All right, I give up. I've reviewed for the Washington Post Book World, I consider some of their work interesting, and can almost forgive them for publishing Ruth Marcus, Charles Krauthammer, Anne Applebaum, and Richard Cohen as if they were sane.

But when your Ombudsman claims that your readers "typically demand coverage that is unfailingly neutral," and cites as an example of "crossing the line" one of your reporters making a statement of fact:

"We can incur all sorts of federal deficits for wars and what not," Raju Narisetti wrote on his Twitter feed. "But we have to promise not to increase it by $1 for healthcare reform? Sad."

There is no purpose for your organization to even claim it publishes news.

Robert Waldmann

Brad DeLong just posted a very interesting Draft Henry George lecture. It contains ideas which I haven't found written down before by Brad or by Krugman. I strongly recommend reading it (for one thing I don't know how to cut and paste from it). People who have read the draft lecture are invited to read my thoughts after the jump (I can't keep people who haven't read it out, but comments which reveal ignorance of the lecture will be mocked ruthlessly).

update: I hereby ruthlessly mock myself for failing to provide the link.
What an idiot. That's the problem with blogger.com it enables people incapable of handling html to post on the web.



So that was a nice lecture wasn't it ? Much of it was new to me.

1) Brad confesses the reason for his lapsed Greenspanism.

I hadn't seen the explanation that he opposed tight regulation of finance, because he thought the purpose of structured finance was to trick people into bearing more risk that they want to bear and that this is a good thing, since people are irrationally unwilling to bear risk.

Oh my not just Greenspanian but a Straussian believer in noble welfare enhancing lies. I might have found the argument convincing in 2006, so I'm glad I didn't read it.

2) Brad claims that fresh water economists have traction, are getting attention etc. I didn't know that. I'd guess a lot of it is due to Paul Krugman who is arguing with them in public. Also, I mean, Nobel memorial laureates tend to get all the attention they want. However, Brad has an interesting theory. Republicans in power listen to economists who don't sound crazy to them (and all non economists). Republicans in opposition use any rhetorical weapon to hand so any criticism of Obama however crazy it sounds to non economists is amplified by the vast right wing conspiracy. An interesting idea. Are fresh water economists really getting a hearing from non economists ? That's a scary thought.

3) Brad notes the similarities between Herbert Hoover, Alan Greenspan and Job. Hoover and Greenspan have been very loyal to the pro market ideology. yet when trouble comes, people who should be their friends accuse them of being pinkos.
Now that is an excellent rhetorical weapon to hand.

Brad's been writing about how Prescott has decided that the Great Depression was caused by the anti market policies of Herbert Hoover. He notes that for Prescott's latest theory to make sense, one would have to argue that Hoover was more anti market than Roosevelt, Truman or Johnson (or any post WWII European socialist ever in power). Now to me, this is no more absurd than the average assertion by Prescott. But it seems to me much more striking to non economists. Usually Prescott uses mathematical terminology and so most people either have no clue as to what he is saying or assume that the clue they have must be misleading, because he couldn't be claiming that (as he is). I'd say some documentation that Hoover was not a pinko is in order.

The similar claim that fresh water economists are saying that Greenspan over regulated is also interesting. I think documentation of that claim is in order. Then I'd go to Greenspan's personal history as a disciple of Ayn Rand. I just found out that he was not just a fan from a distance but part of her tiny group. Rand was a very extreme ideologue and a very unpleasant person. Many on the right will not accept criticism of her. In a no holds barred rhetorical struggle, writing about Rand and Greenspan is likely to be an effective strategy.

Of course, I am not interested in rhetoric and think we should all seek the truth together assuming that all are sincere and well meaning, so I will have nothing to do with that. But someone less high minded and scrupulous than I would talk about Ayn Rand's sex life as often as possible.

update: I am not suggesting that Brad is interested in using any rhetorical arm at hand. I'm sure he argues in good faith and presumes that others do as well until they prove otherwise.

Via Brad DeLong, Eric Falkenstein praises Macroeconomics with faint damns:

Macroeconomics is the triumph of hope over experience, and has been no more successful than sociology.

Insulting our betters will not put economists in good stead. As Paul Krugman frequently notes, "Economics is...not quite as hard as sociology."*

But Falkenstein makes up for this lapse, perhaps, with his conclusion:

Macroeconomists are demonstrably not helpful to those institutions that could use economic expertise. Macroeconomists know a lot of stuff, just not anything useful.

I'll still maintain, and am pleased to see John Quiggin appearing to concur, that The Problem with Macro is believing that it must be a subset of Micro in general and "rational expectations" in particular, leaving the question of what exactly Macro contributes as an exercise. So I'm less ready to make that declaration that Dr. Falkenstein is. But my previous following-the-Devil-in-the-desert comment (see the Update here) seems more and more the correct description of modern macro.

At least when physics looks for GUTs, they know when they haven't found one.


*It is left as an exercise to the reader whether the elided part of that quotation is true, a comparison of apples and oranges, or misses that physics includes people and matter.

Brad DeLong finds the quote that tells you everything you need to know about the origins of the Neoconservative Movement:

Among the core social scientists around The Public Interest there were no economists....The task...was to create a new majority, which evidently would mean a conservative majority, which came to mean, in turn, a Republican majority...

L'Shana Tovah, Shabbat Shalom. May 5770 be better, saner, and more prosperous for all than 5769.

Title ref (and can you believe it's Op. 4??):

Other Reference of Interest:

Ken Houghton is talkin' about his generation.

Pete Davis, Mark Thoma (who at least has the decency to phrase it in the form of a question), N. Gregory Mankiw, and Brad DeLong explain why there should not be any penalties against providers of West Virginia water (h/t Bitch).

Because fungible is fungible, even if it isn't.

At least Garth Brazelton at Reviving Economics gets it right, leaving hope that when we're all dead, the next generation will know how to teach economics so that they're not looked at as if they're insane.

by Tom Bozzo

Back in 2005, I argued at Old Marginal Utility that "Greenspan exceptionalism" was not very well founded in that observers rarely engaged in a proper counterfactual analysis of how well Alan Greenspan performed relative to the next best monetary policy technocrat. That's a fairly stringent evaluation criterion, and even Brad DeLong's glass-half-full response revealed what could be considered major errors in Greenspan's judgment. 2009 hindsight of course shows that there was another major error in inflating the housing bubble, failing to recognize it, and allowing his Rand discipleship to overcome common sense in using Fed powers even to skim the froth.

Now some elite opinion favors Ben Bernanke's reappointment, but politicians are irritated over Fed stonewalling of bailout oversight and others (e.g. Dean Baker) point out that Ben Bernanke who put the Fed throttles to the firewall to save the world is also the Ben Bernanke who carried over Greenspan policy until it was too late among other things.

So what should the counterfactual-based evaluation of Bernanke say? What would the hypothetical panel of smart graduate students have done? It seems even harder to suggest that Bernanke was essential than Greenspan — in this case, because well-read economists should have had it from Ben Bernanke the academician that in a depression-level crisis you don't skimp on the monetary policy intervention. Meanwhile, Bernanke gets no points for prescient instincts as the save-the-world interventions have seemed to be firmly of the close-the-barn-doors-after-the-horses-have-bolted variety.

Meanwhile, significant elements like the opaque lending programs have the appearance if not reality of being in part the predator state (a la Jamie Galbraith) in action. There's a line of 'b-b-but Bernanke and Paulson saved the world' opinion along the lines of this bit of fail from the often incisive Joe Nocera:

So why the anger? Why the suggestions of “cover-up” and “lies”? On Thursday, as I watched Mr. Paulson being castigated, it dawned on me. Seven months later, with the palpable fear of a financial collapse largely subsided, it really all boils down to how you view what happened last year. Was it, as Mr. Towns believes, a bailout of a handful of unworthy but too-big-to-fail institutions? Or was it, in the eyes of Mr. Paulson, a rescue of a teetering financial system? My vote is for the latter.

To which the obvious response is, duh, who says it has to be one or the other? A reality-based critique of the bailouts allows them to be both effective at saving the world and unconscionable screw-jobs that kept an array of bad actors from paying for their greed and incompetence. (The latter clearly feeds a lot of the underlying sentiment of the tea partiers, even if it's ultimately the greedy and incompetent who are marshalling it.) However, considering Team Obama's political tone-deafness, it'll be a pleasant but major surprise if they don't let Bernanke go back to Princeton for some R&R.

(Cross-posted at Marginal Utility.)

should read Sensible Centrist J. Bradford DeLong on the difference in forecasting between the current Administration and the CEA under N. Gregory Mankiw.

Romer/Bernstein/Kreuger et al., 2008-9 edition:

As I understand matters, last December the median private-sector forecast had the unemployment rate topping out at 9% in the second half of 2009. The incoming Obama administration simply adopted that forecast. At the time I thought that was a mistake: (I thought that was a mistake: I thought they should have made a bifurcated forecast with a "good case" 80th-percentile scenario and a "bad case" 20th-percentile scenario; they should then have stressed that in the bad case we would need a large stimulus indeed to prevent high unemployment, and that in the good case we could restrain inflation via monetary policy.)

Mankiw et al., 2003 edition:

it would make it extremely difficult for things to happen like what happened to the Mankiw CEA over the winter of 2003-2004, when high politics appears to have reached down into the forecast, changed the table for payroll employment (and only payroll employment: the rest of the forecast is not out of line with contemporary professional forecasts), and produced an estimate for December 2004 (a) inconsistent with the rest of the forecast, and (b) high by 2.3 million in its estimate of payroll employment--all because Karl Rove and company thought it important to avoid headlines like "Bush administration forecasts 2004 payroll employment to be less than when Bush took office." (link from original)

The positive-spin version is that Mankiw plays politics better than the Obama Team.

UPDATE: Kauffman Foundation invitee Mark Thoma adds to the fun.

Dear Barry:

The need for posts such as this one recurs because the large majority of economists are idiots. (Multiple exceptions noted—but not enough to change the truth of the initial statement.)

As the regulatory reform report notes (quoted by PK at the last link above):

In fact, enforcement of CRA was weakened during the boom and the worst abuses were made by firms not covered by CRA.

But the truth should never be allowed to get in the way of Economic Theory.

Because a world without Leonard Cohen songs readily available to all in Frisian is not a world we want to live in:



plagiarism confession: This post is entirely copied from Brad DeLong who quoted Justin FoxJustin Fox.

See Maureen Dowd -- that wasn't so hard was it ?

Via Brad DeLong, I see Time magazine has identified the "25 people to 'blame' for the financial crisis." [my sarcastic quotes on blame; Time appears to be serious]

Amazingly, none of TWX's (mostly former) top management—who pushed LBOs in the 1980s and Internet bubbles in the 1990s—makes on the list.

More amazingly, Lew Ranieri is on the list, while David Malpass is not.

Also making the list: Wen Jiabao, because the Chinese government "supplied the U.S. with an unprecedented amount of credit over the past eight years." Let's leave aside whether that credit wasn't primarily to support Chinese exports (see, e.g., Brad Setser) and ask the obvious question:

Given that an external economy is providing you with (realtively) "easy" credit, what does that imply your Monetary Policy should be?

UPDATE: DeLong takes M2 to the next step, with predictable results.

I believe this is also how the Laffer Curve was created on Dick Cheney's napkin:

I thought about calling this "Why Tom Toles will never be hiring by the current mismanagement at Time magazine," but that would be cruel.

Ken Houghton notes that no one has stolen my ID or shifted my sense of politics or the economy.

Brad DeLong has been running excerpts from the February 2009 Vanity Fair "Oral History" of the Bush White House. Time and priorities being what they are, I didn't get a chance to read the whole piece until today—coincidentally, right after Paul Krugman said that Larry Summers

"is right" in his assessment that the sense of the economy falling of the table was likely ending.

Now, Krugman went on to qualify this, in the same manner, though with less clear terms, as he did on his blog last Wednesday:

Many will herald this as the end of our problems. But they’ll be wrong, for reasons I laid out during an earlier false dawn, back in early 2002 (the unemployment rate continued to rise for more than a year after that point)....[long, well worth reading but not anywhere close to excerptable for "fair use" example omitted]... I wanted to include a graph to go with this post, illustrating what happened in 2002. And guess what: that surge in output in early 2002 has been revised out of existence.

So Krugman may believe that this is a "false dawn," but affirms that the worst is probably over.

Contrast that with Hank Paulson's comment in the Vanity Fair piece:

This’ll be the longest we’ve gone in recent history without there being turmoil, and given all the innovation in the private pools of capital and the over-the-counter derivatives and the excesses around the world, we figured that when there was turmoil, and these things were tested for the first time by stress, it would be more significant than anything else.

I said at the time, I have a concern that every rally we’re going to have in the financial markets will be a false rally until we break the back of the price correction in real estate. And these things are never over until you have a couple of institutions go that surprise everyone. Bear Stearns can hardly be a shock.

But having said that, it’s one thing to see it intellectually and it’s another to see where we are.[italics mine]

The "couple of institutions" to "go" still hasn't happened.

Suppose I told you that there was a crisis with a stock, say, GE. That the price of the stock had dropped around 75% in the past year. And you responded, "But the problem is solved; the prices of long-term Call Options (say, the January 2011 20s) has gone up, as has their Open Interest.

You will (rightly) point out that this won't revitalise the assets themselves and I will (rightly) note that option markets rather saved the equity markets in 1987, for instance. You will note that I am too optimistic, and I will agree, holding up a Brad DeLong mask (since I'd rather have DeLong's [relative to mine] abundant hair than Geithner's abundant forehead).

Then I will drop the other shoe and say that the toxic ("legacy") assets should be priced as if the Fed-supported trades were options, with the underlying current price worked out by Black-Scholes. (As I've noted before, B-S is specifically INappropriate for this exercise, as it will overvalue the option. And therefore anyone suggesting the toxic ["legacy"] assets should be priced—or carried on their books—at a level higher than that model will clearly be insane.)

Ladies and Gentlemen, welcome to The TARP Solution. Details beneath the fold.


TARP is the Treasury Department's attempt to confront two realities: (1) it isn't a "market" in any reasonable sense of the word if the Fed is putting up 85% of the cash. (People who tell us that this means firms are committing a "large amount" to the process either do not understand the English language,or are hedge fund managers trying to sell something.) So let's put some random numbers together.

Those "legacy" assets are trading in the market around 30. The Big C and others are carrying them on their books around 80. Several people who should know better (Summers, Geithner, DeLong) have conflated "the market is underpricing the assets" with "the true price of the assets will make the banks solvent again."*

So we know three things. (1) People are willing to pay 30% of their own money to buy these assets, (2) the Fed is only requiring them to pay 15%, and (3) the fair value is between 30 (the current market price) and 80, and probably closer to the former than the later.

So again, using back-of-the-envelope principles, let's pretend that we think the recovery will be soon, that the defaults will slow (or at least that resales will be quick and frictionless), and that the market reaches that consensus quickly. And so fair value should be around 50.**

So let's say the Fed offers to buy a MBS for 50. How, as an investor, do I make money off this? Three possible ways:

1. If I own securities for which I paid <50, I sell them to the Fed.
   
2. If I own securities for which I paid >50, and which I cannot sell for 50 without revealing myself to be insolvent, I buy securities at 50 along with the Fed and "average in." (This is the "how to stay solvent longer than the market can be rational" act.)
   
3. If the Fed is buying securities at 50 so that I can no longer buy them at 30—I buy a LONG-dated Call Option on the security.

It is that last that explains TARP. Effectively, the co-investors with the Fed will be buying a Call option at 7.5 on the security at 50.***

Of course, it may not be an at-the-money Call option. More likely, the hedge fund effectively will be buying an out-of-the-money option (say, a 49.5 Call for 8) where some portion of the purchase is put up by the government.

Now you will note that, technically, TARP requires the hedge fund to buy the asset. So you might argue that this is not an option. But let's look at the generic payoff diagram to the hedge fund of the two scenarios.

Amazingly, you can't tell the difference on the payoff diagram as the security gains.**** In both cases, the hedge fund manager has just gone long volatility.

Expect that to have a ripple effect—I'm guessing dampening, cet. par.—on other option volatility trades.

All that is left is to back out what actual value of the security was assumed by the hedge fund when they bought the option. Which I will also leave as an exercise to the reader, while suggesting that a fair indication is min[x, TotalFedContribution] s.t. x a.s. approaches TotalFedContribution.

Will this bring the markets back, or make bank balance sheets more stable? I'm still saying "No," and hoping to be proved wrong.

But what it should do is reduce volatility buying, especially in the other debt markets, for the foreseeable future. So if any of those Bankrupt "legacy asset constrained" institutions has a long volatility position, there will be even more "Unintended Consequences."

*In fairness to Brad DeLong, I don't believe he believes this. As Dr. Black noted, George Voinovich "wants to see a pile of money in flames before he's willing to vote for what's necessary," and DeLong therefore sees this as a necessary evil. Having seen no evidence from the Obama Administration that they Have a Clue, I am naturally suspicious that this particular idiocy will do anything other than waste time and money—both of which are in increasingly short supply—but, since Larry Summers has shown his brilliant foresight before and clear has no skin in the game, I am reassured that there is no Principal-Agent problem at work here, as they was when Christopher "I never saw a regulation I like" Cox was named head of the SEC by the Previous Administration.

**While we're at it, can we pretend that Amber Benson will be my next wife, which is probably very little less likely than those other possibilities (especially since I'm already married to an sf-writing actress/director)? (Amazingly, even without those conditions, we would be using a BotE number of 50: though there is a legitimate argument that 60 would be easier to work with, I'm assuming no one is that stupid.)

***This is why 60 would have been easier; 15% of 60 is 9, so I wouldn't have to pay attention to decimal places. 40 would also have been easier—and both certainly more realistic than 60 and arguably more realistic than 50, but I want to maintain the pretense of the U.S. Treasury that this is a liquidity, not a solvency, crisis. (They're wrong, but it's their game.)

****The reason we can tell the difference on the losses is the possibility that the hedge fund treats the position as if it were an in-the-money Call option for which the Fed paid the in-the-money portion; the real returns to the hedge fund of the position in a TARP security are the same in both cases; there would be differences in the way the rest of the portfolio was managed, though, which are left as an exercise to the reader.

The idea that they aren't inviting Yves, CR, and Roubini onto the calls either led me to wonder for a moment if there was another factor in the invitations.

But skipping Felix, even if he is a short-timer, means that they weren't judging by the blog in the first place.

UPDATE: Dr. Black twists the knife.

The Geithner Plan FAQ is worth reading; it's a classic example of treating an incomplete market as if it were the entire market. And note that "skin in the game" is limited to a part of the local pool.

Unfortunately, while Treasury plays in the wading pool, hedge funds have The Whole Wide World in which to romp. Yves (h/t Mark Thoma) has a commenter who explains:

Say I am SAC Capital. I get to be one of the bidders on bank assets covered by the program

Citi holds $100mm of face-value securities, carried at $80mm.

The market bid on these securities is $30mm. Say with perfect foresight the value of all cash flows is $50mm.

I bid Citi $75mm. I put up $2.25mm or 3%, Treasury funds the rest.

I then buy $10mm in CDS directly from Citi [or another participant (BOA, GS, etc)] on the bonds for a premium of $1mm.

In the fullness of time, we get the final outcome, the bonds are worth $50mm

SAC loses $2.25mm of principal, but gets $9mm net in CDS proceeds, so recovers $6.75mm on a $2.25mm investment. Profit is $4.5mm

Citi writes down $5mm from the initial sale of the securities, and a $9mm CDS loss. Total loss, $14mm (against a potential $30mm loss without the program)

U.S. Treasury loses $22.75mm.

I would have thought by now that economists would know what happens when you create bubbles in a market. That doesn't change just because you use the U.S. Treasury as a Fluffer.

Brad DeLong has the breakdown of things taken out of the no-longer-possible-to-defend-as-stimulating stimulus bill.

Nice to see that no Republican, and precious few Democratic Senators, believe in following even Andrew Samwick's tepid endorsement:

Congress and the Obama Administration should be very discriminating in what they will spend money on. Bailout money for banks and large firms should go. Every piece of pork in the stimulus bill should go. Every additional tax cut should go. What should remain are the highest value public infrastructure projects, many of which the government has been deferring for years or decades.

which is a minor modification of his previous position:

[A]s I will continue to blog until I am blue in the fingers, the appropriate course of action when the economic downturn appears like it will be unusually severe is to bring planned capital projects forward in time. Doing so allows them to be done more cheaply.

This would be especially true of the non-"highest value" projects, as an Finance person can tell you. (At 2%, it might have a positive NPV; at 5% and full employment, it will, er, "crowd out.")

DeLong body-slams Mankiw.

Especially like this:

Mankiw: The CEA website should also post a notice about CEA internships, as we had during my tenure as CEA chair, so students can find out how to apply.

DeLong: "Let me, for one, state that I am very glad that Christie Romer has been too busy since her confirmation a week ago Wednesday night to set up procedures for hiring interns. When setting up and posting procedures on the hiring of interns is the most valuable first use of a CEA chair's time, there is indeed cause for alarm: it would be a sign that the president is like George W. Bush, who would rather not have had any economic advice at all."

I note for the record that the CBO sent out their Summer Internship application notice on January 27th.

Robert Waldmann

Brad DeLong boldly attempts to exhaustively list the factors which can affect the value of a fixed income asset. This is some Mac generated i document and I can't cut and paste. Go here and search for "there are four".

The four are called "default", "the safe real interest rate", "risk", and adverse selection.

I view the assertion that "there are four" as a challenge and quibble after the jump.



First the instruments in question promise nominal payments so the safe interest rate in question is the safe nominal interest rate not the safe real interest rate. The word "real" is essentially a typo.

Second "default" and "risk" are the same things for fixed income instruments (clearly what Brad is discussing). By "risk" I assume he means "risk bearing capacity" or "risk aversion". However, default is a much broader problem than Brad seems willing to admit. He counts exactly two sources of default risk -- 1 trillion in housing related defaults and 3 more trillion from defaults caused by the recession. This leaves out other sources of changes in estimated default risk (not risk aversion or risk bearing caspacity but risk).

That is, I see a fifth cause of the decline in asset values. I think many assets were over-valued in the past, because the ratings agencies were tricked or cashing in on their late lamented excellent reputations (or both). The loss of confidence in said agencies causes an increase in estimated risk not because risk has increased or risk aversion has increased but because the old estimates are now known to be bogus.

More generally, risk modeling by traders was similarly complete nonsense. I don't know to what extent the traders were tricked and to what extent they were in on the scam (nor I suspect do they).

Structured finance created a huge illusion of wealth by creating an illusion of safety. The financial engineers knew how the agencies rated (the agencies explained for a consulting fee) and how traders estimate "value at risk". They knew people assumed (or pretended to assume) that all stochastic variables are normally distributed. Thus it was profitable to sell instruments with skewed returns (fat lower tails) unless the rare negative event occurred during the testing period (in which case the instruments could be re-engineered). A senior tranche of a pool of moderately risky assets has a skewed distribution.

Similarly money could be made by reducing own variance for a given beta by pooling assets and issuing claims on the pool. The variance of an average is less than the average variance. The covariance of an average and the market portfolio is the average covariance. Thus a claim on a pool of BBB rated corporate bonds was rated AAA. Turning BBB to AAA is worth a lot of money except for the fact that it was a scam (investors could pool themselves -- they don't seem to have understood that pre-pooling reduces the benefit to them of their own pooling -- or they were in on the scam).

That is there were trillions of fantasy dollars created out of nothing by financial engineering (on top of whatever real wealth had been created by financial engineering which genuinely made better insurance and diversification possible). The loss of that illusion can't be estimated easily as "housing related defaults" (and note my example has nothing to do with housing or recessions).

The risk of a nationwide decline in house prices was estimated at 0 by S&P (I am not exaggerating). Now there has been such a decline, and they must admit that there is the risk of another such decline in the future. Even if the current decline costs just $ 1 trillion, the future possible declines also cost money.

So much of the wealth was an illusion which won't come back soon. This end of systematic miss-estimation of risk is not on your list.

Also institutions took huge gigantic bets against each other (as in AIG lost writing CDSs). This increases counter party risk. No one knows if a counter party is solvent. That reduces the value of a huge number of instruments. The damage could have been done without involving the housing industry or the stock market if, say, investment bank CEOs played a really high stakes poker game and all claimed to have won money. Also bankruptcy is costly. Even if the CEOs had played hundred billion ante poker on camera, wealth would have been destroyed and more wealth would have been shifted from investors to lawyers. This is another item not on your list.

Finally, much of the strange new finance was designed to help agents avoid prudential rules and regulations which they considered to be costly. Now they have learned two things. First that the regulations weren't so pointless so they will have to pay that cost to avoid bankruptcy. Second they will be audited by banking regulators, trustees etc and found wanting. This last point is semi redundant as it amounts to an increase in perceived risk or a reduction in perceived capacity to bear risk (default or risk in Brad's terms). However, it explains why I keep speculating that this that or the other operator was in on the scam.

UPDATE: DeLong indirectly replies here. [klh]

Brad DeLong suggested a bit before the U.S. election that there was virtually no non-political reason for NBER not to admit the United States was in a recession.*

A little late, but they generally got it right. As Floyd Norris notes:

The National Bureau of Economic Research said today that the current recession began a year ago, in December 2007.

I’ve been arguing for some time that the recession started around then (between October 2007 and January 2008), but for much of that time it was a lonely vigil, with few economists in agreement until things fell apart in September.

I would still argue for October 2007;the "peak" in December was related more to a Certain Holiday than anything real. (It's not called "Black Friday" in honor of workers who get trampled.) But at least they called it, which will make it more difficult to argue that "the recession started on Obama's watch."

Sorry, New Economist.

Brad DeLong suggested a bit before the U.S. election that there was virtually no non-political reason for NBER not to admit the United States was in a recession.*

A little late, but they generally got it right. As Floyd Norris notes:

The National Bureau of Economic Research said today that the current recession began a year ago, in December 2007.

I’ve been arguing for some time that the recession started around then (between October 2007 and January 2008), but for much of that time it was a lonely vigil, with few economists in agreement until things fell apart in September.

I would still argue for October 2007;the "peak" in December was related more to a Certain Holiday than anything real. (It's not called "Black Friday" in honor of workers who get trampled.) But at least they called it, which will make it more difficult to argue that "the recession started on Obama's watch."

Sorry, New Economist.