Exxon Mobil Accuses the Rockefellers of a Climate Conspiracy

Abstract: Exxon Mobil, under fire over its past efforts to undercut climate science , is accusing the Rockefeller family of masterminding a conspiracy against it. Yes, that Rockefeller family. The company, which has been accused of scheming to pay surrogates to deny the threat of climate change, is trying to turn the tables by calling its opponents the real conspirators. It is fighting state attorneys general, journalists and environmental groups in an all-out campaign to defend its image. But the oil and gas giant has directed some of its fiercest fire at the descendants of John D. Rockefeller , who in 1870 founded Standard Oil , the company that became Exxon Mobil. Rockefeller family charities, longtime backers of environmental causes, have supported much of the research and reporting that has called the company to account for its climate policies, and Exxon Mobil is crying foul. The pressure on the company is intense. Journalists have published exposés of the company’s research into climate change, including actions it took to incorporate climate projections into its exploration plans while playing down the threat. Such reporting projects, financed in part by Rockefeller family charities, included last year’s work by Inside Climate News and the Columbia University Graduate School of Journalism, which published its results with The Los Angeles Times . The findings have been boiled down to the popular Twitter shorthand #ExxonKnew . Exxon Mobil, in public statements, court filings and thick dossiers on the company’s opponents, says it is the target of a well-funded and politically motivated conspiracy to harm its core business. Yet where Exxon Mobil and its allies see a tangled conspiracy, members of the Rockefeller family see an effort to use the vast wealth generated by fossil fuels to combat the damage done by fossil fuels. A Range of Opinions on Climate Change at Exxon Mobil Statements made by Exxon Mobil – including executives and its own scientists – about climate change over the years. Now the family has taken the unusual step of going public to state its case in a rare interview and in a two-part essay in The New York Review of Books that lays out in detail Exxon Mobil’s research and funding of climate denial. David Kaiser, an author of the essay and a fifth-generation Rockefeller, said dryly, “The family generally doesn’t do public things in this way.” He said he was aware that the “obvious historical irony of the fact that we are Rockefellers doing this would attract additional attention to the story — and we want attention to the story, because we think it will make clear to the public that the so-called debate over climate science has been a fake one, artificially manufactured, and a basically dishonest one from the beginning.” State attorneys general, beginning last year with Eric T. Schneiderman of New York , began conducting fraud investigations that focus on whether the company’s decades-long research into climate change, and the likelihood that energy companies will not be able to exploit all of their fossil fuel reserves, makes recent valuation of those reserves questionable. The federal Securities and Exchange Commission has launched its own investigation of the company’s accounting of reserves. Exxon Mobil says it has recognized the threat of climate change and the need to fight it for more than a decade; the company says it stopped funding the organizations that promote climate denial in the mid-2000s. It has also argued that its early research has been mischaracterized. The company is attacking the role of the Rockefeller family in encouraging, and in some cases bankrolling, the investigations and campaigns against it. Both journalism organizations that investigated the company were financed, at least in part, by Rockefeller philanthropies, though the organizations say that their donors have no control over what they write. The Rockefeller funds have also provided support to groups like Greenpeace and 350.org that have investigated and criticized the company. A conference in January to discuss activism and education efforts surrounding Exxon Mobil’s climate work was held at the offices shared by two Rockefeller family funds. One potential subject of discussion suggested by a participant was “to establish in public’s mind that Exxon is a corrupt institution that has pushed humanity (and all creation) toward climate chaos and grave harm.” Alan Jeffers, an Exxon Mobil spokesman, said in an interview, “At every turn, as we saw the company coming under attack, there was a link back to either the Rockefeller Brothers Fund or the Rockefeller Family Fund .” The two philanthropies have announced that they are divesting themselves of fossil fuels. When the family fund made its announcement in March, it denounced Exxon Mobil’s “morally reprehensible conduct” on climate change. Mr. Jeffers responded , “It’s not surprising that they’re divesting from the company since they’re already funding a conspiracy against us.” The company and its allies have turned up the heat on its founding family and other opponents. Industry-backed policy groups like Energy in Depth generate stories that attack the family and its philanthropy. Their charges are echoed in conservative news outlets like The Wall Street Journal's opinion page and The Daily Caller . Breitbart News has called the collaboration among environmental groups to urge the investigation of Exxon a “ RICO conspiracy,” using the acronym for the federal racketeering law, and the industry-oriented site Natural Gas Now published an article declaring, “It’s time to RICO the Rockefellers.” The company’s allies offer journalists what political operatives refer to as opposition research, including court records and favorable articles (as do activist groups opposing Exxon Mobil). Exxon Mobil has also pulled the Rockefeller philanthropies into its legal battles against the attorneys general investigating it, sending the groups a subpoena demanding documents and communications related to their activism. A federal judge in Dallas, Ed Kinkeade, granted the company the right to pursue discovery in its cases against the state attorneys general. He ruled that comments by Attorney General Maura Healey of Massachusetts at a news conference about the investigations in March , which also featured former Vice President Al Gore, may have shown that she was presupposing what an investigation would show, which may demonstrate that she acted in bad faith in pursuing the case. The judge has taken the exceptional step of ordering depositions of Ms. Healey and Mr. Schneiderman. The Rockefeller funds have also received subpoenas from another friend of Exxon Mobil, the chairman of the House Science Committee, Rep. Lamar S. Smith, a Texas Republican. Mr. Smith has harshly criticized the attorneys general over their investigations, and has accused the Rockefeller funds of taking part in “a coordinated effort to deprive companies, nonprofit organizations and scientists of their First Amendment rights and ability to fund and conduct scientific research free from intimidation and threats of prosecution.” The Rockefeller family responds that it is trying to right a historic social and environmental wrong, using the straightforward tools of the First Amendment. “The Rockefeller Family Fund has exercised its freedom of speech in expressing our repugnance at Exxon Mobil’s behavior,” said Mr. Kaiser, the president of the fund. “We have exercised our freedom of association by talking with like-minded public interest advocates about how best to educate the public about the realities of climate change. And we have exercised our right to petition the government for redress of grievances by informing elected officials about our concerns that in the course of its climate science campaign, Exxon may have violated the law. All of those rights are explicitly guaranteed to us by the First Amendment.” He said that within the clan — the direct descendants of John D. Rockefeller and their families number some 270 — he has received “passionate support” for the fund’s efforts, though he acknowledged, “I haven’t heard back from everyone in the family.” One family member, Ariana Rockefeller, called the efforts against the oil company “deeply misguided” and said “they are counterproductive to our goal of protecting the environment by undermining Exxon’s ongoing good work in clean and renewable energy.” The Rockefeller family has enthusiastically embraced the environmental movement since the 1960s, and has focused on climate change since the 1980s. The engagement with Exxon itself has been more gradual; members of the family tried for more than a decade, through conversations with company executives and through proxy measures, to get Exxon to take a stronger stance in favor of clean energy and, in the days when the company was expressing doubts in paid advertisements in The New York Times about climate science, to get it to stop. Peter Frumhoff, the director of science and policy for the Union of Concerned Scientists , an advocacy group that published its own investigation of Exxon Mobil’s efforts to promote uncertainty about climate science, said that his group had received “modest funding support” over the years from the Rockefeller funds. He said that activism by the Rockefellers, because of their family connection to Standard Oil, made them “an essential voice,” and that he and his group had received subpoenas from Exxon. “We’ve clearly hit a nerve, haven’t we?” he said.

Exxon Mobil
Rockefeller family
Climate Change
Global Warming
Eric T Schneiderman
Oil and Gasoline


Past and Future Collide at a Yard Sale

Abstract: MORENO VALLEY, Calif. — In neighborhoods in economic distress, upheaval comes in bits and pieces, often only recognizable in total much later. But on an unusual Saturday morning this spring, the past and future of Beth Court, a troubled cul-de-sac here, converged in plain view at a multifamily yard sale. At 8:30 a.m., music was blaring from a house threatened with foreclosure, as children sold homemade baked goods to those who came to look over cribs the children had outgrown. A few doors away, the owner of a house to be sold at a bank auction was unloading a large still-life painting her husband had picked up in Mexico; she had never liked it anyway. Another neighbor, out of work since last summer but still keeping up with the mortgage payments, had his junker Jaguar up for grabs, too. Yard sales, much like strawberries and report cards, remain pleasant signals of summer’s imminent arrival. But for Beth Court, a block of eight houses that has been shaken by the recession and the foreclosure crisis and that The New York Times has visited since January, this sale was in a way also a moment of planned anxiety, when life’s woes were willingly exposed in exchange for cash. It was a moment of surprise too, when the block’s newest residents — or soon to be — made an inaugural visit to their new home. Just before 10 a.m., a dark car pulled into the driveway at No. 11066, a corner home with a big window that had been empty since it was foreclosed upon nine months earlier. “Who is it?” one neighbor asked, as heads turned toward two men and a woman emerging from the car. “I hope it’s a family,” she continued. “I wonder if she’s pregnant?” The newcomers, Steven Schneider and his extended family, represented unwanted change and uncertainty, and there was some sense on Beth Court that they were profiting from the neighborhood’s undoing by picking up their home at a fire sale price. Sprawled on the yards around the new arrivals were reminders of the hard times — sweaters, sewing kits missing a few spools of thread, a treadmill and a dress someone wore for confirmation. Still it was impossible not to herald their arrival, too. The Schneiders’ three-bedroom house had become an eyesore. Vandals once broke in and smashed a window. The lawn was sapped. Home values around it had plummeted, and it was not the only empty house on the block. In Beth Court’s familiar togetherness, a feature that neighbors have always taken pride in, there was a peculiar mix of trepidation and relief. “Well, you never want to see an empty house on the block,” said Connie Hanson, who lives at the entrance to Beth Court on the adjoining street and takes nightly walks around the block. “I just hope there isn’t anything transient about them. We’ve had that problem on the block before.” Mr. Schneider, who had been living in a mobile home in nearby San Bernardino, attracted the curious as he stood surveying the block, awaiting the home inspector. “We’ve been looking for months,” said Mr. Schneider, who put together a down payment of $30,000 on the $148,000 home with the help of a nephew, Timothy Hughes. Mr. Schneider and his fiancée would live in one bedroom, he explained, Mr. Hughes in another, and Mr. Schneider’s elderly parents would take the third bedroom. “The prices were right here, and the interest rates are great,” said Mr. Schneider, standing in the midmorning sun. “I think we’re buying at the right moment.” A small ring of houses in this city 60 miles east of Los Angeles, Beth Court is indicative of the foreclosure crisis that has rocked much of Southern California and the nation. Here in Moreno Valley, a city of 190,000 built on the construction boom of the past three decades, the pain has been particularly acute: 5 of every 100 houses went belly up last year. Of the eight homes on Beth Court, four have been foreclosed on at some point, and the owners of two more are in trouble. But the spoils of the foreclosure mess are houses on the cheap, making homeownership a possibility for many of those left behind during the boom times. For Mr. Schneider, Moreno Valley was out of reach just two years ago; now he was standing face to face with some of the very people losing their homes. Yadira Burgueno, the woman selling the Mexican still life, knew the bank had begun to auction off her home. Eladio Soto, whose children were selling the baked goods, would soon sell his home at a huge loss. Olga Hernandez, who had been forced to leave her foreclosed home months earlier, was back that day with a pile of clothes to sell. But the mountain views remained. “It is beautiful,” Mr. Schneider said of his new neighborhood. “I’d be kicking myself in the rear if I didn’t buy this house.” It was 11 a.m., the morning donuts from the yard sale were gone, and there was talk of whipping up a batch of margaritas. Mr. Schneider and his fiancée locked hands and made their way slowly down the block, with his nephew, Mr. Hughes, trailing behind. They stopped in front of Ms. Sanchez’s home, admiring the wares for sale. She and her husband were among the block’s earliest residents when the houses were built in 1997. “There’s no return on the kids,” Ms. Sanchez cracked, nodding in the general direction of her two daughters, 10 and 12. Mr. Schneider and his fiancée laughed lightly and wandered down the block. Ice broken. Next came Mr. Hughes, a Direct TV installer. “Hi, I’m the new neighbor,” he said to Ms. Sanchez, who squinted up from her chair into the midday sun. “Oh, so you’re the new neighbor?” she asked, somewhat baffled since she thought she had just met the newcomers. “I’m Ellie. I live here. So is it just you are your wife?” “No,” Mr. Hughes said. “Me and my uncle own the house. Well, we’re in escrow.” “Oh, two single guys. So that’s going to be the party house, huh? Everyone on this block has kids. We are not the party houses.” “No,” said Mr. Hughes, taking his turn at bafflement. Beth Court was used to nuclear families. This would just be a little different. Though the Schneider-Hughes arrangement was new to the block, it is not uncommon in Riverside County, real estate agents say. Scores of people who have lost their homes are moving into large houses owned by relatives who need help paying the mortgage; others families have pulled together to buy their first house. As the neighborhood tour continued and the clock hit noon, two of the block’s casualties — Ms. Hernandez and Ms. Burgueno — took the scene in silently from a shared blanket. Ms. Hernandez had lost her four-bedroom home but has harbored fantasies about somehow getting it back. She returns regularly to the block where she raised three children, and participating in the yard sale was natural for her. Mr. Hughes peered into the window of Ms. Hernandez’s house, still empty at that point, then walked across the street. He introduced himself to Adrian Blanco, who after months of unemployment was working with the bank to modify his mortgage and was deeply worried he might lose the house. In a big floppy hat, Mr. Blanco was washing his truck in the driveway. No yard sale for him. His belongings were down to essentials. “Nice truck,” Mr. Hughes said. “Thank you,” Mr. Blanco replied. “It’s a good one. I like it.” After waiting for the new neighbor to make his way along, Mr. Blanco said: “The bank doesn’t want to help me. I don’t know what to do.” By 1 p.m., Mr. Schneider had made the rounds and was back in his driveway and getting ready to leave. But there was one important introduction left. The neighborhood’s unofficial mayor, Ted Hanson, Connie’s husband, came bounding from the adjoining street. Mr. Hanson does not cotton to getting too involved in his neighbors’ lives. But he was happy that an investor had not bought the house, as so often happens on blocks with multiple foreclosures. “This is way better,” he said, glancing up the block toward an empty house. “That lawn looks terrible. I might need to get over there and mow it myself.” By the time Mr. Schneider pulled out of the driveway, the afternoon sun was getting hot and the blankets on the front lawns were being folded up. The treadmill had sold, as had several bits of clothing, a toy here and there, and at least one crib. The still life remained. Its owner would be evicted several weeks later, just as Mr. Schneider and his family began settling in.

Foreclosures
California
Tag Sales
Housing and Real Estate
Subprime Mortgage Crisis


Third World Telecom Moves to the Front

Abstract: The MTN Group, a small mobile operator in South Africa, attracted an investment in 1995 from SBC, an American telecommunications company. Now MTN is a sprawling company that spans 21 countries with 70 million customers, and it is attracting outside investors again. But this time around, companies in emerging markets are on the prowl, reflecting a new order in the mobile telecommunications industry. American companies, it seems, are taking a backseat to upstart rivals overseas. Over the weekend, MTN traded Indian suitors, swapping merger partner Bharti Airtel for rival Reliance Communications. Whether or not this combination holds up, bankers predict some deal will be completed. In the last few days, China said it would reorganize its six telecommunications companies into three. In effect, two of its old fixed-line companies will get some assistance to put them on better footing with China Mobile, the world’s largest leading mobile company with almost 400 million subscribers. If both series of deals go through as planned, four of the top seven operators, China Mobile, China Unicom, América Móvil and MTN-Reliance, would be based in emerging markets. Of the three remaining based in the West, two — Vodafone of England and Telefónica 02 of Spain — have extensive operations in developing markets. The other is T-Mobile of Germany. “The focus of the wireless business is shifting rapidly from the developed Western markets to the developing world,” said Madhusudan Gupta, an analyst based in Singapore for the research firm Gartner. Although American mobile operators were active investors in emerging markets during the 1990s, many of them quickly exited, a trend that accelerated after the plunge in telecommunications and dotcom stocks in 2000. SBC, now a part of AT&T Wireless, sold its stake in MTN after only two years. It paid $90 million to acquire nearly 16 percent. That portion of MTN would cost about $6 billion today. “Many big U.S. telcos eventually lost interest in these markets: they were too small,” said Robert Chaphe, who was chief executive of MTN from 1995 through 2002 and is now semiretired and living in Florida. “Now U.S. telcos see more opportunity closer to home. After all, risk ratios are lower in Kansas than in Africa.” The development of the mobile markets was left for years to Europeans and homegrown companies. Now these fast-growing telecommunications giants are eager to go global. John Gole, an analyst at International Data Corporation in Prague, said that recent rapid economic growth in India, China and the Gulf states had created a new breed of regional mobile operators. They include companies like Orascom of Egypt, with 71 million customers in Africa, the Middle East and Asia; Etisalat, based in Abu Dhabi, with 6.6 million customers and 10 operators in Africa; and the Zain Group of Kuwait, with 45.7 million customers and 22 operators in Africa and the Middle East. “These booming economies and a general economic liberalization have led to the creation of new competitors with the means and experience to expand in emerging markets,” Mr. Gole said. A combined Reliance and MTN would have about 116 million customers, making it the seventh largest mobile operator in the world, just below T-Mobile, the wireless subsidiary of Deutsche Telekom. It would dwarf the largest operator in the United States, AT&T Wireless which has 71.4 million customers. Putting together a deal will not be easy. Reliance’s market capitalization is $27.5 billion, about $10 billion less than MTN’s, and it has about 20 million fewer customers. MTN’s management balked at a takeover by Bharti, a bigger company, proposing that MTN become the parent company instead. Even though it’s a smaller company, Reliance may also balk at a subsidiary role. It is a publicly traded unit of a conglomerate controlled by Indian businessman Anil Dhirubhai Ambani, a conglomerate with a market value of $75 billion. Bankers, analysts and news reports suggest a handful of nascent mobile powers based in emerging markets are interested in MTN, as well as European telecommunications companies. “Something has to happen,” said a banker whose firm was working with a third telecommunications company, which he would not identify, that hoped to woo MTN. MTN and Reliance have been skillful at generating profits from customers who typically spend very little for mobile service — less than $20 a month at MTN and less than $9 at Reliance, based on their latest quarterly reports. That compares with $54 a month at Verizon Wireless in the United States, according to a quarterly report from Vodafone, which owns a 40 percent stake in Verizon. Reliance earned a profit of $1.4 billion on $4.8 billion in sales in the year that ended March 31. MTN had a profit of 11.9 billion South African rand, or $1.6 billion, in 2007 on sales of 73.1 billion rand, or $9.7 billion. Reliance has recently expressed serious interest in Africa, where there are few landlines and much potential growth in mobile lines. Through its subsidiary Reliance FLAG, the company is investing $1.5 billion to lay a submarine fiber optic cable to Africa. In February, the company bought a small Ugandan telecommunications company, and said it plans to invest about $500 million there in the next five years to provide mobile, Internet and broadband service. There are many risks for any outside company looking at Africa’s fast-growing markets, analysts say. Andre Wills, managing director at Africa Analysis, a wireless industry consulting firm in Centurion, South Africa, said: “You need to have a significant understanding of the African operating environment and the challenges of working across all of these different regulatory environments.” If Reliance were to move significantly into Africa, it could raise the stakes for international investors like Vodafone, which has a subsidiary in Egypt and operations in seven other African countries; Orange, which owns stakes in operators in 13 African countries, and Portugal Telecom, which has operations in Angola and Morocco. Other possible suitors for MTN might be Vodafone, which owns 50 percent of Vodacom, another South African operator, and Deutsche Telekom and VimpelCom, which is based in Russia. Vodafone executives have said that the company is not planning any move on MTN. Deutsche Telekom and VimpelCom declined to comment. Africa, where 29 percent of the population owns a cellphone, according to Gartner, is just one of several promising markets. In India, market penetration is 34 percent, well below the United States, at about 70 percent, and Western Europe, at more than 90 percent.

MTN Group
Telephones and Telecommunications
Foreign Investments
Third World and Developing Countries
Wireless Communications
Cellular Telephones
United States Economy
Mergers Acquisitions and Divestitures
China Mobile Limited


Lady Gaga Becomes a Live Nation Client

Abstract: Nearly a year after a public split with her former manager, Lady Gaga has become a client of Live Nation Entertainment’s management division. Live Nation, a concert promoter and the owner of Ticketmaster, has a substantial artist management unit, with semiautonomous executives who manage the careers of acts like U2 and Madonna . This division has made a deal with Lady Gaga’s new manager, Bobby Campbell, the company announced on Wednesday. “Lady Gaga is one of the most iconic and highest-grossing artists of this generation,” Michael Rapino, Live Nation’s chief executive, said in a statement. “We have a longstanding relationship with Lady Gaga dating back to her 2009 Fame Ball Tour and we look forward to continuing to support Lady Gaga and her manager Bobby Campbell in their careers.” Lady Gaga, whose real name is Stefani Germanotta, had long been managed by Troy Carter, but the two had a falling out last year, shortly before the release of her latest album, “Artpop.” Mr. Campbell worked at Mr. Carter’s company, Atom Factory, and began managing Lady Gaga after her split with Mr. Carter. It remains unclear whether Lady Gaga and Mr. Carter have fully negotiated a separation settlement. Lady Gaga remains a popular concert attraction; her current tour has dates in North America, Asia, Australia and Europe. But sales of “Artpop” were poor, with only about 713,000 copies sold in the United States, according to Nielsen SoundScan. Her previous album, “Born This Way,” sold 1.1 million copies in its first week alone.

Lady Gaga
Live Nation Entertainment
Michael Rapino


A Complex Case Tests New York State’s Expanded Definition of Parenthood

Abstract: The two women avoided each other’s gaze in the compact courtroom last week, separated by their lawyers, file boxes and three-inch binders filled with old emails and documents. Somewhere in all the paper was the answer to a question that is being tested as never before in New York State: Were both women the parents of the energetic 6-year-old boy they loved? Or just one of them? Deciding who is a parent in New York used to be a relatively simple matter. A parent was either biologically related to the child or had legally adopted the child. But in State Supreme Court in Manhattan, the first custody case is underway to test a newly expanded definition of parentage , as handed down by the state’s highest court in August. The new definition is aimed at accounting for the complexity of nontraditional families, including same-sex couples. Now, to determine if someone is a parent, judges can consider whether a couple intended to have and raise a child together, among other factors. So in the courtroom in Manhattan, Circe Hamilton, 44, and her former partner Kelly Gunn, 52, are battling over whether Ms. Gunn should be recognized as a parent to the boy, Abush, whom Ms. Hamilton adopted from Ethiopia in 2011. In a city filled with complicated relationships, this one stands out. In the original adoption paperwork, completed in early 2009, the British-born Ms. Hamilton appears as a single woman with a boyfriend, and Ms. Gunn is described as a roommate. But that was because Ethiopia does not allow gay couples to adopt, both women acknowledge. In reality, the two women, who began dating in 2004, had planned to raise the child together, and their application reflected some joint assets. Ms. Gunn said her intent was to eventually co-adopt the child in a second-parent adoption proceeding. They broke up in December 2009, and Ms. Hamilton decided to move forward with the adoption alone, she testified. Despite the breakup, the women remained close. When Ms. Hamilton went to Ethiopia to get Abush, Ms. Gunn met her and the boy in London to fly together to Manhattan. When Ms. Hamilton, a freelance photographer, returned to her tiny apartment in the West Village, she said she was overwhelmed by the challenges of parenting. Ms. Gunn, who ran a successful design company, stepped in, babysitting regularly and attending Abush’s doctors’ appointments, and briefly employing Ms. Hamilton at her firm, according to court testimony. The women continued to occasionally stay together in a house they had once jointly owned on Fire Island. Abush had a crib there, and to Ms. Hamilton, these gestures represented the generosity of a trusted friend, she said recently. “She was someone I had loved, whom I respected,” she said of Ms. Gunn. “I had no reason not to trust a friend offering help.” But to Ms. Gunn, the relationship with Abush was much more. She now describes her situation as analogous to that of a couple who had broken up during a biological pregnancy. It was as if the adoption agreement was a conception, conferring upon the child both her and Ms. Hamilton’s DNA. “He wouldn’t have come into our lives without me,” Ms. Gunn said. “He is a product of our mutual intention, our mutual efforts.” The minutia of their daily lives in recent years — who took Abush to his play dates, his school appointments, his sports classes — are now pieces of a puzzle in a trial that has already had 15 days of testimony, with at least a week to go. The judge must decide whether Ms. Gunn’s involvement in Abush’s life amounts to her being a parent, and if it gives her standing to sue in a second hearing for custody and visitation. Justice Frank P. Nervo, who is presiding over the case, has come up with questions to guide the lawyers. How formalized was the relationship between Ms. Gunn and Abush? What did he think Ms. Gunn’s role was? Did Ms. Gunn assume the duties of a parent? What would be the impact on Abush if their relationship ended? Almost all states now legally recognize de facto parenthood to account for the realities of modern families. In expanding its parenthood definition, the New York State Court of Appeals said in its Aug. 30 ruling that it was seeking a definition that provided “equality for same-sex parents and provides the opportunity for their children to have the love and support of two committed parents.” Parents without adoptive or biological ties can now sue for the right to see children after couples break up, hopefully protecting them from the trauma of forced separation from a parent. “Now the legal parent cannot unilaterally cut the other person out of their life,” said Nancy D. Polikoff, a professor at the American University Washington College of Law. Image Ms. Hamilton said she had made it clear that she intended to continue with the adoption alone, and that Ms. Gunn is trying to rewrite history. Credit Ángel Franco/The New York Times Yet Abush’s case is a tough first test of the state’s new rule because its facts are unusually complicated and disputed by the involved parties, Ms. Polikoff said. Ms. Hamilton said she made clear that she intended to continue with the adoption alone, and that Ms. Gunn “told every single person in her life that she didn’t want to be a mother.” Ms. Gunn disputes that. She said she thought of the breakup as a separation and that she also raised Abush, including regular overnight stays at her home each week. “We are still some kind of family,” she said she remembered thinking after Ms. Hamilton moved out. “We are just going to look different than we thought.” Ms. Gunn said she agreed in 2012 to take the title of godmother to honor her role in Abush’s life. “Despite my own sadness and regret over not being one of Abush’s adoptive parents, I long ago made peace with my role as a godmother,” she wrote to Ms. Hamilton in a 2015 email. “I have never inferred or articulated to Abush, or to anyone, that I am his mother.” Ms. Gunn now says that those statements were influenced by her fear of losing access to Abush, who calls her Kee. Ms. Gunn’s lawyers argue it is not the title, but the actual role she played that should be considered. This summer, Ms. Hamilton announced that she wanted to move back to her native London with Abush. Ms. Gunn responded by saying she would move, too. “I need you not to follow us there. This is mine and Abush’s journey,” Ms. Hamilton said she told her, adding that she did not want Ms. Gunn to visit London for six months to give them time to settle in. She said they would be back to New York in October to visit. But Ms. Gunn could not fathom the thought of losing access to Abush. In late August, Ms. Gunn took him to Fire Island for a goodbye trip. A photograph from the ferry there shows him hugging her and clinging to her chest. Two days later, Ms. Gunn surprised Ms. Hamilton with the lawsuit. A judge ordered Ms. Hamilton to appear in court on Sept. 1 with 90 minutes’ notice, not enough time to get a lawyer. “I am the sole parent; I have the sole custody for my child,” she told the judge, according to a transcript. But Nancy Chemtob, Ms. Gunn’s lawyer, argued that Ms. Hamilton was improperly trying to leave the country with a child both women parented. The judge ordered Abush’s passport confiscated until the matter is resolved. Ms. Gunn was granted time with the boy twice a week until the court rules. Ms. Hamilton said she is in shock, and feels Ms. Gunn is trying to rewrite history. “It’s the most terrifying place to be,” she said. “You can’t wish or will yourself to be a parent against the objections of the legal parent,” Bonnie Rabin, one of Ms. Hamilton’s lawyers, said of Ms. Gunn. “She is trying to will herself into this intact family.” But Ms. Gunn said she could do nothing else; she had promised a little boy she loves to be involved in his life, and does not understand why this parenting situation has to be either-or. “I realized I could never look Abush in the eyes again if I don’t fight for him,” Ms. Gunn said. “He should be able to have the two people who raised him and loved him be with him, without having to fear losing one of us.”

New York
Parenting
Adoption
Ethiopia
Child Custody and Child Support
Motherhood
Fatherhood


S.E.C. Won’t Fight Proxy Ruling

Abstract: The Securities and Exchange Commission announced late Tuesday that it would not dispute a recent court ruling that struck down one of the agency’s new rules for corporate America. In July, the United States Court of Appeals for the District of Columbia Circuit rejected the S.E.C.’s so-called proxy access rule, which would have made it easier for shareholders to oust company directors and install their own candidates for the board. The rule stemmed from the Dodd-Frank Act, the financial regulatory overhaul enacted after the credit crisis. The ruling by a three-judge panel dealt a stinging blow to the agency, which is charged with writing nearly 100 new rules under Dodd-Frank. The decision has exposed the law to multiple other challenges, offering a path for Wall Street trade groups to chip away at the new law. The ruling in the proxy case, filed by the Chamber of Commerce and the Business Roundtable, was the latest major defeat for the S.E.C. Altogether, the appeals court has tossed out three S.E.C. regulations in the last six years, including the proxy rule. In each case, the court rebuked the agency for not fully evaluating a rule’s economic effects.

Dodd-Frank Wall Street Reform and Consumer Protection Act (2010)


Microsoft Sues Three in Click-Fraud Scheme

Abstract: AFTER an investigation that took more than a year, Microsoft has filed its first lawsuit over click fraud, where people manipulate clicks on a Web advertisement. Microsoft filed the civil complaint on Monday in United States District Court in Seattle against Eric Lam, Gordon Lam and Melanie Suen, of Vancouver, British Columbia, along with several corporation names they were believed to have used, and several unnamed parties. Microsoft is seeking at least $750,000 in damages. That might seem a small amount for a company that had sales of $13.7 billion last quarter. But about one in every seven clicks on an advertisement is estimated to be fraudulent, according to the traffic analysis firm ClickForensics , and Microsoft is trying to make that kind of deception more expensive for perpetrators. “We have decided to become more active in the commercial fraud area on the enforcement side,” said Tim Cranton, associate general counsel for Microsoft. “The theory is you can change the economics around crime or fraud by making it more expensive.” Jeremy Fain, the vice president of industry services for the Interactive Advertising Bureau, a trade group, said that Microsoft’s lawsuit was more than a warning shot. “Legally, if you commit wire fraud or mail fraud, there’s a lot of very stiff penalties for that, where we don’t have a lot of precedents, legally, from an Internet perspective yet,” he said. “It’s really meant to try to create more of a legal precedent, and more of a legal library of cases to draw from in the future.” Gordon Lam, reached on Monday evening, said he had not yet seen the filing and could not comment further. Microsoft said it found a pattern of click fraud on its search pages, where lists ranked by relevance and popularity appear alongside a handful of paid results. Advertisers bid on what they will pay to appear in the paid-search results for certain keywords. The more an advertiser pays, the higher they are in that list, and advertisers usually pay for each click on their ad. In March 2008, several auto insurance advertisers began complaining to Microsoft that traffic to their ads was spiking suspiciously. Microsoft looked at the searches being conducted, and noticed that searches for keywords like “auto insurance quote” had sharply increased. And clicks to the advertisers appearing at the top of the paid-search results listings for those terms were high.  Microsoft investigators noticed there was an oddly similar pattern in a seemingly unrelated area, advertisements for the game World of Warcraft. Though investigators weren’t sure how the two were connected, they began to see some similarities. Although traffic appeared to come from different computers, it was actually coming from two proxy servers, which mask the original address of a click. Microsoft began trying to stop the suspect traffic, but a little game evolved. Microsoft would block a server, or block a certain level of traffic for those advertisements, but whoever was on the other side of the clicks kept finding new ways around the company’s fixes. “They’re basically just trying to figure out what our filters and technology tools are going to flag, and seeing if they can change their thresholds to get around it,” Mr. Cranton said. “Then we figure out what they’ve done and we change our thresholds, and it goes back and forth.” Microsoft didn’t know why someone would be interested in both World of Warcraft and auto insurance ads, though, until a third party told investigators that an advertiser for World of Warcraft keywords named Eric Lam was also taking a fee for directing traffic to auto insurance sites. Investigators figured out that seven different accounts, registered under different individual and company names, were linked to Mr. Lam and two other defendants, Gordon Lam and Melanie Suen, believed to be Mr. Lam’s brother and mother. Microsoft’s theory is that Mr. Lam was running or working for low-ranking sites that took potential client information for auto insurers. The complaint said that he directed traffic to competitors’ Web sites so they would pay for those clicks and exhaust their advertising budgets quickly, which let the lower-ranking sites that he sponsored move up in the paid-search results.  When people clicked through to his site, it asked them to supply contact information, which he then resold to auto insurance companies, according to Microsoft’s complaint, which estimated his profit at $250,000. In the complaint, it also said it had to credit back $1.5 million to advertisers because of the Lams’ alleged fake clicks. Microsoft is seeking $750,000 in damages from the defendants. Although small advertisers have sued search firms, complaining the firms did not do enough to prevent fraudulent clicks, this is among the first cases where a search provider has gone after a suspected perpetrator. While Mr. Cranton said that this was not a gigantic case for Microsoft, he said the fraud was “significant.” “We think there’s a good place for enforcement, basically to say, ‘You think this is a game, cat and mouse, back and forth. At some point, once we figure out who you are, we’re going to hold you accountable for it, it’s going to be expensive, and we’re going to deter you from doing it because you’re ripping off advertisers and people online,’ ” he said.

click fraud
Online Advertising
Computers and the Internet
Microsoft Corp
Advertising and Marketing
Frauds and Swindling


Mexico: Legal Wrangling Begins Over Drug Kingpin

Abstract: Two days after Mexican marines arrested the drug kingpin Joaquín Guzmán Loera, questions are being asked about whether he will be tried in Mexico or in the United States. Lawyers for Mr. Guzmán, who was charged Sunday with offenses related to organized crime and cocaine trafficking stemming from a 2009 investigation, are seeking an injunction against extradition. Federal officials in Chicago and New York have said they want to try him in those cities, and he faces additional indictments in Texas and Florida. But Mexico’s interior minister, Miguel Ángel Osorio Chong, said Monday that the government’s security cabinet would “make the most appropriate decision.” Mexico’s ambassador to Washington, Eduardo Medina Mora, said Saturday that Mr. Guzmán should face charges in Mexico first. Mr. Guzmán, who is being held in a high-security prison outside Mexico City, escaped from a Guadalajara prison in 2001 and spent almost 13 years as a fugitive.

Mexico
Extradition
Fugitive
Joaquin Guzman Loera,El Chapo
Drug Abuse


Defeated Gambian Leader Ends Standoff and Boards a Flight Into Exile

Abstract: BANJUL, Gambia — As a military band played, the defeated president of Gambia, who had set off a tense standoff by refusing to step down after his election loss, left the country on Saturday night, boarding a flight that would send him into exile. Teary supporters gathered at the airport to usher off the former leader, Yahya Jammeh , as he finally let go of the presidency, two days after a new president, Adama Barrow, was inaugurated in nearby Senegal, where he had fled out of fears for his safety. Mr. Jammeh, who seized power in a coup in 1994, arrived at the airport in Banjul, the capital, in his Rolls-Royce and dressed in all white. A military band played the national anthem and a song it had composed just for him that it often played to accompany his journeys. Mr. Jammeh walked slowly toward a waiting airplane, shaking hands with a line of people and escorted by Alpha Condé, the president of Guinea. A Quran in one hand, he waved with the other to the crowd. As of Saturday night, it was still unclear exactly where Mr. Jammeh would wind up. Mr. Jammeh had appeared on state television early Saturday morning and announced that he would step down. “I am truly and sincerely proud of being of service to you,” he said in a somber speech . With Mr. Jammeh’s long record of unpredictability, many Gambians had questioned whether he would actually give up power after he was defeated in an election last month . On Saturday, a wave of relief spread across Mr. Barrow’s supporters. Mr. Jammeh’s departure ended a tense stretch for the West African nation, which had been at a standstill, with foreign troops and military vehicles inside its borders and the presidents of both Guinea and Mauritania intervening to persuade Mr. Jammeh to step down to make way for the newly elected president, Mr. Barrow. Fearing for his safety in Gambia, Mr. Barrow was sworn in on Thursday in Senegal, as Mr. Jammeh refused to vacate the statehouse. For weeks, Mr. Jammeh, who has a long record of human rights abuses , has insisted that results of the election that ousted him were flawed. He had called for a new vote, even after initially conceding the election to Mr. Barrow, a real estate agent and a member of the opposition party. Mr. Jammeh vowed to protect his presidency with the help of his military. A coalition of West African nations, with the support of the United Nations, had sent troops into Gambia on standby to forcibly remove Mr. Jammeh from office. The military action paused when Mr. Jammeh said he would step down. Image Yahya Jammeh, the former leader of Gambia, waved to supporters as he departed from the airport in Banjul on Saturday. Credit Jerome Delay/Associated Press On Friday, Mr. Barrow addressed the growing members of the Gambian diaspora , many of whom left the country years ago fearing oppression under Mr. Jammeh, who routinely jailed opponents, some of whom died under questionable circumstances in prison. Finally, Mr. Barrow told them, it was time to return to their country. “You now have the liberty to return home,” he said. “The rule of fear has been vanished from the government for good.” In Gambia, one anxious citizen, Famara Kamara, said he had already called his family on Saturday and planned to pick them up at the border with Senegal. He had taken his wife and two sons across to Senegal last week as tensions rose. He was relieved that his family would not have to live in a refugee camp in another country — a terrifying notion. “I have seen documentaries of people living in refugee camps,” Mr. Kamara said. “It’s a terrible experience. I am so grateful to God and to President Jammeh for putting the interest of the Gambian people first.” Image President Yahya Jammeh appeared on television early Saturday to announce that he would leave office. Credit Gambia State TV, via Associated Press In recent days, Mr. Jammeh’s base of support crumbled. Many ministers in his cabinet resigned. The African Union said it would refuse to recognize him as president. In Banjul, citizens were relieved to hear that Mr. Jammeh seemed ready to go, but their unease would not fully disappear until he was officially outside the nation’s borders. Capt. Momodu Njie of the Gambian Army said he had been in a state of confusion in recent days, unsure which president he was serving. “Both Yahya Jammeh and Adama Barrow said they were constitutional presidents of the republic, and as a soldier, I don’t know much about the clause in the Constitution,” Captain Njie said. “This makes it difficult to take sides, and at the same time, I cannot serve two commanders in chief.” Gambia, the smallest country in continental Africa, suffers from widespread unemployment. Thousands of people have left the country, not only to escape from Mr. Jammeh but also to look for work, setting out on dangerous journeys by sea to Europe. But many Europeans have flocked to the coastal country, known for its beaches and bustling sex trade. The odd equilibrium was thrown off balance in recent days as thousands of tourists jammed the airport in an evacuation organized by tour companies. The sentiments of the strange twist of events in Gambia were captured with eloquence on local news broadcasts that replayed images of Mr. Jammeh’s speech along with commentary. One anchor called Mr. Jammeh’s announcement an “end to what was a troubling few days for this tiny paradise of happiness.” “It is a day like no other in the history of the Gambia,” the anchor said, “as people waited in bated breath to receive the news of a lifetime, an end to a political impasse, which took this beautiful land of ours to the brink.”

Gambia
Election
Yahya Jammeh
Adama Barrow
Politics


Lin Helps Hand Knicks Their First Home Loss

Abstract: For one night this season, a new version of Linsanity was the featured event at Madison Square Garden. Jeremy Lin , wearing his red and silver Houston Rockets jersey, was cheered during pregame introductions, but there were no visible Linsanity signs in the arena — a far cry from last February, when he went from benchwarmer to global phenomenon. When the game began, Lin was booed, and fans chanted “air ball” when a 3-point attempt missed badly, but he settled down and did not seem overwhelmed by the moment. He often drove aggressively to the basket and regained his shooting touch, scoring 22 points and adding 9 assists to help the Rockets to an emphatic 109-96 victory Monday night. James Harden added 28 points as the Knicks (18-6) lost at home for the first time this season in 11 games, and their four-game winning streak ended. Under Coach Mike Woodson, the Knicks are 20-2 in the regular season at the Garden. Carmelo Anthony, who missed eight games while Lin became the centerpiece of the team last season, sat out his second straight game because of a sprained left ankle. He did not sit on the bench, and his status for Wednesday’s game against the Nets at the Garden is questionable. “It was a lot of fun playing on that court again,” Lin said. “I’m thankful to the fans. It was actually a lot better than I thought.” After the Knicks cut the Rockets’ lead to 60-55, Houston went on a 15-0 run. During the run, Houston (12-12) made three consecutive 3-pointers, including two by Harden, to take a 20-point lead. Lin assisted on five of the Rockets’ six baskets and made a steal and layup. “We complemented each other really well,” Lin said. “That’s really important for both of us, to be aggressive, find our spots and pick our times.” From there, the Rockets were never threatened. Without Anthony, the Knicks lacked a dominant playmaker who could score in bunches. On Saturday, they escaped with a 1-point victory over the Cleveland Cavaliers. On Monday night, they relied on 3-point shooting, which has been a key ingredient in their holding the best record in the Eastern Conference. But the Knicks hit an anemic 9 of 31 shots from behind the arc. In Anthony’s absence, the rookie Chris Copeland had a breakout performance, leading the Knicks with 29 points and 5 rebounds. He was 11 of 19 from the floor, including 3 of 5 on 3-point attempts. The Rockets’ victory was similar to their win over the Knicks in November, when the Rockets scored 131 points by penetrating to the basket with ease. The Knicks had trouble guarding Lin and Harden again, which left many Rockets open for 3-pointers. Unlike the Knicks, the Rockets shot 51 percent from the floor. “Our energy just didn’t seem right,” Steve Novak said. “I think that defensively, we had a lot of breakdowns, and it was disappointing.” Raymond Felton, who was responsible for guarding Lin, agreed. “We were a little flat at times, I will admit that,” said Felton, who shot 7 of 18 for 14 points. “Some guys looked a little fatigued, and I was tired out there a couple of times,” he added. The Knicks allowed the Rockets to score 25 fast-break points. “We gave up so many easy baskets,” Tyson Chandler said. “We want to come in and compete, whether we have guys out or not. “I honestly just didn’t like the way we showed up tonight. Our principles are to have two guys back at all times when we take a shot. We’re supposed to have a guy stop penetration, and we didn’t accomplish either.” Woodson was more succient. “We just didn’t play well again,” he said. “They played great, and we played awful.” With 2 minutes 25 seconds remaining in the game, Lin headed toward the bench, his night done. Afterward, he embraced Novak and Chandler, who was hit with a flagrant foul after hitting Lin in the head with his right elbow. He was grinning from ear to ear. REBOUNDS Amar’e Stoudemire was cleared by the Knicks’ medical staff Monday to start practicing Tuesday. The Knicks are not scheduled to practice Tuesday, but Stoudemire will be on the court with the Erie BayHawks, the Knicks’ Development League team, at the training facility in Greenburgh, N.Y. Stoudemire had surgery on his left knee before the season started and has yet to play this season. Mike Woodson is hopeful that Carmelo Anthony will play in Wednesday’s game against the Nets. Woodson said Anthony made the decision not to play.

Houston Rockets
Lin Jeremy
New York Knicks
Basketball


Chile Exhumes Pablo Neruda in Inquiry

Abstract: SANTIAGO, Chile — The remains of Chile’s Nobel Prize-winning poet, Pablo Neruda , were exhumed Monday so that they could be examined for signs of whether he might have died of poisoning instead of cancer, the widely believed cause for almost 40 years. The court-ordered exhumation seeks to establish what caused Mr. Neruda’s death in a private clinic in Santiago on Sept. 23, 1973, less than two weeks after a military coup toppled the nation’s socialist president, Salvador Allende, a close friend of the poet. Mr. Neruda, a prominent member of the Communist Party and a former senator, had prostate cancer and was being treated in Paris, where he was an ambassador appointed by President Allende. He returned to Chile in November 1972. Best known for his romantic poetry, Mr. Neruda won the Nobel Prize in Literature in 1971. Shortly after the coup, as the new military rulers persecuted supporters of Mr. Allende, troops looted and destroyed Mr. Neruda’s house in the capital and twice raided his home in Isla Negra, where he lived with his third wife, Matilde Urrutia. The Mexican government had offered to fly the couple out of the country, and days before he was scheduled to travel, Mr. Neruda was admitted to the Santa María clinic in the capital. In 2011, Mr. Neruda’s driver at the time, Manuel Araya, publicly claimed that Mr. Neruda had not been in critical condition beforehand and that a day before his death Mr. Neruda, 69, told him that a doctor had given him an injection in the stomach that made him “burn inside.” His health quickly deteriorated. Mr. Araya contends that the poet was poisoned by doctors in the clinic, although there are no material witnesses to confirm the accusation. Few of Mr. Neruda’s relatives and friends believe Mr. Araya’s version, nor does the Pablo Neruda Foundation, which manages his estate. But there are contradictory accounts regarding his health conditions and how advanced the cancer was, and it is not clear why Mr. Araya kept silent all these years. Mr. Araya said that he had tried to tell Communist Party leaders at the time, but that no one would listen. Almost four decades later, he again approached the party to relay his suspicions about Mr. Neruda’s death. This time, the party filed a criminal lawsuit to have the courts establish the truth. “Once there is a doubt, I believe it is extremely important to clear it up and use the technological means at our disposal to determine the poet’s cause of death,” said Judge Mario Carroza, who is in charge of the investigation. “We will not spare any possibility.” Mr. Neruda and Ms. Urrutia were buried together in a grave facing the Pacific Ocean at his seaside home in Isla Negra, about 70 miles west of Santiago. His remains were transported Monday to the morgue in the capital, where Chilean and international forensics experts will examine them. Results of the analysis could take several months.

Chile
Pablo Neruda
Poetry
Forensic science


Federal Judge Orders Ohio to Undo Cuts to Early Voting

Abstract: A federal judge on Thursday blocked Ohio’s cuts to early voting and ordered the state to establish additional polling days before November’s elections, saying the reductions would disproportionately harm the poor and members of minority groups. The preliminary injunction issued by Judge Peter C. Economus was a setback for Gov. John R. Kasich, a Republican and vocal proponent of the measures, and could affect the upcoming elections in Ohio, a closely contested swing state. Judge Economus’s ruling directed Ohio to restore early voting during evenings and on at least two Sundays, and to reinstate Golden Week, the first week of early voting in which many African-American churches organize congregants to register and vote on the same day. Mr. Kasich and his supporters have said the measures were needed to reduce fraud, save money and create uniformity of practice across the state, and that the four-week early voting period allowed sufficient time for people to cast ballots. A spokesman for the state attorney general, Mike DeWine, said the state would review the ruling before deciding whether to appeal. The United States Justice Department filed a statement of interest in the case and has challenged similar measures elsewhere, including in North Carolina . The ruling was in response to a lawsuit filed by the American Civil Liberties Union on behalf of the Ohio Conference of the N.A.A.C.P., several African-American churches and the League of Women Voters of Ohio. “This ruling means that thousands of voters who have needed these particular early voting opportunities will continue to have that right,” said Dale Ho, director of the A.C.L.U.’s Voting Rights Project. Ohio introduced early voting in 2008 after encountering significant problems during the 2004 election, including people waiting in lines at polling sites for as long as six hours. In 2012, of the 5.6 million votes cast, 1.9 million were cast early, including about 600,000 that were cast early in person, according to the Ohio secretary of state’s office. But in February, Democrats and civil rights groups objected after Mr. Kasich signed a bill eliminating Golden Week, reducing to 28 days from 35 days the time given in which early voting could take place. And Jon A. Husted, Ohio’s secretary of state, issued a directive limiting evening and weekend hours. Like Mr. Kasich, Mr. Husted and Mr. DeWine are Republican. The poor and minorities tend to vote Democratic. Mr. Husted said Thursday that he believed the state should appeal the decision. The “ruling kicks the door open to having different rules for voting in each of Ohio’s 88 counties, which is not fair and uniform,” he said in a statement. Judge Economus wrote that the state’s measures violated both the Equal Protection Clause of the 14th Amendment and the Voting Rights Act by creating unlawful barriers to the polls for minorities and the poor. The state’s arguments about reducing fraud, according to the judge, “did not withstand logical scrutiny.” There has been virtually no in-person voter fraud documented in the country. The ruling cited a study of early voting in Cuyahoga County — the greater Cleveland area — in 2008 that found that African-American voters were more than 26 times more likely to have cast ballots during the early voting period than white voters. “Despite accounting for a mere 28.6 percent of the estimated overall vote, African-American voters cast an estimated 77.9 percent of all” early votes in the county that year, the ruling said. A second study cited by Judge Economus found that early voters who were white, African-American or Latino had lower incomes than those who cast ballots on Election Day or by mail. The ruling said that restricting Sunday voting would have a similar effect because many of those early voters were African-Americans who voted after attending church services as part of a “Souls to the Polls” initiative. Voting by mail, the judge wrote, would not relieve the reduced access to voting sites because “the record is undisputed that African-Americans, lower-income individuals, and the homeless are distrustful of the mail and/or voting by mail.” Richard L. Hasen, a specialist in electoral law at the University of California, Irvine, said he wondered whether the legal reasoning behind the ruling would stand up to further scrutiny. “If 28 days is unconstitutional and a voting rights violation, what does this say about places like New York, which offer no early voting?” he wrote in an email.

Ohio
Peter C. Economus
Voter registration


10 Months After Fossett Vanished, Adventurers Mount New Searches

Abstract: LAS VEGAS — In a sign that last September’s disappearance of the multimillionaire adventurer Steve Fossett has taken on at least a faint air of Amelia Earhart-like legend, two groups of volunteers are assembling this summer to comb rugged terrain on the Nevada - California border in search of his remains. One group, led by Simon Donato, a Canadian geologist and adventure racer, began a weeklong effort on Monday to solve the mystery surrounding Mr. Fossett, who took off from a ranch in the Reno area on Sept. 3 for a brief jaunt in a single-engine plane and never returned. One of the most extensive, complex and costly searches for a missing aircraft in American history failed to find him last year. In February, at the request of his widow, Peggy, an Illinois judge declared him legally dead. Mr. Donato, who could not be reached for comment Monday, told The Associated Press over the weekend that his 10-member team included paramedics and expert hikers who would conduct a “blitzkrieg” search of remote canyons and forested regions inaccessible to most. Should that effort prove unsuccessful, another adventurer, Robert Hyman, intends to lead a team in August on a similar volunteer search. His group, made up of experts in aviation, mountain terrain, hiking and climbing, has set no limit on the length of its quest. Mr. Hyman, a Washington investor who has led a variety of scientific expeditions at Mount Everest and throughout Central America, said finding Mr. Fossett could be crucial to understanding why the search-and-rescue efforts of last year failed. “They really brought it all out, so why didn’t they find him?” Mr. Hyman said in an interview on Monday. “The answer must be that he can’t be seen from the air. What’s blocking the eyes in the sky? He’s probably under rocks, under a ledge. We just want to find Steve, and we want to help with the methodology with search and rescue.” Neither hunt is sanctioned by Peggy Fossett, who helped finance a large private search last fall in addition to one conducted by the Civil Air Patrol and various Nevada and California agencies. Mrs. Fossett has given no interviews since her husband’s disappearance but issued a statement recently in which she said she had “no further plans for additional searching.” Both Mr. Donato and Mr. Hyman are members of the Explorers Club, an international organization of adventure enthusiasts to which the 63-year-old Mr. Fossett also belonged. Mr. Fossett was famed for his dozens of sea, land and air records, including a nonstop solo trip around the world in a balloon. His status, and the unusual circumstances surrounding his presumed death, have piqued interest similar to that concerning the fate of Amelia Earhart, who vanished over the Pacific on a round-the-world flight in 1937 and was never found. “There is something of a parallel there: it’s simply a mystery,” said the Explorers Club spokesman, Jeff Stolzer, who noted that members of the club were still involved in Earhart searches. “Steve was a beloved member of the club,” Mr. Stolzer said, “and an amazingly nice man. People were really saddened when he disappeared. They feel like it’s almost an obligation to find out what happened.”

Nevada
California
Explorers Club
Fossett Steve
Airlines and Airplanes


On Left Side of Yankees’ Infield, Not Much to Stand On

Abstract: LAKE BUENA VISTA, Fla. — For nine years they were next-door neighbors on the same stretch of real estate: five years on the left side of the infield at the old Yankee Stadium, four at the new. Derek Jeter and Alex Rodriguez started 1,048 games together at shortstop and third base, the highest total for any teammates at those two positions since Bill Russell and Ron Cey started 1,249 for the Los Angeles Dodgers from 1972 to 1982, according to the Elias Sports Bureau. But beginning last season, when injuries limited Jeter and Rodriguez to seven starts together in the field, their reliable side of the infield began to crack and crumble, ushering in a period of doubt and transition. Whether they will ever play next to each other again remains unclear, and if they do, it will not be for much longer. “It’s difficult,” Hal Steinbrenner, the Yankees’ managing general partner, said regarding the uncertain status of both Jeter and Rodriguez with the 2014 season approaching. “Obviously, it’s difficult.” What makes it especially challenging for the Yankees is that they do not know if Jeter and Rodriguez will be able to play in 120 games at their usual positions next season, or 50 games, or none at all. Rodriguez is facing the threat of a record 211-game suspension in connection with Major League Baseball’s investigation of the Biogenesis anti-aging clinic, which is suspected of distributing performance-enhancing drugs. He is appealing the ban, but the educated guess is that it will be at least partly upheld and that Rodriguez, 38 and playing with two surgically repaired hips, could miss much or all of 2014. But the Yankees will not know for certain until January, when the arbitrator in the case is likely to rule. So for now, the Yankees are not sure if they will need a new everyday third baseman, and if they do, how much money they will save by not having to pay Rodriguez some or all of his $25 million salary next year. Jeter is coming off a serious ankle injury that limited him to 17 games in 2013, and he will be attempting to re-establish himself as an everyday player at 39 and 40 (his birthday is June 26) while occupying the most demanding position on the field other than catcher. No matter how confident people are that Jeter is the person to pull it off, the Yankees will not have much of an inkling of whether he can do it until exhibition games begin in Florida. “Nobody is going to work harder than him to get back; we know that,” Steinbrenner said. “But we won’t know until spring training.” There is expert defensive help behind Jeter in Brendan Ryan, but he does not hit much. If Jeter cannot consistently stay on the field anymore, the Yankees will probably have to find another option not currently on the roster. All of this leaves General Manager Brian Cashman in a bind, complicated by the fact that Robinson Cano has left to join the Seattle Mariners, leaving Cashman unclear as to who his second baseman is. Should Cashman pursue front-line players who will play the bulk of the innings at third and short in anticipation that Rodriguez, Jeter or both will not be available to, or should he just get backups to fill in? Image Juan Uribe, who can play second, short and third, would probably cost the Yankees too much. Credit Mark J. Terrill/Associated Press “I don’t know who’s playing second,” Cashman acknowledged. “I still don’t know who’s playing third yet. There’s going to be a question mark at shortstop, even though we know who the player is.” But sooner or later, and maybe in a matter of days, Cashman will come up with a solution at second base. He has to, since there is longer an incumbent. Shortstop and third base, however, are uncertain. Jeter is an immensely proud veteran, the team captain, and not likely to welcome being nudged aside at short. Rodriguez is a walking mystery, a riddle in pinstripes. John Hart, a former general manager for Cleveland and Texas and now an analyst on MLB TV, said that Cashman was confronted with an unusual challenge and that the only similar situation Hart could recall involved — who else? — Rodriguez. In the winter between the 2003 and 2004 seasons, the Rangers were trying to unload Rodriguez, who was then still playing under his original 10-year, $250 million contract. The money owed Rodriguez made it almost impossible to make a trade. First, Hart tried sending him to Boston. When that did not work, Hart finally shipped him to the Yankees, but not until Feb. 16, just as spring training was beginning. “Brian Cashman is juggling a lot of balls right now, and it’s a very uncomfortable situation,” Hart said. “There’s no closure yet with Alex, and how do you know what you’re getting with Derek?” Another former general manager, Steve Phillips, who was with the Mets when Rodriguez joined the Yankees, had a simple solution for Cashman. “Sign Juan Uribe,” he said. The 34-year-old Uribe can play short, third and second, which would be the perfect fit but would most likely cost too much money for a Yankee team trying to keep its 2014 payroll under the $189 million luxury tax threshold. The Yankees have also offered a three-year deal worth roughly $24 million to Omar Infante to play second base, but he is said to be seeking a four-year deal, and may get it with Kansas City. The 31-year-old Infante has mostly played second in his 12-year career, but has also played 225 games at short and 107 at third. His versatility might ease Cashman’s agita. The Yankees also talked about a trade for Brandon Phillips, Cincinnati’s standout second baseman, but would not deal Brett Gardner straight up for him because Phillips is owed $50 million — too much for the Yankees — over the next four seasons. According to a person who spoke directly to Cashman during the just-concluded winter meetings, the uncertain landscape at short and third is leading him toward adding one or more backup players, like Eric Chavez and Michael Young (the player Hart switched to short when he traded Rodriguez), both of whom could play third base, or Mark Reynolds, who can play third and first. But those players are not solutions at shortstop. Cashman has already signed a multitask player, Kelly Johnson, who can play second base or third. So maybe he will be asked to do both. “It’s a really tough situation,” said Jim Bowden, another former general manager. “I’ve never seen anything like it, and I wouldn’t know where to even start to address it.”

Yankees
Derek Jeter
Alex Rodriguez
Baseball
Brian Cashman


Citi Names New Chief of Investment Banking

Abstract: Shaking up its leadership for the third time in six months, Citigroup has named John Havens as the new head of its investment banking and alternative investments group. The move, a subject of speculation for months, came on Sunday night when Vikram S. Pandit officially selected Mr. Havens, a loyal lieutenant going back to his Morgan Stanley days, to improve the performance of the two units. Mr. Havens, known as a strong but sometimes abrasive manager, had been in charge of the alternative investments group after Mr. Pandit combined it with the investment bank last fall to form Citigroup’s institutional clients group. Michael S. Klein, a co-head of Citigroup’s investment bank for the last four years, was given a new assignment with the title of chairman of Citigroup’s institutional client group, but with no day-to-day management responsibilities. Instead, he will move over to Citigroup’s Park Avenue headquarters, where he will continue working directly with clients and lead a committee to help coordinate coverage with the bank’s disparate businesses. The moves, which emerged from recent business reviews, are the latest in a series of changes that Mr. Pandit has made since taking over for Charles O. Prince III in December. Citigroup has been hard hit by the credit crisis, with more than $20 billion in write-offs and a 60 percent drop in its stock price over the last year. Besides strengthening its balance sheet, Mr. Pandit has appointed a new chief risk officer and made changes in the way its mortgage operations and global wealth management unit are structured. Even so, investors continue to raise concerns about its financial health as it braces for billions of dollars in additional losses. The moves also illustrate the organizational and personnel challenges facing Mr. Pandit. “By putting the right talent in the right places, we are enhancing Citi’s ability to meet the needs of our institutional clients,” Mr. Pandit said in a statement. The appointment was reported Monday by The Wall Street Journal. The elevation of Mr. Havens is the latest of several senior appointments for Mr. Pandit’s Morgan Stanley colleagues. Don Callahan was named Citigroup’s administrative chief; Brian Leach was recently appointed its chief risk officer. Mr. Havens has long been at Mr. Pandit’s side. The two were co-founders of Old Lane, which Citigroup bought last year to bring Mr. Pandit aboard, and have worked closely for more than 20 years despite — or perhaps because of — contrasting personalities. Where Mr. Pandit has a more professorial style, Mr. Havens has the command presence of a drill sergeant. The leadership shake-up moves Edward Kelly into Mr. Havens’s previous role as head of Citigroup’s alternative investment group. He had previously been chief executive of the Mercantile Bancorp, before a brief stint at the Carlyle Group in private equity. His hiring in January led to rumors that Mr. Pandit was thinking of reshuffling the senior management of the Institutional Clients Group. It also means that James Forese, who had been co-head of the investment bank, will no longer hold that title. He will now report to Mr. Havens as the head of Citigroup’s sales and trading division.

Appointments and Executive Changes
Citigroup Incorporated
Banks and Banking
Havens John


They Tried to Outsmart Wall Street

Abstract: Emanuel Derman expected to feel a letdown when he left particle physics for a job on Wall Street in 1985. After all, for almost 20 years, as a graduate student at Columbia and a postdoctoral fellow at institutions like Oxford and the University of Colorado , he had been a spear carrier in the quest to unify the forces of nature and establish the elusive and Einsteinian “theory of everything,” hobnobbing with Nobel laureates and other distinguished thinkers. How could managing money compare? But the letdown never happened. Instead he fell in love with a corner of finance that dealt with stock options. “Options theory is kind of deep in some way. It was very elegant; it had the quality of physics,” Dr. Derman explained recently with a tinge of wistfulness, sitting in his office at Columbia, where he is now a professor of finance and a risk management consultant with Prisma Capital Partners. Dr. Derman, who spent 17 years at Goldman Sachs and became managing director, was a forerunner of the many physicists and other scientists who have flooded Wall Street in recent years, moving from a world in which a discrepancy of a few percentage points in a measurement can mean a Nobel Prize or unending mockery to a world in which a few percent one way can land you in jail and a few percent the other way can win you your own private Caribbean island. They are known as “quants” because they do quantitative finance. Seduced by a vision of mathematical elegance underlying some of the messiest of human activities, they apply skills they once hoped to use to untangle string theory or the nervous system to making money. This flood seems to be continuing, unabated by the ongoing economic collapse in this country and abroad. Last fall students filled a giant classroom at M.I.T. to overflowing for an evening workshop called “So You Want to Be a Quant.” Some quants analyze the stock market. Others churn out the computer models that analyze otherwise unmeasurable risks and profits of arcane deals, or run their own hedge funds and sift through vast universes of data for the slight disparities that can give them an edge. Still others have opened an academic front, using complexity theory or artificial intelligence to better understand the behavior of humans in markets. In December the physics Web site arXiv.org , where physicists post their papers, added a section for papers on finance. Submissions on subjects like “the superstatistics of labor productivity” and “stochastic volatility models” have been streaming in. Quants occupy a revealing niche in modern capitalism. They make a lot of money but not as much as the traders who tease them and treat them like geeks. Until recently they rarely made partner at places like Goldman Sachs. In some quarters they get blamed for the current breakdown — “All I can say is, beware of geeks bearing formulas,” Warren Buffett said on “The Charlie Rose Show” last fall. Even the quants tend to agree that what they do is not quite science. As Dr. Derman put it in his book “My Life as a Quant: Reflections on Physics and Finance, ” “ In physics there may one day be a Theory of Everything; in finance and the social sciences, you’re lucky if there is a useable theory of anything.” Asked to compare her work to physics, one quant, who requested anonymity because her company had not given her permission to talk to reporters, termed the market “a wild beast” that cannot be controlled, and then added: “It’s not like building a bridge. If you’re right more than half the time you’re winning the game.” There are a thousand physicists on Wall Street, she estimated, and many, she said, talk nostalgically about science. “They sold their souls to the devil,” she said, adding, “I haven’t met many quants who said they were in finance because they were in love with finance.” The Physics of Money Physicists began to follow the jobs from academia to Wall Street in the late 1970s, when the post-Sputnik boom in science spending had tapered off and the college teaching ranks had been filled with graduates from the 1960s. The result, as Dr. Derman said, was a pipeline with no jobs at the end. Things got even worse after the cold war ended and Congress canceled the Superconducting Supercollider, which would have been the world’s biggest particle accelerator, in 1993. They arrived on Wall Street in the midst of a financial revolution. Among other things, galloping inflation had made finances more complicated and risky, and it required increasingly sophisticated mathematical expertise to parse even simple investments like bonds . Enter the quant. “Bonds have a price and a stream of payments — a lot of numbers,” said Dr. Derman, whose first job was to write a computer program to calculate the prices of bond options. The first time he tried to show it off, the screen froze, but his boss was fascinated anyway by the graphical user interface, a novelty on Wall Street at the time. Stock options, however, were where this revolution was to have its greatest, and paradigmatic, success. In the 1970s the late Fischer Black, then at the University of Chicago, and Myron S. Scholes and Robert C. Merton, both then at M.I.T., had figured out how to price and hedge these options in a way that seemed to guarantee profits. The so-called Black-Scholes model has been the quants’ gold standard ever since. In the old days, Dr. Derman explained, if you thought a stock was going to go up, an option was a good deal. But with Black-Scholes, it doesn’t matter where the stock is going. Assuming that the price of the stock fluctuates randomly from day to day, the model provides a prescription for you to still win by buying and selling the underlying stock and its bonds. “If you’re a trading desk,” Dr. Derman explained, “you don’t care if it goes up or down; you still have a recipe.” The Black-Scholes equation resembles the kinds of differential equations physicists use to represent heat diffusion and other random processes in nature. Except, instead of molecules or atoms bouncing around randomly, it is the price of the underlying stock. The price of a stock option, Dr. Derman explained, can be interpreted as a prediction by the market about how much bounce, or volatility, stock prices will have in the future. But it gets more complicated than that. For example, markets are not perfectly efficient — prices do not always adjust to right level and people are not perfectly rational. Indeed, Dr. Derman said, the idea of a “right level” is “a bit of a fiction.” As a result, prices do not fluctuate according to Brownian motion. Rather, he said: “Markets tend to drift upward or cascade down. You get slow rises and dramatic falls.” One consequence of this is something called the “volatility smile,” in which options that benefit from market drops cost more than options that benefit from market rises. Another consequence is that when you need financial models the most — on days like Black Monday in 1987 when the Dow dropped 20 percent — they might break down. The risks of relying on simple models are heightened by investors’ desire to increase their leverage by playing with borrowed money. In that case one bad bet can doom a hedge fund. Dr. Merton and Dr. Scholes won the Nobel in economic science in 1997 for the stock options model. Only a year later Long Term Capital Management, a highly leveraged hedge fund whose directors included the two Nobelists, collapsed and had to be bailed out to the tune of $3.65 billion by a group of banks . Afterward, a Merrill Lynch memorandum noted that the financial models “may provide a greater sense of security than warranted; therefore reliance on these models should be limited.” That was a lesson apparently not learned. Respect for Nerds Given the state of the world, you might ask whether quants have any idea at all what they are doing. Comparing quants to the scientists who had built the atomic bomb and therefore had a duty to warn the world of its dangers, a group of Wall Streeters and academics, led by Mike Brown, a former chairman of Nasdaq and chief financial officer of Microsoft , published a critique of modern finance on the Web site Edge.org last fall calling on scientists to reinvent economics. Lee Smolin, a physicist at the Perimeter Institute for Theoretical Physics in Waterloo, Ontario , who was one of the authors, said, “What is amazing to me as I learn about this is how flimsy was the theoretical basis of the claims that derivatives and other complex financial instruments reduced risk, when their use in fact brought on instabilities.” But it is not so easy to get new ideas into the economic literature, many quants complain. J. Doyne Farmer, a physicist and professor at the Santa Fe Institute, and the founder and former chief scientist of the Prediction Company, said he was shocked when he started reading finance literature at how backward it was, comparing it to Middle-Ages theories of fire. “They were talking about phlogiston — not the right metaphor,” Dr. Farmer said. One of the most outspoken critics is Nassim Nicholas Taleb, a former trader and now a professor at New York University . He got a rock-star reception at the World Economic Forum in Davos this winter. In his best-selling book “The Black Swan” ( Random House , 2007), Dr. Taleb, who made a fortune trading currency on Black Monday, argues that finance and history are dominated by rare and unpredictable events. “Every trader will tell you that every risk manager is a fraud,” he said, and options traders used to get along fine before Black-Scholes. “We never had any respect for nerds.” Dr. Taleb has waged war against one element of modern economics in particular: the assumption that price fluctuations follow the familiar bell curve that describes, say, IQ scores or heights in a population, with a mean change and increasingly rare chances of larger or smaller ones, according to so-called Gaussian statistics named for the German mathematician Friedrich Gauss. But many systems in nature, and finance, appear to be better described by the fractal statistics popularized by Benoit Mandelbrot of IBM , which look the same at every scale. An example is the 80-20 rule that 20 percent of the people do 80 percent of the work, or have 80 percent of the money. Within the blessed 20 percent the same rule applies, and so on. As a result the odds of game-changing outliers like Bill Gates ’s fortune or a Black Monday are actually much greater than the quant models predict, rendering quants useless or even dangerous, Dr. Taleb said. “I think physicists should go back to the physics department and leave Wall Street alone,” he said. When Dr. Taleb asked someone to come up and debate him at a meeting of risk managers in Boston not too long ago, all he got was silence. Recalling the moment, Dr. Taleb grumbled, “Nobody will argue with me.” Dr. Derman, who likes to say it is the models that are simple, not the world, maintains they can be a useful guide to thinking as long as you do not confuse them with real science — an approach Dr. Taleb scorned as “schizophrenic.” Dr. Derman said, “Nobody ever took these models as playing chess with God.” Do some people take the models too seriously? “Not the smart people,” he said. Quants say that they should not be blamed for the actions of traders. They say they have been in the forefront of pointing out the shortcomings OF modern economics. “I regard quants to be the good guys,” said Eric R. Weinstein, a mathematical physicist who runs the Natron Group, a hedge fund in Manhattan . “We did try to warn people,” he said. “This is a crisis caused by business decisions. This isn’t the result of pointy-headed guys from fancy schools who didn’t understand volatility or correlation.” Nigel Goldenfeld, a physics professor at the University of Illinois and founder of NumeriX, which sells investment software, compared the financial meltdown to the Challenger space shuttle explosion, saying it was a failure of management and communication. Prisoners of Wall Street By their activities, quants admit that despite their misgivings they have at least given cover to some of the wilder schemes of their bosses, allowing traders to conduct business in a quasi-scientific language and take risks they did not understand. Dr. Goldenfeld of Illinois said that a decade ago when he posted scholarly articles, some of which were critical of financial models, on his company’s Web site, salespeople told him to take them down. The argument, he explained, was that “it made our company look bad to be associating with Jeremiahs saying that the models were all wrong.” Dr. Goldenfeld took them down. In business, he explained, unlike in science, the customers are always right. Quants, in short, are part of the system. “They get paid, a Faustian bargain everybody makes,” said Satyajit Das, a former trader and financial consultant in Australia , who likes to refer to them as “prisoners of Wall Street.” “What do we use models for?” Mr. Das asked rhetorically. “Making money,” he answered. “That’s not what science is about.” The recent debacle has only increased the hunger for scientists on Wall Street, according to Andrew Lo, an M.I.T. professor of financial engineering who organized the workshop there, with a panel of veteran quants. The problem is not that there are too many physicists on Wall Street, he said, but that there are not enough. A graduate, he told the young recruits, can make $75,000 to $250,000 a year as a quant but can also be fired if things go sour. He said an investment banker had told him that Wall Street was not looking for Ph.D.’s, but what he called “P.S.D.s — poor, smart and a deep desire to get rich.” He ended his presentation with a joke that has been told around M.I.T. for a long time, but seemed newly relevant; “What do you call a nerd in 10 years? Boss.”

Subprime Mortgage Crisis,2008 Financial Crisis


Even Pessimists Feel Optimistic About the American Economy

Abstract: For more than a decade, the economy has failed to grow the way it once did. Unemployment has not stayed this high, this long, since the 1930s. But could the New Normal, as this long economic slog has been called, be growing old? That is the surprising new view of a number of economists in academia and on Wall Street, who are now predicting something the United States has not experienced in years: healthier, more lasting growth. The improving outlook is one reason the stock market has risen so sharply this year, even if street-level evidence for a turnaround, like strong job growth and income gains, has been scant so far. A prominent convert to this emerging belief is Tyler Cowen, an economics professor at George Mason University near Washington and author of “The Great Stagnation,” a 2011 best seller, who has gone from doomsayer to a decidedly more optimistic perspective. He is not predicting an imminent resurgence. Like most academic economists, Mr. Cowen focuses on the next quarter-century rather than the next quarter. But new technologies like artificial intelligence and online education, increased domestic energy production and slowing growth in the cost of health care have prompted Mr. Cowen to reappraise the country’s prospects. “It’s better than it looked,” Mr. Cowen said. “Technological progress comes in batches and it’s just a little more rapid than it looked two years ago.” His next book, “Average Is Over: Powering America Beyond the Age of the Great Stagnation,” is due out in September. Certainly, there are significant headwinds that will not abate anytime soon, including an aging population, government austerity, the worst income inequality in nearly a century and more than four million long-term unemployed workers. These and other forces prompted some leading economists, led by Robert J. Gordon of Northwestern, to conclude not long ago that the arc of American economic growth for centuries was over, to be replaced by decades of stagnation. Productivity might grow steadily, Professor Gordon argued, but the benefits will not flow to most Americans. Other analysts are challenging that perspective, which they said was colored, in part, by the severe downturn that hit the global economy more than five years ago. And some of them now see a brighter outlook right around the corner, not just far into the future. Two widely followed economic forecasters, Morgan Stanley and IHS Global Insight, have both increased their estimates for growth in recent days. “It’s been a long time coming,” said Nariman Behravesh, chief economist at IHS. “There is more optimism about the U.S. and in particular about the second half of this year and 2014. Three months ago, we wouldn’t have come to that same conclusion.” Image Tyler Cowen, an economics professor at George Mason University, has become more optimistic about the country’s prospects. Credit Amanda Lucidon for The New York Times Indeed, a number of forecasters are now predicting that the expansion, which began in 2009 and has remained subpar ever since, might prove to be far more durable than the typical five-to-six-year growth cycle, in part because of the absence of the traditional boom, then bust pattern. The optimistic view is hardly universal and there have been premature proclamations of better days before, most famously the “green shoots” spotted by Ben S. Bernanke, the chairman of the Federal Reserve, in 2009. Whether or not the economy is poised to grow faster in the months ahead will be the central question when Federal Reserve policy makers meet this week, with more volatility expected on Wall Street as traders look for any sign the Fed is ready to taper back its huge stimulus efforts. Whatever the Fed’s conclusion, many analysts insist the more upbeat view is justified this time. In particular, Mr. Behravesh and other economists said, the economy has shown greater resilience than expected in the face of tax increases and spending cuts in Washington. As the impact from this fiscal tightening eases, the overall growth rate should pick up. Mr. Behravesh now expects the annual growth rate to rise to 2.9 percent in 2014 and 3.5 percent in 2015. If he’s right, it would mark the fastest annual growth since 2005, when the economy expanded by 3.1 percent. It is also well above the 2 percent rise in output the economy has averaged over the last three years. The nonpartisan Congressional Budget Office also sees relatively fast growth of 3.4 percent next year, and 3.6 percent between 2015 and 2018. A few other private economists are even more bullish. Jim Glassman, senior economist at JP Morgan Chase’s commercial bank, estimates the economy could expand by 4 percent in both 2014 and 2015. If that were to come to pass, it would be the strongest back-to-back annual growth since the late 1990s. “I think 2014 will be the real deal,” Mr. Glassman said. “If we get to that level, which I feel pretty confident about, economists will say it’s about time.” Mr. Cowen, who is also an occasional contributor to the Sunday Business section of The New York Times, is more skeptical about a short-term takeoff, focusing instead on what he sees as a brightening, longer-term picture of the United States economy. The recent surge in domestic oil and gas production signals “the start of a new era of cheap energy,” he said, while less expensive online education programs could open the door to millions of people who have been priced out of more traditional academics. At the same time, Mr. Cowen said, he now expects subtler improvements in the country’s economic well-being that will not necessarily be reflected in statistics like gross domestic product, but will be significant nonetheless. For example, slower growth in the cost of health care will be a boon for the government and businesses, but will actually subtract from reported economic activity. “It’s like the music industry,” he said. “Revenues are lower at record companies but the experience for listeners is better.” Image In 2009, Ben S. Bernanke, chairman of the Federal Reserve, said he was beginning to see “green shoots” in the economy. Credit Jason Reed/Reuters Martin Neil Baily, a senior fellow at the Brookings Institution and a former chairman of the Council of Economic Advisers under President Clinton, said he has always been skeptical of Professor Gordon’s long-term view but has recently become more hopeful about the short-term as well. “I don’t buy the historical wave theory,” he said. “He’s right that there are headwinds like slowing population growth but the tech revolution is still very much happening.” In terms of the immediate future, “I thought there was a distinct possibility that spending cuts and tax increases might stall the economy,” he said. “I’m more optimistic now because we seem to be weathering it. There is a sense that we are going to get through this.” The current debate has turned out to be one of the most important ones in years among economists, who half-jokingly refer to their field as the dismal science. Some well-known experts challenge the new optimists. J. Bradford DeLong, an economics professor at University of California at Berkeley, sees few signs of a rebound, adding that Washington’s austerity policies only “dig the hole we are in deeper.” The percentage of workers in the labor force remains at lows not seen for a quarter-century. “The great stagnation will end for a lot of people but not everyone,” Mr. Cowen said. “I think there will be great breakthroughs but the distribution of those gains will go to owners of capital and intellectual property.” How big will these breakthroughs really be? That issue is crucial for Professor Gordon of Northwestern, arguably the most influential pessimist among academic economists today. While computers and the Internet hold revolutionary possibilities, he said, they will not affect living standards or productivity the way the innovations of the last 150 years did, citing developments like railroads, electrification, indoor plumbing and the like. “Electronics has already had its revolution with the Internet, the personal computer and e-commerce,” he said. “Advances in the future will doubtlessly be impressive, but the real impact of the electronic revolutions has already occurred.” Whether pessimists or optimists, economists do not have a great track record of predicting the future. Many feared the Great Depression might return after World War II ended, only to see the economy boom in the postwar era. Similarly, few foresaw the financial crisis of 2008 or the depth of the most recent recession. Mr. Bernanke said that the near-term outlook remains murky but nonetheless put himself firmly in the optimists’ camp in a commencement speech last month at Bard College at Simon’s Rock in Massachusetts. Acknowledging Mr. Gordon’s point that living standards have not advanced since the 1960s the way they did in the previous 50-year period, he nevertheless echoed Mr. Cowen’s newfound optimism about innovation. “Both humanity’s capacity to innovate and the incentives to innovate,” he said, “are greater today than at any other time in history.”

Tyler Cowen
Nariman Behravesh
US Economy
Robert J Gordon