… an artist who’s a close family friend.

He just got a Guggenheim!

UD’s favorite paper thought it’d be a great idea to have Ezra Merkin’s sister write about the Madoff/Merkin scandal, and his sister thought so too.

I mean, this would be fun all around: Daphne Merkin could use the paper’s editorial pages to try to exonerate her brother, the NYT could boast of its proximity to high-society banditry, and NYT readers could satisfy their obscene curiosity as to how the sister of one of the major financial malefactors of our time feels about her brother … Sort of like Shot in the Heart for rich people…

But now the paper’s public editor thinks maybe there were some problems in the plan:

Times readers who realized the connection protested that the newspaper had given Ezra Merkin’s sister a platform to make what they saw as a veiled defense of his conduct without coming clean about the depth of his involvement.

“Her column attempts to put some of the blame on the investors, but the people who invested with her brother knew nothing about Madoff,” said Jane Isay of Manhattan. “Daphne Merkin is a good writer, but readers might consider her ideas more analytically if they knew who her brother actually is, and what he has actually done.”

Daphne Merkin is a very good writer, able to mix it up quite splendidly. NYT readers as a result really need to be on their toes. The paper’s not going to help them.

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Update: America’s most high-profile synagogue continues to be run by Merkin and Ira Rennert, a most godly pair.

From the Washington College newspaper:

… [F]ish are not the only animals living on our campus. Junior Robbie Dinneen keeps two sugar gliders (a small marsupial) in his Talbot room named Jager and Maui. One is male and the other is female. Interestingly enough, these two have yet to mate. Dinneen said it’s really easy to take care of them. The most important thing is to give them a lot of attention because they can get depressed pretty quickly. He has never had any problems with Public Safety, and the majority of people really like the sugar gliders.

Another junior, who would like to remain anonymous, has a soft side for keeping rats. Last year he had two rats in his dorm on campus and this year he houses a whopping seven rats in his apartment off-campus. The seven rats are all girls named Peaches, Pumpkin, Bridget, Xing Xing, Mimi, Luffy and Panya.

Concerning difficulties with caring for them, all he said was, “It’s a bit tough to find supplies for them, especially now that the Pet Store is closed. Still, I try to load up on bedding and stuff whenever I go home.”

Luckily, he never had any problem with Public Safety. He did want us to know, “Rats aren’t as scary as movies and television make them out to be. When they’re healthy and happy, they’re actually more like little dogs than rodents. They make great pets!”

One senior girl agrees, who wishes to remain anonymous, but has joint custody with another girl on campus of two boy rats named Mator and Achilles. She said she opted to get boy rats because they are more social and friendlier.

“I think that having pets is a great thing,” she said. The problem is, she said, they can smell and it’s sometimes difficult to pay for food and bedding. But despite that, she said, “I think the no pets policy on campus is kind of ridiculous.”

Last year, I kept two pet rats in my on-campus room. I also agree that rats make fantastic pets. My roommate and I shared them, though she mostly took care of them. We never had any issues with Public Safety because we made sure not many people knew about them. Our RA knew we had them and assured us that as long as we kept them out of trouble she wouldn’t make us get rid of them.

My first year here at Washington College, I lived in Queen Anne dorm and roomed with a sophomore. I waited three days for her to arrive, and when she finally got here, the first thing she introduced me to was her pet hedgehog. Unfortunately, after a while word spread and Public Safety made her take the hedgehog home…

The scrappy, much-maligned firm has gone straight for the heart of evil by taking on the great and powerful goldmansachs666.com, a blog unfriendly to GS.

Here we are in the midst of the worst credit crisis in memory and the bank was forced to take bailout money from the government shortly after it was forced to change its structure from an investment bank to a bank holding company.

Really, Lloyd? Fighting Goldmansachs666.com is where you want to put your money right now?

… How long Morgan will last in this legal battle with Goldman Sachs will likely depend on the generosity and effectiveness of his lawyers. But how long Goldman will last may well depend on the level of populist rage that fueled the very existence of Morgan’s site in the first place.

First, make that our money.

And second, UD finds this populist rage thing very interesting. Evidence accumulates that many Americans have had enough of the massive greed of our recent markets and marketeers.

But what can do we do? They’ve got the government as sewed up as they’ve got the banks. As Ben Stein reminds us in today’s New York Times, “Wall Street knows how to get its hooks into government. This is how the world works. Money talks.”

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Thanks for the tip, RJO.

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Update: When GS decides to go after satire too, they should keep an eye on this author’s projected book:

The Takeover: Goldman Sachs and the Leveraged Buyout of America

No single company has ever had the prolonged hold on the American political establishment that has been achieved by Goldman Sachs. Of the last four Goldman CEOs, two have been chief economic advisor to the president (Rubin and Friedman), two have been Treasury Secretary (Rubin and Paulson), and one has been a governor and a senator (Corzine). But the firm’s unparalleled influence has extended for decades from former Deputy Treasury John Whitehead thru Bush 43 White House Chief of Staff Josh Bolton to current Treasury Secretary Tim Geithner’s chief of staff plus the guy who runs the TARP program plus there are rumors that new White House public liaison official Kal Penn’s movie Harold and Kumar Go to White Castle was actually backed with Goldman money. During this period in which Goldman rode the government like a pony, U.S. policy has not only thrown off the regulatory shackles that freed them to make money by the boatload, the USG has intervened directly and regularly to the benefit of Goldman from the Tequila Crisis “bail-in” to the AIG “bail out.” How can this have happened? Why has the media rolled over and let Goldman scratch them on the belly throughout? … Why is the government still full of them and others from even less reputable financial institutions (which, to Goldman’s credit, is virtually all others)? Why are we still drinking the Kool Aid that somehow these people have special powers after all we have been through? This book will provide answers. (Unless Goldman pays the author more to shut up. In which case, this one, I volunteer to write…well, to be lucratively co-opted out of writing.)

Frank Rich, New York Times:

… Lawrence Summers, the president’s chief economic adviser, made $5.2 million in 2008 from a hedge fund, D. E. Shaw, for a one-day-a-week job. He also earned $2.7 million in speaking fees from the likes of Citigroup and Goldman Sachs. Those institutions are not merely the beneficiaries of taxpayers’ bailouts since the crash. They also benefited during the boom from government favors: the Wall Street deregulation that both Summers and Robert Rubin, his mentor and predecessor as Treasury secretary, championed in the Clinton administration. This dynamic duo’s innovative gift to their country was banks “too big to fail.”

Some spoilsports raise the conflict-of-interest question about Summers: Can he be a fair broker of the bailout when he so recently received lavish compensation from some of its present and, no doubt, future players? This question can be answered only when every transaction in the new “public-private investment plan” to buy the banks’ toxic assets is made transparent. We need verification that this deal is not, as the economist Joseph Stiglitz has warned, a Rube Goldberg contraption contrived to facilitate “huge transfers of wealth to the financial markets” from taxpayers.

But perhaps I’ve become numb to the perennial and bipartisan revolving-door incestuousness of Washington and Wall Street. I was less shocked by the White House’s disclosure of Summers’s recent paydays than by a bit of reporting that appeared deep down in the Times follow-up article on that initial news. The reporter Louise Story wrote that Summers had done consulting work for another hedge fund, Taconic Capital Advisors, from 2004 to 2006, while still president of Harvard.

That the highly paid leader of arguably America’s most esteemed educational institution (disclosure: I went there) would simultaneously freelance as a hedge-fund guy might stand as a symbol for the values of our time. At the start of his stormy and short-lived presidency, Summers picked a fight with Cornel West for allegedly neglecting his professorial duties by taking on such extracurricular tasks as cutting a spoken-word CD. Yet Summers saw no conflict with moonlighting in the money racket while running the entire university. The students didn’t even get a CD for his efforts — and Harvard’s deflated endowment, now in a daunting liquidity crisis, didn’t exactly benefit either.

Summers’s dual portfolio in Cambridge has already led to one potential intermingling of private business and public policy in his new White House post. He tried — and, mercifully, failed — to install the co-founder of Taconic in the job of running the TARP bailouts. But again, Summers’s potential conflicts of interest seem less telling than the conflict of values that his Harvard double-résumé exemplifies…

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Ben Stein, New York Times

… I read that Lawrence H. Summers — wonderful guy, fine economist, former Harvard president, high-ranking economic adviser to Mr. Obama — was paid about $5 million last year by a large hedge fund, D. E. Shaw.

… If anyone thinks that a man who has had a taste of honey from Wall Street on that scale will ever really crack the whip on Wall Street, he’s dreaming. Wall Street knows how to get its hooks into government. This is how the world works. Money talks.

… Ms. Hunter told investigators that Mr. Hughes had become distressed about one particular subject — discord between his sister and their stepmother, Carol Hughes. The two women have quarreled in recent years over the estate of Ted Hughes. Neither Ms. Hunter nor Frieda Hughes, herself a poet, painter and author in England, responded to requests for comment.

The girlfriend of Nicholas Hughes reports on a possible element of his depression.

You know how, new to a house, you creep about checking out family photos, books, cds?

I got to cds this morning – there’s a player in the kitchen – and DAMNED if the owners don’t have TWO Henry Purcells, one of which features Music for a While.

UD‘s already happily reading Gore Vidal’s Palimpsest from the owners’ library (Vidal was in Key West a few weeks ago, for the literary seminar); now – just now – she put down Vidal and picked up Purcell and slipped him in and put the sound up high and wailed along with Alfred Deller. Twice. And it wasn’t easy onaccounta he’s a guy. But she did it. Boy oh boy.

… [B]y December 2008, college endowments had suffered estimated average six-month losses of 24.1 percent. It is now expected that by the end of the fiscal year (June ’09), full-year losses will be even greater. Already the widespread carnage is being rationalized by comparing results to similar or greater losses in the broader equity markets. But the fact remains that epic losses have no precedent in endowment management. For example, Harvard’s endowment actually grew during ’29-’32–the most devastating years of the Great Depression.

Will endowment managers, who in recent years sought to juice returns by leveraging endowment monies into hedge funds and other corners of the shadow banking system now be held accountable? And can we expect them to give back any of the lavish investment-banker level bonuses they were paid during the go-go years?

We’ll surely be waiting a long time for this kind of accountability…

People keep saying that, you know… Universities paid their managers tens of millions of dollars in bonuses, and now that the shit’s hit the fan because of their arrant fiscal disregard, they should return the bonuses. But no one’s doing anything toward that end.

So… Let’s start here:

In the fiscal year ended June 2004, the two top paid managers at Harvard Management, David Mittelman and Maurice Samuels, each received about $25 million. In the prior year they earned more than $35 million each.

Write to David and Maurice. I think they both still work here, at Convexity Capital Management:

200 Clarendon Street
Boston MA 02116

There’s a phone number and a company email address on the Convexity home page too.

How much should you suggest they give back to Harvard?

Well, think of it this way. Over two years at Harvard (let’s stick with the two years mentioned in this article), each earned over fifty million dollars in bonuses. Remember – that’s bonuses, on top of their salary. Both have been making similar – higher? – bonuses since their time, and probably before their time, at Harvard.

So let’s put anxiety about their grocery budgets aside as we think about a reasonable figure to suggest to David and Maurice, okay?

Of course it’s up to you what you suggest to Mittelman and Samuels.

UD‘s thinking 45 million apiece.

… secession from the United States is reenacted every year at the Conch Republic Independence Celebration, and UD will be covering the event … perhaps… a little… for this blog.

Just as intriguing, though, is the lawsuit raging around the event:

Two competing Conch Republic festivals will begin a week from today – one in Key West and one in Key Largo – despite an ongoing lawsuit over ownership of Conch Republic as a festival brand name.

… [The] suit was filed by the Upper Keys group in December 2008, after two years of talks with [Peter] Anderson to co-produce an Upper Keys Conch Republic festival failed.

… Anderson, who was named secretary general of the Conch Republic by former Key West Mayor Capt. Tony Tarracino, makes his living from the annual Key West festival and by selling Conch Republic passports, flags and other merchandise. He says he owns the sole rights to market and promote the Conch Republic based on his years of use…

Got an email a moment ago telling me students have occupied the graduate building at the New School in New York, barricading themselves in until the president and vice-president of the school resign.

Background here.

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Update: Police have ejected the protesters.

Outrageous sums of money, and protesters.

…pours aromas into the air. Its sweetness is almost too much, part of the almost too muchness of Key West altogether. Almost too many palms, shedding their skins along the sidewalk; almost too many orchids on the deck of UD‘s new home on her beloved Elizabeth Street.

Key West: Lush isle of lushes.

For a few weeks before she goes home to ‘thesda, UD has a house here.

The weather’s gone utopian again, so if you’re reading this from Fargo, forgive me. I’m in the best of all possible whirls, sitting in the breeze on a mild bright evening in the state of Florida.

Who is like unto thee, Florida? No one at all. A singular state.

My house borders Nancy Forrester’s Secret Garden, with its mad parrots, so until Nancy puts them to bed, I hear their wild cries behind my (her?) enormous wall of palms. Outside the secret garden, dusty roosters crow and crow and crow. A lush loud aromatic jungle is where I’m writing from.

When I was younger, my sister – the Morrissey fanatic – had an iguana, Fester. Fester creeped me out.

Yet here, ringed by little Festers, I’m enthralled.

So – animals and plants… But also the lazy intermittent sounds of humanoids home from work, relaxing into their own little gardens. It’s odd to think of people living routine lives in Key West, working in computer stores and shopping malls, manning the smoothie machines on Duval Street. Too poetic a kingdom for the prosaic.

UD, like her lonely betters, works too, writing the prosaic and the poetic.

… to my new house on the island.  Hence very few posts so far today.  Want to describe my digs, and have been wanting to write about Edmund Blunden’s poem, The Midnight Skaters.  Will do that after I get something to eat …

Three years ago, a Harvard professor confessed to David White, his mentor, that he fabricated “as much as half of the data he used on a Harvard study of sleep apnea.”

Harvard’s investigation, says White, “moved glacially.”

Well, yes. Here we are 2009, and the Crimson is finally able to describe the paltry consequences of this man’s behavior.

First, he’s in a far better place now. Merck.

Second, for three years he can’t advise the Public Health Service, and they’ll supervise his research.

That’s it.

A Harvard medical school spokesman “declined to comment on the investigation.”

Right. You wouldn’t a spokesman to talk to the press about an associate professor at the university, the co-director of a Harvard-affiliated program in sleep medicine, whose lying precipitated what White calls a “massive investigation,” involving many retracted papers, etc.

I mean, the results of the investigation have just come out. Give the spokesman another three years to gather his thoughts.

An honest appraisal of conflict of interest, and a suggestion for one thing that might mitigate it.

First point: Conflict of interest is virtually unavoidable, for social and psychological reasons. The author recalls his dealings, as a young researcher, with a medical device manufacturer.

As we developed content, I soon found myself advocating the use of studies that featured the manufacturer’s product as the best illustrations. My experiences at the pleasant luncheon and in the scientific discussions made me feel as if the other consultants and I had a kind of social duty to reciprocate both the kindness and the investment made by the sponsor in the slide set. Accordingly, I spoke out about the importance of using some of the sponsor’s studies as examples.

At the time, I failed to recognize that this sense of duty might be in conflict with an intention to create an unbiased presentation about the risks and benefits of [their product]. It turns out that I am not alone. In a study of medical residents, 61% were confident that drug company promotions did not influence their practice, but only 16% were equally confident that their colleagues were not influenced by those same drug company promotions.

How is this possible? Self-interest simply distorts the way we render judgments about ourselves. As Katz and colleagues describe the problem, “When a gift or gesture of any size is bestowed, it imposes on the recipient a sense of indebtedness. The obligation to directly reciprocate, whether or not the recipient is directly conscious of it, tends to influence behavior. . . . Feelings of obligation are not related to the size of the gift.” Precisely my experience.

Other interesting social science insights have emerged from the field of behavioral economics. For instance, Ariely conducted a series of experiments in which study participants were rewarded financially for the number of correct answers on tests. The experiments were designed so that cheating was possible. On the basis of the results of these experiments, Ariely concluded that many individuals cheat when they have a chance, but only by a small amount; they know that they are overclaiming the number of correct answers; but this low-level cheating does not cause them to view themselves as dishonest. When I recently used a university envelope to mail a letter to my daughter, I too did not view myself as dishonest, perhaps because I used my own postage stamp.

Two: However small, gifts influence behavior.

These minor dilemmas fail to cross key moral boundaries with the result that they are not experienced as a conscious and deliberate choice between the size of the reward and the potential cost to credibility or reputation. The frequently expressed view that industry gifts or consulting fees are too small to influence behavior simply misses the point that, regardless of their size, they influence behavior, and a self-serving bias distorts the way that individuals perceive themselves. As a result, industry gifts, fees, or funding have become culturally acceptable even though service in a profession does not itself provide immunity from potential conflicts of interest or from the appearance of conflicts of interest.

Point Three: We ought to be ashamed.

Recent high-profile failures to disclose financial relationships with industry have been major embarrassments to the profession. Several professors who promoted the use of atypical antipsychotics for bipolar illness in children had received hundreds of thousands of dollars that went unreported to their institutions. The new guidelines from the
Association of American Medical Colleges on the efforts to manage the relationships between academic scientists and industry sponsors emphasize transparency. Senators Chuck Grassley (R, Iowa) and Herb Kohl (D, Wisconsin) have introduced the Sunshine Act, which would require the public posting of information about all industry payments or transfers of value worth $100 or more. This act, if passed, will help ensure the transparency that the profession on its own has not yet been able muster.

The author concludes:

The bias of conflict of interest is a behavioral phenomenon. Under the assumption of an accurate report, the design of the trial, the conduct of the study, and the interpretation of the results are perhaps the best measures that clinicians, researchers, and other readers have to assess the possibility of such a bias among their scientific colleagues and themselves.

It’s a fine irony that the worst conflict of interest offenders come from the psychiatrists who are supposed to be experts in these sorts of human motivations.

The article is from JAMA. You need to subscribe or pay $15 to read it in full.

UD thanks Bill.