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Hometown: Ann Arbor, Michigan
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Weekend Economists Commemorate the Dark Knight July 25-27, 2014

It was a time of uncertainty and peril, great crimes and general chaos....

Debuting in 1938 and 1939 respectively, Superman and Batman have always had an implicit correlation. The only reason Batman was even conceived by Bill Finger and Bob Kane was due to DC Comics wanting to create a hero like Superman. Keep in mind this is before there was really a “superhero” genre to draw from, so they seemed similar enough.

Ironically, the characters have been re-envisioned over time as diametrically opposed. Superman – the “Blue Boy Scout” – surveys Metropolis, a city that is as much the pinnacle of civilization as he is the pinnacle of heroism. Batman – the “Dark Knight Detective” – prowls Gotham, a slum so corrupt that it warrants having a shadowy vigilante protecting it. They’re kinda different...

While both heroes have strict codes against killing, that wasn’t always the case. Before the Comics Code Authority in the 50′s forced comic book companies to adhere to strict censorship, it wasn’t uncommon for either Superman or Batman to cause the death of a criminal through accident or intention. In Batman’s first appearance, he casually chucks a criminal off a roof! Post-Comics Code Authority, both heroes have curbed their violence, but Batman often still has murderous impulses.

In “The Dark Knight Returns”, Batman rigs some thugs’ bomb to blow up before they can use it, resulting in their deaths. He muses that “two men die, leaving the world no poorer”. Compare that to the anguish Superman has over killing Zod, someone much more threatening than two mooks. As the paragon of heroism, it wouldn’t be crazy to think Superman might find Batman’s laxness towards violence objectionable and confront him over it. That’s not even mentioning some of Bats’ other questionable methods such as using children as partners, terrifying citizens, and using nigh-lethal weaponry.

...If a random mugger shot a ten year old’s parents in front of him, that kid would probably grow up with trust issues. Likewise, Batman is often shown to distrustful of people’s intentions, even other superheroes...


In large part, the character and history of Batman is defined by the medium: comic books.

While the form originated in 1933, American comic books first gained popularity after the 1938 publication of Action Comics, which included the debut of the superhero Superman. This was followed by a superhero boom that lasted until the end of World War II. After the war, while superheroes were marginalized, the comic book industry rapidly expanded, and genres such as horror, crime and romance became popular. The 1950s saw a gradual decline, due especially to new censorship laws and the spread of television. The 1960s saw a superhero revival, and superheroes continue to be the dominant character archetype into the 21st century today.

Since the later 20th century, comic books have gained note as collectable items. Comic shops cater to fans, and particularly valuable issues have fetched in excess of a million dollars. Systems of grading comic books have emerged, and plastic bags and backing boards are available to maintain the comic books' condition....

Aficionados know the period from the late 1930s through roughly the end of the 1940s as the Golden Age of comic books. It featured extremely large print-runs, with Action Comics and Captain Marvel selling over half a million copies a month each; comics provided very popular cheap entertainment during World War II especially among soldiers, but with erratic quality in stories, art, and printing. Unusually, the comics industry provided jobs to an ethnic cross-section of Americans (particularly Jews), albeit often at low wages and in sweatshop working-conditions. In the early 1940s over 90 percent of girls and boys from seven to seventeen read comic books.

Following the end of World War II, the popularity of superheroes greatly diminished, while the comic book industry itself expanded. A few standard characters like Superman, Batman and Wonder Woman continued to sell, but superheroes as a genre became relegated to the status of a subgenre of adventure comics, a genre which itself was not amongst the popular genres at the time. Between 1950 and 1952 all attempts at publishing new superhero comic books were in vain.

Dell's comic books accounted for a third of all North American sales in the early 1950s. Its 90 titles averaged a circulation of 800,000 copies each issue, with Walt Disney's Comics and Stories peaking with a circulation of three million in 1953. Eleven of the top 25 best-selling comic books at the time were Dell titles. Out of forty publishers active in 1954, Dell, Atlas (Marvel), DC and Archie were the major players sales-wise. By this time, former big-time players Fawcett and Fiction house had ceased publishing.

Circulation peaked out in 1952, when 3161 issues of various comics were published with total circulation at about one billion. After 1952, the number of individual releases dropped every year for the rest of the decade, with the biggest losses coming in 1955–56. These rapid losses followed the introduction of laws that curbed the sales of comic books that were seen as being harmful to children, as well as a crackdown on press wholesalers by the U.S. Senate, which freed retailers from tie-ins. While there was only a 9% drop in the number of releases between 1952 and 1953, circulation plummeted by an estimated 30–40%. The cause of the decrease is not entirely certain. Television had come to provide competition with comic books, or the rise of conservative values that came with the election of Dwight Eisenhower. The Comics Code Authority, a self-censoring body founded to curb juvenile delinquency believed to be influenced by crime and horror comics, has been targeted as the culprit, though sales had begun to drop the year before it was founded. The major publishers were largely unaffected by the drop, but smaller publishers like EC (the prime target of the CCA) were wiped out. By the 1960s, output stabilized at about 1500 releases per year.

The dominant comic book genres of the post-CCA 1950s were funny animals, humor, romance, television properties and Westerns. Detective, fantasy, teen and war comics were also popular, while adventure, science fiction, superheroes and comic strip reprints were in decline, with Famous Funnies seeing its last issue in 1955.


Batman and other comic books were basic cheap, fantasy entertainment for the young and not terribly sophisticated. I remember scrounging for 6 pop bottles (2 cents deposit) to buy the latest 12 cent issue...

Painful Progress in Detroit



If the measure of a good compromise is that everyone is left unhappy, the Detroit bankruptcy plan certainly qualifies.

Detroit’s municipal retirees have approved a restructuring blueprint that will cut their promised pension payouts significantly as part of a larger effort to reduce the city’s $18 billion debt. Other creditors rejected the blueprint, including hedge funds and bond insurers that hold or back billions of dollars in municipal debt. One of their complaints is that the blueprint unfairly discriminates against them in favor of pensioners. Another complaint, advanced by a group of bondholders who would receive 100 percent of their principal under the plan, is that their losses are too great compared with what they would have made under the bonds’ original terms.

The next step is for Judge Steven Rhodes of federal bankruptcy court to hold a trial, scheduled to begin on Aug. 14, at which the City of Detroit will have to make the case for the blueprint, while objectors argue against it. If the judge finds the plan legal, equitable, fair and feasible, he would confirm it, in effect, forcing the blueprint’s terms on the “no” voters. Whatever the result, there will be no victories. Pensioners voted yes not because they were getting a sweet deal, but because they faced even deeper cuts — potentially as high as 27 percent of monthly benefits for some retirees — if they voted no. To avert such a crippling blow, the State of Michigan, nonprofit foundations and donors to the Detroit Institute of the Arts pledged $816 million to reduce the planned pension cutback and to protect the city’s art collection from being sold to pay off bondholders — but only if the pensioners approved the blueprint and if the judge confirms the plan. Nonuniformed city retirees now face cuts to their monthly pension payments of 4.5 percent, the elimination of annual cost-of-living adjustments and, for some, claw backs of annuity payments deemed excessive. Police and fire retirees, who are not covered by Social Security, face deep cuts to annual cost-of-living adjustments.

The no votes, in contrast, basically reflect the hopes of bondholders for a better deal, which they have the right to fight for. Some of their grievances involve complex legal issues that clearly need to be resolved in court. But there is no doubt that municipal pensioners who voted yes on the blueprint are a more vulnerable constituency than the financial institutions that voted no. The pensioners also have negotiated in good faith on a plan that is now Detroit’s best hope for making a fresh start. By comparison, most of the other creditors are professional investors who knew or should have known the risks of lending money to Detroit yet now find themselves calling for deeper pension cuts or auctioning off masterpieces in order to minimize their losses. Their no votes on the blueprint — and their probable appeal if Judge Rhodes confirms the blueprint — will only further delay Detroit’s restructuring and deepen its misery.

For now, the painful bankruptcy process is moving forward as it should. The outcome is uncertain, but one thing is sure: The people of Detroit have suffered enough.


Hedge funds escaped billions in taxes


Two large banks used a complex financial scheme to help 13 hedge funds avoid paying billions of dollars in taxes and evade federal borrowing limits on brokerage accounts over a 15-year period, according to the findings of a Senate subcommittee investigation. Deutsche Bank and Barclays Bank sold "basket options" to the hedge funds that allowed the funds to report trading profits as long-term capital gains for tax purposes, even though 97% of the assets were held for less than six months, the Senate Permanent Subcommittee on Investigations said. Also, the trades were made in the banks' accounts so that the hedge funds would not be subject to leverage limits that prevent banks from lending more than $2 for every dollar put up by the hedge funds, according to its report. The funds, however, controlled all assets, executed all the trades and reaped the profits, the subcommittee said.

From 1998 to 2013, its report said, the banks sold 199 basket options to hedge funds to conduct more than $100 billion in trades. One fund, Renaissance Technologies, earned about $34 billion in profits and avoided paying $6.8 billion in taxes through the financial legerdemain, the report said. The subcommittee's findings focused on two hedge funds — Renaissance and George Weiss Associates — because it said they were involved in the single-largest volumes of trades.

"Ordinary Americans have shouldered the tax burden these hedge funds shrugged off," said Sen. Carl Levin, D-Mich, chairman of the subcommittee. "The same ordinary Americans would pay another price if the reckless borrowing outside of federal safeguards would blow up."

Deutsche Bank said in a statement: "The options offered by Deutsche Bank which were discussed in the Committee's report were at all times fully compliant with applicable laws, regulations and guidance. Moreover, they were a niche offering to a small number of clients over a discrete period of time which we completely ceased offering in 2010. We fully cooperated with the Committee throughout its investigation."

Barclays said in a statement that it "has been fully compliant with the law, has cooperated with the committee and looks forward to continuing that cooperation at the hearing. "

In a statement, Renaissance spokesman Jonathan Gasthalter said: "We believe that the tax treatment for the option transactions being reviewed by the (subcommittee) is appropriate under current law. These options provide Renaissance with substantial business benefits regardless of their duration. The IRS already has been reviewing these option transactions for over six years, and Renaissance has cooperated fully with both reviews."

George Weiss Associates said it terminated its basket options in May 2010 "because of increasing market volatility." It added, "basket options are lawful financial instruments often used to obtain leverage."

The basket options will be the subject of a subcommittee hearing Tuesday morning.

According to the subcommittee's findings, Deutsche Bank began selling the basket options in 1998 and Barclays started offering them in 2002. By exercising the option, a hedge fund would either make or lose money based on the results of millions of trades over many months. Since they often waited more than a year to exercise the option, the hedge funds treated the profits as long-term gains. The subcommittee, however, says the option was simply an artifice and the funds made an average 26 million to 36 million trades during the year, holding many positions for only seconds. As a result, the trades should have been part of a normal brokerage account, and the funds should have been paying an ordinary income tax rate for short-term gains, which is as high as 39% instead of a 15% or 20% rate for long-term capital gains.

In 2010, the Internal Revenue Service issued a memorandum that said basket options with constantly changing assets were not true options and investors must recognize the gains or losses when they occurred rather than when an option was exercised. At that time, Barclays continued offering new options for two years, the Senate report said. Deutsche Bank stopped offering new options but continued to administer existing ones. In 2012, the IRS notified Renaissance that it would not allow basket option profits from trades lasting less than 12 months to be treated as long-term capital gains and sought additional taxes from the company, the report said. Renaissance submitted a letter opposing the finding and the matter is now awaiting an appeal.

By conducting trades in the banks' accounts, the banks were able to provide the hedge funds as much as $20 in loans for each dollar put up by the funds, according to the report. While the hedge funds controlled all of the trades, the banks contend they were simply acting as investment advisers, the subcommittee said. The subcommittee said the banks also profited from the scheme, with Deutsche Bank earning $570 million in financing, trading and other fees and Barclays taking in $655 million. The subcommittee says the IRS should audit hedge funds that used basket options from Deutsche Bank or Barclays and collect unpaid taxes. Regulators also should step up their scrutiny of these transactions. The Treasury Department and the IRS also should simplify the rules so that regulators don't have to notify potentially thousands of a hedge fund's partners to conduct an audit, the subcommittee said.

Meet Executive Order 12333: The Reagan rule that lets the NSA spy on Americans By John Napier


John Napier Tye served as section chief for Internet freedom in the State Department’s Bureau of Democracy, Human Rights and Labor from January 2011 to April 2014. He is now a legal director of Avaaz, a global advocacy organization.

In March I received a call from the White House counsel’s office regarding a speech I had prepared for my boss at the State Department. The speech was about the impact that the disclosure of National Security Agency surveillance practices would have on U.S. Internet freedom policies. The draft stated that “if U.S. citizens disagree with congressional and executive branch determinations about the proper scope of signals intelligence activities, they have the opportunity to change the policy through our democratic process.” But the White House counsel’s office told me that no, that wasn’t true. I was instructed to amend the line, making a general reference to “our laws and policies,” rather than our intelligence practices. I did. Even after all the reforms President Obama has announced, some intelligence practices remain so secret, even from members of Congress, that there is no opportunity for our democracy to change them.

Public debate about the bulk collection of U.S. citizens’ data by the NSA has focused largely on Section 215 of the Patriot Act, through which the government obtains court orders to compel American telecommunications companies to turn over phone data. But Section 215 is a small part of the picture and does not include the universe of collection and storage of communications by U.S. persons authorized under Executive Order 12333. From 2011 until April of this year, I worked on global Internet freedom policy as a civil servant at the State Department. In that capacity, I was cleared to receive top-secret and “sensitive compartmented” information. Based in part on classified facts that I am prohibited by law from publishing, I believe that Americans should be even more concerned about the collection and storage of their communications under Executive Order 12333 than under Section 215.

Bulk data collection that occurs inside the United States contains built-in protections for U.S. persons, defined as U.S. citizens, permanent residents and companies. Such collection must be authorized by statute and is subject to oversight from Congress and the Foreign Intelligence Surveillance Court. The statutes set a high bar for collecting the content of communications by U.S. persons. For example, Section 215 permits the bulk collection only of U.S. telephone metadata — lists of incoming and outgoing phone numbers — but not audio of the calls. Executive Order 12333 contains no such protections for U.S. persons if the collection occurs outside U.S. borders. Issued by President Ronald Reagan in 1981 to authorize foreign intelligence investigations, 12333 is not a statute and has never been subject to meaningful oversight from Congress or any court. Sen. Dianne Feinstein (D-Calif.), chairman of the Senate Select Committee on Intelligence, has said that the committee has not been able to “sufficiently” oversee activities conducted under 12333. Unlike Section 215, the executive order authorizes collection of the content of communications, not just metadata, even for U.S. persons. Such persons cannot be individually targeted under 12333 without a court order. However, if the contents of a U.S. person’s communications are “incidentally” collected (an NSA term of art) in the course of a lawful overseas foreign intelligence investigation, then Section 2.3(c) of the executive order explicitly authorizes their retention. It does not require that the affected U.S. persons be suspected of wrongdoing and places no limits on the volume of communications by U.S. persons that may be collected and retained.

“Incidental” collection may sound insignificant, but it is a legal loophole that can be stretched very wide. Remember that the NSA is building a data center in Utah five times the size of the U.S. Capitol building, with its own power plant that will reportedly burn $40 million a year in electricity. “Incidental collection” might need its own power plant...Before I left the State Department, I filed a complaint with the department’s inspector general, arguing that the current system of collection and storage of communications by U.S. persons under Executive Order 12333 violates the Fourth Amendment, which prohibits unreasonable searches and seizures. I have also brought my complaint to the House and Senate intelligence committees and to the inspector general of the NSA....I am not the first person with knowledge of classified activities to publicly voice concerns about the collection and retention of communications by U.S. persons under 12333. The president’s own Review Group on Intelligence and Communication Technologies, in Recommendation 12 of its public report, addressed the matter. But the review group coded its references in a way that masked the true nature of the problem....When I started at the State Department, I took an oath to protect the Constitution of the United States. I don’t believe that there is any valid interpretation of the Fourth Amendment that could permit the government to collect and store a large portion of U.S. citizens’ online communications, without any court or congressional oversight, and without any suspicion of wrongdoing. Such a legal regime risks abuse in the long run, regardless of whether one trusts the individuals in office at a particular moment.

I am coming forward because I think Americans deserve an honest answer to the simple question: What kind of data is the NSA collecting on millions, or hundreds of millions, of Americans?


Most of the World Doesn’t Like Our Unaccountable Flying Death Robots By: Jon Walker



Amazingly, American flying robots that can rain death down on almost anywhere on Earth, with very little accountability, are not popular among the people forced to live on Earth. From Pew Research:

Widespread Opposition to Drones

Nothing wins hearts and minds like flying death machines.

How to clean up a broken CFL bulb


If a fluorescent light comes crashing down onto your kitchen floor, releasing the mercury trapped within, you don't need to panic. Just follow these steps to safely get things cleaned up...
First things first, you don't need to panic. While mercury is nothing to play around with, the amount contained inside a standard CFL is only about 1 percent of the amount that you'll find inside an old-fashioned mercury thermometer. Still, to be safe, you'll want to be sure that you clean the mess up correctly -- here's how to do just that, per EPA standards.

Step one: Air out the area

As soon as that bulb breaks, you'll want to let the room air out for about 15 minutes. Get everyone out (especially pets, who might be inclined to investigate the mess), then open the windows and shut the doors. You'll also want to be sure and turn off your central air -- the last thing you want is to circulate that mercury throughout your home.

Step two: Find a sealable container

While you're avoiding the area in question, go ahead and take a moment to find something capable of containing that broken bulb. A glass jar with a metal lid is ideal, but if you don't have one handy, a plastic food container or even a sealable plastic bag will do the trick.

Step three: Pick up the pieces

You'll be tempted to sweep everything up with a broom -- but don't. Anything that rifles through the broken bits of your bulb is going to risk mercury contamination. You'll also want to be sure not to use your vacuum, as doing so will risk kicking mercury back up into the air.

The best bet is to carefully scoop up the larger bits of glass with a piece of paper or cardboard, something you can easily dispose of along with the broken bulb. Once the big pieces are up, try using a piece of duct tape to easily lift the tinier bits, along with any white powder that you see. You could also use a piece of bread -- just don't eat it afterwards.

Step four: Wipe the floor clean

Once you've gotten the glass up off of the floor, you'll need to wipe things down with a damp paper towel. You'll want to go over the area fairly liberally, making sure not to leave any of that white powder from the bulb behind...Once you're done, add that used paper towel to the container with the paper, the tape, and the broken glass. Go ahead and seal it up, then take it outside. Now would also be a good time to thoroughly wash your hands with soap and water.

Step five: Let the room air out for another few hours

You've gotten the floor spic and span, but there still might be trace amounts of mercury vapor left in the air. If you're able to, leave the windows open and the air conditioning off for another couple of hours. Better safe than sorry, right?

Step six: Dispose of the broken bulb

Depending on your local regulations, you might not be required to take the broken bulb to a recycling center. It's a good idea nonetheless, as you don't want that mercury sent off to a landfill, where it might slowly leech into the ground. The waste management section of your local government's website should have info on which facilities will take hazardous household materials off of your hands.


A new American political order? By Burkely Hermann


Recently, pollsters found out, via ‘We Need Smith,’ which is a self-declared “movement of Americans who believe we need new leaders because our country is badly headed in the wrong direction” and not relying on the “usual politics,” what they called the “battlelines of a new political order.” I’m not sure how I feel about this whole ‘We Need Smith’ movement, and as a result I will continue to be critical. This article will not only debut my new chart, the ‘People Policy Counter,’ but it will include charts and data on overarching views of the American public presented by the said pollsters, and other polls. And if you have any suggestions, please share them below.

The People Policy Counter

Basically, the People Policy Counter is a list of 100 issues that a majority of the American people believe, which is then compared to the positions of politicians (hopefully) and political parties. From my tabulations, I found that (numbers ordered by amount of agreement with the American people):

  1. The Green Party agrees with the American people 79% of the time
  2. The Justice Party agrees with the American people 61% of the time
  3. President Obama agrees with the American people 28% of the time
  4. The Democratic Party agrees with the American people 25% of the time
  5. The Libertarian Party agrees with the American people 24% of the time
  6. The Constitution Party agrees with the American people 21% of the time
  7. The Republican Party agrees with the American people 6% of the time

These results are not trying to advocate for any of the said parties, or President Obama. I tried to take my bias toward certain issues out of the equation, and I mostly just searched on the Gallup website, snatching up poll results as I went. Rather, taken from a number of polls (probably over 50), it is meant to show how in line these political parties are with the opinions of the American people. As it turns out, only the centre-left Justice Party and the Green Party agree with the American public most of the time, more often than most. There were also a number of issues that I did not know the opinions of the said parties, so I did not fill them out, meaning that the percentages came out of the total of 100 issues. Hopefully, I can expand this to other politicians in the future. Here are some interesting positions that NONE of the parties took (to my knowledge) but the American people believe:

  • national referendum on key issues if voters request it
  • shorten primary season to five months
  • have a nationwide primary election, not individual state primaries
  • term limits for politicians in US Senate and US House
  • Super PACs should be illegal and there would be less corruption in the political system if there were limits on how much could be given to Super PACs
  • attack social problems as a way to lower the crime rate

Before I get to the polls conducted by ‘We Need Smith,’ here are some polls which I didn’t use in my People’s Policy Counter but are still interesting, adding questions about a ‘new political order’ emerging in the United States:


Results from a recent poll by Rasmussen, which is usually a conservative polling organization:

Here’s a graph from Gallup showing Americans are losing confidence in ALL branches of federal government:

Polls by ‘We Need Smith’

Now for some of the polls from ‘We Need Smith’ which I turned into a graphic:

Further analysis

Yet, while these poll results are encouraging, one must remember that it is only applying to American voters. What about the Americans who don’t vote! That’s what makes this polling troubling. Americans in general, one should not forget still view socialism negatively, even though 36% view it positively, including a good amount of liberals, and even some conservatives and moderates. Still, as Gallup notes,

“Socialism” is not a completely negative term in today’s America. About a third of Americans respond positively when they hear the term. Some of this reaction may reflect unusual or unclear understandings of what socialism means. Reaction to the term is not random, however, as attested by the finding that positive images are significantly differentiated by politics and ideology.

However, what Gallup says about an “unusual and unclear understanding” of socialism is silly as they provide no evidence to back up that claim, and criticizing those who think of the word positively just reinforces their moderate position as a polling organization.

There is more. It is clear that Americans are wary of Big Business and rightly critical of it. After all, US banks and financial institutions are trusted more than two times less than small business, as noted in a Gallup poll. Similarly, Americans do not have a great of confidence in other parts of American society as well: big business, the U.S. Supreme Court, the criminal justice system, the medical system, newspapers, the presidency, the healthcare system, public schools, television news and news on the internet, and Congress. Even organized religion/the church does not have a great deal of confidence from the American people. Sadly, there is low confidence in organized labor while there is high confidence in the military (74% have confidence) and a majority having confidence in the police (53% have confidence).

With the American people having a great deal of confidence in the military and the police, two of the institutions in established society which work to maintain the existing order, makes me question that we are on the “battlelines of a new political order.” Yes, the American people clearly believe in policies which I would say are overwhelmingly social democratic and yes, this is a basis for a transpartisan coalition (a ‘left-right coalition’) against the powers that be. After all, Americans do in some sense or another constitute a “silent radical majority” compared to those currently in power. But, this does not mean that Americans want to overturn the existing system and put in something like, say ‘modified socialism’ as Martin Luther King mentioned once. Rather, the people want reforms that would tweak the existing system. There are definitely some ideas that should be pushed forward, like single-payer healthcare and ending the wars (and general anti-interventionism) that the American people definitely support. However, no one should be fooled into thinking that these polls evidence a new political order, but rather that they show the need for the removing of the shackles of capitalists in order to confront the climate catastrophe and capitalist system itself.

Weekend Economists' Bad Boys' Review: Benedict Arnold July 18-20, 2014

So, what was the story with the Egg Man? (Eggs Benedict is my favorite breakfast, with the exception of chocolate waffles...)

Benedict Arnold (January 14, 1741 {O.S. January 3, 1740} – June 14, 1801) was a general during the American Revolutionary War who originally fought for the American Continental Army but defected to the British Army. While a general on the American side, he obtained command of the fortifications at West Point, New York (future site of the U.S. Military Academy after 1802), overlooking the cliffs at the Hudson River (upriver from British-occupied New York City), and planned to surrender it to the British forces. After the plan was exposed in September 1780, he was commissioned into the British Army as a brigadier general.

Born in Connecticut, Arnold was a merchant operating ships on the Atlantic Ocean when the war broke out in 1775. After joining the growing army outside Boston, he distinguished himself through acts of intelligence and bravery. His actions included the Capture of Fort Ticonderoga in 1775, defensive and delaying tactics despite losing the Battle of Valcour Island on Lake Champlain in 1776, the Battle of Ridgefield, Connecticut (after which he was promoted to major general), operations in relief of the Siege of Fort Stanwix, and key actions during the pivotal Battles of Saratoga in 1777, in which he suffered leg injuries that ended his combat career for several years.

Despite Arnold's successes, he was passed over for promotion by the Continental Congress while other officers claimed credit for some of his accomplishments. Adversaries in military and political circles brought charges of corruption or other malfeasance, but most often he was acquitted in formal inquiries. Congress investigated his accounts and found he was indebted to Congress after spending much of his own money on the war effort. Frustrated and bitter at this, as well the alliance with France and failure of Congress to accept Britain's 1778 proposal to grant full self-governance in the colonies, Arnold decided to change sides and opened secret negotiations with the British. In July 1780, he was offered, continued to pursue and was awarded command of West Point. Arnold's scheme to surrender the fort to the British was exposed when American forces captured British Major John André carrying papers that revealed the plot. Upon learning of André's capture, Arnold fled down the Hudson River to the British sloop-of-war Vulture, narrowly avoiding capture by the forces of George Washington, who had been alerted to the plot.

Arnold received a commission as a brigadier general in the British Army, an annual pension of £360, and a lump sum of over £6,000. He led British forces on raids in Virginia, and against New London and Groton, Connecticut, before the war effectively ended with the American victory at Yorktown. In the winter of 1782, Arnold moved to London with his second wife, Margaret "Peggy" Shippen Arnold. He was well received by King George III and the Tories, but frowned upon by the Whigs. In 1787, he returned to the merchant business with his sons Richard and Henry in Saint John, New Brunswick. He returned to London to settle permanently in 1791, where he died ten years later.

Because of the way he changed sides, his name quickly became a byword in the United States for treason or betrayal. His conflicting legacy is recalled in the ambiguous nature of some of the memorials that have been placed in his honor....

And as for the egg dish:

There are conflicting accounts as to the origin of eggs Benedict, including: In an interview recorded in the "Talk of the Town" column of The New Yorker in 1942, the year before his death, Lemuel Benedict, a retired Wall Street stock broker, claimed that he had wandered into the Waldorf Hotel in 1894 and, hoping to find a cure for his morning hangover, ordered "buttered toast, poached eggs, crisp bacon, and a hooker of Hollandaise." Oscar Tschirky, the famed maître d'hôtel, was so impressed with the dish that he put it on the breakfast and luncheon menus but substituted ham for the bacon and a toasted English muffin for the toast.

Refuting the claims of Oscar Tschirky/Lemuel Benedict, prior to serving as Maitre d’hotel (1893 to 1943) at the Waldorf, Tschirky was "on the staff of the old and famous Delmonico’s," along with the renowned Chef Charles Ranhofer.

This reflects an earlier claim to eggs Benedict as evidenced in Chef Ranhofer's 1894 cookbook, The Epicurean which includes "a selection of interesting bills of fare of Delmonico's from 1862-1894", in particular a recipe for eggs Benedict (Eggs à la—Benedick / Eufa à la Benedick):

Cut some muffins in halves crosswise, toast them without allowing to brown, then place a round of cooked ham an eighth of an inch thick and of the same diameter as the muffins on each half. Heat in a moderate oven and put a poached egg on each toast. Cover the whole with Hollandaise sauce (No. 501).

During Chef Ranhofer's Delmonico years (1862-1899), Captain and Mrs. Le Grand Benedict (born 1843, Emma Frances Gardner) were frequent diners. Five generations of Benedict family history, including Mabel C. Butler (descended through Mrs. LeGrand Benedict's daughter Florence), author of a 1967 letter to the NY Times, and great-great-granddaughter Emily Benedict (born 1962, descended through Mrs. LeGrand Benedict's son Harold) independently cite similar stories from the late 1860s, that frequent patron Mrs. Benedict became uninterested in the usual Delmonico menu offerings and inquired for the Chef to create "something new". He replied asking if she had any ideas, to which she suggested what is now known as eggs Benedict (although her original version included a truffle on top.) Thereafter the creation made its way into Chef Ranhofer’s The Epicurean.

Oscar Tschirky quite possibly learned of eggs Benedict from Chef Ranhofer during their crossover Delmonico years together. While Lemuel Benedict may indeed have requested the egg concoction from Tschirky at the Waldorf in 1894 as a hangover cure, in that same year, the recipe was already printed in Chef Ranhofer's The Epicurean.

Further reading in line with Mrs. Le Grand Benedict's story - as retold by her descendents - can be found in "More New York Stories: The Best of the City Section of The New York Times".

A third claim to the eggs Benedict fame was circuitously made by Edward P. Montgomery on behalf of Commodore E.C. Benedict. In 1967 Montgomery wrote a letter to then NY Times columnist Craig Claiborne and included a recipe he claimed to have received through his Uncle, a friend of the Commodore. Commodore Benedict's recipe - by way of Montgomery - varies greatly from Chef Ranhofer's version, particularly in the hollandaise sauce preparation - calling for the addition of "hot, hard-cooked egg and ham mixture."

I like to use hash browns instead of English muffin, and a shot of lemon juice in the hollandaise...and now, I'm hungry....National Eggs Benedict Day is celebrated on April 16!

Was He the Eggman?

Bad debt cannot simply be “socialized” By Michael Pettis


...while debt plays a key role in understanding the recent evolution of the Chinese economy and the timing and process of its upcoming adjustment (as it also does for all if not most major economies), there seems to be a remarkable amount of confusion as to why debt matters. In much classical economics debt, or more generally the structure of the liability side of an economic entity, doesn’t even fundamentally matter to the growth of that entity. The liability side of the balance sheet is treated mainly as the way in which the cashflows associated with the management of the asset side of the balance sheet, which we can call operating earnings, are distributed, and it is the growth in operating earnings that ultimately matters.

But even if this is all there were to debt – and in fact in my classes at both Peking University and, previously, at Columbia University I propose to my students that one way to think of the liability side of the balance sheet is precisely as a series of formulae that distribute the operating earnings of a company (or the total production of goods and services of a country) – this would still make it singularly important in understanding the functioning of and prospects for an economy. After all the way you distribute earnings is a major part of an institution’s incentive structure, and changes in the structure of incentives lead almost automatically to changes in the ways economic agents behave. Investors usually take the topic of debt much more seriously than economists. They have no choice, I guess. Their conceptual failures cost money. This is probably why until very recently brilliant economists like Hyman Minsky, Irving Fisher and even Marriner Eccles were far more likely to be read by thoughtful investors than by academic economists (I myself was introduced to Minsky in the early 1990s by Bob Kowitt, and well-known institutional investor with a great bookshelf in his office).

At any rate for several years I have been arguing that the main reason analysts have managed to get China so wrong is because of their failure to understand the basic distortions driving the economy and one of the major consequences of these distortions is the creation of debt, which itself further impacts the evolution of these distortions. All rapid growth, Albert Hirshman argued in the 1960s and 1970s, is unbalanced growth, and in many if not most cases the kinds of imbalances that result from rapid growth may be acceptable and even necessary in a growing economy. But as the economy changes, the nature and extent of the imbalances change too, and it is inevitable that eventually the system forces a reversal of the imbalances. This is especially true in countries, like China, with highly centralized decision-making. In these countries the imbalances can be taken to extremes impossible in other countries, thus creating all the more pressure for a reversal of the imbalances.

This means that in China, if you can figure out how the growth model works and how the model generates imbalances and debt, you can pretty much figure out logically, albeit fairly broadly, the various paths that the country must follow in order the reverse the imbalances. I tried to this in my most recent book, Avoiding the Fall, in which I listed the six different ways that China can rebalance, ranging from the catastrophic to the orderly. These were not predictions. They were simply a list of the various ways in which China could rebalance, and none of these various rebalancing paths included, for example, the possibility that China could maintain average GDP growth rates of 7-8%, or even of 5-6%, during President Xi’s administration except under very specific, and unlikely, conditions. According to the logic of the model, it would require a massive transfer of wealth from the state sector to the household sector, on the order perhaps of 4-5% of GDP annually or more, for China to rebalance at growth rates significantly higher than 4-5%. Without this transfer, however, it simply cannot happen. Analysts, then, who expected two or three years ago that China might be able to maintain growth rates of 7-8% through the rest of this decade were going to prove wrong, even if they hedged by accepting the possibility that conditions might change and growth rates slow sharply. Their analysis fundamentally confused the sources and consequences of Chinese growth...




Edward Snowden should not face trial, says UN human rights commissioner


The United Nations's top human rights official has suggested that the United States should abandon its efforts to prosecute Edward Snowden, saying his revelations of massive state surveillance had been in the public interest.

The UN high commissioner for human rights, Navi Pillay, credited Snowden, a former US National Security Agency contractor, with starting a global debate that has led to calls for the curtailing of state powers to snoop on citizens online and store their data.

"Those who disclose human rights violations should be protected: we need them," Pillay told a news conference.

"I see some of it here in the case of Snowden, because his revelations go to the core of what we are saying about the need for transparency, the need for consultation," she said. "We owe a great deal to him for revealing this kind of information."

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