Most of my American friends are solidly behind Barack Obama. In an interesting LRB piece, Jonathan Raban explains why…

Even when Obama’s at his most public, firing up an audience at a rally, one notices about him a detachment, a distinct aloofness, as if part of him remains a sceptical and laconic watcher in the wings, keeping his own counsel, as he appears to have been doing since infancy. In more intimate and less artificial circumstances, his capacity for empathy and his innate reserve work in consort. He’s hungry for the details of other people’s lives. He conducts each meeting with his trademark ambassadorial good manners, sussing out his companions and playing his own hand cautiously close to his chest (when he was a state senator in Illinois, he was a leading member of a cross-party poker school). In the heat of a fierce election, he could be mistaken for a writer doing research for a book.

Hillary Clinton, armed with a relentlessly detailed, bullet-pointed position paper for every human eventuality, is a classic technocrat and rationalist; Obama is that exotic political animal, a left-of-centre empiricist. The great strength of his writing is his determination to incorporate into the narrative what he calls ‘unwelcome details’, and you can see the same principle at work in the small print of his policy proposals. Abroad, he accepts the world as it is and, on that basis, is ready to parlay with Presidents Ahmadinejad, Assad and Castro, while Clinton requires the world to conform to her preconditions before she’ll talk directly to such dangerous types. At home, Obama refuses to compel every American to sign up to his healthcare plan (as Clinton would), on the grounds that penalising those who lack the wherewithal to do so will only compound their problems. Where Clinton promises to abolish the Bush education programme known as No Child Left Behind, he wants ‘to make some adjustments’ to it (like moving the standardised tests from late in the school year to the beginning, so that they are neutral measures of attainment, and don’t dictate the syllabus like an impending guillotine).

Raban points to an intriguing video of Obama having dinner with four of his constituents. You can see why people take to him.

From this week’s Economist…

CAPITALISM without bankruptcy, it is said, is like Christianity without hell. With recession looming, the air in America’s bankruptcy courts is thick with brimstone and the coals are being heated in readiness for the many sad souls whose sin was to borrow too much. After several heavenly years, in which bankruptcies fell to record lows, going bust is back. How bad will things get?

If the debt markets are to be believed, companies could be in at least as much trouble as they were in the previous two downturns, in the early 1990s and at the start of this decade, after the dotcom bubble burst. A leading indicator is the spread between yields on speculative “junk” bonds and American Treasury bonds. A year ago, the spread was only about 280 basis points; the long-term average is around 500 points. This month the spread exceeded 800 points for the first time since March 2003, reaching 862 on March 17th…

It’s a deliciously incomprehensible article. At one point, for example, it explains that

the difference between corporate-bond spreads and actual default rates is unusual and hard to explain: on the previous occasions when spreads have exceeded 800 points, the default rate was already 9.43% in 1990 and 5.44% in 2000. That said, the huge amounts of “covenant lite” debt issued in the credit boom of 2005-07, which gives lenders much less power to demand their money back than in the past, may have delayed the moment of default for many underperforming firms. So FridsonVision looked at the ten firms in which spreads exceeded 1,000 points by the smallest amounts. If these were merely victims of irrational pessimism in the market, they ought to be in relatively good shape. In fact, the analysts found plenty of reasons to worry. The companies included household names such as Beazer Homes, Ford and Rite Aid, all of which are “exhibiting classically distressed behaviour of downsizing amid recurring losses.”

And as for the mischief that hedge funds might get up to in the present crisis, well…

In a bankruptcy, a hedge fund could use the voting rights attached to different securities to maximise the overall value of its holdings in the firm at the expense of other investors.

Imagine, for instance, a hedge fund that owns debt secured against a company asset. It may prefer to force the firm into liquidation in order to win that asset rather than engage in a restructuring negotiation that will keep the firm alive. Meanwhile, it can boost its returns by short selling its unsecured debt and its equity. Or suppose that a hedge fund owns credit-default swaps as well as a firm’s debt. If the fund makes enough money from the pay-out of the credit-default swaps, it may prefer to use the voting rights on its debt to ensure that the firm goes bust rather than negotiate a way to avoid bankruptcy.

Got that? Good. Neither have I.

…in 1979, America’s worst commercial nuclear accident occurred inside the Unit Two reactor at the Three Mile Island plant near Middletown, Pennsylvania.