Grasping Reality on TypePad, by Brad DeLong

WASHINGTON (MarketWatch) -- The deficit fear-mongers burst onto the front page of The New York Times this week with the first story in a series called "Payback Time: The Debt Bomb." Back in the opinion pages of that same A section, however, Nobel Prize-winning economist and Times columnist Paul Krugman decried the panic over the federal deficit as mistaken, calling deficit worries a "phantom menace." Read the entire column. Krugman, who defends the theories originally espoused by John Maynard Keynes that the government should run a deficit in a down economy to create demand and put people back to work, has a certain amount of authority because of that Nobel Prize and a generally high regard among fellow economists. If Obama buckles to pressure on the deficit, he risks, unwittingly or not, following in Herbert Hoover's footsteps.

Frontline has a program on tonight about the credit card industry, which may be a useful accompaniment to the regulatory reform debate. They include this juicy paragraph in their press release: “They’re lower-income people-bad credits, bankrupts, young credits, no credits,” Mehta [former CEO of Providian] says. Providian also innovated by offering “free” credit cards that carried heavy hidden fees. “I used to use the word ‘penalty pricing’ or ’stealth pricing,’” Mehta tells FRONTLINE. “When people make the buying decision, they don’t look at the penalty fees because they never believe they’ll be late. They never believe they’ll be over limit, right? … Our business took off. … We were making a billion dollars a year.”

Federal Reserve officials believe the recovery is going to expand at a slow rate while unemployment will continue to remain high, according to the minutes of their closed-door Nov. 3 and Nov 4 meeting released Tuesday. The Fed forecast that the U.S. unemployment rate could stay elevated in 2010 in the range of 9.3% to 9.7% and would only drop modestly to 8.6% in 2011, according to the summary of the latest meetings. The unemployment rate hit 10.2% in November, a 26-year high. The Fed forecast in June that the unemployment rate could hit a range of 9.5% to 9.8% in 2010 and 8.8% in 2011 in a slightly more negative projection.

One of my favourite fantasy writers, Barbara Hambly, has written some stories set in universes that the publishers cancelled and is placing them on her webpage as downloadable PDFs for $5 each. There are a couple of Benjamin January stories and a 15,000 word Antryg novella.