Previous month:
March 2012
Next month:
May 2012

April 2012

Quote of the Day: April 26, 2012

"As the crude gets hotter, different fractions reach their varying boiling points and turn into gas. At room temperature, the methane immediately evaporates. At more than i oo degrees Fahrenheit, the 8-carbon-chains octane or gasoline turn to gas and drift off. At around Soo degrees, the i6-carbon-chains, the diesel, evaporate. At over i,ooo degrees, even the tarry 8o-carbon-chains, the coke, start to stew. In modern refineries, each constituent is lovingly captured, as its vapors rise in giant steel towers, cooling as they float higher and higher."

--Sonia Shah, Crude: The Story of Oil

Noah Smith on Wall Street's Obama Aversion

Noah Smith:

Why Does Wall Street Dislike Obama so Much? Non-Financial and Financial Equity Values Since 2007 Edition: It's all about the bond market…. Wall Street firms thus make most of their money from the bond market…. Wall Street firms have far more power in the illiquid, opaque, highly complex bond market than they do in the liquid, transparent, simple stock market…. [T]he bond market depended heavily on fraud/opacity (basically, on tricking people) and on favorable tax treatment during the finance-industry super-boom of the last few decades. New regulation will curb the former and the closing of loopholes may curb the latter. This will leave the U.S. finance industry with very few sources of excess profit indeed.

In other words, simply enforcing reasonable rules will force our finance industry to go back to researching companies and facilitating M&A - pedestrian, low-margin activities that are socially useful but for which they will only be paid as well as software engineers or doctors. What they want is the glory days back - the days when the bond market was a giant cash transfer machine that sucked money out of the rest of the developed world and put it into the pockets of Wall Street employees. But for that to continue, even in some diminished form, would require a government that bent over backward to give the finance industry every regulatory waiver and tax break possible.

In other words, the finance industry hates Obama because he refuses to continue burning America's furniture to keep their bond-market party going.

Why Oh Why Can't We Have a Better Press Corps? FT Editorial Edition


The FT Editorial Department drives Paul Krugman 100% into shrill unholy madness:

The New Voodoo: Every time I think we might be making progress against the prejudices and myths that pass for judicious thinking these days, something like this editorial in the FT comes along to renew my despair….

Continue reading "Why Oh Why Can't We Have a Better Press Corps? FT Editorial Edition" »

Adolf Hitler Liveblogs World War II: April 26, 1942

Adolf Hitler:

The British Jew, Lord Disraeli, once said that the race problem is the key to the history of the world. We National Socialists have become great in this knowledge. By devoting our attention to the existence of the race problem, we have found the solution for many problems which would have otherwise have seemed incomprehensible. The hidden forces which incited England already in 1914, in the first world war, were Jews. The force which paralyzed us at that time and finally forced us to surrender with the slogan that Germany was no longer able to bear homeward a victorious flag, came from the Jews. It was the Jews who fomented the revolution among our people and thus robbed us of every possibility at further resistance. Since 1939 the Jews have maneuvered the British Empire into the most perilous crisis it has ever known. The Jews were the carriers of that Bolshevist infection which once threatened to destroy Europe.

Continue reading "Adolf Hitler Liveblogs World War II: April 26, 1942" »

Paul Krugman: American Austerity

American Austerity  NYTimes com

Paul Krugman:

American Austerity: With all the focus on Europe’s sudden discovery that austerity doesn’t work, we shouldn’t lose sight of just how much de facto austerity we’ve done on this side of the Atlantic. Here’s a comparison of changes in government employment (federal, state, and local) during the first four years of three presidents who came to office amid a troubled economy.

That spike early on is Census hiring; once that was past, the Obama years shaped up as an era of huge cuts in public employment compared with previous experience. If public employment had grown the way it did under Bush, we’d have 1.3 million more government workers, and probably an unemployment rate of 7 percent or less.

Did Ben Bernanke Just Say That the Fed Made a Mistake by Allowing Inflation to Get Above 2% During the Great Depression?


It would be so easy for Ben Bernanke to say: "We have a 2%/year inflation target, and also strive for maximum feasible employment and purchasing power by attempting to keep the unemployment rate close to what we believe to be its natural rate. Whenever the unemployment rate is below what we believe to be its natural rate, we expect inflation to rise and so are unhappy--and believe additional tightening is warranted--unless inflation is below its 2%/year target. Whenever the unemployment rate is above what we believe to be its natural rate, we expect inflation to fall and so are unhappy--and believe additional loosening is warranted--unless inflation is above its 2%/year target."

That's not what he says. Does he think that the Great Depression-era Federal Reserve made a mistake by allowing inflation to get above 2%/year after the 1933 Great Depression trough? It sure sounds like it:

Ben Bernanke: There's this view circulating that the views I expressed about 15 years ago on the Bank of Japan are somehow inconsistent with our current policies. That is absolutely incorrect. My views and our policies today are completely consistent with the views that I held at that time.

I made two points at that time to the Bank of Japan. The first was that I believe that a determined central bank could and should work to eliminate deflation, that is, falling prices. The second point that I made was that when short-term interest rates hit zero, the tools of a central bank are not exhausted. There are still other things that the central bank can do to create additional accommodation.

Now, looking at the current situation in the United States, we are not in deflation. When deflation became a significant risk in late 2010, or at least a modest risk in late 2010, we used additional balance sheet tools to help return inflation close to the 2 percent target.

Likewise, we have been aggressive and creative in using non-federal-funds-rate-centered tools to achieve additional accommodation for the U.S. economy. So the very critical difference between the Japanese situation 15 years ago and the U.S. situation today is that Japan was in deflation. And, clearly, when you're in deflation, and in recession, then both sides of your mandate, so to speak, are demanding additional accommodation.

In this case, we are not in deflation. We have an inflation rate that's close to our objective.

Now, why don't we do more? Well, first, I would, again, reiterate that we are doing a great deal. The policy is extraordinarily accommodative. We, and I won't go through the list again, but you know all the things that we have done to try to provide support to the economy.

I guess the question is: does it make sense to actively seek a higher inflation rate in order to achieve a slightly increased pace of reduction in the unemployment rate? The view of the committee is that that would be very reckless. We, the Federal Reserve, have spent 30 years building up credibility for low and stable inflation, which has proved extremely valuable in that we’ve been able to take strong accommodative actions in the last four or five years to support the economy without leading to expectations or destabilization of inflation. To risk that asset for what I think would be quite tentative, and perhaps doubtful, gains on the real side would be an unwise thing to do.

Target the path of nominal GDP, people!

You know, I thought that this would work out very differently. I thought 3 1/2 years ago that the Federal Reserve would announce:

  • that this was an emergency situation.
  • that its task was to stabilize the growth rate of nominal GDP.
  • that as long as nominal GDP was below its pre-2008 trend, the Federal Reserve was going to buy bonds for cash--and keep buying bonds for cash until forecasts of nominal GDP were back on track.

And I thought 2 1/2 years ago that:

  • People like me would say that the past five years had demonstrated that the costs of being at the zero lower bound were much larger than we had thought.

  • People like me would say that as a result the target of 2%/year inflation was inappropriate, because it carried enormous downside risk.

  • People like me would say that adopting a long-run target of 4%/year inflation--the inflation rate with which Paul Volcker was satisfied--was appropriate for the long term.

  • The Federal Reserve would then say no, that a 4%/year inflation target was not appropriate for the long term.

  • But the Federal Reserve would also say that an intermediate 4%/year inflation target was appropriate as long as nominal GDP was below its projected pre-2008 growth path.

That is not what has happened. That is not what has happened at all.

  • But

Mitt Romney vs. the Republican Congressional Caucus

Jonathan Bernstein:

The trap Democrats are laying for Mitt Romneyt: The emerging Democratic strategy is to find popular issues that Republican Members of Congress oppose, and to force votes on them. The goal: To try to make Mitt Romney choose between either appearing ideologically extreme or risking conflict within his own party…. Perceptions of ideological extremism are one of the few factors that influence voter perceptions of challengers, as George McGovern and Barry Goldwater discovered. So Romney presumably wants to move to the center…. And yet this isn’t easy, because Romney doesn’t want a civil war to break out in the GOP….

First up: The student loan rate extension. Romney has already committed to Barack Obama’s position on this one, but House Republicans are reluctant to go along.

Next: The Violence Against Women Act, where Republicans in Congress have objected to reauthorization if modest Democratic changes are included.

And after that, the Senate will be taking up the “Paycheck Fairness” bill, which covers discrimination against equal pay for women.

Each of these is apt to be highly popular, and yet in each case Congressional Republicans are expected to oppose the bills as proposed….

[T]he real players here are House and Senate Republicans, and more broadly, conservative opinion leaders. Of course Democrats are going to try to push Romney on these sorts of issues; of course he’s going to try to move to the center. But will conservative opinion leaders let him? Will Congressional Republicans (who have their own fears of being labeled RINOs) quietly allow Romney to break with them, or will conservatives punish him for pivoting away from their principles?

We don’t yet know the answer to these questions…. But add it all up and these fights could definitely help determine whether Romney will be perceived as extremely conservative by November — which in turn could be decisive in dictating the outcome.

Yes, Neville Chamberlain Is Much Better than David Cameron and Nick Clegg. Why Do You Ask?: British Second Great Depression Blogging

UK Recession vs Great Depression  Business Insider

Joe Weisenthal:

UK Recession vs. Great Depression - Business Insider: Well, everyone is dumping on the UK today after that dismal Q1 GDP number, which confirms that the country has gone into double dip. David Cameron is taking a lot of heat for two reasons:

  • The GDP stallout occurred right after he took office.

  • He continues to be in denial, and so he's bragging a ton about low interest rates.

Now here's another chart that everyone is tweeting, and which Paul Krugman has just posted. The UK recovery is now doing WORSE than the great depression.


The "Recovery" in the G7

Why UK GDP continues to lag the G7 | Gavyn Davies | Insight into macroeconomics and the financial markets from the Financial Times  FT com

Bearing in mind that the U.S. has--or ought to have--a growing population, its trend growth rate ought to be about 1%/year faster than Europe. That means that, correcting for and relative to (what ought to be) the long-term trend, the U.S.'s cyclical performance is down with the U.K. and Italy…

Quote of the Day: April 25, 2012

"Ultimately, it was Enron’s tragedy to be filled with people smart enough to know how to maneuver around the rules, but not wise enough to understand why the rules had been written in the first place."

--Kurt Eichenwald, Conspiracy of Fools: A True Story

The Need for Fiscal Stimulus: Might We Actually Be Persuading People?

Joe Weisenthal:

The Turn Against Austerity: As we wrote this morning, the bad news for Angela Merkel is that the jig is up: There's almost nobody left who is willing to go along with the German idea that the sole solution for Europe is spending discipline and "reform," whatever that means…. Nicholas Kulish…. Ryan McCarthy… also rounds up a bunch of other anti-austerity commentary…. [C]ombine it with the latest note from Richard Koo… you sense that something really is changing.

There's not a new consensus settled on yet. For example, Francois Hollande's vision of a more socially integrated Europe is obviously different than whatever caused Geert Wilders to torpedo the Netherland's austerity deal, but Germany is clearly becoming very isolated.

Richard Koo:

Richard Koo's Trip To Europe: My recent trip to Europe began with a conference held on the shores of Lake Como…. Nouriel Roubini served as moderator. The Italian business executives making up some 80% of the audience welcomed my balance sheet recession theory thanks to some powerful backup from Professor Roach, one of the very few economists to issue an early warning about the US housing bubble….

While Dr. Stark probably would not agree with that assessment, I was received at my next seminar—at the Bank of Italy—as “the man who stood up against Jürgen Stark.” The number of seminar participants greatly exceeded organizers’ expectations…. Early the next week, I conducted seminars at the ECB and Bundesbank in Frankfurt, and once again the number of participants was far greater than initially expected…. Similar scenes unfolded at seminars held by Nomura offices for investors in Frankfurt and Milan….

Germans will understand need for fiscal stimulus if issue is properly explained…. I spent an hour and a half explaining to several hundred ordinary Germans that most of the eurozone was in the midst of a balance sheet recession and that these countries desperately needed fiscal stimulus…. Many people thanked me for letting them know that there was a different way of looking at the crisis in Europe based on balance sheet recession theory. Most of the questions from the audience were quite to the point…. The experiment proved that even ordinary Germans are capable of understanding the theory of balance sheet recessions—an economic concept not found in any university textbook—if only it is explained properly.

Based on this experience, I find the argument that fiscal stimulus is impossible “because the German people would not tolerate it” completely unconvincing…

Why Does Wall Street Dislike Obama so Much? Non-Financial and Financial Equity Values Since 2007 Edition


A worker bee at a mainline investment bank told me last fall:

Back in 2008 Wall Street was split 40-60 Obama-McCain. Now it is split 10-90 Obama-Romney.

Why? It is not as though Wall Street has done badly under Obama. Stock prices are up and interest rates are down, so leveraged financial institutions long assets--as Wall Street inevitably is--have done very, very well indeed. The standard bargain that the Democrats offer Wall Street has held. It is:

We will try to tax you (and, given the power of your lobbying operation in Congress, probably fail to do so), but we will give you competent economic management in striking contrast to that offered by the ideologically-blinded wingnuts who are the Republicans.

SPX Chart  S P 500 Index  Bloomberg

That has been the bargain that the Democrats have offered Wall Street from the days of Hoover to Bush II, and when Wall Street has had a sense of its own long-run interests, it has taken the Democrats up on it. And it has been happy.

But not this time.

Why not? What is going on? What is there about 50% real increases in equity values over less than 3 1/2 years that is not to like?

C New York Stock Chart  Citigroup Inc  Bloomberg 1

A big part of it, I think, is that Obama was not just supposed to make things better: he was supposed to fix things--to bring things back to "normal". Things are certainly not back to normal for America's workers. And, while things are pretty much back to their mid-2000s normal for equity investors--an S&P of 1400 compared to 1500 in the summer of 2007--that is definitely not the case for financials.

MS New York Stock Chart  Morgan Stanley  Bloomberg 1

Investors in Bank of America have lost 75% of their wealth as of the summer of 2007. Investors in Morgan Stanley have lost 70% of their wealth as of the summer of 2007. Investors in Citigroup have lost 93% of their wealth as of the summer of 2007. If you were working for those organizations and had taken your pay in options--well, whatever bonuses you have gotten since the crisis started are almost surely much smaller than the losses you have taken on your options portfolio.

BAC New York Stock Chart  Bank of America Corp  Bloomberg 1

Obama did not fix things: Wall Street bankers today are a lot poorer than they were in mid-2007. And the Wall Street bankers think that Obama disses them. And the Wall Street bankers know that Obama wants to tax them.

This historical record strongly suggests that they will do much, much better if Obama wins a second term than if he loses to Romney. But Wall Street is not listening.

Doug Henwood:

Obama’s stock market: pretty good (if you care about that sort of thing): Republicans and business interests have been relentless in their whining about how B. Hussein Obama has the “job creators” cowering under a reign of terror, what with his socialist policies and hostile rhetoric. But how have the monied been voting their approval or disapproval in one of their favorite venues, the stock market?… Obama’s stock market is the third best, beaten only by Clinton’s second term and Eisenhower’s first…. Since the beginning of Obama’s term in office in January 2009, the S&P 500 is up 60%…. Adjusting for inflation, Obama’s score is three times the average.)… The 40-month average for Democratic presidents is 36%; for Republicans, 24%. Still, Obama’s 60% is nearly twice his party’s average….

[T]he notion that Obama has been “bad for business” is a hard case to make—not that it will stop it from being asserted…

Footnote on Financial Returns Since the Summer of 2007

Investors in Goldman Sachs have lost 40% of their money since the summer of 2007:

GS New York Stock Chart  Goldman Sachs Group Inc The  Bloomberg

Only investors in JPMorgan Chase have held even since the summer of 2007:

JPM New York Stock Chart  JPMorgan Chase  Co  Bloomberg

Basically, if your capital is invested in non-financials, things are now back to the mid-2000s normal from your personal wealth perspective. If your capital is invested in Treasuries, you have made out like clover. If your capital is invested in financials, you are deeply underwater relative to mid-2007.

John Berry Defends the Honor of the Federal Reserve System: Monetary Policy at the Zero Lower Bound Blogging

Behind the paywall at, John Berry responds to Paul Krugman:

No Paul, Political Intimidation Is Not Shaping Fed Policy: Paul Krugman… and other [Left Opposition] Fed critics are going to be disappointed again tomorrow when the Federal Open Market Committee does not announce a big policy shift…. Krugman… complained that Chairman Ben S. Bernanke and his colleagues aren't doing more because they fear some sort of retaliation from conservative congressional critics.

Whatever the Fed is or is not doing, that's not the reason….

Krugman wrote:

more of the 'quantitative easing' that is now the main tool of Fed policy should be a no-brainer. So what's going on? I think that Fed officials, whether they admit it to themselves or not, are feeling intimidated-and that American workers are paying the price for their timidity.

Krugman leaps to that conclusion solely because he believes… fear of political retaliation must be the reason why [his preferred policies] haven't been adopted. Well… Bernanke's views… on the ability of a central bank to stimulate an economy when overnight interest rates have hit the zero bound have changed greatly… began to shift as early as 2002….

In the FOMC discussion… 2003… everyone agreed that setting ceilings on long-term rates simply would not work…. The idea of announcing a higher inflation target… disappeared well before the conservative political pressure materialized…. When Bernanke discussed the limits of the zero bound a dozen years ago, the issue was Japan where mild deflation was a constant reality….

Looking at this history and also remembering all of the extraordinary actions Bernanke and the Fed took during and after the financial crisis, many of which were wildly unpopular, the issue of the influence of political intimidation looms very small indeed.

In my view, there is an odd symmetry between the Federal Reserve of today and the Federal Reserve of the 1970s. The Federal Reserve of today does not take effective steps to reduce unemployment because it thinks any risk of sustained inflation above 2%/year is unacceptable. The Federal Reserve of the 1970s did not take effective steps to control inflation because it thought sustained unemployment above 7% was unacceptable. Since then, the Federal Reserve of the 1970s--Arthur Burns and G. William Miller--have been censured, condemned, scorned, and damned for their failure to understand the situation they were in and their proper objective function.

Chairman Bernanke Should Listen to Professor Bernanke: Why We Are So Shrill Department

Paul Krugman:

Chairman Bernanke Should Listen to Professor Bernanke: Consider, if you will, the current state of our nation. Despite hints of economic progress, we’re still in the midst of an immense disaster, in which unemployment and underemployment are devastating millions of American lives. And none of this need be happening! There has been no plague of locusts; we have not lost our technological know-how. Americans should be richer, not poorer, than they were five years ago. Yet economic policy across the board has become almost passive, has essentially accepted this disaster instead of trying to end it.

The Fed under Bernanke is by no means the worst sinner in this failure of intellect and will, and you can argue that Ben Bernanke has done a better job than anyone else who might have held his position. Yet the fact is, he has not done remotely enough. The Fed, under its eminent chairman, was supposed to be an important part of the solution to mass unemployment. That isn’t happening.

Yes, Austerity in Europe is Making a Major Fiscal Crisis Not Less But More Likely. Why Do You Ask?

Paul Krugman estimates that €1.00 of spending cuts in Europe produces only €0.40 of debt reduction relative to baseline and produces a €1.25 fall in production in the short run.

Assuming a long-term real interest rate on secure government debt of 4%/year, that means that austerity now improves the government's long-run fiscal condition only if the η--the hysteresis shadow cast on future European output by the current downturn--for Europe right now is less than 0.014. If even 3 out of 200 workers laid off for a year during this depression never return to work and 3 out of every 200 machines not installed in factories are never installed, then austerity is a bad bet on pure fiscal-stability grounds alone.

Austerity And Growth Again  Wonkish  NYTimes com

Paul Krugman:

Austerity And Growth, Again: Kash has a nice summary of… the new Eurostat numbers…. So I thought I’d do a bit more…. Let’s… create a crude adjusted measure of austerity. I calculate the amount the budget balance “should” have changed as 0.45 x (growth from 2009 to 2011 – 4%). In this formula, 0.45 is the average share of government revenue in GDP in the euro area, so this is a rough measure of revenue effects of growth; I’m just assuming that 4 percent would represent normal growth for a euro country over 2 years. And I estimate austerity as the difference between the actual change in budget balance and this predicted change.

So this is a kind of E. Cary Brown computation…. What do we get… [?] An apparent multiplier of around 1.25, not out of line with other estimates.

It’s worth noting that this also implies that 1 euro of austerity yields only about 0.4 euros of reduced deficit, even in the short run. No wonder, then, that the whole austerity enterprise is spiraling into disaster.

Peter Diamond and Emmanuel Saez : "High Tax Rates Won't Slow Growth We're not close to the top of the Laffer Curve. Raising tax rates is part of a sensible deficit reduction strategy"

Quote of the Day: April 24, 2012

"Four in every five German soldiers killed in the Second World War died on the Eastern Front, an inconvenient fact for any historian who wishes to make too much of the Western Allies’ contribution to the victory."

--Andrew Roberts, Masters and Commanders

Liveblogging World War II: April 24, 1942

Chester Nimitz:

From, Commander-in-Chief, United States Pacific Fleet.
To: Commander-in-Chief, United States Fleet.
Subject: Report of Action in connection with the bombing of Tokyo on April 18, 1942….

Forwarded herewith as enclosures are reports of ships of Task Force SIXTEEN which participated in the subject operations.

It is a satisfaction to know by actual experience that sixteen B-25 planes can be flown from the deck of a Hornet class carrier, and further that these planes can be carried in addition to 65 of the regular allowance of 72 planes.

Continue reading "Liveblogging World War II: April 24, 1942" »

Jonathan Ree : "Seabright is no neuromaniac: our outdated emotions are facts we need to live with rather than laws we have to obey. We sexual gods and domestic goddesses are not automata driven by basic instincts, but dupes of the obsolete publicity machines in our heads."

Adrian Hon: Missing: A Common Grammar for Tablet Gestures

Adrian Hon:

Thoughts on consistency in tablet news apps | Mssv: A few months ago, I finally had what I’d been dreaming of for years – digital delivery of every single magazine and newspaper I read…. I was free and the iPad did it all…. Of course… completely different method[s] of operation and user interface that conspires to frustrate me in big ways and small. Before a recent trip abroad I… synced everything, but The Atlantic proved too wily… when I tried to read the magazine while offline, it sniffily informed me that another update was required. Thanks for nothing…. I shall refrain from going too much into The Atlantic app’s failings… magazine pages as images that are just-about-but-not-quite readable without zooming in; the practically non-existent navigation; the weird text-only mode….

This Cambrian explosion of interfaces that touchscreens have ushered in is exhilarating in the truest sense; I’m pleased to see new ideas flourish, but I’m frankly tired at having to keep track of so many different UI conventions….

[This,] I believe, has made so many people enamoured of iOS. We might complain about how the home screen and its grid of apps is getting rather long in the tooth, but at least you know how it works….

The same reason lies behind why people like ‘personal newspapers’ like Flipboard, Zite, and arguably Instapaper (along with their earlier incarnations, RSS readers); these apps make the reading experience consistent across every blog and newspaper and magazine, and just make things easier to read, even if they don’t actually have best-of-class UX. They also download stuff faster and provide a one-stop shop. I could frankly care less about the social stuff, it’s just the convenience that’s important…

What Is QE? And Why Are Those Who Claim QE Is the Brainchild of Alien Lizard-Men Public Benefactors?

There are three channels through which quantitative easing--QE--could boost the economy right now:

  1. By taking duration risk onto its own balance sheet and thus onto the taxpayers' books, the Federal Reserve takes duration risk off of the private investor community's books. The private investor community's required rate of return on marginal risky securities thus falls, interest rate spreads fall, real interest rates charged to businesses fall, and aggregate demand increases.

  2. By expanding the money supply now, the Federal Reserve raises rational expectations of future money supplies because it would be in some way embarrassing or costly for the Federal Reserve to fully undo its QE transactions in the future. A higher money supply in the future means a higher price level in the future, and so means higher expected inflation. With interest rates at the ZLB, higher expected inflation means lower real interest rates, and higher aggregate demand.

  3. By engaging in quantitative easing, the Federal Reserve induces low-information investors to fear future inflation even though the Federal Reserve fully intends to undo its QE transactions in the future before the economy exits from the ZLB and thus does not intend to raise the path of the price level. These low-information investors then seek some form of protection against inflation. This raises aggregate demand.

Since the costs of undoing QE transactions are infinitesimal, and since the amount of risk taken onto the Federal Reserve's balance sheet by QE transactions are small, if QE is to give a significant boost to the economy it must be through channel (3).

Thus everyone who writes on Zerohedge that:

the fed manipulates our very life blood, as ordered by the lizard men, in order to create infinite debt and establish a soviet central planning regime...

is a public benefactor.

Paul Krugman:

What We Talk About When We Talk About QE: Karl Smith is bemused; in two posts he asks what Wall Street thinks quantitative easing does, and apparently is getting a lot of vehemence but no coherence. (I liked this comment:

Zerohedge commentary suggests the fed manipulates our very life blood, as ordered by the lizard men, in order to create infinite debt and establish a soviet central planning regime.


I can’t help him here. It might, however, be helpful to have a picture of what we’re talking about here. The Cleveland Fed has a nice, continually updated chart on the Fed’s balance sheet. Here’s the story up to now:

What We Talk About When We Talk About QE  NYTimes com

There was a period when the Fed was lending a lot of money to banks under the TALF… but most of that has been repaid. These days, QE is basically purchases of long-term federal debt and bonds issued by Fannie and Freddie, which is effectively also federal debt. And these purchases have vast effects on the economy because… well, I share Karl Smith’s bemusement.

PS: Reading a few comments, I think it’s really important to emphasize that the Fed is only buying agency mortgage-backed securities — that is, the stuff that already has an implicit Federal guarantee. A lot of readers seem to think that the Fed is buying subprime MBS or something like that, handing over money for worthless paper. Not so.

The Tragically Flip : "Sooo basically what I’m reading is that [Jonah] Goldberg’s point that Hitler was a vegetarian and many liberals are vegetarians remains his strongest argument for liberals being the inheritors of the Nazi political tradition? Also, I understand that the Democratic People’s Republic of Korea should be understood to be a vibrant democracy. IT SAYS SO RIGHT IN THE NAME!”

Twitter / @thinkprogress : "Since Nov. 63% of Obama coverage has been about 'political strategy', 21% about 'foreign or domestic policy issues'"

Noam Scheiber : "My only quibble…. The formulation [of] David Plouffe…. 'Whether it’s tax policy, whether it’s his approach to abortion, gay rights, immigration, he’s the most conservative nominee that they’ve had going back to Goldwater.' I’d tweak this…. 'Whether it’s tax policy… abortion, gay rights, immigration, he’s running as the most conservative nominee that they’ve had going back to Goldwater.' I don’t think many people look at Mitt Romney and see an authentic, fire-breathing conservative. But I do think they’ll believe he’s been willing to act like one to appease his party. And that the appeasement won’t abruptly end on Election Day…"

Academics to the Barricades!: Long Past Time to Stop Publishing in High-Cost Journals...

Henry Farrell writes:

Harvard Library pushes open access: This looks like a bombshell announcement to me (I’m not aware of the internal politics behind the announcement, but I’m presuming that Robert Darnton’s fingerprints are all over it). Discuss.

We write to communicate an untenable situation facing the Harvard Library.… [M]ajor periodical subscriptions, especially to electronic journals published by historically key providers, cannot be sustained.… It is untenable for contracts with at least two major providers to continue on the basis identical with past agreements. Costs are now prohibitive…. [P]lease consider the following options open to faculty and students (F) and the Library (L), state other options you think viable, and communicate your views: Make sure that all of your own papers are accessible by submitting them to DASH in accordance with the faculty-initiated open-access policies (F). Consider submitting articles to open-access journals, or to ones that have reasonable, sustainable subscription costs; move prestige to open access (F). If on the editorial board of a journal involved, determine if it can be published as open access material, or independently from publishers that practice pricing described above. If not, consider resigning (F).

Some of this may be hardball bargaining, with the two unnamed providers (one of which, I presume, has a name starting with E[lsevier-North Holland]). But not very much – to state the problem so bluntly, and to encourage faculty to stop publishing in, and resign from the boards of non-open access journals sounds more like pushing for system-change than for a better deal within the current system. This may be the beginning of the end.

It ought to be not just the beginning of the end, but the end itself.

Fareed Zakaria : "Europe suffers from too much austerity: The U.S. economy is on track to grow between 2 and 3 percent this year… half the eurozone economies are going to actually shrink this year - and not one major European country will grow over 1%…. Didn't it look like the Europeans had managed to avert a crisis only a few weeks ago? Yes it did. Mario Draghi, Europe's new Central banker, had adopted a version of Ben Bernanke's policies and injected money into the European financial system and economy. But his efforts are now being undercut by the German Bundesbank, which reflects Germany's obsession about inflation even at the cost of growth. The larger failure, shared across Europe, has been too much austerity…"

Jay Yarow : "Android Is Suddenly In A Lot Of Trouble: The next big trend that's bad for Android: It has been a complete and utter disaster in the tablet space…. The success of the iPad over the dozens of Android tablets shows that on a level playing field, where a consumer is just picking out the best gadget, he or she chooses the iOS gadget..."

More Evidence That Ross Douthat (and Karl Smith) Really Need to Read Euthyphro...

Karl Smith:

Douthat on Secular Morality: A coherent secular morality is a tricky problem in and of itself. One that makes absolute claims even more so, and one that makes absolute claims absolutely seems well beyond our grasp. And, I say this as a secularist…. [T]he claim that slavery is fundamentally wrong in all cases is not controversial among secularists but it is far from clear how one justifies this except by asserting it. And, then of course what is one to say to people who deny it? Intending no disrespect to the underlying issue, the argument seems to devolve into “na-na na-na boo-boo.”…

The ethics-game is an attempt to answer the question, what moral stance “should” I adopt…. What Douthat appears to be saying is that the ethics-game is hard for secularists, and that is correct.

What Karl seems to miss is that playing the ethics-game is much much harder for Ross Douthat than for secularists.

For secularists it is simply the very hard question: "what is good?" For Ross it is three even harder and much more convoluted questions: "what do the priests tell me God commands?", "what reason is there to think that the priests know what God commands?" and "why should I think that what God commands is good?" Cf. Euthyphro, passim.

And consider:

Ephesians 6:5-8: Slaves, be obedient to them that are your masters according to the flesh, with fear and trembling, in singleness of your heart, as unto Christ; Not with eyeservice, as menpleasers; but as the servants of Christ, doing the will of God from the heart; With good will doing service, as to the Lord, and not to men: Knowing that whatsoever good thing any man doeth, the same shall he receive of the Lord, whether he be bond or free.

When asked "what have you to say to slaves?" St. Paul responds: "Slaves! Obey your masters! And do so enthusiastically, diligently, and lovingly--that way you will have treasure in heaven!"

That's a considerably worse "argument" on the proper place of slavery in this fallen sublunary sphere than "na-na na-na boo-boo".

Plus there is always Genesis 22:1-10 to deal with. The idea that when God commands evil we must attempt to do HIS will because HE will somehow make it come out all right in the end is very unattractive...

As the Second Phase of Europe's Second Great Depression Rolls Forward...

Simone Foxman writes:

European Markets Get Destroyed Today with Italy—in particular, Italian banks—leading the carnage.

  • FTSE 100: -1.85%
  • CAC 40: -3.02%
  • DAX: -3.37%
  • FTSE MIB: -3.83%
  • IBEX 35: -2.91%

Italian banks led those losses, with Intesa Sanpaolo halted after it fell 6.47 percent, according to Reuters reporter Michel Rose.

  • Intesa Sanpaolo: -6.21%
  • UBI Banca: -5.04%
  • Banca MPS: -4.13%
  • UniCredit: -5.48%

At this stage, what would be best would be for U.S. Treasury Secretary Tim Geithner to summon the world press to the Cash Room and say: "A strong dollar is no longer in America's interest. A strong dollar was in America's interest when capital flows into America were funding technological R&D in Silicon Valley, but now such flows are merely a drag on aggregate demand in the U.S. The U.S. is abandoning its strong-dollar policy and embracing a market fundamentals-dollar policy."

The northern European political discussion immediately turns on a dime from "we must punish those feckless southerners for daring to accept the loans we pushed on them!" to "we must expand our money supply to prevent the U.S. from engaging in a competitive devaluation to steal our jobs!"

And with more expansionary monetary policy in Europe, everybody benefits. See Barry Eichengreen and Jeffrey Sachs (1986), "Exchange Rates and Economic Recovery in the 1930s"

Why Does William Saletan of Slate Fly the False Flag of Claiming to Be a Liberal?

Why oh why can't we have a better press corps?

In my view, it's a standard move Saletan learned from Michael Kinsley: claim to be a liberal, advocate something conservative, wait for observers to say "even the liberal William Saletan agrees with the conservatives on this one", goal!

It makes me tired.

It makes DougJ irate:

It’s a big enough umbrella: Sometimes I laugh at conservatives for saying “he’s not really a conservative, he supports X”. Other times, I think they’ve got a point. Tebow-damn John for making read the first few paragraphs of the Saletan-Douthat wankoff but this got me from Will Saletan:

I think I speak for a lot of secular liberals…

Back that thing up. Saletan is not a liberal. Supported the Iraq War, check. Thinks black people are genetically inferior, check. Is ambivalent about reproductive rights, check. I’ll give him the secular part…. But that doesn’t make him a liberal. And the whole “secular liberal” thing annoys me too. I give liberal Catholics who still throw money in the plate a lot of shit, but my belief in social justice may have come from going to church (mine was not a right-wing freak show when I was a kid), and I’ll take even the most annoying liberal religion-apologists over assholes like Saletan every day of the week and twice on Sundays.

I’m sorry but these right-center agnostics/atheists don’t get to speak for us, not matter how much they reject religion. It’s great that liberalism is a big tent, but if you’re a neocon on foreign policy and you hate poor people, then shut the f*^% up about what liberals think. Because you’re not one.

Update. Saletan replies to me:

Doug, I’ve tried reasoning with you before. I’m sorry that you’re angry at the world, but I can’t help you with your illness.

Quote of the Day; April 23, 2012

"The more I advanced in the study of American society, the more I perceived that the equality of conditions is the fundamental fact from which all others seem to be derived, and the central point at which all my observations constantly terminated."

--Alexis de Tocqueville, American Institutions and Their Influence

New York Times Total Fail: No, Online Pharmacies Do Not Peddle Fake Drugs Edition

Why oh why can't we have a better press corps?

Felix Salmon:

Let’s not worry about fake online drugs: Roger Bate… is the lead author on a study which bought 370 drug samples from 41 online pharmacies around the world, and then tested their authenticity. The results? With the exception of Viagra bought from non-verified websites, every single drug was 100% authentic. But you’d never guess that from his op-ed:

In 2007-8, when counterfeit versions of heparin, a blood-thinning drug, were shipped from China to the United States market, 149 people died. In the last few months, bogus versions of the cancer drug Avastin… have surfaced…. Numerous incidents surely go unreported, the evidence swallowed, the deaths incorrectly attributed to natural causes. Fighting the fake drug menace is like playing whack-a-mole. It is technically illegal for individuals to order drugs online from other countries. And yet no sooner does the F.D.A. shut down one dubious online pharmacy than another pops up….

This is all highly alarming — but also highly misleading. The “more and more cases” of fake drugs being found by the FDA? The FDA’s counterfeit medicine page lists exactly six cases in the past 24 months, of which just two — Tamflu in June 2010, and Vicodin ES in March 2012 — were linked to online pharmacies. The bogus Avastin, by contrast, was being distributed through legitimate channels by two distributors: Quality Specialty Products (QSP), a/k/a Montana Health Care Solutions, and Volunteer Distribution in Gainesboro, Tennessee. It had nothing to do with online pharmacies at all.

Realistically, the US simply doesn’t have a “fake drug menace”. Yes, fake drugs exist, and they’re not all that hard to find if you’re based in, say, Ethiopia…. What’s more, even if the US did have a fake drug menace, which it doesn’t, the menace would not be coming from internet pharmacies. As Bate himself has found, internet pharmacies sell authentic drugs at low prices; the only exception to this rule is unlicensed sites hawking Viagra.

But Bate doesn’t seem to believe the evidence of his own eyes. Instead, he relies on urban myths: his July 2011 paper, for instance, said in its second sentence that “according to the World Health Organization, substandard and counterfeit drugs have been found in both developed and developing countries, accounting for more than 10% of the global medicines market and over US$32 billion in annual earnings.” This is a classic bogus counterfeiting statistic: if you go to the WHO page he links to, the WHO in fact makes no such assertion at all. Instead, it attributes the factoid to the FDA, with no footnote…