From The Economist:
Protest in Russia
A Russian awakening

AFTER several days of tension, clashes and arrests following Russia’s rigged parliamentary election (http://www.economist.com/node/21541455) on December 4th, yesterday something unexpectedly good happened. Tens of thousands of middle-class Muscovites held a peaceful rally in the centre of Moscow, the biggest such event since the early 1990s.

Astonishingly, there was not a single arrest. Indeed, some of the thousands of
policemen and interior-ministry troops showed sympathy for the protestors.
This was an uplifting display of both dignity and indignation. Citizens were riled not
only about the electoral fraud, but at being treated as imbeciles by their leader,
Vladimir Putin. There was anger at the Kremlin, calls for “Russia without Putin” and
against the ruling United Russia party (“the party of thieves and crooks”), but no
aggression. The crowd contained not only liberals but also Communists, anarchists
and some nationalists. But protestors were almost conspicuously polite towards each
other.

Some carried white flowers, which they tried to give to the police. They made jokes.
146% of Muscovites are for free elections one sign read. Another said: I did not
vote for these bastards. I voted for other bastards. I demand a recount.


The speakers included liberal politicians, such as Vladimir Ryzhkov and Boris Nemtsov,
but also Boris Akunin, a famous writer, and Leonid Parfyonov
(http://www.economist.com/blogs/easternapproaches/2010/11/russian_media) , a
celebrated television journalist. They demanded the immediate release of more than
1,000 political activists arrested during last week’s protests, a full investigation into
electoral fraud allegations, a new election, the sacking of Vladimir Churov (head of the
electoral commission) and the registration of all opposition parties, not just the ones
sanctioned by the Kremlin.

The government is unlikely to meet any of these demands. But the rally has already
achieved its most important result: the political awakening of Russia’s urban middle
class. Over the past decade these people have devoted their energy to making
money, consuming and travelling, allowing Mr Putin to consolidate unprecedented
power, eliminate alternative sources of influence and turn television into a tool of
propaganda.

But yesterday the protestors showed themselves to be a political force. “We exist! We
exist!” they chanted. They were educated and affluent—many of them carried iPads—
and were keen to make their voice heard. The protest had been organised on social
networks, but yesterday this Facebook crowd turned its virtual agitation into political
reality.

The rally was a rare example of all sides showing sense. The authorities allowed the
demonstration to go ahead and showed restraint in policing it. The organisers went
out of their way to stop provocations and keep the event peaceful. Even the statecontrolled media, which had completely ignored all previous demonstrations and
suggestions of electoral fraud, reported the rally in a balanced and accurate way.
A small group of radicals who tried to hold their own event at Revolutionary Square
were ignored by everyone, including the police. Their leader, Eduard Limonov, bitterly
complained that his revolution had been stolen. But for a few hours yesterday,
Russia’s capital felt democratic, despite the heavy police presence.

Similar, if smaller, rallies were held in some 90 cities across Russia. (Some ended with
arrests). Almost everywhere protestors chanted “Russia”. This is what United Russia
members were encouraged to do by Mr Putin at their recent party conference. But
yesterday it had a very different sound, and it was a very different Russia.

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Ruth Marcus tells us that gay marriage is good politics.   William Baude, in his maiden voyage at Volokh, gives us some insight into the complexity of purely legal issues regarding marriage, gay marriage, and DOMA.  Baude continues tomorrow for those inclined to follow legal arguments, as I am.

Were I a state legislator, I would vote to legalize gay marriage in my state.  As a federal constitutional issue, despite my idea of what good politics is, I would be very hesitant to impose an “equal rights” argument.  Not because that argument has no appeal for me, but because marriage itself is not a constitutional issue.  I full well know that Loving made it one in the case of race, and I think that was justified on 14th A grounds, from the historical perspective.  But that does not necessarily apply to all other conditions of distinction.

So now I will tell a funny story about an old war I lost in Austin.

In the late 70s and early 80s I represented Braniff’s then wholly owned Driskill Hotel.  Did their employment stuff, mainly.  Well, gay activists began dancing mano a mano and femme a femme in the 1886 Club, and Braniff wanted it stopped, because it pissed off the pilots who always frequented the club.

The hotel’s manager, to whom I directly answered, was gay, and had not thought about it until the big cheeses in Dallas came down on him.

Austin had just passed its first anti-discrimination law based on sexual orientation or preference.  I advised my client to quietly break up all same sex dancing couples and offer them a free drink or an escort out of the club, setting up the confrontation.

The City prosecuted.  We went to trial before a jury of 6.  The City was represented by its own attorneys and a volunteer from a SF, CA Gay Rights organization.

On cross examination, I elicited testimony from the dancing gays that each could have physically chosen to dance with someone of a different gender.  Some had done so – mano a femme gay dancing.  Thus I was able to obtain the admission that it was not their sexual orientation that kept them off the dance floor.

On my defensive case, I put on a gay dance instructor from Arthur Murray who explained that he was gay, but that he taught traditional dance, with steps, patterns, and a lead and follower role.  He said that in traditional ballroom dancing, a male and a female were the dancers.  I had set up the prosecution to ask more questions, and they did.  They crossed my “expert” by asking him to admit he would prefer to dance with a man.  He answered that he preferred sex with men, but formal ballroom dancing was not about sex, it had rules.  He preferred to dance with women, otherwise it was not dancing.  He  persisted in saying that same sex dancing was not about dancing, but about sex.  He allowed as how PDA is offensive.  The more he spoke, the more the jury giggled.  I thought that was a good sign – they obviously liked the guy. The prosecutors asked about Middle Eastern formal dancing, with men only.  My expert brightened up and said if that was what 1886 Club had prohibited they would be wrong, because that was traditional dancing.

They had no experts on dance.

Lost 6-0.  Liberal Austin jurors were not buying.  Politically, same sex dancing had come to  Austin.  I thought I had made a record for appeal, however, and told the manager.  He said he was happy to have put up a good fight but happy to have lost [not to tell that to Braniff, however].  And so it went.

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Club for Growth has a chart on S&P Returns for the 3rd year of recent presidents. 1995 under Clinton was awesome! The lesson? We should have elected Hilary Clinton.

I’m not a fan of such selective comparisons (if we compare every 3rd Sunday in a Leap Year and take an average, this president is the worst ever), but was curious if there’s anything meaningful to it.

Historically, incumbency is power. I can see Obama losing handily to a solid conservative Republican, given other externalities. If we had the economy of 1996, Obama would sail to victory. As it is, even without the primary challengers, I see Obama as vulnerable. But losing to Mitt Romney or Newt Gingrich? Incumbency is still awfully potent.

Still, it could be a very good time for a mediocre candidate to become President (unlike 2008), and natural cycles might make a president Romney look a lot better in 2014 than a president Romney would have looked in 2010. So, you never know.

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Vital Statistics:

European stocks are weaker this morning as Moody’s announced it will review ratings for all Euro sovereigns in the first quarter of next year. Italian sovereign yields are 34 basis points higher and Spanish sovereign yields are 23 basis points higher. US futures are weaker on Europe and a profits warning from Intel.

The WSJ has an article this morning discussing the strength of consumer spending. We have been noting nascent strength in consumer spending / sentiment over the past few months, and there appears to be follow-through. The article goes on to caution that spending has increased without an increase in incomes, which is unsustainable. That is true, but is also typical of how recessions end. Demand increases => spending increases => unemployment decreases. I also want to throw out a few charts that illustrate what is going on with the consumer.

The first chart is US Household debt as a percent of GDP. Household debt as a percent of GDP has been rising steadily since WWII, and a lot of that has been driven by the widening acceptance of credit cards. That said, the consumer has delevered in a remarkable way since the recession began – Debt to GDP has dropped to 87% from 98% in late 08. But, if you look at the chart, you would say that household debt would have to drop to 70% of so to get back to “healthy” levels.

Chart: US Household Debt as a Percent of GDP:

That ratio looks at consumer debt versus the economy as a whole, but it doesn’t tell the whole story – what matters to the consumer is their debt versus their incomes, and spending is a function of disposable income. Disposable income is also a function of interest rates – as rates fall, debt service falls. The chart below looks at the ratio of debt service payments to disposable income. Debt service payments have dropped more dramatically than debt because interest rates have fallen and a large chunk of those debt service payments are fixed rate mortgages which aren’t going up, even when rates start to increase in a few years.

Chart: Ratio of Debt Service Payments to disposable income:

If you look at debt service to income ratios, not only has debt service dropped to “healthy” levels, it has dropped to very depressed levels – levels which preceded large increases in consumer spending. If incomes rise even slightly, it will have an outsized effect on the ratio. Just another indication of pent-up demand and the path out of the malaise.

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I got nuthin’. I started watching the new Battlestar Galactica, finally—it’s awesome.

Otherwise, it’s all yours.
— KW

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This essay looks at how doctors make end of life care decisions for themselves. They don’t subject themselves to what the rest of us do.

What are we getting for the money we spend: “What it buys is misery we would not inflict on a terrorist.”

More: “Several years ago, my older cousin Torch (born at home by the light of a flashlight—or torch) had a seizure that turned out to be the result of lung cancer that had gone to his brain. I arranged for him to see various specialists, and we learned that with aggressive treatment of his condition, including three to five hospital visits a week for chemotherapy, he would live perhaps four months. Ultimately, Torch decided against any treatment and simply took pills for brain swelling. He moved in with me.

We spent the next eight months doing a bunch of things that he enjoyed, having fun together like we hadn’t had in decades. We went to Disneyland, his first time. We’d hang out at home. Torch was a sports nut, and he was very happy to watch sports and eat my cooking. He even gained a bit of weight, eating his favorite foods rather than hospital foods. He had no serious pain, and he remained high-spirited. One day, he didn’t wake up. He spent the next three days in a coma-like sleep and then died. The cost of his medical care for those eight months, for the one drug he was taking, was about $20.”

This isn’t saying anything that I haven’t already said, so I’m just passing it along.

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I have a bluetick coonhound and can’t say enough about how wonderful they are. This one needs a home.

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Vital Statistics:

Stocks are up this morning on the perception of progress in Europe. Here is the document. In typical European fashion, it is short on specifics, but the markets seem to like what they see.

Jon Corzine “never intended” to authorize the transfer of segregates loans. He had mentioned that it is possible that someone below him misinterpreted his directive to “fix this.” In separate news, it looks like George Soros took some of Corzine’s position off of his hands.

The University of Michigan Consumer Sentiment index was released this morning. It shows that the sentiment numbers have picked up from late summer / fall, but are still pretty depressed.

Chart: University of Michigan Consumer Sentiment Index:

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Ron Paul gets the Bad Lip Reading Treatment.

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Vital Statistics:

European Central Bank President Mario Draghi has shown the markets his bazooka and they yawned. The ECB cut interest rates by 25 basis points and then further announced they would offer banks 3 year loans and relax collateral requirements. This is an extension from the one year loans currently being offered; the market had expected an extension to 2 years.

Initial Jobless Claims came in lower than expected – 381k vs 295k expected. Continuing Claims were 3.58million vs. 3.7 million expected. This print approaches the post crisis low of 375 set in Feb 2011. Just another sign that the labor market is beginning to thaw.

Jon Corzine will be in front of Congress this morning to address the MF Global fiasco. In his prepared statements, he claims he has no idea where the money was and wasn’t involved in the day-to-day movement of capital at the firm. He doesn’t understand why the accounts haven’t been reconciled yet. The Kenny Lay defense, I guess. I would bet the missing money went to cover margin calls. If so, the money should be recoverable – technically it wasn’t MF Global’s money to give. Find out who made the margin call and you will know who is about to make an earnings pre-announcement.

Bloomberg released some of the findings from its Bloomberg Global Poll this morning. 61% of the respondents (mainly professional investors) believe China will face a banking crisis within the next 5 years. It will be interesting to see how the “world’s best managed economy” behaves once the bubble bursts. I am sure the Thomas Friedmans of the world will not abandon their fixation that the government can fine-tune the economy and manage it intelligently.

Chart: Initial Jobless Claims:

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