REMEMBERING OPEN OUTCRY TRADING: “There was nothing more exhilarating, and it was a crazy way to make a living. Some of my closest friends are from here. I’d trust them with my life. It was treacherous, and raw unbridled capitalism.”

WELL, THIS IS THE 21ST CENTURY: Transplanting Pig Lungs Into Humans.

PIVOT OR DIVOT: Mickey Kaus: Obama’s 5 Disconnects.

LOOK OUT BELOW! CNBC: Work more, get less in Obamacare ‘cliff.’

RACHEL MADDOW CALLS OBAMA A LIAR.

PROF. BAINBRIDGE ON corporations, contraception, and “reverse veil-piercing.” Which is not as dirty as it sounds.

TAXPROF ROUNDUP: The IRS Scandal, Day 83.

TRYING TO THINK OUTSIDE THE BLUE BOX.

DAN DREZNER: How Come All These Terrorists Are Suddenly Escaping En Masse From Prison Everywhere?

Well, once we inserted the tracking chips, we had to let them escape and rejoin their confederates so we’d know where to target the drones.

UNTRUSTWORTHY NUMBERS: Black Holes At China’s Shadow Banks.

Banks are controlled by the government, with interest rates for both deposits and loans set by fiat. The government also feels free to tell banks how much to lend, and to mandate that they buy government bonds at particular prices. When I went to China in 2010, one of the bankers there told us that a huge chunk of their Tier One capital consisted of special government bonds that couldn’t be sold and paid about 5 percent interest — at a time when inflation was, according to most of the experts I talked to, well above that.

In a Western banking system, you’d expect this to lead to a crisis. But what would that even mean in China? Its currency isn’t convertible, and financial links to the outside world are tenuous. Maybe the government can just keep ordering banks to keep making loans at low interest rates, and declare by fiat that the loans are performing. That seems like a crazy thing to say, but it’s also hard to describe how a crisis would happen.

In the years since I visited China, I’ve asked various experts to explain its banking system to me in a way that makes sense. No one has been able to so far.

The fact that the mechanics of a crisis are hard to sketch out doesn’t mean that the system works well. You know those Chinese ghost cities, the eerie forests of apartment buildings and commercial complexes equipped with everything except people? Those homes are a major store of value for Chinese families. With bank account interest rates fixed, a fledgling stock market full of speculative issues, and few financial connections to the outside world, the Chinese have been forced to look into nonfinancial stores of value for their massive savings rate. Like us, they often choose real estate. But not to rent, because that would devalue the property; the Chinese place a high value on new. No, they buy the houses and keep them empty, as stores of value rather than places to live.

In recent years, China has moved to liberalize things slightly, since obviously it makes no sense to plunge so much of the nation’s investment capital into empty houses and similar “assets.” But this, too, creates issues.

Everybody hates the bust, but the real harm is done in the boom, with capital being diverted to things that don’t make sense, because the boom’s distortions make them seem to make sense.

UNCOMMON KNOWLEDGE: Peter Robinson interviews Tom Wolfe.

AT AMAZON, Back-to-School Deals In Electronics.

Also, today only: Sony Cyber-shot DSC-HX200V Digital Camera, $249.99 (48% off). Amazing what you can get for under $250 now: “Its 18.2MP sensor and 30X optical/60X Clear Image zoom capture breathtaking photos at up to 10fps, plus ultra-stabilized Full HD 1080/60p videos.”

IRS SCANDAL UPDATE: IRS Targeted Existing Conservative Organizations, Too?

MEMBERS OF CONGRESS UPSET THAT OBAMACARE APPLIES TO THEM. Plus, the price of a win-at-any-costs mentality:

The article also provides a useful reminder that what became the PPACA was a draft bill that its supporters never intended to become law. The Senate-passed health care reform bill was intended to serve as the Senate’s contribution to a House-Senate conference that would iron out all the final details. Yet after Scott Brown was elected to the Senate, the Democrats lost their filibuster-proof majority and had to use the Senate bill as the basis for the final law. . . . Because the Senate bill was used as the basis for the PPACA, and only subject to limited reconciliation amendments, there are quite a few provisions were enacted that were not what health care reform supporters wanted. (This likely explains the language at issue with the IRS tax credit rule too.) The problem is that intentions are not law, and if Congress passes an imperfect or ill-conceived statute, it’s still the law of the land.

Someone should be challenging all these waivers in court.

M.I.T. CLEARED OF WRONGDOING IN M.I.T. REPORT.

Some related thoughts from Larry Lessig.

PRIORITIES: SFO Officials Make Citizen Arrests Of Internet Rideshare Drivers. Taxi drivers don’t want the competition, and have enlisted the state to help keep it out.

GLOBAL WARMING HITS CHICAGO: “Things stabilize slowly after the impact of the record and near-record cold over the weekend and more normal summer fishing returns for this lakes section of the Midwest Fishing Report.”

Related: 1,122 Record Cold Temps in the U.S. in one week. It’s not climate. It’s just weather.

DIVISION: Pennsylvania Democrats join the ‘war on coal’ opposition. “More and more Democrats are joining the chorus of opponents to President Obama’s “war on coal.” In addition to West Virginia Democrats, two state lawmakers from Pennsylvania are knocking the federal government for its onerous regulations that have been shutting down coal plants across the country.”

DID I MENTION THAT HE’S A DEMOCRAT, AND CLOSE TO THE CLINTONS? Conflicting accounts about Anthony Weiner’s 2011 text flirtation with high school girl.

Weiner’s collapsing mayoral campaign has suffered communications problems of its own. After a Weiner intern described the campaign as rife with staff departures, non-payment of workers and lying in an article for the New York Daily News Tuesday, Weiner’s communications director shot back in an interview with Talking Points Memo, calling the intern a “twat,” “bitch,” “cunt” and “slutbag.”

Charming. Oh, but look at this: Huma to take “break” from job with Hillary. Just more collateral damage in the Democrats’ War On Women. But at least he’s not talking about binders or anything.

JAMES TARANTO: Hypocrisy and Hypergamy: Behind the Huma-Hillary double standard. “So Hillary is admired and Huma maligned because Hillary married better. Isn’t feminism wonderful?”

PAUL AND CHRISTIE ARE SCRAPPING, BUT SCOTT WALKER JUST CHUGS ALONG: Wisconsin Among Best in Nation in Economic Outlook.

FEELING THE HOPE AND CHANGE YET? Pro Publica: Charting Obama’s Crackdown on National Security Leaks. “Despite promises to strengthen protections for whistleblowers, the Obama administration has launched an aggressive crackdown on government employees who have leaked national security information to the press.” It’s the Omerta Administration.

ROLL CALL: Obama’s ‘Grand Bargain’ Tax Plan Is Hard Sell to GOP. “Lawmakers regarded President Barack Obama’s latest attempt to engage them on an economic proposal as largely irrelevant Tuesday, with neither Democrats nor Republicans viewing it as an actual step forward toward breaking their ongoing budget impasse.” Well, largely irrelevant describes Obama himself at this point. He hasn’t been much of a legislative negotiator. And now people don’t trust him to keep his promises anyway.

DETROIT IS NOT AN ANOMALY, JUST AHEAD OF THE CURVE: Chicago Is In Big Trouble. “In addition to the pension, law enforcement, and emergency response concerns that remind us of a certain bankrupt city across the lake, the report notes that three of Chicago’s four largest private employers (JP Morgan, Accenture LLP, and Northern Trust) are in finance. It seems like blue cities have a codependent relationship with the one percenters progressives claim to hate. It hasn’t all hit the fan quite yet, but Chicago seems perilously close to real trouble. The city is all out of money, and with an imploding public education system and harrowing levels of violence, it is losing residents fast.”