Liveblogging World War II: December 16, 1944: The Battle of the Bulge
Morning Must-Read: Noah Smith: Cultural Liberalism Is About Personal Responsibility

Noted for Your Nighttime Procrastination for December 15, 2014

Screenshot 10 3 14 6 17 PMOver at Equitable Growth--The Equitablog


Must- and Shall-Reads:

And Over Here:

  1. W.J. Astore: The Torture Was the Message: "Cheney... Rumsfeld... Rice... Wolfowitz--fancied themselves to be the new Vulcans... the Roman god of war.... They believed that Rome had prospered because of its willingness to use force with unparalleled ruthlessness.... Call it ‘shock and awe.’... In attempting to intimidate the enemies they saw everywhere, they tortured widely as well.... People like Cheney concluded the same: they had to be willing to use brutal force at whatever cost... project an image of ruthlessness, because the language of brutality was the only language ‘they,’ the enemy, could and would understand. It wasn’t necessary to sacrifice democracy to defend democracy, since to the Vulcans, America wasn’t really a democracy anyway.  No: America was the new Rome, the new global hegemon, and it had to act like it.... Torture was not an aberration. It was method.  A method of intimidation that sent a message to barbarians about America’s willingness to use whatever force was necessary to defend itself. Whether torture yielded reliable intelligence was beside the point. The torture was the message. That’s why you’ll hear no apology from Dick Cheney or the other Vulcans..."

  2. Tim Duy: More Questions for Yellen: "1. A journalist needs to push Yellen on the secular stagnation issue.... Does she or the committee agree with Fischer?  And does she see any inconsistency with the SEP implied equilibrium Federal Funds rates and the current level of long bonds?.... 2. The 5-year, 5-year forward breakeven measure of inflation expectations. Does she see this measure as important or too noisy to be used as a policy metric?  What is her preferred metric?... 3. Considering that recent updates of your optimal control framework now suggest that the normalization process should already be underway, how useful do you believe such a framework is for the conduct of monetary policy? What specific framework are you now using to dismiss the results of your previously preferred framework?... 4. St. Louis Federal Reserve President James Bullard has defined a specific metric to assess the Fed's current distance from its goals. What is your specific metric and by that metric how far is the Fed from it's goals?  What does this metric tell you about the likely timing of the first rate hike of this cycle?... 5. Why is the Fed setting the stage for raising interest rates next year while inflation measures remain below target? What is the risk, exactly, of explicitly committing to a zero interest rate policy until inflation reaches at least your target?... 6. High yield debt markets are currently under pressure from the decline in oil prices. Are you confident that macroprudential tools are sufficient to contain the damage to energy-related debt? If the damage cannot be contained and contagion to other markets spreads, what does this tell you about the ability to use low interest rate policy without engendering dangerous financial instabilities?"

  3. Severin Borenstein: Gas prices are going up, but it's a small price to pay at the pump to address climate change: "Under California's cap-and-trade program... wholesale gasoline distributors... will have to buy... one emissions allowance for every metric ton of greenhouse gases you emit when you burn the gasoline.... At the current price of allowances... that works out to about 10 cents per gallon of gas.... Unfortunately, as the date for expanding cap-and-trade to transportation fuels approaches, both the program's opponents and supporters have been exaggerating how much or little impact it will have.... The oil lobby... is claiming that the change will raise gas prices 16 to 76 cents... based on two analyses that were done many years ago.... The oil industry knows what allowances actually sell for today.... But they are choosing to stick with the outdated--and scarier--estimates.... Some proponents... are saying that Big Oil is not required by law to raise its prices, so it will be its own choice if it does, not the fault of the cap-and-trade program. This is just as disingenuous.... By establishing a price for emissions, California sends a signal to the rest of the country and the world that we recognize the risk of climate change and are willing to take actions to address it.... No one thinks California's climate change program alone will solve this global problem, but if advanced economies like ours aren't willing to step up, there will be no solution at all."

  4. Tyler Cowen: Comparing Living Standards Over Time: "I say I prefer $100k[/year] today to $100k[year] in 1964, that being a nominal rather than a real comparison.  If you are not convinced, try comparing $1 million or $1 billion (nominal) today to 1964. For some income level, we have seen net deflation. But here’s the catch: would you rather have net nominal 20k[/year] today or in 1964?  I would opt for 1964, where you would be quite prosperous and could track the career of Miles Davis and hear the Horowitz comeback concert at Carnegie Hall. (To push along the scale a bit, $5 nominal in 1964 is clearly worth much more than $5 today nominal. Back then you might eat the world’s best piece of fish for that much.) So for people in the 20k a year income range, there has been net inflation. Think about it: significant net deflation for the millionaires, but significant net inflation for those earning 20k a year.  In real terms income inequality has gone up much more than most of our numbers indicate."

  5. Paul Krugman: Dodd-Frank Damaged in the Budget Bill: "The securities and investment industry--perhaps affected by New York’s social liberalism, perhaps recognizing the tendency of stocks to do much better when Democrats hold the White House--has historically split its support more or less equally between the two parties. But that all changed with the onset of Obama rage. Wall Street overwhelmingly backed Mitt Romney in 2012, and invested heavily in Republicans once again this year. And the first payoff to that investment has already been realized. Last week Congress... included... a rollback of one provision of the 2010 financial reform... [a] significant but not a fatal blow to reform. But it’s utterly indefensible. The incoming congressional majority has revealed its agenda--and it’s all about rewarding bad actors.... What just went down isn’t about free-market economics; it’s pure crony capitalism.... Few Democrats actually believ[e] that undoing Dodd-Frank is a good idea. Meanwhile, it’s hard to find Republicans expressing major reservations about undoing reform. You sometimes hear claims that the Tea Party is as opposed to bailing out bankers as it is to aiding the poor, but there’s no sign that this alleged hostility to Wall Street is having any influence at all on Republican priorities...."

  6. Dani Rodrik: Good and Bad Inequality: "Latin America is the only world region where inequality has declined since the early 1990s. Improved social policies and increased investment in education... the decline in the... 'skill premium' has also played an important role.... If... an increase in the relative supply of skilled workers, we can be hopeful that... faster growth.... But if... decline in demand for skilled workers... industries on which future growth depends are not expanding sufficiently.... Automation and other technological changes, globalization, weaker trade unions, erosion of minimum wages, financialization, and changing norms about acceptable pay gaps within enterprises have all played a role, with different weights in the United States relative to Europe. Each... has a different effect.... Technological progress clearly fosters growth, the rise of finance since the 1990s has probably had an adverse effect.... It is good that economists no longer regard the equality-efficiency tradeoff as an iron law. We should not invert the error and conclude that greater equality and better economic performance always go together. After all, there really is only one universal truth in economics: It depends."

  7. Will Wilkinson: Blogging as Being: "My personal blog... goes back to November 2001, and I keep the whole thing online as a matter of principle, despite its damning evidence of a once-serious interest in Ayn Rand, because it is... a record of my intellectual and moral identity.... If I did not maintain its public existence I would begin to shade the truth about myself to myself, the better to conform to whatever idea about myself I am currently in the grip of, and would start to believe I had always been the way I’d prefer to imagine I had always been. And we don’t want that."

Should Be Aware of:


  1. Lizzie Wade: Wealth may have driven the rise of today’s religions: "Today’s most popular religions all have one thing in common: a focus on morality. But the gods didn’t always care whether you are a bad person. Researchers have long puzzled over when and why religions moved away from a singular focus on ritual.... A new study proposes that the key to the rise of so-called moralizing religions was, of all things, more wealth.... Baumard and his colleagues... [believe] that when people have fewer resources at their disposal, prioritizing rewards in the here and now is the best strategy.... But when you become more affluent, thinking about the future starts to make sense.... The values fostered by affluence, such as self-discipline and short-term sacrifice, are exactly the ones promoted by moralizing religions.... In cultures where people had access to fewer than 20,000 kilocalories a day, moralizing religions almost never emerged. But when societies crossed that 20,000 kilocalorie threshold, moralizing religions became much more likely, the team reports online today in Current Biology. ‘You need to have more in order to be able to want to have less,’ Baumard says."

  2. Daniel Davies: The most powerful financial regulators in the world — and they never asked for the job**: "The deep issue here is that clearing houses are the choke-points of financial trading... even more the case going forward, as regulators have insisted that more and more markets should be centrally cleared. Given this, you can see why it’s such a big priority for supervisors and market players alike that a clearing house should never be allowed to fail.... I worry, quite a lot, that people are kind of missing the point. The problem with clearing houses is really not the remote, theoretical (although admittedly horrifying) risk that one of them might suffer a counterparty default which forced it into insolvency. The problem about clearing houses is that the ways in which they protect themselves against credit risk tend to have the effect of radiating liquidity problems out into the rest of the system..."

  3. Ian Millhiser: A Non-Lawyer’s Guide To The Latest Supreme Court Case Attacking Obamacare: "An amendment to the Affordable Care Act requires the federally-run exchanges to report various information that they would only be able to report if they were providing subsidies, such as whether taxpayers received an ‘advance payment of such credit’; information needed to determine individuals’ ‘eligibility for, and the amount of, such credit’; and ‘[i]nformation necessary to determine whether a taxpayer has received excess advance payments.’ These reporting requirements make no sense if federally-run exchanges were not intended to offer subsidies"


Noted for Your Morning Procrastination for December 17, 2014