Howzit Howard

Music post: When music blows a different way

"Bolero" is an exception, but most of what Maurice Ravel composed, he first composed for solo piano, then orchestrated. You may also know that Modest Moussorgsky composed "Pictures at an Exhibition" for solo piano and the most popular orchestrated version of it is by...Maurice Ravel. My Saturday morning radio show is often filled with jazzed up or other altered versions of classics, but there is quite a substantial body of classical music which has not been fully altered but merely arranged so that it can be performed by different resources than those for which a piece was first intended. Bach arranged some Vivaldi violin concertoes for keyboards, and most of Bach's own keyboard music can be enjoyed on harpsichord, organ, piano or synthesizer. Not only synthesizers but also the modern piano did not exist in his lifetime, but it works. Ravel, to get back to him, composed "Tombeau de Couperin" for piano as a six-movement piece, then orchestrated four movements, considering the other two too pianistic to orchestrate. I also have an arrangement of "Tombeau" for woodwind quartet that was done by someone else. Analogous to this in rock music would be "MTV Unplugged." Who can forget how interesting and affecting it was to hear Kurt Cobain performing his "Nirvana" hits on acoustic guitar? The quiet versions showed the sadness and isolation that figured into his subsequent suicide (the amplified versions might be argued to show the anger and disaffection that led him to inflict such an act on his family, but I'm not psychologist so let's drop it.) Think of all this is you tune in my show this weekend. Around quarter past six I'll play an arrangement of Gershwin's "Rhapsody in Blue" for saxophone quartet. "Howard's Day Off" airs Saturday mornings from 5 a.m. to 7 a.m. on Hawaii Public Radio stations KHPR Honolulu, KKUA Wailuku and KANO Hilo, as well as being streamed on the Web on http://hawaiipublicradio.org . This is the Facebook page on the program, set up by Max Cacas, a Washington, D.C.-based listener who hears the show on streaming audio... http://www.facebook.com/group.php?gid=75105218989

Unemployment tops 10% on four of six islands

You can read Hawaii's new 7.4% seasonally adjusted jobless rate several ways, but one that has particular validity, since each island is to some extent its own economy, is that the jobless rate is now more than 10% on four islands -- Hawaii, Kauai, Molokai and Lanai. As for the statewide rate, 7.4% is two full percentage points below the new national rate of 9.4%, but the statewide increase of four tenths a percentage point was the same as the national increase. We're not lagging the mainland; we're tracking it, but to a milder degree. Since we know how painful things have been in the islands, that'll give you an idea what it's like on the mainland now. Oahu continues to outperform the rest of the state. A series of events at the Hawaii Convention Center has helped keep Waikiki hotels two thirds full, better than the rest of the state and a lot better than most U.S. tourist meccas, and Oahu has also been helped by its military economic sector. The island of Maui rose four tenths, to 9%, a very high jobless rate but still below the new national average. Maui is more diversified than some other islands with a lot of high-tech employment and farming for its population. Kauai rose four tenths to 10.3%, the Big Island rose six tenths to 10.4% (the Big Island also has a good share of high-tech employment, but its tourism sector took a very hard hit) and Lanai rose 2.7 points to an unprecedented 11.5%. Two years ago Lanai unemployment was sometimes less than 2%. Molokai, despite actually falling seven tenths, held onto its sad distinction of having the highest Hawaii jobless rate, 13.6%. I know that many kama'aina think of Molokai as a different kind of economy with far more reliance on both barter and off-the-books work. This is true, but these factors do not come close to covering the current differential in joblessness. The significance of Molokai's barter economy is not statistical but human: weathering a deep recession is better handled by people who know how to hunt, fish and share. Now we're talking about people instead of percentages, you should know that the figures released Friday by the Hawaii Department of Labor & Industrial Relations represent 48,000 out of work, 3,000 more than the month before and 23,000 more than the year before. As you know if you follow my TV or radio reports, the state does a weekly count of the number of residents putting in for unemployment compensation. The applications for one week are released on Thursday or Friday of the week following. I have before me on my eMac screen the tallies for all five weeks of May and the first two weeks of June, and the biggest number is 22,279 (the week ending May 16) while the rest are all between 21,000 and 22,000. A year ago, the weekly tallies ranged from 9,726 to more than 11,000. So how can there be 23,000 more jobless than a year ago? There can't. This is a good example of why there is an old saying that there are three kinds of lies: lies, damned lies, and statistics. So let me explain a few of the factors affecting these numbers. First, a monthly unemployment report is a survey, not a census. (Two surveys, actually; they survey some employers and some households, and the two findings never completely agree.) The weekly jobless claims number is an actual count. Second, the monthly jobless rate (except for the island breakdowns) is subjected to seasonal adjustment. The premise is that employment always rises at Christmastime and summertime, declining afterwards, so let's work up a formula to dial that out to see "real" employment trends. So instead of explaining seasonal changes, which would be fairly simple, we have to explain the variations between the formula and what actually happened, which is harder. Third, if you're comparing a monthly jobless rate to a weekly jobless claims count, allow for some people finding work fast. Even if you had a four-week month with each weekly count precisely 20,000, there might be 2,000 people who applied the first two weeks and then found work, and 2,000 other people who sought unemployment checks in the back half of the month. Pretty complicated, huh? And that's before considering people who are still employed but lost their second job or had their hours cut back or their pay cut... or got told they'll have to take off three days a month without pay, as state government employees are now being told.

North Korea: What ' s REALLY going on here?

The State Department can barely conceal its amusement at nuclear saber-rattling by North Korea. The official spokesman was literally smirking at the podium. It raises the question, if we don't take ghetto head of state J-Kim Puff-Hair seriously, why is it a crisis? While officials really do seem to believe that North Korea couldn't fire a missile at its own butt with both hands, it is important to remember that intelligence from the ground inside the Midieval Empire is hard to come by. We can be confident of what our satellites see but so few outsiders travel inside North Korea that it must be next to impossible to get next to a missile installation. But the reason I bring up the topic is that after thinking back to my years in Washington, D.C., I can think of several reasons to pretend to take the Kimster seriously:

• Mobilizing our own military forces to be prepared for a real attack, however remote we actually consider the chance of an attack to be, is better training than any exercises. Even if everyone involved knows North Korea can't hit Japan even if Japan holds still, every good sailor and soldier thinks, "Ah, but what if we're wrong?"
• It's not just about North Korea. Any time we can learn something about the ability of Japan, South Korea, China and Russia to respond to a crisis, that's a good thing. We should closely watch everything China does, for example, to learn more about how it may behave in some other kind of geopolitical dust-up.
• Since the matter seems to be more of a diplomatic incident than military, and may remain so, and since China seems to have the best communications with Pyong-yang, the crisis can also be good training for China, something America should support since we're pretty friendly with China these days.
• In case we think we may one day need to bomb North Korea, goading its ridiculous ruler into a series of breaches of etiquette on the world stage is as good a way as any to build international support for some future possible slapdown. A joint mission by America and China to take out a missile silo might actually have broad global support if Kim keeps illin'.

Fallout from the budget crisis: broad criticism of state employees

A state employee who faces an effective 14% pay cut might be excused for being more concerned about that than about what taxpayers think of his or her work. But the flap has made some people flip, triggering complaints about state workers. Chuck writes, "I know of a state office that has a pot luck day twice a month. This effectively shuts down the office for the entire day and nothing gets done... The state needs a secret shopper type person that goes around and checks out where our money is being wasted." Ire at state workers increased after renewed calls by state employee union leaders to save their salaries by raising the excise tax. Debbie writes, "Why should state workers be any different from private sector workers? The state is a business, and it should be viewed as one." That view is most enthusiastically held in households suffering from private sector cutbacks. They don't want to pay higher taxes to shield someone else from what they're already going through. Yula writes, "My husband lost a day a week; that's a large loss for us but all the workers where he works would rather lose that than their jobs... let's just work together and help, and not be so greedy." For me the most intriguing part of the reaction is the horror stories of rude, inept or lazy state employees. I have several observations to make after reading or hearing dozens of stories like this:

• Almost all of them are stories about state employees who answer the phone or work directly with the public from the other side of a counter.
• The horror stories almost never concern teachers, although many taxpayers think teachers have a better employment deal than teachers think they do.
• Many of the stories actually come from state workers who told their private sector spouses. In fact, many state employees seem to have the same low opinion of bureaucrats in general, merely excepting themselves.
• A couple of private sector spouses told me about things they heard at the dinner table that made an impression because they knew things would be different at their private sector workplace.

This fascinates me, coming from Washington, D.C., where I was surrounded by bureaucrats. All them accepted the general low view of bureaucrats but none thought it applied to them. They just assumed they worked as hard as people in the private sector.

Fresh hope for quick resolution of state employee crisis

Hawaii's budget crisis is still so severe that I can't think of any resolution in which state workers do anything other than take it in the shorts, but there is at least some hope now that labor and management will fast-track a new contract, and then we'll all know where we stand. Three things happened Wednesday that make me more optimistic that the principals will behave like adults and get something done. First, the state actually submitted some contract proposals. Second, the union leaders emerged from the first day of negotiations saying they were hopeful they could quickly formulate a contract. Third, the Hawaii Congressional delegation did something that makes it less likely state officials will dig in their heels on universal furloughs. It is not unusual, when contract talks begin, for one side or the other to fiddle around, delaying a real contract proposal for weeks or even months. Sometimes this even suits both sides, like when a company is in peril and neither management nor labor has the vaguest idea what the firm can afford in the next three years. So they huff and puff and stall until things sort themselves out. For the state to have walked into talks Thursday with some proposals ready, and for the union to welcome this with reasonably good cheer, shows both sides are amenable to working fast. Fast is a relative term, of course. In the sometimes glacial world of contract negotiations, fast may not mean "by July 1." But still. And the Congressional delegation? This was an interesting development indeed. We already knew that a truly fair, truly spread-out furlough plan was not technically possible, because Gov. Lingle could not simply order this for legislative, judicial or school employees; she could merely cut their funds by the correct amount, and then leave it to them to cut spending through furloughs or other acts. But the Congressional delegation discovered a fresh challenge: some state jobs are federally-funded, which means forcing those employees to take days off would not only save no state funds, but by disrupting a federally-funded program it could lead to a cut-off of some federal funds, a net cost instead of a net savings. Sen. Dan Inouye, Sen. Daniel Akaka, Rep. Neil Abercrombie and Rep. Mazie Hirono all signed a letter that cited a specific case of this, an office that evaluates social security disability applications, which has 36 state employees (and more working as contract medical consultants) whose pay is actually funded by federal money. Though the letter confined itself to these three dozen people, the clear implication is that there are probably several places in the state government where people's wages are subsidized or funded outright by outside grants. The Congressional delegation is all Democrat and Lingle is Republican, but the tone of the letter was polite, one would almost say deferential, as if to say, "It's not a red and blue thing, we just noticed this problem and we think you might reconsider all this." The more logistical hassles there are, the less likely that anyone on the governor's staff will be able to successfully argue for holding the line and demanding across-the-board furloughs. This bodes well for a contract settlement, which by extension means it bodes well for employees actually getting some input into what happens. But does it mean the resulting plan will be less painful? With wages and benefits accounting for more than two thirds of all state spending, and with all previous spending cuts having squeezed the other one third, I don't see how any alteration to the governor's plan will reduce the pain for state workers unless the excise tax is increased, and then, of course, there will be more pain for everyone else, especially if it slows further what is already expected to be a plodding tourism recovery. But at this moment the thing to do is to congratulate the principals for their workmanlike attitude, encourage math-based arguments, and discourage arguments based on politics.

Crisis du jour -- and the crisis of tomorrow

While Gov. Lingle plans furloughs, with outright layoffs as Plan B, the state's mayors are saying they do not currently need to do anything so draconian. Does this mean the mayors are more competent or planned better? It does not. You can argue with some justification that the governor has erred in not keeping union leaders more in the loop, but the overall financial crisis is not of her making (or the state legislature's) and the crisis is different for the counties for accidental reasons. The Hawaii state government gets most of its revenue from the general excise tax, which, like a sales tax, closely tracks the general economy. GET revenues soared during the boom and have plunged in the recession. The state's four operating counties get more of their revenue from property taxes, which are slower to be affected by the vagaries of the economy. Let's explore the difference between the two. Excise tax: You decide that because there's a recession, or because you lost your second job, you'll cancel plans to spend $20,000 cash to buy a good used car, and instead spend $500 to replace the alternator on your current car. This one decision reduces your intended taxable spending by $19,500, and the effects will be felt in the state coffers in a matter of days. Property tax: You own your home, and its value rose sharply over recent years, culminating in a letter last January raising your property tax bill due this July. But in the past year the value of your home has fallen 30%, based on home sales on the block, and that will be reflected in your next assessment letter. But that won't arrive in the mail until next January, with the actual payment not due until July 2010. In other words, if the county mayors are going to have a crisis, it will be next year. Postscript: A source in the teacher's union pointed out something interesting. Since Hawaii is the only state in the nation with a single statewide public school system, it's funded by state taxes, which is to say, excise taxes. Everywhere else, school systems are funded by cities and counties, which is to say, by property taxes. So the recession has hit our school system harder and sooner than would be the case if property taxes were used to fund them. The source likes the statewide system, which he sees as good for rural areas, but he wishes the funding mechanism were different.

Three-ring contract negotiations

The state budget crisis now has three rings of constant action and could get more interesting only if Governor Lingle rode in standing on a white horse while HGEA Executive Director Randy Perreira breathed fire. And it could come to that. The recession so dramatically reduced state tax revenues -- the Council on Revenues literally has not been able to keep up in revising forecasts down -- that it does not now appear possible to balance the budget without pain to 40,000 state workers. Negotiations over what to do and how to do it are now taking place Barnum-and-Bailey-style in three rings -- in the media -- in the courts -- and actual bargaining. It was all talk until Tuesday, when three unions filed lawsuits and a fourth filed a class grievance, on the eve of the first scheduled negotiations, due to begin at 1 p.m. Wednesday at the United Public Workers union offices with a federal mediator. "We were forced to take legal action," said Randy Perreira, referring to suits filed in 1st Circuit Court by the United Public Workers and the Hawaii State Teachers Association. "The governor has continued to refuse to negotiate with us." The governor does not refuse to negotiate at the Wednesday session but set the stage for negotiations with her unilateral order that state workers take three unpaid furlough days per month. Now Perreira, with equal drama, has set the stage on his side. Lingle's people called in the federal mediator unilaterally, a breach of negotiating etiquette that does not anger but perplexes union leaders. One union official told me that precisely because it's not important or controversial, it suggests to him a disinterest in good faith bargaining that is not connected to the crisis. Labor attorney Mike Nauyokas says it is usually customary not to call in a mediator until or unless both sides feel they have exhausted attempts to settle their differences without one.  While the other unions are suing, the union representing University of Hawaii professors has filed a class grievance against UH President David McClain, asserting that Section 30 of their contract specifies that if their contract expires without a new one to succeed it, their existing wages stay in place. The UPW, which directly represents 11,809 employees and about 3,000 retirees, stipulates that Gov. Lingle is "a public employer" under law, which is key to the state's own assertion that she can release employees for lack of funds. The UPW suit notes that Hawaii's constitutional convention of 1950 established a right to organize for collective bargaining in the private sector and it was plainly extended to the public sector in 1968. It adds that public employees were given, in the 1950 convention, a constitutional right "to accrue retirement benefits which may not be diminished or impaired." The UPW suit also cites places in state law which, while they do not oblige a judge to rule in the union's favor, give some covering fire by citing the legislature's declaration that "it is the public policy of the state to promote harmonious and cooperative relations between government and its employees." A judge could use that bit either way -- it could be argued that furloughs shared by all promote harmony by avoiding outright layoffs -- but the union, one assumes, adopts the view that you're not being cooperative unless you're working this sort of thing out with union representatives in the room. The suit also maintains that announcing a two-year furlough plan -- the governor and the legislature work on a rolling two-year budget which they are required by the state constitution to balance -- amounted to announcing the intention "to suspend for two years the defendants' obligation to engage in collective bargaining." Whether this argument has merit would, I assume, depend on whether the governor has at any point foreclosed the option of switching from her plan to a new negotiated plan if it meets the constitutional requirement of a balanced budget. On first reading the HSTA suit seems to make all the same points. It was written by the same lawyers. So now we have suits for judges to rule on, negotiations getting underway with a federal mediator on hand, and the continuing debate the media. And a fourth ring could open up, too, if legislative leaders decide they want to come into session. The partisan among us will have already chosen heroes and enemies based on party politics or where one sees oneself on the labor-management spectrum. For those of us given to a more dispassionate view, there is hope that all of this was leading up to Wednesday's bargaining session, and that the governor and the unions will actually be able to think of something that hurts less.

Newest Japanese monster: the flu bug

Fewer than 2,500 people flew to Hawaii from Japan on Monday. Three years ago in the last hurrah of the tourism boom, we took it for granted that some days would bring twice as many tourists from Japan. On Friday I reported that international arrivals so far this June were down 25% from last year, based on daily arrivals tallies by the state through Thursday morning. By Monday afternoon, armed with weekend data, I had to change that to down 26%. And arrivals specifically from Japan are down 31% so far this month. Even the 8% decline in arrivals from foreign countries other than Japan and Canada can be partly attributed to the Japanese fear of fluing, because these days some Japanese travelers fly to Seoul and then catch KAL flights to Honolulu. On Friday I used information from KINE's Billy V, whose Japanese wife works with hula enthusiasts in Japan, to report that Japanese officials did a good job of scaring people about swine flu but were slow to mention that unusual mildness of that particular strain. This week I have more official information from Hawaii Tourism Japan, the agency that has the Hawaii Tourism Authority contract for marketing Hawaii to the Japanese. "Japan reacted aggressively to halt the spread of swine flu," HTJ reports, "from conducting on-board quarantines to closing schools to warning Japanese against travel abroad or even going outside." You may recall that the World Health Organization's original announcements sounded pretty dire to us, too, and we dutifully reported what they said, only to have them backtrack later and play down their own terms, even "pandemic," which they stressed referred to the spread of the flu and not to its severity. Japan, apparently, held to the original panic mood a little longer. "New cases were reported in the media daily and consumers stocked up on masks and other precautionary goods," HTJ said. "However, the hype has finally started to simmer" [I think the writer means "subside"] "and schools have begun to reopen." I noticed myself from reading English translations of Tokyo news stories that they made a big deal of the first three Japanese swine flu patients having just returned from Canada, and last week they were reporting three cases that had just returned from Hawaii. HTJ said it requested a letter from Gov. Lingle stating that Hawaii was safe, open for business and still welcoming visitors, she obliged, and now HTJ has sent the letter to Japanese media. This aspect of our tourism crisis will not be long-lived. Even at their most alarmed the Japanese did not have the notion that Hawaii was more flu-ridden than anywhere else, and Hawaii remains one of Japan's favorite vacation destinations. For the first four months of this year, when 5.1 million Japanese vacationed in other countries, the top five destinations were China/Hong Kong (1.3 million), Korea (1.1 million), Hawaii (370,000), Guam (300,000) and Taiwan (280,000). The next most popular destinations were Spain (210,000), the U.S. mainland (150,000), Vietnam (130,000), Malaysia (130,000), Singapore (130,000), Macau (120,000) and Australia (110,000). I think I speak for everybody when I say... Spain?

The state budget crisis and the national health crisis -- parallels seen

Over the weekend I moderated a panel of health care specialists for a Local 5 meeting in Waikiki, and the more we discussed the difficulties of the national health care crisis the more it reminded me of our current state fiscal crisis. The most important similarity is one better told with numbers than with words, but I'll do my best: each crisis has reached its current severity, not so much by changing in any other respect, but simply by getting worse at an accelerated rate. For the past 12 months the decline in state tax revenues has grown more severe, until at last the governor and the legislature had exhausted other forms of spending cuts and started talking about outright layoffs or spread-out furloughs. A large number of people who have not troubled to follow the crisis in details are quick to pretend that it stems from incompetence, venality or meanness on the part of the governor (if the griper is a Democrat) or the lawmakers (if the griper is a Republican). Both are wrong. Both Gov. Lingle and legislative leaders have done what they could within the law and the exigencies of politics and now, with the shortfall still growing, they have no alternative but to take unpopular actions. The health care crisis is eerily similar. For decades, health care costs have risen because of many factors:

• Inflation.
• Wonder drugs and scanners that prolong our lives.
• Higher malpractice insurance costs.
• Increasing reliance by doctors on lab tests.
• Increasing willingness of doctors to have patients "take a pill" for everything.
• People with no free time eat more unhealthy foods and skip exercise.
• Little competition.
• Underpayment by Medicare.

These factors are not equally important. For example, large malpractice awards, though always cited by doctors in discussions of health care costs, do not account directly for much of the bill. But the risk of being sued may indeed be a prime cause of doctors ordering a lot more lab tests than they used to. I learned at the weekend seminar that HMOs are trying to counter this by having some of the more expensive medical tests go through an evaluating panel, so a doctor is partly immunized from being sued if a test wasn't done. I notice, however, that people who are looking to control medical costs seem to operate on a default assumption that many unnecessary CT scans and other expensive tests are ordered, but it's not clear to me that this has been much demonstrated, despite the fact that bean-counters have clearly been looking for evidence of it. Medical professionals rarely accuse themselves of prescribing too many drugs. But during my two weeks in the hospital earlier this year I saw it. Today's doctors give patients narcotic painkillers that virtually shut down their digestive systems, then prescribe stool softeners and laxatives to undo the size effect. My own caregivers, who were wonderful, nonetheless kept trying to push narcotic painkillers on me, repeatedly saying I had a right not to endure pain, but when I told them they could prevent pain by shaving the hair off my hand before taping IV needles to it, they didn't do it. I do not think that what happened to me, or what I saw in the next bed, constitutes a nationwide trend necessarily, but I sure have run into a lot of people who tell similar stories. There is a small federal office in Washington, D.C., that sets the rates Medicare will pay, and it deliberately sets them low in the face of the most basic knowledge of what services actually cost. HMSA executives told me this has been true for years but the gap used to be small enough to be easily met by slightly overcharging private employers. This practice has persisted but now employers are choking on it. This factor, which is one of the larger ones, is interesting because it's all about bureaucracy, with no connections whatever to the true rising cost of medicine. (Defenders of the practice say the original idea was to pay low in order to keep providers from passing along any costs they felt like incurring.) This is too complex a topic for a single post but perhaps you'll have some of your own thoughts or information to share.

Will Obama regulate Wall Street or will Wall Street regulate Obama?

If sharks could talk, they would tell you that you don't need to oppose shark cage tours close to land because they'll control themselves and not swim more frequently into human-infested waters. Wall Street derivatives players can talk. I'll show you. "Derivatives offer significant value," says Robert Pickel, CEO of the International Swaps and Derivatives Association. "Requiring exchange trading of all derivatives would harm the ability of American companies to manage their individual, unique financial risks and ultimately harm the economy." He should know about harm to the economy. His membership is a Who's Who of financial institutions that broke the global economy last summer through mismanagement of the very transfer of risk that is supposed to be the main benefit of these evil financial instruments. If sharks could talk, they might even have the gall to tell you it's okay to swim with them sans cages, because they'll regulate themselves, taking care not to do anything that bites you in the okole, recognizing that shark attacks have become a challenge for humans. They might say, through their International Shark Dialogue Association, "ISDA recognizes that the industry faces significant challenges, and is urgently moving forward with new solutions." Oh, wait, that's the other ISDA, the one Robert Pickel heads. Here in Hawaii we don't think of sharks are evil -- I have personally witnessed someone on the beach at Waimanalo screaming, "Shark!" and everyone runs toward it to look at it. But we do respect that sharks have sharp teeth and use them... that is what sharks do. Here's what you, and all Americans, including President Obama, need to keep firmly in mind on the topic of regulation versus self-regulation.

• It is not true that regulations are bad, or that they are good. Both kinds exist.
• Theft is illegal because we do not trust people to self-regulate this behavior. Some behaviors need to be regulated.
• Just as it is not reasonable to expect a shark not to bite, it is not reasonable to think that derivatives traders will willingly cede some of their profits for a greater good while their rival doesn't.
• Regulating business, when done well, sets clear rules for the game, and steers financial people away from shenanigans and shortcuts.

This week the Obama administration will propose regulations for derivatives, the complex financial instruments that allowed Wall Street CEOs to convince themselves they could take bigger risks for bigger profits because those risks were spread out. The Wall Street CEOs were wrong, and former Federal Reserve Board Chairman Alan Greenspan, who held the same view, has since admitted he was wrong, yet Washington and Wall Street still act like there is some kind of financial brain trust in the uppermost floors of Manhattan. The truth is that some of these very smart people are very stupid people, including a couple who are now trying to manage the crisis from within the Obama administration. One of the very few Obama lieutenants to join Alan Greenspan in manning up and admitting to having misunderstood the credit swap situation years before is Gary Gensler, who played a supporting role in the suppression of derivatives regulations ago but now, as chairman of the Commodity Futures Trading Commission, is about to propose regulations himself. (He has the job Brooksley Born had in the Clinton administration. She's that woman I told you about who tried to regulate derivatives, or least get Wall Street to report how much money was going into them, only to be shouted down by Greenspan, Larry Summers and Robert Rubin. Summers and Rubin, both of whom continue to be regarded as geniuses in some circles, are senior Obama advisors. Gensler worked for Rubin.) This past week, Gensler told a Senate committee that he wanted all derivatives traders to be subject to reporting requirements as well as capital requirements... keeping a certain amount of cash on hand in case of trouble, likes banks do. But Gensler opposes any move to confine such trading to a formal exchange. Sen. Tom Harkin, D-Iowa, is proposing that. "Give me an example," Harkin says, "of an over-the-counter derivative contract that is so customized that it can't be traded over an exchange." There isn't one, or ISDA would be buying TV commercials to tell you about it. But they're working on new instruments now, I suspect, if only to invent one that evades whatever regulations arise from this mess. Robert Pickel, whose job it is to argue for the least possible regulation, argues that forcing derivatives trading into an exchange would have a "disastrous effects" on companies "by taking away basic risk management tools." You can't blame him for saying that. His job is to say that. But you can blame anyone else who believes it. We have already experienced "disastrous effects," not from regulating derivatives but from not regulating them. In the process we learned that unregulated derivatives, far from being "basic risk management tools," are flawed financial instruments that magnify financial risk. You might write your congressman or your banker and ask them not to swim with sharks.