Grasping Reality on TypePad, by Brad DeLong

Simon Gilchrist and Egon Zakrajsek: The Impact of the Federal Reserve's Large-Scale Asset Purchase Programs on Corporate Credit Risk:

Estimating the effect of Federal Reserve's announcements of Large-Scale Asset Purchase (LSAP) programs on corporate credit risk is complicated by the simultaneity of policy decisions and movements in prices of risky financial assets, as well as by the fact that both interest rates of assets targeted by the programs and indicators of credit risk reacted to other common shocks during the recent financial crisis. This paper employs a heteroskedasticity-based approach to estimate the structural coefficient measuring the sensitivity of market-based indicators of corporate credit risk to declines in the benchmark market interest rates prompted by the LSAP announcements. The results indicate that the LSAP announcements led to a significant reduction in the cost of insuring against default risk--as measured by the CDX indexes--for both investment- and speculative-grade corporate credits. While the unconventional policy measures employed by the Federal Reserve to stimulate the economy have substantially lowered the overall level of credit risk in the economy, the LSAP announcements appear to have had no measurable effect on credit risk in the financial intermediary sector.

The market-based economics that I was brought upon had four principles:

1. It is important to get the distribution of wealth right, or as right as you can, so that household willingness-to-pay properly represent social marginal values.
2. It is important to get aggregate demand right--for the government to create the right amount of safe and of liquid assets to match shifting private sector demand and so make Say's Law true in practice if not in theory--so that the problems economic policy is dealing with are Harberger Triangles and not Okun Gaps.
3. Then you can let the competitive market rip--as long, that is, as...
4. You have also imposed the right Pigovian taxes and bounties to deal with externalities.

Take a deck of three cards--High, Middle, and Low. Deal one card each to two players, Opener and Responder. Both players ante. Opener checks or bets. If Opener checks, Responder then checks or bets. If Opener bets, Responder then folds or calls. If Opener checks and Responder bets, Opener than folds or calls.

UMKC hosts 8th annual Pat Kelly Scholarship Poker Tournament | Law School News:

More than 90 participants, including students, faculty and alumni, recently gathered for the 8th annual Pat Kelly Scholarship Poker Tournament. The tournament, which is sponsored by the UMKC Law Foundation, the UMKC Law Alumni Association and the SBA, was held Friday, Sept. 13 in the UMKC Student Union. Second-year student Blair Barbieri won the tournament and received an iPad 2 and the coveted Pat Kelly trophy for her excellent game play.

One more card to come, three hearts out on the table headed by the ace, and I had two wired hearts in the hole headed by the queen…

I went all-in[1]…

1. The best economics weblog aggregator is and remains: Mark Thoma's Economist's View
2. "Put simply, most people are on a downward escalator. Although jobs are slowly returning, pay is not": Robert Reich: American Bile
3. "Russia’s domestic situation remains deplorable. With the collapse of the planned economy in 1991, Russia proved to be not so much a developed as a misdeveloped country, unable to sell most of its products in non-captive markets. So Russia regressed into a commodity-based economy, mainly selling energy, while its talented scientists and technicians sought jobs abroad and its intellectual life decayed. Russia is also, no surprise, blighted by corruption, which drives away foreign investment and costs the country billions of dollars annually": Robert Skidelsky: The Russian Janus
4. "Adults will make their own decisions. My story underscores the moral failings of the people attempting to persuade strangers to assume a risk like uninsurance for the sake of their own dubious principles": Brian Buetler: The $200K lesson I learned from getting shot
5. "What makes markets appear invincible is not the perfect aggregation of information that is sometimes attributed to them, but the sheer unpredictability of persuasion, exhortation, and social influence that can give rise to major shifts in the distribution of narratives": Rajiv Sethi: Information, Beliefs, and Trading
6. "Peter Dinklage recently appeared on Sesame Street as Simon, the one who says, and things got seriously musical as the various Muppets of Sesame Street pondered why we always do as Simon says while Dinklage made several amazing faces that reminded us, oh, this is why": Stubby the Rocket: In Which Sesame Street Posits Peter Dinklage as Our New God

Battle of Smolensk (1943): Wikipedia:

In the week from 7–14 September, Soviet troops were once again reinforced and were preparing for another offensive. The next objectives set by the Stavka were the major cities of Smolensk, Vitebsk and Orsha. The operation resumed on 14 September with the Smolensk-Roslavl offensive operation (Смоленско-Рославльская наступательная операция), involving the left flank of the Kalinin Front and the Western Front. After a preliminary artillery bombardment, Soviet troops attempted to break through the Wehrmacht lines. On the Kalinin Front’s attack sector, the Red Army created a salient 30 km (19 mi) wide and 3–13 km (1.9–8.1 mi) deep by the end of the day. After four days of battle, Soviet rifle divisions captured Dukhovshchina, another "key" to Smolensk.

James Scott, "Legibility," Flavius Apion, Anoup, the Emperor Justinian, Robin of Locksley, Rebecca Daughter of Mordecai, King Richard, and Others…: September 14, 2010;

In 542 AD the late Roman (early Byzantine?) Emperor Justinian I wrote to his Praetorian Prefect concerning the army. The army had been trained and equipped and paid for by the Roman State Justinian headed. It was intended to control the barbarians and to "increase the state." But Justinian was, Peter Sarris reports in his Economy and Society in the Age of Justinian, upset that:

certain individuals had been daring to draw away soldiers and foederati from their duties, occupying such troops entirely with their own private business.... The emperor... prohibit[ed] such individuals from drawing to themselves or diverting troops... having them in their household... on their property or estates.... [A]ny individual who, after thirty days, continues to employ soldiers to meet his private needs and does not return them to their units will face confiscation of property... "and those soldiers and oederati who remain in paramonar attendance upon them... will not only be deprived of their rank, but also undergo punishments up to and including capital punishment."

Ezra Klein: AIG CEO: Anger over AIG bonuses ‘just as bad’ as lynchings:

AIG's CEO Robert Benmosche… told the Wall Street Journal that the outrage over the bonuses promised to AIG's members was just as bad as when white supremacists in the American South used to lynch African Americans…. Yes, enduring some public criticism for receiving multimillion-dollar bonuses after helping crash the global economy is a lot like being hanged from a tree by your neck until you die. These kinds of sentiments don't emerge in a vacuum. Benmosche is expressing a view that was pretty common back in 2010 and 2011…. John Catsimatidis…. Steven Schwarzman…. I was in an off-the-record meeting with top Wall Street folks where similar comparisons to Nazi Germany were tossed around. It really was a meme on Wall Street that the singling out of the wealthy for criticism--and, more to the point, taxation--had a direct historical precedent in Nazi Germany, where the Jews were first demonized, then taxed, and then, well, you know. The sense was that the rich in general, and Wall Street in particular, weren't just being criticized, but that they were being turned into a dangerously despised minority.

That's the context…. I would bet he's made the same point a number of times in private rooms to appreciative nods. When you say and hear that kind of thing often enough, however, you forget how insane and offensive it is — and then you say it to the Wall Street Journal.

If he's going to be this late, he had better bring lots of refreshments.

Just saying:

Douglas Holtz-Eakin: GOP Economist Warns Party on Shutdown Risks:

A shutdown would impact just 36% of the federal budget and leave untouched the largest – and growing – elements that many Republicans believe need to be structurally changes, such as Medicare and Social Security.

“People don’t really understand how this works,” said Mr. Holtz-Eakin, president of the American Action Forum. “Shutting the government down is bad idea. It’s a bad policy and a bad political move at this point in time.”… “You will hear Republicans say ‘but the public is with us,’” Mr. Holtz-Eakin said. “That might be true, but if you look at polling from 1995 and1996, the public agreed with the Republican position on budget deficits and policy issues and what was at stake, but they punished Republicans for shutting the government down.”

His group is releasing a paper, “Government Shutdowns: What they are and what they are not” that he hopes will clarify that a shutdown will have virtually no impact on the implementation of White House’s controversial health care law and instead lead to politically unpopular things, such as suspending pay for military personnel.

Jonathan Alter: The National Memo » When Obamacare Polls Are Accurate Without Being True:

As Republicans form a circular firing squad, nervous Democrats continue to believe that this is a depressing time when the future of Obamacare is on the line…. But young people, who as a group support President Obama, aren’t likely to buy Koch lies. And Hollywood progressives are about to unveil a strange-bedfellows alliance with insurance companies that will spend tens of millions of dollars telling Americans the truth…. So why the jitters?…

Americans have been told that the public doesn’t support the president’s signature achievement. This is true in only the most literal sense of the word…. Consider a September 15 NBC News/Wall Street Journal poll…. The overall figure--43 percent support Obamacare and 54 percent oppose it--that received wide coverage, just as similar poll numbers have in the past…. [But] 16 percent oppose it because it isn’t liberal enough. In other words, 59 percent of the American public either supports Obamacare or wants it to go further.

470 years ago, in 1543, King Henry VIII Tudor of England married his sixth and last wife, Katherine Parr. He also allied with the Holy Roman Emperor Charles V Habsburg "of Ghent"; declared war on France; imposed the English administrative grid of counties, shires, boroughs, and House of Commons representatives on Wales; made yet another short-lived treaty with Scotland; burned the three Protestant Windsor Martyrs; and named the composer Thomas Tallis a Gentleman of the Chapel Royal. A busy king, for one so sick and mad.

Peter Orszag: Economy Can’t Be All That’s Slowing Health Costs:

A new set of projections released last week by Medicare’s actuaries… suggests the deceleration in the growth of health costs we’ve seen over the past few years is ephemeral… [due] to the “lingering effects of the economic downturn and sluggish recovery” and to increases in cost sharing. Both of these explanations have serious shortcomings….

Note that unless you think the income distribution is "optimal", there are powerful positive externalities to funding more people to go to college even if the marginal individual is making a rational benefit-cost decision.

And the numbers very very strongly suggest that many, many people deciding not to attend college have not been making rational benefit-cost decisions:

http://priceonomics.com/is-college-worth-it/:

Marianne Bitler and Hilary Hoynes: The More Things Change, the More They Stay the Same: The Safety Net, Living Arrangements, and Poverty in the Great Recession:

Much attention has been given to the large increase in safety net spending, particularly in Unemployment Insurance and Food Stamps, during the Great Recession. In this paper we examine the relationship between poverty, the social and private safety net, and business cycles historically and test whether there has been a significant change in this relationship during the Great Recession. We explore the mediating role played by six core safety net programs-including Food Stamps, cash welfare (AFDC/TANF), the Earned Income Tax Credit, Unemployment Insurance, and disability benefits (Supplemental Security Income and Social Security Disability Income)-in buffering families from negative economic shocks. This analysis yields several important findings. First, the relationship between unemployment and official cash poverty remained remarkably consistent with historical patterns during the Great Recession. However, our more expansive alternative poverty measure shows that, if anything, the cyclicality of poverty has increased in the current period. Second, the safety net programs receiving the most attention through the Great Recession (Food Stamps and UI) exhibit adjustments very consistent with their behavior during previous historical cycles. The most dramatic change in the safety net is the post-welfare reform decline of cash assistance in providing protection for the most disadvantaged. Third, changes in living arrangements are modest and for the most part in line with prior cycles. Thus on balance we find, as our title suggests, that despite the attention to the apparent differences in the responses of the private and social safety nets in the Great Recession, the relationship between cycles and economic well-being are as we would have predicted from the historical patterns. 

Scott Lemieux: “No, Mr. uninsured cancer patient, I expect you to die”:

The Republican opinions in NFIB v. Sebelius. Both Roberts’s opinion and the joint dissent argued that the federal government could regulate the health care market, which would seem to include guaranteed issue. But once you’ve conceded this, you’ve conceded everything. Even if one accepts the (highly unconvincing) argument that it’s impermissible to regulate “inactivity” directly… the necessary and proper clause as it’s been interpreted for nearly 200 years settles the question…. The responses on this point were particularly feeble. Roberts’s strategy was to invent a new distinction between “necessary” and “proper”:

World War II Today: Michael Howard at Salerno:

First we had to find our way to the starting-point, which meant leaving our scattered slit-trenches after dark, still under spasmodic mortar-fire, shaking out into single file, and moving in the correct order over steep mountain paths to line up along the perimeter wall of the hospital. That took far longer than expected.

The files lost one another, the platoons somehow got into the wrong order. We eventually arrived at the start-line long after H hour, almost too late to catch up with the artillery barrage. Two out of my three sections had disappeared altogether, and turned up only as the attack began. From the dark hill facing us, streams of tracer bullets were already zipping over the low wall behind which we eventually formed up.

[…]

Scott Lemieux: A Tribalism Bleg:

A correspondent asked me a good question that I’d figure I’d throw open to the hivemind. With the exceptions of Michael McConnell and Charles Fried (and the latter, as a Harlan disciple who was also critical of the constitutional arguments against the PPACA, barely counts these days), have any conservative law professors criticized Shelby County? Jonathan Adler stopped short of endorsing it but didn’t criticize it, either. I can’t think of any others. Have there been other critics in the conservative legal academy?

AEI's Chris Conover claims that, because total national health spending is going to be higher than baseline as a result of the ACA, it is not possible for the premiums paid by those who purchase health insurance to be going down as a result of the ACA. Say what? Right now the premiums of those who buy insurance pay for a lot of the uninsured's medical care. If you broaden the base by insuring more people, you lower the rates that those who are insured and pay for the system pay.

Of course, nobody at the AEI will point out that Conover is either--at best--confused, or is simply saying things he knows are not true.

Obedience to their political masters, after all, rules on 17th St. Informing the public and raising the level of the policy debate doesn't.

1. "The in het ootje method of trade required the seller to pay a commission independent of the seller’s acceptance or refusal of the bid (typically the equivalent of a round or two of drinks), which placed a premium on accepting a decent bid, further fueling the market": James Narron and David Skeie: Crisis Chronicles: Tulip Mania, 1633-37
2. "And Mrs. Claypool's checks will probably come back in the morning": *Buce: Underbelly: Groucho & Co
3. "When participants noticed disparity between how much they perceived an asset to be worth and the rate of transactions for that asset, they began making poor business decisions and bubbles started to form in the market…. Peter Bossaerts…. 'It's group illusion. When participants see inconsistency in the rate of transactions, they think that there are people who know better operating in the marketplace and they make a game out of it. In reality, however, there is nothing to be gained because nobody knows better': Jen Middleton: Drivers of financial boom and bust may be all in the mind, study finds
4. "The American health-care system is not merely the only one in the advanced world that’s closed off to a large share of the population; it’s also the most expensive by far": Jonathan Chait: The Republican Plot to Kill Obamacare
5. "As a law student at Harvard, he refused to study with anyone who hadn't been an undergrad at Harvard, Princeton, or Yale. Says Damon Watson, one of Cruz's law-school roommates: 'He said he didn't want anybody from 'minor Ivies' like Penn or Brown'": Jason Zengerle: Ted Cruz: The Distinguished Wacko Bird from Texas
6. "For all the ways [Andrew] Sullivan has made back a little ground from his fifth column BS and giving Betsy McCaughey a platform to lie about health care reform, it seems like the guy just cannot manage so much as one reasonable post about science…. What to think?… Ask a columnist who knocks global warming for a living! Lacking knowledge about climate climate change must give the guy some trenchant insights about evolution": Tim F.: …because someone is wrong on the internet

Thomas Sheehan:

Heidegger and the Nazis: Two years earlier, on January 20, 1948, [Martin] Heidegger answered the letter of his former student, Herbert Marcuse, who had inquired why he had not yet spoken out about the Nazi terror and the murder of six million Jews. Heidegger responded by comparing the Holocaust to the Soviet Union's treatment of Germans in Eastern Europe:

Jim McDonald: Making Light: Inaccuracies:

John Kennedy delivered his inaugural address on Friday, 20 January 1961. For those who don’t remember those times, the Cold War was pretty darned cold right then…. Two days after Kennedy asked not, just after midnight on 23 January 1961, a B-52 carrying two thermonuclear devices broke up over North Carolina. We now learn that one of the bombs came close to exploding…. Dr. Ralph Lapp told the story in his book, Kill and Overkill: The Strategy of Annihilation in 1962…. What is new is this: the story has been confirmed. Thanks to the automatic declassification schedule, what was Secret then is unclassified fifty years on. And due to a Freedom of Information Act request, someone has found other documents relating to this event. The Guardian has the original document: It’s commentary by Parker Jones, the gent who was responsible for the mechanical safety of US nuclear bombs.

Joseph Cotterill: Cows as safe assets:

[Anagol, Etang, and Karlan note that] maybe cows aren’t at all safe assets in developing economies…. They become sick, or wander off, or (increasingly even in India) get rustled. Yet rural households appear ready to pay up to keep cattle even so…. If labour markets for women don’t exist, and they cannot have labour value, then there’s no opportunity cost in their tending cattle at home instead. Maybe. The other theory’s more to do with financial liberalisation itself. Poor households already tolerate negative interest rates on savings sometimes, given their only avenues are often informal and costly vehicle, according to the paper. Compared to the local deposit collector, cattle might be a safer asset.

David Keohane: A Merkel rout:

That’s:

• CDU/CSU: 41.5% (311)
• SPD: 25.7% (192)
• Linke: 8.6% (64)
• Green: 8.4% (63)

With parties that do not get into the parliament because they do not break the 5% threshold (including the FDP!) at 15.6%...

Felipe Calderón and Nicholas Stern: The New Climate Economics:

How to reconcile increased action to reduce greenhouse gas emissions with strong economic growth…. As most countries have started making serious investments in renewable energy, and many are implementing carbon prices and regulations, critics complain that such policies may undermine growth…. The advent of shale gas has confused the energy debate even more. If gas is substituted for coal, it can be a useful bridge to a low-carbon future. But astonishingly, it is coal, the dirtiest fuel, that is experiencing the sharpest increase in use…. Policy vacillation in some countries has not helped. Advocates of stronger action respond that low-carbon investments can generate much stronger, cleaner growth…. These are serious economic debates, but too often they have become entangled in ideological disputes about the appropriate response to the economic crisis and the value of government intervention in markets. That is regrettable. Climate change is not a partisan issue, and climate policy is essentially market-based. It is about correcting market failures….

Robert Engel: Lehman Was Not Alone--Measuring System Risk in the 2008 Crisis:

On September 15, 2008, Lehman Brothers filed for bankruptcy and ushered in the worst part of the recent financial crisis…. My colleagues at NYU and I have developed measures of systemic risk…. We estimate the amount of capital that a financial institution would have to raise in order to continue to function normally if we have another financial crisis like the one in 2008…. We call this measure SRISK…. Was Lehman at the top of the list in 2008? No. In fact, it was Number 11. The top of the list was Citigroup, which was estimated to need $139 billion…. Lehman would have needed $48 billion in capital. And it was allowed to go under. Interestingly, Washington Mutual, at Number 14, also was allowed to fail.

1. "Plan actuaries are working in the dark…. Actuaries have similar training and utilize similar tools to make predictions, and they are pretty good at it when they have solid information on the relevant group. In the case of ACA exchanges, there are huge uncertainties about who is going to sign up and what their health history has been:" Joel Ario, Adam Block, and Ian Spatz: Premium Rate Variation In Exchanges Is An Eye Opener
2. Too long; must read: Jonathan Chait: The Republican Plot to Kill Obamacare
3. "The FOMC has put increased weight on stabilizing the labor market as, for example, prescribed by Vice Chair Janet Yellen’s 'balanced approach'…. But this… cannot explain why the “dots” are still so low in 2016 because the FOMC expects unemployment and inflation to be close to its longer-run goals at this point. We therefore explore today to what extent the 'optimal control' approach—-discussed by Yellen in a series of speeches in 2012—-might provide an explanation. Our update… points to the first hike in early 2016, even later than the dots": Jan Hatzius et al.: Why the Dots Are so Low: Goldman-Sachs Research
4. "The Helium Program is currently scheduled to begin shutting down on October 1. This would reduce domestic supply by over 40 percent, forcing scientific and industrial users to adjust to sudden shortages and high prices, and idling an extremely valuable public resource": Joseph Kennedy: Managing the Helium Reserve
5. "With so little pre-election polling and no exit polls in these three states, we cannot definitively establish how much their electorates were tilted toward evangelicals or any other constituency favorable to Santorum. But even if we assume that there was such a tilt, it alone was not sufficient to explain Santorum’s success": John Sides and Lynn Vavreck: The Republicans almost went insane: Santorum really could have beaten Romney
6. "[The Corrections] needed negative 4089 C of sexism to return to conditions amenable to reading rather than being the heart of a the giant blue-white star which is poised, even now, to go supernova in the center of the swirling storm of Eta Carinae. Let us never speak of Jonathan Franzen again": Belle Waring: Drink The Haterade: Jonathan Franzen Edition

World War II Today: The Last Major Episode in the Battle of the Atlantic:

The ships of Convoy ONS 202 and 18 continued their steady course west. The marshalling of 65 merchant ships in mid Atlantic would never have been an easy task in the fog and heavy seas that prevailed. On top of this the Convoy commander had to attempt co-ordinate his Escort group of warships, in a fight against a group of U-boats that were making a combined attack.

Already HM Frigate LAGAN had been damaged beyond repair, and HM Corvette POLYANTHUS and HM Destroyer ST CROIX had been sunk. He did not know that these ships had been the victims of the new German T5 acoustic torpedoes.

Belle Waring: It May Interest You to Know, But If Not, There Is a Scroll Feature

Is it really the case that pretty much all the Important Male Novelists of the mid to late 20th-century are such sexist dillweeds that it is actually impossible to enjoy the books? That would be a bummer, wouldn’t it? Unfortunately, the answer is yes…. The past is a region ruled by the soft bigotry of low expectations. We all allow it to run up against the asymptote of any moral value we hold dear now. We are moved by the ideals of Thomas Jefferson even though we know he took his wife’s little sister, the sister she brought with her as a six-month old baby, the very youngest part of her dowerage when she married him--he took that grown girl as a slave concubine, and raped that woman until he died. We would all think it a very idiotic objection to The Good Soldier Švejk that women weren’t allowed to serve in the military at that time and so it didn’t bear reading.

My favorite part of the Odyssey is book XXII, when Odysseus, having strung his bow, turns its arrows on the suitors and, eventually, kills them all. This is despite the fact that he and Telemachus go on to hang the 12 faithless maids with a ship’s cable strung between the courtyard and another interior building, so that none of them will die cleanly, and they struggle like birds with their feet fluttering above the ground for a little while, until they are still. There is no point in traveling into the land of “how many children had Lady MacBeth,” but, at the same time--the suitors raped those women, at least some of them, and likely all, if we use our imagination even in the most limited and machine-like fashion on the situation. Still it is my favorite, because I am vengeful….

Bill Clinton: Summers slandered:

Bill Clinton says Lawrence Summers, his former Treasury secretary, did not deserve the criticism he received when he was under consideration to be the next chairman of the Federal Reserve. "I think there's this kind of cartoon image that's been developed that somehow Larry Summers was a one-note Johnny, just trying to let big financial titans ravage the land," the former president said in an interview aired Sunday on CNN's "Fareed Zakaria Live." "And it's just ludicrous." Clinton said Summers, who came under criticism from liberals for being too close to Wall Street's largest financial institutions, had accomplished much. Summers has also served as director of the National Economic Council, chief economist of the World Bank and president of Harvard.

"He played a central role in helping President Obama use the power of the government to try to bring the economy back when we were on the brink of just sliding into depression when he took office," Clinton said. "When he worked for me, he played a central role in implementing much more balanced policies than had been let on, where we had more private sector growth, but we also had good, sensible regulatory oversight."

Jon Hilsenrath: Yellen Would Bring Tougher Tone to Fed:

Dick Anderson, who served a brief stint as the chief operating officer of the Fed's Washington board, ending in December 2012, said, "Yellen's abrasive, intimidating style is probably more suited for a 'Mad Men' era as opposed to a modern office environment." Mr. Anderson and Ms. Yellen clashed over a plan he proposed to cut spending by regional Fed banks, which she thought reached beyond his job description and resisted, according to people familiar with the matter. Her style, Mr. Anderson said, sharply contrasted with Mr. Bernanke's style and wouldn't serve the Fed well….

Comments on Brad DeLong: Eugen Weber: The ups and downs of honor:

bob_is_boring said...

"It shows no sense of sportsmanship, no fair play, no chivalrous treatment of opponents" Been awhile since I read The Iliad -- and I know the prime target of this sentence was Roland, but the author levels the same claim at Homer -- but this is, well, not true. IIRC Books 7 and 8 both have instances of all of the above; the Big Name Heros perhaps not so much (they are mostly dicks anyway) but the sides agree to, e.g., declare a temporary truce to bury the dead, etc. Just sayin'.

Clearly we need a better quality of blanks:

Kansas City Star: Performer injured during re-enactment of bank robbery in Richmond, Mo:

A performer suffered a leg injury Saturday during an re-enactment of a 1867 bank robbery when a gun accidentally discharged during Outlaw Days in Richmond, Mo.

The re-enactor was hit in the leg when the gun, loaded with blanks, discharged during the reenactment around noon, said festival chairman Jim Carter.

An ambulance took the performer to a Kansas City area hospital for treatment of a moderate leg injury, Carter said. No one else was injured. The rest of the fall festival’s activities continued as scheduled.

1. Some Hero Strapped a GoPro Camera Onto An Eagle And The Footage Is Breathtaking
2. "I can’t tell if education reformers are stupid, riddled with ideology, or just trying to make their projects seem grander than they are:" MattBruenig: Education and poverty, again
3. "More than half of all homes sold last year and so far in 2013 have been financed without a mortgage, according to an analysis by economists at Goldman Sachs Group": Nick Timiraos: Report: Half of All Homes Are Being Purchased With Cash
4. "The U.S. does not provide more upward mobility than other nations do; if anything, young Americans’ economic fortunes are more tied to those of their parents than is true in other western nations. So, where did this image of exceptional mobility come from?": Claude Fisher: Loss of economic exceptionalism
5. "In a Perfect World, we wouldn’t have to go out and battle paid disinformationists to save the world but we do. In a Perfect World, the most wealthy corporations in human history wouldn’t be controlled by a handful of science-denying sociopaths, but they are": *Wonkette: It’s Getting Hot In Here, Starbursts, Lady Squids With Balls, And More In This Week’s Sci-Blog!
6. "In asking why people keep entering humanities Ph.D. programs when the economic payoff of the multi-year investment seems uncertain… the implication is that economic analysis is what’s first and foremost…. Asking why young people keep entering Ph.D. programs is a lot like asking why young people keep moving to New York planning to become actors. Or asking why young people head into journalism": Heather Horn: In Defense of the Humanities Ph.D.: It's No Crazier Than Becoming a Journalist

Robert J. Shiller: The Best, Brightest, and Least Productive?:

In the United States, 7.4% of total compensation of employees in 2012 went to people working in the finance and insurance industries. Whether or not that percentage is too high, the real issue is that the share is even higher among the most educated and accomplished people, whose activities may be economically and socially useless, if not harmful…. Thomas Philippon and Ariell Reshef [note that] much of the increase in financial activity has taken place in the more speculative fields, at the expense of traditional finance… credit intermediation… declined relative to “other finance”… wages in “other finance” skyrocketed relative to those in credit intermediation.

Paul Krugman: SNAP Notes:

I wanted to tie together two of this week’s stories: the new Census numbers on income and poverty, and the GOP vote to throw several million people off food stamps. It has now become dogma on the right that the expansion of the SNAP program represents some kind of explosion of moocherism…. This despite clear evidence (pdf) that the recent rise in SNAP participation is overwhelmingly a response to the economy. To the extent that there’s any rational argument here at all, I think, it rests on the observation that while SNAP enrollment did fall during the boom of the 1990s, it was flat or rising during the expansion of the middle Bush years. This supposedly shows that the program’s use was being driven by things other than economic factors. But there’s a crucial point such analyses miss: the “Bush boom,” such as it was, never did trickle down to lower-income Americans--the kind of people who might use food stamps…. The Clinton expansion led to a substantial rise in incomes near in the lower part of the distribution, and was accompanied by a sharp fall in SNAP usage. The Bush expansion never did… so it’s no surprise that SNAP use didn’t fall…. Oh, and SNAP use hasn’t come down yet in the recovery because for lower-income Americans, there hasn’t been a recovery…. The story of the past decade is overwhelmingly about a program doing exactly what it’s supposed to do, aiding people facing real hardship.

Tyler Cowen: The food stamps program:

In an ideal policy world, would food stamps exist as a program separate from cash transfers?  Probably not.  But as it stands today, they are still one of the more efficient programs of the welfare state and the means-testing seems to work relatively well.  And giving people food stamps — since almost everyone buys food — is almost as flexible as giving them cash.  It doesn’t make sense to go after food stamps, and you can read the recent GOP push here as a sign of weakness…

VIDEO LINK: BBC News - Pearl Witherington: British spy who fought the Nazis:

The list of heroes who played a critical role in WWII is filled with famous names, but few people are familiar with Pearl Witherington's story. Perhaps that is because for decades she refused to tell it.

Born and raised in Paris, Witherington fled Nazi-occupied France only to parachute back in as part of Churchill's secret army, the Special Operations Executive.

Kevin Roose: The Fed Decides the Economy Still Sucks:

In a widely unexpected move, the Federal Reserve has decided not to "taper" its bond-buying…. The no-taper decision is sending stocks to all-time highs…. Another Fed, itching to stop abnormal stimulus and shrink the balance sheet, might have plugged its ears…. But this Fed listened…. Part of the reason today's move shocked Wall Street is that this is a much different Fed from the one most traders are used to dealing with. It's a more compassionate Fed, a more holistic Fed, and a Fed that sees its role… filling the gaps where legislators are failing…. The Fed, with few exceptions, is all Yellens now. 

Ann Marie Marciarille: Missouri State of Mind: The Private Option for Medicaid Expansion:

I appreciate that the Missouri version of Arkansas-style Medicaid Expansion is being circulated without name as "Rough Draft No. One." The shoe fits. As far as I can tell, the proposal mimics in essentials Arakansas' 1115 waiver application… http://humanservices.arkansas.gov/dms/Documents/Final%201115%20Waiver%20Materials%20for%20Submission.pdf…. The "rationale" section of the Arkansas 1115 waiver application is the most interesting:

Arkansas Medicaid provides rates of reimbursement lower than Medicare or commercial payers, causing some providers to forego participation in the program and others to "cross subsidize" their Medicaid patients by charging more to private insurers….

States establish their own Medicaid provider payment rates within federal requirements and Arkansas has not chosen to be at the top of the permissible range…. What is the message: we need the commercial insurance market to save Medicaid from ourselves?

The Nazis Massacre the Italian Soldiers on Kefalonia: Battista Alborghetti:

A nightmare. This is still for me, Kefalonia. I’m a survivor. I was in that hell from November 1942 to November 1944, along with other 11,600 Italians. After September 8, 1943--as a result of our refusal to surrender to the German army--10,500 Italian soldiers were massacred.

A terrible massacre, that still remains in my eyes and on my mind. There are so many images about those awful days of terror: stories of war and death, written in the blood of so many young people who pursued the dream of a better Italy.

1. "The sense of surprise at the US Federal Reserve on Wednesday is a reminder that we are still in the PalmPilot era of forward guidance about monetary policy": Robin Harding: Fed’s QE surprise shows problems of forward guidance
2. Charles Cook finally arrives at the judgment of the Republicans I arrived at back in 1993: better late than never: Charles Cook: The GOP's Reckless Bet
3. "What changed in the last year?… Europe now has a true lender of last resort…. But Europe could still suffer a hard landing…. Doing just enough to prevent the eurozone from collapsing is not the same as setting the stage for sustainable growth": Barry Eichengreen: Is Europe Out of the Woods?
4. David Freddoso: Next step: Defund Obamacare by preventing a vote on defunding Obamacare
5. "Beginning in 2018 a 40 percent excise tax will be assessed on the cost of any of these plans exceeding $10,200 for individual coverage and $27,500 for family coverage": Chris Fleming: Health Policy Brief: The ‘Cadillac’ Tax
6. "It became clear this week that investors are having trouble figuring out when the Fed’s multibillion-dollar stimulus program will end. But they’re not the only ones… their range of answers show why the path to the taper has been so confusing for so many investors": Ylan Q. Mui: Fed officials have been all over the map on ending QE

Ezra Klein: John Boehner is being even more irresponsible than Ted Cruz:

There's been a lot of talk--much of it among Republicans--about how irresponsible Ted Cruz is being in his fight to defund Obamacare or shut the government down trying. But Boehner and the rest of the House GOP leadership is being much more irresponsible in their promises to delay Obamacare or cause a global financial crisis while trying. And the way they're going to get past Cruz's irresponsible threats is to double down on their own, even more irresponsible, threats.

Thomas Piketty and Gabriel Zucman: Capital is Back: Wealth-Income Ratios in Rich Countries 1700-2010:

How do aggregate wealth-to-income ratios evolve in the long run and why? We address this question using 1970-2010 national balance sheets recently compiled in the top eight developed economies. For the U.S., U.K., Germany, and France, we are able to extend our analysis as far back as 1700. We find in every country a gradual rise of wealth-income ratios in recent decades, from about 200-300% in 1970 to 400-600% in 2010. In effect, today’s ratios appear to be returning to the high values observed in Europe in the eighteenth and nineteenth centuries (600-700%). This can be explained by a long run asset price recovery (itself driven by changes in capital policies since the world wars) and by the slowdown of productivity and population growth, in line with the β = s/g Harrod-Domar-Solow formula. That is, for a given net saving rate s = 10%, the long run wealth-income ratio β is about 300% if g = 3.33% and 600% if g = 1.67%. Our results have important implications for capital taxation and regulation and shed new light on the changing nature of wealth, the shape of the production function, and the rise of capital shares.

1. "Mr Bernanke must take his fair share of blame for bungling communication": Financial Times: Fed gets it right but says it wrong
2. "If Latvia really was as hugely over capacity as they claim… it represents a more-or-less unique case. And arguing that Latvia was vastly over capacity in 2007 has another, perhaps surprising implication: it makes much of the debate over both austerity and internal devaluation moot": Paul Krugman: Latvian Adventures
3. "Raghuram Rajan, the new governor of the Reserve Bank of India, struck a firmly hawkish pose on Friday with a surprise 25 basis point increase in the bank’s repo interest rate to 7.25 per cent, confounding a consensus prediction of no change": Jonathan Wheatley: Raghuram Rajan smells the onions
4. "Melissa Kearney of the University of Maryland will succeed Michael Greenstone as director of The Hamilton Project, and Benjamin H. Harris, currently affiliated with the Urban Institute, will succeed Adam Looney as policy director": The Hamilton Project | Brookings Institution
5. "Californians are generally supportive of a pathway to citizenship… overwhelmingly so for those who were brought into the country as children and might be covered under the Dream Act. But substantial majorities in both parties also said it was 'extremely important' that illegal immigrants offered a pathway to citizenship be able to pass an English test and demonstrate a history of steady work. Californians prefer to include in the country those who contribute to the economy and who 'fit in': Jack Citrin: On immigration: A pathway to citizenship, with conditions
6. "It also gets at the dangerous temptation to be cautiously 'sophisticated' when it comes to pursuing our ideals, and so I think it carries a lesson": Fred Clark: Be wise as serpents and innocent as doves

1. Manage the macroeconomy to match aggregate demand to potential supply. Take the dual mandate seriously: maintaining full employment is as important a central bank goal as low and stable inflation--and much more important than preserving healthy margins for the banking sector. Run large deficits--run up the national debt--in times of war, depression, or other national emergency calling for government action. Pay down the debt in other times.

2. Invest. Invest in ideas, in equipment capital, in structures capital, in education: we need more of all forms of investment. Boost public and private investment: we need both kinds.

3. Over the past generation, America has shifted enormous resources into value-substracting industries: health-care administration, prisons, finance, carbon energy. We need to reverse those shifts, and focus the American economy on the value-creating sectors rather than the value-subtracting ones.

4. We ought to have had a carbon tax 20 years ago. We still need one.

5. We need more immigration. It is much easier, worldwide, to move the people to where the institutions are already good than to make good institutions where the people are. More immigration produces a richer country for those already here. More immigration is a mitzvah for immigrants. More immigration is, to a a lesser degree, a mitzvah for those in poor countries outside who see less population pressure on resources. And a U.S. in 2070 that has 600 million people is more of an international superpower than a U.S. in 2070 that has only 400 million people.

6. We need more equality. If we want to have equality of opportunity 50 years from now, we need substantial equality of result right now.

7. We are going to need a bigger and better government. The private unregulated market does not do well at health-care finance, at pensions, or at education finance. The private unregulated market does not do well at research and early-stage development. The private unregulated market does not do well with commodities that are non-rival. We are moving into a twenty-first century in which these sectors will all be larger slices of what we do, and so a well-functioning economy will need a larger government relative to the private economy than the twentieth century did.

The market will simply never believe that the amount of Quantitative Easing is independent of the future interest-rate path.

That is all.