links for 2008-04-24

• How Robust Was the 2001-2007 Economic Expansion? - CBPP
• What if we could run history twice? - Cognition and Language Lab
• Human brain appears 'hard-wired' for hierarchy - EurekAlert
• We must break the male cartel in the workplace - FT
• Singing the Praises of the Bumblebee - New York Times
• Animated Bambi Debate Arouses Pastoral Passions - New York Times
• Triple-A Failure - New York Times
• Interference at the EPA - UCS

Comments

[hari]

Iran and Nuclear Weapons - Role of IAEA

The Pres. of Iran is on way to an official visit to India next week. US State Dept spokesman has asked India to tell Iran to stop nuclear weapons technology....Rice has repeated same to her counterpart. Now, Indian FM has gone on record advising US to stop interfering with IAEA mandate and responsibility with regard to Iranian nuclear technology developments. India doesn't want US to *arrogate* to itself the authority to decide what's going on in Iran in this critical area ...that, it says, is the sole responsibility of IAEA.

Obviously there's some delusion in US State Dept. Relations between Iran (Persia) and India (subcontinent) goes back a few centuries, and The Moghul Rule in the subcontinent.

[anne]

http://www.juancole.com/2008/04/5-us-troops-killed-turkey-bombs-n-iraq.html

April 24, 2008

5 US Troops Killed; Turkey Bombs N. Iraq; Iran Backs al-Maliki against Mahdi Army
By Juan Cole

Five US troops were killed in Iraq on Tuesday.

Turkey bombed northern Iraq again on Wednesday, claiming to hit at guerrillas of the Kurdish Workers Party (PKK) "attempting to infiltrate Turkey from the Khakurk region of northern Iraq."

Iran's foreign minister, Manuchehr Mottaki, strongly backed Prime Minister Nuri al-Maliki's attack on the Mahdi Army militia on Wednesday. He said, "Weapons should be only in the hands of the Iraqi army." The Iraqi army appears increasingly to be dominated by cadres of the Badr Corps paramilitary of the Islamic Supreme Council of Iraq, headed by Abdul Aziz al-Hakim. The Badr Corps was trained by the Iranian Revolutionary Guards, and it and ISCI are key Iranian clients in Iraq. What Mottaki said therefore makes complete sense. What doesn't make sense is the Bush administration's long-term effort to misrepresent the nativist Sadr Movement and its Mahdi Army, based in Iraq's festering slums, as Iran-backed.

It is precisely the closeness of the al-Maliki government and its primary current pillar, ISCI, to Iran that has made Sunni Arab countries such as Egypt and Saudi Arabia skittish about allowing it into the Arab League system as a full diplomatic partner. The Sunni Arab states largely do not have embassies in Baghdad, and Iraqi Shiites accuse them or their populations of surreptitiously helping Iraqi Sunni Arab guerrillas.

[anne]

http://www.cbpp.org/8-9-05bud.htm

April 22, 2008

How Robust is the Current Economic Expansion?
By Aviva Aron-Dine, Chad Stone, and Richard Kogan

Proponents of the 2001 and 2003 tax cuts often argue that the economic and employment growth of the past several years establishes that these tax cuts "worked" and had strong beneficial effects. More recently, some have also argued that, with growth slowing, new tax cuts are needed and would reinvigorate the economy.

It now appears that the economic expansion that began in 2001 is drawing to a close. The economy may be entering a recession; if not, it is certainly entering a slow-down. Now is therefore a good time to take stock of the recent economic expansion as a whole. We examine the expansion from 2001, when it began, through the third quarter of 2007, before the slow-down in economic growth in the last part of 2007.

The evidence on the 2001-2007 expansion provides no support for the claim that the tax cuts generated exceptional economic growth. Rather, examination of a broad range of key economic indicators indicates that the economic expansion that began in 2001 was, on balance, weaker than average. In fact, with respect to GDP, consumption, investment, wage and salary, and employment growth, the 2001-2007 expansion was either the weakest or among the weakest since World War II.

Moreover, the economy's performance between 2001 and 2007 was weaker, overall, than its performance in the equivalent years of the 1990s, years following significant tax increases. GDP growth was somewhat weaker than in the 1990s, and job creation, investment, and wage and salary growth all were substantially weaker.

What the Data Show: The Key Findings

We examine Commerce Department, Labor Department, and Federal Reserve Board data on seven economic indicators: the Gross Domestic Product, personal consumption expenditures, private domestic fixed non-residential investment, net worth, income from wages and salaries, payroll employment, and corporate profits. For each indicator, we look at average growth both since the economy hit bottom in November 2001 and since the last business-cycle peak in March 2001. We compare average growth over these periods with the average growth that occurred over comparable periods in the other business cycles since the end of World War II.[1] (Growth is measured after adjusting for inflation, except for employment levels, where such an adjustment is inapplicable.)

For six of the seven indicators, the average annual growth rate between 2001 and 2007 was below the average growth rate for the comparable periods of other post-World War II economic expansions. Notably, this expansion was among the weakest since World War II with respect to both overall economic growth and growth in fixed non-residential investment. These two indicators should have captured any positive "growth effects" of the tax cuts.

The labor market also was weaker during the 2001-2007 expansion. Both employment growth and wage and salary growth were weaker during this expansion as a whole than in any prior expansion since the end of World War II.

The 2001-2007 expansion outperformed the average post-World War II expansion in only one area: corporate profits, which grew much more rapidly than average.

These conclusions hold whether one focuses on comparisons that examine the period since the expansion began or comparisons that examine the period since the last business-cycle peak (i.e., since the 1990s expansion ended).

The 2001-2007 Expansion

As noted above, we have examined the performance of these economic indicators in two ways: from the start of the expansion in November 2001 (that is, since the fourth quarter of 2001) through the third quarter of 2007; and from the previous economic peak (the first quarter of 2001) through the third quarter of 2007. This section focuses on the expansion period.

The Gross Domestic Product, consumption, net worth, non-residential investment, wages and salaries, and employment all grew less rapidly than during other comparable expansionary periods.[2] Labor market progress was especially weak, with employment and wage and salary growth far below average and, in fact, lower than in any previous post-World War II expansion. Employment grew at an average annual rate of only 0.9 percent since November 2001, as compared with an average of 2.5 percent for the comparable periods of other post-World War II expansions. In addition, real wages and salaries grew at a 1.9 percent average annual rate in the 2001-2007 expansion, as compared with a 3.8 percent average annual rate for the comparable periods of other post-World War II expansions.

Corporate profits fared exceptionally well. The sole exception to the 2001-2007 period's lackluster performance was the growth of corporate profits. They experienced average annual growth of 10.3 percent, as compared with average growth of 7.4 percent for other comparable post-war periods....

[anne]

Notice an economic expansion that to my understanding is unlike any other in American history.

Since the initial budget of George Bush in October 2001, military spending has increased as a portion of national income while social spending has decreased as a portion of national income. Social spending has actually decreased in real per capita terms, while taxes have been cut especially for the wealthiest. Regulatory policy has slanted to business management interests.

Profits have been at record levels, profits have increased as a share of national income, corporate non-residential domestic investment has been tepid, wages and benefits have grown relatively slowly and employment growth has been slow. Income and wealth inequality has grown to historic levels.

This is remarkable.

[Elvis]

Notice an economic expansion that to my understanding is unlike any other in American history...
Anne, you've taken the blue pill. You've started to notice things. This is not good. We can help.
Take two red pills, watch FOX and call us in the morning.

[hari]

Triple - A Failure (NYT)

This is story about Moody and its ratings of subprime mortgages (SIVs) and whatnot.

Ackermann/Deutsche Bank went on record (Spiegel interview) that Banks bot SIVs based on Moody's AAA ratings. Simple fact of life - there is no way Banks can apply in=house machinery to value or revalue Moody's ratings. However DB got a hint of what was happening...and stopped trading in SIVs. That's how they're able to forestall a complete disaster ...

Now, EU is looking closely at how US ratings agencies operate in EU markets; they will recommend ways and means of reforming the system. There's absolute need for not only *independence* and *professional* competence but reassurance of it in reality.

[anne]

"Simple fact of life - there is no way Banks can apply in=house machinery to value or revalue Moody's ratings."

Vanguard has and does value and revalue bond ratings. I have not read the article yet, but I years ago wrote here that I follow Moody's an by summer 2002 I found mortgage-backed securities so uninteresting, so poor an investment, I did not even bother to follow them after.

Warren Buffett did not have any interest in mortgage-backed securities and years ago made that clear, even though Berkshire Hathaway is mostly a financial corporation. My sense is the Chinese were never significantly invested in mortgage packages. Goldman Sachs was not caught, and Goldman sold the packages.

[hari]

Yet it was the volume of SIVs that attracted demand from the credit market and specially banks. They never or seldom q' Moody's AAA ratings - until now!

[anne]

Hari:

"Yet it was the volume of SIVs * that attracted demand from the credit market and specially banks. They never or seldom questioned Moody's AAA ratings - until now!"

* Structured investment vehicles

Interesting comment.

[anne]

http://krugman.blogs.nytimes.com/2008/04/24/repetitions/

April 24, 2008

Repetitions
By Paul Krugman

Joe Klein, The incredible shrinking Democrats, * February 2005.

Joe Klein, The incredibly shrinking Democrats, ** April 2008.

The first time, by the way, the Dems were "boorish" for failing to appreciate Bush's "Iraq achievement" and obstinately standing in the way of Social Security privatization.

* http://www.time.com/time/columnist/klein/article/0,9565,1025086,00.html

** http://www.time.com/time/politics/article/0,8599,1734643,00.html