links for 2009-07-15

• Conor Clarke Finds the Washington Post Sickening
  What Palin's Op-Ed Didn't Say: Derek Thompson and others have pointed out to me that the piece does not contain the words pollution, emissions, carbon, or global warming. As Derek says, this is a bit like an op-ed on health care that doesn't contain the words spending, costs, coverage, or medicine, or a high-school paper on Catcher in the Rye that doesn't contain the words, um, Catcher in the Rye. I find this absence sickening. Deciding how to deal with climate change is... uncertain and complicated... costs in the present... benefits a hundred years in the future... costs in the U.S.... benefits in... Bangladesh... concrete GDP... the world's floral and animal diversity... sacrificing... to ward off uncertain and unquantifiable... risks. This... demands reflection and humility. And then you have Sarah Palin show up, blathering about how we're "destroying America's economy" while we're "literally" sitting on mountains of oil and drill baby drill and blah blah blah. Sickening.
• Martin Wolf: After the storm comes a hard climb
  The expected economic “recovery” is not going to feel like much of one. The latest consensus forecasts for growth in the high-income countries for 2010 are well below potential. Yet this is also at a time when the admittedly uncertain estimates of “output gaps” (or excess capacity) are at extreme levels. For 2009 the OECD estimates these at 4.9 per cent of potential gross domestic product in the US, 5.4 per cent in the UK, 5.5 per cent in the eurozone and 6.1 per cent in Japan. Given the forecasts for modest growth, excess capacity will be greater at the end of 2010 than at the end of 2009. The risks to inflation – or rather risks of deflation – are self-evident. So are the chances of further jumps in unemployment. In keeping with this, the “breakeven rate” of inflation implied by inflation-indexed and conventional US treasury bonds has fallen again, to close to 1.5 per cent. June’s hysteria over rising yields on conventional bonds looks absurd.
• Marc Frank: Raúl clears out Fidel's cabinet
• Paul Krugman: Universal Health Care: A $1 trillion bargain
  OK, so the CBO score for the 3-committee House health care plan is in: $1 trillion over the next decade for 97 percent coverage of legal residents. That’s a bargain: the catastrophe of being ill without insurance, the fear of losing insurance, all ended — for much less than the Bush administration’s useless $1.35 trillion first tax cut, quickly followed by another $350 billion. And that’s just the budget cost, which the House proposes covering partly with savings elsewhere, partly with higher taxes on very high incomes. As Jon Cohn points out, the overall effect of expanded coverage will probably be lower health care costs for America as a whole. There is now absolutely no excuse for Congress to balk at doing the right thing.
• Andrew Bacevich Best Intentions: An Appreciation of Graham Green
  Pyle’s nominal assignment is a tissue-thin cover; he is actually a CIA agent (although the agency is never identified as such). To stem the Communist tide threatening to inundate Southeast Asia, the agency wants to conjure up an indigenous democratic alternative to French colonialism. Pyle’s job is to devise this Third Way. As he undertakes this task, Pyle draws inspiration from a journalist named York Harding, a sort of proto–Thomas Friedman who parachutes into various trouble spots and then in best-selling books serves up glib recipes for advancing the cause of liberty. In Pyle’s estimation, the challenge he faces does not appear all that difficult. York Harding provides the answer: “you only had to find a leader and keep him safe from the old colonial powers.” “Impregnably armored by his good intentions and his ignorance,” Pyle embodies all that Fowler (and Greene) can’t stand about Americans...
• Cogitamus: Leave Sarah Alooooooone!
• In Which Charlie Stross Is Scared of His Readers...
  Amazon sell some really weird stuff; for example, tins of uranium ore. No, that's not the scary bit. The scary bit is that customers who bought this item (the aforementioned uranium ore) also bought copies of Halting State and Volume Four of Knuth's The Art of Computer Programming (insofar as extracts are available for purchase). I seem to recall writing about that here. I think I'm going to go and hide under the bed now. (Yes, the bedroom is circular; not a right angle in it!)
• International Monetary Fund - Data and Statistics - BOP, DOT & IFS Data Browsers
• Menzie Chinn: Pre-ARRA, How Badly Did Macroeconomic Forecasters Overpredict GDP and Employment GDP in 2009Q1?
  The point forecasts suggest that 1.16 million of the average 2009Q1 NFP level is associated with the lower than anticipated GDP, and similarly 1.74 million of the average 2009Q2 level. Since there is estimation error involved in relating NFP to GDP, I've included the forecast plus 2 standard errors and minus 2 standard errors (which is bigger than the plus/minus 2 standard error bands often depicted in VAR analyses). The actual employment level is below that which can be explained by estimation error.
• Paul Krugman: Multiplier Muddles
• Sonia Sotomayor Explains Nunchucks to Orrin Hatch
• Perry Mehrling: Shadow Banking: What It Is, How it Broke, and How to Fix It - The Atlantic Business Channel
  I use the term "Credit Insurer of Last Resort."... Floating the system with money market liquidity, which is what the Fed did, didn't solve the problem, because it wasn't getting to the capital markets. That's why we need a credit insurer of last resort, to put a floor on the value of the best collateral in the system. I say the new Bagehot Rule should be: Insure freely but at a high premium. Why a high premium? If you insure an earthquake, you are not making earthquakes more likely. The insurance contract is a purely derivative contract, it isn't influencing earthquakes. That is not true of insurance of financial risk. When AIG is selling you systemic risk insurance for 15 basis points, that price is too low. People said: "If I can get rid of the whole tail risk that cheaply, I should load up. I should take more systemic risk." So the prices were wrong. So the important thing for government intervention here is to get that price closer to a reasonable rate...
• Matthew Yglesias: Palin, Washington Post, and the End of Newspapers
  [T]he Post’s habit of publishing this kind of material [like Sarah Palin] is part of the reason why... I wouldn’t shed a tear if the Washington Post Company were to... shutter it’s money-losing newspaper and focus on its core competency in the field of standardized test preparation.... [W]hy does Sarah Palin have an op-ed on climate legislation...? Does she have scientific expertise? Economic expertise? Knowledge of the state of international climate negotiations? Perhaps... a reputation for an unusually solid grasp of complicated policy details? Or is the idea that she’s known for being honest? A good-faith participant in public policy debates? Well, no. And the fact of the matter is that the Palin op-ed actually fits very comfortably alongside the established norms of Charles Krauthammer, George Will, and Robert Samuelson—words on paper that are neither paid advertisements nor serious efforts to improve people’s understanding of the world.
• Matthew Yglesias: Thought of the Day
  I would pay good money to hear Sonia Sotomayor say, “Senator Sessions, I think it’s ironic to be facing these questions from a man whose judicial nomination was rejected by this very committee on the grounds that he’s a huge racist.” UPDATE: Seriously, though, when the Republican Senate Conference was meeting, did nobody say "if we're going to oppose the first Hispanic Supreme Court justice, maybe we shouldn't have a giant racist leading the charge?" This seems like a situation in which Mel Martinez might have been able to offer a useful perspective. Or they could have called up JC Watts out of retirement. What were they thinking?