You were busy listening to President Obama talk about health care, or watching the economy defy even the most pessimistic doomsayers. But all the while, the Web was churning with news of backroom dealings, car tech, Harvard's secret shame, and the intractable war on drugs. Here's what you may have missed.
Online buzz has grown over the car that the LA Times likened to a "studio loft" aimed at twenty-somethings and hip boomers. Learning from the success of Honda's Element and its own Versa compact, Nissan cranked out a boxy fuel-sipper it's calling the Cube. Already a success in Japan, the cube has an interior layout that's meant to be pragmatic but distinctive; it boasts tons of interior space, with plenty of cubbies and tie-downs for gadgets and gear, as well as a shelf-like dash and rippled speaker grills.
The 1.8L, 122-horsepower four cylinder comes in either automatic or six-speed manual, and starts at around $14,000. As we noted last week, the Cube probably won't wrestle any green buzz away from the Prius or the coming Chevy Volt, but it may still develop a following all the same. You can check out Consumer Reports' preview of the buggy here.
The Economist's Argument for Drug Legalization
Drug policy has never been more pertinent than it is now; Mexico is in the midst of losing its battle against heavily-armed and resource-rich narcoterrorists in a bloody war right on our border. So it is with special urgency that The Economist reiterated its editorial position that to legalize drugs is the "least bad" policy that world leaders can assume.
Evidence, the magazine claims, is in the tens of billions of ineffectual dollars wasted by the US and other nations to combat smuggling, which have only succeeded in eliminating smaller operations and funneling more business to bigger ones. The Economist's piece claims that even the language we couch the discussion in implies a Sisyphean effort. (The UN Office on Drugs and Crime has ceased to talk about a drug-free world, and now gets excited if it can claim market "stablization," the article says.)
Economies of scale have allowed big cartels to expand into human trafficking, racketeering and political tampering, and the only thing preventing legalization (and the market control it would bring), The Economist argues, is fear of widespread addiction—something that is a reality in most industrialized countries already.
A good counterpoint to The Economist's legislative solution comes from economist Tyler Cowen in this post at his blog, Marginal Revolution.
If you've had a particularly rough week, you might be interested in this Wikipedia article that's been making the rounds on the social news sites. The entry describes several alternative sleeping patterns that involve breaking up a night's sleep into smaller intervals, or phases. The concept was given a name in the 20th century, but dates back hundreds of years; Ben Franklin was known to have favored a "cold-air bath" in the middle of the night, in which he rose from bed and read for several hours naked before returning to sleep.
Surprisingly, there has been a recent proliferation in sleep-pattern blogs, in which the authors self-experiment with various napping patterns and report their results. Initial side effects are similar to sleep deprivation, and consist of impairment to brain and body function, but that's not the reason most people eventually give up. In fact, it's simply hard to sleep in phases when there's an eight-hour work day and daylight social engagements too.
Chrysler's Turbine Cars
It hasn't been a good year for the gasoline combustion engine—it has been derided for its poor fuel economy, noxious emissions and its cost, and folks everywhere are betting on electric or hybrid cars to replace them. Turns out there's a third alternative—or at least there was. The Chrysler turbine engine reached the very brink of production in the early 1960s, after engineers realized that the turbine design required 80% fewer parts than a conventional engine, offered better fuel economy, little maintenance, safer emissions, and a cheaper cost of production. Oh, and it was faster, too.
Why aren't turbine cars on the road today? At its crucial moment of mass market launch in 1979, Chrysler experienced terrible financial trouble, and subsisted only thanks to some government loan guarantees. As a condition, the company had to sell off its defense unit, that had developed the turbine engine. Soon after, the government made Chrysler shutter its experimental car programs, citing excessive risk.
Shame on Harvard
Harvard's business school purports to educate some of the country's finest business minds, but its track record of late has been abysmal. The London Times highlighted the phenomenon, calling out dunderheaded top brass: the CEOs of Merrill Lynch and Lehman Brothers were graduates, as are Treasury Secretary Hank "freebie" Paulson and former President George W. Bush. Then there's asleep-at-the-switch SEC Commissioner Christopher Cox, and Enron's CEO Jeff Skilling.
What about the leaders who emerged as prescient? As the article notes, businessmen like Sergey Brin, Bill Gates, and Richard Branson don't have any kind of formal business education. (Warren Buffett, incidentally, applied to Harvard Business School but was turned down and went to Columbia instead.) The author blames the bad track record on Harvard students' dubious moral compass and propensity to try to make a quick buck in financial services or consulting, instead of going into other, more substantive sectors of the economy. At least it's pretty.
Where Are the Foreclosures?
USAToday featured a fascinating infographic today that shows the concentration of bank foreclosures across the nation. Surprisingly, just 35 counties in a handful of states account for nearly 50% of foreclosed homes, that reached numbers over 1.5 million in 2008. "This crisis was triggered by foreclosures, and a lot of those were in a very small number of areas," says William Lucy, a professor at my alma mater, the University of Virginia, in the article. Bubble markets like Southern California, Las Vegas, Phoenix, Washington and South Florida have been hardest hit, while foreclosures in the rest of the country have actually dropped since 2006, according to RealtyTrac numbers cited in the piece.
AIG's Backroom Dealings
In a final and dismal note, more light is being shed on the process by which the Federal government funneled hundreds of billions of dollars into failing insurer AIG using legal chicanery and closed-door arrangements. Twin articles on the blog Talking Points Memo ask the right questions: Where did AIG's bailout money actually go, and how did it get there to begin with?
Neither government officials nor AIG will say who the company's counterparties are, and the process by which the Fed granted AIG money—something that, if it had happened directly, would have been illegal—involved three vehicle corporations incorporated by Fed officials in Delaware to "invest" money in AIG. The Fed is only allowed to act as a lender of last resort, not a buyer of assets; after "lending" the money to LLCs called Maiden Lane I, II and III, those companies turned around and bought toxic assets from AIG (and earlier, Bear Stearns.) To read the evidence in infuriating black and white, click here and here.