links for 2008-03-18

• Fostering Sustainable Homeownership - Ben Bernanke
• Why the Fed must act in unfamiliar ways - FT
• First 'rule' of evolution: life will become more complex - eurekAlert
• Capital Flight is Good - knzn
• Da Vinci Linked to Chess Puzzles - National Geographic
• What Is McCain's Economic Agenda? - Jared Bernstein
• Time to renew the financial toolbox - FT
• Shifting Environmental Balance in Warmer Yellowstone- New York Times
• Fed Takes Bold Steps to Protect the U.S. Economy - John M. Berry

Comments

[Metatone]

Krugman has commented on the FT piece by the man from Pimco.

He thinks it's a coded call to "socialise the losses, privatize the profits..." Krugman is optimistic however that this is politically untenable. I hope he's right.

[anne]

http://krugman.blogs.nytimes.com/2008/03/17/the-uses-of-incomprehensibility/

March 17, 2008

The Uses of Incomprehensibility
By Paul Krugman

I've been looking around, trying to see what the great and the good — or at least those who play such on TV — are starting to say about what should be done. And I was particularly eager to read this piece, * by a top guy from Pimco. Pimco is a smart outfit, with a deserved reputation for talking frankly about stuff. So what would Mr. El-Erian say?

I read it; and read it again; and again. It took me the third reading before I got it.

Why is it so incomprehensible? Because what he's basically saying is, bail out the investors, do nothing for the homeowners:

"Policymakers now face the unpleasant reality of having to cross at least one of two lines in the sand: altering contracts so that stressed mortgage holders can avoid default and foreclosures; and/or explicitly using the government's balance sheet to support the housing market....

"Crossing the first line critically undermines the sanctity of contracts and, at the very minimum, leads to a persistent increase in the risk premiums that lenders impose on all borrowers. In addition, there may be unintended consequences that erode the integrity of the market system.

"The other line, which involves the authorities' balance sheet, amplifies inflationary pressures and weakens public finances. Yet these costs are less persistent and, as such, lower than those associated with the alternatives. Indeed, the real cost of the second regime shift is more nuanced."

The incomprehensibility is not, I think, because El-Erian is a bad writer. It's because he understands, perhaps unconsciously, that saying this clearly would outrage people.

But it's not going to work. The financial industry is not going to get away with a covert bailout, snuck past voters with obscure wording.

* http://www.ft.com/cms/s/0/194ed856-f441-11dc-aaad-0000779fd2ac.html

[anne]

http://www.juancole.com/2008/03/52-killed-in-karbala-bombing-bombing-in.html

March 18, 2008

Iraq: No Let-Up in the Humanitarian Crisis
Edited by Juan Cole

The International Committee of the Red Cross has issued a new report on the humanitarian crisis in Iraq. ** It says in part:

"Five years after the outbreak of the war in Iraq, the humanitarian situation in most of the country remains among the most critical in the world. Because of the conflict, millions of Iraqis have insufficient access to clean water, sanitation and health care. The current crisis is exacerbated by the lasting effects of previous armed conflicts and years of economic sanctions.

"Despite limited improvements in security in some areas, armed violence is still having a disastrous impact. Civilians continue to be killed in the hostilities. The injured often do not receive adequate medical care. Millions of people have been forced to rely on insufficient supplies of poor-quality water as water and sewage systems suffer from a lack of maintenance and a shortage of engineers.

"Many families include people who have been forced by the conflict to flee their homes, leaving those left behind with the daily struggle of trying to make ends meet. A sustained economic crisis marked by high unemployment further aggravates their plight."

* http://www.icrc.org/web/eng/siteeng0.nsf/htmlall/iraq-report-170308/$file/ICRC-Iraq-report-0308-eng.pdf

[anne]

http://www.juancole.com/2008/03/52-killed-in-karbala-bombing-bombing-in.html

March 18, 2008

Cheney in Baghdad
By Juan Cole

McClatchy's headline says it all: "Cheney cites 'phenomenal' Iraqi security progress as bombing kills 40". * Cheney even needed a complicated security routine and lots of bodyguards just to move around the Green Zone where Iraqi and US offices are. The heavily fortified Green Zone actually took incoming mortar fire on Monday, during Cheney's visit there. If the Vice President of the United States can't visit the most fortified place in Baghdad, the capital of the country he militarily occupies, without risking a mortar strike, then things are still not all the great. I don't believe Gen. MacArthur in Tokyo suffered any similar humiliation.

* http://www.mcclatchydc.com/iraq/story/30645.html

[anne]

The Administration and John McCain are methodically determined to make American withdrawal from Iraq impossible, no matter who is the coming President, and through careful selection presently there will be in place a general officer corps determined to remain in Iraq as well. Should there then be a Democratic President, there must be an expressed determination of changing policy immediately and leaving Iraq. Barack Obama and Hillary Clinton must make this absolutely clear, which Clinton is currently doing and Obama hopefully will.

The name calling by Samantha Power was foolish but of little concern, while the questioning of Obama's intent to leave Iraq was a prime concern and simply cannot be overlooked if a candidate's policy is going to matter.

[anne]

The New York Times has been positively frightening in printing series of retrospectives on Iraq that are repeatedly the memories and analyses of the very international relations specialists who brought us to invade Iraq to begin with and who supported occupation from the beginning. Not a word, not a sentence on leaving Iraq.

[anne]

http://www.nytimes.com/2008/03/18/opinion/l18iraq.html

The Iraq War: 5 Years and Counting

To the Editor:

Thank you for including the essays of the "experts on military and foreign affairs" * on the fifth anniversary of the Iraq war and occupation. The request for what surprises they've encountered since the start of the war exposed some of the callous indifference to the cause they once championed so tirelessly.

It is perfectly clear that the neocons of the Brookings Institution and the American Enterprise Institute will not only dodge any responsibility for their role in this catastrophe but be perfectly happy throwing their complicit administration under the bus as well.

It is astonishing that Danielle Pletka could seriously propose that the Iraqis have no "freedom gene" (since they couldn't or wouldn't submit willingly to an armed occupation?).

Like children playing with matches as the fire rages around them, they'll blame the trees with a straight face.

William Bronson
Brooklyn, March 16, 2008

* http://www.nytimes.com/2008/03/16/opinion/16intro.html

[anne]

http://www.nytimes.com/2008/03/18/opinion/l18iraq.html

The Iraq War: 5 Years and Counting

To the Editor:

You enabled the Iraq war with your cheerleading reportage, and you continue to provide a forum for its blinkered defenders, Richard Perle, Frederick Kagan, Danielle Pletka, Kenneth M. Pollack and L. Paul Bremer III.

They were wrong at the beginning, and continue to be wrong. They hide their defective judgment behind excuses that someone stabbed them in the back, or that they were in good company in their disproven beliefs, and argue that we should forget about their history of failure and take their advice now.

They are an insult to public discourse, but you continue to enable them.

Edwin M. Walker
Nashville, Tenn., March 16, 2008

[anne]

http://www.nytimes.com/2008/03/18/opinion/l18iraq.html

The Iraq War: 5 Years and Counting

To the Editor:

Your retrospective on the fifth anniversary of the Iraq war this week was a dispiriting collection of self-serving pieces, mostly from writers who were pro-war in 2003. I would be more interested in hearing from those who were sidelined in 2003 because they predicted a difficult path and recommended caution.

History has established their authority to speak on the subject. Why not ask, "Where do we go from here?" Some suggestions for contributors: Scott Ritter, Howard Dean, Al Gore and Gen. Eric K. Shinseki.

Marita Pettit
Loveland, Ohio, March 16, 2008

[anne]

http://www.nytimes.com/2008/03/18/opinion/l18iraq.html

The Iraq War: 5 Years and Counting

To the Editor:

After reading the reflections on the invasion of Iraq, I must conclude that those most responsible for overly optimistic prewar analysis and egregious misjudgments and who urged the Decider to attack Iraq seem five years later only to have learned to distance themselves from responsibility for the disastrous consequences of their advice. They should be ashamed.

Michael Magney
Elko, Nev., March 16, 2008

[anne]

http://krugman.blogs.nytimes.com/2008/03/18/shouting-fire-in-a-crowded-theater/

March 18, 2008

Shouting “Fire” in a Crowded Theater
By Paul Krugman

At the risk of adding to the Muddled Metaphor Index, I had this thought about the nature of the financial problem:

We are, in effect, suffering from a giant bank run, albeit on financial institutions that aren’t called banks — and aren’t regulated like banks.

Bank runs come in two kinds.

In some cases, the bank run is a pure self-fulfilling prophecy: the bank is “fundamentally sound,” but a panic by depositors forces a too-hasty liquidation of its assets, and it goes bust. It’s as if someone calls “fire!” in a crowded theater, provoking a stampede that kills many people, even though there wasn’t actually a fire.

In other cases, the bank is fundamentally unsound — but the bank run magnifies its losses. It’s as if someone calls “Fire!” in a crowded theater, and there really is a fire — but the stampede kills people who would have survived an orderly evacuation.

We’re in the second case. The Fed has spent the last 7 months trying to assure people that there isn’t any fire. But there is.

Worse yet, thanks to decades of deregulation, the theater doesn’t have a sprinkler system - and the town the theater is in doesn’t have a fire department.

And now we have to put together an emergency response.

[anne]

http://www.nytimes.com/2008/03/07/opinion/l07herbert.html

We Can't Afford to Ignore the Iraq War

To the Editor:

"The $2 Trillion Nightmare," by Bob Herbert:

As the mother of a 21-year-old American marine who returns to Iraq next week for his second tour of duty, I am grateful, as ever, to Bob Herbert for continuing to highlight the human, financial and consequential costs of the endless, disastrous Iraq war.

Five years on, it is astonishing that most Americans still have their heads in the sand. I, too, ask, for the nth time, Where is the outrage?

The money spent on this catastrophic waste of resources, treasure and blood has benefited only the war-machine and security industries, with the petrochemical industry waiting in the wings.

How doubly tragicomic, then, that George W. Bush likens his unpopularity to that of Harry S. Truman, when part of President Truman's everlasting and honorable legacy was his crusade against war profiteering.

I now have another seven months of sleepless nights and desperate days to get through, during which time I must avert my eyes from news of casualties while I furiously remember if my son is out on convoy or "safe" on base that week. This is the stuff of my nightmares.

Donna J. Anton
Hayle, England, March 4, 2008

[anne]

http://www.nytimes.com/2008/03/04/opinion/04herbert.html?ref=opinion

March 4, 2008

The $2 Trillion Nightmare
By BOB HERBERT

We've been hearing a lot about "Saturday Night Live" and the fun it has been having with the presidential race. But hardly a whisper has been heard about a Congressional hearing in Washington last week on a topic that could have been drawn, in all its tragic monstrosity, from the theater of the absurd.

The war in Iraq will ultimately cost U.S. taxpayers not hundreds of billions of dollars, but an astonishing $2 trillion, and perhaps more. There has been very little in the way of public conversation, even in the presidential campaigns, about the consequences of these costs, which are like a cancer inside the American economy.

On Thursday, the Joint Economic Committee, chaired by Senator Chuck Schumer, conducted a public examination of the costs of the war. The witnesses included the Nobel Prize-winning economist, Joseph Stiglitz (who believes the overall costs of the war — not just the cost to taxpayers — will reach $3 trillion), and Robert Hormats, vice chairman of Goldman Sachs International.

Both men talked about large opportunities lost because of the money poured into the war. "For a fraction of the cost of this war," said Mr. Stiglitz, "we could have put Social Security on a sound footing for the next half-century or more."

Mr. Hormats mentioned Social Security and Medicare, saying that both could have been put "on a more sustainable basis." And he cited the committee's own calculations from last fall that showed that the money spent on the war each day is enough to enroll an additional 58,000 children in Head Start for a year, or make a year of college affordable for 160,000 low-income students through Pell Grants, or pay the annual salaries of nearly 11,000 additional border patrol agents or 14,000 more police officers.

What we're getting instead is the stuff of nightmares....

[anne]

http://www.cbpp.org/3-13-08sfp.htm

March 13, 2008

Facing Deficits Many States Are Imposing Cuts That Hurt Vulnerable Residents
By Iris J. Lav and Elizabeth Hudgins

To date, at least 17 states facing deficits have made or proposed budget cuts that threaten vital services for many residents, including some of the state’s most vulnerable residents. Examples include:

Public health programs: At least ten states have implemented or are considering cuts that will affect low-income children’s or families’ eligibility for health insurance or reduce their access to health care services. For example, Rhode Island’s governor has proposed eliminating health coverage for nearly 7,400 low-income parents; New Jersey’s governor has proposed cutting funds for charity care in hospitals by 15 percent; and California’s governor has proposed requiring many families to pay more for their children’s health care.

Programs for the elderly and disabled: At least four states are cutting or proposing to cut medical, rehabilitative, home care, or other services needed by low-income people who are elderly or have disabilities, or significantly increasing the cost of these services. For example, Tennessee has cut community-based services for the mentally retarded; Maine’s governor has ordered cuts that will remove 7,000 mentally ill and poor adults from Medicaid; and Rhode Island is requiring low-income elderly people to pay more for adult daycare.

K-12 education: At least eight states are cutting or proposing to cut K-12 education; three of them are proposing cuts that would affect access to child care or Head Start. For example: California’s governor is proposing cuts in state education aid that would translate to a total loss of $787 per student; and Arizona is considering eliminating child care subsidies for approximately 3,200 children in low-income working families.

Colleges and universities: At least eight states have implemented or proposed cuts to public colleges and universities. For example, Florida has already cut university budgets and community-college funding, with further cuts expected in March; Kentucky and Virginia have cut university funding for the current fiscal year by 3 percent and 5 percent, respectively; and Maine’s governor has proposed cuts that could lead to tuition hikes of 14 percent for universities and community colleges....

[anne]

http://www.cbpp.org/3-13-08sfp.htm

In Mississippi, Medicaid is slated for a 13.9 percent reduction, once special funds are taken into account. The specifics of the cuts are not yet available. Public health programs such as vaccinations, disease management, obesity awareness, and mosquito control would be subject to an 11.8 percent reduction....

[Remember the increase in infant mortality that was experienced when Medicaid was prevously cut in Mississippi.]

[anne]

There will be a time if there is decency and courage enough when we ask properly what the costs of war and occupation have been and we realize that the costs include even an increase in infant mortality in the South. Now, concern is so little that cuts in health care provision, that cuts in public health services, simply happen.

[anne]

http://www.nytimes.com/2007/04/22/health/22infant.html?ex=1334894400&en=5d5d40b319346648&ei=5090&partner=rssuserland&emc=rss

April 22, 2007

In Turnabout, Infant Deaths Climb in South
By ERIK ECKHOLM

HOLLANDALE, Miss. — For decades, Mississippi and neighboring states with large black populations and expanses of enduring poverty made steady progress in reducing infant death. But, in what health experts call an ominous portent, progress has stalled and in recent years the death rate has risen in Mississippi and several other states.

The setbacks have raised questions about the impact of cuts in welfare and Medicaid and of poor access to doctors, and, many doctors say, the growing epidemics of obesity, diabetes and hypertension among potential mothers....

"I don't think the rise is a fluke, and it's a disturbing trend, not only in Mississippi but throughout the Southeast," said Dr. Christina Glick, a neonatologist in Jackson, Miss., and past president of the National Perinatal Association.

To the shock of Mississippi officials, who in 2004 had seen the infant mortality rate — defined as deaths by the age of 1 year per thousand live births — fall to 9.7, the rate jumped sharply in 2005, to 11.4. The national average in 2003, the last year for which data have been compiled, was 6.9. Smaller rises also occurred in 2005 in Alabama, North Carolina and Tennessee. Louisiana and South Carolina saw rises in 2004 and have not yet reported on 2005.

Whether the rises continue or not, federal officials say, rates have stagnated in the Deep South at levels well above the national average.

Most striking, here and throughout the country, is the large racial disparity....

[anne]

http://delong.typepad.com/sdj/2007/04/falling_indicat.html

April 23, 2007

Falling Indicators of Human Development in Mississippi
By Brad DeLong

There are 2.8 million people in Mississippi. About 15% of the non-elderly population--make that 350,000--were on Medicaid.

Cut Medicaid enrollments by 50,000, by 1/7.

42,000 babies born in Mississippi each year.

For the share who die to jump from 0.97% to 1.14%... That's a less than 1/3000 chance.

That's worth saying.

[anne]

http://krugman.blogs.nytimes.com/2008/03/15/call-the-metaphor-police/

March 15, 2008

Call the Metaphor Police!
By Paul Krugman

I've been worried for a while about the fact that, according to financial reporters, the freezing up of the credit markets is causing a financial meltdown. The world is ending in ice and fire, simultaneously. But this * is true cause for alarm:

"The self-feeding downturn now in place shows signs of becoming deeply entrenched," economists at Citigroup wrote Friday.

Uh oh. we've got a downturn that can feed itself and, at the same time, dig trenches.

The fascist octopus will sing its swan song any day now.

* http://www.nytimes.com/2008/03/16/business/16bernanke.html

[anne]

http://krugman.blogs.nytimes.com/2008/03/18/fascist-octopus-blogging/

March 18, 2008

Fascist Octopus Blogging
By Paul Krugman

Judging from comments, some readers don't know that the fascist octopus singing its swan song comes from George Orwell, "Politics and the English Language," * the best essay on writing ever written.

Everything in the essay is memorable, but the section that influenced me most was Orwell's translation of a passage from the King James Bible into Greenspanspeak. The original:

"I returned and saw under the sun, that the race is not to the swift, nor the battle to the strong, neither yet bread to the wise, nor yet riches to men of understanding, nor yet favour to men of skill; but time and chance happeneth to them all."

The modern version:

"Objective considerations of contemporary phenomena compel the conclusion that success or failure in competitive activities exhibits no tendency to be commensurate with innate capacity, but that a considerable element of the unpredictable must invariably be taken into account."

* http://www.mtholyoke.edu/acad/intrel/orwell46.htm

[anne]

http://www.mtholyoke.edu/acad/intrel/orwell46.htm

1946

Politics and the English Language
By George Orwell

By using stale metaphors, similes, and idioms, you save much mental effort, at the cost of leaving your meaning vague, not only for your reader but for yourself. This is the significance of mixed metaphors. The sole aim of a metaphor is to call up a visual image. When these images clash -- as in "The Fascist octopus has sung its swan song, the jackboot is thrown into the melting pot" -- it can be taken as certain that the writer is not seeing a mental image of the objects he is naming; in other words he is not really thinking.

[anne]

http://blog.washingtonpost.com/the-trail/2008/03/18/a_mccain_gaffe_in_jordan.html

March 18, 2008

Speaking to reporters in Amman, the Jordanian capital, McCain said he and two Senate colleagues traveling with him continue to be concerned about Iranian operatives “taking al-Qaeda into Iran, training them and sending them back.”

Pressed to elaborate, McCain said it was “common knowledge and has been reported in the media that al-Qaeda is going back into Iran and receiving training and are coming back into Iraq from Iran, that’s well known. And it’s unfortunate.” A few moments later, Sen. Joseph Lieberman, standing just behind McCain, stepped forward and whispered in the presidential candidate’s ear. McCain then said: “I’m sorry, the Iranians are training extremists, not al-Qaeda.”

[Good grief.]

[anne]

http://krugman.blogs.nytimes.com/2008/03/18/market-thought/

March 18, 2008

Market Thought
By Paul Krugman

When the Fed cuts less than you expected, there are two common but opposite reactions:

1. Sell! Ben didn’t give us what we wanted — that means he isn’t willing to flood the markets with money! Run for the hills!

2. Buy! A smaller cut means the Fed knows that things aren’t as bad as we thought!

Reaction 2 obviously won the day today. But you know what? Both reactions are silly.

On the one hand, Ben is clearly determined to do everything he can, and never mind the inflation risks (I agree, by the way.) The only question is whether he’s got the tools, which is as doubtful now as it was last Friday.

On the other hand, the Fed really has very little special knowledge of the economic/financial situation. Maybe a slightly better view of a few balance sheets, maybe some early glimpses of economic data, but when all is said and done they’re reading the same data and reports the rest of us are.

So what was that about? Not much.