Brad DeLong

McCain Campaign Multiple Choice

Is this (a) between truth and self-deception, (b) between self-deception and mendacity, or (c) beyond mendacity?

From Ed Morissey:

Team McCain conference call/a>: With a mere four days left, the polls have begun to tighten in the presidential race.  Pennsylvania appears within the margin of error, and a last-minute surprise could turn the race in McCain’s favor.... [Rick] Davis says we’re witnessing one of the greatest comebacks in political history.... Crowds are huge, and energy is high. Sarah Palin is electrifying crowds and bringing people back into the game.... [T]hey have Iowa as a dead heat, and Obama seems to confirm that [by]... going back to Iowa over the weekend....

McInturff says that intensity is increasing among core Republican coalitions, and that has brought a narrowing of the gap in party identification.... [T]his will be a close election, but... McCain is very much in it.... The RNC’s ability to raise money has given the GOP parity on GOTV and in advertising. Their turnout efforts grow week-on-week, and may be the most underreported aspect of the campaign.  The microtargeting, VOIP efforts, and analytical models continues to improve the GOTV efforts.... They polled the viewers of the Obamamercial to see whether it convinced people to vote for him... “less likelies” slightly outpolled the “more likelies”.  Team McCain also noted that the money they spent on that infomercial would have bought a week’s worth of advertising in all of the battleground states.

The McCain campaign says they will outspend Obama over the next 72 hours by $10 million...

Ross Douthat vs. Joe the Plumber

Ross Douthat:

Obama and the Race Card - Ross Douthat: Think about it this way: Maybe the "Joe the Plumber" line is a super-coded attempt to play the race-and-welfare card. Hell, maybe all of the race cards McCain has supposedly played... have been completely cynical attempts to tap into the white electorate's latent or not-so-latent racist sentiments. If this is your take on the election, though, you should acknowledge that if these were all attempts to play the race card, they've been pathetic.... [T]he Obama campaign (and its surrogates and allies) have done a masterful job of boxing the GOP in on race-related fronts, playing off the media's biases, McCain's sense of honor, and the Republican Party's unpleasant history to create a climate of hair-trigger sensitivity around terrains and topic that usually hurt Democratic candidates...

Joe the Plumber:

Don't listen to talk show hosts, don't sit there and listen to papers, I mean, get out there, get the information. Learn it. You know, the facts are out there. Once you find out the facts, it becomes quite obvious.... Get out and vote and, as far as my vote, it's going to be for a 'real American', John McCain...

I don't think it requires hair-trigger sensitivity, Ross, to understand what John McCain's #1 surrogate is saying: Joe the Plumber is saying that Barack Obama is not a 'real American'--and if Barack Obama is not a 'real American', Ross, neither are you.

It's not too late to endorse Barack Obama, and so gain a seat at the table of patriots trying to make America live up to its promise over the next four years. Or you can vote for John McCain and spend the next four years making small talk with Sarah Palin and Joe Wurzelbacher.

Kathryn Jean Lopez of National Review Is for Obama too...

She cannot say that she is for Obama because of who pays her paycheck, but, in light of this week's news from Larry Eagleburger and the hermeneutic method of Leo Strauss, the implications of this post on what she really thinks of McCain's choice of Sarah Palin as vice presidential nominee are very clear:

The Corner on National Review Online: An Important Election Reminder   [Kathryn Jean Lopez] From a Marine dad:

My son started boot camp for the USMC two weeks ago. He is putting is butt on the line for you and defend the Constitution of the US and defend it from all enemies.  He is not asking for your support. He is going into special operations and is willing to die to protect you. A completely incompetent Commander in Chief could put my son in serious jeopardy. American might be resilient, but my son would be put at risk.

Welcome to the fight, KJL!

John McCain: Dishonest and Dishonorable

So much so that Reagan chief-of-staff Ken Duberstein is voting for Obama:

Former Reagan chief of staff Ken Duberstein told CNN's Fareed Zakaria Friday he intends to vote for Democrat Barack Obama this Tuesday. Duberstein said he was influenced by another prominent Reagan official - Colin Powell - in his decision. "Well let's put it this way - I think Colin Powell's decision is in fact the good housekeeping seal of approval on Barack Obama." Powell served as national security advisor to Reagan during Duberstein's tenure as chief of staff.

Wall Street Journal Crashed-and-Burned Watch (James Fallows on Fouad Ajami and Paul Gigot Edition)

Why oh why can't we have a better press corps? Outsourced to James Fallows:

An essay by someone who has never worked in a political campaign (updated) - James Fallows: From [Fouad Ajami on] the Wall Street Journal op-ed page [edited by Paul Gigot]:

There is something odd -- and dare I say novel -- in American politics about the crowds that have been greeting Barack Obama on his campaign trail. Hitherto, crowds have not been a prominent feature of American politics.

What???  A general-election presidential campaign consists, roughly speaking, of appearing before one crowd after another all day long. I know this from having worked in one, but all you have to do is watch TV to get the idea.

I know, it is hardly shocking that the WSJ would publish a piece suggesting that Barack Obama is the wrong man for the times. (This one by Fouad Ajami.) Nor that it would reach, Pravda-like, to find the latest argument against him. Haven't looked, but I bet that when Sarah Palin was drawing big crowds the Journal's editorialists noted this with approval.

But doesn't a certain self-protective "wait a minute, can we really say that?" instinct kick in at some point?

No.

Obama Buys Airtime in Arizona

John Dickerson of Slate says that McCain campaign pollster Bill McInturff's declaration that the race is effectively tied is somewhere between truth and self-delusion. Chris Cilizza does not buy that at all:

Who's Got The Momentum? - The Fix: [Rick] Davis cited Iowa, where Obama is expected to visit today, and where McCain's internal numbers showed the race dead even. (An independent poll out this morning shows Obama leading McCain 53 percent to 39 percent in the Hawkeye State.)... Obama remains very much in the driver's seat heading into the final weekend of the race.... Republicans have seized on the new Fox News/Opinion Dynamics poll that showed Obama leading McCain by a 47 percent to 44 percent margin.... The general trend in national polling suggests some level of tightening but nothing that would point to a major change in momentum for McCain. The pollster.com average of all national polls -- the full chart is below -- puts Obama at 49.7 percent and McCain at 44.2 percent.

The evidence against a McCain "surge" is even more determinative when it comes to the battleground states. Take Indiana for example. Yesterday alone, two new independent polls in Indiana showed the race dead even -- one by Selzer & Co. and the other by Research 2000. Asked about the tightness of Indiana, Davis cited a new Rasmussen poll out today that put McCain ahead 49 percent to 46 percent. But, remember that George W. Bush carried Indiana by 21 points in 2004 and 16 points in 2000. The very idea that Indiana is shaping up to be a nip and tuck race seems to belie the Republican argument that things are moving in McCain's direction in the final days.... [N]atural tightening does not equal momentum. At least not yet.

Cutler and DeLong: Obama Can Cure Health Care's Ills

Harvard Kennedy School - David M. Cutler and J. Bradford DeLong commentary: Obama Can Cure Health Care's Ills: October 29, 2008 Forbes.com

Every other North Atlantic country spends less than half what we spend on medicine. Every other North Atlantic country is healthier than America.

This extraordinary gap--between how much we spend on health care and what we get for it--is not because our doctors, nurses and pharmacists are unskilled or undedicated. On the contrary, they are the best in the world. But they are embedded in a poorly designed system that gives us low value for our money.

Taking the long view, the inefficiency of our health system is the biggest threat to economic growth over the next two decades--bigger, even, than the current financial crisis. The doubling of health insurance premiums since 2000 has forced employers to choose between cutting wages, cutting benefits and hiring fewer workers. The result is lost profits and lost wages, in addition to pointless risk, insecurity and a flood of personal bankruptcies. Without serious changes, this problem will only get worse.

Democratic presidential nominee Barack Obama wants to address the health care crisis head-on. Like Franklin Roosevelt, who faced equally large challenges, Obama will try many strategies and be guided by results, not predetermined ideological conviction. The strategies he proposes fall into four general areas.

One element of reform is information: Doctors, patients and administrators simply do not know enough about which treatments work and which are ineffective or harmful. An estimated one-third of medical costs go toward care with no value. Obama proposes to jump-start the long-overdue information revolution in health care with $50 billion to computerize the medical system and spread the word about best practice.

A second element is to fix perverse incentives in medical care. Doctors and hospitals today are paid for performing procedures, not for helping patients. Insurers make money by dumping sick patients, not by keeping people healthy. Obama proposes to base Medicare and Medicaid reimbursements on patient outcomes in a coordinated effort to drive the entire payment system toward paying for improved health rather than just more care.

A third element is to help the small players--individuals and small firms--get the same deals as large buyers. Obama proposes purchasing pools where individuals and small firms get the same low rates as large firms and sick people get coverage the same way as the healthy. Our current system of excluding the sick from coverage does not make their costs disappear but rather assume other, less efficient guises.

A fourth element is prevention. In today's health-care market, less than one dollar in 25 goes for prevention--despite the fact that three-quarters of medical care is for conditions that could be prevented. Guaranteeing access to preventive services will improve health and, in many cases, save money.

As the reforms take hold, costs will drop. As costs drop, insurance will become more affordable. Millions previously priced out of the market will be able to buy insurance. Add on tax credits for those still unable to afford coverage and for small businesses, and everyone will have access to affordable, portable insurance.

By contrast, Republican presidential nominee John McCain believes that the central problem in health care is that people have too much insurance and, because of it, consume too much medical care. McCain seeks to reform the health care system by taxing and punishing businesses that offer employer-sponsored insurance. Once they are forced to drop coverage, he holds, their workers will find themselves in the non-group health insurance market, where they will buy less generous plans and go to the doctor less often. Modest tax credits would help some, but nowhere near all, of the uninsured afford coverage.

We are skeptical of the value of McCain's plan for three reasons. First, the tax increase McCain proposes and the resulting dislocations it creates are the last thing American business needs now, when it's in the midst of a severe economic crisis. Second, the non-group market is nowhere near as rosy as McCain makes it out to be. People who buy insurance in that market now are risk rated, see their pre-existing conditions excluded from coverage or priced higher and are never secure in their coverage. The McCain plan would amplify, not fix, these problems.

Third, the McCain health plan has a huge financing hole--between $1 and $2 trillion over the next decade. Only the most draconian Medicare and Medicaid cuts would make the plan work. But such cuts would be devastating for the very providers that are needed to make health reform work.

It is clear to us that Barack Obama's health care reform plan is much better for the country, and much more likely to be successful, than John McCain's.

---

David M. Cutler, the author of Your Money Or Your Life: Strong Medicine for America's Health Care System, is the Otto Eckstein professor of applied economics at Harvard's department of economics and Kennedy School of Government. He is also an adviser on health care to Barack Obama. J. Bradford DeLong, who blogs at http://delong.typepad.com/sdj/, is a professor of economics at U.C. Berkeley. Both authors are research associates at the National Bureau of Economic Research.

Leonid Teytelman: Obama For a Sound Economy

Leonid Teytelman asks:

Obama For a Sound Economy:Barack Obama has repeatedly said that he will lower taxes for 95% of Americans. Those making $250,000 or above will see their tax rates rolled back to the pre-Bush levels, and the 15% on capital gains will go back to the 20% that it was before Bush. These changes are what John McCain keeps referring to, threatening that Obama wants to raise taxes, take away jobs, and hurt the already suffering economy. So, we asked the individuals who would be affected by these increases, "Why are you supporting Barack Obama? Why do you think he will help the economy?"

Answers:

During the past eight years the future American economy has been mortgaged by extraordinary federal borrowing that increases the national debt and decreases discretionary flexibility in the national budget. We must move the country back to a fiscally sound footing. Senator Obama's proposals and intentions are clearly aimed in this direction. He brings fresh and refreshing candor to the political dialogue and remarkable leadership skills that will serve the country domestically and, perhaps more important, internationally. His policies show a clear respect and regard for scientific and technical consultation. As a scientist and engineer, I look forward to his election. It will mark a milestone in our history an  . . .[read more] -- Vint Cerf, Vice President, Google, Reston, VA

I've already contributed to and voted for Barack Obama despite the facts that I'm a 70-year-old white male and small business owner whose taxes will increase when he is president. Obama is the first Democrat I've voted for and the first presidential candidate to whom I've sent money. We need a leader who will focus on education for all; a thoughtful and intelligent leader who can inspire this great nation of ours during the difficult times ahead. -- Bill Struve, CEO of Metal Adventures Inc., Wilmington, NC

I do not think it's class warfare [Obama's economic policies], I think it's empirical economics. The real issue is the empirical content of the supply side economics dogma. It's pretty threadbare. The "real business cycle" theory is simply inconsistent with empirical evidence. That does not prevent it from being taught as gospel to students (it's really gospel not empirical evidence). I would first and foremost talk to Ray Fair (Yale) and Mark Watson (Princeton) about the evidence for the supply side model. What is ironic is that those who preach supply side practice a crude version of Keynesian economics that ignores all of those incentive effects claimed to be so important by the supply side theorist  . . .[read more] -- James Heckman, Nobel Laureate in Economics, Professor of Economics, University of Chicago, Chicago, IL

I will pay more taxes under the Obama administration, and like Warren Buffet and Adam Smith, I think that is not unreasonable. In return I get a country that: invests more in basic science research (which will grow the economy faster), understands the need for a transformative switch to a new energy economy (which gains jobs, decreases oil usage and alleviates climate problems), and regains respect on the world stage (bettering all of us in the USA, and all of us on earth). I call that a bargain. -- Peter Norvig, Ph.D., Director of Research, Google, Palo Alto, CA

In the last few decades, the Democrats have shown that they know how to stimulate the economy and Obama is very much in that tradition. One of his key plans is to invest in science because he knows that science generates new ideas, innovation and ultimately solid economic growth. For scientists, he will provide the wherewithall for us to investigate our ideas and to find new directions for economic growth. Obama will also adjust the very unfair tax structure that was put in place by Bush, which reduced taxes on the wealthy and put more of the burden on the middle class. I must admit that by his definition, I am one of the wealthy. But like Bill Gates and Warren Buffett, I believe that I should be paying more (  . . .[read more] -- David Baltimore, Nobel Laureate in Medicine, Professor of Biology, California Institute of Technology, Pasadena, CA

My view of the future is extremely dim - whoever is elected will have ruins to deal with, with rampant inflation, banking mess, closures in the public sector. Obama definitely has the right qualities with his steady analytical approach to handle this extraordinary economical situation. Obama's competent advisers will also be critical to charting the path to recovery. On a more personal level, as an owner of small business with its main market in scientific instrumentation, I hope Obama can put an end to the shameful situation with science funding in the US. -- Dmitry Teytelman, Ph.D., President, Dimtel Inc., San Jose, CA

The announcements from the Treasury this weekend, October 11-12th, however belated are welcome. Should Paulson take the next step and guarantee interbank lending, we will be where we should have been on the eve of his ill advised decision to allow the collapse of Lehman Brothers just over four weeks ago. Something had to be done, but something much better could have been done. The Treasury proposal to buy toxic mortgage assets wasted valuable time and was the result of Paulson's refusal to consider taking equity or preferred shares plus warrants in return for direct investments in financial institutions. The purchase of toxic assets will take months to implement and would be ineffective, unless the government  . . .[read more] -- Alan L. Madian is a Director of LECG, an economic, finance and management consultancy. He served as CEO of an investment bank and as economic advisor to governor of New York and the U.S. Senate Subcommittee on Antitrust. McLean, VA

I am the founder and president of a small multinational business with headquarter in New York City. One of the most important issues for me, with respect to my company, is that of employer-sponsored health insurance. Over the last decade, I have seen significant increases of about 10 percent a year for the health care costs that I cover for each employee. Unfortunately, these increases will seem tame compared to what will happen if McCain is elected and eliminates tax breaks for employer-provided insurance. I fear McCain's proposal would be bad for my business, and bad for my employees. After carefully reviewing Obama's health insurance proposals, there is no doubt in my mind that Obama's plan would be far  . . .[read more] -- Joseph Duncan, President, Geotext Translations, New York, NY

Taxes seem to be the "third rail" in American political discourse....the T-word that cannot be said. My wife and I are very fortunate in having two good incomes and stable jobs, and hence are in the category of Americans that Obama would like to raise taxes on. While paying more taxes is never pleasant, how are we going to dig out of the present economic and political situation without some of us paying up a little bit more? The McCain/Palin administration would have us continue to believe the fantasies that go back to Ronald Reagan: that we can have more by paying less, and that our education system will improve with fewer taxes to pay for it. Personally, I am not ready to drink their kool-aid. The present fin  . . .[read more] -- Jasper Rine, Richmond, CA

I was dismayed to see that two of Princeton's economics faculty could support McCain's Bush-Reagan economic opinions. The false aura of prosperity of a very small managerial class has concealed the fact that the great majority of us, if asked whether we are really better off now than eight years ago, would say no. It is a provable fact (look at most countries in Africa or South America) that there is some level of income maldistribution at which the economy no longer works: it works best if essentially everyone has some stake in it and some hope for improvement. Most sensible economists would also agree that there are many parts of the economy which go down the drain if not supported adequately by the cent  . . .[read more] -- Philip Anderson, Nobel Laureate in Physics, Professor of Physics, Princeton University, Priceton, NJ

A comment about Obama's proposal to raise the maximum tax on dividends to 20%: Except for the 15% Bush/McCain aberration that went into effect in 2003, maximum rates of tax on dividends for the last 40 or 50 years have ranged from 28% to 70%. Thus even Obama's modest raise would leave the maximum rate of tax on dividends well below historical precedents. -- Robin Westbrook, J.D., Practitioner in Residence, Tax Clinic, American Univ. Washington College of Law, Washington, DC

The science policy over the last eight years has been a disaster. It has been extremely difficult for new scientists just setting up their laboratory to obtain support to run their laboratories. Science, research, and technology are the engines that run our economy. The only way that we are going to become independent of oil, have better, cheaper health care and embark on a greener economy is through much greater investment in research and technology development. This is not a luxury, but a necessity to ground our economy back on the work and creative productivity of our great nation. Obama will provide the leadership and resource to get this done. -- Mario Capecchi, Nobel Laureate in Medicine, Distinguished Professor of Human Genetics and Biology, University of Utah School of Medicine, Salt Lake City, UT

I am a business owner, asset manager and financial advisor based in New York City, and a strong supporter of Senator Barack Obama for President. Senator Obama promises to raise my taxes and I will be happy to pay the proposed higher rates. Let me tell you why: I believe that paying taxes for worthy programs that help to strengthen America such as early childhood education, improvement in school programs, providing loans to students for college and supporting better pay for teachers, police, fire services and providing social services to the needy are part of my civic duty as a responsible and patriotic citizen. I do not mind paying taxes, but I do care that my taxes are not wasted on an unnecessary war and subs  . . .[read more] -- Ian D. Quan-Soon, MBA, CFP, President, IQ Financial Services, Inc., New York, NY

We need to work to make the economy fundamentally sound again. That involves fixing the mess on Wall Street and making investments in the areas of our economy that have been neglected too long: health care, energy, and education. Sensible investments in those areas will promote US economic growth now and for the next several decades. -- David Cutler, Research Associate, National Bureau of Economic Research, Professor of Economics, Harvard Univeristy, Cambridge, MA

My support for Barack Obama is based upon multiple factors including science policy. I have no question that our country needs his leadership, and I am optimistic about our country's future. The real work begins in January, and we should all get behind our new President. -- Peter Agre, M.D., Nobel Laureate in Chemistry, Director of the Johns Hopkins Malaria Research Institute, Baltimore, MD

We have built up a business that grosses over six million dollars. Some years we are lucky enough to have enough profit that slides us into a higher income bracket. It's easy enough to distribute the profit among the people who work for the bookstore and avoid higher taxes, but I have always believed that paying taxes is patriotic. We are supporting our nation in collaboration with other Americans investing in the future, allowing all Americans to acheive a better life. Under President Obama I hope our taxes can be used to support improvements in education, health, and alternative energy. -- Carla Cohen, Co-Owner of Politics and Prose Bookstore, Washington, D.C.

My husband and I both support Barack Obama because we believe in his sound analytical approach to the current economic crisis that jeopardizes the future of our society as we know it. It is unfortunate that McCain-Palin label Obama's efforts as "socialist" when McCain has supported the bailout of banks - very hypocritical and divisive at a time when we need everyone to come together and be part of the solution - Obama's very consistent message. -- Sylvia McKean, M.D., Boston, MA

Paying taxes is a privilege for living in this country. We can no longer continue with the myth that we can have all the benefits this country provides without paying for it. Obama shares that view and offers a plan for a more equitable society.I share his commitment to provide proper health care for those who have been doing without for so long.I consider myself fortunate in being able and willing to have my taxes raised in order to provide assistance for those working families still in need. -- Paul Berg, Nobel Laureate in Chemistry, Professor of Biochemistry, Stanford University School of Medicine, Stanford, CA

I am as concerned about the future of United States as anyone, even though I don't have any kids whose future the Republican Party is so clearly putting in jeopardy. We all can see that Bush has messed up essentially every major decision he had to make as president, and McCain seems on course to continue the unbroken record. Look where that kind of person has taken us. Yes, the government now IS the problem, and Bush has made it so. Even now when Bush or McCain go on TV to say how concerned all people must be about the current financial mess and how it is a cricis, neither can bring themselves to give even the slightest indication that he has any responsibility for having dug us into this hole. In light of the  . . .[read more] -- Thomas Cline, Ph.D., Professor of Genetics, Genomics, and Development, University of California, Berkeley, CA

And Edward Prescott, Nobel Memorial Laureate in Economics, Arizona State University:

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 12:00 PM Dear Professor Prescott: Two of my friends and myself have started a web site, http://www.obamaforeconomy.com. We would absolutely love to have a statement of support for Obama from you. The inspiration for the site are the many conversations that we’ve had with supporters of McCain. Many people we know hesitate to vote for Obama because they are afraid that increasing taxes on the wealthy would derail the economy; some are concerned about their own income or capital gains taxes going up. The goal of the site is to dispel the illusion that Obama’s economic policies are a form of class warfare or redistribution by displaying the reasons why affluent supporters and experts believe Obama would be better for the US economy.

From: Edward Prescott Date: Sat, Oct 11, 2008 at 12:22 PM: Why is Western Europe by one-third depressed relative to the U.S. ? Answer is that they are following the policies that Obama is proposing. This is an established scientific finding. All respectable students of public finance agree the taxing of capital income is bad policy. It distorts the inter temporal trade off between consumption today and consumption in the future. The corrupt rich lawyers and Wall Street bankers support Obama. Obama caters to the special in interests. That is why the CEO’s of the big companies support him and the people oppose him

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 12:35 PM Dear Professor, Thank you so much for the response. It is quite a forceful statement. Given my former Soviet Union residence, I have a very strong revulsion when it comes to socialist or communist ideas. However, I do not see Obama’s proposals as anything near the socialist economics. It seems to me that investment in infrastructure is sorely lacking in the US, and I think that is the main reason why Bloomberg and “Economist” laude Obama’s infrastructure proposals. The overhead on our healthcare is an enormous drag on the US economy, and Obama’s healthcare proposal seems to be on the right track to reducing it. As for populist messages and protectionism, I see these as a sad reality of American politics. I think that Obama spews nonsense and panders to the base when talking about many economic issues (protectionism, biofuels, etc.). I view that as a sad political reality that both McCain and Obama face. McCain is locked into the lower-tax-cut theme (or the ridiculous gas tax holiday) just because of his party, even though he opposed the tax cuts before. One other critical factor for me is John McCain’s early support for the rush to Iraq. I have no respect left for politicians (including Biden), who supported this war. Best, Leonid

From: Edward Prescott Date: Sat, Oct 11, 2008 at 1:54 PM: Infrastructure investments are best made at the local and state level. The Army Core of Engineers and the levies in New Orleans were Bama in action. Our health systemn was great until the federal government got involved. Mc Cain has made a serious proposal to improve the system. Obama’s proposal is to make a bad system worse. Edward C. Prescott P.S. With people like you I understand why Ruyssians can not governed themselves.

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 2:31 PM Dear Professor: It is pretty obvious that we will never see eye-to-eye on these issues. There is a good reason why so many well-informed and educated people disagree on whether McCain or Obama would be better for this country. What I love about the United States is that such disagreements are welcome in public, and that in the upcoming presidential elections, there is a sort of a referendum on who has the better ideas. While the elections are still far away and anything can happen, I do have to note that at this point, Obama is leading McCain by quite a margin in the polls. Particularly when it comes to the economy, overwhelming majority of the public thinks that Obama would do a better job of leading the country. I am not sure how that reconciles with your statement that “CEO’s of the big companies support him [Obama] and the people oppose him.” Lastly, I must say that I am perplexed by your comment that it is because of people like me that the Russians cannot govern themselves. To be sure, the Russian government and political system is a mess, thanks to the communism and the botched transition out of it. There are a million causes of the Russian problems, but people like me being one of them? I am a socially-liberal and fiscally-conservative voter. I am not registered with either party (find both of them pretty disappointing). I tend to form my opinions based on much reading and thinking. My opinions may differ from yours, but isn’t that the point of democracy and debate? Isn’t that how the correct decisions are ultimately made? How am I the problem?

From: Edward Prescott Date: Sat, Oct 11, 2008 at 4:11 PM: Show some honesty. Facts are facts and you choose to ignore. Scientist collusions follow from their assumptions. It is not a matter of religious belief. Are you Russians goiung to getogether with the Germans again and split up Poland again? You invade Georgia.

From: Leonid Teytelman Date: Sat, Oct 11, 2008 at 4:22 PM Dear Professor: I am a scientist. Facts and the scientific method are what I go by; but as always is the case in science, same facts can lead to different and competing models. I think this is exactly what is happening in our exchange - we observe the same facts, but our interpretations differ. By the way, I am a United States citizen and came to this wonderful country in 1990 as a refugee from the former Soviet Union. I don’t think I bear much responsibility for the invasion of Georgia. Leonid Teytelman

From: Edward Prescott Date: Sun, Oct 12, 2008 at 6:45 AM: In economics there is almost always one theory or no theory. You and your think a likes destroyed Russia and now are destroying the United States. Society needs religion to get around the time inconsistency problem. Your religion of Statism is a not a good religion. It is detrimental to the welfare of the people. A basic tenet of my religion is free to choose and to enter into mutually beneficial contracts.

Berkeley Housing Symposium: Comment on Leamer and Shiller

Moderator: Case
Papers: Leamer, Shiller
Discussants: Hall, Wilcox, DeLong

In Ed Leamer's formulation, our eleven recessions since World War II--for Robert Hall and his business-cycle dating colleagues will someday declare that the economy peaked in the fourth quarter of 2007 and has since then been in a recession--consist of one sharp reduction in defense spending, one "comeuppance" after the end of a high-tech bubble, eight housing- and consumer-driven recessions, and today. Ed wants to be a macroeconomic time-series econometrician, and use the patterns of previous housing- and consumer-driven recessions to analyze what is going on.

Now this is a brave, a bold, but I think a foolhardy exercise. Even in normal times, I would not wish the task of a macroeconomic time-series econometrician on a mangy dog. Especially not now. For what is going on now is not only not like the post-Korean War structural adjustment and shift out of defense and into consumption, not only like the post-2000 structural adjustment and shift out of Silicon Valley and into housing, but also not like the previous eight housing- and durable-led recessions we have seen since World War II.

You see, those eight other previous post-WWII housing recessions have their origins in the big conference room of the Eccles Building on the Mall in Washington DC. The impulse is that in each case, at some moment, the 19 voting and non-voting members of the Federal Reserve Open Market Committee said: "Oh, BLANK, inflation is too high. We can't let this go on. We have to..." and then the Keynesian members of the committee say "raise interest rates" and the monetarist members say "stop interfering with the normal market processes that would push interest rates up." Basically, the Federal Reserve fights inflation by attempting to create deficient demand. It creates deficient demand by using high interest rates as a brick with which to hit the housing sector on the head, and also credit-financed consumer durables on the head as well. Demand shrinks, production shrinks, employment shrinks, income shrinks until the people in the Eccles Building say either "we have done enough" or "ooops, we've done more than enough" or "ooops, we just bankrupted Mexico" and lowers interest rates, and housing and credit-financed consumer durables bounce back.

That is not what is happening now. Something different is happening. The Federal Reserve did not hit the housing sector on the head with a high interest-rate brick. Wall Street has done something bad. Do patterns derived from looking back at historical events unlike what is going on now in key features provide a useful guide, or rather in what respects do they provide a useful guide and in what respects are they misleading?

That is a question. I know that Ed Leamer is very smart and very brave to be a macroeconomic time-series econometrician. But it is not clear what macroeconomic time-series econometricians have to offer here. I have no answer.

Robert Shiller wants to step back and talk about long-run considerations for policy. He is one of the leaders in what is now a consensus among economists that we need to reject the theory of economic policy that I call "Greenspanism." Greenspanism is the doctrine that the Federal Reserve must make sure that consumer-price inflation stays low and that expectations of future consumer-price inflation stay low, but that otherwise should let the macroeconomy govern itself and if exuberance leads to an episode in which the economy is saying laissez les bon temps roulez, then laissez les bon temps roulez. If the exuberance turns out to be irrational, and if a big crash does come, and if the risk that crashes is not properly diversified but is instead held unhedged by highly leveraged financial intermediaries, and if they go bankrupt--well, the central bank and the Treasury have the tools to clean up the mess. Better to clean up the mess afterwards than to, anticipatorily, hit the economy on the head with a brick and cause high unemployment and business bankruptcies just because you fear that a boom will turn into an irrational bubble which will generate a crash in which you find that risk was not properly hedged and your big financial institutions go belly-up and then you will have a problem.

Nowadays there are few Greenspanists. Indeed, Alan Greenspan is no longer a Greenspanist. I relied, he said, on the self-interest of financial-sector professionals to keep their organizations properly hedged. And, properly hedged, we shouldn't have a problem. There are now $2T of mortgage security losses. There are $70T of financial assets in the global economy. A 3% decline in aggregate asset values should not be a big problem for the macroeconomy. Yet it is.

So there are no Greenspanists now. To be a Greenspanist you need to believe that (i) market exuberance won't turn irrational or (ii) if it does it will deflate rather than crash or (iii) if it crashes portfolios will be diversified or (iv) if they aren't diversified the financial system will be able to work it out on its own. We don't believe, anymore, that we can trust that even one of these four lines of defense will hold.

So if we are none of us Greenspanists now, what should we do--both in the short term, now, and in the long term, in the way of institution design?

That is, also, a auestion. I have no answer--this is an answer-free discussion. I do know that I do not trust Henry Paulson: his career means that his thinking is too close to that of the investment banking industry and his Republican ideology means that he cannot adopt policies that involve government control without being dragged kicking and screaming. I do trust Ben Bernanke: his academic career seems to have been ideal preparation for dealing with the worst financial crisis since the Great Depression, and his staff is very good and very large.

---

UC Berkeley Events Calendar: The Mortgage Meltdown, The Economy, and Public Policy: A UC Berkeley-UCLA Research Symposium: Conference/Symposium | October 30-31 | 8 a.m.-5 p.m. |  Alumni House

Featured Speakers: Ben Bernanke (via satellite from Washington, DC), Chair, Federal Reserve Board of Governors; Janet Yellen, President, Federal Reserve Bank of San Francisco; Sen. Darrell Steinberg (D-Sacto.), President pro Temp.-elect, California State Senate...

Papers: http://urbanpolicy.berkeley.edu/pdf/mortgagemeltdown.zip

UC Berkeley - UCLA Symposium The Mortgage Meltdown, The Economy, and Public Policy Thursday & Friday, October 30-31, 2008 Cal Alumni House, UC Berkeley

AGENDA

THURSDAY, OCTOBER 30TH

12:00pm Welcome and Opening Remarks: Stuart Gabriel, UCLA | John Quigley, UC Berkeley

12:15pm The Policy Maker's Perspective on the Financial Meltdown and the Economy: Janet Yellen, Federal Reserve Bank of San Francisco | Stuart Gabriel, UCLA, Moderator

1:15pm The Future of the Housing Finance System: Nancy Wallace, UC Berkeley, Moderator | Brad Blackwell, Wells Fargo Bank | John Krainer, Federal Reserve Bank of San Francisco | Paul Leonard, Center for Responsible Lending | Paul Jablansky, 400 Capital Management LLC

3:00pm Are Government Agencies Up To The Task?: Anthony Downs, Brookings Institution, Moderator | Robert Van Order, University of Michigan | Susan Wachter, University of Pennsylvania | John Weicher, Hudson Institute | Susan Woodward, Sand Hill Econometrics

FRIDAY, OCTOBER 31ST

8:30am Welcome and Opening Remarks: Stuart Gabriel, UCLA | Michael Schill, UCLA | John Quigley, UC Berkeley

8:45am Panel 1: The Crisis in Finance Markets: Karl E. Case, Wellesley College, Moderator | "Why are the Cycles in Homes and Consumer Durables So Similar?" Edward Leamer, UCLA | "Policies To Deal With the Implosion in the Mortgage Market" Robert Shiller, Yale University | Discussants: Brad DeLong, UC Berkeley | Robert Hall, Stanford University | James Wilcox, UC Berkeley

11:00am On the Future of Mortgage Finance in the United States Chairman Ben Bernanke Federal Reserve Board of Governors (via satellite) | Christina Romer, UC Berkeley, Moderator

12:15pm A California Policy Perspective on the Financial Crisis: Darrell Steinberg, President Pro Tem.-elect, California State Senate | Larry Rosenthal, UC Berkeley, Moderator

1:30pm Panel 2: Demography and Geography of Foreclosures Robert Edelstein, UC Berkeley, Moderator | "House Prices, Interest Rates, and the Mortgage Market Meltdown" Chris Mayer, Columbia University | "Subprime Mortgages, Foreclosures, and Urban Neighborhoods" Paul Willen, Federal Reserve Bank of Boston | Discussants: Mark Garmaise, UCLA | Walter Torous, UCLA | Alexei Tchistyi, UC Berkeley

3:30pm Panel 3: The Regulatory Frontier: Michael Schill, UCLA, Moderator | "Three Mortgage Innovations for Enhancing the American Mortgage Market and Promoting Financial Stability" Diana Hancock and Wayne Passmore, Federal Reserve Board of Governors | "Regulating the Investment Banks and GSEs After the Subprime Crisis" Dwight Jaffee, UC Berkeley | Discussants: Richard Green, USC | Richard Roll, UCLA |Lawrence White, NYU

Bob Hall Says: Capital Requirements

Berkeley mortgage conference: Bob Hall says: "Capital requirements! We need bigger and better procyclical capital requirements--for all financial institutions and not just commercial banks. Capital requirements!"

There Is at Least One Thing Lawrence Eagleburger Will Not Do for the Republican Party

I don't know of any other things he won't do for the Republican Party, but he won't endorse Sarah Palin:

Eagleburger Blisters Palin: "Of Course" She's Not Ready: A former Republican Secretary of State and one of John McCain's most prominent supporters offered a stunningly frank and remarkably bleak assessment of Sarah Palin's capacity to handle the presidency should such a scenario arise. Lawrence Eagleburger, who served as Secretary of State under George H.W. Bush and whose endorsement is often trumpeted by McCain, said on Thursday that the Alaska governor is not only unprepared to take over the job on a moment's notice but, even after some time in office, would only amount to an "adequate" commander in chief. "And I devoutly hope that [she] would never be tested," he added for good measure -- referring both to Palin's policy dexterity and the idea of McCain not making it through his time in office. (Listen to audio below.)

The remarks took place during an interview on National Public Radio that was, ironically, billed as "making the case" for a McCain presidency. Asked by the host whether Palin could step in during a time of crisis, Eagleburger reverted to sarcasm before leveling the harsh blow. "It is a very good question," he said, pausing a few seconds, then adding with a chuckle: "I'm being facetious here. Look, of course not." Eagleburger explained: "I don't think at the moment she is prepared to take over the reigns of the presidency. I can name for you any number of other vice presidents who were not particularly up to it either. So the question, I think, is can she learn and would she be tough enough under the circumstances if she were asked to become president, heaven forbid that that ever takes place?

"Give her some time in the office and I think the answer would be, she will be [pause] adequate. I can't say that she would be a genius in the job. But I think she would be enough to get us through a four year... well I hope not... get us through whatever period of time was necessary. And I devoutly hope that it would never be tested." The indictment of Palin was all the more biting because both she and McCain have held Eagleburger up repeatedly during the past several weeks as evidence that the Republican ticket has firm standing and support within foreign policy circles. (In fact, McCain conferred with Eagleburger by phone just this week, on matters pertaining to national security.)

We Want Our Felix Salmon!!

Unfortunately, I have not only never bought a copy of Portfolio, I do not believe that I have ever seen a copy of Portfolio. But let me join my voice to that of Tyler Cowen:

Marginal Revolution: I want my Felix Salmon:

Employees said they were told Thursday that most of Portfolio’s Web site staff would be dismissed and that much of the content unique to the site would be dropped.

Please keep him, we need him.  I hold out hope in that word "most."  Here is the story.  Media, like new library books, are being hurt by the downturn and the slowing of advertising dollars.  I fear that the non-independent blogosphere may be in for a bit of a financial bloodbath.  So often the bloggers were an "investment in long-term name and image" rather than a profit center.

Economist Equity Graph Pr0n

Calculated Risk: Comparing Stock Market Crashes: Reader Will sent me this graph comparing four stock market crashes. This is an epic crash.

Why Oh Why Can't We Have Better Press Corps?

Jim VandeHei and John Harris assume a defensive crouch, and promise to slant their coverage more toward mcCain and other Republicans in the future:

Why McCain is getting hosed in the press: Politico political editor Charles Mahtesian was e-mailing the other day with a Republican lobbyist who signed off with a plea that sounded more like a taunt: “Keep it balanced.”... [S]omeone in Rochester, N.Y.... “You guys are awfully tough on McCain. There may be some legitimacy to the claim of press bias. Mom.”...

Yes, in the closing weeks of this election, John McCain and Sarah Palin are getting hosed in the press, and at Politico.... There have been moments in the general election when the one-sidedness of our site — when nearly every story was some variation on how poorly McCain was doing or how well Barack Obama was faring — has made us cringe.... A couple weeks back, Politico managing editor Bill Nichols sent out a note to the campaign team urging people to cough up more story ideas that took a skeptical look at the campaign tactics and policy proposals of the Democrat.... Reporters obsess about personalities and process, about whose staff are jerks or whether they seem like decent folks, about who has a great stump speech or is funnier in person than they come off in public, about whether Michigan is in play or off the table... we care about the horse race — we don’t care that much about our own opinions of which candidate would do more for world peace or tax cuts....

[T]he 2008 election has had... McCain backlash.... Even during his “maverick” days, McCain was a consistent social conservative.... Yet he won swooning coverage for a decade.... Now he is paying. McCain’s decision to limit media access and align himself with the GOP conservative base was an entirely routine, strategic move for a presidential candidate. But much of the coverage has portrayed this as though it were an unconscionable sellout... bad faith on McCain’s part....

[Obama] has benefited from the idea that negative attacks that in a normal campaign would be commonplace in this year would carry an out-of-bounds racial subtext.... Obama has benefited from his ability to... starve the press's bias for palace intrigue.... [T]he bulk of negative stories about McCain are... about intrigue and turmoil... driven by the flood of Republicans inside and out of the campaign eager to make themselves look good or others look bad....

Countering the bias in favor of momentum is the bias against boredom. We’ve seen... an outlying poll number being pumped to suggest big changes in a race that is basically unchanged... you’ll see this phenomenon more in the next week. Then there is the bend-over-backward bias... stories suggesting Palin held her own or even won her debate against Joe Biden when it seemed obvious she was simply invoking whatever talking points she had at hand, hanging on for dear life...

Washington Post Crashed-and-Burned Watch (David Ignatius Edition)

A commenter writes:

David Ignatius is completely insane. I mean, that is an insane understanding of how markets and capitalism works. Clearly, children and young adults cannot be allowed to read the WaPi op-ed page.

Now I am scared. Do I have to go see?

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

---

UPDATE: Another commenter writes:

No. I'm stupider for having read it. Think of a horror movie... MY EYES!!!!!

I'm still too terrified to surf over...

We Have Always Been at War with Eurasia! (Matthew Yglesias Gets Snookered by the Orwellian Right Department)

Matthew Yglesias gets snookered by the Orwellian right:

Matthew Yglesias: Serfdom Correction: It’s been pointed out to me by several friends that The Road to Serfdom doesn’t actually make the argument I had believed it made. My impression had been that it was a statement about the inevitable development of Soviet-style totalitarianism from certain trends toward social democracy in postwar Europe. It seems that a lot of people think this is what the book argues, but that it’s not right. Hayek himself wrote “it has frequently been alleged that I have contended that any movement in the direction of socialism is bound to lead to totalitarianism. Even though this danger exists, this is not what the book says.”

The Orwellian right cites the 1976 preface to The Road to Serfdom:

Hayek: 1976 Preface: It has frequently been alleged that I have contended that any movement in the direction of socialism is bound to lead to totalitarianism. Even though this danger exists, this is not what the book says...

The Orwellian right, however, takes the 1956 preface to The Road to Serfdom and throws it down the memory hole:

Hayek: 1956 Preface: Of course, six years of socialist government in England have not produced anything resembling a totalitarian state. But those who argue that this has disproved the thesis of The Road to Serfdom have really missed one of its main points: that "the most important change which extensive government control produces is a psychological change, an alteration in the character of the people." This is necessarily a slow affair... attitude[s] toward authority are as much the effect as the cause of... political institutions under which it lives.... [T]he change undergone... not merely under its Labour government but in the course of the much longer period during which it has been enjoying the blessings of a paternalistic welfare state, can hardly be mistaken.... Certainly German Social Democrats... never approached as closely to totalitarian planning as the British Labour government has done.... The most serious development is the growth of a measure of arbitrary administrative coercion and the progressive destruction of the cherished foundation of British liberty, the Rule of Law... [E]conomic planning under the Labour government [has] carried it to a point which makes it doubtful whether it can be said that the Rule of Law still prevails in Britain...

Hayek wrote the book in 1944. In 1956, Hayek thought that his book made the argument that the Orwellian right says it does not make. By 1976, however, history had been "revised."

John McCain: Dishonest and Dishonorable

Duncan Black:

Eschaton: Nobody Could Have Predicted: And this time I mean it. Really nobody could have predicted that a Republican candidate for president would try to win by tying himself to Hillary Clinton. Strange days have arrived.

This, My Friends, Is a Presidential Candidate We Can Believe in!

Joan Walsh:

Joan Walsh: Clinton shared the candidate's measured, investigative approach to the financial crisis in September: calling his advisors, calling Clintons' advisors, calling both Clintons and others. What Obama told everyone, Clinton said, was, "'Tell me what's right. Don't tell me what's popular, tell me what's right, and I'll figure out how to sell it.' That's what a president does. He will be a very fine decision maker, working for the American people."

Obama responded to Clinton in kind: "In case all of you forgot: This is what it's like to have a great president. It is such an honor and a privilege to be joined by him here tonight." He peppered his standard stump speech with examples of the glory of the Clinton years. It was a little stiff at first, but Clinton almost fell off his chair laughing at Obama's joke about being a "redistributionist" for sharing his peanut butter sandwich with a childhood friend, and after that he was a more expressive, appreciative audience, laughing and clapping on cue. By the end they were hanging on one another, whispering into each other's ears and cracking one another up as they walked offstage waving to the crowd.

Maybe I'm seeing what I want to see, but I hope they enjoyed one another tonight. It's certainly not what Clinton expected, but Obama could be his chance at finally securing his legacy. He wanted it to be his wife, but maybe it will be the first black president who will complete the job Clinton started of expanding opportunity, creating jobs, making work pay and building ladders of upward mobility between classes. Clinton deserves it, Obama deserves it, and most important, the country deserves it. After Clinton and Obama left the stage, MSNBC moved to a "Hardball" rerun, and Tom DeLay was about to speak again. I quickly clicked away, reassured of DeLay's irrelevance.

Finally it was time to watch Obama on "The Daily Show." My favorite part was when Jon Stewart asked him if he was worried that, being part white, the Bradley effect (the perhaps apocryphal tendency for some white voters to say they support a black candidate but then not vote for him) could afflict him, as a (half) white voter. "That's a problem," Obama dead-panned. Stewart couldn't believe his ears, and Obama had to repeat it. "That's a problem. I've been going to therapy to make sure that I vote properly on the 4th." Surrender, Tom DeLay and friends. You have no idea what you're up against. Love and warmth and humor trump filth, every time.

Run Like the Wind, Mr. Skittles! (Aaron Swartz Gives the Play-by-Play)

TBogg:

Invasion of the Obama Snatchers: Writing from their negro-proof panic room (which doubles as the laundry room when their wives send him out to get milk) sweaty, disheveled, and quite possibly drunk wingnuts type out warnings, insert them into a hamster ball with Mr. Skittles the Wonder Hamster and then lob it through a cracked door in the hopes that, God willing, it is not too late to save America.

Run like the wind, Mr. Skittles!
Godspeed and good luck:

Aaron Swartz

Raw Thought: Aaron Swartz's weblog: Blame the Terrorist Black Muslims: As John McCain sinks in the polls, it's been amazing to watch one of America's two major parties adopt wholesale an insane racist conspiracy theory and to watch the mainstream media lap it up. Back when Republicans were insisting that the Clintons ran an underground drug-smuggling ring and murdering their political opponents, you at least had to send away for the video. Now it's broadcast 24-hours-a-day on CNN and Fox. The claims, outlined in this seizure-inducing Web ad (since deleted from McCain's site), are basically that Barack Obama, left-wing terrorists, and inner-city blacks have teamed up to cause the mortgage meltdown and commit voter fraud to ensure Obama wins the election. Yes, in an era when huge banks are failing left and right and the Republican is down 14 points in the polls, Republicans are convinced that poor African-Americans must be responsible. If only!

It's all blatant lies, of course... setting the stage for more repression and violence against powerless blacks. And ACORN, one of the few organizations that actually helps these communities, is just being shredded by the media because of these false allegations. Of course, it's also a cover for ongoing attempts at voter intimidation and other sleazy tactics to steal the election...

Ph'nglui Mglw'nafh Cosma Shalizi R'lyeh Wgah'nagl Fhtagn!

Ghost Peaks, Buried in Ice, in Antarctica.

Cosma Shalizi writes:

Ghost Peaks, Buried in Ice: [T]his has me terrified:

It is perhaps the last great Antarctic expedition - to find an explanation for why there is a great mountain range buried under the White Continent. The Gamburtsevs match the Alps in scale but no-one has ever seen them because they are covered by up to 4km of ice. Geologists struggle to understand how such a massif could have formed and persisted in the middle of Antarctica. Now, an international team is setting out on a deep-field survey to try to get some answers. The group comprises scientists, engineers, pilots and support staff from the UK, the US, Germany, Australia, China and Japan.

The ambitious nature of the project - working in Antarctica's far interior - has required an exceptional level of co-ordination and co-operation.... "There are two easy ways to make mountains," explained Dr Robin Bell, from the Lamont-Doherty Earth Observatory, who is a lead US researcher on the expedition. "One is colliding continents, but after they collide they tend to erode; and the last collision was 500-million-plus years ago. They shouldn't be there. The other way is a hotspot, [with volcanoes punching through the crust] like in Hawaii; but there's no good evidence for underneath the ice sheet being that hot. I like to say it's rather like being an archaeologist and opening up a tomb in a pyramid and finding an astronaut sitting inside. It shouldn't be there."...

The expedition gets under way in the next few weeks and will take some two-and-a-half months to complete.

Space-travelers. In tombs. In an inaccessible, highly anomalous mountain-range in Antartica. Do the fools know nothing? Or do they know only too much?

I am forced into speech because men of science have refused to follow my advice without knowing why. It is altogether against my will that I tell my reasons for opposing this contemplated invasion of the Antarctic — with its vast fossil hunt and its wholesale boring and melting of the ancient ice caps. And I am the more reluctant because my warning may be in vain...

Run Like the Wind, Mr. Skittles! (Omnibus via George Packer and Jon Swift Edition)

TBogg does not say:

Invasion of the Obama Snatchers: Writing from his negro-proof panic room (which doubles as the laundry room when his wife send him out to get milk) sweaty, disheveled, and quite possibly drunk Republican wingnuts type out warnings, insert them into a hamster ball with Mr. Skittles the Wonder Hamster and then lob it through a cracked door in the hope that, God willing, it is not too late to save America.

Run like the wind, Mr. Skittles!
Godspeed and good luck:

George Packer:

Interesting Times: George Packer: Online Only: The New Yorker: A roundup [by Jon Swift] (via Andrew Sullivan) of conservative anti-Obama blogging during the election. Much of it has appeared on popular right-wing Web sites, including National Review Online, disclosing the “news” that Bill Ayers wrote “Dreams from My Father,” Obama was involved in domestic terrorism during the South Africa divestment campaign of the early 1980s, Michelle Obama used the word “whitey” in recorded conversation with Louis Farrakhan, Obama has had a female lover as well as a gay lover with a criminal record, he was fed answers during the first debate via a clear plastic device in his ear, and his birth certificate was forged, casting doubt on his citizenship (which is why he’s now in Hawaii—to preserve the cover-up, not to visit his very ill grandmother).

Wading for a few minutes through the sewage of these Web sites reminds me uncannily of the time I’ve spent having political discussions in certain living rooms and coffee shops in Baghdad. The mental atmosphere is exactly the same—the wild fantasies presented as obvious truth, the patterns seen by those few with the courage and wisdom to see, the amused pity for anyone weak-minded enough to be skeptical, the logic that turns counter-evidence into evidence and every random piece of information into a worldwide conspiracy. Above all, the seething resentment, the mix of arrogance and impotent rage that burns at the heart of the paranoid style in politics.

The problem isn’t lack of education—it’s that of a self-isolating political subculture gone rancid. I heard an Iraqi engineer claim that American soldiers allowed Kuwaitis to steal hundreds of Iraqi cars as revenge for the first Gulf War. I heard a Shiite cleric argue that the Kerry campaign was behind suicide bombings. Bloggers like Andrew McCarthy, a former federal prosecutor who peddled the Ayers theory, and Ann Althouse, a law professor who pushed the plastic-device story, hold diametrically opposed views to those of Islamists and Arab nationalists. But their habits of mind are just the same.

It will only get worse if Obama wins.

Tom Toles Is a National Treasure

Good Title!

Mauricio Drelichman of the University of British Columbia is speaking in the 211 seminar on Monday. His topic is "Lending to the Borrower from Hell: Debt and Default in the Age of Philip II, 1556-1598."

Matthew Yglesias's Zen Commentary

He describes conservative elites:

Matthew Yglesias: The Red Menace: Conservative elites... are absolutely convinced that France and Germany are dystopian cesspools and that Scandinavia can no more exist than a round circle. If the government starts giving people health care and building trains, next thing you know we’ll all be... well, it’s not clear exactly what we’ll all be like. But it won’t be good!

Either this is a deep and subtle claim that conservative elites are so batshit wingnut insane that it is as if they deny the existence of a round circle.

Or this is the world's worst typographical error.

This Is an Attack Ad We Can Believe in, My Friends!

Will Wilkinson Resists His Telos!

What duties and obligations do we have to our creator? Will Wilkinson says: none:

Let’s Measure Meaning!: “I don’t know why we are here,” Ludwig Wittgenstein, the grimly mystical Austrian logician, once confessed, “but I’m pretty sure that it is not in order to enjoy ourselves.”  I’m pretty sure Wittgenstein is correct. Evolution by natural selection–the only credible non-fiction story about “why we are here”–tells us that we exist “in order to” make copies of our genes. In the typical case, we enjoy genetic recombination a lot, but to enjoy ourselves is not what we are for. To enjoy ourselves is not why we are here. 

But knowing why we are here, or what we are for, turns out to be terrifically useless in guiding our choices or framing our lives. It doesn’t matter why we are here. Should I learn that I had been designed by bioengineering performance artists from Alpha Centauri to savagely exterminate kittens, it would not validate my taste for ripping the heads off tiny whimpering calicos. Knowing my function would not tell me what it is for my life to go best, from my point of view. Were I to fight my instincts and lovingly cuddle kittens instead of wantonly destroying them, that would be my otherworldly creators’ failure, not mine. Should I find a hollowness, a gnawing absence of kitten corpses at the center of my life, I might be right to think that my life would, in some sense, mean more to me were I to give in to my biological imperatives. But I would be wrong to think that a more meaningful life, in that sense, would be better. The value of meaning would remain an open question...

NON SERVIAM!!!

John McCain: Dishonest, Dishonorable, Ignorant, and Incompetent (Two Worst Adds Ever Edition)

Aimai is a much braver woman with a much stronger stomach than I am.

Aimai:

If I Ran the Zoo: Neck and Neck: This has to be neck and neck for the worst two commercials of McCain's campaign. This one isn't definitively anti-Obama at all, since the "Senator" to whom the protagonist speaks isn't named and the act of which he speaks isn't exactly clear.

And as for this one? I dare you to watch it without falling into an epileptic fit, rolling around on the floor with your head and your heels touching like a hoop, and having the family shut off the TV to rush you to the hospital.

Let me give you all fair warning: the act of voting for John McCain debars you from polite society for the rest of your natural life. Just saying.

October Surprise!

Sam Stein:

GOP Mailer Uses Obama Supporter To Attack...Obama: The Republican Party of Wisconsin is sending out a somewhat peculiar attack-mailer targeting Barack Obama.... [T]he back of the piece, which features a picture of a bird with its head in the sand -- meant, ostensibly, to represent Obama. Moreover, the prior page (which has upright birds in the backdrop) includes a quote from an article written by Ezra Klein -- of the liberal American Prospect -- that reads: "Obama is that oddest of all creatures: a leader who's never led." That Klein piece was written way back in October 10, 2006 -- several months before Obama even announced his candidacy. And one would be hard pressed to find an article written by him since the launch of the campaign that praises John McCain as a more adept leader than the current Democratic nominee.... Reached over IM, Klein responded to his inclusion in the mailer by saying: "I'm Ezra Klein, and I do not approve this message"...

And let me agree with Sam Boyd, who says:

That's it. The election is over. Barack Obama will lose. All Democrats running for the House and Senate will lose. Democratic senators not up for reelection will be forced to resign in shame.

The only questions are whether liberal Supreme Court justices will be hunted down in the streets, and whether college campuses will get off with a mild looting or be burned down and have their grounds salted so that nothing can grow there again.

John McCain: Dishonest and Dishonorable

Steve Benen:

The Washington Monthly: McCain, most notably during the Republican primaries, announced his opposition to lots of his own bills. Yesterday, as Ron Chusid noted, McCain was on CNN and took this to the next level, announcing that he would have vetoed the same spending bills he'd voted to support.

BLITZER: Where would you, as president, draw the line between vetoing that kind of spending bill or accepting it because of the greater good that it also includes, as you decided in the bailout?

MCCAIN: I would have vetoed literally every spending bill, even those that I had voted for, if I were president of the United States.

Chusid noted, "This is even more ridiculous than John Kerry's quote on voting for an appropriation before he voted against it. In Kerry's case he was talking about two different bills.... McCain is talking about vetoing bills he actually voted for. He did have the opportunity to vote against them." I'm trying to wrap my head around McCain's argument -- the spending bills were bad, Bush should have vetoed them, so McCain voted for them.

George F. Will Endorses Barack Obama

George F. Will:

George F. Will - Call Him John the Careless: McCain has a history of reducing controversies to cartoons. A Republican financial expert recalls attending a dinner with McCain for the purpose of discussing with him domestic and international financial complexities that clearly did not fascinate the senator. As the dinner ended, McCain's question for his briefer was: "So, who is the villain?"...

George: McCain is smarter than Bush, less malevolent than Bush, and more clued-in to policy than Bush. The Republican Party in 2000 was the same as the Republican Party today. If it is wrong to vote for McCain today, it was wronger to vote for Bush in 2004 and 2000.

Rat. Ship. Sinking. Leave.

John McCain Doesn't Have an Education Policy or an Inequality Policy

Why am I not surprised?

Matthew Yglesias:

Matthew Yglesias: As we saw a week ago, Doug Holtz-Eakin, speaking on behalf of John McCain, said that the inability of the number of people graduating from college to keep pace with the growth in the skills premium for college graduates is the sole cause of growing inequality. As I said at the time, this is wrong. The evidence is clear that other things are going on. But it’s also clear that this is one factor. And given that it really is an important part of the puzzle, and that the McCain team thinks it’s the entire puzzle, you’d think that John McCain would have a real higher education policy. But he doesn’t. Until now. But today, via Steve Benen, McCain unveils his “plan” for affordability:

As president, Mr. McCain would take a bully pulpit approach to student aid, aides say. Rather than propose any new federal money, he would jawbone and publicly try to coax colleges to slow their rate of tuition increases using the federal tax exemptions they receive as leverage….

Mr. McCain is also calling for the Pell Grant, which assists low-income students, to be high enough to cover in-state undergraduate tuition…. Mr. McCain, however, has not proposed any new money for the Pell program.

Long story short, I think we can expect inequality to keep growing.

Why Oh Why Can't We Have a Better Press Corps? (Slate Edition)

Why friends don't let friends read Slate: time to call "bullshit" on John Dickerson:

The McCain campaign is unusually upbeat. Does it have reason to be?: Where do we plot the mindset of the McCain campaign on a continuum that stretches from deceit (aides know they're losing badly and they're play-acting) to Drudge-like self-delusion (they're mindlessly clutching at, and believing in, any glimmer of positive news) to truth (there actually are real signs of hope)?... [T]he McCain campaign is somewhere between self-delusion and truth.

In McCain's most optimistic scenario, he loses a few Republican states like New Mexico, Nevada, Colorado, and Iowa. He just has to hope that he doesn't lose too many of them. (Losing a biggie like Florida or Ohio would be curtains.) He could make up for a small loss of GOP states with a victory in Pennsylvania or New Hampshire.... The McCain path to victory relies heavily on the campaign's pollster, Bill McInturff, who is conducting surveys in battleground states every day.... McInturff has often been a bit of a wet blanket. Whenever they've felt good, he's been the voice of caution, explaining that the landscape was bleaker than they thought. Recently, though, his internal campaign updates have actually been eagerly anticipated: The subject line of a recent one said "a memo you will want to read."

Could McInturff be blowing pretty rings of imaginary smoke? Perhaps. But he has a good reputation for honesty.... McInturff released a memo yesterday that outlined his case for why it's still possible for McCain to pull a rabbit out of his hat. Here's what he sees: His poll of battleground states shows Obama with such a small lead, it's within the margin of error, which means it's effectively tied...

And here I call bullshit. Within the "margin of error" means that there is a greater than 5% chance that the guy the poll says is behind is actually ahead. But only a John Dickerson would say that a side that has a 15% chance of victory is actually even.

Dickerson goes on:

In Iowa, [McIntuff] sees the race tightening to within a few points. In Pennsylvania, it's in single digits (though that could mean nine). (The average of other pollsters say McCain is down by a dozen in Iowa and Pennsylvania)...

And here I call "bullshit" again. Pollsters know that there is information in other polls. When pollsters tell journalists like Dickerson "look at my pollls: don't look at any of the others" they aren't engaging in self-delusion, they are engaging in deceit.

Will the NBER Call the Recession This Morning?

Third quarter real GDP drops at an 0.3% annual rate. With this news, not calling the recession is much more of a political act than calling one...

Circular Firing Squad of Flying Republican Attack Monkeys

CNN watches Sarah Palin throw John McCain under the bus:

Eschaton: Wolf Blitzer: And this just coming into the "Situation Room," the Republican vice presidential candidate Sarah Palin now speaking out openly about her intentions in 2012 if, if she and John McCain were to lose this contest next Tuesday. In an interview with ABC News, Sarah Palin is now saying, she would be interested in remaining a serious national political figure, going ahead to 2012. She was asked what happens in 2012 if you lose on Tuesday, would you simply go back to Alaska? Elizabeth Vargas of ABC News asked her and Palin said this, and I will read it to you verbatim according to an ABC News transcript:

"Absolutely not," Sarah Palin says. "I think that, if I were to give up and wave a white flag of surrender against some of the political shots that we've taken, that ... that would ... bring this whole ... I'm not doin' this for naught," and that is a direct quote from Sarah Palin. Clearly, leaving open the possibility that she would be interested in leading the Republican Party in 2012 if she and John McCain were to lose this presidential contest right now.

Let's go to Dana Bash. She has been covering the McCain campaign reaction from the rather blunt statement from Sarah Palin that she would in fact be interested in leading the Republican Party going forward after Tuesday if they lose?

Dana Bash: I just got off of the phone, Wolf, with a senior McCain adviser and I read this person the quote and I think it is fair to say that this person was speechless. There was a long pause and I just heard a "huh" on the other end of the phone. This is certainly not a surprise to anybody who has watched Sarah Palin that she is interested in potentially future national runs, and she is being urged to by a lot of people inside of the Republican Party if they do lose, but it is an "if" and people inside of the McCain campaign do not want any discussion that has an "if" in front of it six days before the election, they don't want any discussion at all, any kind of hypothetical talk about running for the next time around. So certainly, this is not at least initially being received well inside of the McCain campaign.

Wolf Blitzer: I am not surprised, not surprised at all. It is one of those "wow, she is talking about 2012 if we lose," that is not supposed to be something that you say. You are supposed to say, "well, I'm not looking ahead, I'm not looking ahead only to Tuesday," and those are the talking points she's supposed to be saying, but she is obviously blunt and she is looking ahead if something were to happen on Tuesday that she wouldn't be happy with...

There is no excuse for anybody to work for these clowns. None. There is no excuse for anybody not to endorse and vote for Barack Obama. None.

Circular Firing Squad of Flying Republican Attack Monkeys

The McCain campaign trots out its opposition research against Sarah Palin, and feeds it to ABC's Jake Tapper:

Political Punch: Allies of Alaska Gov. Sarah Palin are now trying to throw McCain aide Nicolle Wallace under the proverbial bus, and as they do so those in McCain’s circle are wary of the impact on Sen. John McCain, R-Ariz., himself. Since becoming McCain's running mate, there have been a host of issues where Palin publicly challenged decisions made by McCain.... But nothing has seemed so resonant as $150,000 in clothes purchased for Palin and her family by the Republican National Committee. Palin has taken to blaming the entire incident – as well as her introduction to the nation – on her “handlers,” presumably meaning Wallace.... McCain allies say that Palin allies talked to Fox News commentator Fred Barnes to further throw Wallace under the bus. Barnes yesterday said, “the person who went and bought the clothes and, as I understand it put the clothes on her credit card, went to Saks and Neiman Marcus...the staffer who did that has been a coward” for not coming forward and accepting the blame for the $150,000 shopping spree. Barnes clarified that he was talking about Wallace. But Wallace didn’t buy the clothes, put the clothes on her credit card, or go to Saks and Neiman Marcus, sources on the McCain campaign say. And plenty of people on the McCain campaign are mystified as to how the $150,000 charges were racked up.

Moreover, McCain campaign sources say, Palin has developed quite a reputation on the campaign trail for shopping.... McCain insiders were appalled to read a blog account from Nevada  noting that the day before Palin held an event in Reno, “Palin's assistant stopped in at the Ann Taylor at the Summit Sierra Mall and bought the skirt suit that she wore during to her speech Tuesday at the Reno-Sparks Convention Center. ‘She bought a short, three-quarter sleeve jacket, a skirt and a couple other items,’ store manager Suzette Ludden said.” All the while, Palin herself has given the wardrobe story more media coverage by denying that she had anything to do with it. "It is so nice to be back here in the Sunshine State and quite warm which I love and grabbed a jacket this morning to put on not realizing how warm it would be,” she said in Florida. “My own jacket, yes.... This whole thing with the wardrobe you know I have tried to just ignore it because it is so ridiculous,” she continued. “Those clothes they are not my property, just like the lighting and the staging and everything else that the RNC purchased. I am not taking them with me, I'm back to wearing my own clothes from my favorite consignment shop in Anchorage, Alaska.”

At McCain HQ, senior aides rolled their eyes, unable to believe that Palin was continuing to give the story more airtime. And some Republicans are starting to now say they should have seen this coming, since Palin has a reputation for making friends who can help her and then screwing them over. The list is long:

• Former Wasilla Mayor John Stein says he mentored Palin during her 1994 run for City Council. Then she decided to challenge him and run for Mayor. “Things got very ugly,’ Naomi Tigner, a friend of the Steins, told Salon.com. “Sarah became very mean-spirited.” Palin allies suggested she would he “Wasilla's first Christian mayor,” even though Stein is Protestant. Palin allies also whispered that Stein and his wife – who hadn’t taken his name - were not legally wed. “We actually had to produce our marriage certificate,’ Stein said. His wife died in 2005 without ever reconciling with Palin. “I had a hand in creating Sarah, but in the end she blew me out of the water,” Stein told Salon. “Sarah's on a mission, she's an opportunist.”

• Former City Councilman Nick Carney also helped mentor Palin in her first city council run. They later had a falling out when Palin accused him of corruptly advocating that the city use his trash hauling business. “The episode might serve as a compelling, if small-bore, example of Palin's reformer instincts,” the New Republic reported.  :Except that, according to those who were present, Carney wasn't quite the crooked trash magnate Palin makes him out to be. For one thing, Carney couldn't have proposed the ordinance because he'd recused himself from the matter. The council, in fact, had asked him to appear as a kind of expert witness on the relevant rules and regulations.” Carney endorsed Stein in the 1996 mayoral race against Palin, and news reports say she subsequently as mayor refused to call on him. Carney told Salon that Palin – without council authorization -- spent more than $50,000 in city funds to redecorate her office. “I braced her about it,” he said. “I told her it was against the law to make such a large expenditure without the council taking a vote. She said, 'I'm the mayor, I can do whatever I want until the courts tell me I can't.”

• State Senate President Lyda Green from Wasilla, is a fellow conservative and was an ally of Palin’s throughout the 1990s. “If you had looked at our résumés, as far as being pro-life, pro-N.R.A., pro-family, pro-parental control, saving taxpayer dollars, keeping government out of our lives, we would have been identical,” Green told the New Yorker.  “She traces the chill in their relationship to her decision not to endorse Palin in her 2006 gubernatorial primary. (She stayed neutral.)... “The animosity became public last January, when Palin turned up on an Anchorage shock-jock radio program, ‘The Bob and Mark Show.’ Bob Lester said that he knew Palin believed Green was ‘a bitch’ and ‘a cancer.’ Palin laughed at the comments. ‘Sarah can be heard in the background tittering, hee-heeing,’ Green said, ‘never saying, ‘That’s not appropriate, let’s not talk like that, let’s change the subject,’ or anything.’ Green was devastated. ‘I worked through it,’ she said. ‘The difficult thing about it was when my children read about it online. They were dumbfounded, because they had known Sarah. I had breast cancer in ’97 and had a radical mastectomy. Sarah certainly knew I had breast cancer, because she sent me flowers when I was ill.’”

• Former Gov. Frank Murkowski made Palin the chair of a state commission overseeing oil and gas drilling. Four years later she challenged him – and beat him – for governor.

• Prominent Alaska conservative talk radio host Dan Fagan was a longtime friend. But he found himself on the outs after he criticized her for raising taxes on oil companies. “He found himself branded a ‘hater,’” the New York Times reported. “It is part of a pattern, Mr. Fagan said, in which Ms. Palin characterizes critics as ‘bad people who are anti-Alaska.’”

Now, I don’t know what happened with all of these former allies. Certainly Murkowski was much-criticized. And certainly Palin views all these publications as left-leaning and hostile to her views. But that said, all I can tell you is that some McCain allies are now quite suspect of Palin and worried that Sen. McCain is going to become just the latest Palin ally whom she uses – and then discards -- in her rapid ascendance to power.

This is what the McCain campaign is telling the press about its own vice presidential candidate.

There is no excuse for anybody to work for these clowns. None. There is no excuse for anybody not to endorse and vote for Barack Obama. None.

Washington Post Crashed-and-Burned Watch (Howard Kurtz Edition)

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

Howard Kurtz:

Howard Kurtz - Worlds Apart: The Great Hannity-Olbermann Divide: On Fox News last week, Sean Hannity said he was tempted to ask Barack Obama: "Where did you buy your cocaine, how much cocaine? How much cocaine did you use? How often did you use it? When did you stop?" On the same Monday night, Keith Olbermann said on MSNBC that John McCain had a responsibility "to say 'enough' to Republican smears without end" and not be "party to a campaign that devolves into hatred and prejudice and divisiveness."

Are these guys watching the same presidential race, or even living in the same country?... As high-profile hosts adored by fans and derided by critics, Hannity and Olbermann provide a case study in the power of ideological punditry...

I call false equivalence. Saying "stop sliming" is not sliming. Sliming is sliming.

Sam Wang's Electoral College Map: October 29, 2008

Pedal to the Metal, Commander...

The Federal Reserve cuts the Federal Funds rate by half a percentage point...

The Economics of Covert Actions

Ray Fisman features Arindrajit Dube, Ethan Kaplan, and Suresh Naidu:

Forensic economists examine the effects of CIA-led coups on the stock market: In 1951, Jacobo Árbenz Gúzman became Guatemala's second democratically elected president. Árbenz's authoritarian predecessors had been very sympathetic to... the United Fruit Co.... Once in office, Presidente Árbenz sought to take it all back, nationalizing UFC's Guatemalan assets and redistributing them to the poor.

But UFC had friends in very high places—the assistant secretary of state for inter-American affairs, John Moor Cabot, was the brother of UFC President Thomas Cabot. The secretary of state himself, John Foster Dulles, had done legal work for UFC, and his brother Allen Dulles was director of the CIA and also on UFC's board. Thanks to the Freedom of Information Act, we now know that the various Cabots and Dulleses had a series of top-secret meetings in which they decided that Árbenz had to go and sponsored a coup that drove Árbenz from office in 1954.

With a U.S. puppet back in the president's mansion, UFC's profits were safe. But it appears the company wasn't the only beneficiary of this Cold War cloak-and-dagger diplomacy.... By tracking the stock prices of UFC and other politically vulnerable firms in the months leading up to CIA-staged coups in Guatemala, Chile, Cuba, and Iran, the researchers provide evidence that someone—perhaps one of the Dulleses, Cabots, or others in the know—was trading stocks based on classified information of these coups-in-the-making....

Dube, Kaplan, and Naidu examine how the stock market reacted to events that no Wall Street trader should have known about: top-secret meetings of the coup-plotting cabals at CIA headquarters and presidential approvals of CIA-organized invasions.... These meetings and authorizations were all highly classified, however, and since you can't trade on information you don't have, UFC's stock price shouldn't have budged until the coup actually took place and the investing world learned of the regime change.

Unless, that is, some of the Cabots, Dulleses, or other insiders were using their privileged information to profit personally from a future coup....

For example, in the week that President Eisenhower gave full approval to Operation PBFortune to overthrow Árbenz, UFC's price went up by 3.8 percent; the stock market overall was flat that week. In all, shares of coup-affected companies went up by a total of 10 percent following top-secret authorizations, swamping the 3.5 percent gain that came immediately in the coups' aftermaths....

The CIA-led invasion of Cuba is referred to these days as the Bay of Pigs fiasco for a reason, and whoever was trading on insider knowledge seemed to place his bets accordingly—the pre-invasion increase in American Sugar's stock price was much lower than the gains for companies affected by the other, successful coups in the study.

There Is too a Credit Crunch

Spencer of Angry Bear writes:

Angry Bear: Bank Lending growth is not evidence that there is no crises: The point that bank lending is expanding is not a sign that their is no credit crunch. Rather it is an indicator that the Fed actions over the last year to provide large scale financing to the banking system is working.... [On] the liability side of the balance sheet... [banks] raise the funds to finance their loans and/or investment... deposits... borrowing in the money markets... borrowing from the Fed.

The crises has been the contraction in the banks' ability to borrow in the money markets.... Everything the Fed has done over the last year to provide special financing to the banks has been to offset or counterbalance the banks' inability to funds their operations in the money markets. The fact that bank lending is still rising demonstrates the success of the Fed....

Why are firms borrowing?... [B]ank credit is a lagging indicator. In the early stages of a business downturn business credit demands typically surges... an unusual surge in unwanted inventories.... Until firms can dispose of their unwanted inventories and cut expenses they have to expand their use of credit. This is why credit demand normally expand sharply in the early stages of a business downturn.... This... is exactly what we are now seeing...

Wall Street Journal Crashed-and-Burned Watch (George Newman/WSJ Editorial Page Edition)

Run Like the Wind, Mr. Skittles! (George Newman/WSJ Edition)

TBogg does not write:

Invasion of the Obama Snatchers: Writing from his negro-proof panic room (which doubles as the laundry room when his wife send him out to get milk) a sweaty, disheveled, and quite possibly drunk George Newman types out a warning, inserts it into a hamster ball with Mr. Skittles the Wonder Hamster and then lobs it through a cracked door in the hopes that, God willing, it is not too late to save America.

Run like the wind, Mr. Skittles!
Godspeed and good luck:

George Newman:

The Markets Are Weak Because the Candidates Are Lousy: A lot has been said about the causes of the drastic drops -- and extreme volatility -- in stock prices and the impending recession.... Investors have heard enough from both candidates in the last month or two to conclude that prospects for a flourishing, competitive, growing and reasonably free economy in a McCain administration are bad, and in an Obama administration far worse....

• Have you thought of what a gradual doubling (and indexation) of the minimum wage, sailing through a veto-proof and filibuster-proof Congress, would do to inflation, unemployment and corporate profits? The market now has.
• Have you thought of how easily a Labor Department headed by a militant union boss would push through a "Transparency in Labor Relations" law that does away with secret ballots in strike votes, and what this would do to industrial peace? The market now has.
• Have you thought of how a Treasury Secretary George Soros would engineer the double taxation of the multinationals' world-wide profits, and what this would mean for investors (to say nothing of full-scale industrial flight from the U.S.)? The market now has.
• Have you thought of how an Attorney General Charles J. Ogletree would champion a trillion-dollar reparations-for-slavery project (whittled down, to be fair, to a mere $800-billion, over-10-years compromise), and what this would do to the economy? The market now has.
• Have you thought of what the virtual outlawing of arbitration -- exposing all industries to the fate of asbestos producers -- would do to corporate liability and legal bills? The market now has.
• Have you thought of how a Health and Human Services Secretary Hillary Clinton would fix drug prices (generously allowing 10% over the cost of raw materials), and what this would do to the financial health of the pharmaceutical industry (not to mention the nondiscovery of lifesaving drugs)? The market now has.
• Have you thought of a Secretary of the newly established Department of Equal Opportunity for Women mandating "comparable worth" pay practices for every company doing any business with government at any level -- where any residual gap between the average pay of men and women is an eo ipso violation? Have you thought about what this would do to administrative and legal costs, hiring practices, productivity and wage bills? The market now has.
• Have you thought of what confiscatory "windfall profits" taxes on oil companies would do to exploration, supply and prices? The market now has.
• Have you thought of how the nationalization of health insurance, the mandated coverage of ever more -- and more exotic -- risks, the forced reimbursement for excluded events, and the diminished freedom to match premium to risk would affect the insurance industry? The market now has.
• Have you thought of Energy Czar Al Gore's five million new green jobs -- high-paying, unionized and subsidized -- to replace, at five times the cost, what we are now producing without those five million workers, and what this will do to our productivity, deficit and competitiveness? The market now has.

I could go on, but you get the point. Nothing reveals Mr. Obama's visceral hostility to business more than the constant urging of our best and brightest to desert the productive private sector ("greed") and go into public service...

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

The first real encounter I had with Paul Gigot, now running the WSJ editorial page, was his claim that my bosses and I in the Treasury were "in denial" about how the Clinton tax increases on the rich of 1993 would crush the U.S. economy like an eggshell.

Fifteen years, and Gigot has learned nothing. Rupert Murdoch has learned nothing as well: this isn't good for him either.

The Wolfsburg Corner...

Molly Neal in the WSJ:

Heard on the Street - WSJ.com: Inverse relationships rarely get as extreme as Volkswagen's soaring share price and the plummeting reputation of Germany's financial-market authorities. The retort from the authorities and Porsche that nobody has broken any rules during the past week's maneuverings won't wash.... Porsche has built up its stake in VW using options it doesn't have to declare publicly.... A sudden decision to publicly declare a much larger stake than expected, sending VW's stock sky-rocketing, has distorted Germany's stock market -- VW is a component of the benchmark DAX 30 index -- in the middle of the world's severest financial crisis since the 1920s.

The repercussions may be more significant. Any major losses suffered by hedge funds which have scrambled to cover short positions in VW at ever more exorbitant prices could end up enfeebling counterparty banks, already hard hit by the credit crunch. Sniggering over the irony of hedge funds' calls for more, rather than less, regulation would then prove short lived. It's hard to square this with the orderly functioning of Germany's financial markets for which Deutsche Borse and Bafin, the watchdog, are responsible. Deutsche Borse's reweighting of the DAX index to limit VW's contribution to 10% is too little too late.

Porsche's move to sell back up to 5% of VW in an attempt to improve the stock's liquidity is a tacit admission it is partly, if indirectly, to blame for the short squeeze. VW's shares nearly halved in value Wednesday to 550 euros but are still trading at more than double Friday's closing price. Bafin remains missing in action.... The... challenge of protecting investors' interests through timely and judicious oversight of the stock market remains.

Porsche investors and Volkswagen investors have done absolutely fine. It's the short hedge funds--and the banks that provided the leverage underpinning their option positions--who are in trouble.

I have a hard time thinking about this: after all, as long as there is a free float for Volkswagen shares--as long as there are enough individuals long VW--why don't they show up today, willing to lend their shares out? Couldn't the government of Lower Saxony lend out its shares (for a healthy consideration) and so keep the short squeeze from punishing hedge funds "too much"? And how do we figure out what "too much" is?

Do I Have to Become a Chartist?

The Dow-Jones Industrial Average has spent 25 of the past 40 years--62%--between 800 and 1250 or between 8000 and 12500. These ranges comprise roughly 25% of the (logarithmic) total range of the Dow as a function of time.

It really looks like there may something special about the nominal value of a 1 followed by a bunch of zeros.

This is disturbing to me as an economist.

Plus ca Change...

• The Harlem Corner of 1864: Daniel Drew once again struggled with Cornelius Vanderbilt, speculating on the stock of the Harlem Railroad. Drew was selling the stock short, but Vanderbilt and his associates bought every share he sold, ultimately causing the stock price to rise from 90 to 285 in five months. Drew lost $500,000.

• The Northern Pacific Corner of 1901.

• The Porsche-VW Corner of 2008: Richard Milne in London: Volkswagen’s shares more than doubled on Monday after Porsche moved to cement its control of Europe’s biggest carmaker and hedge funds, rushing to cover short positions, were forced to buy stock from a shrinking pool of shares in free float. VW shares rose 147 per cent after Porsche unexpectedly disclosed that through the use of derivatives it had increased its stake in VW from 35 to 74.1 per cent, sparking outcry.... [T]he sudden disclosure meant there was a free float of only 5.8 per cent – the state of Lower Saxony owns 20.1 per cent – sparking panic among hedge funds. Many had bet on VW’s share price falling and the rise on Monday led to estimated losses among them of €10bn-€15bn.... “This was supposed to be a very low-risk trade and it’s a nuclear bomb which has gone off in people’s faces,” said one hedge fund manager. As of last Thursday, according to consultancy Data Explorers, 12.9 per cent of VW’s shares were on loan for investors to go short and bet on them falling – the highest percentage of any German company.

Those who do not remember their history...

I Protest!

Arnold Kling writes:

EconLog | Library of Economics and Liberty: It should also be noted that Brad DeLong hates Greenspan and adores Bernanke...

Ummm... No. I like Alan Greenspan a lot. I now think he was wrong not to move aggressively to curb the housing bubble of the 2000s. But I think all in all he did a very good job as a central banker over 18 years:

http://www.google.com/search?num=100&hl=en&client=safari&rls=en-us&q=site%3Adelong.typepad.com+greenspan+excellent&btnG=Search

New York Times Death Spiral Watch (Andrew Rosenthal Edition) Music | guardian.co.uk

Andrew Rosenthal says that conservative columnists lie--and he publishes them anyway:

Bono to become New York Times columnist: "[US Secretary of State] Condoleezza Rice is a particularly bad op-ed writer," Rosenthal said. However, the problem doesn't end there. "The problem with conservative columnists," Rosenthal said, "is that many of them lie in print."

Run Like the Wind, Mr. Skittles! (Anne Applebaum Edition)

Run Like the Wind, Mr. Skittles! (Anne Applebaum Edition)

TBogg does not write:

Invasion of the Obama Snatchers: Writing from her panic room (which doubles as the laundry room) a sweaty, disheveled, and quite possibly drunk Anne Applebaum types out a warning, inserts it into a hamster ball with Mr. Skittles the Wonder Hamster and then lobs it through a cracked door in the hopes that, God willing, it is not too late to save America.

Run like the wind, Mr. Skittles!
Godspeed and good luck:

Anne Applebaum - Why McCain Lost Me: the last political party I truly felt comfortable with was Thatcher's Conservative Party (I lived in England in the 1980s and 1990s).... I'm not voting for McCain -- and, after a long struggle, I've realized that I can't -- maybe it's worth explaining why.... [I]t's not his campaign, disjointed though that has been, that finally repulses me: It's his rapidly deteriorating, increasingly anti-intellectual, no longer even recognizably conservative Republican Party. His problems... have to do with his colleagues, advisers and supporters.... [I]t's not his personality I admire most. Far more important is his knowledge of foreign affairs.... Another thing I liked about McCain was the deliberate distance he always kept from the nuttier wing of his party and... the loyalty he's shown to a recognizably conservative budgetary philosophy.... Finally, I admired McCain's willingness to tackle politically risky issues....

The appointment of Palin -- inspired by his closest colleagues -- turned out not to be a "maverick" move but, rather, a concession to those Republicans who think foreign policy can be conducted using a series of cliches and those in his party who shout down the federal government while quietly raking in federal subsidies.... [H]e's let his campaign appeal to his party's extremes... cultivate ignorance and fear.... Maybe that's all tactics, and maybe the "real" McCain will ditch the awful ideologues after Nov. 4....

I would give anything to rewrite history and make McCain president in 2000. But in 2008, I don't think I can vote for him. Barack Obama is indeed the least experienced, least tested candidate in modern presidential history...

Anne: this Republican Party is the same Republican Party it has always been. Anne: this John McCain is the same John McCain he has always been. To say that if you were transported back in time to 2000 you would vote for the Republicans and McCain then, but won't vote for them now, makes you a leading candidate for Stupidest Woman Alive^TM.

And yes, this is part of the Washington Post crashed-and-burned watch. And why oh why can't we have a better press corps?

John McCain: Dishonest and Dishonorable

Matthew Yglesias:

Matthew Yglesias: McCain: Vote for Me and I’ll Create an International Crisis: Lately, John McCain’s been trying to dine out on Joe Biden’s weird remark that electing Barack Obama would somehow prompt others to “test” him within six months. But the rhetoric around it is a bit weird:

“I have been tested,” McCain said, with a certain gritted-teeth look at the state fairgrounds in New Mexico. “I’m gonna test them. They’re not gonna test me.”

So rather than respond to an international crisis provoked by others, McCain intends to provoke one himself? Why? Sounds dangerous.

Run Like the Wind, Mr. Skittles! (James Pinkerton of Fox Edition)

Run Like the Wind, Mr. Skittles! (James Pinkerton of Fox Edition)

TBogg does not write:

Invasion of the Obama Snatchers: Writing from his negro-proof panic room (which doubles as the laundry room when his wife send him out to get milk) a sweaty, disheveled, and quite possibly drunk James Pinkerton types out a warning, inserts it into a hamster ball with Mr. Skittles the Wonder Hamster and then lobs it through a cracked door in the hopes that, God willing, it is not too late to save America.

Run like the wind, Mr. Skittles!
Godspeed and good luck:

James Pinkerton: The Devil Is In the Details: Another Obama Connection You Ought to Know About: Could Lucifer play a role in this presidential election? It may sound crazy, but one of the candidates in this race has publicly praised, even emulated, a writer-activist who himself paid tribute to Lucifer.  That’s right, Lucifer, also known as the Devil, Satan, Beelzebub—you get the idea.... If you’ve never heard of this true fact—and most Americans obviously haven’t—well, that might help to explain why John McCain is behind in the polls....

David Freddoso wrote about it in his book, The Case Against Barack Obama: The Unlikely Rise and Unexamined Agenda of the Media’s Favorite Candidate;  and the inimitable Ann Coulter noted it, too, just last month. And the connection between Alinsky and Barack Obama—and Alinsky and the left in general—is real enough. As John Fund, author of a newly revised book, Stealing Elections: How Voter Fraud Threatens Our Democracy, observes, Alinsky, who died in 1972, was a sort of godfather to all the activist groups that emerged in the 60s and 70s, the most famous (or, if you prefer, notorious) of which today is ACORN.... Obama is an on-the-record fan too: Fund quotes The Washington Post’s Peter Slevin, writing in 2007, “Obama embraced many of Alinsky’s tactics and recently said his years as an organizer gave him the best education of his life.”...

The full truth about Alinsky, and whom he admired, is so wacky, or so horrible, that even the media have been reluctant to get into the story.   And so it has received relatively little play.  Oh sure, if John McCain had expressed admiration for a Lucifer admirer, that would have been news, but as we all know, there’s a media double standard on such things....

McCain... would seem to have the greatest interest in taking Obama down.... So why hasn’t he highlighted the Alinsky-Lucifer connection?... [T]he Obama-Alinsky-Lucifer connection is left to float around in the vast soup of the Internet—plenty of mentions, here and there, but no real impact. But had McCain really gone after [Obama-]Ayers AND [Obama-]Wright AND [Obama-]Alinsky-Lucifer, all at once, he would have had a strong argument that Obama was, and is, well out of the mainstream...

When I was introduced to James Pinkerton in the 1990s, the Republican doing the introduction described him as "the smartest of the younger generation of Republicans."

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

Circular Firing Squad of Flying Republican Attack Monkeys

Mike Allen:

Playbook 24/7 - Politico.com: 7 days -- One week out -- Republicans expect to be crushed in historic landslide: buy emergency time in Montana and West Virginia: Good Tuesday morning. The Republican National Committee buys TV time in deep-red MONTANA and WEST VIRGINIA, a sign the party is scrambling to stave off a historic landslide a week from today. “Tough environment,” one Republican official says sardonically. The McCain campaign has not officially given up on VIRGINIA but a top official concedes it is LOST, while maintaining that a PENNSYLVANIA miracle can still get Sen. McCain to 270. He and Gov. Palin will be there repeatedly before Election Day. But should they also be shoring up Nevada, now a must-win?...

ABC’s George Stephanopoulos, on a “demoralized” McCain campaign: “Palin is going to be the most vivid chapter of the McCain campaign's post-mortem. … Those loyal to McCain believe they have been unfairly blamed for over-handling Palin. They say they did the best they could with what they got.”

In convo with Playbook, a top McCain adviser one-ups the priceless “diva” description, calling her “a whack job.”

It is really bad in there...