The close:

[W]hen the New York Times came and offered [Ross Douhat] a column, he did not turn it down saying "no, I clearly do not deserve this honour, others are far more qualified for it that me".

The NYT thinks Douhat's important because people link to him. They neither realize—nor care—that you're laughing at him. They just count the links and think he's Valuable.

Stop linking. Please. Even the thorough destructions (e.g., Dave Noon) include the trackback.

Don't include a link to Douhat. Think of the children.

Robert Waldmann

AHIP The health insurance lobby just declared war on the Baucus plan. This is new, since they previously supported health care reform. It is not, however, surprising. AHIP made its condition clear, they would support health care reform provided that all were insured. Basically the individual mandate was the price for their support.

Displaying his usual inverted political genius, Baucus decided to water down the individual mandate so that some people are allowed to go without insurance. He was trying to compromise with Republicans, well in this case, with a Republican -- Olympia Snowe. Thus he violated the terms of a very clear very public agreement with AHIP. It's not as if I didn't warn on September 2 that this is a terrible idea.


Now Baucus has lost AHIP and Snowe remains officially undecided. He dumped AHIP Prsident Karen Ignani in a bid for the Ignavi (I make that plural to refer to the Divine Comedy but pretend it is to include Nelson or Lieberman or someone).

Update: Maybe I was wrong. Maybe Baucus is an even more brilliant 11 dimensional chess player than Obama (a 12 dimensional chess player) and he knew that provoking AHIP was a brilliant strategy. The line from an anonymous "finance committee aide" is that AHIP's attack is good for Baucus. The idea seems to be that Senators are angry with AHIP and don't want to appear to take instructions from AHIP (doesn't mean they don't want to take the instructions, it just means that they don't want it to be obvious as in changing their position the day before the big vote after a very public command).

Of course I assume that "a finance committee aide" would not make a totally bogus claim in support of the view that Sen Baucus is a genius and certainly wouldn't demand anonymity if the claim were totally bogus. Nahhh that's just not the way Washington works.

I'd guess that the bought and paid for insurance industry senators (definitely including Sen Baucus) aren't even capable of being good fiduciaries of insurance company shareholders -- that there obsession with compromising, watering down and settling for half a loaf (and above all pissing of the left wing of the party) lead them to water down the individual mandate which is much more critical to insurance company profits than is the avoidance of a public option.

update 2: Kevin Drum has the same theory as I do, but he writes much more goodly.

update 3: Yves Smith ways in
More comments after the jump.

Interestingly the AHIP broadside is not a press release. It is an A1 article by Ceci Conolly in The Washington Post. I thought the Washington Post was a subsidiary of the test prep industry not the health insurance industry (live and learn).

Dougj notes that The Washington Post publisher invited health industry players to pay for access to Ceci Conolly and writes "There’s a pretty strong prima facie case for pay-to-play here."

Also AHIP didn't just say the Baucus bill is a bad bill which will cause insurance premia to increase. They commissioned a study from PricewaterhouseCoopers to conduct an analysis (it must be an analysis there are lot's of numbers in it) and a frightening possible price tag. PricewaterhouseCoopers clearly explains, in the text of their analysis, that they made extreme and implausible assumptions to make the calculated number as large as possible. AHIP and PwC assume that they know how journamalism works. Journalists don't look at the assumptions or any non headline number so credibility can be bought (although I didn't know that PwC had any left to sell). John Cohn read the fine print so you don't have to.

I'm not sure if the old approach will work now that serious journalists have to worry about geeks who actually read the analysis that interest groups buy. OK I'm pretty sure it will still work.

update: looks the approach of anonymous sources praising their bosses still works.

Mark Cuban gets the FTC's artificial distinction between bloggers and journalism exactly correct.

Full disclosure: I had a Press Pass to the Clinton Global Initiative, and got things such as a disc copy of Financial Football* and a video ostensibly about the Rwandan National Forests (sadly, not so interesting) as a result.


*It's not my fault Visa describes it as "Financial Soccer" on the U.S. edition of their website.

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.

by cactus

Norman Borlaug, Michael Jackson, and the Invisible Hand

When Adam Smith described the concept of laissez-faire capitalism, he argued that it was not just efficient but moral. As long as everyone acted in their own self-interest and the government did not interfere, the Invisible Hand would guide market forces toward the best possible outcome for society. Its generally accepted that this doesn't always work in the presence of externalities; someone (i.e., government) has to be there to ensure that people don't exercise their right to swing their fist beyond the start of other people's noses.

But there is another problem which seems to be less highly recognized, namely that the whole concept of the Invisible Hand itself is bull$#^&. As an example, I'm writing this a few minutes after reading about the death of Norman Borlaug. He was a Nobel Laureate who developed disease-resistant and fast growing crops. Depending on who you ask, his work saved the lives of somewhere between a quarter of a billion and a billion people. So far. If we don't all die in some sort of cataclysm in the next fifteen minutes, that number will only grow.

Now consider another person recently deceased - Michael Jackson. I believe Jackson was finally buried some time last week. Aside from being known the world over, Jackson was very wealthy, despite his clear incompetence with money. He probably made at least one dollar for every life saved by Norman Borlaug, so far. Norman Borlaug, on the other hand, to the best of my knowledge, did not. Furthermore, this discrepancy in income is very, very, very hard to attribute to government interference.

Which means, there are two possible alternatives:

1. Michael Jackson did more positive things for the world than Norman Borlaug.
2. Michael Jackson did less positive things for the world than Norman Borlaug.

There is no third option. None. Now, I think very, very few people, even die-hard Michael Jackson fans, when presented with numbers like "a quarter of a billion lives saved so far" would agree with option 1. Which leaves option 2. And if option 2, then the Invisible Hand is bull$#^&. Which means capitalism doesn't work or is immoral. That does not imply any other philosophical system would work better, mind you, but trusting the market to do its thing provides perverse results.
_______________________________________
by cactus

UPDATE by Ken:

I mentioned this in comments, but I think it's worth embedding here, too, as context for Norman Borlaug:

If you needed a picture of a Megan M., you could have used this one:

I'm probably not the only one who wonders why you chose a Megan F. instead.

(h/t Susan of Texas. Photo credit to superficialgallery.com)

I have generally decided that the NYT's attempt at becoming the WSJ on its editorial page is not worth the trouble of discussing. An editorial staph that replaces the despicable but somewhat coherent Bill Kristol with the execrable incoherence of Ross Douthat is clearly suffering a fatal infection, and therefore not deserving of support.

But then the Lovely and Talented Susan of Texas gets loose. And, while there is still no reason to bother with the original, the interpretation is a standard against which all others should be judged:

Shorter Ross Douthat: I tried to have some sort of intercourse about Iraq but the Left was like a chunky Reese Witherspoon, masticating on Colin Powell's UN presentation and spilling its breasts out of its protests. I wanted to surge into Iraq but the Left wanted a premature withdrawal. If we withdraw, Iraq will swell into violence and give birth to a Middle Eastern abomination, one that even the Left can't abort.

If you can't do that, folks—and most of us cannot—don't bother with the backlinks. It will only delude the NYT that they have some reason to exist that is not named Bob Herbert or Paul Krugman.

Another dual-bankruptcy female with real estate problems. Wonder what the difference will be?

Susan of Texas has an immortal post on the housing crisis, McMegan's ratiocination, and the persistence of ignorant memes. The money quote:

McArdle doesn't refute facts, she hen-pecks at the methods used to gather information. That way she doesn't actually have to prove anything, she just casts enough aspersions on the data to confuse the issue. When source after source after source after source brings up a problem, dismissing it out of hand begins to look like bigotry and callous indifference instead of honest disagreement. [links from original]

Go Read the Whole Thing.*

(Cross-posted and expanded from Marginal Utility)

*Yes, rdan, this is another blog we've been keeping from you.

Dear Philadelphia Inquirer,

I also am a native of the City of Brotherly Love. The last two firms at which I have worked have lost billions of dollars.

While I admit that—unlike your latest columnist—I am not responsible for that happening, I believe this qualifies me to write a monthly column for you. While I understand that you must keep the amount you pay for the column secret from the workers who took $25/week pay cuts in an effort to save the paper, I believe that we can quickly agree to an amount in the neighborhood of the $1,750 you pay Rick Santorum, whose Philadelphia ties are much more suspect than mine.

I will, of course, write columns for you specifying that the current financial system is in perfect order, functioning precisely as it should. This should give my column the same truthiness that Mr. Santorum and your latest columnist bring to your august institution, and "promote further discourse."

You can reach me via this blog. I look forward to receiving a contract.

Best,

Ken Houghton

So the brilliant NFL has "solved" the Yom Kippur problem, moving the starting time for the Jets-Titans game to 1:00p.m.

Which means that, with luck, the game ends around 4:00—probably closer to 4:15.*

It appears that sundown on 27 September 2009—from which time one is expected to fast for 24 hours, so any eating better be done well before that—is going to be just about 6:45pm (assuming EDT).

I've driven around the Meadowlands around the time of football games before (mostly by accident; not something anyone wants to do). No one who has done so would agree with Representative Anthony Weiner:

"This commonsense solution is a win for everyone involved," Weiner said, praising the league's decision. "The NFL can maximize the greatest audience while Jewish New York Jets fans can support their team and respect their religion."

In comments, please estimate where a car of fans with midlevel seats, who pack up at the final whistle of a non-Overtime game and are heading East, will be at 6:45p.m. My admittedly-optimistic assumption is the in the title of this post.**

*For analysis, I am going to assume that the game is close and interesting. Perhaps the NFL does not make that assumption?

**Feel free to assume driving up to the GWB and taking the Triborough Bridge: maximum tolls and possibly minimum traffic.

rdan

Well, there you go. And all that fuss for naught. (bolding is mine)



Time CNN declares:

Investors find it disconcerting to see the stocks in the huge financial institutions that are at the foundation of the global capital system trading up and down 25% a day, and, in some cases trading in the pennies. Banks became the visible and ugly wound that reminded Wall St. each day that it had torn down what it spent decades building, which was a money-making machine driven by leverage and the cleverest synthetic financial instruments the world has ever seen.


Wells Fargo’s big profits, and what that means for the financial system

But, the great banking crisis of 2008 is over. It began last September 15 when Lehman Brothers filed for bankruptcy and bottomed when Citigroup (C) traded below $1 last month. Most analysts believe that mortgage-backed securities which included packages of subprime home loans failed when mortgage default rates went up and housing prices raced down. That is only partially true. Banks made a tremendous series of ill-advised loans to private equity firms, hedge funds, commercial real estate holders, and the average man with a credit card balance which he cannot pay. (See pictures of the top 10 scared traders.)

When people look back on the near-collapse of the banking system they may say that the Congress and Henry Paulson threw enough money into the path of the oncoming failure of the credit system to slow it down so that the government could properly go through the process of guaranteeing parts of the balance sheets of firms including Citigroup (C) and Bank of America (BAC). The initial TARP may also have provided time for the new Administration to put together its widely hailed bank "stress test" program meant to determine which of the big financial institutions have dysentery and which do not. Finally, the hundreds of billions of dollars that went into the largest banks late last year allowed Secretary Geithner to produce his public/private partnership to buy toxic assets off of bank balance sheets.

All of those plans, no matter how well-intentioned they may seem, are unnecessary now. Wells Fargo (WFC) indicated that it made about $3 billion in the first quarter of the year and declared its buyout of the deeply troubled Wachovia to be a success. Wells Fargo (WFC) said that the low cost of money from the government combined with a surging demand for mortgages was all the medicine that it required.

Banks stocks reacted to the news, which took the markets completely by surprise, by driving up Wells Fargo's stock by 32%. Bank of America (BAC) shares jumped 35%.

Oddly absent from the discussion of how well Wells Fargo did is why the government was in the midst of testing bank balance sheets at all. The experts at the Treasury had been thrown off the scent and consequently had missed the fact that there was not need to test what is already working well. The same holds true for the Geithner plan to take toxic assets off bank balance sheets. It is academic now. What banks are earning from the difference between the cost of capital and the income from lending is now great enough for the banking system to be self-sustaining again.

UPDATE: Via Paul Krugman, don't look behind the curtain of Wells Fargo's "profits," unless you want to see what a finance wizard really looks like. --klh

Headline from the Christian Science Monitor: "As G-20 battles protectionism, a cautionary tale in Ecuador" [emphasis mine]

Subhead for that same article: "The country has put steep tariffs on an array of goods. Seventeen of the world's 20 largest economies have broken recent promises not to take protectionist measures." [emphasis mine]

Presumably, the other three were smart enough not to make such a stupid promise in the first place.

Robert Waldmann

What can we learn from really bad arguments ?

I think it is useful to examine plainly invalid arguments, because the error in thought which they grossly manifest might contaminate less obviously idiotic contributions to the discussion.

A few arguments are so dumb that they have remained fixed in my mind. Most of them are not due to Mickey Kaus, but two are. They illustrate the same fallacy. I discuss one here.

The other is Mickey Kaus's argument that liberals should not concern themselves with inequality of income. After the jump, I will critique my recollection of this argument.

Update: I appear to have inadvertantly slandered St Bonaventura (more often spelled Bonaventure by people who don't live in Italy) when I compared his reasoning to Kaus's. St B might thank mALACLYPSE in comments.



IIRC Kaus argued that there is clearly an increasing trend in income inequality in developed countries. He was struck, in particular, by the fact, that inequality had increased in Sweden so the change in income inequality over the preceding 10 years had been positive in both Sweden and the USA, which have notably different approaches to dealing with inequality.

Then Kaus implicitly assumed that all positive numbers are approximately equal and concluded that the evidence proved that there was nothing much to be done about increasing income inequality and that we should just accept it as inevitable.

Anyone who reads this paper (warning pdf), must notice that the argument is, shall we say, not proven by evidence which became available after Kaus made his argument and implicit prediction. There aren't developed countries in which inequality has declined much in recent decades, but there are developed countries in which measured inequality hasn't increased noticeably. The increase in the USA is clearly extraordinary.

In any case, an argument based on the assumption that all positive numbers are approximately equal is worthless (note I resisted the temptation to write "approximately worthless").

The total worthlessness of Kaus's argument becomes, if possible, more obvious, if we consider how he might have argued if the data had been different. Equally valid (that is worthless) arguments can be made for not trying to do anything about income inequality if it is clearly trending up, clearly trending down or has no clear trend. In fact, the argument for not bothering based on the clear widespread downward trend (up until the 70's roughly) was much more convincing that Kaus's. If inequality in market economies trends down, then we might hope that it will more or less vanish (it can't be less than zero). So why worry ?

The argument based on the absence of a clear trend actually has a noble pedigree. Pareto argued, based on the fact that he found no clear trend in inequality, that it is a social constant and will always be about the same. Therefore he concluded there wasn't much point trying to do anything about it.

Now if there are three possibilities and they all imply the same highly controversial conclusion via arguments of clearly similar validity, we should guess that all three are of roughly zero validity.

The more recent example of an clearly invalid argument from Kaus, teaches us nothing new about reasoning. It just shows that Kaus still relies on the assumption that all positive numbers are approximately equal.

I haven't actually read many arguments made by Kaus (after the first I encountered which is the one discussed above, I decided it wasn't good for my health). So, I've read a few, certainly less than 10 (my honest guess is at most 3) and, it seems to me, that two of them develop the implications of the assumption that all postive numbers are approximately equal.

I conclude that Kaus really thinks that way, and sees nothing wrong with the assumption.

I am not exaggerating. This is my sincere opinion, expressed without hyperbole, and held with considerable confidence.

For another example, 30 years ago, I tried to figure out what was wrong with the ontological proof of the existence of God made by Saint Bonaventura Anselm based on a possibly unfair translation which begins with a definition of the word "God"

God n. A being more sublime than any other conceivable being.

Then proceeds to note that if God did not exist, then it would be possible to conceive of a being which had all of God's other sublime characteristics and further more had the characteristic of "existence". This contradicts the definition of God. Therefore God exists.

Now even assuming for the sake of argument, that God does in fact exist, there is clearly something wrong with this argument. One has to wonder whether the same thing is also wrong with arguments that have convinced one. I didn't get very far in my effort to figure out what was wrong with the argument, but there was this guy named Willard Quine who did and wrote the arguments down in this little book "From a Logical Point of View."

There are two problems. First, the general rule of debate is that people are allowed to define terms. At most, they may be prevented from redefining an existing word and forced to define a neologism (so Bonaventura St. Anselm would only prove the existence of the most sublime conceivable being God2 if the word "God" was taken). This general rule is no good, as definitions are not necessarily "innocent". We can't allow people the authority to just state a definition, because such a statement may have implications which are false. Here Bonaventura St. Anselm is defining "God" and defining "sublime" so that "existence" is one form of sublimity.

Instead, we might hope to make rules for defining terms such that only innocent definitions -- definitions which can't be false statements -- are allowed. Quine's main point (I'm told) is to conclude that this effort had failed and we'd just have to risk falling for BonaventurAnselmian arguments.

The other problem is that "existence" is not a characteristic like other characteristics. "Pegasus exists" is not a statement like "Pegasus flies." The grammatic similarity hides a fundamental difference. Pegasus can't fly without existing. All statements about mythical or hypothetical entities (including statements which are true by definition including uhm definitions) must be phrased in the form "if Pegasus were to exist then Pegasus would be a winged horse." A simpler rule, which works just as well, is to require all definitions to be of that form so we can define "Life" by "If life exists it would be the notional trait shared by all things that grow and reproduce" without expressing a view as to the existence or non existence of at least one living thing.

Why that works rather well. Bonaventura would be rewritten as having proven "If God exists then God exists".

All (somewhat***) via Mark Thoma:

Thomas Frank in the WSJ tells me why I always disagree with Robert (and the Other Economists) on the role of rating agencies:

And who makes sure that Moody's and its competitors downgrade what deserves to be downgraded? In 1999 the obvious answer would have been: the market, with its fantastic self-regulating powers.

If you look at the spreads of various debt products, you can see that the market was doing that type of job even in 2007. For instance, the debt market priced ["rated"] Bear Stearns's five-year bond issue in August 2007 at 245 over: rather closer to "junk" status than its rating would have implied. If you compare the debt and stock markets, it's easy to see which is closer to "rating." Unfortunately, the area where information is more valuable* is not the one discussed and understood in the press, where BSC kept trading up for several more months.

If a market "regulates" but no one notices, does it make the WSJ?

Brad Setser finishes the destruction of Tyler Cowen's LTCM "argument" begun by Buce, while revealing its underbelly:

The big banks called to the New York Fed were the creditors of LTCM and they were in some sense “bailed-in.” To avoid taking losses on the credit that they had extended to LTCM, they had to pony up and recapitalize LTCM. [footnoted exception for BSC]

It just so happened that the market recovered and it was possible for LTCM to exit many of its positions without taking large losses, or in some cases any losses. The banks that took control of LTCM when LTCM was on the ropes were able to unwind LTCM’s portfolio in a way that didn’t result in additional losses. But the result Cowen desired — large losses for the banks and broker-dealers who provided credit to LTCM – was quite possible if LTCM’s assets weren’t sufficient to cover all its liabilities. No creditor of LTCM was able to get rid of its exposure as a result of the Fed’s actions. [emphases mine]

It used to be a standard rule that if you wanted to bury something in a newspaper, you published it on a Friday, or the day before a holiday. This seems to be what the NYT is doing with Casey Mulligan (previously discussed here here), who dropped the other shoe yesterday and was, amazingly, worse than expected. PGL at Econospeak does the read and calls out the deed:

Mulligan is essentially saying that those poor saps who have lost their jobs actually quit so they can game the mortgage system. In other words, there is no such thing as involuntary unemployment or being forced to either lose one’s home versus enter into one of these mortgage modification programs.

As noted in the WaPo two weeks ago (via Stan Collender at Capital Gains and Games),** qualifying for the "mortgage modification" program (i.e., reducing the principal on your loan to not more than 90% of the current market value) is an onerous task:

He was hoping he could qualify for the federal government's Hope for Homeowners program, which allows the Federal Housing Administration to insure a new mortgage if the lender voluntarily writes down the mortgage principal to 90 percent of the new value of the home. But when he asked his bank about that, he was told he would have to be on the brink of foreclosure or have an adjustable-rate mortgage.

So Mulligan is basically blaming (1) those whose ability to keep their home depended on keeping their job and (2) those who took Alan Greenspan's venal advice to go into ARMs just at the point at which he started raising rates. Class act.

And, finally, lest you think I'm always bashing Tyler Cowen, he notes a phenomenon in chess and suggests a reasonable conclusion:

I also see a general principle operating: the more exact a "science" the game becomes, the smaller is the value of accumulated experience relative to sheer skill.

The sheer is dicey, but the identification of the shift in proportionality may be accurate, and probably has applications in economics as well.

*The debt market is less liquid and therefore considers information more valuable. This is effectively the corollary of the DeLong, Shliefer, Summers and Waldmann papers: if you can't depend on momentum trading, you take more care not to be the "greater fool."

**Yes, I saw the Collender-bashing in my previous post. I've said before that CG&G became significantly less readable after the election, and am foolishly optimistic enough to believe that they may be returning to rationality. Besides, he happened to be correct: any given from increased military spending is definitionally no better (and likely worse) than spending the same amount on public infrastructure.

***I read PGL's piece before seeing it in the links, but they're all there.

Among their editorial suggestions for replacing Tim Geither as head of the New York FRB:

Better choices would include ...David Malpass, an economist who worked at the Reagan Treasury and long predicted the credit bubble....

Yes, you saw that correctly.

David Malpass.

Strangely, they don't describe him as "David Malpass, former Chief Economist for Bear Stearns, who long advocated taking monies out of your house because appreciation in housing prices changed "the structure of the household portfolio."

And that "long predicted the credit bubble"? This is a family blog, so I can't call that horseshit. So let's look at what Malpass said in August of 2007—the point at which his firm was issuing bonds at what were essentially junk levels—about the bubble, in the very pages of the WSJ:

Another aspect of the market disruption is a dramatic stand-off between bond buyers and sellers: Buyers in both housing and debt markets are using the market discontinuity to claw prices and terms back to Earth. The slowdown talk weighing on equities also reflects the Wall Street view that debt, mortgage and takeover businesses have replaced General Motors as the economy's bellwether. According to the bears: As goes the credit market, so goes the economy.

Fortunately, Main Street is not that fickle. Housing and debt markets are not that big a part of the U.S. economy, or of job creation. It's more likely the economy is sturdy and will grow solidly in coming months, and perhaps years.

Unlike the 1998 seizure in credit markets to which many are now drawing comparisons, reservoirs of global liquidity are full to overflowing, not empty as they were that year. The deep 1997-1998 Asian crisis has been replaced with an all-cylinder boom. Unemployment rates are falling all around the world, while China's equities have continued hitting new highs. [emphases mine]

The other nominees are little better, including the Gary Stern, current head of the Minneapolis Fed of "Credit Crisis? What crisis?" fame. (At least Stern admits he doesn't care about finance as much as some other things.) But Malpass—and the lies told in support of him—should be beyond the pale even by WSJ standards.

Among their editorial suggestions for replacing Tim Geither as head of the New York FRB:

Better choices would include ...David Malpass, an economist who worked at the Reagan Treasury and long predicted the credit bubble....

Yes, you saw that correctly.

David Malpass.

Strangely, they don't describe him as "David Malpass, former Chief Economist for Bear Stearns, who long advocated taking monies out of your house because appreciation in housing prices changed "the structure of the household portfolio."

And that "long predicted the credit bubble"? This is a family blog, so I can't call that horseshit. So let's look at what Malpass said in August of 2007—the point at which his firm was issuing bonds at what were essentially junk levels—about the bubble, in the very pages of the WSJ:

Another aspect of the market disruption is a dramatic stand-off between bond buyers and sellers: Buyers in both housing and debt markets are using the market discontinuity to claw prices and terms back to Earth. The slowdown talk weighing on equities also reflects the Wall Street view that debt, mortgage and takeover businesses have replaced General Motors as the economy's bellwether. According to the bears: As goes the credit market, so goes the economy.

Fortunately, Main Street is not that fickle. Housing and debt markets are not that big a part of the U.S. economy, or of job creation. It's more likely the economy is sturdy and will grow solidly in coming months, and perhaps years.

Unlike the 1998 seizure in credit markets to which many are now drawing comparisons, reservoirs of global liquidity are full to overflowing, not empty as they were that year. The deep 1997-1998 Asian crisis has been replaced with an all-cylinder boom. Unemployment rates are falling all around the world, while China's equities have continued hitting new highs. [emphases mine]

The other nominees are little better, including the Gary Stern, current head of the Minneapolis Fed of "Credit Crisis? What crisis?" fame. (At least Stern admits he doesn't care about finance as much as some other things.) But Malpass—and the lies told in support of him—should be beyond the pale even by WSJ standards.

Or does he know better?

This year’s election coincided with an important moment in the financial crisis. The credit markets have stabilized in the last few weeks and even improved a bit. But the rest of the economy is deteriorating fairly rapidly. It’s now in danger of falling into a vicious spiral, in which spending cuts by consumers and businesses lead to further layoffs and then more spending cuts.

To prevent that from happening, the Obama administration will need to move quickly — before it takes office — to put together some emergency plans for the financial markets and the broader economy.[italics mine; emphasis his]

So Leonhardt's first solution is "throw more money." Or maybe—as with the common taters last night who pretended that the Republicans didn't control the Presidency and both Houses of Congress for six years—he's forgotten that this one was tried, with the same kleptocrat at the helm of the Treasury then as there is now, and will be until 20 January 2009.

Leonhardt then admits that Barack Obama knows more about economics than he does:

Throughout the campaign, whenever Mr. Obama was asked about the financial crisis, he liked to turn the conversation back to his long-term plans, by saying that they were meant to solve the very problems that had caused the crisis in the first place. Back in January, he predicted to me that the financial troubles would probably get significantly worse in 2008. They had their roots in middle-class income stagnation, which helped cause an explosion in debt, and the mortgage meltdown was likely to be just the beginning, he said then.[italics mine]

We then get the mealy-mouthed conditional that makes the NYT so Authoritative:

His prognosis was right — and the pundits now demanding that he give up major parts of his economic agenda in response to the financial crisis are, for the most part, wrong.[ibid.]

And, just so we're clear, Leonhardt isn't talking about much money:

There is at least one obvious area of potential compromise: Mr. Obama’s call for a $1,000 payroll-tax rebate for almost every family. That would cost the government about $65 billion. But a stimulus package should probably be a lot bigger than that — maybe $200 billion or so. And at this point, drafting it well matters more than passing it immediately.

So consumers might get to borrow $2 to pay themselves for every $7 they give to Hank Paulson's buddies. But of course these monies will be poorly spent. Not the parenthetic:

That means starting work on new construction projects that government agencies have already deemed worthy but that lack financing. It also means sending money to state governments to close their budget shortfalls, in addition to softening the blow of the downturn by extending jobless benefits (as flawed as the unemployment insurance system is).

Meanwhile, giving AIG that money has been a great investment.

Leonhardt finally gets to a positive:

The two leading candidates for Mr. Obama’s Treasury secretary — Timothy Geithner and Lawrence Summers — seem likely to be more aggressive than Henry Paulson, the current secretary. Mr. Geithner, the president of the Federal Reserve Bank of New York, has at times lobbied for a more proactive approach to the current crisis. He favored direct equity injections into banks, for instance, before Mr. Paulson did.

As early as last December (2007), meanwhile, Mr. Summers criticized policy makers for being "behind the curve."

"More aggressive" translates to "actually know what they are doing."

What will this mean? Leonhardt glosses the ending:

Whatever he decides, it probably has to involve more money — which will make the government’s budget problems even worse. Some economists think next year’s deficit could potentially exceed $900 billion. Relative to the size of the economy, that would be the largest deficit since the years just after World War II.

A deficit like that will indeed force Mr. Obama to change his approach to the economy’s long-term problems, mainly by coming up with new ways to pay for his solutions. But that is tomorrow’s problem. Today’s are big enough as it is.

What this means is that apparatchiks like EconomistMom* will be whining about "the deficit" and the evil of "having to pay the increasing costs of social programs." (If you wonder why we question your motives, look at your list of Senators and Conngresssmen who are determined to "do something about the spectre of future deficits"—a large portion of whom are the same people who pushed through the 2001 and 2003 raping and pillaging of the same people whose benefits you want to cut now. We question your motives because, by your own Revealed Preferences, you're crooked.)

Leonhardt wants to placate them. Dean Baker, for one, knows that's not possible, and pushes for a more optimal solution.

*If I were being fair to Diane Rogers (who advertises her Clinton Administration credentials whenever she can, so that we can believe she's one of The Good Ones even as she shills for Pete Peterson and the entitlements-for-me-but-not-for-thee crowd), I would say she was hired to argue that neo-Hooverism is A Good Thing—but she made that bed and chooses to lie in it, so sympathy is not something I'm inclined to. Others here disagree. You can look it up.

Or does he know better?

This year’s election coincided with an important moment in the financial crisis. The credit markets have stabilized in the last few weeks and even improved a bit. But the rest of the economy is deteriorating fairly rapidly. It’s now in danger of falling into a vicious spiral, in which spending cuts by consumers and businesses lead to further layoffs and then more spending cuts.

To prevent that from happening, the Obama administration will need to move quickly — before it takes office — to put together some emergency plans for the financial markets and the broader economy.[italics mine; emphasis his]

So Leonhardt's first solution is "throw more money." Or maybe—as with the common taters last night who pretended that the Republicans didn't control the Presidency and both Houses of Congress for six years—he's forgotten that this one was tried, with the same kleptocrat at the helm of the Treasury then as there is now, and will be until 20 January 2009.

Leonhardt then admits that Barack Obama knows more about economics than he does:

Throughout the campaign, whenever Mr. Obama was asked about the financial crisis, he liked to turn the conversation back to his long-term plans, by saying that they were meant to solve the very problems that had caused the crisis in the first place. Back in January, he predicted to me that the financial troubles would probably get significantly worse in 2008. They had their roots in middle-class income stagnation, which helped cause an explosion in debt, and the mortgage meltdown was likely to be just the beginning, he said then.[italics mine]

We then get the mealy-mouthed conditional that makes the NYT so Authoritative:

His prognosis was right — and the pundits now demanding that he give up major parts of his economic agenda in response to the financial crisis are, for the most part, wrong.[ibid.]

And, just so we're clear, Leonhardt isn't talking about much money:

There is at least one obvious area of potential compromise: Mr. Obama’s call for a $1,000 payroll-tax rebate for almost every family. That would cost the government about $65 billion. But a stimulus package should probably be a lot bigger than that — maybe $200 billion or so. And at this point, drafting it well matters more than passing it immediately.

So consumers might get to borrow $2 to pay themselves for every $7 they give to Hank Paulson's buddies. But of course these monies will be poorly spent. Not the parenthetic:

That means starting work on new construction projects that government agencies have already deemed worthy but that lack financing. It also means sending money to state governments to close their budget shortfalls, in addition to softening the blow of the downturn by extending jobless benefits (as flawed as the unemployment insurance system is).

Meanwhile, giving AIG that money has been a great investment.

Leonhardt finally gets to a positive:

The two leading candidates for Mr. Obama’s Treasury secretary — Timothy Geithner and Lawrence Summers — seem likely to be more aggressive than Henry Paulson, the current secretary. Mr. Geithner, the president of the Federal Reserve Bank of New York, has at times lobbied for a more proactive approach to the current crisis. He favored direct equity injections into banks, for instance, before Mr. Paulson did.

As early as last December (2007), meanwhile, Mr. Summers criticized policy makers for being "behind the curve."

"More aggressive" translates to "actually know what they are doing."

What will this mean? Leonhardt glosses the ending:

Whatever he decides, it probably has to involve more money — which will make the government’s budget problems even worse. Some economists think next year’s deficit could potentially exceed $900 billion. Relative to the size of the economy, that would be the largest deficit since the years just after World War II.

A deficit like that will indeed force Mr. Obama to change his approach to the economy’s long-term problems, mainly by coming up with new ways to pay for his solutions. But that is tomorrow’s problem. Today’s are big enough as it is.

What this means is that apparatchiks like EconomistMom* will be whining about "the deficit" and the evil of "having to pay the increasing costs of social programs." (If you wonder why we question your motives, look at your list of Senators and Conngresssmen who are determined to "do something about the spectre of future deficits"—a large portion of whom are the same people who pushed through the 2001 and 2003 raping and pillaging of the same people whose benefits you want to cut now. We question your motives because, by your own Revealed Preferences, you're crooked.)

Leonhardt wants to placate them. Dean Baker, for one, knows that's not possible, and pushes for a more optimal solution.

*If I were being fair to Diane Rogers (who advertises her Clinton Administration credentials whenever she can, so that we can believe she's one of The Good Ones even as she shills for Pete Peterson and the entitlements-for-me-but-not-for-thee crowd), I would say she was hired to argue that neo-Hooverism is A Good Thing—but she made that bed and chooses to lie in it, so sympathy is not something I'm inclined to. Others here disagree. You can look it up.

Ms. mochi-tsuki discovers that the Washington Post has no copyeditors and cannot do math.

If this were another blog, I would be typing "Why, oh why, can't we have a better press corps" here. Instead, let's just leave it at: if you can't extract data from the census correctly, what are you doing publishing a newspaper read by government officials?