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July 2009

Bruce Bartlett Argues Against a Second Stimulus

He writes:

We do not need a second stimulus plan: As the US unemployment rate has risen to 9.5 per cent from 8.1 per cent since the $787bn fiscal stimulus package was enacted in February, many Democrats have become very nervous. They say that another large stimulus may be needed to keep unemployment from rising.... Another stimulus would be a grave mistake. The first one was justified by extraordinary circumstances. But it must be given time to work. People should not allow their impatience to lead to the adoption of policies that will not only fail to reduce unemployment this year, but could stoke inflation in the not-too-distant future....

The forecast also showed the unemployment rate peaking at 8 per cent with the stimulus and 9 per cent without. Obviously this was wrong. Yet it would be incorrect to conclude that the stimulus was doomed to failure, as many Republicans and conservative economists argued.... [T]he Romer-Bernstein document presents reasonable estimates of how quickly different forms of spending would raise gross domestic product. Tax cuts and government transfers are slow to have an effect and have a low multiplier, raising GDP less than $1 for every $1 increase in the deficit even when fully effective after two years. By contrast, government purchases stimulate growth much more quickly and have a higher multiplier, raising GDP by $1.57 for every $1 spent. Unfortunately, the low-impact spending has been the fastest to come online while the high-impact spending is dribbling out very slowly.

In a recent report to the International Monetary Fund, Doug Elmendorf, Congressional Budget Office director, looked at the rates of spending for different components of the stimulus package. He estimates that by the end of fiscal year 2009, which falls on September 30, 32 per cent of the income transfers for things such as food stamps and extended unemployment benefits will have been spent and 31 per cent of the tax cuts will have been disbursed. By the end of fiscal year 2010 virtually all of the money allocated to these programmes will have been spent.

However, just 11 per cent of the discretionary spending on highways, mass transit, energy efficiency and other programmes involving direct government purchases will have been spent by the end of this fiscal year. Even by the end of 2010 less than half the funds will have been disbursed and by the end of 2011 more than a quarter of the money will be unspent. Consequently, it is hardly surprising that five months after the stimulus bill passed it has not yet affected the unemployment rate....

What all this means is that it is foolish to think that any sort of stimulus that is enacted now will have an impact on the economy any time soon. We just have to wait for the medicine we have already taken to work. Pushing ahead with another stimulus will only make it harder to tighten fiscal policy down the road to keep inflation in check.

It's a balance of risks. Any second stimulus package passed this fall would have little impact on the economy until late 2010, that is true. But come late 2010 we might really need more demand to curb unemployment. On balance the inflationary risks of having an extra stimulus hit the economy in late 2010 if it is not needed are outweighed by the deflationary risks of not having an extra stimulus hit the economy in late 2010 if it is needed.

It is like driving a car with its windshield painted black by looking in the rear view mirror.


Second Stimulus Program...

Last December I said that a $1 trillion stimulus looked appropriate but that the incoming administration should get a second stimulus into the budget resolution, with appropriate triggers so that it would be sprung if things turned out to be worse than we then expected.

If the Obama administration had done so, right now we wouldn't be trying to persuade a political system that a stimulus designed for an 8% peak unemployent recession is too small for the 10% unemployment recession we have--let alone the 12% peak unemployment recession we fear.

I wish I weren't so smart...

Laura Tyson adds her voice to the good guys:

naked capitalism: Submitted by Edward Harrison of Credit Writedowns. Laura Tyson, an advisor to President Barack Obama, said in a speech to day in the lead up to the –8 conference that the ground work for a potential second stimulus bill must be laid now. To be sure, the G-8 leaders are expected to recommend continued policy accommodation worldwide. However, Vice President Joe Biden recently suggested that the Obama Administration has no plans for a second stimulus bill on the political TV show Meet the Press (transcript here).  So, which is it – stimulus or no stimulus?

The U.S. should consider drafting a second stimulus package focusing on infrastructure projects because the $787 billion approved in February was “a bit too small,” said Laura Tyson, an adviser to President Barack Obama.

The current plan “will have a positive effect, but the real economy is a sicker patient,” Tyson said in a speech in Singapore today. The package will have a more pronounced impact in the third and fourth quarters, she added, stressing that she was speaking for herself and not the administration.

Tyson’s comments contrast with remarks made two days ago by Vice President Joe Biden and fellow Obama adviser Austan Goolsbee, who said it was premature to discuss crafting another stimulus because the current measures have yet to fully take effect. The government is facing criticism that the first package was rolled out too slowly and failed to stop unemployment from soaring to the highest in almost 26 years.

Obama said last month that a second package isn’t needed yet, though he expects the jobless rate will exceed 10 percent this year. When Obama signed the first stimulus bill in February, his chief economic advisers forecast it would help hold the rate below 8 percent.


Retiring TARP Warrants: Obama's Treasury Makes a Significant Mistake

Whether or not you think that it is good for the system for banks to buyback the preferred-stock investments that the Treasury has made through the TARP program, there is no argument at all that it is good for the system to buy back the equity warrants: we want banks to have more equity capital right now, not less. If you don't want the U.S. government holding them, sell them on the open market. But don't retire them until the financial crisis is two years past.

There's at least one chance in ten that the banks will hit the wall again sometime in the next couple of years if the recession turns out to be worse than forecast, and we may once again be desperate to have the banks have as much equity as possible.

And I haven't even reached the issue of what price the warrants should be valued at: just don't do it.

David Mildenberg:

U.S. TARP Warrant Plan Favors Banks, Professor Says: Policy makers want to speed the withdrawal of the government from the banking industry, rather than attempt to maximize returns for the taxpayers by waiting for share prices to rise, Washington banking lawyer William Sweet of Skadden, Arps, Slate, Meagher & Flom said last week. “The president has clearly stated that his objective is to dispose of the government’s investments in individual companies as quickly as is practicable,” the Treasury statement said. The Obama administration gave approval in June for 10 of the biggest U.S. banks, including JPMorgan Chase & Co., Goldman Sachs Group Inc. and Morgan Stanley, to repay $68 billion of TARP funds. When the money was first obtained, banks had to give the Treasury preferred stock plus warrants to buy stock at a future date at a specific price, called the strike price.

Wilson values JPMorgan’s warrants at $1.55 billion using the traditional method of determining how much the stock may gain in the next decade, compared with $1.33 billion set by Treasury, he said. The strike price for JPMorgan is $42.42, about 25 percent higher than yesterday’s closing price of $34.11 in New York Stock Exchange composite trading. Banks will have 15 days after retiring government stakes to propose a “fair-market value” for the warrants, the Treasury said last week. Should officials object to the estimate, up to three “independent advisers” will help set a price. If lenders don’t make an offer, the warrants will auctioned.

Negotiations as planned by Treasury open the door to political favoritism and corruption, Simon Johnson, an economist at Massachusetts Institute of Technology, said in an interview. Johnson favors public auctions. “The question is why wouldn’t you sell these on the open market and the answer is that the banks would probably lose,” he said. Treasury is bound by contracts with the banks that set out a specific negotiating process, spokesman Andrew Williams said.

Valuing the warrants may rile Congress because lawmakers including Sen. Jack Reed, a Rhode Island Democrat, have warned Treasury Secretary Timothy Geithner not to let banks buy back government stakes at discount prices. “I will be watching closely to ensure Treasury’s pricing system works both fairly and efficiently for the benefit of taxpayers,” Reed said in a June 26 statement. At least 10 smaller banks have negotiated warrant buybacks with Treasury, including First Niagara Financial Group Inc., which paid $2.7 million, according to a statement this week. It’s among the best prices Treasury has received so far, equal to 65 percent of what the warrants were actually worth, compared with an average of 48 percent for the 10 previous repurchases, Wilson said.


Jonathan Chait Tells David Broder and All the Other Clubby, Groupthinking Mediocrities of the Republican Press Corps What He Thinks of Them

Jonathan Chait:

David Broder Isn't Laughing: In his column yesterday, David Broder called Minnesota Senator Al Franken "the loud-mouthed former comedian." Needless to say, given the authorship, this is a conventional view, though Broder has expressed it with unusual vehemance. What should we suppose this swipe means? It doesn't, or shouldn't, mean that Franken is insufficiently versed in public policy. Franken is a hard-core wonk. Paul Krugman writes:

Al Franken’s dirty secret is that … he’s a big policy wonk. I used to go on Franken’s radio show, all ready to be jocular — and what he wanted to talk about was the arithmetic of Social Security, or the structure of Medicare Part D.

I've had the same experience.

Second, David Broder is hardly a policy wonk himself. Indeed, like many political writers, he thinks elected officials who focus too much on the details of public policy ridiculous. Here he was discussing Al Gore in 2000:

In tone and substance, Vice President Al Gore's acceptance speech on the final night of the Democratic National Convention was like nothing I have heard in 40 years of covering both parties' quadrennial gatherings.

Usually these acceptance speeches are attempts to take you to the mountaintop and show you the future. Gore's was more a request to step inside a seminar room, listen closely and take notes....

I have to confess, my attention wandered as he went on through page after page of other swell ideas, and somewhere between hate crimes legislation and a crime victim's constitutional amendment, I almost nodded off.

Broder's condescension has nothing to do with Franken's command of public policy. It's about decorum, self-seriousness, clubbiness, and other qualities prized by official Washington.

In the course of praising Franken, Rick Hertzberg expressed his long-standing preference for more Senators of genuine intellect and debating skill:

We would be better off as a country if more senators were cut from the Franken cloth, even if the ideological balance remains unchanged. Must we have right-wing senators who, rather than admit that there are problems that tax cuts and “free markets” can’t solve, would have the icecaps melt, the seas boil, and the coasts drown? Very well, then, but let them be conservatives whose brain waves are not completely flat and who have spent their professional lives doing something worthier than flattering local realtors, hating the life of the intellect on principle, and regurgitating Heritage Foundation talking points.

I think the Washington establishment, with its preference for clubby, groupthinking mediocrities, would find such a prospect horrifying.


Arthur Burns in the 1970s...

Sounding a little bit like the fish in The Cat in the Hat: "'This is not a good game!' said the fish to the cat...":

Each temporary surge in inflation was quickly followed by--or in the case of the mid-1970s oil shock inflation cycle roughly coincident with--an increase in unemployment. Each cycle in the late 1960s and 1970s was larger than the one before: unemployment peaked at around 6 percent in 1971, at about 8.5 percent in 1975, and at nearly 10 percent in 1982-83. Congress attempted to legislate full employment. Federal Reserve chair Arthur Burns pushed back: “[The] Humphrey-Hawkins [proposal]... continues the old game of setting a target for the unemployment rate. You set one figure. I set another figure. If your figure is low, you are a friend of mankind; if mine is high, I am a servant of Wall Street.... I think that is not a profitable game...” (Wells (1994))


Burning Chrome...

Greg Farrell:

Former Goldman employee accused of cyber-theft: Law enforcement officials in the US arrested a former Goldman Sachs employee over the July 4 holiday weekend, accusing him of stealing sensitive automated trading codes and uploading them to a server based in Germany. Sergey Aleynikov, a computer programmer who joined Goldman in May 2007 and resigned last month, was arrested late Friday as he disembarked from a flight at Newark International Airport and charged the next day with theft of trade secrets and transfer of stolen property.

According to an affidavit filed by a Federal Bureau of Investigation agent in the matter, Mr Aleynikov – who held the title of vice-president at Goldman before leaving June 5 – was part of a team that developed and improved the software codes used in the firm’s computerised trading programs. Mr Aleynikov was bound by Goldman’s standard confidentiality agreements. The FBI affidavit alleges Mr Aleynikov, after accepting the offer from his new firm – which has yet to be identified – downloaded approximately 32 megabytes of proprietary trading platform data from his desktop computer at work as well as his laptop at home on four separate occasions between June 1 and June 5, his last day at Goldman.


The William Kristol Harmonic Convergence

Whiskey Fire, Attaturk:

Rising Hegemon: Let's hear it for unintentional humor!: Thers found this first, but this Bill Kristol protest of Todd Purham's Vanity Fair piece on Sarah Palin and Bill Kristol's need to take part in a daisy chain with Rich Lowry is a classic example of self-immolation:

Is there any real chance that "several" Alaskans independently told Purdum that they had consulted the Diagnostic and Statistical Manual of Mental Disorders? I don’t believe it for a moment. I’ve (for better or worse) moved in pretty well-educated circles in my life, and I’ve gone decades without “several” people telling me they had consulted the Diagnostic and Statistical Manual of Mental Disorders.

Bill, if your circle was in the habit of consulting the DSM-IV, you'd never be able to leave the house because of the restraining orders. In fact, you might want to clue Krauthammer, the psychiatrist, to its existence because I'm pretty sure the guy hasn't read anything on the topic since Carl Jung (or was it Carl Hungus?) died.

The Economit:

The curse of Bill Kristol | Democracy in America | Economist.com: WHAT'S the killer insult in Jonathan Martin's piece about the continuing battle over Sarah Palin's role in the 2008 election? The article is full of them, but this one from Steve Schmidt, John McCain's campaign manager, really stings:

I'm sure John McCain would be president today if only Bill Kristol had been in charge of the campaign. After all, his management of Dan Quayle’s public image as his chief of staff is still something that takes your breath away.

How vindictive is this? Bill Kristol, as the editor of the Weekly Standard, did more than almost any magazine editor in 1999 and 2000 to build up John McCain as a serious politician, not just a military hero (those guys often falter in presidential bids), but an innovative foreign-policy thinker who could shape the future of the Republican Party. He carried water for the 2008 campaign like a sherpa, even defending Mr McCain's disastrous decision to "suspend his campaign" during the financial crisis: "If the race is between an energetic executive and an indecisive talker, the energetic executive should win."

So Mr Kristol was the perfect press ally for Mr McCain. He's also somewhat dangerous for Republicans. The vanquished 2008 candidate had a fly-by-night attitude that led to all kinds of bad decisions—the campaign suspension, the pick of Mrs Palin, the idiotic month of campaigning with Joe the Plumber. He's irrelevent to the next Republican renaissance, but Mr Kristol is very relevant, and everything he says about Republicans—on strategy, foreign policy, health care, and probably the best way to pick a cantelope—is taken seriously. If Mr Schmidt is trying to warn Republicans, good luck with that: Mr Kristol has the stage. 

Glenn Greenwald, October 12, 2008:

Bill Kristol in a nutshell: On October 5, [2008] Bill Kristol used his New York Times column to describe his telephone interview with Sarah Palin, during which they both agreed that the McCain/Palin campaign must attack Obama harder on his "associations," particularly with Bill Ayers. He ended his column this way:

I asked at the end of our conversation whether Palin, fresh off her own debate, had any advice for McCain. . . . "Have fun. Be yourself, and have fun. And Senator McCain can do the same.” She paused, and I was about to thank her for the interview, but she had one more thing to say. “Only maybe I’d add just a couple more words, and that would be: ‘Take the gloves off.’ ”

And maybe I’d add, Hockey Mom knows best.

On October 7, Kristol went on Fox News and urged McCain to use Bill Ayers to attack Obama in the debate:

I disagree with all of the advice that McCain is getting. . . . You have to talk endlessly about the economy. These attacks on Obama on Bill Ayers and possibly Reverend Wright don't matter. I don't agree with that. . . . McCain has got to tie the economic crisis to Obama's character and judgment and say:  "who do you want in charge for four difficult years, who is up to the job -- is this inexperienced, liberal Democrat who has hung out with some pretty unsavory characters, is he the guy who you want him to run the country?" I think that's got to be the core of McCain's message tonight.

Though McCain didn't bring it up in the debate, since then, the campaign has followed Kristol's advice, talking about Ayers more than any other single topic.  But now that it is conclusively clear that these attacks are failing -- that they are actually backfiring and making Obama more popular and McCain and Palin more unpopular -- Kristol went on Fox News this morning and attacked the McCain campaign for running what he called a "stupid campaign" and "a pathetic campaign" because the attacks "haven't worked" and they're "doing things that don't work and they keep doing them" -- without ever bothering to mention that he, Kristol, just last week, was one of the loudest and most vocal advocates for relying on these character attacks against Obama:

That's typical Bill Kristol -- not only chronically wrong about everything, but far worse, completely incapable of acknowledging mistakes.  He just suppresses them, pretends they don't exist, and in that regard is the perfect face for the right-wing movement that is dying a painful, harsh and profoundly well-deserved death in front of everyone's eyes.  

What we're seeing in this video is just the start of the angry recriminations in this movement as they seek to blame each other for what has happened.  As John Cole puts it:  "The coming circular firing squad is going to be fun."  It's also likely to be protracted, bitter and brutal.  Looking around at the utter destruction they've sown -- to our Constitution, to our economy, to our standing in the world, and to multiple other countries -- that is the only just outcome.


Coffee Drinking Mice!

Isn't science wonderful:

BBC NEWS | Health | Coffee 'may reverse Alzheimer's': Drinking five cups of coffee a day could reverse memory problems seen in Alzheimer's disease, US scientists say. The Florida research, carried out on mice, also suggested caffeine hampered the production of the protein plaques which are the hallmark of the disease....

The 55 mice used in the University of South Florida study had been bred to develop symptoms of Alzheimer's disease. First the researchers used behavioural tests to confirm the mice were exhibiting signs of memory impairment when they were aged 18 to 19 months, the equivalent to humans being about 70. Then they gave half the mice caffeine in their drinking water. The rest were given plain water. The mice were given the equivalent of five 8 oz (227 grams) cups of coffee a day - about 500 milligrams of caffeine. The researchers say this is the same as is found in two cups of "specialty" coffees such as lattes or cappuccinos from coffee shops, 14 cups of tea, or 20 soft drinks.

When the mice were tested again after two months, those who were given the caffeine performed much better on tests measuring their memory and thinking skills and performed as well as mice of the same age without dementia. Those drinking plain water continued to do poorly on the tests. In addition, the brains of the mice given caffeine showed nearly a 50% reduction in levels of the beta amyloid protein, which forms destructive clumps in the brains of dementia patients. Further tests suggested caffeine affects the production of both the enzymes needed to produce beta amyloid. The researchers also suggest that caffeine suppresses inflammatory changes in the brain that lead to an overabundance of the protein.

Earlier research by the same team had shown younger mice, who had also been bred to develop Alzheimer's but who were given caffeine in their early adulthood, were protected against the onset of memory problems. Dr Gary Arendash, who led the latest study, told the BBC: "The results are particularly exciting in that a reversal of pre-existing memory impairment is more difficult to achieve. They provide evidence that caffeine could be a viable 'treatment' for established Alzheimer's disease and not simply a protective strategy. That's important because caffeine is a safe drug for most people, it easily enters the brain, and it appears to directly affect the disease process."

The team now hope to begin human trials...

I would be happy to volunteer


Jo Walton on Spearpoints

From "The Dyer of Lorbannery":

papThe Dyer of Lorbannery: There comes a point in writing, and it's a spear-point, it's very small and sharp but because it's backed by the length and weight of a whole spear and a whole strong person pushing it, it's a point that goes in a long way. Spearpoints need all that behind them, or they don't pack their punch in the same way. Examples are difficult to give because spear-points by their nature require their context.... They tend to be moments of poignancy and realization. When Duncan picks the branches when passing through trees, he's just getting a disguise, but we the audience suddenly understand how Birnam Wood shall come to Dunsinane....

[T]he [spear] I used as a title for this -- in The Farthest Shore, a minor character shouts out her name for all to hear. For someone who read that page alone, this would be inexplicable and possibly silly. For someone who has come all the way through Earthsea as far as Lorbannery already, it's terrible and revelatory -- and when Ged does the same thing later, quoting his own name in what Orm Embar says to him, there's an even longer spear-point that goes back to Ged's naming at Ogion's hands near the beginning of A Wizard of Earthsea...


links for 2009-07-06


Robert Shiller, Jeff Madrick, Teresa Ghilarducci, Brad DeLong: Animal Spirits

  1. Introduction3 min 25 sec
  2. Robert Shiller: Why People Didn't Foresee the Crisis4 min 8 sec
  3. Comparing the Current Crisis to The Depression3 min 5 sec
  4. International Economic Fears2 min 38 sec
  5. Obama's Economic Challenge2 min 13 sec
  6. Tracking Changes in Home Prices6 min 26 sec
  7. The Psychology of Bubbles2 min 15 sec
  8. Analyzing Obama's Stimulus Plans5 min 39 sec
  9. Implementing Long-Term Financial Solutions4 min 27 sec
  10. Strategies for Keeping People in Homes4 min 47 sec
  11. Brad DeLong: The Purpose of Financial Markets2 min 25 sec
  12. Problems with Financial Markets2 min 55 sec
  13. Vindicating Shiller's 'Animal Spirits' Theory5 min 9 sec
  14. Why Government Intervention is Necessary6 min 3 sec
  15. Teresa Ghilarducci: Rethinking Retirement Planning2 min 45 sec
  16. The Origins of 41(k) Plans4 min 19 sec
  17. Rethinking Obama's Stance on Retirement Plans3 min 58 sec
  18. Implementing 'Guaranteed Retirement Accounts'2 min 26 sec
  19. Commentary by Jeff Madrick5 min 29 sec
  20. Robert Shiller's Response11 min 48 sec
  21. Q 0 min 8 sec
  22. Q1: Increasing the Size of the Stimulus1 min 53 sec
  23. Q2: Avoiding Another Bubble0 min 49 sec
  24. Q3: Rethinking Housing Subsidies2 min 35 sec
  25. Q4: Implementing Countercyclical Regulation1 min 52 sec
  26. Q5: Regulating Shadow Banks3 min 47 sec
  27. Q6: Nationalizing Banks3 min 41 sec
  28. Q7: Problems with the Auto Bailout5 min 39 sec

Who the "Friends of the People" Are and Why We Bash the Neoconservatives

Matthew Yglesias explains:

Matthew Yglesias: In Defense of Neo-Con Bashing: Greg Djerejian offers up something of a mea culpa and something of a defense against Jeff Weintraub’s charge of “rather tiresome ritual ‘neocon’-bashing which is becoming too much of a reflex in some quarters.”

It’s actually true that neocon bashing is a bit on the tiresome side. That said, I think it really has to be understood as a vital social necessity. Adherents of a deranged and sociopoathic “neocon” conception of America’s role in the world continue to be tremendously influential in our society. They have columns at The Washington Post and dominate the foreign policy coverage on Fox News. They have The Weekly Standard and Commentary and a healthy slice of The New Republic. And most important, as best as anyone can tell their ideas remain utterly dominant in the Republican Party. Their intra-party critics like Colin Powell, rather than winning intra-party arguments seem to be simply drifting out of the GOP coalition.

This is a dangerous situation. In the United States, the opposition party is always one ill-timed recession or political scandal from taking power. So a set of ideas that dominates one such party is something you need to keep a watchful eye on, no matter how marginalized that party may seem at any particular moment.

In other words, if we don't bash them at every opportunity they will be back--more stupid and more destructive than ever. (If we do bash them they will probably be back too, but at least we have a chance...)


joe Biden Misses the Point...

If the Obama fiscal boost program has its anticipated impact on the economy as its main effects take hold over the next year, it is still half the size of the program it now looks like we need. Only if it magically turns out to be twice as strong as we think--only with simple Keynesian multipliers of 3 rather than 1.5--is it the right size.

And, of course, if the situation deteriorates further we will need an even bigger stimulus, while if the situation improves having too-big a stimulus is not a problem because we can soak up the demand through monetary policy.

So Vice President Joe Biden completely misses the point when he says:

I think it's premature to make that judgment [that we need a larger stimulus]. This was set up to spend out over 18 months. There are going to be major programs that are going to take effect in September, $7.5 billion for broadband, new money for high-speed rail, the implementation of the grid -- the new electric grid. And so this is just starting, the pace of the ball is now going to increase.

Of course, he is paid to miss the point. Which is one reason why being Vice President is a really lousy job.

Sam Stein reports:

Biden Ignores Warnings Of Krugman, Stiglitz, Roubini And Others: During his interview with ABC's This Week on Sunday, Vice President Joe Biden made what will be a much-discussed admission in the week ahead. The Obama administration, he said, had "misread" the extent of the economic catastrophe it inherited. "The truth is, we and everyone else misread the economy," declared Biden. "The figures we worked off of in January were the consensus figures and most of the blue chip indexes out there. We misread how bad the economy was, but we are now only about 120 days into the recovery package," the vice president said later in the interview. "The truth of the matter was, no one anticipated, no one expected that that recovery package would in fact be in a position at this point of having to distribute the bulk of money."

Certainly, the Obama administration's acknowledgment that it misjudged the crisis it inherited is rife with possibilities for its political opponents. House Minority Leader John Boehner rapped the White House repeatedly on Sunday for presiding over the loss of more than two million jobs since January. Former Bush strategist Matt Dowd, appearing on the ABC panel after Biden, did much the same. For an Obama White House that, two weeks ago, told the public to measure the success of its policies based on jobs they created, it is difficult to decry these critiques as inherently unfair, regardless of what troubles were passed on from the Bush administration.

But equally problematic is Biden's assertion that "everyone" - not just the White House - was off in their prognostications. This is simply untrue. Host George Stephanopoulos pointed out that "a lot of people were saying that you needed to do something bigger and bolder" when it came to the stimulus package. He named New York Times columnist Paul Krugman as one example. There are many others. The prize-winning Columbia University economist Joseph Stiglitz not only warned that the stimulus was too small during its construction, the day after Obama signed it into law he predicted how its shortcomings would make themselves apparent. "I think there is a broad consensus but not universal among economist that the stimulus package that was passed was badly designed and not enough. I know it is not universal but let me try to explain. First of all that it was not enough should be pretty apparent from what I just said: It is trying to offset the deficiency in aggregate demand and it is just too small," Stiglitz said. "The shortfall in state revenue [is] probably in the order of 150 to 200 billion dollars a year. And the states have balanced budget frameworks so if you follow the newspaper you know the drastic problems that California and New York are in, these are really serious problems and because of their balanced budget frameworks they have to reduce their spending... if their income comes down. So that would be a negative stimulus of 150 to 200 billion unless there is federal aid. And the stimulus package there was a little of federal aid but just not enough. So what we will be doing is we will be laying off teachers and laying off people in the health care sector while we are hiring construction workers. It is a little strange for a design of a stimulus package. You ask, why do you want to hire construction workers and fire teachers. I don't know what is the rationale behind that." Stiglitz was joined by a whole host of liberal economists -- from the University of Texas' James Galbraith to Dean Baker of the Center for Economic and Policy Research -- who warned that the stimulus package inexplicably underestimated the size of the crisis.

Several weeks after the stimulus passed, economist Nouriel Roubini, known affectionately as Dr. Doom, made the case that the administration's approach to stabilizing the economy lacked an effective international component. "You have to have a set of concerted, coherent policies done not just by the U.S. but by Europe, Japan, China and everyone else," he said. "The credit crunch is just massive. One thing that's needed is much more aggressive monetary easing. The second dimension is that you need much more fiscal stimulus -- in the countries that can afford it -- that is front-loaded. The U.S. [stimulus package] is $800 billion, but only $200 billion is front-loaded. Of that $200 billion [in stimulus] this year, half of it is tax cuts. That's going to be a waste of money, because people are not going to spend it." In mid-June, weeks before the latest round of poor job numbers came out, U.C. Berkeley professor and former Clinton administration official Brad DeLong was arguing that "the Obama administration's federal fiscal stimulus programs are on the low side of what is appropriate by a substantial margin. This is the largest economic downturn since the Great Depression and the standard tools of expansionary monetary policy are tapped out and broken right now," he wrote.

The day that June's job numbers came out, meanwhile, Nassim Taleb, principal of Universa Investments and author of 'The Black Swan,' offered a far more grim interpretation of what was transpiring, though one relatively consistent with what he had said in the past. "We're in the middle of a crash," said Taleb during an appearance on CNBC. "So if I'm going to forecast something, it is that it's going to get worse, not better."

Certainly Krugman himself has aired his share of skepticism. In late June, he reminded his readers that his early concerns had not been misplaced. "[S]ome of us warned about what might happen: if unemployment surpassed the administration's optimistic projections, Republicans wouldn't accept the need for more stimulus," he wrote in the Times. "Instead, they'd declare the whole economic policy a failure. And that's exactly how it's playing out. With the unemployment rate now almost certain to pass 10 percent, there's an overwhelming economic case for more stimulus. But as a political matter it's going to be harder, not easier, to get that extra stimulus now than it would have been to get the plan right in the first place. This past week, meanwhile, he declared once more that the Obama stimulus plan, while "better than nothing" needs to be supplemented with something more.

To be fair, the process of economic forecasting is, as Taleb noted in his CNBC segment, an inherently tricky proposition. In October 2008, for instance, Roubini was arguing that the government needed a $400 billion stimulus package, which ended up being just more than half of what the Obama White House settled on.

But among those who were sounding the loudest alarms about the potential inadequacies of the economic recovery plan, the consensus seems to be emerging that more now needs to be done. Later in his ABC segment, Biden - who is responsible for overseeing the stimulus - was asked if a second package was in the offing. No, he replied, without dismissing the possibility outright. "I think it's premature to make that judgment. This was set up to spend out over 18 months. There are going to be major programs that are going to take effect in September, $7.5 billion for broadband, new money for high-speed rail, the implementation of the grid -- the new electric grid. And so this is just starting, the pace of the ball is now going to increase."


Josh Marshall on Sarah Palin: She's Done

The astonishing thing about Sarah Palin is her claim that Sean Parnell will be a better governor of Alaska than she would be.

But in that case, why run for office in the first place? Why did she not simply support Parnell in 2006? My head spins.

Josh Marshall:

She's Done | TPM: TPM Reader MC checks in ...

Am I living in Bizarro world? Does anyone really think that there is any realistic way Palin could be a candidate for President after resigning as governor? Yet pundit after pundit is saying this is a "risky" move that "may pay off". This is absolutely preposterous, and any professional putting such ideas into print should be relegated to writing copy for infomercials. All one needs to do is imagine the campaign ads (Can we Trust S.P. to Finish What She Starts?; Palin Quits When She's Tired, Winners Quit When They're Done; or just string together a few clips from the Mistake by the Lake) to realize there is no recovering from this. This is no wily strategic move; it's running from a scandal.

As I said earlier, I think there's a small chance there's no specific scandal and that Palin is just very mentally unstable. But MC is 100% correct that any pundit who thinks this is some risky but potentially brilliant strategic move is absolutely smoking crack. Hitting the crack pipe, or, just as likely, being witlessly contrarian to set themselves apart from the common herd of sane people. The kinds of ads MC mentions are right on the mark. But they're really only the beginning.

To a degree it goes without saying. But it's worth reviewing just how deeply preposterous Palin's argument yesterday really was when she claimed that she refused to exploit the people of Alaska by serving out her full term.

When you run for governor, as for president, you run for a four year term. You commit, at least implicitly, to serving four years, though many people end up not doing that for various reasons. There's nothing in the implied contract about running for reelection. Indeed it's arguable that the public would be better served by a governor focusing for four years on running the state rather than laying the groundwork for their reelection.

In any case, Gov. Palin, who's served only a little more than half her first term (remember, she was elected in 2006), announces she won't run for reelection. And having decided that she won't run for a second term, she concludes that it would be exploiting the people of Alaska to agree to serve out the remainder of the term they elected her to serve back in 2006. This is apparently because she'll be a lame duck. And, she claims, lame ducks never get anything done and just spend a lot of money going on taxpayer funded junkets. So better to walk away from her job and pass it off to the Lt. Governor who no one hired to do the job at all.

You could keep plumbing the depths of this ridiculousness for some time. But as MC rightly notes it's simply poisonous, toxic, fatal for anyone running for president. Setting side political and policy stances, the one thing really key about a president is that they be steady under pressure, not rash, and not prone to spur of the moment freak outs where they just walk away from the job to go to Disneyland. A lot of nonsense gets knocked around about 'character' in presidential elections. But this is the foundational question of character that really is critical. Assuming this isn't about some soon-to-pop scandal and it's really that Palin just decided on a moment's notice (look at how much preparation went into the press conference to know how long this was in the works) to up and walk away from her responsibilities, that's simply fatal for anyone's presidential chances.

She may resurface as a latter-day Hannity or she may found some Palin-specific Anti-Defamation League dedicated to calling out obscure bloggers who've written mean things about her. But what very little shot she had as a future presidential candidate (and it was a much longer shot than I think many realized) is over. She's done. She's back to what she was -- a small person looking for someone to be angry at.


Froomkin Retrospective

Five things to note:

(1) A strange piece on Fred Hiatt and company's firing of Dan Froomkin from the Washington Post by the Washington City Paper's Erik Wemple, who writes:

Why Did the Washington Post Sack Dan Froomkin?: [J]ust because the Post’s decision wasn’t tainted by neocon ideology and the cowardly calculations of an “establishment media” operation...

This is an odd thing for Erik to assert. For the first attempt to push Dan Froomkin off to the side--the one led by then-ombudsman Deborah Howell and then national political news boss John Harris--was explicitly and unashamedly motivated by neocon ideology and the calculations of an "establishment media" operation. Remember December 2005? How Deborah Howell wrote that:

The Two Washington Posts: Political reporters at The Post don't like WPNI columnist Dan Froomkin's "White House Briefing," which is highly opinionated and liberal...

How Washington Post national political news editor John F. Harris uttered a truly remarkable and bizarre sequence of adjectives about Dan Froomkin over a five-day period:

[Froomkin] invites confusion... dilutes our... credibility... we would never allow a White House reporter... a problem... a liberal prism... not trying very hard to avoid such perceptions... we do not want to spike his column--or at least I don't... an obstacle to our work... tendentious and unfair... no regard for the tradition of objective journalism... Froomkin’s... pompous suggestion... [false claim to be] high priest and arbiter of good journalism... total bullshit... [Froomkin's] comment... a smear on Washington Post reporters... I'm not trying to make this a bigger matter than it is... on-line crankosphere... [Republican operative claim: "Dan Froomkin: Second Rate Hack"] does not seem far-fetched to me...

And how, when NYU Professor Jay Rosen asked John Harris to come up with an example of Froomkin's "bias," Harris came up with was an attack by Patrick Ruffini--Bush-Cheney 2004 Webmaster and at the time eCampaign Director for the Republican National Committee. At the time we wondered: is it really possible that the Washington Post's national political editor really thinks that the Washington Post should be responsive to a claim of liberal bias made by the RNC's eCampaign Director? Is it really possible that the Washington Post's national political editor really does think that the idea that Dan Froomkin is a "second-rate hack" "does not seem far-fetched"? The answers appeared to be "yes."

Now John Harris and Deborah Howell are gone from the Post. The Post honchos have clammed up. But is it really that farfetched to think that Howell and Harris think like the rest of the people at the print Post--who, after all, were hired by the same trio of Graham, Downie, and Hiatt who hired them? And is it really that farfetched to think that people have been waiting in the weeds to fire Dan since?

(2) Having concluded--by overlooking the history here--that Dan Froomkin's firing was a pure business decision, Wemple goes on to say that it was a very bad business decision. An insane business decision. An incompetent business decision by clowns who fundamentally do not understand their industry:

That doesn’t mean it wasn’t dumb, short-sighted, and self-destructive. It was all of those things. The key number in this whole saga... is $500,000-plus. That’s what the Post invested over the years in "White House Watch." That’s what it took to pay someone with the doggedness to mine every last detail about presidential coverage on the Web and turn it into something digestible. And that’s what it took to actuate thousands upon thousands of fans to bookmark Froomkin for as long as he stayed at it. And what a wise investment it was, to judge by the outrage that has spilled onto comments boards around the Web. To fire the guy six months into a new administration... [is] a betrayal of... patient, long-haul planning. As President Obama faces more and more difficult decisions in reforming Washington, he’s bound to alienate the lefty constituency that has formed a crowded party on Froomkin’s platform for more than five years. Three to six months more--that’s all it would have taken for Froomkin to get back to his old traffic neighborhood...

(3) And Wemple then spins his theory of what really went on:

Froomkin, 46, should have seen this coming. He’s just the latest in a series of departures from the Web side of the Post. His first job with the organization was back in 1997, not long after the Post located its online operations in Arlington. Part of the motivation for placing Froomkin and other web people on the other side of the river was to keep their operation from getting swallowed whole by the retrograde print cluster.... Over the past year, top Post officials have decided to merge the print and Web operations. But “merge”... [is] far too mutual a term.... [T]he [web]site’s top talent has either fled or been elbowed aside, including online Publisher Caroline Little, washingtonpost.com Executive Editor Jim Brady, Managing Editor Ju-Don Roberts, multimedia editor Tom Kennedy, and political editor Russ Walker.... [O]nce his contract came up for review, he essentially had to rely on the print team to back him up. Yeah, like that was going to happen...

Because the print Post is incapable of understanding the environment it now lives in:

Froomkin is a new-media animal.... [H]e doesn’t bang the phones all day and attend briefings. [Actually, Dan Froomkin does bang the phones all day. And he does attend briefings--remotely, however.] He does his work by reading and synthesizing what other journalists do. And he does it all from his Tenleytown home! How could a second-hand journalist like this guy become such a force on the Internet? Via constancy. Day in and day out, Froomkin nailed the same themes and the same players--and delivered his package at the same hour, not unlike the evening newspapers of yore. His franchise fused the basic principles of Internet success: define your beat narrowly, post consistently, be passionate. It’s a great formula, and the Post should be proud of having nurtured it. Pretty soon now, it’ll be the asset of whatever organization hires Froomkin to replicate it. The columnist expects to reach a deal with a new employer “within a week or two.”

(4) Another theory--in addition to the ideological-revenge-tastes-best-cold theory and to Wemple's--come from Michael Calderone: that Howard Kurtz did not like Froomkin showing him up:

Michael Calderone: [B]efore management decided to finally pull the plug, editors chose to spike a few Froomkin columns because they fell more on Howie Kurtz’s turf. It's strange that a White House columnist — especially one with a unique audience — would be  discouraged from writing on the WH press corps.  Not to mention, it's not so out of the ordinary to cross over the two beats: Indeed, Post White House correspondent Michael Shear has a media-related item up today...

(5) And Bob Somerby has a somewhat different twist on that theory:

EZRA SI, FROOMKIN NO: Why is Dan Froomkin gone from the Post when they employ other liberals?... [W]e’ve been looking for an excuse to discuss Ezra Klein’s move to the Post. This is a good day for it.... We of course have no way of knowing why the Post has dumped Dan Froomkin.... [But] Dan Froomkin criticizes the press corps. In the press corps, if you’re a liberal, that just isn’t done. Duh. We’ve explained this bone-simple point for years. If there’s one thing you’ll never see Dionne or Robinson do, it’s criticize their cohort—--he coven, the clan. Dionne established this point quite brilliantly all through Campaign 2000. Of course he knew that his cohort was talking all manner of bullsh-t about Gore. (On one or two very tiny occasions, he even tinily said so.) But in the mainstream press corps, liberals don’t discuss the mainstream press. That’s the price of getting those (very good) jobs. It’s also the price of holding them....

This brings us around to the recent hiring of Ezra Klein, a smart young liberal who just may know how to keep his big trap shut. (Froomkin doesn’t do that.) A few years ago, Ezra broke all the rules! Behaving much like Froomkin himself... he described a recent speech by Gore.... By the rules of the Washington mainstream press, this simply cannot be done....

KLEIN (4/06): The address was the keynote for the We Media conference, held at the Associated Press headquarters in New York last October and attended by an audience that included both old media luminaries and new media innovators. In attendance were Tom Curley, president of the AP, Andrew Heyward, president of CBS News, and New York Times columnist Nicholas Kristof, all leading lights of a media establishment that, five years earlier, had deputized itself judge, jury, and executioner for Gore’s 2000 presidential campaign, spinning each day’s events to portray the stolid, capable vice president as a wild exaggerator, ideological chameleon, and total, unforgivable bore...

Ezra was just a kid in those days... And you may recall what happened next. Ezra went on C-Span’s Washington Journal to discuss his cover story. And sure enough! He didn’t say a freaking word.... On C-Span, Ezra didn’t repeat what he’d said--and he never discussed it again. Go ahead: Reread what he wrote. In a rational world, is that remarkable statement the sort of thing a person says just once?...

[W]hy is Ezra at the Post? This is what it says in our novel: Ever since making that rookie mistake, he’s kept his big trap shut. Liberals get to write about policy. They aren’t allowed to tell the truth about the “mainstream” press corps’ conduct. Dionne and Robinson know that rule. They know they must never disrespect it. Froomkin never played by that rule. Today, he’s on the street.


Donald Rumsfeld Uses the Passive Voice

Justin Eliot:

Justin Eliot: Rumsfeld On Abandoning Geneva: 'All Of A Sudden, It Was Just All Happening': "All of a sudden, it was just all happening, and the general counsel's office in the Pentagon had the lead," Rumsfeld told former Washington Post journalist Bradley Graham, as quoted in By His Own Rules: The Ambitions, Successes, and Ultimate Failures of Donald Rumsfeld. "It never registered in my mind in this particular instance--it did in almost every other case--that these issues ought to be in a policy development or management posture. Looking back at it now, I have a feeling that was a mistake. In retrospect, it would have been better to take all of those issues and put them in the hands of policy or management."

[Rumsfeld is talking about] the Bush Administration's decision -- in which Rumsfeld played a key role -- to not grant prisoner-of-war designation to detainees from Afghanistan. In the Department of Defense, which had authority for Gitmo, the policy initially took the form of a since-declassified January 2002 memo, written by Rumsfeld, that said Al Qaida and Taliban detainees "are not entitled to prisoner of war status" under the Geneva Convention. This memo, as Graham puts it, "effectively nullified half a century of U.S. military adherence to the [Geneva] conventions"...

Preschool-age children will resort to the passive voice like this: "the chair got broken." Grownups do so more rarely.


Best 4th of July Weblog Post

From Bully:

Bully Says: Comics Oughta Be Fun!: Flag Day Bonus: Ben Franklin...Plagiarist!: On this patriotic holiday, so you think you know the origin and history of our proud American star-spangled banner? Well, think again, bub! All that the teachers taught you weren't cool! That story about Betsy Ross being bitten by a radioactive starfish and thirteen snakes? Bullhockey propaganda implanted in your puny mind by Commies! Or, maybe the Red Skull. Come to think of it, how can you be sure your kindly history teacher wasn't a Skrull, pallie?!?

No, on this special day, you deserve to know the truth, the whole truth, and nothing but the truth about the true origins of our American flag. And who better to depict that amazing day in American history than the King himself, Jack Kirby? Let's call it: Old Glory: Who She Is and How She Came to Be!

Okay, first, Captain America travelled back in time...wait, wait, work me me on this one:

201CI2019ve been ripped off by Benjamin Franklin!201D 2013 plus marketing etiquette question 2014 Crooked Timber

Hat tip: John Holbo.


links for 2009-07-04


Sarah Palin: Video

Sarah Palin:

Sarah Palin Announces Resignation as Governor, Part 1; Sarah Palin Announces Resignation as Governor, Part 2.

"It was four yeses, and one 'hell yes!'"

An enormous amount of bulls--- here.

But this sounded genuine:

In fact, this decision comes after much consideration, and finally polling the most important people in my life - my children (where the count was unanimous... well, in response to asking: "Want me to make a positive difference and fight for ALL our children's future from OUTSIDE the Governor's office?" It was four "yes's" and one "hell yeah!" The "hell yeah" sealed it - and someday I'll talk about the details of that... I think much of it had to do with the kids seeing their baby brother Trig mocked by some pretty mean-spirited adults recently.) Um, by the way, sure wish folks could ever, ever understand that we ALL could learn so much from someone like Trig - I know he needs me, but I need him even more... what a child can offer to set priorities RIGHT - that time is precious... the world needs more "Trigs", not fewer...


Media Criticism: Scott Eric Kaufman Tears Brent Bozell into Shreds and Gobbets, and then Eats the Gobbets...

Scott Eric Kaufman, last seen in the Washington Post "claiming" to have a Ph.D. in English, tears Brent Bozell into shreds and gobbets, and then eats the gobbets.

SEK:

Google Image Result for http://upload.wikimedia.org/wikipedia/commons/8/83/Shoggoth_by_pahko.jpg

Sorry. SEK:

And the Award for Missing the Point goes to...: ...Brent Bozell, of the ironically named “Media Research Center,” who refuted Oliver Stone’s comment that “Nixon always said Reagan was a dumb son of a bitch” by quoting a number of prominent figures in Reagan’s administration who thought Reagan was really smart...

Bozell to Stone:

“Nixon always said Reagan was a dumb son of a bitch,” you said, and the audience laughed, and you smiled and decided to take that statement further by agreeing with it. So you said, “You know, I think that he was,” and the audience now cheered and hooted and applauded...

SEK:

There are two claims being made here: one, that Nixon thought Reagan was a dumb son of a bitch; two, that Oliver Stone thinks Reagan was a dumb son of a bitch. Unfortunately for Bozell, Nixon illegally taped every conversation he ever had, and when we consult his conversations with Henry Kissenger on the morning of November 17, 1971 [620a.mp3], we learn that while Nixon didn’t use those exact words—about Reagan, at least, since we know he used that particular phrase about everyone from the Canadian Prime Minister, Pierre Trudeau, to the Director of the Secret Service, James Rowley, to one of his own White House aides, Tom Charles Huston—he didn’t think too highly of the Gipper’s wits:

(beginning at 1:33:02): President Nixon: "What’s your evaluation or Reagan after meeting him several times now." Kissinger: "Well, I think he’s a—actually I think he’s a pretty decent guy." President Nixon: "Oh, decent, no question, but his brains?" Kissinger: "Well, his brains are negligible. I—" President Nixon: "He’s really pretty shallow, Henry." Kissinger: "He’s shallow. He’s got no . . . he’s an actor. He—When he gets a line he does it very well. He said, “Hell, people are remembered not for what they do, but for what they say. Can’t you find a few good lines?” That’s really an actor’s approach to foreign policy . . ."

(beginning at 1:46:19): President Nixon: "Back to Reagan though. It shows you how a man of limited mental capacity simply doesn’t know what the Christ is going on in the foreign area. He’s got to know that on defense—doesn’t he know these battles we fight and fight and fight? Goddamn it, Henry, we’ve been at—"...

In other words, the person who misremembered what Stone said in an article somewhere, but doesn’t remember where, who then re-read the article from he-doesn’t-remember-where and promptly forgot where it was again—this person thinks Stone is a lousy historian because he correctly cited Nixon’s sentiments about Reagan and correctly stated that he agreed with Nixon’s assessment. If I were Bozell—and could remember that I was Bozell long enough to cite myself—I wouldn’t be knocking people who don’t claim to be historians for being lousy historians when those same tables could so easily be turned on, say, a “lecturer, syndicated columnist, television commentator, debater, marketer, businessman, author, publisher and activist” who fancies himself qualified to judge who is and isn’t “a real [historian].”


Paying the Piper and Dancing the Tune

The investment banks want the Federal Reserve's lender-of-last-resort support without wanting its regulatory oversight. Sorry guys, it doesn't work that way.

Emanuel Derman, via James Wilmott:

Emanuel Derman's Blog: Are you bicestrian? You don't look bicestrian.: "So many riders in the Tour de France have been tossed out because of drugs, the overall leader is now a delivery guy from Empire Szechuan," joked David Letterman in 2007. Anyone who lives on the Upper West Side of Manhattan knows what it's like to walk across Broadway when the sign says WALK and then narrowly escape being hit by a delivery guy coming through on a bicycle. Or riding the wrong way down a one-way street.

There's a simple explanation. The delivery guys have been given the right at any time to regard themselves as either cyclists or a pedestrians. When the traffic light is green, they regard themselves as vehicles and ride. When the light is red they define themselves as a pedestrian who just happens to have wheels. They can choose whatever is advantageous at any time. Who can blame them? Life is short and they need the money.

I am reminded of this when I read rumors that some of the investment banks want to give up their bank holding company status now that their funding crisis is over.


Sarah Palin's Resignation Speech (Department of "Huh?")

Via Talking Points Memo Sarah Palin:

Full Text Of Palin's Resignation Speech | LiveWire: Hi Alaska, I appreciate speaking directly TO you, the people I serve, as your Governor. People who know me know that besides faith and family, nothing's more important to me than our beloved Alaska. Serving her people is the greatest honor I could imagine.

I want Alaskans to grasp what can be in store for our state. We were purchased as a territory because a member of President Abe Lincoln's cabinet, William Seward, providentially saw in this great land, vast riches, beauty, strategic placement on the globe, and opportunity. He boldly looked "North to the Future". But he endured such ridicule and mocking for his vision for Alaska, remember the adversaries scoffed, calling this "Seward's Folly". Seward withstood such disdain as he chose the uncomfortable, unconventional, but RIGHT path to secure Alaska, so Alaska could help secure the United States.

People who know me know that besides faith and family, nothing's more important to me than our beloved Alaska.

Alaska's mission - to contribute to America. We're strategic IN the world as the air crossroads OF the world, as a gatekeeper of the continent. Bold visionaries knew this - Alaska would be part of America's great destiny.

Our destiny to be reached by responsibly developing our natural resources. This land, blessed with clean air, water, wildlife, minerals, AND oil and gas. It's energy! God gave us energy.

So to serve the state is a humbling responsibility, because I know in my soul that Alaska is of such import, for America's security, in our very volatile world. And you know me by now, I promised even four years ago to show MY independence... no more conventional "politics as usual".

And we are doing well! My administration's accomplishments speak for themselves. We work tirelessly for Alaskans.

We aggressively and responsibly develop our resources because they were created to be used to better our world... to HELP people... and we protect the environment and Alaskans (the resource owners) foremost with our policies.

Here's some of the things we've done:

  • We created a petroleum integrity office to oversee safe development. We held the line FOR Alaskans on Point Thomson - and finally for the first time in decades - they're drilling for oil and gas.
  • We have AGIA, the gasline project - a massive bi-partisan victory (the vote was 58 to 1!) - also succeeding as intended - protecting Alaskans as our clean natural gas will flow to energize us, and America, through a competitive, pro-private sector project. This is the largest private sector energy project, ever. THIS is energy independence.
  • And ACES - another bipartisan effort - is working as intended and industry is publicly acknowledging its success. Our new oil and gas "clear and equitable formula" is so Alaskans will no longer be taken advantage of. ACES incentivizes NEW exploration and development and JOBS that were previously not going to happen with a monopolized North Slope oil basin.
  • We cleaned up previously accepted unethical actions; we ushered in bi-partisan Ethics Reform.
  • We also slowed the rate of government growth, we worked with the Legislature to save billions of dollars for the future, and I made no lobbyist friends with my hundreds of millions of dollars in budget vetoes... but living beyond our means today is irresponsible for tomorrow.
  • We took government out of the dairy business and put it back into private-sector hands - where it should be.
  • We provided unprecedented support for education initiatives, and with the right leadership, finally filled long-vacant public safety positions. We built a sub-Cabinet on Climate Change and took heat from Outside special interests for our biologically-sound wildlife management for abundance.
  • We broke ground on the new prison.
  • And we made common sense conservative choices to eliminate personal luxuries like the jet, the chef, the junkets... the entourage.
  • And the Lt. Governor and I said "no" to our pay raises.

So much success in this first term - and with this success I am proud to take credit... for hiring the right people! Our goal was to achieve a gasline project, more fair oil and gas valuation, and ethics reform in four years. We did it in two. It's because of the people... good public servants surrounding the Governor's office, with servants' hearts and astounding work ethic... THEY are Alaska's success!

We are doing well! I wish you'd hear MORE from the media of your state's progress and how we tackle Outside interests - daily - SPECIAL interests that would stymie our state. Even those debt-ridden stimulus dollars that would force the heavy hand of federal government into our communities with an "all-knowing attitude" - I have taken the slings and arrows with that unpopular move to veto because I know being right is better than being popular. Some of those dollars would harm Alaska and harm America - I resisted those dollars because of the obscene national debt we're forcing our children to pay, because of today's Big Government spending; it's immoral and doesn't even make economic sense!

Another accomplishment - our Law Department protected states' rights - TWO huge U.S. Supreme Court reversals came down against that liberal Ninth Circuit, deciding in OUR state's favor over the last two weeks. We're protectors of our Constitution - federalists protect states' rights as mandated in 10th amendment.

But you don't hear much of the good stuff in the press anymore, do you?

Some say things changed for me on August 29th last year - the day John McCain tapped me to be his running-mate - I say others changed.

Let me speak to that for a minute:

Political operatives descended on Alaska last August, digging for dirt. The ethics law I championed became their weapon of choice. Over the past nine months I've been accused of all sorts of frivolous ethics violations - such as holding a fish in a photograph, wearing a jacket with a logo on it, and answering reporters' questions.

Every one - all 15 of the ethics complaints have been dismissed. We've won! But it hasn't been cheap - the State has wasted THOUSANDS of hours of YOUR time and shelled out some two million of YOUR dollars to respond to "opposition research" - that's money NOT going to fund teachers or troopers - or safer roads. And this political absurdity, the "politics of personal destruction" ... Todd and I are looking at more than half a million dollars in legal bills in order to set the record straight. And what about the people who offer up these silly accusations? It doesn't cost them a dime so they're not going to stop draining public resources - spending other peoples' money in their game.

It's pretty insane - my staff and I spend most of our day dealing with THIS instead of progressing our state now. I know I promised no more "politics as usual," but THIS isn't what anyone had in mind for ALASKA.

If I have learned one thing: LIFE is about choices!

And one chooses how to react to circumstances. You can choose to engage in things that tear down, or build up. I choose to work very hard on a path for fruitfulness and productivity. I choose NOT to tear down and waste precious time; but to build UP this state and our country, and her industrious, generous, patriotic, free people!

Life is too short to compromise time and resources... it may be tempting and more comfortable to just keep your head down, plod along, and appease those who demand: "Sit down and shut up", but that's the worthless, easy path; that's a quitter's way out. And a problem in our country today is apathy. It would be apathetic to just hunker down and "go with the flow".

Nah, only dead fish "go with the flow".

No. Productive, fulfilled people determine where to put their efforts, choosing to wisely utilize precious time... to BUILD UP.

And there is such a need to BUILD up and FIGHT for our state and our country. I choose to FIGHT for it! And I'll work hard for others who still believe in free enterprise and smaller government; strong national security for our country and support for our troops; energy independence; and for those who will protect freedom and equality and LIFE... I'll work for and campaign for those PROUD to be American, and those who are INSPIRED by our ideals and won't deride them.

I WILL support others who seek to serve, in or out of office, for the RIGHT reasons, and I don't care what party they're in or no party at all. Inside Alaska - or Outside Alaska.

But I won't do it from the Governor's desk.

I've never believed that I, nor anyone else, needs a title to do this - to make a difference... to HELP people. So I choose, for my State and my family, more "freedom" to progress, all the way around... so that Alaska may progress... I will not seek re-election as Governor.

And so as I thought about this announcement that I wouldn't run for re-election and what it means for Alaska, I thought about how much fun some governors have as lame ducks... travel around the state, to the Lower 48 (maybe), overseas on international trade - as so many politicians do. And then I thought - that's what's wrong - many just accept that lame duck status, hit the road, draw the paycheck, and "milk it". I'm not putting Alaska through that - I promised efficiencies and effectiveness! ? That's not how I am wired. I am not wired to operate under the same old "politics as usual." I promised that four years ago - and I meant it.

It's not what is best for Alaska.

I am determined to take the right path for Alaska even though it is unconventional and not so comfortable.

With this announcement that I am not seeking re-election... I've determined it's best to transfer the authority of governor to Lieutenant Governor Parnell; and I am willing to do so, so that this administration - with its positive agenda, its accomplishments, and its successful road to an incredible future - can continue without interruption and with great administrative and legislative success.

My choice is to take a stand and effect change - not hit our heads against the wall and watch valuable state time and money, millions of your dollars, go down the drain in this new environment. Rather, we know we can effect positive change outside government at this moment in time, on another scale, and actually make a difference for our priorities - and so we will, for Alaskans and for Americans.

Let me go back to a comfortable analogy for me - sports... basketball. I use it because you're naïve if you don't see the national full-court press picking away right now: A good point guard drives through a full court press, protecting the ball, keeping her eye on the basket... and she knows exactly when to pass the ball so that the team can WIN. And I'm doing that - keeping our eye on the ball that represents sound priorities - smaller government, energy independence, national security, freedom! And I know when it's time to pass the ball - for victory.

I have given my reasons candidly and truthfully... and my last day won't be for another few weeks so the transition will be very smooth. In fact, we will look to swear Sean in - in Fairbanks at the conclusion of our Governor's picnics.

I do not want to disappoint anyone with my decision; all I can ask is that you TRUST me with this decision - but it's no more "politics as usual".

Some Alaskans don't mind wasting public dollars and state time. I do. I cannot stand here as your Governor and allow millions upon millions of our dollars go to waste just so I can hold the title of Governor. And my children won't allow it either. ? Some will question the timing. ? Let's just say, this decision has been in the works for awhile...

In fact, this decision comes after much consideration, and finally polling the most important people in my life - my children (where the count was unanimous... well, in response to asking: "Want me to make a positive difference and fight for ALL our children's future from OUTSIDE the Governor's office?" It was four "yes's" and one "hell yeah!" The "hell yeah" sealed it - and someday I'll talk about the details of that... I think much of it had to do with the kids seeing their baby brother Trig mocked by some pretty mean-spirited adults recently.) Um, by the way, sure wish folks could ever, ever understand that we ALL could learn so much from someone like Trig - I know he needs me, but I need him even more... what a child can offer to set priorities RIGHT - that time is precious... the world needs more "Trigs", not fewer.

My decision was also fortified during this most recent trip to Kosovo and Landstuhl, to visit our wounded soldiers overseas, those who sacrifice themselves in war for OUR freedom and security... we can ALL learn from our selfless Troops... they're bold, they don't give up, they take a stand and know that LIFE is short so they choose to NOT waste time. They choose to be productive and to serve something greater than SELF... and to build up their families, their states, our country. These Troops and their important missions - those are truly the worthy causes in this world and should be the public priority with time and resources and NOT this local / superficial wasteful political bloodsport.

May we ALL learn from them!

((Gotta put First Things First))

First things first: as Governor, I love my job and I love Alaska. It hurts to make this choice but I am doing what's best for Alaska. I've explained why... though I think of the saying on my parents' refrigerator that says "Don't explain: your friends don't need it and your enemies won't believe you anyway."

But I have given my reasons... no more "politics as usual" and I am taking my fight for what's right - for Alaska - in a new direction.

Now, despite this, I don't want any Alaskan dissuaded from entering politics after seeing this REAL "climate change" that began in August... no, we NEED hardworking, average Americans fighting for what's right! And I will support you because we need YOU and YOU can effect change, and I can too on the outside.

We need those who will respect our Constitution where government's supposed to serve from the BOTTOM UP, not move toward this TOP DOWN big government take-over... but rather, will be protectors of individual rights - who also have enough common sense to acknowledge when conditions have drastically changed and are willing to call an audible and pass the ball when it's time so the team can win! And that is what I'm doing!

Remember Alaska... America is now, more than ever, looking North to the Future. It'll be good. So God bless you, and from me and my family - to ALL Alaska - you have my heart.

And we will be in the capable hands of our Lieutenant Governor, Sean Parnell. And Lieutenant General Craig Campbell will assume the role of Lieutenant Governor. And it is my promise to you that I will always be standing by, ready to assist. We have a good, positive agenda for Alaska.

In the words of General MacArthur said, "We are not retreating. We are advancing in another direction."

Huh?


Forensic Table Reading: Bush CEA Forecast Edition

In email, lurkers are questioning my claim that:

Forecasting the Obama Economy: ...what happened to the Mankiw CEA over the winter of 2003-2004, when high politics appears to have reached down into the forecast, changed the table for payroll employment (and only payroll employment: the rest of the forecast is not out of line with contemporary professional forecasts), and produced an estimate for December 2004 (a) inconsistent with the rest of the forecast, and (b) high by 2.3 million in its estimate of payroll employment--all because Karl Rove and company thought it important to avoid headlines like "Bush administration forecasts 2004 payroll employment to be less than when Bush took office." White House Media Affairs would have a much harder time pressuring the forecasters to produce a "rosy scenario" if the pressure has to be kept on month after month [as the Troika forecast is revised, updated, and released at a monthly frequency].

I think that the smoking gun is provided by a little forensic table reading--going through the Bush administration's economic forecasts year-by-year as they were published in the successive versions of the Bush-era CEA's Economic Report of the President, the ERP:

  • In the 2002 ERP, Table 1.1 shows 3.2% growth expected for the next two years gives you 2.9 million jobs--for a forecast labor productivity growth rate of about 2.1% per year...
  • In the 2003 ERP, Table 1.1 shows 3.5% growth expected for the next two years gives you 4.4 million jobs--for a forecast labor productivity growth rate of about 1.8% per year...
  • In the 2004 ERP, Table 3.1 shows 3.7% growth expected for the next two years gives you 6.2 million jobs--for a forecast labor productivity growth rate of about 1.3% per year...
  • In the 2005 ERP, Table 1.1 shows 3.4% growth expected for the next two years gives you 4.1 million jobs--for a forecast labor productivity growth rate of about 1.8% per year...
  • In the 2006 ERP, Table 1.1 shows 3.3% growth expected for the next two years gives you 3.8 million jobs--for a forecast labor productivity growth rate of about 1.9% per year...
  • In the 2007 ERP, Table 1.1 shows 3.0% growth expected for the next two years gives you 3.3 million jobs--for a forecast labor productivity growth rate of about 1.8% per year...

The forecast rate of labor productivity growth over the next two years or so is a relatively stable variable. It starts at an annual rate of 2.1% in the first Glenn Hubbard ERP, and then Glenn and company drop it to 1.8% the next year as they become less optimistic about productivity growth in the aftermath of the collapse of the high tech bubble. Thereafter the Bush CEA forecast assumes a labor productivity growth rate of 1.8% - 1.9% in every year save one: the 2004 ERP, issued at the start of 2004, drops the labor productivity growth rate to 1.3% (and the 2005 ERP raises it back up to 1.8%).

Was there anything in the economic data that would make one much more pessimistic about labor productivity growth in early 2004 and only early 2004? No.

But assuming a 1.8% labor productivity growth rate at the start of 2004 would have meant that the forecast average level of employment in Tqble 3.1 for 2004 would have been lower than the level of employment when Bush took office, and that would have created a point of political vulnerability. There were two ways to fix this that would have satisfied White House Media Affairs: (i) reformat the table so that it no longer reports an annual average payroll employment number, or (ii) push assumed labor productivity growth down because if you keep GDP the same but reduce labor productivity arithmetic forces your forecast to produce higher employment.

Why the Bush CEA didn't pick option (i) is something I have never understood...


http://www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf

http://www.gpoaccess.gov/usbudget/fy04/pdf/2003_erp.pdf

[Workbook2]Sheet1 Chart 1


Origins of the Current Financial Crisis

In which Barry Ritholtz encounters the unreliable Stan Liebowitz saying very strange and very false things about the mortgage market:

Zero Down Is a Foreclosure Factor: There is a kind of weird OpEd in today’s WSJ by Stan Liebowitz. The professor makes the incredible discovery that zero down payments, 100% LTV financings tend to slide in great numbers into foreclosure.... This is analysis by gross over-simplification. Not quite reductio ad absurdum, but close. Unfortunately, it leads to conclusions that are at best only partially correct. And that conclusion? The problem has been Prime, not sub-prime loans....

Here is where things get weird: I can’t verify many of [Liebowitz's] data points. They don’t square with the data I review via RealtyTrac or Mortgage Bankers Association or Bloomberg. (I assume the professor meant we had 4.3m foreclosures since Q3 2006, not during). As to prime versus sub-prime, it appears the Mortgage Bankers Association, data dispute the professor’s. Jay Brinkmann, chief economist for the MBA, noted in May 2009 that in 2008, prime, fixed-rate loans were only 19% of foreclosure starts nationwide, while Subprime adjustable-rate mortgages were 39%. More recently, the two levels have come together: prime loans are up to 29% of foreclosure starts while subprime adjustables came down to 27%.

But reporting only in percentages can be misleading. As Floyd Norris noted in August of 2008, “There are far more prime mortgages than subprime, of course, and subprime loans are much more likely to get into trouble. But this does show how the foreclosure problem is spreading.” Agreed. But the claim that during this crisis it has been Prime and not Subprime is simply unsubstantiated by the timeline or data. Subprime went bad first, then Alt-A, and then prime followed it later. Sub-prime and Alt-A went bad due to poor lending standards; Prime went bad in part due to job losses and as the economy got worse...


The Wall Street Journal Editorial Page: Paul Krugman Asks a Question I Have Never Heard a Good Answer to...

Paul Krugman wonders:

Secrets of the WSJ: This morning’s Wall Street Journal opinion section contains a lot of what one expects to see. There’s an opinion piece making a big fuss over the fake scandal at the EPA. There’s an editorial claiming that the latest job figures prove the failure of Obama’s economic plan — something I dealt with in the Times. All of this follows on yesterday’s editorial asserting that the Minnesota senatorial election was stolen.

All of this is par for the course; the WSJ editorial page has been like this for 35 years. Nonetheless, it got me wondering: what do these people really believe? I mean, they’re not stupid — life would be a lot easier if they were. So they know they’re not telling the truth. But they obviously believe that their dishonesty serves a higher truth — one that is, in effect, told only to Inner Party members, while the Outer Party makes do with prolefeed.

The question is, what is that higher truth? What do these people really believe in?

The best conversation about this I ever heard was one I was not supposed to hear. But it was very entertaining to listen to.

As I remember--and since I didn't write down notes afterwards, I may have some details wrong--I was seated at lunch in Washington DC, and at the table immediately behind me were then-representative Charlie Stenholm (D-TX) and Senator Judd Gregg (R-NH). They started talking about why the WSJ editorial page was what it was. They settled on the conclusion that the Journal editorial writers thought that their role was to make not the strongest but rather the most persuasive case for lower taxes and Republican candidates in every circumstance--that they had a duty not to inform their readers, not even to make the truest arguments for the side that they had been hired to support, but rather to make the arguments for the side they had been hired to support that would strengthen that side the most by convincing the most people.

Then they went on to the second level: why did the rest of the Wall Street Journal allow this? Robert Bartley's (and now Paul Gigot's) editorial page was, they agreed, not good for the self-respect of the Bancroft family, and certainly not good for the reputation of the journalists at the news pages. One of them raised the possibility that the editorial page gets subscribers whose money can be used to subsidize the news pages, and that the news pages think that without the editorial page they would be unable to finance their high-quality news operation. But then they settled on the answer: Robert Bartley had pictures, pictures of senior Dow-Jones executives, pictures of senior Dow-Jones executives doing things that belong on Judge Alex Kozinski's website...


A Post-Modern Media Revenue Model...

And Lindsay Beyerstein has quotes:

Washington Post's pay-to-play flyer : Spirited? Yes. Confrontational? No. The relaxed setting in the home of Katharine Weymouth assures it. What is guaranteed is a collegial evening, with Obama administration officials, Congress members, business leaders, advocacy leaders and other select minds typically on the guest list of 20 or less....

Offered at $25,000 per sponsor, per Salon. Maximum of two sponsors per Salon. Underwriters’ CEO or Executive Director participates in the discussion. Underwriters appreciatively acknowledged in printed invitations and at the dinner. Annual series sponsorship of 11 Salons offered at $250,000 … Hosts and Discussion Leaders... Health-care reporting and editorial staff members of The Washington Post... An exclusive opportunity to participate in the health-care reform debate among the select few who will actually get it done.... A Washington Post Salon... July 21, 2009 6:30 p.m....

Does anybody have a .pdf of the sponsorship-request "flyer" itself? I would appreciate one very much...


washington-post-white-house-health-care-lobbyists.png 800ձ035 pixels


Does John McCain Have a Legitimate Place in American Politics? I Say No

This is why:

Michelle Goldberg on Sarah Palin:

Is She a Narcissist?: On Thursday, CBS News had a small scoop.... After McCain’s chief strategist, Steve Schmidt, rejected a request by Palin to reply to a report that her husband, Todd, had been a member of the secessionist Alaska Independence Party, Palin came forward with a preposterous excuse.... Secession, she insisted—despite all available evidence—is not part of the party’s platform, and besides, Todd “was only a 'member' bc independent alaskans too often check that 'Alaska Independent' box on voter registrations thinking it just means non partisan. He caught his error when changing our address and checked the right box. I still want it fixed." A clearly exasperated Schmidt wrote back that secession is the AIP’s “entire reason for existence. A cursory examination of the Web site shows that the party exists for the purpose of seceding from the union. That is the stated goal on the front page of the Web site. Our records indicate that Todd was a member for seven years. If this is incorrect then we need to understand the discrepancy. The statement you are suggesting be released would be inaccurate.”

Despite such rebukes, and her punchline status in much of the country, Palin’s self-conception appears undiminished.... Her seemingly irrational faith in herself might not be totally misplaced, especially if other Republicans keep self-destructing at their current rate. That’s because while Palin is unhinged, so is much of her competition. Politics has always attracted the deeply screwed up, but our current political system seems to do so more than most. Perhaps that’s because healthy people looking to make their mark on the world don’t want to subject themselves to the inquisitorial media attention or crushing vapidity of modern campaigning.... Success in our politics often requires a voracious, antinomian egotism, a sense that rules are for others.

The Alaska governor shares the personality flaws of many of her male peers, but by all accounts she doesn’t express them via the preferred method of politicians like John Edwards or Mark Sanford—by being sexually reckless. The United States has grown more blasé about sex scandals post Bill Clinton, but they remain more damaging than, say, dishonesty, greed, or naked incompetence.

Palin may have gone rogue on John McCain, had public feuds with her grandson’s teenage father, turned on loyal aides, flubbed interviews, spent tens of thousands of dollars of other people’s money on clothes, and told countless lies, but as far as we know she hasn’t cheated on her husband. If congenital narcissists dominate our politics, Palin may be just the narcissist the GOP needs.


links for 2009-07-03


Underbelly: Bring Me the Blog of Dan Froomkin

Buce:

Underbelly: Bring Me the Blog of Dan Froomkin: Look, I know this is comic book silly, but no sillier than the whole episode. Now that we know thaat the Washington Post was willing to sell its good name for a crappy 25k, is there any chance we have insight into the real reason behind the (otherwise bafflingly stupid) Dan Froomkin firing? I mean, could it be that some ill-wisher said he'd drop a quarter of a big on in the till if Dan would just go? And the publisher said yessiree bop? Might be fun to see the rest of the price list here. How much are they asking for Krauthammer? Meanwhile, somebody needs to tell Katharine Weymouth that there's a difference between doing it for a few friends and doing it for money.


No, It Is Not a Sine Wave

FT.com / US / Economy & Fed - Jobs data dash recovery hopes

Krishna Guha and Sarah O’Connor in Washington, Michael Mackenzie in New York and Ralph Atkins in Luxembourg write:

Jobs data dash recovery hopes: Published: July 2 2009 13:47 | Last updated: July 2 2009 21:49: Stock markets on both sides of the Atlantic tumbled on Thursday as investors took fright at a bigger-than-expected fall in US jobs last month that dashed hopes the recession was all but over in the world’s biggest economy. The data showed that the number of people in employment fell 467,000 in June and the unemployment rate rose from 9.4 per cent to 9.5 per cent, its highest for 26 years...

But what reason was there to hope that the recession was all but over in the first place? Just that the recent curve looked somewhat like a sine wave?


Krishna Guha: Please Discipline Your Headline Writers!

Krishna Guha to the orange courtesy phone, please.

The headline over your article is:

Romer Upbeat on US Economy

The quotes from the Hon. Christina D. Romer are:

  • We do not want to repeat the mistake Japan made in the 1990s, when the moment things started to improve they tightened policy...

  • [Stimulus spending is] going to ramp up strongly through the summer and the fall. We always knew we were not going to get all that much fiscal impact during the first five to six months. The big impact starts to hit from about now onwards...

  • [Stimulus spending] should make a material contribution to growth in the third quarter...

  • I am more optimistic that we are getting close to the bottom...

  • I still hold out hope it will be a V-shaped recovery. It might not be the most likely scenario, but it is not as unlikely as many people think. We are going to get some serious oomph from the stimulus, there is the inventory cycle, and I believe there is some pent-up demand by consumers...

If that is what the FT calls "upbeat," what would be "downbeat"? "CEA Chair Romer advised Americans to stockpile bottled water, ammunition, gasoline, and sewing needles; and to start training for the Thunderdome"?

FT.com / US / Economy & Fed - Romer upbeat on US economy: The US economy will feel a substantial boost from the Obama administration’s emergency spending package over the next few months, says Christina Romer, a senior White House official, who has warned against tightening monetary and fiscal policy before recovery is well established. Ms Romer, chairman of the US president’s council of econ omic advisers, told the Financial Times in an interview she was “more optimistic” that the economy was close to stabilisation. But while hopeful that America could yet experience a V-shaped recovery, she said it was much too soon to begin tightening policy: “We do not want to repeat the mistake Japan made in the 1990s, when the moment things started to improve they tightened policy.”

Meanwhile, David Axelrod, a senior White House adviser, told NBC Television on Sunday the administration would be open to further stimulus if needed. “Let’s see in the fall where we are, but right now we believe what we have done is adequate to the task. If more is needed, we’ll have that discussion.”

Ms Romer’s comments come as opposition Republicans step up their attacks on the $787bn fiscal stimulus, pointing out that it has not prevented unemployment from hitting a quarter-century high of 9.4 per cent. Ms Romer said stimulus spending was “going to ramp up strongly through the summer and the fall. We always knew we were not going to get all that much fiscal impact during the first five to six months. The big impact starts to hit from about now onwards,” she said.

Ms Romer said that stimulus money was being disbursed at almost exactly the rate forecast by the Office of Management and Budget. “It should make a material contribution to growth in the third quarter.” But she acknowledged that cutbacks by states facing budget crises would push in the opposite direction. Ms Romer said the latest economic data were encouraging, following a weaker patch a month ago. “I am more optimistic that we are getting close to the bottom,” she said.

The CEA chairman, who has forecast a sharper rebound in 2010 than most economists, said she had lowered her estimates for growth this year “and also for next year, a bit” since the start of the year. She said the consensus forecast that unemployment would continue to rise for the rest of this year and peak early next year was probably accurate. But she added: “I still hold out hope it will be a V-shaped recovery. It might not be the most likely scenario but it is not as unlikely as many people think. We are going to get some serious oomph from the stimulus, there is the inventory cycle and I believe there is some pent-up demand by consumers.”


Fifty Little Herbert Hoovers Watch

The Economist's free exchange:

Fifty little Hoovers, hoovering up stimulus: MATTHEW YGLESIAS makes a good point:

Reading Harold Meyerson’s column on the looming devastation of California public services was yet another reminder of the remarkable extent to which the terrible continuing economic situation has bizarrely dropped off the political agenda. Even the whole “green shoots” debate is really about whether we can expect things to be somewhat better or somewhat worse six months out from now. In either case, things really are really bad right now. And a whole bunch of states—including large ones like California and Pennsylvania—are soon to implement substantial cutbacks in services at just the time when the objective need for social services is going up.

The American economy appears to be nearing the end of contraction. That's good news, particularly when one considers that only about 10% of the funds authorised in this year's stimulus bill has been spent; the plan is only beginning to ramp up and outlays will peak in 2010. We should expect that injection to provide the economy with a nice boost at a critical time.

On the other hand, state budget policies are sharply contractionary at this point. Despite allocations of federal aid to states, services are being cut, state employees are being laid off, and taxes are being raised in order to balance the budgets of local governments constitutionally unable to run deficits. It's not at all clear that the federal stimulus will entirely compensate for state-level fiscal tightening, which means that American fiscal policy could, on net, be contractionary.

Easy money is doing its part, of course, but the bottom line is that the fiscal boost many are expecting may not actually materialise. This will end up causing a lot of human suffering, and it may make for a long and shallow recovery—or worse, a tipping back into contraction.

Nobody thinks that it's time to go back in the water yet. And we do need a bigger stimulus.


links for 2009-07-02


Getting Ready for a Bad Employment Number Friday Morning...

From Macro Advisers:

Private nonfarm payroll employment declined by 473,000 from May to June on a seasonally adjusted basis, according to the ADP National Employment Report™. Assuming government payrolls expand by 12,000 (the average monthly increase over the last year), this implies an estimated 461,000 decline in total nonfarm payroll employment, roughly 100,000 more of a decline than consensus expectations...


That Fiscal Stimulus Packages Work Is "Not Controversial," Says Bush CEA Chair Greg Mankiw

He said it back in 2003, when it was a Bush stimulus rather than an Obama stimulus program. But sauce for the goose...

Mark Thoma deals the deck:

Economist's View: "Deficits are Worrisome, but Not as Worrisome as an Economy that is Not Growing and is Rapidly Shedding Jobs": What do you think of this administration's arguments for deficit spending to spur the economy?:

Remarks of the Chair of the Council of Economic Advisers: I... want to discuss some larger issues about how fiscal policy should be evaluated.... I view the economy as experiencing something similar to a tug of war.... On the contraction end of the rope are the shocks that the U.S. economy has experienced.... Pulling hard on the other end of the rope are the expansionary forces of monetary and fiscal policy--the Federal Reserve’s series of interest rate cuts and the Administration’s... stimulus package.... I will not say much today about monetary policy.... But fiscal policy is my beat as CEA chair....

[A]nalysis done within the Administration has shown ... that ... the ... job market is not what we would like it to be right now, but it would have been worse without the Administration’s actions.... [Our stimulus] helps maintain the aggregate demand for goods and services. There is nothing novel about this. It is very conventional short-run stabilization policy: You can find it in all of the leading textbooks....

The qualitative effects... on the short-run output gap... are not controversial. There is less agreement on quantifying these effects.... To answer these questions, one would normally turn to a macroeconomic model such as those maintained by private forecasting firms.... I view such models as being very useful....

Deficits can raise interest rates and crowd out of investment, although I should note that the magnitude of this effect is much debated in the economics literature. The main problem now facing the U.S. economy is not high interest rates.... The Administration would prefer not to have deficits, but deficit reduction is only one of many goals.... Deficits are worrisome, but not as worrisome as an economy that is not growing and is rapidly shedding jobs....

The most important fiscal challenge facing the United States is not the current short-term deficits... but instead the looming long-term deficits associated with the rise in entitlement spending.... These longer-term issues, however, should not blind us to the immediate needs of the economy. The President came into office inheriting an economy... [in] a recession. He has responded vigorously to the challenges and, as a result, the current outlook for the U.S. economy is bright...

That was Greg Mankiw, on September 15, 2003 in a speech to the NABE. [Note: verb tense changed from past to present in a few places, 'chairman' was changed to 'chair,' and he is, of course, mainly promoting tax cuts, not government spending.]

I want to thank Mark for making me laugh louder than I have in two months.


Hoisted from Archives: The Invisible College

Grasping Reality with Both Hands: The Invisible College: J. Bradford DeLong (2006), "The Invisible College," Chronicle of Higher Education Review 52:47 (July 28, 2006):

The Chronicle: 7/28/2006: The Invisible College: Right now I'm looking out my office window, perched above the large, grassy, Frisbee-playing, picnicking, and sunbathing area that stretches through Berkeley's campus. I'm looking straight out at the Golden Gate Bridge. It's a view that I marvel at every day. I wonder why the chancellor hasn't confiscated such offices and rented them out to hedge funds to improve the university's finances.

I walk out my door and look around: at the offices of professors who know more about topics like the history of the international monetary system or the evolution of income distribution than any other human beings alive, and at graduate students hanging out in the lounge. It's a brilliant intellectual community, this little slice of the world that is our visible college. You run into people in the hall and the lounge, and you learn interesting things. Paradise. For an academic, at least.

But I am greedy. I want more. I would like a larger college, an invisible college, of more people to talk to, pointing me to more interesting things. People whose views and opinions I can react to, and who will react to my reasoned and well-thought-out opinions, and to my unreasoned and off-the-cuff ones as well. It would be really nice to have Paul Krugman three doors down, so I could bump into him occasionally and ask, "Hey, Paul, what do you think of .. ." Aggressive younger people interested in public policy and public finance would be excellent. Berkeley is deficient in not having enough right-wingers; a healthy college has a well-diversified intellectual portfolio. The political scientists are too far away to run into by accident — somebody like Dan Drezner would be nice to have around (even if he does get incidence wrong sometimes).

Over the past three years, with the arrival of Web logging, I have been able to add such people to those I bump into — in a virtual sense — every week. My invisible college is paradise squared, for an academic at least.

Plus, Web logging is an excellent procrastination tool. Don't feel like grading? Don't feel like writing that ad hoc committee report or completing the revisions demanded by clueless referee X? Write on your Web log and get the warm glow of having accomplished something.

Plus, every legitimate economist who has worked in government has left swearing to do everything possible to raise the level of debate and to communicate with a mass audience rather than merely an ivory-tower audience. That is true of those on the right as well as the left. Web logging is a promising way to do that.

Plus, there is the hope that someday, somehow, all of this will develop in a way to provide useful tools for teaching or marketing one's books, or something — that Web logging is a lottery ticket to something in the future, unknown but good.

Plus — and this is the biggest plus — it is a play in the intellectual influence game. My blog got about 20,000 page-views a day last month.

The hope of all of us who blog is that we will become smarter, do more useful work, be happier and more productive, and will also impress our deans so they will raise our salaries. The first three hopes are clearly true: Academics who blog think more profound thoughts, have a bigger influence on the world — both the academic and the broader worlds — and are happier for it. Are we more productive in an academic sense? Maybe. We will see when things settle down.

Are our deans impressed? Not so far, but they should be. A lot of a university's long-run success depends on attracting good undergraduates. Undergraduates and their parents are profoundly influenced by the public face of the university. And these days, a thoughtful, intelligent, well-informed Web logger like Juan Cole or Dan Drezner is an important part of a university's public face. Michigan gains in reputation and mindshare from having a Cole on its faculty. Yale loses from not having an equivalent.

A great university has faculty members who do a great many things — teaching undergraduates, teaching graduate students, the many things that are "research," public education, public service, and the turbocharging of the public sphere of information and debate that is a principal reason that governments finance and donors give to universities. Web logs may well be becoming an important part of that last university mission.


Forecasting the Obama Economy

Economic Scene - Mistake by Obama2019s Advisers in Predicting Job Losses - NYTimes.com

David Leonhardt writes:

Mistake by Obama’s Advisers in Predicting Job Losses: In the weeks just before President Obama took office, his economic advisers made a mistake. They got a little carried away with hope. To make the case for a big stimulus package, they released their economic forecast for the next few years. Without the stimulus, they saw the unemployment rate — then 7.2 percent — rising above 8 percent in 2009 and peaking at 9 percent next year. With the stimulus, the advisers said, unemployment would probably peak at 8 percent late this year. We now know that this forecast was terribly optimistic.... [T]he difference between the situation that the Obama advisers predicted and the one that has come to pass is about 2.5 million jobs. It’s as if every worker in the city of Los Angeles received an unexpected layoff notice.

There are two possible explanations that the administration was so wrong.... The first... is that the economy has deteriorated because the stimulus package failed.... The... answer is that the economy has deteriorated in spite of the stimulus. In other words, the patient is not as sick as he would have been without the medicine he received. But he is a lot sicker than doctors realized when they prescribed it.

To me, the evidence is fairly compelling that the second answer is the right one. The stimulus package does seem to have helped. But its impact has been minor — so far — compared with the harshness of the Great Recession. Unfortunately, the administration’s rose-colored forecast has muddied this picture.... Worst of all, the economy really may need more help.... There is no ironclad way to judge the stimulus, because we can’t rerun the last six months in an alternate universe. But you can get a pretty good sense by looking at the size of the gap between where the economy is today and where the administration thought it would be: those 2.5 million jobs that would still exist if the forecast had been right.

This gap is just far too large to be explained by the stimulus. The plan that Mr. Obama signed definitely has its flaws. It spends money more slowly than is ideal and spends some of it on projects of little long-term value. But no stimulus package could have come close to preventing 2.5 million job losses over six months.... When private economists began analyzing various stimulus proposals in January, they said that none would have a major effect on the jobless rate until the end of the year. By June, the effect would be only a few tenths of a percentage point, which translates into several hundred thousand jobs.

The stimulus that passed may in fact be having an impact of roughly this scale.... “Early results,” says Mark Zandi, [former McCain advisor and] chief economist of Moody’s Economy.com, “suggest the stimulus is performing close to expectations.” Obviously, though, the economy is not performing close to expectations...

As I understand matters, last December the median private-sector forecast had the unemployment rate topping out at 9% in the second half of 2009. The incoming Obama administration simply adopted that forecast. At the time I thought that was a mistake: (I thought that was a mistake: I thought they should have made a bifurcated forecast with a "good case" 80th-percentile scenario and a "bad case" 20th-percentile scenario; they should then have stressed that in the bad case we would need a large stimulus indeed to prevent high unemployment, and that in the good case we could restrain inflation via monetary policy.) By combining standard estimates of the effects of the fiscal boost package with that forecast, Jared Bernstein, Christie Romer, Steve Braun, Alan Krueger, and company came up with the "unemployment tops out at 8%" projected path for the economy that they put to bed a couple of days after New Year's and released at 6 AM EST Saturday, January 10, 2009.

By the end of January, when the Obama fiscal boost bill started working its way through congress, the situation had deteriorated significantly: things got worse in December as Christmas sales fell significantly below even recent expectations, et cetera. And here the Obama administration made its second mistake. The executive branch of the U.S. government is geared to do budget updates in two cycles six months apart: a January cycle and a July cycle. By the end of January the work on budget forecasting for the January cycle was well-advanced using the forecast as the transition had made it in mid-December. To change the forecast in early or mid-February to reflect the way the situation had changed over year-end would have required that OMB tear up a lot of estimation work and do it over at a time when the people in the NEOB are already working twelve-hour days to cope with all the extra work associated with a change of administration. I thought that they should have (a) changed the forecast and (b) simply not done the extra budget work: that they should simply have put an asterisk on every page of the budget saying that these numbers use the outdated mid-December rather than the current forecast. (In fact, I think the administration Troika should decouple its forecasts from the budget process, update them monthly, release them, and yet still feed them into the budget process only twice a year.) But, I think largely for these bureaucratic process reasons, they did not update their forecast. So by the time the stimulus bill was passed everyone's expectations were already that the 8% unemployment peak was way overoptimistic...

How about it guys? Can we get Steve Braun and company on a monthly forecast public update cycle decoupled from the budget process? It would improve the quality of information.


Among other things, it would make it extremely difficult for things to happen like what happened to the Mankiw CEA over the winter of 2003-2004, when high politics appears to have reached down into the forecast, changed the table for payroll employment (and only payroll employment: the rest of the forecast is not out of line with contemporary professional forecasts), and produced an estimate for December 2004 (a) inconsistent with the rest of the forecast, and (b) high by 2.3 million in its estimate of payroll employment--all because Karl Rove and company thought it important to avoid headlines like "Bush administration forecasts 2004 payroll employment to be less than when Bush took office."

White House Media Affairs would have a much harder time pressuring the forecasters to produce a "rosy scenario" if the pressure has to be kept on month after month...


http://www.gpoaccess.gov/usbudget/fy05/pdf/2004_erp.pdf

http://www.gpoaccess.gov/usbudget/fy04/pdf/2003_erp.pdf

[Workbook2]Sheet1 Chart 1


Jonathan Martin of the Politico Raises the Bar on "Opinons on Shape of Earth Differ" Journamalism

I can envision seeing a more complete, more craven, and even funnier abdication of the journalist's responsibility to inform his or her audience--for some reason "Josef Stalin: lover of puppies or genocidal dictator?" springs to mind--but I never have.

Jonathan Martin raises the bar:

Jonathan Martin - POLITICO.com: The vitriol also suggests the degree to which Palin remains a Rorschach test not simply to Republicans nationally but within a tight circle of elite operatives and commentators, many of whom seem ready to carry their arguments in 2012. Was Palin a fresh talent whose debut was mishandled by self-serving campaign insiders, or an eccentric “diva” who had no business on the national stage? Going forward, does she offer a conservative and charismatic face for a demoralized and star-less party? Or is she a loose cannon who should be consigned to the tabloids where she can reside in perpetuity with other flash-in-the-pan sensations?


links for 2009-07-01