A Rough Script of Life, if Ever There Was One

The lives of the 5,600 residents of Chadron, Neb., unfold item by item,
week after week, in the police log of the local newspaper.
photo by Angel Franco/The New York Times

By DAN BARRY

Published: September 2, 2007

CHADRON, Neb.

Item from the blotter of the Chadron Police Department: Caller from the 900 block of Morehead Street reported that someone had taken three garden gnomes from her location sometime during the night. She described them as plastic, “with chubby cheeks and red hats.”

When you reach Chadron you’re glad for it, because this Nebraska town is a long way from anywhere. Drive north on Main Street, past the Police Department, and you hit prairie; drive south, past the state college, and you hit prairie. In between, 5,600 people embrace, avoid and endure one another in a compact place that began more than a century ago as a remote railroad town.

Here, as anywhere, the specifics of most encounters between residents evaporate with the moment, leaving only those precious, fleeting bits, snatched from the ether and pinned by some dispatcher sitting at a desk behind the Police Department’s service window. A call comes in, the dispatcher types and another brief paragraph is added to the continuing Chadron epic.

Caller from the 200 block of Morehead Street advised a man was in front of their shop yelling and yodeling. Subject was told to stop yodeling until Oktoberfest.

It is in this regard that Chadron is blessed. For here, life’s gradual unfolding is measured and honored by Police Beat, a longstanding feature in The Chadron Record, the weekly newspaper. It records those small, true moments lost in the shadows of the large — moments that may not rise to the Olympian heights of newsworthiness, yet still say something about who we are and how we create this thing called community.

Caller from the 400 block of Third Street advised that a subject has been calling her and her employees, singing Elvis songs to them.

Police Beat repeats, almost verbatim, some of the calls that the town’s police dispatchers receive and then dutifully log, often in a literary style that synthesizes the detached jargon of the police with the conversational language of the people.

Caller from the 200 block of Morehead Street advised that a known subject was raising Cain again.

Every day, except on those days when they don’t feel like it, the dispatchers fax copies of their calls log to the ink-perfumed office of The Record, just around the corner. There, a young reporter named Heather Crofutt selects the most interesting items, edits out the names and specific addresses and types them up for Police Beat. Although she is essentially transcribing the reports, she says, “People think I make it up.”

Officer on the 1000 block of West Highway 20 found a known male subject in the creek between Taco John’s and Bauerkemper’s. Subject was covered in water stating he was protecting his family. Officers gave subject ride home.

George Ledbetter, (pictured) the editor, says Police Beat rivals the obituaries in popularity, so much so that it has become an integral part of local culture. Not long ago, for example, the loud practice sessions of four Chadron State College musicians earned them a mention in the log. They instantly knew what to call their fledgling band: Police Beat.

Mr. Ledbetter struggles to name his favorite item; there are so many. But taken as a whole, he says, the feature is “such a reflection of human life.”

Over the years, Chadron police officials have had a tolerate-hate relationship with Police Beat. One top-ranking officer complains that the feature seems to minimize the difficulty of police work. She says that while there are plenty of calls about animal encounters (Caller on the 900 block of Parry Drive advised a squirrel has climbed down her chimney and is now in the fireplace looking at her through the glass door, chirping at her.), there are plenty of calls about far more serious matters: child abuse, domestic violence, you name it.

But Police Beat often reflects how heavily some of us rely on law enforcement for just about everything (Caller from the 800 block of Pine Street advised that she had just left someone’s home and she forgot her jacket, and requested an officer to get her coat), and demonstrates how deft the police can be at defusing potentially volatile matters:

Caller from the 100 block of North Morehead Street requested to speak to animal control because caller felt that someone was coming into his yard and cutting the hair on his dogs. Dispatch advised caller to set up video surveillance on his house. Caller said he planned on it.

What emerges, then, is a kind of weekly prose poem to the human condition, where annoyance about barking dogs is validated, where nighttime fears born of isolation are reflected, where concern about others is memorialized.

Caller stated that there is a 9-year-old boy out mowing the yard and feels that it is endangering the child in doing so when the mother is perfectly capable of doing it herself.

In short, Police Beat is a rough script to the tragicomedy that is everyday life. And if the details preserved in the ever-expanding Chadron epic do not always find us at our best, there are moments, recorded for posterity, when we seek redemption, we make amends. We try.

Two weeks after the theft of those three chubby-cheeked, red-hatted garden ornaments, a brief item in Police Beat reported a break in the case. Two girls refusing to identify themselves had “brought in some gnomes.”

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Hedge Funds and the Little People

By GRETCHEN MORGENSON

Published: September 2, 2007

BURTON R. LIFLAND, a United States bankruptcy judge in Lower Manhattan, said last week that he needed more time to decide whether the liquidation of two failed Bear Stearns mortgage securities funds could proceed in the Cayman Islands, where they are incorporated, or in this country, where most of their assets and many of their investors reside.

Although there is little left in the funds to divvy up among investors and creditors, how Judge Lifland rules will be closely watched. That’s because most hedge funds are domiciled in faraway places where the courts may be, ahem, less friendly to investors than they are to the managers who park billions there. If the Bear Stearns funds are liquidated in the Cayman Islands, they will be shielded from investors’ suits, and all distributions to creditors will be handled by the courts there.

Bear Stearns wants the Cayman courts to oversee the liquidations. The firm’s spokesman, Russell Sherman, said: “Because the two funds are incorporated in the Cayman Islands, the funds’ boards filed for liquidation there. The return to creditors and investors will be based on the underlying assets and liabilities of the funds not on the location of the filing.”

Judge Lifland said in court last week that he would decide the matter shortly.

Ronald L. Greene, 79, a retiree in Northern California, is one investor watching the Bear Stearns case closely. Mr. Greene lost $280,000 in the Bear Stearns High Grade Structured Credit Strategies Fund and says he will join a suit that has been filed against the firm. He contends that Bear Stearns duped him with assurances that the fund’s high-quality investments would protect holders against market and credit risks.

Hedge funds are theoretically open only to institutional investors and extremely wealthy individuals, who are deemed savvy and well heeled enough to assess and weather complex risks. But documents from Mr. Greene’s files show that Bear Stearns Asset Management allowed investments of $250,000 in its fund, considerably smaller than the typical $1 million minimum for many hedge funds.

ON July 20, 2005, he received an e-mail message from his broker at a small regional firm, with the following header: “Bear Stearns High-Grade Structured Credit Strategies Fund will accept smaller investments this month on a limited basis.” Noting that the fund was temporarily reopening on Aug. 1, 2005, the message said that for investors who “do not have $1,000,000 to invest, the fund will accept a limited number of clients this month for 500k and perhaps 250k.”

The message went on to note the fund’s stellar performance: up a cumulative 29.4 percent since its October 2003 inception, and no down months.

Mr. Greene, a former engineer, said he invested in several hedge funds in recent years, aiming to preserve his principal. Most of the funds have worked out well, he said, producing slightly better-than-market returns with little volatility. He estimated that he has $600,000 to $800,000 invested in hedge funds.

He invested in the Bear Stearns fund in October 2005, and he said the fund appealed to him because its returns of about 1 percent a month did not seem to fall into the too-good-to-be-true category.

Mr. Sherman, the Bear Stearns spokesman, said the fund’s general partner was allowed to waive the $1 million investment minimum and that any investor in the fund had to have at least $5 million in liquid, investable assets.

“Everything went fine until last June,” Mr. Greene said; that was when he learned from his broker that the funds were having difficulties. “I asked him how they could be in trouble if they were high-grade securities. He said they were bundled high grade but not really high grade. If you’re going to be dealing with a high-grade securities dealer, I didn’t understand how that was an excuse of any kind.”

Mr. Greene said officials at Bear Stearns Asset Management conducted monthly conference calls with investors, discussing the funds’ performance.

For example, according to notes taken by another investor during some of these calls, Ralph R. Cioffi, senior portfolio manager for the fund and an executive at Bear Stearns Asset Management, predicted on Jan. 18, 2007, that fund investors would benefit from a negative bet that he had recently placed on subprime mortgages. Mr. Cioffi also said the fund had plenty of cash to take advantage of market dislocations, according to the investor, and that the team of people monitoring the securities in the fund had increased to 11.

The next month, according to the investor, Mr. Cioffi told conference-call participants that the fund had little exposure to subprime mortgages. And in April, Mr. Cioffi told investors that even though returns were down, the fund had not been forced to sell securities. Acknowledging that investors had been frightened by unusually high delinquencies on loans made in 2006, Mr. Cioffi said fund investors would be safer at Bear Stearns because it did its own due diligence and did not rely solely on ratings agencies, the investor said.

In June, the wheels came off the Bear Stearns hedge funds. Mr. Greene said that as soon as he learned that his fund was in trouble, he submitted a redemption request to Bear Stearns, through his broker. “We had all kinds of trouble getting them to admit they had received it,” he said. He never got any of his money out.

In mid-July, Bear Stearns told investors that the funds, once worth $1.5 billion, had lost almost all their value. By the end of June, the firm said, the fund Mr. Greene had held was down 91 percent.

“In light of these returns, we will seek an orderly wind-down of the funds over time,” Bear Stearns told its clients in a letter. Obviously, the lawsuits over this debacle are only just beginning for Bear Stearns. One of Mr. Greene’s lawyers, Jacob H. Zamansky, said he and his co-counsel have been contacted by fund investors from around the world. All tell the same story, Mr. Zamansky said.

“We believe that Bear Stearns misrepresented the risk to investors in the hedge fund, misrepresented the extent of risk controls that were in place to cut losses and misrepresented performance on conference calls to avoid a run on the bank,” he said.

Mr. Sherman, the spokesman, said that “the allegations are unjustified and without merit.”

“The accredited, high-net-worth investors in the fund,” he added, “were made very aware that this was a high-risk speculative investment vehicle.”

Of course, it will be up to the securities arbitrators to judge whether investors in the funds were misled about their risks. But these cases may also help regulators understand the degree to which retail investors have bought into hedge funds.

Back in 2003, the Securities and Exchange Commission conducted a study on hedge funds and determined that their investors were mostly institutions. But the study also warned that the types of hedge fund investors appeared to be changing. “Although we did not observe an existing retail market for hedge funds,” the study said, “the potential for that market is clearly at hand.”

The study was right. Four years later, that potential may have become a reality.

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The Kurdish Secret

By THOMAS L. FRIEDMAN

Published: September 2, 2007

Erbil, Iraq

Iraq today is a land of contrasts — mostly black and blacker. Traveling around the central Baghdad area the past few days, I saw little that really gave me hope that the different Iraqi sects can forge a social contract to live together. The only sliver of optimism I find here is in the one region where Iraqis don’t live together: Kurdistan.

Imagine for a moment if one outcome of the U.S. invasion of Iraq had been the creation of an American University of Iraq. Imagine if we had triggered a flood of new investment into Iraq that had gone into new hotels, a big new convention center, office buildings, Internet cafes, two new international airports and Iraqi malls. Imagine if we had paved the way for an explosion of newspapers, even a local Human Rights Watch chapter, and new schools. Imagine if we had created an island of decency in Iraq, with public parks, where women could walk unveiled and not a single American soldier was ever killed — where Americans in fact were popular — and where Islam was practiced in its most tolerant and open manner. Imagine ...

Well, stop imagining. It’s all happening in Kurdistan, the northern Iraqi region, home to four million Kurds. I saw all of the above in Kurdistan’s two biggest towns, Erbil and Sulaimaniya. The Bush team just never told anybody.

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No, Kurdistan is not a democracy. It has real Parliamentary elections, but the region’s executive branch is still more “Sopranos” than “West Wing,” more Singapore than Switzerland — dominated by two rival clans, the Talibanis and the Barzanis. It has a vibrant free press, as long as you don’t insult the leadership, and way too much crony-corruption. But it is democratizing, gradually nurturing the civil society and middle class needed for a real democracy.

On Oct. 17, the new American University of Iraq will open classes in Sulaimaniya. “The board wanted three campuses, one in Kurdistan, one in Baghdad and one in Basra, but this is the only part of the country where an American University can open and function safely,” said Owen Cargol, the school’s chancellor.

Iraq is a disaster in so many ways, but at least America’s invasion midwifed something really impressive in Kurdistan. And in the best way: we created the opening and the Kurds did the rest. But while the Kurds liberated their region from Saddam’s army in the 1990s — with U.S. air cover — their current renaissance was only possible, they say, thanks to the overthrow of Saddam, their mortal enemy.

“Saddam’s eyes were always on this region,” said Nechirvan Barzani, prime minister of the Kurdistan regional government. Once he was toppled, “it gave us psychological hope for the future. Those who had even a limited amount of money started to invest, start small businesses or buy a car, because they thought they could see the future. The uncertainty was removed. ... We have to thank the American people and government. But we are a lover from only one side. We love America, but nothing in response. They don’t want to give the perception that they are helping us.”

Added Hoshyar Omar, a 23-year-old student-translator: “My father was buried alive [by Saddam’s men] when I was 3. I want to thank Mr. George Bush personally. ... He may have made some bad decisions, but freeing Iraq was the best decision he has ever made. ... We had nothing and we built this Kurdistan that you see.”

Why is Kurdistan America’s best-kept secret success? Because the Bush team is afraid the Kurds will break away. But the Kurds have no interest in splitting from Iraq now. Iraq’s borders protect them from Turkey, Iran and Syria.

The Kurdish autonomous zone should be our model for Iraq. Does George Bush or Condi Rice have a better idea? Do they have any idea? Right now, we’re surging aimlessly. Iraq’s only hope is radical federalism — with Sunnis, Shiites and Kurds each running their own affairs, and Baghdad serving as an A.T.M., dispensing cash for all three. Let’s get that on the table — now.

Months after Saddam’s capture, a story made the rounds that he was asked, “If you were set free, could you stabilize Iraq again?” He supposedly said it would take him only “one hour and 10 minutes — one hour to go home and shower and 10 minutes to reunify Iraq.” Maybe an iron-fisted dictator could do that. America can’t.

“No one here accepts to be ruled ever again by the other,” Kosrat Ali, Kurdistan’s vice president, told me. “If you get all the American forces to occupy all of the towns and the cities of Iraq, you might be able to centralize Iraq again. That is the only way.” Otherwise, “centralized rule is finished in Iraq.”

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Two Champions, and Two Levels of Preparedness

By SELENA ROBERTS

Published: September 2, 2007

The threat to Maria Sharapova (pictured left) materialized as an anonymous Polish player who is neither intimidated by willowy stars with frigid stares nor fat rodents far from the cuddly “Ratatouille” variety.

In fact, Agnieszka Radwanska keeps them caged as pets. (The beasts, not the beauties.)

“They’re dangerous, I think,” Radwanska said of her rats. “They’re aggressive.”

The danger to Roger Federer arrived as an unknown named John Isner, equipped with a college résumé and a periscope’s body. Federer is not acrophobic, but dudes at great heights can freak him out.

Over the years, Max Mirnyi, Mario Ancic, Tomas Berdych and Ivan Ljubicic have formed a 6-foot-4-and-over league of players who have, on exceptional occasion, stolen a match from beneath Federer’s greatness.

So at 6-9, with a big serve that kicked like Beckham, Isner wasn’t simply a tall tale from the first week of the United States Open. He was the real deal.

All of Arthur Ashe Stadium witnessed it yesterday as Isner took the first set from Federer, creating the most raucous rumble this side of the 7 train. Holy upset, was everyone seeing double?

A couple of hours earlier, Sharapova, who like Federer walked into Queens as the defending Open champion, had dropped her first set to Radwanska.

The similarities ended there. Federer decoded what hit him. Sharapova was flummoxed by it. Federer survived in four sets. Sharapova exited in three.

•

In her evolution as an elite player, if she can ever go beyond her rigid father for coaching advice, Sharapova may learn to adjust to the unforeseen, to greet Tour risers with respect. As it happened, Sharapova allowed herself to be psyched out on her serve when Radwanska jumped to and from the service line as if engaged in some tennis hokey-pokey.

As Radwanska explained, “I knew that she doesn’t like if somebody is moving if she serving.”

Sharapova responded, “I don’t worry about what my opponent is doing.”

But part of the game is recognizing an opponent’s tactics and strengths and hot streaks. Part of being a champion is to fret over every detail, no matter how small or how tall. Federer personally scouted Isner against Jarkko Nieminen in the first round.

“I will probably never be surprised on a tennis court because I don’t underestimate opponents anymore,” Federer said last night, adding, “I knew the danger and was ready for it.”

Federer is on heightened alert — now more than ever. He is the dutiful caretaker of his legacy, not in a paranoid way, but in a preservationist’s way.

“It’s different now than maybe two or three years ago,” Federer, 26, said in a recent interview. “Before, I was happy to be No. 1. I know I’m the best, and it’s easy and I think everything I’m doing is the right thing. Now it’s a bit more different.

“You start to think a little more. You’ve done it over so many years now, and you start to wonder how many more years can you do it.”

Can he top Pete Sampras’s 14 major titles? Can he keep up his streak at No. 1? How long will his body continue to glide lightly, almost ghostlike, over the court?

“Because I’m getting so close to all these records, I think, well, these guys before me didn’t make it longer than this age or that age; so for me, time is getting shorter to some degree,” Federer said. “I know I can do it, but there are more questions now. Can I do it? For the past few years, I have. I’m proud of that.”

His pride doesn’t inhibit self-awareness. He knows there are challengers to his extended dominance. Beyond the Rafael Nadals and Andy Roddicks, there are other Isners lurking. Federer doesn’t dismiss his vulnerability, understanding he is the sitting target in the carnival dunk tank.

“You do feel a little like everybody is trying to figure you out,” Federer said. “I really felt that in the very beginning when I became No. 1. It was like, ‘We’re happy for you, but now we’re going to take you down.’ I think once you prove you’re worthy of No. 1 and then, say, win Wimbledon back to back, then people will say, ‘O.K., he’s not just here to go away.’ And then the respect starts to builds and then the aura, you start to create that. Like some people say I sometimes win matches in the locker room even though I don’t believe that.”

He doesn’t rely on aura to win. Sharapova seems to use it as a crutch. She is graced with as much talent, power and intensity as anyone on the Tour — even the Williams sisters — but she has yet to develop a Plan B when her strategy of glowering and attacking fail to intimidate fearless Poles with pet rats.

“I just didn’t quite feel like me out there,” Sharapova said.

The key isn’t just to know yourself, but also your opponent. Fear the unknown. It works for Federer.

E-mail: selenasports@nytimes.com

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Women’s World Cup Team Looks Back and Looks Ahead

By GEORGE VECSEY

Published: September 2, 2007

Abby Wambach knows how much she owes the ’91ers, the self-styled old ladies who built women’s soccer in the United States. She starts with the car she drives and the home where she lives.

“They were my source of income,” Wambach said recently about the pioneers of her sport. “I want to say to them directly, ‘You guys did good.’ ”

Wambach, a bruising striker, plans to say exactly that to Kristine Lilly, the last member of that fabled 1991 team still in uniform, when they take the field for the FIFA Women’s World Cup in China, which begins in a week.

Those ’91ers became one of the greatest national teams the United States has ever fielded, winning that first World Cup in China. In talent and charisma and results, they were the equivalent of the 1992 Dream Team of men’s basketball.

But Jordan and Bird and Magic merely upgraded a popular sport, whereas the ’91ers seemed to be building a dynasty. Only it did not happen.

•

Instead, the fuss over Mia Hamm and Julie Foudy and the rest has left a rosy glow in the darkening sky as the United States prepares to play in this World Cup, literally in the middle of the night back home. To make matters worse, the professional league that began in 2001 did not make it past the third year.

“The Greatest Team You’ve Never Heard Of,” that’s how the media guide describes this year’s team. No matter how well the United States does over there, it will never match the excitement in the Rose Bowl on July 10, 1999, when Lilly stopped a Chinese shot with her head, Briana Scurry defended the goal during the shootout, and Brandi Chastain scored the winning penalty kick and promptly pulled off her jersey to reveal a sports bra more substantial than a lot of outfits seen around Manhattan, her gesture quickly becoming the symbol of that dashing squad.

“Unfortunately, people don’t know our team,” said Kate Markgraf, a leader of this squad who also played in that final.

“They call it the Mia Factor,” said Wambach, 27, who was not on that 1999 team. Wambach adores Hamm, who tutored her when they were teammates with Washington in the first year of the overly ambitious Women’s United Soccer Association.

Wambach, however, feels that the news media and the marketing people often seemed to “focus all your attention on one person. With Mia, it was difficult to know the other faces.”

And therein lies the paradox. Hamm was one of the most reluctant American superstars, displaying a genuine deer-in-the-headlights look when facing the hordes of reporters. She had an ego, of course, but it functioned best on the field, accompanied by sharp elbows and opportunistic feet. (Hamm may not have been the best American player; I would pick Michelle Akers, stalking some hapless opponent who temporarily possessed the ball.)

The news media and public helped create Hamm’s mystique, but now she is a retired mother of twins. Her absence seems linked with the end of that era, as indicated by the tiny corps of seven American news media outlets traveling to China to cover this World Cup.

Have women’s sports been downgraded in a time of news media austerity? Or is this World Cup, on the other side of the globe, running smack into the first month of American football? Probably both.

China was supposed to be the host in 2003, but the tournament was shifted to the United States because of the SARS epidemic there.

With little preparation time, and overlapping with baseball and football in early autumn, the 2003 Women’s World Cup did not match 1999 in any way, as the United States finished third.

Also, the W.U.S.A. folded, a victim of its own grandiosity, although it served a purpose by developing Wambach and Shannon Boxx, two mainstays of the current team.

“Anytime a game is not being played, it limits visibility,” Markgraf said. “Or course, with the league, we’d be much farther along. But that didn’t happen.”

She hopes that the energy from this World Cup and the 2008 Olympics in Beijing will be a stimulus for a proposed league to begin play in April 2009.

Right now, the women are in Shanghai, training for their first game against North Korea in Chengdu on Sept. 11, at 5 a.m. Eastern in the United States, televised on ESPN or ESPN2. The players are thankful to their federation for financing the year-round program that got them to China.

“U.S. soccer puts us in an environment to play,” Wambach said. “All of us are excited about ’09. It gets kind of hard kicking each other in practice.”

•

The 5-foot-11 Wambach is not shy about muscling opponents. If she had come along a few years earlier, she would have been a force even on that great 1999 team.

Now she can only hope that Americans will discover her team in the post-midnight hours of the next few weeks.

E-mail: geovec@nytimes.com

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Floyd Norris: Notions on High and Low Finance

August 31, 2007, 2:09 pm

Having it Both Ways

Quotes from President Bush’s speech today:

“A federal bailout of lenders would only encourage a recurrence of the problem. It’s not the government’s job to bail out speculators, or those who made the decision to buy a home they knew they could never afford.”

“In the coming days, the FHA will launch a new program called FHA-Secure. This program will allow American homeowners who have got good credit history but cannot afford their current payments to refinance into FHA-insured mortgages. This means that many families who are struggling now will be able to refinance their loans, meet their monthly payments and keep their homes.”

Just how do those deserving homeowners differ from “speculators” who bought a home “they knew they never could afford?” And why is this not “a federal bailout of lenders?” The president did not say.

What it will mean is that the federal government will decide which overleveraged homeowners deserve to keep their homes, and which lenders will have bad mortgages repaid in full.

The issues are not easy ones, and I do not have my own solution. But don’t be surprised if, in a year or two, we learn that lobbyists swarmed all over “FHA-Secure” and that a good part of the money went to those with good political connections.

August 28, 2007, 5:56 pm

Home Prices, Down Again

The S.&P./Case-Shiller indexes are out for June, and there are more dismal figures. Fifteen of the 20 markets they cover show prices down, year-over-year. That helps to explain why 2006-vintage mortgages are in such trouble.

But it is the two-year picture that is most disturbing. Prices are now lower than they were two years ago in 6 of the 20 markets. That is bad news for people in those markets who took out 2-28 mortgages — the ones that had a low teaser rate for two years, and then reset to a higher rate. The assumption was that the homeowner could then refinance. But that does not work if the house is worth less than the mortgage amount.

The markets that are lower in June 2007 than they were in June 2005 come in two flavors. First are Rust-Belt markets that did not boom but now are suffering — Detroit (off 12.7 percent over two years), Cleveland (-3.2 percent) and Minneapolis (-0.4 percent).

The others — and the ones where the most homeowners are likely to be moaning — are the boom markets gone bad. San Diego is down 5.7 percent over two years, Boston is off 5.5 percent and Washington is down 0.5 percent. San Francisco and Las Vegas — two other former boom areas — are now virtually even over two years.

I have long maintained that there are really two different prices in the boom market. The first is the seller’s price. That is the one usually reported, of, say $300,000 or $500,000. The second is the buyer’s price. That figure is $2,500 a month, or whatever.

For much of the boom, sellers’ prices soared while buyers’ prices rose much more slowly. First, declining interest rates meant you could buy more home for the same monthly payment. Then funny mortgages — teaser rates, interest only, pay-option — kept the monthly payments low, for a limited period, even if the seller was getting much more.

Now those funny mortgages are hard, if not impossible, to get. A buyer who must take a conventional mortgage to buy a house will pay a lot more, per month, than he expected to pay. Making homes affordable under the new mortgage regime may mean much lower prices for the seller.

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August 26, 2007, 4:27 pm

The Ignorant CFO

Ignorance remains a popular defense among executives.

The tale of Stephen Bennion, who just lost his job as CEO of Selectica, is discussed in this item from a blog at the San Jose Mercury News, the hometown paper in Silicon Valley.

Jack Davis of the Merc summarizes part of the conclusions of the special committee of directors, who decided that Mr. Bennion, who was CFO when the options were backdated, had to step down as CEO:

“As for the back dating activity he was ‘aware of or was involved with,’ the committee can’t prove he was ‘intentionally’ doing wrong, or that he ‘understood’ the activity ‘would result in a misstatement of the company’s financial results.’

Why would a CFO know about stuff like that?”

An excellent question, particularly given that the executive in question is also a CPA.

The company, Selectica, is best known for its own market timing. It went public on March 10, 2000, the very day the internet bubble peaked, with Frank Quattrone’s group at CS First Boston as the lead underwriter. The shares were sold (to those with enough pull to get in on the offering) at $30 a share, opened above $90 and traded at $154 that day.

Since then, alas, the company has yet to earn a quarterly profit, and revenues are declining. As for the share price, it is basically the same as it was that first day, if you ignore decimals. If you don’t ignore those pesky things, it is down 99 percent, at $1.54.

The company tells us that Mr. Bennion did not exercise his own backdated options, but does not say why. Could it be that they are worthless?

Mr. Bennion, by the way, is not leaving the company. He is so valuable that he will stay on as a vice president. We are assured he will have nothing to do with accounting.

P.S. I am back from vacation.

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And on the 4th Day, They Voted

By GAIL COLLINS

Published: September 1, 2007

LOWELL, Mass.

It’s time for the 23rd debate in the Fifth Congressional District Democratic primary campaign! Or perhaps the 22nd. Everyone seems to have lost count, but we can definitely say that if the candidates were puppies, somebody would have been arrested for cruelty.

“We are ready to rock!” says the moderator.

Actually, the candidates look like they’re ready to collapse. This primary — an almost sure ticket to a safe Congressional seat — is going to be held on the day after Labor Day. There is an old saying that the only people who show up for special elections are the kind of compulsive voters who would turn out in a hurricane. For this one, they’re going to be down to the folks who would go to the polls even if God scheduled the Rapture.

The election date is due to timetables the Democrats set up in 2004, when they were looking forward to the triumph of a president-elect from Massachusetts and trying to make sure Mitt Romney would not win the newly opened Senate seat. To summarize: Like most undesirable political developments, this can be blamed on John Kerry.

Nobody here needs to be jealous of the attention voters get in Iowa and New Hampshire. If you were a resident of Lowell or Lawrence and expressed a willingness to show up and vote on the day after Labor Day, you could get any one of five Democrats to volunteer to drive you to the polls, bring you back home, cook your breakfast and tutor your oldest child for the S.A.T.’s.

Massachusetts has only sent three women to Congress since the dawn of time, and the most interesting thing about this race is that the two leading candidates are Eileen Donoghue, the former mayor of Lowell, and Niki Tsongas, the widow of Paul Tsongas, the beloved former congressman, senator and presidential candidate who died of cancer a little over a decade ago.

When Paul Tsongas won the New Hampshire primary in 1992, all the Democratic candidate wives were lawyers. At the time, that seemed to be a significant factoid — a sign that women who married politicians were beginning to carve out their own lives apart from the supportive spouse role. Back in 1985, when she was just starting law school, Niki Tsongas told The Washington Post that the old model of “wives who are very involved” with their husbands’ Congressional activities made her uncomfortable. “I guess I was just too proud. I felt whatever I chose to do I’d have to do it separate from what Paul did,” she added.

Now we seem to have a Third Way — the partner-spouse who is both liberated and completely engaged in her husband’s work. In this campaign, Tsongas calls her husband’s political career “a shared experience.” Once, in a slip of the tongue, she told voters from the district that she had “represented it in Washington for 10 years.”

The debate gets around to the question of Tsongas’s qualifications pretty quickly, since there is not a whit of serious policy disagreement among the major candidates. (Donoghue has a TV commercial pointing out that while Tsongas’s Iraq policy is to end the war and take care of veterans, hers involves ending the war and a specific plan to take care of veterans.)

Inevitably, Donoghue read The Washington Post story.

“That was 25 years ago,” snapped Tsongas.

Either woman would undoubtedly do fine in Congress. (Vote on the day after Labor Day! The stakes are low!) But you can understand Donoghue’s frustration. Paul Tsongas recruited her to run for the Lowell City Council. She has put in nearly 12 years, four as mayor, and Lowell is looking pretty good, its downtown speckled with art galleries and coffee shops that lend the former mill town a fragile panache. Now, she’s running against someone who wants to revert to the old tradition in which the only women who ever got to go to Congress were the widows of former incumbents.

On a recent Sunday morning, right after a Boston television station aired what was possibly the 21st candidate debate, Donoghue was out distributing campaign literature. A man and a woman, she said, came power-walking past her. “Then the woman turned around and came back to me and said: ‘I was on the fence. But after I watched this morning’s debate, I think you’re ready for Congress. And I don’t think she is.’ ”

That cheered Donoghue up immensely. To win an election that arrives on the heels of a three-day weekend, you’re going to need either a large number of relatives or just the kind of people who like to begin their Sunday mornings with the viewing of a debate, followed by a brisk power-walk.

•

Correction: The Larry Kudlow interview mentioned in Thursday’s column was on CNBC, not MSNBC. Also, when it is 3 p.m. in India, its neighbor Nepal believes it to be 3:15, not 3:45 as I wrote on Aug. 23.

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Anxious About Tomorrow

By BOB HERBERT

Published: September 1, 2007

You know you’ve stepped into a different universe when you hear a major American labor leader saying matter-of-factly that employer-based health insurance and employer-based pensions are relics of a bygone industrial economy.

Andrew Stern, president of the Service Employees International Union, which has 1.9 million members and is the fastest-growing union in the country, is not your ordinary union leader. With Labor Day approaching, he was reflecting on some of the challenges facing workers in a post-20th-century globalized economy.

“I just don’t think that as a country we’ve conceptualized that this is not our father’s or our grandfather’s economy,” Mr. Stern said in an interview. “We’re going through profound change and we have no plan.”

The feeling that seems to override all others for workers is anxiety. American families, already saddled with enormous debt, are trying to make it in an environment in which employment is becoming increasingly contingent and subject to worldwide competition. Health insurance, unaffordable for millions, is a huge problem. And guaranteed pensions are going the way of typewriter ribbons and carbon paper.

“We’re ending defined benefit pensions in front of our eyes,” said Mr. Stern. “I’d say today’s retirement plan for young workers is: ‘I’m going to work until I die.’ ”

The result of all of this — along with such problems as the mortgage and housing crisis, and a domestic economy that is doing nothing to improve living standards for ordinary Americans — is fear.

“Workers are incredibly, legitimately scared that the American dream, particularly the belief that their kids will do better, is ending,” said Mr. Stern. He is trying to get across the idea that in a period of such profound change, the old templates, the traditional ideas and policies of even the most progressive thinkers and officeholders, will not be sufficient to meet the new challenges.

“We can’t be the only country on earth that asks our employers to put the price of health care on its products when a lot of our competitors don’t,” he said. “And job security? Even if you want to stay with your employer, as in the old economic model, we’re seeing in many industries that your employer is not going to be around to stay with you.”

A comprehensive new approach is needed, but what should that approach be? Franklin Roosevelt always hoped to inject a measure of economic security into the lives of ordinary Americans. But the New Deal was seven decades ago. Workers are insecure now for a host of different reasons and Mr. Stern wants the labor movement to be part of a vast cooperative effort to develop the solutions appropriate to today’s environment.

He told me, “I’d like to say to the Democrats that we are as far today from the New Deal as the New Deal was from the Civil War.”

He wants more people to pay attention to the big issues that affect not just union workers but all working families: How do you bring health care to all? What do you do about retirement security? How will the jobs of the 21st century be created?

And what about schools, energy, global warming, the environment?

Mr. Stern tends to see the nation as a team and wants the team to pull together to develop a creative vision of what the U.S. should be about in the 21st century. A cornerstone of that vision, he said, should be adherence to the “primary value” of rewarding work.

“We’re a team in the 21st-century period of rapid change and competition,” he said. “And right now, we don’t have leadership, and we don’t have a plan. At the same time, a group of people are enriching themselves far beyond anything that’s reasonable.”

What he would like to see, he said, is a large group of thoughtful people from various walks of American life — business, labor, government, academia and so forth — convened to begin the serious work of cooperatively developing a real-world vision of a society that is fairer, healthier, better educated, better prepared to compete globally, and more economically secure.

“I think you’re already seeing the beginnings of odd formations of people who appreciate, issue by issue, that we have to do something different here,” he said.

The kind of effort Mr. Stern would like to see would logically be initiated at the highest levels of government, preferably the White House. But if that’s not in the cards, someone else should take up the challenge. And there should be a sense of urgency about it.

The fears of America’s workers are well founded. “There’s something wrong with the system right now,” said Mr. Stern, “and we can’t just say, ‘Well, it’s all going to work out.’ It’s not.”

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Safin Has Changed but the Grandstand Is the Same

By GEORGE VECSEY

Published: September 1, 2007

Primal screams. Pile drivers. Babies crying. Spectators virtually hanging over the court. Welcome to the grandstand at the United States Open, sometimes known as the Graveyard, where tournaments have ended abruptly for highly ranked players, and careers have sometimes begun to teeter.

Because it is intimate, the grandstand is invaded by the clatter of the Long Island Rail Road, a reminder of time and distance. Yesterday, the train of life was rolling onward for Marat Safin of Russia, who won this tournament in 2000 when he was 20. Now an old man of 27, Safin was ushered out in the second round by Stanislas Wawrinka of Switzerland, 6-3, 6-3, 6-3.

“You know how many times I have like this?” Safin said later in nearly perfect English, his third language. He added: “And one bad day off, there is not much you can do. That’s it. The day is over and we move on, back to our lives.”

Not everybody has taken an upset on the grandstand court with as much pragmatism, whether feigned or real. Boris Becker was not amused when he was eliminated by Brad Gilbert in 1987, and Vitas Gerulaitis did not wax philosophical when knocked out by the 16-year-old amateur Aaron Krickstein in 1983. And fifth-seeded Kevin Curren staged an epic tirade when he was upset by Guy Forget in the very first round in 1985.

“I hate the city, the environment and Flushing Meadow,” Curren said. “There is noise, the people in the grandstand are never seated and it takes an hour and a half in traffic to get here. It’s sickening that with all the money they get from TV, the U.S.T.A. doesn’t build a better facility. The U.S.T.A. should be shot. And they should drop an A-bomb on the place.”

•

The Open has since upgraded its facilities, but the grandstand still hunkers down on the east end of campus, a magnet for grounds-pass-only fans who want to get close to good players.

“Hit the ball,” Essie Herron, a fan visiting from Milwaukee, blurted yesterday as Ahsha Rolle of the United States dinked a volley rather than drill her opponent, Dinara Safina of Russia, sister of Marat.

“She does that every game,” added Herron’s friend Lolita Bevenue, also of Milwaukee, part of Rolle’s frustrated gallery, a few rows up behind the baseline.

Rolle was not helped when the pneumatic pile drivers at the Mets’ future ballpark (why do I keep wanting to call it New Shea?) began booming as she served in the 10th game. Perhaps distracted, Rolle lost, 6-4, 6-3, and then Safina’s older brother came out for his grandstand moment.

Strange things have happened in this joint, where Wilt Chamberlain used to sit and schmooze away the lazy August evenings. Bud Collins, the vibrant memory of tennis, recalls rushing over to the grandstand in 1995 when Shuzo Matsuoka of Japan suffered leg cramps and was essentially counted out as he writhed on the court. And for sheer macho tennis, there was Chip Hooper’s second-round knockout of Roscoe Tanner in 1982, volleys hitting body parts like heavyweight punches.

•

Safin’s loss yesterday was nowhere near that epic, just a 25th-seeded player on his way out. Somebody remembered that after Safin beat Pete Sampras in the 2000 final, Sampras predicted Safin would win many more Grand Slam events.

“See, even the geniuses make the mistakes,” Safin said yesterday. Safin has since won one Australian Open and was not predicting any more yesterday.

“Only the most beautiful moments still to come,” said Safin, a figure out of Tolstoy or Chekhov ruminating on life. “The past wasn’t bad for me, but the future is — that’s why I will hope for the best. That’s why moving through life, I think the best moments are still to come. It can be tennis or anything different.”

Safin said his life was so much better than he could have imagined when his mother, Raouza Islanova, a tennis coach, moved the family from Moscow to Spain and gave him $500, saying: “You have luck or you don’t have luck. So this is your last hope.”

He added: “To come from there, from having nothing, zero, and to become what I achieve right until now, well, it’s a long way. I could have ended up anywhere in Moscow or Russia, doing God knows what. I’m sitting here, and you’re asking me pretty nice questions, so I think I did pretty well in my career.”

This mood was far from the elation he touched off in 2000, when President Vladimir V. Putin praised him in Moscow while Safin partied the night away in New York.

Now, Safin said, he doesn’t hang out in the players’ lounge, preferring to rest up in his Manhattan hotel (“SoHo — I’m not a big fan of uptown,” he said) and perhaps take coffee in a cafe and watch the world pass by. He continued in that reflective vein for many minutes, far removed from the nihilistic Kevin Curren rant 22 years ago. The grandstand affects people in many ways.

E-mail: geovec@nytimes.com

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The Opinionator: A blog at the NY Times by Tobin Harshaw & Chris Suellentrop

August 31, 2007, 6:16 pm

How Conservatives and Gays Can Get Along

By Chris Suellentrop

Tags: Gay Rights

Writing at the blog of the Independent Gay Forum, Jonathan Rauch (the author of “Gay Marriage: Why It Is Good for Gays, Good for Straights, and Good for America”) links to an op-ed by Steve Lonegan, the Republican mayor of Bogota, N.J., that was published August 19 in The Record.

Rauch excerpts part of Lonegan’s op-ed:

Historically, gay Americans have struggled for the freedom to live their lives the way they choose in order to pursue happiness. This is the American Dream, the cornerstone of conservative thinking, and it is these principles that make the increasingly influential gay community the conservative movement’s natural ally.

Rauch comments, “Sadly, it is just about impossible to imagine any nationally prominent Republican, gay or straight, make that statement ­as opposed to the kind of statement Sen. Larry Craig made (‘I am not gay’).”

Lonegan’s op-ed was written in response to “the passing of a constituent, friend and fellow conservative who also happened to be gay.” In it, he proposes a bargain to be struck among religious conservatives and gay Americans: “Gays shouldn’t expect government to foist acceptance of their lifestyle on others; religious conservatives shouldn’t expect gays to abandon an integral part of their being.” Lonegan also writes:

Barry Goldwater once remarked that government cannot pass laws to “make people like each other.” His words still ring true today. Labeling people “homophobes” or “bigots” if they refuse to accept the entire gay agenda creates political fractures that work against individual liberties and serve to keep gay voters in the Democratic Party’s political ghetto.

The Republican Party must reestablish its commitment to the rights of the individual while respecting the moral code of one subset and upholding the freedom of another.

August 31, 2007, 10:13 am

The ‘He Never Proposed’ Defense

By Chris Suellentrop

Tags: Gay Rights, Larry Craig

Conservatives have begun making a few limited defenses of Sen. Larry Craig of Idaho. Writing at The Corner, National Review’s staff blog, Jonah Goldberg says “Craig’s (alleged) behavior is terrible” but not hypocritical, despite the senator’s voting record on gay marriage and other issues. Goldberg writes:

I’d like someone to walk very slowly through the argument that it’s hypocritical to A) indulge in anonymous gay sex in seedy locations and B) oppose gay marriage. Last I checked, the common definition of hypocrisy involves saying one thing and doing another. Well, Craig wasn’t trying to marry anybody in stall #3 was he?

Goldberg adds, “That being anti-gay marriage and anti-gay are synonymous is a entirely a political argument that people are confusing for a philosophical truth.”

The real hypocrites in this scandal are the Republican senators who have called for Craig’s resignation but not for the resignation of Sen. David Vitter, Republican of Louisiana, who admitted to using the services of an escort: “from any social-conservative calculus (or at least my social-conservative calculus) prostitution has to be considered a greater social evil than cruising for gay sex in bathrooms,” Douthat writes.

Douthat criticizes “the unfortunate extent to which socially-conservative politicians have focused their fire on gays, because opposing gay rights was for a long time an 80-20 issue for the Right (though no longer), while studiously ignoring the various beams in heterosexuals’ eyes.”

Douthat concludes that “[i]t’s a hard pattern to break, but the G.O.P. could find worse places to start than making sure that Vitter shares whatever political fate awaits Larry Craig.”

***********************************

August 30, 2007, 3:36 pm

Novak: I Knew It Was You, Fredo

By Chris Suellentrop

Tags: Alberto Gonzales

Now he tells us! Seven years after his first meeting with Alberto Gonzales, Robert Novak relays the news that “several Republican senators” believed in 2001 “that Gonzales was not qualified for a senior government position.” Novak writes in his Washington Post column:

I met Gonzales for the first time in 2001 when, along with other conservative journalists, I went to the White House for a background briefing on the new president’s judicial nominations by presidential counsel Gonzales. I was stunned by the incoherence of the briefer. After checking with several Republican senators, I received the same verdict. Their judgment was that Gonzales was not qualified for a senior government position.

***********************************

August 30, 2007, 9:58 am

Craig’s Next Move

By Chris Suellentrop

Tags: Larry Craig

In its third consecutive daily editorial about Senator Larry Craig, the Idaho Statesman editorial page asks Craig to resign.

“It is difficult and unpleasant to call on Idaho’s senior senator to end a career in public service. We don’t do this casually, or unanimously,” the editorial states. It continues:

However, we cannot abide an elected official who didn’t disclose a lewd conduct arrest until the story broke 77 days later — a lie by omission and a violation of the public trust. We cannot believe Craig can effectively serve Idaho, under the shadow of his guilty plea on a lesser charge of disorderly conduct. We cannot afford, as a state with but four congressional representatives, to have a senator who merely provides fodder for bloggers and late-night talk show hosts.

“Worse still, Craig’s credibility has eroded within the power structure in Washington, D.C.,” the editorial argues, later adding, “He will no longer be a spokesman for his causes, from immigration reform to seeking federal dollars for Idaho projects. He will always be seen — even if no one is so coarse as to say it — as that senator involved in that weird arrest at an airport restroom renowned as a pickup spot for anonymous sex.”

Even if Craig’s public image is now “an incomplete caricature,” by staying in office “he is contemplating a future that just doesn’t exist,” the editorial says. “The longer it takes for him to face the facts, the longer the interests of Idaho are marginalized.”

Craig has responded to the stories about his arrest by “operating from a defensive state of denial,” the editorial says. It adds, “If Craig wishes to keep his secrets, he may do so as a former U.S. senator.”

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Katrina All the Time

By PAUL KRUGMAN

Published: August 31, 2007

Two years ago today, Americans watched in horror as a great city drowned, and wondered what had happened to their country. Where was FEMA? Where was the National Guard? Why wasn’t the government of the world’s richest, most powerful nation coming to the aid of its own citizens?

What we mostly saw on TV was the nightmarish scene at the Superdome, but things were even worse at the New Orleans convention center, where thousands were stranded without food or water. The levees were breached Monday morning — but as late as Thursday evening, The Washington Post reported, the convention center “still had no visible government presence,” while “corpses lay out in the open among wailing babies and other refugees.”

Meanwhile, federal officials were oblivious. “We are extremely pleased with the response that every element of the federal government, all of our federal partners, have made to this terrible tragedy,” declared Michael Chertoff, the secretary for Homeland Security, on Wednesday. When asked the next day about the situation at the convention center, he dismissed the reports as “a rumor” or “someone’s anecdotal version.”

Today, much of the Gulf Coast remains in ruins. Less than half the federal money set aside for rebuilding, as opposed to emergency relief, has actually been spent, in part because the Bush administration refused to waive the requirement that local governments put up matching funds for recovery projects — an impossible burden for communities whose tax bases have literally been washed away.

On the other hand, generous investment tax breaks, supposedly designed to spur recovery in the disaster area, have been used to build luxury condominiums near the University of Alabama’s football stadium in Tuscaloosa, 200 miles inland.

But why should we be surprised by any of this? The Bush administration’s response to Hurricane Katrina — the mixture of neglect of those in need, obliviousness to their plight, and self-congratulation in the face of abject failure — has become standard operating procedure. These days, it’s Katrina all the time.

Consider the White House reaction to new Census data on income, poverty and health insurance. By any normal standard, this week’s report was a devastating indictment of the administration’s policies. After all, last year the administration insisted that the economy was booming — and whined that it wasn’t getting enough credit. What the data show, however, is that 2006, while a good year for the wealthy, brought only a slight decline in the poverty rate and a modest rise in median income, with most Americans still considerably worse off than they were before President Bush took office.

Most disturbing of all, the number of Americans without health insurance jumped. At this point, there are 47 million uninsured people in this country, 8.5 million more than there were in 2000. Mr. Bush may think that being uninsured is no big deal — “you just go to an emergency room” — but the reality is that if you’re uninsured every illness is a catastrophe, your own private Katrina.

Yet the White House press release on the report declared that President Bush was “pleased” with the new numbers. Heckuva job, economy!

Mr. Bush’s only concession that something might be amiss was to say that “challenges remain in reducing the number of uninsured Americans” — a statement reminiscent of Emperor Hirohito’s famous admission, in his surrender broadcast, that “the war situation has developed not necessarily to Japan’s advantage.” And Mr. Bush’s solution — more tax cuts, of course — has about as much relevance to the real needs of the uninsured as subsidies for luxury condos in Tuscaloosa have to the needs of New Orleans’s Ninth Ward.

The question is whether any of this will change when Mr. Bush leaves office.

There’s a powerful political faction in this country that’s determined to draw exactly the wrong lesson from the Katrina debacle — namely, that the government always fails when it attempts to help people in need, so it shouldn’t even try. “I don’t want the people who ran the Katrina cleanup to manage our health care system,” says Mitt Romney, as if the Bush administration’s practice of appointing incompetent cronies to key positions and refusing to hold them accountable no matter how badly they perform — did I mention that Mr. Chertoff still has his job? — were the way government always works.

And I’m not sure that faction is losing the argument. The thing about conservative governance is that it can succeed by failing: when conservative politicians mess up, they foster a cynicism about government that may actually help their cause.

Future historians will, without doubt, see Katrina as a turning point. The question is whether it will be seen as the moment when America remembered the importance of good government, or the moment when neglect and obliviousness to the needs of others became the new American way.

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Lafayette’s 250th: Iraq Aside, We’re Still Grateful to France

By CLYDE HABERMAN

Published: August 31, 2007

Relations between the United States and France seem to have climbed out of the musty sub-basement where they had lingered since the start of the Iraq war.

Of course, many here still resent France, perhaps because it deemed the war a bad idea several years before most Americans came to the same conclusion; few people love a premature realist. But in the main, the days of Bordeaux boycotts and “freedom fries” Babbitry are over, thanks in part to the ascension of a pro-American French president, Nicolas Sarkozy.

With France no longer the bogeyman it once was, permit us to note that next Thursday, Sept. 6, is the 250th anniversary of the birth of a fellow who, for Americans, may be the most significant Frenchman not named Gérard Depardieu. That would be Marie Joseph Paul Yves Roch Gilbert du Motier. Without his help during the Revolutionary War, we might all be eating bangers and mash.

You probably know him better as the Marquis de Lafayette, though over time he preferred Lafayette, plain and simple.

A soldier from the age of 14, he volunteered his services to the Continental Congress, fought the British as a member of George Washington’s army and became Washington’s lifelong friend. He arrived on these shores, ready to do battle, when he was all of 19. Those were the days.

In a rare action, Congress made Lafayette an honorary American citizen five years ago. But do many people have a sense of him? Not judging from a recent survey by the New-York Historical Society.

That quaintly hyphenated organization dispatched summer interns to different neighborhoods, including two of the streets in the city named for Lafayette, in Manhattan and in Brooklyn. The interns, history students at U.C.L.A., asked dozens of people what they knew about the old boy. The responses boiled down to: Lafayette, we are clueless.

“Definitely among the younger generation, not a soul knew who Lafayette was,” said Louise Mirrer, the historical society’s president. Even older New Yorkers offered responses like “Never heard of him” or at best, if they were really on the ball, “Sounds French.”

“But one fireman knew quite a lot,” Dr. Mirrer said. “That was reassuring.”

Most likely, Lafayette’s birthday will come and go with few New Yorkers taking note. The historical society intends to keep him in the public eye, though, with an exhibition planned for mid-November. The focus will be less on Lafayette’s Revolutionary War exploits than on a 13-month return journey that he began in 1824, 10 years before his death.

That trip, through all 24 states that then formed the United States, began at Castle Clinton in Lower Manhattan. It was a landmark event, said Richard Rabinowitz, who is the exhibition’s curator, working with his wife, Lynda B. Kaplan, a media producer. The United States was in the early stages of figuring out what it thought of itself as a nation, Mr. Rabinowitz said, and Lafayette gave the process a caffeine-like jolt.

There he was, Washington’s buddy, showing up at age 67 and “schlepping around 6,000 miles of the United States,” Mr. Rabinowitz said. “This was like a return of your grandfather’s sidekick” — and with the sidekick telling people at each stop that “we were doing everything right.”

“If Europeans complain that Americans are too self-congratulatory,” he said, “they can blame Lafayette.”

We were doing everything right? Uh, wasn’t there a little detail known as slavery? Lafayette indeed considered it “a blight on the country,” Mr. Rabinowitz said. But “he thought it would disappear, that it was incompatible with American liberty.”

With his pre-Sarkozy affection for America, Lafayette was lionized. Wherever he went, Ms. Kaplan said, there were parades, banners, dinners and what can only be called, in perfect non-French, tchotchkes: ceramic bowls and plates, brushes, snuffboxes, children’s shoes, all bearing his image or scenes of his visit.

“This was really the beginning of the T-shirt craze,” Mr. Rabinowitz said.

He was joking. But maybe we should be grateful that all this took place more than 180 years ago. Today, you’d have “I ♥ Lafo” T-shirts and the like. There’s just so much that anyone should have to take.

E-mail: haberman@nytimes.com

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New Worries for Small Banks

By FLOYD NORRIS

Published: August 31, 2007

For America’s small banks, the changing financial landscape of the last decade meant that many opportunities were no longer available. The big national banks went after consumer lending and came to dominate the market for credit cards. Lending to big companies had long since migrated away from local banks.

What was left? Real estate. That included home mortgages, of course, but in that business there was more and more competition from independent mortgage brokers and from national companies that packaged the loans and sold them to investors. The banks’ share of such mortgage lending was still large, but it was declining.

Still, one part of the real estate picture remained dominated by local financial institutions: lending to local land developers. It was a market where local knowledge mattered.

A result has been a steady increase in commercial real estate loans, particularly loans secured by raw land that a developer plans to build on.

By the middle of this year, 15 percent of the assets of smaller financial institutions in the United States — defined as those with less than $1 billion in assets — were in construction loans, quadruple the proportion a few years ago.

Now, the banks that were most dependent on that strategy are being questioned by investors — in some cases to the irritation of bank executives who say they are being tarred by fallout from lending excesses in which they had no part.

“Everything about Colonial is speculation, and rumor and fear,” Robert E. Lowder, the chief executive of Colonial BancGroup, a bank holding company based in Montgomery, Ala., complained in a conference call this week.

Of Colonial’s $15.5 billion in loans, 42 percent are construction loans. Most are in Florida, where the real estate boom has faltered.

“Everybody’s down on Florida,” Mr. Lowder said. “Everybody thinks Florida is going to fall into the Gulf of Mexico. Trust me, Florida is still a great place to be.”

The chief executive of another bank heavy in construction loans, the Las Vegas-based Community Bancorp, was in New York this week assuring institutional investors that they should not worry. “We’re doing great,” the executive, Edward M. Jamison, said in an interview. “We see a lot of vitality in our markets.”

With home prices falling and mortgage delinquencies rising in many areas, banks now feel a need to prove their loans are safe. Mr. Jamison emphasized that his bank lent to commercial, not residential developments, principally strip malls. Mr. Lowder, whose bank does finance residential developments, said it had avoided speculative projects.

Few construction loans are behind in interest payments, but that fact may be less reassuring than it seems, since many such loans do not require payments until the project is completed.

Bank regulators are at least a little worried. The Federal Deposit Insurance Corporation keeps track of banks that are heavily dependent upon commercial real estate loans — either because construction loans are greater than the capital of the bank or because total commercial real estate loans, including mortgages on commercial properties, are at least three times the bank’s capital. By this June, 37 percent of all banks met one or both criteria, triple the figure of a decade ago.

Early last year, the regulators proposed new rules on such loans, but the watered-down policy that finally came out did little more than to warn that “rising commercial real estate loan concentrations may expose institutions to unanticipated earnings and capital volatility in the advent of adverse changes in commercial real estate markets.”

In the stock market, banks with such concentrations have done a little worse than other banks this year. Short-interest on those stocks is up sharply, a sign that hedge funds think banks will end up owning a lot of vacant real estate, having to pay taxes on land that brings in no income.

Mr. Jamison, the Las Vegas banker, scoffs at such a forecast.

“It would,” he told me, “be almost a perfect storm to have a meltdown in the real estate market.”

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In Need of Relief, the Mets Find None

Paul Lo Duca walking off the field after
Tadahito Iguchi scored the winning run in the ninth.

By HARVEY ARATON

Published: August 31, 2007

Philadelphia

Billy Wagner’s 45th and final pitch yesterday, about 20 too many under normal circumstances, was smacked by Chase Utley past the outstretched glove of Carlos Delgado and into right field, taking with it the last vestige of the Mets’ firm control of the National League East.

They have a precarious two-game lead over the surging Phillies, is what they have, all they have, after being swept here in a four-game-series brew of bad performance and worse luck. Beyond that, they have three games in more hostile and typically, for them, unhappy territory, Atlanta, starting tonight, among other urgent issues.

Foremost among them: no reliable setup man for the closer, Wagner. No fireballing phenomenon to pitch by his own rules, like the one currently electrifying the Bronx every couple of days.

In the aftermath of a crushing 11-10 Mets defeat here yesterday, a game they should have won, needed to win, deserved to win, was the inescapable feeling that in the now likely event of a divisional race to the end of September, no Joba for the Mets equals mission improbable.

Hyperbole in the wake of calamity? Perhaps, but the sight of Wagner, alone in the middle of a largely vacant Mets clubhouse and also in accepting the blame for perhaps the worst regular-season defeat of the Omar Minaya-Willie Randolph regime, somehow made Manager Randolph’s decision to use Wagner for two innings simultaneously cautious and desperate.

Under the circumstances and given his alternatives, you could say it was the only choice he had.

“That’s what he gets paid to do,” Randolph said, noting that Wagner hadn’t pitched in the series. “He was ready for it.”

Mind you, not that he volunteered for it.

“Told,” Wagner said to the question of whether he had made a request to start the eighth with the Mets just having been gifted five runs on two hits by the Phillies’ bullpen for a 10-8 lead. But because Wagner, as much as anyone in the Mets’ clubhouse and more than most, is a standup guy, he also said: “I should be able to do that.”

The result, on the other hand, spoke for itself.

Due south from where Joba Chamberlain and the Yankees were tidying up in the Bronx, sweeping the Red Sox in a comparatively brisk 3 hours 1 minute, American League baseball came here in all its messy, excruciating glory, exactly four hours’ worth that saw the Mets spot the Phillies leads of 5-0 and 8-5 and still have a four-game divisional lead in their closer’s hand, albeit that one crucial inning earlier than usual.

In effect, Randolph was subscribing to the Bill Jamesian approach of going with his strength when the situation most demanded it. He could have used Aaron Heilman, but the Phillies had Utley, Pat Burrell and Ryan Howard due up and Heilman, after too many untimely home runs surrendered this season, inspires little confidence.

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Pedro Feliciano, another candidate from the coalition of the willing but not entirely able, had already pitched two innings. Guillermo Mota was no doubt dismissed as detrimental to the condition of Randolph’s stomach after the roller coaster he’d ridden.

Much better last season while on performance-enhancing drugs, Mota has been Minaya’s least admirable maneuver during his three years as general manager. In fact, the bullpen Mota was re-signed to fortify now threatens all the fine work done by Minaya in putting the Mets on the postseason map.

He allowed the very useful Chad Bradford to slip away to Baltimore last winter and was unlucky with the health of Duaner Sánchez. He made a shaky call on Ambiorix Burgos at the expense of a useful pitcher, Brian Bannister. Scott Schoeneweis has been a certifiable bust.

When it all shook out yesterday, when Randolph considered the consequences of losing after the Mets had climbed out of a rare hole dug by Orlando Hernández, he called on Wagner and said, It’s all on you.

Wagner proceeded to give up Burrell’s second home run of the game with one out in the eighth and a two-out walk to Aaron Rowand, elevating his pitch count past 20. In the ninth, Jayson Werth dunked a single into left field, and stole second and third without a throw. Wagner needed a strikeout against Tadahito Iguchi but didn’t have enough left in the tank to get it. Iguchi singled to left and stole second too. Jimmy Rollins was walked intentionally. Here came Utley. There went two games in the standings, from four to two.

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There, in all likelihood, went Wagner’s availability tonight in Atlanta, where the Mets will start a rookie call-up from New Orleans tomorrow and where Pedro Martínez will meet them today for a bullpen session that will determine the next step in his return from surgery last summer.

Unfortunately for the Mets, he won’t be staying — in the bullpen, that is. That’s not his job, and, worse, there is no Joba.

E-mail: hjaraton@nytimes.com

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Go West, Old Man

By DAVID BROOKS

Published: August 31, 2007

Every year we go to the beach, and every year it becomes more obvious that beach vacations are a metaphor for the human predicament. For while in his soul the contemporary man seeks to realize the loftiness of his essential nature, in actual life he finds himself whacking a ball against the windmill arm in an eternal game of mini-golf.

Middle-aged man seeks the spiritual grandeur of a mountain vacation, but is trapped in the saltwater taffy of a beach vacation. He seeks to ride a dude ranch horse among whispering pines and timberline silences, but society is structured such that he finds himself in a piercingly loud ski-ball arcade surrounded by “Party Like a Rock Star” T-shirts and eating a funnel cake.

Not that there is anything wrong with funnel cake. It is the only food left that hasn’t been captured by the Alice Waters/Whole Foods set.

Nobody is making organic, locally grown, zero-carbon-footprint funnel cake.

Still, man seeks something more. And so I repeat my theme: No decliningly virile American man should be content with a beach vacation when a mountain vacation is more in keeping with his inner longing. No middle-aged man of a certain girth should be wearing bathing trunks around adolescents when he could be wearing riding chaps around livestock.

We all, you see, have two summer selves.

Our greater summer self is the mountain self, which is spiritually and physically robust, in a Robert Redford/Horse Whisperer sort of way. Our lesser self is our beach self, which is a banal bimbo-ized version of the person we think we are.

Our beach self munches on cheese fries while browsing through “You Were Better-Looking on MySpace” T-shirts along boardwalks that are basically strip malls of unnecessary objects. Our beach self suffers from sandzheimers syndrome, which is manifested by the tendency to spend hours staring at oncoming waves while making scientific observations like, “Here comes a big one.”

Our beach self is ruled by a spiritual Gresham’s law — every aspiration becomes three degrees trashier than it used to be.

Once, kids were lobbying for a pet dog. Now they are lobbying for a pet hermit crab.

Once, adults were hoarding blue-chip stocks. Now they are hoarding 4,500 video arcade prize tickets in hopes of getting a dayglo Megadeth poster.

It even infects northern Europeans. It was on beaches there that I first came across the menace of Belgian cultural hegemony — the tendency to take everything erotically charged and make it boring. For it is on northern European beaches that middle-aged burghers unaccountably strip off their clothes. If you want to do permanent damage to your libido, go watch 1,000 aging Germans eat bratwurst naked on the beach.

If Vincent van Gogh had taken beach vacations, we wouldn’t have the masterpieces dotting the museums of the world. Instead, van Gogh would have discovered body surfing. He would have concluded, without any actual evidence, that he was really good at body surfing. He would have imagined that people along the shore were admiring his form as he got pounded into the sand. Instead of “Bedroom at Arles,” we’d have a pale guy nursing a piña colada and showing off his chest abrasions.

I think it was Abraham Joshua Heschel — after he broke off with Reinhold Niebuhr and formed Jefferson Airplane — who observed that though the ancients counseled, “Know Thyself,” in 87 percent of actual cases, profound self-knowledge is not transforming. It’s just disappointing.

And this is never more true than when the beach self takes over. There is a boardwalk game near where we vacation where you roll balls into holes to try to get your mechanical horse across a track faster than your 11 opponents. You pay a dollar a game and if you win you get a stuffed horse worth 75 cents. My beach self has played that game for 15 years, and I have never once gotten up without secretly wishing I was playing again.

In my heart, I’d be happy to play that game 11 hours a day at the cost of several thousand dollars, and the only thing preventing me is that the Slovakian girl behind the counter might conclude that American men are pathetic.

Is this really the way we want to spend the summers of our lives? Am I going to spend every August of my declining years sitting on broiling sands feeling inferior to the lifeguards? In fact, probably.

It’s the human predicament.

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A Return to the Mother of Conflicts

By ROGER COHEN

Published: August 30, 2007

WASHINGTON

The sources of global frustration with the Bush administration have been many and varied, but its refusal over several years to get serious about the Israel-Palestine conflict has ranked high. To dream some path led from Baghdad to Jerusalem was always upside-down foolishness.

So President George W. Bush’s discovery last month that “Iraq is not the only pivotal matter in the Middle East” was encouraging, as was his tacit relegation of the “road map” to nowhere. The Bush endgame, like Clinton’s, is going to see a push for a resolution of the mother of all conflicts.

R. Nicholas Burns, the under secretary of state for political affairs, told me a “supreme effort to help Israelis and Palestinians define a framework for Palestinian statehood” is to be made. “We don’t rule out Palestinian statehood, certainly not, within the term of this presidency,” he said.

The convocation of a conference in the United States in November ups the ante and demonstrates that the incremental has been supplanted by a thrust for the finish line.

Is this just a hopeless lunge for the history books from a lame-duck administration undone by Iraq? Bush, swagger stripped, is weak. Ehud Olmert, the Israeli prime minister, may be even weaker. The Palestinians are split, the region radicalized by Iran rising and Iraq fissuring.

But low expectations are a diplomat’s ally. It may seem foolish to speak of exhaustion in a conflict with such proven regenerative capacity. Yet that is what a senior U.S. official found recently in the region, alongside a conviction that “it’s time to change the Israeli-Arab equation.”

In fact, that equation has already changed. The Palestinian national movement and global jihadism are distinct, but to the extent the former has been permeated by the latter it has redoubled the determination of Palestinian pragmatists like President Mahmoud Abbas and his prime minister, Salam Fayyad, to deliver.

Regular Abbas-Olmert meetings of late are one sign of this. The Israelis like Fayyad, a manager and doer. Radicalizing currents are such that people see “this opportunity may not materialize again,” Burns argued.

Another shift involves Iran’s growing influence — in Shia-dominated Iraq, in Lebanon through Hezbollah and in Gaza through Hamas. The Shia crescent makes Sunni states jumpy. Israel is Iran’s enemy. The enemy of an enemy can be a friend.

“Most, if not all the Sunni countries, see Iran as disturbing, unhelpful and violent,” Burns told me. “It’s a hard question whether they now see Iran as more dangerous than Israel. But most of these states understand that Israel is not a threat to them while Iran might be.”

To coax Gulf countries to reach out to Israel — a Saudi presence with Israel at the November conference is a core U.S. strategic aim — the United States is readying a multibillion-dollar military aid package for them. It needs Congressional approval that will not come easily.

The package “says to the Iranians and Syrians that the United States is the major power in the Middle East and will continue to be and is not going away,” Burns said. It is designed to strengthen Sunni allies and bolster their conventional deterrence against Iran.

Unlike Clinton in 2000, who tried to coax Yasir Arafat to compromise and hoped Middle Eastern states would follow, Bush is trying to capitalize on Sunni unease to get the region to reinforce the Abbas-Fayyad peace push.

The other side of this approach is confrontation with Tehran. Burns argues there is no other strategic choice if Iran continues to enrich uranium and embrace terrorists.

The price, however, will be Iranian use of surrogates to attempt to sink in blood any Israeli-Palestinian progress. Why not quietly expand existing contacts with Iran in Baghdad to cover all issues?

A decisive political contest has begun. The United States must deliver by November or its conference will be a farce that only feeds the sophisticated Iranian propaganda machine.

Delivering means Saudis at the same table as Israelis: de facto, if not de jure, recognition. It means enough hammering on Israel’s “occupation” — Bush’s word — to enable Abbas-Fayyad to get the West Bank economy moving.

It means sufficient progress on territorial compromise and the principles governing the thorniest issues — Jerusalem and refugees — for Palestinians in Gaza to wonder if they are missing the statehood express.

The Bush administration, in its uncritical war-on-terror embrace of Israel, contributed to Palestinian hopelessness on which Hamas thrived. It can undo that damage only by ushering in hope.

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You are invited to comment at my blog: www.iht.com/passages.

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