – and I don’t know when soon is – at some point we have to say we’ve done all we can.”

Christian Schneider at The Corner:

The Wisconsin politerati is all atwitter today at a WSJ report indicating that senate Democrats might soon end their Illinois exile. In the article, Democratic senate leader Mark Miller says recent polls show Walker’s budget-repair bill to be politically “disastrous” for the governor, which he says will give Democrats more leverage to negotiate portions of the larger budget bill in the weeks to come.

If this is what Miller thinks, it seems like a suspect strategy — a variation on the rarely seen Let’s capitulate to our opponent because the public currently doesn’t like what he’s doing plan. How many congressional Republicans rooted for Obamacare because they thought it would show the public once and for all how unpopular government health care could be? What if Green Bay Packer quarterback Aaron Rodgers said in an interview before the Super Bowl, “Maybe it won’t be so bad if the Steelers win — imagine how sick of Ben Roethlisberger the public will be”? It sounds like Mark Miller, in today’s parlance, has convinced himself that he’s “winning.”

Perhaps Miller’s quote was a trial balloon, meant to gauge the opposition he’ll get from his base, which has spent three weeks screaming itself hoarse on the steps of the state capitol. It would be reasonable to expect some displeasure: If Democrats do return and vote on the bill without any changes — as they had indicated they would never do — cops, firefighters, and teachers are likely to ask, “Why did I just spend three weeks in the capitol pressed up against a hippie?” Indeed, within hours of the story being published, Miller was rebuffed by some members of his own caucus.

On the other hand, it is possible that Scott Walker really has waited them out. (On his last physical, does it say “Blood Type: Tiger”?) In the past three weeks, Democrats and public-sector unions (but I repeat myself) have thrown everything they have at Walker, and he hasn’t budged. (And I do mean everything: They even tried to embarrass him by exposing the fact that in high school he had a mullet and was nicknamed “the Desperado” — unaware that in Wisconsin, this is likely to increase his approval rating.)

It seems a little short-sighted for senate Democrats to believe Walker has damaged himself irreparably. Several polls show Walker’s approval rating to be in the low 40’s, but Walker almost certainly expected to take some kind of public-relations hit when he entered this standoff.

Moe Lane at Redstate:

You see, we tend to forget that politicians are not identical, like potatoes: these fourteen men and women are just that – men and women – and it’s easy to believe that they’re getting tired, sore, and fuming about how they’ve somehow become the surrogate whipping boys for a national debate on public sector unions. Some of them might even be thinking that they didn’t actually sign up for this, that this wasn’t in the job description, and that the people urging them to exile in Illinois might not really give a tinker’s dam about them or their problems. And that this situation that they’re in is getting old. Oh, sure, no doubt a few of the AWOL senators are having a ball… but some of them are not, and the loss of message discipline in the last few days shows that.

And it only takes one AWOL senators to end this nonsense.

Scott Johnson at Powerline

Jason Stein at The Milwaukee Journal Sentinel:

The leader of Senate Democrats hiding out in Illinois is seeking a face-to-face meeting with Gov. Scott Walker and the Senate GOP leader.

Senate Minority Leader Mark Miller (D-Monona) said in a letter sent out Monday that he wants to meet with Republicans “near the Wisconsin-Illinois border to formally resume serious discussions” on Walker’s budget repair bill. Two other Democratic senators met with Senate Majority Leader Scott Fitzgerald (R-Juneau) last week in Kenosha.

Democrats have been holed up south of the state line since last month to block action on Walker’s budget repair bill, which would end most collective bargaining for public employee unions in the state.

“I assure you that Democratic state senators, despite our differences and the vigorous debate we have had, remain ready and willing to find a reasonable compromise,” Miller said in the letter.

Neither Miller nor Walker spokesman Cullen Werwie could be reached immediately for further comment. Fitzgerald spokesman Andrew Welhouse had no immediate comment.

The Wall Street Journal spurred hopes of compromise Sunday with a story citing Miller and saying the Democrats would be back “soon.” But that same night Democrats knocked that down, saying that they hoped to return soon but that there was still no development to make that happen.

Miller spokesman Mike Browne said Monday morning  that he knew of no plans for Democrats to return later in the day. The senators were scheduled to meet later in the morning or early afternoon, he said.

One of the Democratic senators, Tim Cullen of Janesville, said in a phone interview Sunday that there were no developments toward a possible compromise with Republicans and no talks scheduled for this week.

Two other Democratic senators — Jon Erpenbach of Middleton and Chris Larson of Milwaukee — said Sunday their group had no plans to come back to the Capitol until Republicans addressed more of their concerns with the budget-repair bill.

“I can tell you for a fact that nothing has changed down here,” Erpenbach said.

On Monday morning, a small, dedicated group began to chant in protest of Walker’s budget-repair bill in the Capitol rotunda.

Outside the Capitol, there is little or no sign of the mass protests that have engulfed the Capitol square in recent weeks.

On the streets surrounding the Capitol, the number of satellite trucks has dwindled to two. And the only sign of an organized-labor presence is the sight of two Teamsters semi-trailers.

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Goldbook Or Facesachs?

Anupreeta Das, Robert Frank and Liz Rappaport and Wall Street Journal:

It was supposed to be Wall Street’s hottest tech deal in years: the private offering of as much as $1.5 billion in shares of Facebook Inc. And it was a coup for the company’s adviser, Goldman Sachs Group Inc., the most envied firm on the Street.

Goldman bankers burned up the phone lines in the first week of January, pushing many of their best American clients to invest in the deal. And then, on Sunday and Monday, those same advisers were on the phone with those same clients with some bad news. They wouldn’t be getting any Facebook shares after all.

Now, Goldman has a very different mission to execute: soothing a legion of irate investors.

Goldman Sachs experienced a slowdown in many of its divisions in the fourth quarter, and earnings dropped 53 percent, to $2.39 billion, or $3.79 a share.

While the per-share profit in the quarter was modestly higher than the $3.76 a share analysts polled by Thomson Reuters were projecting, it was a stark reminder of how challenging the markets had been for firms like Goldman during the last year.

David Viniar, Goldman’s chief financial officer, told analysts in a conference call on Wednesday that the revenue slowdown came amid client uncertainty about the economy and regulatory reform. With client activity down, fees dropped, too.

Revenue in its powerful fixed income, currency and commodities unit, known as F.I.C.C., fell 48 percent, to $1.64 billion, from the period a year earlier. Investment revenue, which includes equity and debt underwriting, fell 10 percent, to $1.51 billion.

Over all, net revenue in the quarter was $8.6 billion, off 10 percent from the period a year earlier. For the year, revenue minus interest expenses fell 13 percent, to $39 billion, compared with 2009. Full-year earnings were $8.35 billion, 38 percent lower than 2009.

“Market and economic conditions for much of 2010 were difficult, but the firm’s performance benefited from the strength of our global client franchise and the focus and commitment of our people,” Lloyd C. Blankfein, chairman and chief executive, said in a statement. “Looking ahead, we are seeing signs of growth and more economic activity, and we are well-positioned to help our clients expand their businesses, manage their risks and invest in the future.”

Juli Weiner at Vanity Fair:

As the bank was reminded earlier this week, though, money can’t buy Friends: Goldman’s abrupt inability to sell shares of Facebook to select American investors has not sat well with select American investors, or with Facebook. “They pushed me hard to get here and invest, and then they pull the rug out from under me,” one such spurned Goldman client told The Wall Street Journal. “The whole thing has left a bad taste in my mouth.” To describe the highly public, fruitless Facebook fiasco, one might even invoke a phrase from Goldman’s recent past: “shitty deal.”

Earlier this month, Goldman solicited certain investors with poorly written offers to purchase Facebook stock. However, given the round-the-clock, breathless coverage of the firm’s $450 million investment in Facebook, Goldman rescinded the offer to U.S. clients in deference to “rules limiting [the] marketing of private securities.” according to Bloomberg.com. “Goldman Sachs concluded that the level of media attention might not be consistent with the proper completion of a US private placement under US law,” the bank said in a statement on Monday. “We regret the consequences of this decision, but Goldman Sachs believes this is the most prudent path to take.”

Facebook executives were reportedly “miffed” about the public scrutiny surrounding the investment opportunity, according to the Journal. The offering “turned out to be far more public than they expected.” Should have checked the privacy settings!

John Cassidy at the New Yorker:

What does this mean? Over at Dealbook, Andrew Ross Sorkin fills in some details: “Federal and state regulations prohibit what is known as ‘general solicitation and advertising’ in private offerings. Firms like Goldman seeking to raise money cannot take action that resembles public promotion of the offering, like buying ads or communicating with news outlets.”

So Goldman couldn’t go ahead with the Facebook offering because it would be getting too many media inquiries? Come on. Only last week, Groupon, the group-buying Web site, raised $950 million in a private placement arranged by Allen & Co., the boutique investment bank. Extensive media coverage of that deal didn’t prevent some of Silicon Valley’s leading venture capital firms from plonking down almost a billion dollars, which Groupon is planning on using to fund its expansion prior to an I.P.O.

Goldman could easily have arranged a similar money-raising exercise for Facebook. However, it probably wouldn’t have been able to do such a deal at a valuation of fifty billion dollars—the price it has purportedly put on Mark Zuckerberg’s business. Despite Facebook’s rapid growth, many venture-capital outfits would have been reluctant to buy its equity at a multiple of thirty or forty times revenues. (Estimates of Facebook’s revenues range from one to two billion.) Rather than tapping the VCs at a lower valuation, Goldman decided to set up a special-purpose vehicle (i.e., a shell company) through which hundreds, and perhaps thousands, of wealthy individuals (American and foreign) would be offered the privilege of purchasing Facebook stock prior to an I.P.O.

With all due respect to Goldman and its high-priced attorneys, it wasn’t a hostile media that upended this plan. It was the fact that it appeared to many people (not just reporters) to be a blatant effort to circumvent the Securities Exchange Act of 1934, which decrees that any company with more than five hundred shareholders is legally obliged to issue public financial statements, something that Facebook is keen to avoid, at least for now. Under Goldman’s scheme, all the investors in its special-purpose vehicle would be counted as a single “beneficial” shareholder, thereby excluding Facebook from this disclosure provision. (An illuminating discussion of the legal niceties can be found at Dealbook.)

Having been a keen observer of Goldman for some twenty-five years (sometimes as a critic but often as an admirer of its meritocratic culture and the quality of the people it employs), little that the firm does surprises me. But this entire imbroglio has left me puzzled and raised more questions in my mind about Goldman’s senior management.

It is surely fair to assume that the bright spark in Goldman’s investment-banking division who came up with the original Facebook proposal hadn’t seen the report of the Business Standards Committee. Let’s further stipulate that when somebody more senior asked him (her) if the deal was legit, he (she) said, a) Goldman’s top lawyers had signed off on it, and b) it would give Goldman a lock on Facebook’s I.P.O., which many bankers expect to be the biggest (and most lucrative) yet seen in the United States.

Felix Salmon:

In other words, Facebook has a speculative shareholder for the first time, now that it’s made its decision to get into bed with Goldman. And Goldman will think nothing of buying puts or selling calls on Facebook shares — or even dumping its shares outright, if it’s allowed to do so — if that’s what it needs to do to protect its $450 million investment.

As the same time, however, one of the main unwritten rules of IPOs of young companies is that they always need to be priced at a level above their last funding round. If Facebook can’t IPO at a valuation significantly north of $50 billion, then it probably won’t come to market at all. (That probably explains why bidders on SecondMarket are happy to buy at a $70 billion valuation: they’re betting that when Facebook goes public, it’ll be worth more than that.)

A lot of stuff can happen to Facebook between now and a 2012 IPO. And if Goldman is shorting Facebook rather than massaging its valuation and orchestrating an IPO which values the company at $70 billion or more, then maybe Facebook won’t go public at all next year. Maybe, indeed, Facebook will learn from this whole episode that dealing with investment banks is an unpleasant and expensive exercise, and will try to avoid doing so in future as much as it possibly can.

John Hudson at The Atlantic with a round-up.

John C. Abell at Wired

Joe Weisenthal at Business Insider:

The Facebook deal itself was already going to be controversial, because at first blush it came off like Goldman finding a way to skirt securities regulations (though later it was made clear that regardless of whether it did a real IPO, Facebook would report financials).

As for the current mess, it’s still a little unclear how it happened.

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They Write Op-Eds, Too, Part III

Barack Obama in The Wall Street Journal:

For two centuries, America’s free market has not only been the source of dazzling ideas and path-breaking products, it has also been the greatest force for prosperity the world has ever known. That vibrant entrepreneurialism is the key to our continued global leadership and the success of our people.

But throughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.

From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business—burdens that have stifled innovation and have had a chilling effect on growth and jobs. At other times, we have failed to meet our basic responsibility to protect the public interest, leading to disastrous consequences. Such was the case in the run-up to the financial crisis from which we are still recovering. There, a lack of proper oversight and transparency nearly led to the collapse of the financial markets and a full-scale Depression.

Over the past two years, the goal of my administration has been to strike the right balance. And today, I am signing an executive order that makes clear that this is the operating principle of our government.

This order requires that federal agencies ensure that regulations protect our safety, health and environment while promoting economic growth. And it orders a government-wide review of the rules already on the books to remove outdated regulations that stifle job creation and make our economy less competitive. It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades.

The Executive Order

Chris Good at The Atlantic. More Good:

The business community is praising President Obama’s new regulatory initiative, while retaining a degree of skepticism that meaningful change will come.

Obama rolled out a plan this morning to minimize the burdens of regulation on businesses, introducing it in a Wall Street Journal op-ed. Obama said the administration will seek input from businesses, and he issued a memo and executive order requiring executive agencies to review existing regulations and make compliance info searchable online.

“We welcome President Obama’s intention to issue an executive order today restoring balance to government regulations,” said Thomas Donohue, president and CEO of the U.S. Chamber of Commerce, the nation’s most prominent business group.

“While a positive first step, a robust and globally competitive economy requires fundamental reform of our broken regulatory system.  Congress should reclaim some of the authority it has delegated to the agencies and implement effective checks and balances on agency power,” Donohue continued, in a statement issued by the group.

Health care and financial reform should be examined as well, Donohue said: “No major rule or regulation should be exempted from the review, including the recently enacted health care and financial reform laws.”

It remains to be seen what will come out of this new roll-out. Obama has held a tricky relationship with business as president: Business coalitions like the Chamber supported his stimulus plan at the outset of his presidency, but the pushes to reform energy, health care, and Wall Street didn’t thrill them as much.

Jonathan Adler:

It reaffirms the basic principles outlined in President Clinton’s Executive Order 12866, issued in September 1993, and continues to require agencies to conduct cost-benefit analyses of proposed rules.  As noted in the President’s op-ed, it also requires agencies to engage in  “retrospective analysis” of existing rules so as to accelerate the pace at which outdated regulations are revoked.  Specifically, it requires all agencies to develop a plan for such retrospective review within 120 days.  If the White House Office of Information and Regulatory Affairs ensures such reviews are meaningful, this could be a significant and positive step.

Michelle Malkin:

While the Sherlock Homes of 1600 Pennsylvania sleuths around in search of “the right balance” that they’ve skewed catastrophically over the last two years, the mother of all job creation-stifling regulations — Obamacare — awaits repeal.

“Balance” my you-know-what

Bruce McQuain at Q and O:

Of course on the other side of that are those saying “since when is it a function of government to decide what gas mileage a car must get?”  The entire premise that it is a function of government is built on belief in a “justified” level of intrusion far beyond that which any Constitutional scholar would or could objectively support (that’s assuming he is a scholar and an honest one).  In fact the example perfectly states the obvious difference between big government advocates and small government advocates.  BGA’s think it is government’s job to dictate such things – that it is a function of government to do so.  SGAs believe it is the market’s job to dictate such things and that government shouldn’t be involved in these sorts of things.

So in essence, while the Obama op/ed has all the proper buzz words to attempt to sell it as a pro-business, small government move, it is in fact simply a restatement of an old premise that essentially says “government belongs in the areas it is now, we just need to clean it up a little”.

This really isn’t about backing off, it’s about cleaning up.  It isn’t about letting the market work, it’s about hopefully making government work better.  And while Obama claims to want to inform us about our choices rather than restricting them, I’ll still be unable to buy a car that doesn’t meet government standards on gas mileage even if I want one.

Now that may not seem like something most of us would want – few if any of us want bad gas mileage and the cost it brings – but it does illustrate the point that government regulation really isn’t about providing choice at all, it is and always will be about limiting them.  And all the smooth talking in the world doesn’t change that.   It’s the nature of the beast.

Choire Sicha at The Awl:

The president’s last executive order was signed between Christmas and New Year’s. It codified the bias in hiring towards college graduates (and more and more in America, those without college degrees will never have access to decent work!), but at least demanded the creation of entry level positions in the government for recent college graduates and veterans. The Wall Street Journalextends a statement from the president today, promoting his new executive order, which we shall call Operation Untangling. The plan apparently means that every government agency must identify which of their regulations are stupidest, and make them go away, supposedly. For instance, Obama trumpets that they just changed the EPA regulations that ensured saccharine was treated as a toxic chemical. American, onward and upward, very, very slowly. Anyway there’s lots of dog whistle noises in here about business and regulation that are designed to appeal to particular people but judging from the reaction, it’s just another chance for everyone to complain from various opposing viewpoints about how America is broken.

Mike Konczal at Rortybomb:

It’s fine as far as it goes. Here’s where it would be helpful if Obama picked some fights and put out some reform markers, because I can’t tell if this is just cover to go after proxy access rules as a way of making peace with the business community.   It’s worth noting that, as far as I read it, we’d have the same exact financial crisis, the same criminal securitization chain, the same uncapitalized derivatives positions, the same shadow banking panic if we regulated the financial sector with these guidelines.

And the things that actually acted on these principals in the past two years – the CFPB which has consolidated regulatory burdens across agencies in order to make regulations more clear, interchange reform which created a market between credit cards and debit cards to de facto create a market rate of credit at the individual merchant level – were bitterly opposed by the industries in question.

More generally I don’t like the notion that regulation is conceptually some sort of brakes on markets, a dial that can be turned up or down until some sort of optimal space is hit. I think of regulation as a means of handling the consequences of a specific market, both by setting up the terms on which the market plays as well as the mechanisms for handling conflicts and the way things collapse.  How does a firm fail?  How do other firms compete, and under what terms is information disclosed to the market?  In some ways this is obvious: the nuclear energy market would not exist in its current form without the government.  I’d be more likely to support for crazy loans if our bankruptcy courts were designed to modify primary household debt and also if we reformed the bizarre way we deal with junior liens, a conflict people knew about at the beginning of the housing bubble.

Ann Althouse:

And here‘s the underlying Wall Street Journal op-ed by Barack Obama, which features an illustration of a man — not Obama… he looks a bit like Don Imus — in a gray business suit, running with scissors — running with scissors! — cutting his way through an abstract field of red tape. In the op-ed, Obama is all about carefully and thoughtfully weighing the value of particular regulations in relation to the burdens they impose, so the picture is amusingly inapt.

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The Mommy Wars Go International

Amy Chua at Wall Street Journal:

A lot of people wonder how Chinese parents raise such stereotypically successful kids. They wonder what these parents do to produce so many math whizzes and music prodigies, what it’s like inside the family, and whether they could do it too. Well, I can tell them, because I’ve done it. Here are some things my daughters, Sophia and Louisa, were never allowed to do:

• attend a sleepover

• have a playdate

• be in a school play

• complain about not being in a school play

• watch TV or play computer games

• choose their own extracurricular activities

• get any grade less than an A

• not be the No. 1 student in every subject except gym and drama

• play any instrument other than the piano or violin

• not play the piano or violin.

I’m using the term “Chinese mother” loosely. I know some Korean, Indian, Jamaican, Irish and Ghanaian parents who qualify too. Conversely, I know some mothers of Chinese heritage, almost always born in the West, who are not Chinese mothers, by choice or otherwise. I’m also using the term “Western parents” loosely. Western parents come in all varieties.

All the same, even when Western parents think they’re being strict, they usually don’t come close to being Chinese mothers. For example, my Western friends who consider themselves strict make their children practice their instruments 30 minutes every day. An hour at most. For a Chinese mother, the first hour is the easy part. It’s hours two and three that get tough.

Despite our squeamishness about cultural stereotypes, there are tons of studies out there showing marked and quantifiable differences between Chinese and Westerners when it comes to parenting. In one study of 50 Western American mothers and 48 Chinese immigrant mothers, almost 70% of the Western mothers said either that “stressing academic success is not good for children” or that “parents need to foster the idea that learning is fun.” By contrast, roughly 0% of the Chinese mothers felt the same way. Instead, the vast majority of the Chinese mothers said that they believe their children can be “the best” students, that “academic achievement reflects successful parenting,” and that if children did not excel at school then there was “a problem” and parents “were not doing their job.” Other studies indicate that compared to Western parents, Chinese parents spend approximately 10 times as long every day drilling academic activities with their children. By contrast, Western kids are more likely to participate in sports teams.

Maureen O’Connor at Gawker:

This weekend, I came across “Why Chinese Mothers Are Superior” by Amy Chua. Since I have a Chinese mother, I assembled my face into a self-righteous smirk and began to read. But—woe is me!—my Chinese mother’s a fraud.For Amy Chua revealed that my Chinese mother (maiden name: Lily Chua) failed her ethnicity by failing to slave-drive me with the “screaming, hair-tearing explosions” necessary for raising a superior child. Consequently, I am not a math genius who performs open heart surgery and violin concertos simultaneously, but a blogger who spends her days contemplating Katy Perry’s breasts. I learned arithmetic not by “every day drilling,” but the way every red-blooded American does, by typing equations into my TI-86 during marathon sessions of Drugwars. (Maybe I got the “sneaky Chinaman” gene instead of the “obedient Chinese daughter” one?) And my mother and I never had showdowns like this:

Back at the piano, Lulu made me pay. She punched, thrashed and kicked. She grabbed the music score and tore it to shreds. I taped the score back together and encased it in a plastic shield so that it could never be destroyed again. Then I hauled Lulu’s dollhouse to the car and told her I’d donate it to the Salvation Army piece by piece if she didn’t have “The Little White Donkey” perfect by the next day. […] When she still kept playing it wrong, I told her she was purposely working herself into a frenzy because she was secretly afraid she couldn’t do it. I told her to stop being lazy, cowardly, self-indulgent and pathetic.

“The Little White Donkey,” just like Amy Chua’s husband, a stupid caucasian ass named Jed who lacks her superior Asian childrearing skills:

“Everyone is special in their special own way,” I mimicked sarcastically. “Even losers are special in their own special way. Well don’t worry, you don’t have to lift a finger. I’m willing to put in as long as it takes, and I’m happy to be the one hated.”

Reading Amy Chua’s article, I am sad as a broken fortune cookie. If only my Chinese mother had humiliated me in newspaper articles that would plague my dating life forever—maybe I, too, could have performed piano solos in Carnegie Hall, like Amy Chua’s daughter did, according to Amy Chua. How unlucky I am: I have never hated my mother.

My only solace: that Irish-American father’s inferior academic genes came packaged with superior genes for drinking.

That said, Amy Chua appears to have absorbed a few American parenting skills, like the incessant upper-class need to one-up every other upper-class parent in the tri-state area. Mommy bragging: The virtue that unites us all.

Ann Hulbert at Slate:

Chua’s mindset and methods—bolstered by faith in Chinese family tradition—pose a useful challenge for an era haunted by a helicoptering ethos as hard to shake as it is to like. Here is an alternative to the queasy hypocrisy of typical hyperparents, buffeted by shifting expertise that leaves them anxious about overpressuring even as they push. Chua breaks through all that. She is a crusader invigorated by practicing what she preaches: the arduous work she believes necessary to do anything well, child-rearing included. Her exacting program is incredibly time-consuming and burdensome, for her as much as her kids, and is bound to look outlandish to others. (While teaching, writing her second book, and traveling constantly, Chua types up elaborate practice instructions, which freak out one of her law students when he stumbles on them—and which are to be found on pages 163-165.) But precisely because Chua slaves away as hard as her girls do, one thing her program is not is guilt-inducing. In the end, her ordeal with Lulu teaches Chua humility and proves her daughter’s very healthy autonomy—and inspires next to no regrets.

Let’s hope a furor over the book doesn’t change all that. Boris Sidis lived to regret his boastful diatribe, or at least his wife did, lamenting poor Billy’s interlude in the spotlight, which complicated an already rocky transition to adulthood that ended in a lonely retreat. “Educators, psychologists, editorial writers and newspaper readers were furious” with her husband, Sarah Sidis wrote. “And their fury was a factor in Billy’s life upon which we had not counted.” Norbert Wiener, who battled depression to become the future founder of the field of cybernetics, was devastated as a teenager when, browsing in a magazine, he learned that his father, Leo, had claimed his son’s successes as his own, while blaming failures on the boy. Proselytizing and prodigy-raising are a fraught mix.

In a coda to her book, Chua loosens up, describing how she gave her daughters the manuscript and welcomed them as collaborators. The wise girls are wary about getting roped in. “I’m sure it’s all about you anyway,” Lulu says. As they hunker down to criticize, and make her revise, revise, revise, Sophia, now 17, issues a warning well worth keeping in mind if, or when, the mommy wars erupt over Chua’s provocative portrait. “It’s not possible for you to tell the complete truth,” Sophia tells her mother. “You’ve left out so many facts. But that means no one can really understand.” Let’s not forget that it’s only how the girls themselves understand their mother’s methods that really counts in the end.

Blake Eskin at New Yorker:

It did not escape my attention that “Jewish” was not on Chua’s list, and furthermore that her softie foil in the essay was her husband, who is identified as Jed—and is presumably why their daughters can be intimidated with threats of withheld Hanukkah presents. (Minimal Internet research reveals that Jed is, like his wife, a Yale Law School professor and a published author; his last name is Rubenfeld.) Most American Jews are comfortably assimilated, although Chua could probably forge a Sino-Soviet alliance with a few Russian-speaking recent arrivals. But even in the early twentieth century, when Jews were known for toughness (see Siegel, Bugsy; Rosenbloom, Slapsie Maxie) the stereotypical Jewish mother used what Joseph Nye would call soft power, wrapping specific and restrictive ideas about her children’s future in a nurturing bosom. This blend of stubborn guidance and smothering affection has produced successful doctors, lawyers, and engineers. It has also inspired characters from Sophie Portnoy to Estelle Costanza (who, though technically not Jewish, qualifies, too), envisioned by creative children scarred by their childhoods.

Some children, Chinese and otherwise, may respond well to “Chinese mothering,” and I hope for their sake that Chua’s two daughters are among them. But it’s simply not possible that every child becomes “the No. 1 student in every subject except gym and drama.” And not every child is well served by forcing them to try. Some children will fail with tragic consequences, others, if we are more fortunate, with literary ones, finding humor and meaning in stories of suffering. In a perfectly plotted world, one of Chua’s girls will, according to plan, become the concertmistress of a world-class orchestra, and the other will avenge herself by novel or memoir—and sell more books than her mother and father combined.

Julianne Hing at Ta-Nehisi Coates’ place:

Chua’s tone is arrogant but filled just the same with bullseye observations, and I spent a long time trying to untangle the sincere from the deadpan. So much of the piece is an accurate reflection of a specific brand of hard-ass Asian parenting. But would other people be able to sense the gleeful embellishments in her piece, the way she seems to relish insulting and threatening her kids to get them to perform? And then I doubled back: was I being too charitable to read it as exaggeration?

Meanwhile, on the other side of the Internet, one of my aunties sent the piece around to other women in my family last night. “Thought you might enjoy this,” my auntie wrote to other mothers. “Were you raised by a Chinese mother … or are you perhaps one yourself?”

My mother was horrified at the piece, called it embarrassing and terrible and outrageous, said that she resented the fact that Chua used the term “Chinese mother,” even with the disclaimers at the opening that not all Chinese mothers deserve the title, and some non-Chinese mothers could be admitted to the club of harsh, ultra-strict parenting.

Like Chua, my parents sacrificed a great deal to raise me and my siblings–they make for great stories now that we’re all adults. My mom would hand us math workbooks to occupy us during car rides the way other parents hand their kids Pop Tarts or carrot sticks. She, like Chua, packed our violins in the trunk of the minivan so we could practice even while we were on vacation and forbade sleepovers and weeknight television well into my high school years. I struggled mightily with math and science and my mother would wake me up at 6 am on weekends so we could go over math drills together for hours. Letting me fail was not an option to her, though I occasionally wished she would have. Thanks to her, I didn’t.

All of this I recognize as love.

Tom Scocca at Slate:

There are many, many bizarre and debatable notions in the memoir extract that Yale law professor Amy Chua published in Saturday’s Wall Street Journal, in which she argued that screaming at one’s children to do drill work and depriving them of entertainment or social contact with their peers are the secrets to why Chinese people raise smarter and more successful children than regular decadent Americans do. A working-class Jamaican-immigrant mother, for instance—who would be an honorary “Chinese mother,” according to Chua—might be surprised to learn that good, hard parenting means spending a week at the piano, going “right through dinner into the night,” threatening and yelling at a seven-year-old girl to force her to learn a difficult piano part. Not everybody’s boss gives out flex time as readily as Yale Law does.

But mostly, as with so many child-rearing success stories, the biggest question Chua raises is: what makes you so sure you’ve succeeded? God bless Chua’s daughters, but according to some simple arithmetic and the pictures accompanying the Journal piece, they’re considerably younger than, say, 60. Or 40. Or even 25. There’s plenty of time yet to find out what fruit all those years of rigorous “Chinese” alpha parenting—no sleepovers with friends, Chua brags, no personally chosen extracurriculars, no musical instruments other than piano and violin (sorry, Yo-Yo Ma; your parents weren’t Chinese enough)—will really bear. Marv Marinovich wouldn’t let his son eat Big Macs, either. Discipline and high standards, all the way. “I don’t know if you can be a great success without being a fanatic,” was how he put it

Rebecca Greenfield at The Atlantic

Kate Zernike at The New York Times:

In the week since The Wall Street Journal published an excerpt of the new book by Amy Chua, a Yale law professor, under the headline “Why Chinese Mothers Are Superior,” Ms. Chua has received death threats, she says, and “hundreds, hundreds” of e-mails. The excerpt generated more than 5,000 comments on the newspaper’s Web site, and countless blog entries referring in shorthand to “that Tiger Mother.” Some argued that the parents of all those Asians among Harvard’s chosen few must be doing something right; many called Ms. Chua a “monster” or “nuts” — and a very savvy provocateur.

A law blog suggested a “Mommie Dearest” element to her tale (“No. Wire. Hangers! Ever!!”). Another post was titled “Parents like Amy Chua are the reason Asian-Americans like me are in therapy.” A Taiwanese video circulating on YouTube (subtitled in English) concluded that Ms. Chua would not mind if her children grew up disturbed and rebellious, as long as she sold more books.

“It’s been a little surprising, and a little bit intense, definitely,” Ms. Chua said in a phone interview on Thursday, between what she called a “24/7” effort to “clarify some misunderstandings.” Her narration, she said, was meant to be ironic and self-mocking — “I find it very funny, almost obtuse.”

But reading the book, “Battle Hymn of the Tiger Mother,” it can be hard to tell when she is kidding.

“In retrospect, these coaching suggestions seem a bit extreme,” she writes in the book after describing how she once threatened to burn her daughter’s stuffed animals if she did not play a piano composition perfectly. “On the other hand, they were highly effective.”

In interviews, she comes off as unresolved. “I think I pulled back at the right time,” she said. “I do not think there was anything abusive in my house.” Yet, she added, “I stand by a lot of my critiques of Western parenting. I think there’s a lot of questions about how you instill true self-esteem.”

David Brooks at the New York Times:

I have the opposite problem with Chua. I believe she’s coddling her children. She’s protecting them from the most intellectually demanding activities because she doesn’t understand what’s cognitively difficult and what isn’t.

Practicing a piece of music for four hours requires focused attention, but it is nowhere near as cognitively demanding as a sleepover with 14-year-old girls. Managing status rivalries, negotiating group dynamics, understanding social norms, navigating the distinction between self and group — these and other social tests impose cognitive demands that blow away any intense tutoring session or a class at Yale.

Yet mastering these arduous skills is at the very essence of achievement. Most people work in groups. We do this because groups are much more efficient at solving problems than individuals (swimmers are often motivated to have their best times as part of relay teams, not in individual events). Moreover, the performance of a group does not correlate well with the average I.Q. of the group or even with the I.Q.’s of the smartest members.

Researchers at the Massachusetts Institute of Technology and Carnegie Mellon have found that groups have a high collective intelligence when members of a group are good at reading each others’ emotions — when they take turns speaking, when the inputs from each member are managed fluidly, when they detect each others’ inclinations and strengths.

Participating in a well-functioning group is really hard. It requires the ability to trust people outside your kinship circle, read intonations and moods, understand how the psychological pieces each person brings to the room can and cannot fit together.

Laura Donovan at The Daily Caller:

In a letter to the New York Post, Sophia Chua-Rubenfeld responded to the critics of her mother’s recent Wall Street Journal piece, “Why Chinese Mothers Are Superior,” which details the numerous restrictions Chua imposed upon her two daughters during their childhood. Among many other things, Chua has been blasted for forbidding her daughters from attending sleepovers and calling one of her girls lazy, cowardly, self-indulgent, and pathetic for playing a piano piece incorrectly.

In “Why I Love My Strict Chinese Mom,” Chua-Rubenfeld says outsiders don’t know what her family is actually like.

“[Outsiders] don’t hear us cracking up over each other’s jokes,” Chua-Rubenfeld wrote. “They don’t see us eating our hamburgers with fried rice. They don’t know how much fun we have when the six of us — dogs included — squeeze into one bed and argue about what movies to download from Netflix.”

Though it was “no tea party” growing up under all Tiger Mother’s rules, Chua-Rubenfeld claims to be more independent as a result of her rigid upbringing.

“I pretty much do my own thing these days — like building greenhouses downtown, blasting Daft Punk in the car with Lulu and forcing my boyfriend to watch ‘Lord of the Rings’ with me over and over — as long as I get my piano done first,” Chua-Rubenfeld wrote.

Chua-Rubenfeld may have thicker skin than her mother’s critics think. Chua has received lots of flak for rejecting the “not good enough” birthday cards her daughters made, but Sophia writes that she wasn’t all that offended.

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Danger, Danger, Will Robinson! (Predictable Headline #424)

Mark Brown and Nathalie Boschat at WSJ:

Two leading rating firms have cautioned the U.S. on its credit rating, expressing concern over a deteriorating fiscal situation that they say needs correction.

The warnings issued Thursday echoed prior statements by the companies, however, and financial markets largely ignored them. Treasury yields, which move in the opposite direction as prices, were lower in late-morning trade and the cost of insuring U.S. debt against the risk of default, already below that of Germany, the euro-zone benchmark, barely budged.

“My traders are shrugging it off as stuff we’ve heard before,” said Tom Di Galoma, head of interest-rate trading at Guggenheim Partners in New York.

Moody’s Investors Service said in a report that the U.S. will need to reverse an upward trajectory in the debt ratios to support its triple-A rating.

“We have become increasingly clear about the fact that if there are not offsetting measures to reverse the deterioration in negative fundamentals in the U.S., the likelihood of a negative outlook over the next two years will increase,” said Sarah Carlson, senior analyst at Moody’

Kevin D. Williamson at National Review:

If you think the 2008 financial crisis was bad, ask yourself this: Who is big enough to bail out the United  States? Answer: Nobody.

Note to Washington: If you thought the Tea Party looked like an angry mob, wait until you see what happens when Social Security checks start bouncing.

James Pethokoukis:

I am pretty sure these folks will lower the U.S. debt rating the day after bond and currency markets go nuts in, as the econ guys say, “a non-linear event.”  That’s right, a Black Swan, baby. Instead of a gradual repricing of U.S. debt, there’s a sudden and seemingly unpredictable break. Of course,  a lack of action by Washington makes such a happening completely predictable.  One interesting bit is the remark by Sirou on the jobless nature of the recovery. Not only is high unemployment costly, but it is a sign of a lack of vigor in the economy. Slow growth will only make it that much harder to escape the debt trap.

Ed Morrissey:

This makes the imperative to seriously cut spending all the more urgent.   We cannot run deficits that amount to a third of our budget any longer, and we can’t afford to tax our way up to the spending level at which we currently operate.  We have to start cutting large amounts from pretty much all phases of federal government, and especially need structural reforms in entitlements to genuinely reduce spending rather than just slow the rate of increases.  And that has to happen now.

Doug Mataconis:

Even a drop from AAA to AA would mean hundreds of billions of dollars a year in additional interest expenses, which is one budget expense that we cannot cut.

As of Tuesday, the National Debt is $14,019,559,567,587.86. We are long past the time when we should have been dealing with this.

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Falling, Falling, Falling

Sudeep Reddy at WSJ:

In California, former auto worker Maria Gregg was out of work five months last year before landing a new job—at a nearly 20% pay cut.

In Massachusetts, Kevin Cronan, who lost his $150,000-a-year job as a money manager in early 2009, is now frothing cappuccinos at a Starbucks for $8.85 an hour.

In Wisconsin, Dale Szabo, a former manufacturing manager with two master’s degrees, has been searching years for a job comparable to the one he lost in 2003. He’s now a school janitor.

They are among the lucky. There are 14.5 million people on the unemployment rolls, including 6.4 million who have been jobless for more than six months.

But the decline in their fortunes points to a signature outcome of the long downturn in the labor market. Even at times of high unemployment in the past, wages have been very slow to fall; economists describe them as “sticky.” To an extent rarely seen in recessions since the Great Depression, wages for a swath of the labor force this time have taken a sharp and swift fall.

Huffington Post:

When hard times hit, employers typically are reluctant to reduce wages. But this downturn has been different: More than half the workers who found new work by early 2010 after losing jobs between 2007 and 2009 said their pay had dropped, according to Labor Department data cited in the WSJ. A full 36 percent said the new job paid 20 percent less than their former one.

While headlines have focused on the national unemployment rate of 9.4 percent, the pain extends far beyond those 14.5 million who are deemed officially unemployed by government statistics. The only other instance of such severe wage reductions since the Depression was during the recession of the early 1980s, but the current slump is on track to be far worse, the WSJ notes.

Among people who are lucky enough to have work, living standards have been significantly downgraded. Almost a third of America’s working families are now considered low-income, earning less than twice the official poverty threshold, according to a recent report. The recession reversed a period of improvement.

This trend spells a grim future for the American worker, and for the American economy.

“They’re no longer working actively, with a chance to advance and gain more experience and skills,” said Brandon Roberts, manager of the Working Poor Families Project and a co-author of the report on low-income working families. “They’re just putting pieces together to stay afloat, to meet basic needs.”

Calculated Risk:

Even for those who can find work, the impact of the great recession lingers …

Note: Wages are typically sticky downward for those workers who do not lose their jobs – but for those who lose their jobs, wages can fall sharply when they eventually find new work (this happened in the early ’80s too).

James Pethokoukis:

Some liberal economists, for instance, claim wages have been falling since the Golden Era of the 1970s. More likely that they actually went up by at leasts 20 percent in real terms, according to researchers at the Fed.  But I have no doubt that wage growth slowed during the downturn and many folks have suffered a real and permanent loss of income. I think you will hear Democrats talk more and more about wage insurance — having government temporarily make up the shortfall between old and new jobs — especially with Gene Sperling back in the White House. He is a big proponent of the policy.  And we shouldn’t forget that John McCain proposed something like this back in 2008 during the campaign.

Ezra Klein

Rob Bluey at Heritage

Ryan Avent at Free Exchange at The Economist:

Is downward wage rigidity a problem? Mr Reddy’s anecdotes indicate that many of those who’ve been without work for a long time are willing to take new jobs at significant pay cuts, but perhaps others are still holding out for the wages they’re used to.

On the other hand, there may not be jobs available for them. Why would that be the case? Why wouldn’t firms swap out older, more expensive workers for the cheaper unemployed ones available to them? One possibility is that firms are worried about the disruptive impact of such workforce turnover and have decided that it’s better to keep employing existing labour at existing wages. But then we might expect new firms to start up and hire jobless workers; if the unemployed were just as productive as the employed, new businesses could operate at a significant cost advantage over competitors. But Robert Hall argues that credit conditions remain tight for new businesses, who are the big job creators.

Or it could be that jobless workers are simply much less productive than those who continue to work. Ragu Rajan indicates that this kind of structural explanation could be behind most current unemployment, and he therefore emphasises the importance of retraining. But if so many workers are now too unproductive to hire, one has to ask why firms had them on payrolls before the recession. Mr Rajan points to the unusual growth and subsequent collapse in the construction industry, but as Mr Shimer notes unemployment has basically doubled among all subgroups within the labour force. The data seem not to point toward structural factors as the primary driver of unemployment.

Perhaps the problem is a shortfall in demand, which is preventing existing firms from expanding. It could be that the real interest rate simply isn’t low enough to induce firms to invest in new plants and equipment—investments that would produce corresponding jobs.

These are the factors with which economists are currently wrestling in an attempt to understand unemployment. I do think it’s worth pointing out that a little bout of inflation would be helpful in resolving all of the above issues, with the possible exception of structural skills mismatch. So I continue to find criticism of the Fed’s decision to resume easing perplexing.

Ed Morrissey:

In one sense, this is just the normal response to supply and demand.  Labor is a commodity in that sense, and the cost of labor increases when supply is short, and decreases when supply is glutted.  As a hiring manager for several years in the Twin Cities, we had to repeatedly increases wages across the board (not just for new hires) to keep staff on board and to entice qualified applicants to work for us when unemployment in the area was in the 3% range.  Right now it’s more like 7% in this region, and I’m certain that had I remained in that career, I would be finding it much easier to keep the call center staffed without having to raise compensation levels at all.

It may not be quite as bad as it sounds, either.  While compensation falls as the jobless have to settle into new, less-lucrative jobs, prices are also falling in other areas, especially in real estate.  Retail prices have stabilized, but retailers are still relying on heavy discounting to move inventory.  Buying power may not be declining as much as wages, although it’s certainly not increasing.

The reason that the problem is worse than at any time since the Depression, assuming that the WSJ is correct in that analysis, is that we have had the worst extended unemployment since that time.  The best way to resolve this problem is, not coincidentally, the best way to resolve the housing crisis and other economic woes: stimulate job-creating growth.  Unfortunately, as the Obama administration pursues its regulatory expansion, it will disincentivize that kind of domestic investment, which will perpetuate this problem for at least another two years.

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Parker Spitzer: The Break-Up Of The Band

Sam Schechner at Wall Street Journal:

CNN is considering replacing Kathleen Parker, co-host of its new evening program “Parker Spitzer,” according to people familiar with the matter, as the network struggles to reverse a steep slide in its evening audience.

The conservative columnist could be replaced by a new co-host to serve alongside former New York Gov. Eliot Spitzer, as executives mull a shake-up of the show, the people said, adding that no decision has been made. “Parker Spitzer” hasn’t been able to significantly build its audience since its debut just over three months ago.

Juli Weiner at Vanity Fair:

Middling cable network CNN may dispose of one half of the Parker Spitzer team. Guess which half? “CNN is considering replacing Kathleen Parker,” according to today’s Wall Street Journal. Rumors of a Parker departure have been swirling since as early as December 1, when the New York Post reported that the conservative columnist simply did not care for Eliot Spitzer. At the time, we suggested some possible Parker replacements, including Christine O’Donnell, George W. Bush, and Julian Assange. As those options are under police investigation, presumably unwilling, and under police investigation, respectively, other speculators are now recommending a new roster of potential backups. For example, Gawker proposed that “a piece of string” fill in for Parker. We like it … but think big: what about several pieces of string fashioned together to create a doll?

Flashy replacements aside, a CNN spokesperson declined to confirm or deny the rumors, telling the Journal that “the show continues to improve.” Presenting a similar sentiment last week, Phil Kent, chief executive of Turner Broadcasting, which owns CNN, characterized Parker Spitzer as “a work in progress.”

Mark Joyella at Mediaite:

CNN’s primetime programs performed poorly in 2010, which marked the network’s worst ratings performance in fourteen years.

Max Read at Gawker:

But who could bring the same ability to sit there and not talk? Ashley Dupre? Piers Morgan? Ted Williams? A piece of string?

Glynnis MacNicol at Business Insider:

The problem of course isn’t all Parker.  While her mother hen-like clucking at Spitzer – likely conceived to make viewers feel safer with the disgraced ex-governor — is interminably annoying it is far from the only problem

The show, initially taped and edited ahead of time, often feels awkward and the terrible graphics that float behind the anchor’s heads throughout are irritating and distracting.

But the real problem continues to be that Spitzer never seems to be allowed to be Spitzer: the unpredictably, fiery person New Yorkers heard so much about when he was governor. Airing the show live, and capitalizing on the unpredictability that would come along with that would be the easiest way to grab some attention.

Meantime, who to replace Parker with.   The NYPost hears it may be E.D. Hill a former Fox News anchor and co-host of “Fox and Friends” who got booted for her “terrorist fist jab” remark.

But I think CNN needs to go big here in order to reconvince people to tune.  Someone like Michelle Malkin might work — she has a wide audience, could probably hold her own with Spitzer, but is not so extreme in her views (a la Ann Coulter) as to turn off mainstream viewers.

But perhaps she’s not mainstream enough to solve the problem.  Before Parker Spitzer first went on air CNN did the regular audience testing and discovered Spitzer wasn’t as nationally recognized as they had assumed.

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