The Daily Parker

The Vice President on BP:

After a Strategy exam, Finance exam, Strategy team paper, project estimate for work, and...well, that's really all I did the last four days, come to think of it...I'm more or less back.

Herewith a quorum of things I noticed but didn't have time to note:

• The Washington Post reported yesterday that MC 900 Ft. Jesus—sorry, I meant an actual 30 m statue of Jesus—got struck by lightning Monday night and burned to the ground. Signpost to Armageddon? Probably not, but it has an element of Apocalyptic whimsy to it, don't you think?.
• Via Sullivan, the Vision of Humanity project's Global Peace Index puts New Zealand at the top and Iraq at the bottom. We're 85th (of 149); Britain is 31st; and Finalnd and Russia, countries I'm visiting in two weeks, are 9th and 146th, respectively. Check out the interactive map.
• The Economist's Gulliver blog linked to a Sunday Times (reg.req.) article about the beauty of window seats. I always get the window, if possible; so does Gulliver, apparently, and the Times author who wrote: "My favourite window-seat ride is crossing America — with the asphalt labyrinth of the crammed east coast giving way first to ceaseless Appalachian forest, then to the eerie geometric perfection of the farm-belt fields, then to the intimidating, jaw-dropping emptiness of the west, before the smog starts lapping at your window as California sprawls into view." Yep.
• Today has tremendous significance to my small and fuzzy family which I will relate later.

Back to the mines.

Terry Barr, president of Colorado-based Samson Oil and Gas, wrote in to the Wall Street Journal today explaining point by point how BP personnel, not BP equipment, caused the worst environmental disaster in U.S. history:

Mr. Hayward and BP have taken the position that this tragedy is all about a fail-safe blow-out preventer (BOP) failing, but in reality the BOP is really the backup system, and yes we expect that it will work. However, all of the industry practice and construction systems are aimed at ensuring that one never has to use that device. Thus the industry has for decades relied on a dense mud system to keep the hydrocarbons in the reservoir and everything that is done to maintain wellbore integrity is tested, and where a wellbore integrity test fails, remedial action is taken.

This well failed its casing integrity test and nothing was done. The data collected during a critical operation to monitor hydrocarbon inflow was ignored and nothing was done. This spill is about human failure and it is time BP put its hand up and admitted that.

It turns out, BP's estimates of the oil billowing into the gulf may have been off by a factor of two, or greater:

The new calculation suggested that an amount of oil equivalent to the Exxon Valdez disaster could have been flowing into the Gulf of Mexico every 8 to 10 days.

This assessment, based on measurements taken before BP cut the riser pipe of the leaking well on June 3 to cap some of the flow, showed that approximately 25,000 to 30,000 barrels of oil could have been gushing into the Gulf each day. That is far above the previous estimate of 12,000 to 19,000 barrels a day.

And this:

"It is technically not [Obama's] job as president to console families of men who died off shore," said Keith Jones, a Baton Rouge lawyer whose 28-year-old son, Gordon, a mud engineer, died in the explosion. “But he made it his business and we’re grateful for it."

"I don't know what people expected the president to do exactly, if they want him to go out there and wash pelicans," Jones said. "He's the president. He's not someone who cleans beaches. It's important for us Louisianans to know that we have his support and I think he's communicated that."

We won't know for months how bad this is, but you remember all those "worst-case" scenarios? Those might have been underestimates, too.

Via Talking Points Memo:

From Slate, The Only Political Article You'll Ever Have To Read:

Obama now faces some of the most difficult challenges of his young presidency: the ongoing oil spill, the Gaza flotilla disaster, and revelations about possibly inappropriate conversations between the White House and candidates for federal office. But while these narratives may affect fleeting public perceptions, Americans will ultimately judge Obama on the crude economic fundamentals of jobs numbers and GDP.

Chief among the criticisms of Obama was his response to the spill. Pundits argued that he needed to show more emotion. Their analysis, however, should be viewed in light of the economic pressures on the journalism industry combined with a 24-hour news environment and a lack of new information about the spill itself.

The whole article is spot-on.

Mondays are Economist days over here. I've got myself into a rhythm of travel, school, work, and keeping sane that requires me to put things in small boxes of time; on Mondays I read the latest Economist. This week had two unusually interesting (and short) articles in the "Finance and Economics" section[1].

First, a report that numeracy predicts mortgage defaults better than any other variable:

Even accounting for a host of differences between people—including attitudes to risk, income levels and credit scores—those who fell behind on their mortgages were noticeably less numerate than those who kept up with their payments in the same overall circumstances. The least numerate fell behind about 25% of the time. For those who did best on the test, the number of payments they missed was almost 12%. A fifth of the least numerate group had been in foreclosure, but only 7% of those who were more numerically adept had.

Surprisingly, the least numerate were not making loan choices that differed much from their peers. They were about as likely to have a fixed-rate mortgage as the more numerically able. They did not borrow a larger share of their income. And loans were about the same fraction of the house’s value.

They've even got a handy quiz of the type the researchers used. Two pages on, in the "Economics Focus" column, the newspaper reported on the FCC's decision two weeks ago to treat ISPs as common carriers for their last-mile service. This is a big deal:

A medieval innkeeper, for example, often offered the only lodging in town; a boatman could cross only with the king’s writ. Second, the state sometimes offers favours of its own to transporters—public lands and roads, say, or the seizure of private property to make way for new infrastructure—and expects a certain level of public service in return. Third, transport is essential to commerce. It represents an input cost to almost all businesses, and to restrict access or overcharge is to burden the entire economy.

All these arguments applied in spades to 19th-century rail. Like a medieval town’s sole inn, a railway line is a perfect example of a natural monopoly: it is tremendously expensive to build and it is difficult to justify more than one set of tracks on any route just to guarantee competition. ...

Telecoms operators argue that America does not need common carriage for internet access, because the country’s unique network of local cable monopolies competes against its last-mile copper-wire monopolies. ... The FCC’s current plan—to ask last-mile providers to subsidise rural service, and to ensure equal treatment of packets of information—is a mild intervention by global standards.

Time now to review, once again, the team's finance assignment due tonight, and then collapse in a heap. The Daily Parker will probably continue to have slightly less velocity than usual for a week or so as I twist myself into a small knot of anxiety over my finance midterm. If only it could be as engaging as a class as it is in a newspaper.

[1] Yes, the topic interests me in the abstract, but at the same time I can't wait until the end of doing concrete finance—e.g., working out CAPM calculations—once my finance class ends next month.

NPR reports that a new analysis of the BP oil spill puts the gusher at 2.3 to 11.7 megaliters per day, rather than BP's original estimate of 590 kL. They've also got video.

Also, there's a good reason why dead fish aren't washing up on shore yet. We've already killed them all, thanks to oxygen deprivation caused by Mississippi River runoff. The oil spill just gilds the lily, really.

So, with a project running somewhere around 105%, an old and patient client that predates my current employment waiting for some updates, Global Financial Management requiring that I figure out the combined beta of two companies about to merge, Foundations of Strategy expecting a transaction cost analysis Saturday morning, and an overwhelming anticipation of seeing Diane and Parker tomorrow after almost two weeks, I find myself completely out of creativity. Heaven bless my winter office (probably, now that the pizzeria around the corner has left, simply "my remote office").

Fortunately, other people on the Intertubes have plenty of it. Creativity, I mean. Here is a quorum, mostly pinched from Sullivan:

• The Washington Post has a list of twelve things to toss out this spring, as written by Elizabeth Warren, Karl Rove, and Onion editor Joe Randazzo. (The last is an indictment of Internet memes.) There's also a bit on virginity.
• Writer Andrea Donderi posits a dichotomy between Asker and Guesser cultures. In Cultures, Civilization, and Leadership (one of the CCMBA's core classes) we'd look at this in terms of ICE profiles, which I would explain if I could find the link. (See above re: being overloaded.) This comes via The Guardian, who have the distinction this week of having endorsed for prime minister the guy who became deputy PM. By the way, this kind of embarassment (two guys running against each other only to have to work together as #1 and #2) hasn't happened in the US since 1800. But that's not important right now.
• While on the subject, it's a little daunting that we haven't had our midterms yet and I've made no progress on the video, but there are only 50 days until our next residency starts. (See above re: being really overloaded.)
• Finally, Sam Harris has a new demolition of the Catholic Church Good line near the top: "This scandal was one of the most spectacular 'own goals' in the history of religion, and there seems to be no need to deride faith at its most vulnerable and self-abased." (I would explain that my views are probably more moderate than Harris's, and yet I enjoy his writing, but see above re: being really monster raving loony overloaded.)

Shannon has brought my last drink and my check, my teammate KW is busy compiling all of our notes for Strategy, and Parker, I expect, is getting a relaxing belly-scratch from Diane 1,000 km away. I think we're all OK with this, but Parker has the best deal.

Also, for those of you watching in real time, yes: I posted this blasted entry five times in quick succession, because I kept finding typos. This should come as great news to the people currently engaged in Scrabble games with me on Facebook.

I came across this at lunchtime: a Canadian analysis of how the Conservative-Liberal coalition in the UK will simultaneously introduce fixed, five-year parliamentary terms and at the same time prevent the government from calling an early election. (Why Canadian? Because Canada has a fixed-term parliament, but, as Stephen Harper demonstrated in 2006, it isn't a fixed term if the ruling party doesn't want it to be.) The whole column is a bit wonkish, but it describes something approaching an intersection of game theory and UK constitutional law:

[I]f you look at the text of the Conservative-Lib Dem accord, it...says 55% would be required for “dissolution,” that is for dissolving the House and calling an election. This is a crucial difference [with a vote of no confidence]. Significantly, too, the provision comes at the tag end of the paragraph establishing a fixed five-year term of government. Because it’s the guarantee of it.

What it means is that if the government were defeated in the House — by the usual 50% margin — Prime Minister Cameron could not simply go the Queen and ask for dissolution. He would have to get a vote of 55% of the House to permit him to do so. So he could not wriggle out of the coalition, or the commitment to a five-year term, by engineering his own defeat (still less do what Stephen Harper did, and call a snap election, without even the fig-leaf of defeat to justify the breach).

A note about velocity: I'm posting less lately because I'm on a pretty intense project at work, and because this term's Duke workload is actually larger than first term. I'll explain what that means when I have a spare moment.