links for 2008-01-17

• Taxes and revenues another history lesson - Paul Krugman Blog
• Slash rates now - Nouriel Roubini
• Time to Take Action on the Recession - Larry Mishel
• I’m Out of Toll Puns - Ryan Avent
• The Education of Ben Bernanke - New York Times
• Bernanke Is Said to Support Stimulus Measures - New York Times
• The Judges Own Too Much Oil Stock to Hear Your Case - NYT Blog
• On emptying seas, a vanishing way of life - csmonitor.com
• (Not) forecasting tastes - Stumbling and Mumbling
• Long Ago, a Rodent as Big as a Bull - New York Times
• A Revival of 1992’s Glum Mood - New York Times
• Venezuela cuts zeroes from currency in hope of stalling inflation - Mises Blog
• Populism's Candidate - Chris Hayes
• The good news about the recession - Daniel Gross
• Amartya Sen: Multiculturalism Has Become a Tool for Segregation - WIP
• Will the Faltering Economy Help the Democrats? - The American Prospect
• Economists Who Deny Stopler-Samuelson - PGL
• Trade and compensation - Dani Rodrik
• Trade and consequences - Free exchange
• A Coffin for Rabies - Olivia Judson
• Killjoys (18th amendment on alcohol) - The Edge of the American West
• Bernanke: A Wise Man at the Fed - Felix Salmon
• Clinton, Edwards, and Obama on How to Reduce Poverty - Lane Kenworthy
• Will inflation fears restrain the Fed? - Econbrowser

Comments

[anne]

http://www.juancole.com/2008/01/3-us-troops-killed-bomber-kills-8-us.html

January 17, 2008

US Bombing Raids Up 5 Times
By Juan Cole

The US military dropped five times as many bombs on Iraq in 2007 as it had in 2006. * Human Rights Watch is worried about the impact on civilian casualties.

* http://www.washingtonpost.com/wp-dyn/content/article/2008/01/16/AR2008011604148.html

[anne]

We are nearly 5 terrible years from invasion and military occupation of Iraq, and we are disgracefully continue to attack in urban Iraq. Imagine loosing 40,000 pounds of bombs on an Iraqi town in a mere 10 minutes in a lone bombing among hundreds of bombings, and passing along as though nothing had happened.

[anne]

We averaged 4 air bombings a day in Iraq through 2007. This is what military occupation has meant, and this is what we prefer not to know or understand in knowing. Hundreds of American urban bombings in a country that was never a threat to us and is no threat to us now but which we have occupied for nearly 5 years.

[anne]

http://www.thewip.net/contributors/2008/01/according_to_harold_bloom_what.html#more

January 12, 2008

“What we are seeing is…the fall of America”
By Eva Sohlman

Harold Bloom: “I am 77 years old and I have never seen this country in such a bad state. It is madness. What we are seeing is the fall of the Roman Empire, only now it is the fall of America, the glory of our Empire. This war is what Parthya was to Rome.

“The horror of what is taking place in Iraq exceeds my worst fears five or six years ago (after Bush came to power). I am horrified at the disastrous mistake involved. Imagine the complete madness in trying to occupy a large Arab country in the middle of the Arab world, a culture we know precious little about, and who speaks a language only a handful of our specialists can speak, with armed forces which we have limited control of and with a large army of private soldiers… The whole thing is a scandal…a series of lies. I don’t understand the motivation for the war, but suspect the real reason for the war, which one would suspect of a country which is a third oligarchy, a third plutocracy and a third theocracy, is that it simply is a profitable machine.” ...

[anne]

http://krugman.blogs.nytimes.com/2008/01/17/making-predictions-is-hard/

January 17, 2008

Making Predictions is Hard …
By Paul Krugman

… especially about the future, and sometimes about the recent past. Will we have a recession? Are we already in one? Nobody knows for sure.

Today, for example, we had three pieces of economic news: a plunge in housing starts, a plunge in the Philadelphia Fed index of industrial production, and a plunge in new claims for unemployment insurance. One of these things is not like the others.

One thing that’s clear, though, is that the threat of recession has gone from being perceived as a remote possibility to being seen as highly likely by conventional wisdom. One piece of evidence is the price of the Intrade contract on “recession in 2008″:

[Chart.]

What’s interesting is that I don’t think there was nearly as much consensus on the eve of the 2001 recession — in fact, many forecasters, famously, continued to predict no recession well after the slump had, in fact, already started.

I suppose a contrarian position is that since everyone and his brother thinks we’re about to have a recession, they’re probably wrong. But anyway, that’s your fact for the day.

[anne]

http://krugman.blogs.nytimes.com/2008/01/17/not-so-fast/

January 17, 2008

Not So Fast
By Paul Krugman

One assumption in Ben Bernanke’s testimony today was that if a recession happens, it will be over soon, so stimulus has to come fast or not at all. It’s by no means clear that this is right. To be fair, I think it’s right to caution Congress not to do anything now that won’t come in quickly. But both recent history and the nature of our current problem suggest that we may be in for more than a few bad months.

It’s true that the 2001 recession was officially very short. But the economy felt weak for much longer than that. Here’s my favorite picture, the employment-population ratio, once again:

[Picture.]

Employment-population ratioIt kept falling through the summer of 2003. And the Fed certainly thought the economy was weak, and needed more help; it kept cutting rates long after the recession was officially over, and didn’t start raising them until 2004.

[Picture.]

So the last slump de facto lasted about 2 1/2 years. And I don’t see why the same couldn’t happen this time. After all, what’s supposed to take the place of weak housing and consumer spending. Exports, yes — but how much will come, how fast?

Anyway, the point is that the last recession was not, in reality, short — and this one might not be, either.

[anne]

The recession ended in November 2001 and we our in January 2008, but real hourly and weekly wages since the end of the recession have increased by a mere 1%. A short and shallow recession was followed by what appears to be the weakest recovery following a recession in 50 years. Another recession does not bode well for middle class Americans.

[anne]

http://krugman.blogs.nytimes.com/2008/01/17/reagan-and-revenue/

January 17, 2008

Reagan and Revenue
By Paul Krugman

Ah - commenter Tom says, in response to my post on taxes and revenues: *

"Taxes were cut at the beginning of the Reagan administration.

"Federal tax receipts increased by 50% by the end of the Reagan Administration.

"Although correlation does not prove causation the tax cut must have accounted for some portion of this increase in federal tax receipts."

I couldn’t have asked for a better example of why it’s important to correct for inflation and population growth, both of which tend to make revenues grow regardless of tax policy.

Actually, federal revenues rose 80 percent in dollar terms from 1980 to 1988. And numbers like that (sometimes they play with the dates) are thrown around by Reagan hagiographers all the time.

But real revenues per capita grew only 19 percent over the same period — better than the likely Bush performance, but still nothing exciting. In fact, it’s less than revenue growth in the period 1972-1980 (24 percent) and much less than the amazing 41 percent gain from 1992 to 2000.

Is it really possible that all the triumphant declarations that the Reagan tax cuts led to a revenue boom — declarations that you see in highly respectable places — are based on nothing but a failure to make the most elementary corrections for inflation and population growth? Yes, it is. I know we’re supposed to pretend that we’re having a serious discussion in this country; but the truth is that we aren’t.

* http://krugman.blogs.nytimes.com/2008/01/16/taxes-and-revenues-another-history-lesson/

[anne]

http://krugman.blogs.nytimes.com/2008/01/16/taxes-and-revenues-another-history-lesson/

January 16, 2008

Taxes and Revenues — Another History Lesson
By Paul Krugman

One thing I'm hearing a lot lately is the old line that tax cuts actually increase revenues, sometimes accompanied by a few out-of-context numbers. So a bit more history plus chart on all that.

The important thing to realize, when looking at the history of federal revenues, is that they tend to grow over time even if there is no change in policy. One reason is inflation; another is growing population; a third is long-run economic growth.

It's easy to correct for the first two; a bit harder to correct for growth, since part of what's at issue is whether tax cuts do wonderful things for growth. So the chart below shows real federal revenue per capita — specifically, revenue in thousands of 2000 dollars per person — since 1993. All data from BEA.

[Chart]

What you see is that there was a huge revenue increase during the Clinton years. There was also the much-touted revenue surge of the later Bush years, but this followed a spectacular revenue plunge earlier. At this point real revenue per capita is only slightly higher than it was at the end of the 1990s. That's actually abnormal: given the long-term growth of the US economy, we should have expected a continuing upward trend in revenues per capita.

Overall, the graph suggests that yes, Virginia, cutting taxes reduces revenue. But it also tells us that stuff happens: the stock bubble inflated revenues in the late 90s, the collapse of that bubble hit revenues thereafter, then the housing bubble did its thing, and so on.

[Denis Drew]

.