Guan’s blog

Felix Salmon has a post today outlining his views on regulation of payments. Some thoughts:

1. Felix says that in Scandinavia, consumer payments happen in real time. I know this is often true in Sweden, although not between all banks, but in Denmark interbank payments always take a business day. They are free for most customers if ordered online. Some banks charge a small fee. Banks are compensated through fees and because the bank earns interest on the money while it’s in “transit”.
2. There is already an infrastructure for low-quality bank transfers between consumers. It’s not debit cards, but rather ACH debits. It is hopelessly outdated and slow, but it works. Kind of. You can use PayPal to tap into this (“Add Funds from Bank Account”), and it’s free. Dwolla, a new provider that as far as I can tell only uses ACH, charges 25 cents. My credit union charges $1, which is outrageous.
3. Beyond the rents being extracted, a big problem with private monopolistic payment providers is that they control who gets to make payments. Right now it may not be a huge deal that PayPal restricts payments to Bradley Manning’s legal defense fund because we can always send a check or cash. This would be much harder if PayPal or a small number of other payment providers dominate the market in a cash- and checkless world. Barring illegal activity as determined after an actual conviction, I really think there should be a right to access common forms of payment.
4. Real time payments are costly because the sending bank never knows how much liquidity to keep around. Clearing payments once a day, or perhaps more than once a day, is not a bad idea.

Aaron Swartz asked for some blog recommendations. In no particular order, and without noting whether I agree with the blogger’s views or read for outrage or indifference, and omitting most of the usual suspects:

1. Elder of Ziyon for the Zionist perspective. Mondoweiss for the anti-Zionist perspective. +972 and Bernard Avishai too.
2. Howard French: Africa, China, photography.
3. Accrued Interest, Credit Slips, DealBook, Delaware Corporate and Commercial Litigation Blog, Fama/French Forum, footnoted, Interfluidity, Aswath Damodaran, SCOTUSblog.
4. ANIMAL, The Awl, EV Grieve.
5. Arabic Literature (in English), Johnson, Language Log, LAWnLinguistics.
6. Awful First Dates, China Daily Show, The Content Farm, Fucking Word of the Day.
7. bezdomny ex patria, bokane, China Hearsay, China Law Blog, chinaSMACK, Imagethief, Evan Osnos, The Opposite End of China.
8. Bleeding Heart Libertarians, Crooked Timber, Eunomia, Hendrik Hertzberg, Secular Right, The American Scene, The Reality-Based Community.
9. British Politics and Policy at LSE, Lenin’s Tomb.
10. Caissie’s Thing, Choire Sicha, Susan Orlean.
11. Cheap Talk, Market Urbanism, Market Design, orgtheory.net.
12. Cool Tools, Hack a Day, Jeri Ellsworth, Ken Rockwell.
13. Cultural Learnings, The Plot Thickens.
14. Jason Sweeney, Jessica Bigarel, Laura Jul, Lindsay Robertson, Mrs. O, The Impossible Cool, The Lawrence/Julie & Julia Project, Tokyo Camera Style.
15. myNoSQL, Running with Data, Shtetl-Optimized, TightWind.

There has been a lot of noise about Congressman Peter King’s hearings on Muslim terrorism and his support for Irish terrorism. When questioned about this, he said that:

I understand why people who are misinformed might see a parallel. The fact is, the IRA never attacked the United States. And my loyalty is to the United States.

Justin Elliott at Salon’s War Room points out that the IRA has killed Americans, but I wanted to find out if King’s claim is actually true. I couldn’t find any Irish Republican attacks in the US, but from 1866 to 1871 fighters from the Fenian Brotherhood, some of whom called themselves the “Irish Republican Army” with “IRA” buttons and were the first known use of that name, launched a series of raids into Canada.

They were defeated by Canadian troops and Andrew Johnson ultimately decided to rein in the fighters, but the threat of a US attack demonstrated by the raids was one of the causes of Canadian confederation in 1867.

I’m reading Lynn LoPucki’s Courting Failure: How Corruption for Big Cases is Corrupting the Bankruptcy Courts. For those not familiar with the bankruptcy literature, LoPucki is one of a group of legal scholars who argue that the rules for bankruptcy venue in the United States are horribly broken and too many cases are filed in debtor-friendly bankruptcy courts in Delaware and the Southern District of New York. (The Borders bankruptcy case is a recent example of this phenomenon.)

In addition to competition between US bankruptcy courts for US cases, there is also a degree of international competition, leading to a race to the bottom in bankruptcy law as other countries copy US bankruptcy law to retain cases. This is because any company with “property” in the United States, but essentially no other connection, can file in an American court. LoPucki gives the example of the Global Ocean Carriers bankruptcy:

The Delaware bankruptcy court began from the accepted premise that having “property” in the United States qualified a foreign corporation to file bankruptcy in the United States. The property, the court said, could be “a dollar, a dime, or a peppercorn.” The court acknowledged that most of the corporations in the Global group did not have a dollar, a dime, or a peppercorn in the United States. But the Delaware court nevertheless managed to find that each had property in the United States.

In the cases of large public ocmpanies, bankruptcy lawyers do much of their work on credit. When the debtor is foreign, however, the lawyers routinely require that the debtor pay a substantial portion of the fees—referred to as a “retainer”—in advance. One of the corporations in the Global group had paid such a retainer for representation of the entire group. That, the court pointed out, meant that all 15 corporations had property in the United States—their right to the lawyer’s representation.

As LoPucki points out, this means that any foreign corporation that files for bankruptcy in the US will automatically qualify.

Matthew Yglesias:

The Friedman view is that an entrepreneur who’s obsessed with creating great products is not just in some loose sense a sucker compared to the one who’s more focused on creating a politically entrenched monopoly, but that he’s also guilty of some kind of ethical failing.