links for 2008-10-10

• Denmark Offers a Model Mortgage Market - WSJ.com
• We Have the Tools to Manage the Crisis - Paul Volcker
• Nations Weigh Global Action to Crisis - NYTimes.com
• Lawmakers Weigh Plan for Stimulus - NYTimes.com
• No, Really, the Fundamentals of the Economy Are Strong - NYTimes.com
• US culture derails girl math whizzes - EurekAlert
• Lessons from Japan - Information Processing
• Emerging markets: Beware the backlash against capitalism - Vox EU
• What's so wasteful about funding discovery? - sacbee.com
• How high is financial risk today? - macroblog
• Don’t Just Do Something, Talk - LRB
• Scientists adapt economics theory to trace brain's information flow - EurekAlert
• Time for the bankers' silver bullet - Thomas Palley
• Pillow Talk - Kevin Drum
• In desperate economic times, grasp the fiscal nettle - Barry Eichengreen
• What G7/8 leaders can do to solve the global credit crisis - Vox EU
• Will globalization be reversed? - Dani Rodrik
• The Meltdown (Part III) - Robert Reich

Comments

[anne]

http://www.eurekalert.org/pub_releases/2008-10/uow-ucd100308.php

October 10, 2008

US Culture Derails Girl Math Whizzes

MADISON — A culture of neglect and, at some age levels, outright social ostracism, is derailing a generation of students, especially girls, deemed the very best in mathematics, according to a new study.

In a report published today in the Notices of the American Mathematical Society, a comprehensive analysis of decades of data on students identified as having profound ability in math describes a culturally constricted pipeline that puts American leadership in the mathematical sciences and related fields at risk.

According to the report, many girls with extremely high aptitude for math exist, but they are rarely identified in the U.S. because they veer from a career trajectory in the mathematical sciences due to the low respect American culture places on math, systemic flaws in the U.S. public school education system, and a lack of role models.

"The U.S. culture that is discouraging girls is also discouraging boys," says Janet Mertz, a University of Wisconsin-Madison professor of oncology and the senior author of the study. "The situation is becoming urgent. The data show that a majority of the top young mathematicians in this country were not born here."

Joseph A. Gallian, a co-author of the report, a professor of mathematics at the University of Minnesota, Duluth, and current president of the Mathematical Association of America, says, "Just as there is concern about the U.S. relying on foreign countries for our oil and manufactured goods, we should also be concerned about relying on others to fill our needs for mathematicians, engineers and scientists."

Mertz and Gallian conducted the analysis with Jonathan Kane, a professor of mathematics and computer science at the University of Wisconsin-Whitewater involved with math competitions, and Titu Andreescu, a professor of mathematics education at the University of Texas at Dallas. Andreescu is a former leader of the U.S. International Mathematical Olympiad team and director of AwesomeMath, a summer program for mathematically gifted children.

The new study draws on decades of data from extremely difficult mathematics competitions aimed at the most elite student math performers, including the collegiate William Lowell Putnam Mathematics Competition and the pre-collegiate International and U.S.A. Mathematical Olympiads.

Mining the data, Mertz and her colleagues found:

Contrary to the myth that females lack the intrinsic aptitude needed to excel in mathematics at the highest level, an idea proffered most famously by former Harvard University President Lawrence Summers, many girls exist with truly exceptional talent for mathematics.

Girls as well as boys with such talent are frequently identified and nurtured in some countries where this ability is highly valued; in the U.S., such talent is routinely overlooked or ignored, with many American boys and girls feeling they are actively discouraged from excelling in math.

American children of immigrants from countries where math talent is highly valued — notably Eastern Europeans and Asians — are much more likely to be identified as possessing extraordinary mathematical ability.

The pipeline for nurturing top math talent in the U.S. is badly broken beginning at the middle school level. Eighty percent of female and 60 percent of male faculty hired in recent years by the very top U.S. research university mathematics departments were born in other countries.

"We show," the group reports, "that many girls exist who possess extremely high aptitude for mathematical problem solving. The frequency with which they are identified is due, at least in part, to a variety of socio-cultural, educational or other environmental factors that differ significantly among countries and ethnic groups and can change over time."

When raised in some environments, girls were found to be 11-24 percent of the children identified as having profound mathematical ability; when raised in others, girls, including U.S.-born white ones, were 30-fold or more underrepresented. Andreescu believes that, "Innate math aptitude is probably fairly evenly distributed throughout the world, regardless of race or gender. The huge differences observed in achievement levels are most likely due to socio-cultural attributes specific to each country."

"We are wasting this valuable resource," says Mertz. "Girls can excel in math at the very highest level. There are some truly phenomenal women mathematicians out there."

In elementary school, girls do as well as or better in math than boys. In middle school, Mertz and her colleagues suggest, girls with an inclination for math begin to lose interest and fall behind, mostly due to peer pressure and societal expectations. Throughout middle and high school, social stigma and lack of appropriately challenging educational opportunities for the mathematically precocious becomes a hard reality in most American schools. Consequently, gifted girls, even more so than boys, often camouflage their mathematical talent to fit in well with their peers....

[anne]

http://www.nytimes.com/2008/10/10/education/10math.html?ref=education&pagewanted=print

October 10, 2008

Math Skills Suffer in U.S., Study Finds
By SARA RIMER

The United States is failing to develop the math skills of both girls and boys, especially among those who could excel at the highest levels, a new study asserts, and girls who do succeed in the field are almost all immigrants or the daughters of immigrants from countries where mathematics is more highly valued.

The study suggests that while many girls have exceptional talent in math — the talent to become top math researchers, scientists and engineers — they are rarely identified in the United States. A major reason, according to the study, is that American culture does not highly value talent in math, and so discourages girls — and boys, for that matter — from excelling in the field. The study will be published Friday in Notices of the American Mathematical Society.

“We’re living in a culture that is telling girls you can’t do math — that’s telling everybody that only Asians and nerds do math,” said the study’s lead author, Janet E. Mertz, an oncology professor at the University of Wisconsin, whose son is a winner of what is viewed as the world’s most-demanding math competitions. “Kids in high school, where social interactions are really important, think, ‘If I’m not an Asian or a nerd, I’d better not be on the math team.’ Kids are self selecting. For social reasons they’re not even trying.”

Many studies have examined and debated gender differences and math, but most rely on the results of the SAT and other standardized tests, Dr. Mertz and many mathematicians say. But those tests were never intended to measure the dazzling creativity, insight and reasoning skills required to solve math problems at the highest levels, Dr. Mertz and others say.

Dr. Mertz asserts that the new study is the first to examine data from the most difficult math competitions for young people, including the USA and International Mathematical Olympiads for high school students, and the Putnam Mathematical Competition for college undergraduates. For winners of these competitions, the Michael Phelpses and Kobe Bryants of math, getting an 800 on the math SAT is routine. The study found that many students from the United States in these competitions are immigrants or children of immigrants from countries where education in mathematics is prized and mathematical talent is thought to be widely distributed and able to be cultivated through hard work and persistence.

The International Olympiad, which began in Romania in 1959, is considered to be the world’s toughest math competition for high school students. About 500 students from as many as 95 countries compete each year, with contestants solving six problems in nine hours. (Question 5 from the 1996 test was famously difficult, with only six students out of several hundred able to solve it fully.)

The United States has competed in the Olympiad since 1974. Its six-member teams are selected over years of high-level contests, and trained during intensive summer math camps.

One two-time Olympiad gold medalist, 22-year-old Daniel M. Kane, now a graduate student at Harvard, is the son of Dr. Mertz and her husband, Jonathan M. Kane, a professor of mathematics and computer science at the University of Wisconsin, and a co-author of the study. The other two co-authors are Joseph A. Gallian, a math professor at the University of Minnesota and president of the Mathematical Association of America, and Titu Andreescu, a professor of math education at the University of Texas and a former leader of the United States Olympiad team.

All members of the United States team were boys until 1998, when 16-year-old Melanie Wood, a cheerleader, student newspaper editor and math whiz from a public high school in Indianapolis, made the team. She won a silver medal, missing the gold by a single point. Since then, two female high school students, Alison Miller, from upstate New York, and Sherry Gong, whose parents emigrated to the United States from China, have made the United States team (they both won gold).

By comparison, relatively small Bulgaria has sent 21 girls to the competition since 1959 (six since 1988), according to the study, and since 1974 the highly ranked Bulgarian, East German/German and Soviet Union/Russian IMO teams have included 9, 10 and 13 girls respectively. “What most of these countries have in common,” the study says, “are rigorous national mathematics curricula along with cultures and educational systems that value, encourage and support students who excel in mathematics.”

Ms. Wood is now 27 and completing her doctorate in math at Princeton University. “There’s just a stigma in this country about math being really hard and feared, and people who do it being strange,” she said in a telephone interview. “It’s particularly hard for girls, especially at the ages when people start doing competitions. If you look at schools, there is often a social group of nerdy boys. There’s that image of what it is to be a nerdy boy in mathematics. It’s still in some way socially unacceptable for boys, but at least it’s a position and it’s clearly defined.”

Ms. Miller, who is 22 and recently graduated from Harvard, and Ms. Gong, 19 and a Harvard sophomore, both cite Ms. Wood as their role model. Ms. Wood and Ms. Miller helped coach the United States girls’ team that began competing in the Girls’ Math Olympics in China two years ago. Thirteen girls from the United States have competed in the last two years, according to the study, and all are of Asian descent except one, Jennifer Iglesias.

The leader of those two teams, and of the United States Olympiad team is Zeming Feng, who grew up in China and teaches math at Phillips Exeter Academy in New Hampshire.

Dr. Feng says that in China math is regarded as an essential skill that everyone should try to develop at some level. Parents in China, he said, view math as parents in the United States do baseball, hockey and soccer.

“Here everybody plays baseball,” Dr. Feng said. “Everybody throws a few balls, regardless of whether you’re good at it, or not. If you don’t play well, it’s O.K. Everybody gives you a few claps. But people don’t treat math that way.”

A big part of the problem, Dr. Mertz and others say, is that while the young math Olympians are wooed by elite colleges like Harvard and the Massachusetts Institute of Technology, as well as the country’s leading hedge fund firms, they are mostly invisible to the public.

“There is something about the culture in American society today which doesn’t really seem to encourage men or women in mathematics,” said Michael Sipser, the head of M.I.T.’s math department. “Sports achievement gets lots of coverage in the media. Academic achievement gets almost none.”

Ana Caraiani, 23 and a graduate student in math at Harvard, is a two-time Romanian International Olympiad gold medalist. “In Romania, math is not considered as something you need to be a nerd to do,” Ms. Caraiani said. “Math is about being smart. It’s about having intuition. It’s about being creative.”

Still, she says, it was not easy excelling in mathematics as a girl in Romania. In 2001, in fact, she was the first girl to make the country’s Olympiad team in 25 years.

[anne]

http://www.nytimes.com/2008/10/10/books/10nobel.html?hp&pagewanted=print

October 10, 2008

French Writer Wins Nobel Prize
By SARAH LYALL

LONDON — The French writer Jean-Marie Gustave Le Clézio, whose work reflects a seemingly insatiable restlessness and sense of wonder about other places and other cultures, won the 2008 Nobel Prize in Literature on Thursday. In its citation, the Swedish Academy praised Mr. Le Clézio, 68, as the "author of new departures, poetic adventure and sensual ecstasy, explorer of a humanity beyond and below the reigning civilization."

Mr. Le Clézio's work defies easy characterization, but in more than 40 essays, novels and children's books, he has written of exile and self-discovery, of cultural dislocation and globalization, of the clash between modern civilization and traditional cultures. Having lived and taught in many parts of the world, he writes as fluently about North African immigrants in France, native Indians in Mexico and islanders in the Indian Ocean as he does about his own past.

Mr. Le Clézio is not well known in the United States, where few of his books are available in translation, but he is considered a major figure in European literature and has long been mentioned as a possible laureate. The awards ceremony is scheduled to be on Dec. 10 in Stockholm, and, as the winner, Mr. Le Clézio will receive 10 million Swedish kronor, or about $1.4 million.

At an impromptu news conference in Paris at the headquarters of his publisher, Éditions Gallimard, Mr. Le Clézio seemed unperturbed by all the attention. He said he had received the telephone call telling him about the prize while he was reading "Dicatorship of Sorrow," by the 1940s Swedish writer Stig Dagerman.

"I am very happy, and I am also very moved because I wasn't expecting this at all," he said. "Many other names were mentioned, names of people for whom I have a lot of esteem. I was in good company. Luck, or destiny, or maybe other reasons, other motives, had it so that I got it. But it could have been someone else."

In a news conference in Stockholm after the announcement, Horace Engdahl, the permanent secretary of the Swedish Academy, which awards the prize each year, described Mr. Le Clézio as a cosmopolitan author, "a traveler, a citizen of the world, a nomad."

"He is not a particularly French writer if you look at him from a strictly cultural point of view," Mr. Engdahl said. "He has gone through many different phases of his development as a writer and has come to include other civilizations, other modes of living than the Western, in his writing."

Last month, Mr. Engdahl provoked a wave of indignation when he criticized American writers as "too isolated, too insular" and "too sensitive to trends in their own mass culture." Europe, he declared, is "the center of the literary world." No American has won the Nobel literature prize since Toni Morrison did in 1993.

Mr. Le Clézio was born in 1940 in Nice and raised in a nearby village, speaking English and French. His father, a British doctor with strong family connections in the island of Mauritius, lived in Africa for many years while young Jean-Marie was growing up. When he was 7, Jean-Marie traveled to Nigeria with his family and spent a year out of school, an experience he recalled later in his semiautobiographal novel "Onitsha" (1991).

He studied English at the University of Bristol, graduated from the Institut d'Études Littéraires in Nice, received a master's degree at the University of Aix-en-Provence and wrote his doctoral thesis for the University of Perpignan on the early history of Mexico. He has taught at, among other places, colleges in Mexico City, Bangkok, Albuquerque and Boston; has lived among the Embera Indians in Panama; and has published translations of Mayan sacred texts.

Mr. Le Clézio's first marriage ended in divorce; he was married again, to a Moroccan woman, in 1975. The two divide their time between Nice, Mauritius and Albuquerque.

Mr. Le Clézio became a literary sensation with his first novel, "Le Procès-verbal" (1963), published in English as "The Interrogation." The novel follows the meanderings around town of a sensitive young man who winds up for a time in a mental hospital. It has been compared in mood to Camus's "The Stranger."

But his style evolved in later books, becoming more lyrical and accessible, and taking on bolder and more sweeping themes, often with an ecological underpinning.

"The latter part has a very contemporary feel," said Antoine Compagnon, a professor of French and comparative literature at Columbia University. "It has an openness to others, to other cultures, to the South, to minorities. This is a very current sensibility."

Bronwen Martin, a research fellow in the French department at Birkbeck College in London, said that Mr. Le Clézio's work had recently become more popular among academics. "I think it's because of his more explicitly postcolonial work," said Ms. Martin, who has written two books on Mr. Le Clézio's writing.

In 1980, Mr. Le Clézio published "Désert," the story of a young nomad woman from the Sahara and her clashes with modern European civilization. The book was considered his definitive breakthrough, and it became the first winner of the new Grand Prix Paul Morand, awarded by the Académie Française.

In the United States, David R. Godine, one of a handful of publishers that have released Mr. Le Clézio's works in English, plans to issue a paperback edition of "The Prospector" (translated from "Le Chercheur d'Or" in French) and plans to translate and publish "Désert" in English.

In a reminder that politics and culture are closely intertwined in France, the French prime minister, François Fillon, said in a statement on Thursday that the award "consecrates French literature" and "refutes with éclat the theory of a so-called decline of French culture."

Mr. Le Clézio is not one to seek the limelight. He once described himself in an interview as "a poor Rousseauist who hasn't really figured it out."

He said, "I have the feeling of being a very small item on this planet, and literature enables me to express that."

Asked at the news conference if he had any message to convey, Mr. Le Clézio said: "My message will be very clear; it is that I think we have to continue to read novels. Because I think that the novel is a very good means to question the current world without having an answer that is too schematic, too automatic. The novelist, he's not a philosopher, not a technician of spoken language. He's someone who writes, above all, and through the novel asks questions."

[anne]

http://www.nytimes.com/2008/10/10/books/10excerpt.html?ref=books&pagewanted=print

October 10, 2008

Jean-Marie Gustave Le Clézio

In the beginning of summer most of the children were like little savages — sunbrowned faces, arms and legs, bits of grass tangled in their hair, torn, dirt-smudged clothes. Esther loved going out with the children every morning, in that mixed group of boys and girls, Jewish children and children from the village, all rowdy, tousled — Mr. Seligman's class. With them, she ran through the still-cool, narrow village streets, then across the large square making dogs bark and old people sitting in the sun grumble. They followed the street with the stream down toward the river, cut through the fields to reach the cemetery. When the sun burned down hot, they bathed in the icy waters of the torrent. The boys stayed down below and the girls climbed up the torrent to hide behind the huge boulders. But they knew the boys came into the bushes to spy on them, they could hear their muffled snickering and they splashed water around haphazardly and let out shrill shrieks.

Esther was the wildest of them all with her black curly hair cropped short, her brown face, and when her mother saw her come home for lunch she said, "Hélène, you look like a gypsy!" That pleased her father and so he said her name in Spanish, "Estrellita, little star."

He was the one who'd first shown her the vast grassy fields high above the village, above the torrent. Still farther up began the road leading to the mountains, the dark forest of larches — but that was another world. Gasparini said that in winter there were wolves in the forest and if you listened at night, you could hear them howl far off in the distance. But as hard as she listened at night in her bed, Esther had never heard their howling, maybe because of the sound of the water that was constantly streaming down the middle of the street.

— "Etoile Errante" ("Wandering Star") (1992)

[anne]

http://www.nytimes.com/2008/10/10/books/10excerpt.html?ref=books&pagewanted=print

October 10, 2008

Jean-Marie Gustave Le Clézio

John, from Nantucket:

It was in the beginning, at the very beginning, when there was nobody on the sea, nothing more than birds and sunlight. Since childhood I had dreamed of going there, to this place where all began and all ended. They spoke of it as though of a secret, like a treasure. In Nantucket they all spoke about it, talking as though drunk. They said that over there in California there existed a secret place in the ocean where the whales went to birth their young, and where the old females went to die. There was this reservoir, this immense shallow in the sea, where they gathered by the thousands, the youngest along with the oldest, and the males formed a protective circle around them to prevent orcas and sharks from entering, and the sea roiled under the crash of fins, the sky grew misty with the spray of blowholes, with the cries of the birds sounding like a forge.

This is what they said. They all told stories of this place as though they had seen it. And I, on the piers of Nantucket, I listened to them and also remembered as though I had been there.

And now it all has disappeared. I remember it, it is as though my life has been this dream alone, in which everything that was beautiful and new in the world was undone, destroyed. I never returned to Nantucket. Does the ripple of this dream still exist?

— "Pawana" (1992)

[anne]

http://krugman.blogs.nytimes.com/2008/10/09/happy-yom-kippur/

October 9, 2008

Happy Yom Kippur
By Paul Krugman

Forgot to post this at the appropriate time. Oh well, better late than never.

By way of explanation: my father worked at a New York insurance company that was, rather oddly, an overwhelmingly Catholic institution. (A relative from the Sephardic side of the family, named Menahem, also worked there; everyone called her Monahan.)

Anyway, my father did take the Jewish holidays off, as a matter of principle — and his co-workers tried. So they would indeed wish him happy Day of Atonement.

[anne]

http://www.juancole.com/2008/10/suicide-bomber-kills-11-in-baquba.html

October 9, 2008

The Federal Communnications Commission will investigate the ties of retired military analysts on cable and network television to the Pentagon, * which used them as "force multimpliers". Although the New York Times blew the whistle on these links months ago, the television networks never even reported the allegations!

* http://www.editorandpublisher.com/eandp/news/article_display.jsp?vnu_content_id=1003871393

-- Juan Cole

[Farrar]

In the Pride cometh before a fall department, how do you thike this -
A master plan for China to bail out America
http://www.ft.com/cms/s/0/dd091644-946e-11dd-953e-000077b07658.html
A master plan for China to bail out America
By Arvind Subramanian
Published: October 7 2008 19:34 | Last updated: October 7 2008 19:34
The financial rescue plan passed by the US Congress is viewed as flawed but necessary to head off panic in financial markets and loss of confidence in the economy. It seems a holding operation, a Plan C or D that might need augmentation via a Plan A.

A vital component of a Plan A is likely to be additional money. For one thing, there is suspicion that the amount of toxic assets is considerably greater than the rescue plan provides for. For another, more money may be required to address the problem in the housing market by providing relief to subprime and marginal borrowers. And finally, further fiscal stimulus could become necessary if recessionary forces take hold.

Where will this additional money – perhaps as much as another $500bn – come from? The US taxpayer is wary. Joe Six-Pack has ponied up a lot already, and done so with no great confidence that the money was for a worthwhile cause or that it will be well spent.

Enter China. Ken Rogoff of Harvard cheekily characterised the vast Chinese accumulation of US Treasury bonds over the past five years as the biggest foreign assistance programme in history. Why not push that further? Here is a thought experiment.

The Chinese government could offer to lend up to $500bn (from its current stock of $1,800bn) to the US government for the rescue of its financial sector. Its previous assistance – buying US bonds – was indirect and unconditional. Not so in this case.

China’s loan offer would be direct to the US government to be spent in the current financial crisis. More important, it would come with strings attached. Tied aid, the preferred mode of operation of western donors since the postwar period, would now be embraced by China.

What would be the nature of the strings – or “conditionality” as the US Treasury, a longtime practitioner of this art, has called it? Conditionality as imposed by the World Bank and International Monetary Fund was underpinned by an ideology that favoured markets and globalisation. But there was also an assumption that either borrowing third world governments did not understand their benefits or the reformers there needed a “spoonful of sugar” to help overcome any internal opposition.

China would impose two conditions. First, it would declare that the offer of money was conditional on the US government’s adopting a particular approach to rescuing the banks, namely to favour in the next round the use of government money to recapitalise the banks. Europe has been using this approach and evidence suggests it is the most effective way of dealing with large-scale financial crises.

The US government – like third world governments in the past – has been unable to adopt the most efficient course of action. This stems from an ideological obsession against “socialising” banks or because inducement is necessary to overcome any domestic opposition to it.

The second condition would relate to “social safety nets”, which had become standard embellishments to World Bank/IMF adjustment programmes. China would stipulate that monies be devoted to cushioning the impact on vulnerable homeowners, so that they would not be forced into forgoing the American dream of home ownership. Chinese conditionality on this front would achieve an outcome that several economists on the left and right have argued for on grounds of fairness, and also to address the fundamental problem in the housing market.

For China, this offer of help would have three virtues. First, it would be riding to the rescue of a situation partly created by its own policies of undervalued exchange rates, which led to lax global liquidity conditions. Second, its economic interest would be served because successful US efforts at rescuing its financial sector could help avert an economic downturn, protecting China’s exports, its growth engine.

Perhaps most important, it would seal China’s status as a responsible superpower willing to deploy its economic resources for the sake of protecting the world economy. And if the means for achieving that are by providing the current hegemon with the largest aid package the world has ever seen with a healthy dose of sensible conditionality, well, what could be more statesmanlike than that?

The writer is senior fellow, Peterson Institute for International Economics and Center for Global Development, and senior research professor, Johns Hopkins University

Copyright The Financial Times Limited 2008

[hari]

These socalled experts wqho offer such magnifgicient advise for China foreign aid to the hegemon should, just for once, learn to read what Chinese press is sayuing about the crisis before fiddling with their nonsense.

[anne]

http://krugman.blogs.nytimes.com/2008/10/10/faustian-bargains/

October 10, 2008

Faustian Bargains
By Paul Krugman

I’ve lately become a reader of Across the Curve, the blog of the bond trader John Jansen. It’s jargon-heavy — sometimes even I have to look up the terms he uses — but in a time of disordered markets (does anyone actually manage to borrow at Libor these days) it’s really helpful to have reports from a "tone and feel of the markets" guy who can tell you what the numbers can’t.

And his opening comment this morning * is a shocker. After describing some of the weird action in Treasuries, he says:

"Is this the beginning of the end for the dollar and the Treasury market? Is this the first sign of the bursting of the bubble in Treasury securities? That market, in a sense, represents the ultimate bubble as it exists at the whim and caprice of foreign investors, who have as participants in a Faustian bargain, financed our war(s) and our lifestyle so generously over the last decade. Maybe even that bizarre construct is crashing about us as we speak."

Maybe I should be drinking something a bit more … calming ... than coffee right now.

* http://acrossthecurve.com/?p=1835

[anne]

When Krugman wonders whether anyone is actually able to borrow at Libor (London Interbank Offered Rate) these days, I am told "no" by a bond specialist.

[anne]

http://krugman.blogs.nytimes.com/2008/10/09/two-kinds-of-problem/

October 9, 2008

Two Kinds of Problems
By Paul Krugman

One thing I've been asked is why I'm not writing more about relief for homeowners and other kinds of bottom-up aid to the economy. Probably I should be saying more. But in defense, let me say that there are two kinds of economic problems right now.

The most acute problems involve the run on the financial system. This has to be brought under control if we want to avoid a 1931-style collapse. And things like homeowner workouts quite simply won't deliver enough relief to bank capital, and certainly not fast enough, to help significantly on that front. So there's a financial relief imperative, which mainly involves injection of capital and guarantees of liquidity.

Now, on top of that we've got the economy's slide into recession, which will continue even if the high-speed financial crisis is brought under control. What we need there is action on many things: fiscal stimulus, aid to state and local governments, homeowner relief, and more.

It's important to work on both kinds of problems, but it's also important not to imagine that solving either one automatically solves the other. And the slower-motion issues, realistically, won't be effectively addressed for a while, probably until whatshisname moves out of the White House. The high-speed stuff, on the other hand, had better be addressed in the next few days.

[anne]

http://angryarab.blogspot.com/2008/10/number-of-ethiopians-needing-emergency.html

October 10, 2008

"The number of Ethiopians needing emergency food assistance has jumped to 6.4 million from 4.6 million in June, the aid agency Oxfam said on Friday." *

* http://www.alertnet.org/thenews/newsdesk/L9111834.htm

-- As'ad AbuKhalil

[Ethiopia, the country we needlessly and immorally encouraged and supported in attacking and occupying an even poorer Somalia, beginning a war that has continued from December 2006.]

[anne]

http://angryarab.blogspot.com/2008/10/choice-between-mccain-and-obama-is.html

October 10, 2008

The choice between McCain and Obama is a choice between a surge in Iraq and a surge in Afghanistan. You get to choose.

-- As'ad AbuKhalil

[anne]

http://movies.nytimes.com/2008/10/10/movies/10lies.html?hp&pagewanted=print

October 10, 2008

Big Stars Wielding an Array of Accents, Fighting the War on Terrorism
By A. O. SCOTT

Ridley Scott's new movie, "Body of Lies," raises a potentially disturbing question. If terrorism has become boring, does that mean the terrorists have won? Or, conversely, is the grinding tedium of this film good news for our side, evidence of the awesome might of Western popular culture, which can turn even the most intransigent and bloodthirsty real-world villains into fodder for busy, contrived and lifeless action thrillers? ...

[Rush right out to watch....]

[anne]

What is interesting is the strength of the Japanese Yen, but the Yen always seems strong, having risen in relative value in the midst of the deflation years even during those times when the government was doing all that was possible to lower the value.

[anne]

http://economix.blogs.nytimes.com/2008/10/10/how-cheap-are-stocks/

October 10, 2008

How Cheap Are Stocks?
By David Leonhardt

How cheap are stocks?

By one important measure, they’re as cheap as they have been since 1985. They’re 20 percent less expensive than they have been, on average, over the past 100 years. And yet they still may have a ways to fall.

The standard measure of the cost of stocks is the price-earnings ratio: the current price of stocks divided by some measure of annual earnings. Wall Street often likes to use the past year’s earnings or the forecasted earnings over the next year. But I find the first of these measures to be too volatile and the second to be too — shall we say — optimistic. So I prefer a p-e ratio based on the average corporate earnings over the past 5 or 10 years. It’s fair to assume that Warren Buffett also has some sympathy for this measure.

At noon today, after several gyrations in the morning, the Standard & Poor’s 500-stock index was at about 870. That meant the five-year p-e ratio was just below 12. (The corporate earnings data isn’t all available yet, so this is an estimate.) It was last that low in late 1985. Over the past 100 years, the average p-e has been about 15.5.

If you use a 10-year p-e instead, stocks look somewhat more expensive — the ratio is 14, the lowest since 1988 but only a little lower than the 100-year average.

There are two things to keep in mind, in the event that you consider these ratios to be a sign that now is the time to buy. First, the p-e ratio typically falls well below its long-run average during a bust. It fell to about 6 in both the 1930s and early 1980s.

Second, remember that there are two components to the p-e ratio: the ‘p’ and the ‘e.’ Based on the kind of recession we may now be entering, it’s entirely reasonable to think that corporate earnings will fall, maybe significantly. That would mean that stocks would also have to fall just to keep the p-e ratio in its current place.

I don’t pretend to know what is going to happen with stocks. They’re certainly not overvalued the way that they were for most of the last decade. But the fundamentals also don’t make it obvious that we’re at the bottom or on the verge of a sharp snap-back....

[anne]

http://delong.typepad.com/sdj/2008/10/new-york-times.html

October 10, 2008

New York Times Death Spiral Watch (Casey Mulligan Edition) *

Why oh why can't we have a better press corps? The New York Times thinks it's good to use its space to let Casey Mulligan tell us that the Great Depression was a figment of our imagination. Memo to everyone: if you are ever tempted to make an argument that implies that the Great Depression simply did not happen, stop....

* http://www.nytimes.com/2008/10/10/opinion/10mulligan.html

[Fine; but it is quite important to notice that Casey Mulligan is a professor of economics at the University of Chicago.]

[anne]

http://krugman.blogs.nytimes.com/2008/10/10/john-jansen-has-more/

October 10, 2008

John Jansen Has More
By Paul Krugman

Maybe it isn’t the end of a Faustian bargain * — instead, he says, ** rising interest rates on long-term Treasuries may be

"about a giant systemic margin call and the means to meet the margin call is via sales of liquid assets. So, the wreckage floating in the street results from those sales."

And this is meant to be reassuring!

* http://krugman.blogs.nytimes.com/2008/10/10/faustian-bargains/

** http://acrossthecurve.com/?p=1839

[anne]

I have little sense of what is happening in the bond market from a trading perspective, where every price squiggle counts so much, but if there is excessive selling of long-term Treasuries I find no evidence in what have seemed to be mild day to day rate movements. Returns on long-term treasuries have been fine this year. Where is the general selling?

[anne]

Notice also that various limits on short selling could be argued as not having limited financial market volatility or price declines, unless the limits were effectively protecting against worse.

[anne]

http://www.nytimes.com/2008/10/11/world/asia/11nato.html?hp&pagewanted=print

October 11, 2008

NATO to Hit Drug Trade in Afghanistan
By JUDY DEMPSEY

Some members had misgivings about the decision, which represents a major shift in strategy for the alliance.

http://www.nytimes.com/2008/10/02/world/asia/02military.html?ref=world&pagewanted=print

October 2, 2008

NATO Aims at Afghans Whose Drugs Aid Militants
By THOM SHANKER and ERIC SCHMITT

WASHINGTON — NATO forces in Afghanistan will step up attacks on drug lords and narcotics traffickers who are supporting an insurgency that has rebounded in the past year and is responsible for rising violence, the top American commander in Afghanistan said Wednesday....

[anne]

What puzzles me is since drug crops are so important economically in Afghanistan, and evidently well protected since the successful deposing of the government in 2002, how were the Taliban able to significantly limit planting and processing of drug crops? Violence alone would not seem to be a reasonable answer because NATO forces have repeatedly sought to limit the planting and processing of drug crops by force.

Since the country is so poor and farmers so dependent on drug crops, how can NATO be successful after all this time no matter the force? Economic alternatives would seem difficult to manage on a significant scale, since such alternatives have never been meaningfully there till now.

[hari]

However Nato intradiction will only take place under official request from Afghan Gov. That's the compromise which was forced on Gates by Europeans because they don't want their forces involved in drug traffiking.

The policy will not succeed and it is moreover questionable why Gates is introducing it now at end of Bush regime.

Afghans farmers have no other alternative to a cash crop in Hindu Kush.

[Julio]

"Violence alone would not seem to be a reasonable answer because NATO forces have repeatedly sought to limit the planting and processing of drug crops by force."

Violence organized by an absolute dictatorship with pervasive presence in the population is quite different (and much more effective) than violence imposed by an occupation force.

As for the folly of the crop-eradication strategy, superimposed on a failing occupation strategy, superimposed on a crumbling nation-building pseudostrategy, don't get me started.

[anne]

Julio:

"Violence organized by an absolute dictatorship with pervasive presence in the population is quite different (and much more effective) than violence imposed by an occupation force.

"As for the folly of the crop-eradication strategy, superimposed on a failing occupation strategy, superimposed on a crumbling nation-building pseudostrategy, don't get me started."

[Helpful surmise.]

[anne]

While I am puzzled by the pessimistic assessments and changes in strategy in Afghanistan, and similar though quieter strategy changes in Iraq, my sense is the Administration is locking in strategy for the coming President in each country. The course in Iraq being a continued though lower level presence of American soldiers, since direct military involvement there is considered critical by the current Administration in terms of sustaining a regional military influence.

[anne]

Hari:

"However Nato interdiction will only take place under official request from the Afghan Gov."

Right; I understand that now.

[hari]

GOP knows now they've no chance to win on 4th Nov. That's given...So how does one ensure continuity of policy, as far as external relations are affected.

*Bush signed 123 Nuclear Energy Agreement with India - inspite of implications to NPT ( India is not a signatory to NPT). Yet BO and McCain have supported it. There is a larger strategic interest here, I discern. That's mainland China....

*Iraq - Bush strategy will not be upheld by BO given his 16mth deadline to start removing combat forces. He'll do it no matter what GOP says or does.

Afghanistan - BO is supporting most if not all of Gates/Bush current policy decisions to replicate a *surge* in Hindu Kush. So, me thinks, there is not much diffference except that development policy might finally find central focus to allow Afghans to takeover their own defense. That's exactly what the Germans would also like to push right now - with their increased combat forces in Northern region.

#Bottomline, from policy perspective, Bush is seeking to tie the hands of next Pres for atleast the first term with two external wars and other strategic issues inside Nato.

[hari]

Also don't forget there is election next year in Germany and one doesn't know if Merkel will survive now - since CSU (Bavaria) is going thru complete facelift in leadership. CSU is part of the coalition in Berlin and more status quo oriented on social policy than CDU. They lost their absolute majority in Munich after 3 or 4 decades!

There might be election in UK - Conservatives are running ahead of Labour right now.

EU-27 is in uproar after the subprime mortgage crisis and will demand root and branch policy changes to international finance regulatory regime and so forth.

Next Admin will have an incentive from EU-27 to work on disarmament and resolution of Middle East conflict. It might seem easier with BO but I am not confident he can provide the new global leadership required after this financial meltdown and recession which is underway. On the other hand, he has very good (political) allegiance (already) with Sarkosy, Merkel, Brown and EU-President/Borosso. The chemistry seems or looks good. But will it really work on strategic level or not is not clear.

[anne]

http://krugman.blogs.nytimes.com/2008/10/10/failure-of-leadership-part-lxxiv/

October 10, 2008

Failure of Leadership, Part LXXIV
By Paul Krugman

Bloomberg:

"Finance ministers and central bankers from the Group of Seven nations signaled reluctance to adopt a coordinated effort to shore up banks, risking a deeper crisis of confidence after this week’s crash in global stock markets."

Do these people have any idea how much is at risk?

* http://bloomberg.com/apps/news?pid=20601087&sid=aRCG.M86ZIiE&refer=home

[hari]

Paul - there is no such thing as a *free* lunch!

[anne]

http://www.nytimes.com/2008/10/11/world/africa/11somalia.html?ref=world&pagewanted=print

October 11, 2008

Somalia’s ‘Forgotten Crisis’ Worsens
By JEFFREY GETTLEMAN

While the audacity of a band of Somali pirates who recently hijacked a ship has grabbed the world’s attention, the suffering of millions of Somalis seems to go unnoticed.

[And so, we applauded a war begun in December 2006 the consequences of which become more profoundly tragic especially since we are rarely reminded of our influence.]

[anne]

http://krugman.blogs.nytimes.com/2008/10/10/not-about-the-financial-crisis/

October 10, 2008

Not About the Financial Crisis
By Paul Krugman

The crisis isn't the only scary thing going on. Something very ugly is taking shape on the political scene: as McCain's chances fade, the crowds at his rallies are, by all accounts, increasingly gripped by insane rage. It's not just a mob phenomenon — it's visible in the right-wing media, and to some extent in the speeches of McCain and Palin.

We've seen this before. One thing that has been sort of written out of the mainstream history of politics is the sheer insanity of the attacks on the Clintons — they were drug smugglers, they murdered Vince Foster (and lots of other people), they were in league with foreign powers. And this stuff didn't just show up in fringe publications — it was discussed in Congress, given props by the editorial page of the Wall Street Journal, and so on.

What it came down to was that a significant fraction of the American population, backed by a lot of money and political influence, simply does not consider government by liberals (even very moderate liberals) legitimate. Ronald Reagan was supposed to have settled that once and for all.

What happens when Obama is elected? It will be even worse than it was in the Clinton years. For sure there will be crazy accusations, and I wouldn't be surprised to see some violence.

The next few years are going to be very, very tough.

[hari]

What Paul is talking about is White Racism and its social implications including violence. To elect a blackman Pres. is after all a historical event - even in this critical financial crisis. GOP will raise the threat of racism by association, like they are already doing. If violence is the result of such rhetorics, by GOP candidate, it's also possible that the public will try and punish perpetrators of such racism and violence.

At least I hope so.

[Barkley Rosser]

hari,

Unfortunately, GOP still has a chance to win on Nov. 4. No, it will not be due to this ugly campaign they are now waging. It would be due to an unforeseen event in the foreign policy arena that upsets the applecart, just as the last few weeks of financial crashes "distracted" the public from Obama's evil "softness" on Russia and Georgia, where McCain had been able to push himself into the lead over such stuff.

The hard fact is that the US public continues to rate McCain higher than Obama on national security and the reverse on the economy. So, as long as the economy remains the leading, most salient issue, Obama will win. But, if the markets stabilize next week and some horrible foreign policy event occurs (the list of possbilities is long and ugly), things could change fast.

Everyone should continue to expect the unexpected, and three and a half weeks is a long time (and two weeks is the period of short term memory salience; what is happening now will be "in the past" on Nov. 4, unless it continues).

[rufus]

McCain booed after trying to calm anti-Obama crowd
By PHILIP ELLIOTT and BETH FOUHY,
Associated Press Writers

http://news.yahoo.com/s/ap/20081010/ap_on_el_pr/
mccain_angry_crowds;_ylt=Ahm6yRy9kA7SqzkGjevl1GQGw_IE

LAKEVILLE, Minn. - The anger is getting raw at Republican rallies and John McCain is acting to tamp it down. McCain was booed by his own supporters Friday when, in an abrupt switch from raising questions about Barack Obama's character, he described the Democrat as a "decent person and a person that you do not have to be scared of as president of the United States."

A sense of grievance spilling into rage has gripped some GOP events this week as McCain supporters see his presidential campaign lag against Obama. Some in the audience are making it personal, against the Democrat. Shouts of "traitor," "terrorist," "treason," "liar," and even "off with his head" have rung from the crowd at McCain and Sarah Palin rallies, and gone unchallenged by them.

McCain changed his tone Friday when supporters at a town hall pressed him to be rougher on Obama. A voter said, "The people here in Minnesota want to see a real fight." Another said Obama would lead the U.S. into socialism. Another said he did not want his unborn child raised in a country led by Obama.

"If you want a fight, we will fight," McCain said. "But we will be respectful. I admire Sen. Obama and his accomplishments." When people booed, he cut them off.

"I don't mean that has to reduce your ferocity," he said. "I just mean to say you have to be respectful."

Presidential candidates are accustomed to raucous rallies this close to Election Day and welcome the enthusiasm. But they are also traditionally monitors of sorts from the stage. Part of their job is to leaven proceedings if tempers run ragged and to rein in an out-of-bounds comment from the crowd.

Not so much this week, at GOP rallies in Pennsylvania, Wisconsin, Florida and other states.

When a visibly angry McCain supporter in Waukesha, Wis., on Thursday told the candidate "I'm really mad" because of "socialists taking over the country," McCain stoked the sentiment. "I think I got the message," he said. "The gentleman is right." He went on to talk about Democrats in control of Congress.

On Friday, McCain rejected the bait.

"I don't trust Obama," a woman said. "I have read about him. He's an Arab."

McCain shook his head in disagreement, and said:

"No, ma'am. He's a decent, family man, a citizen that I just happen to have disagreements with (him) on fundamental issues and that's what this campaign is all about."

He had drawn boos with his comment: "I have to tell you, he is a decent person and a person that you do not have to be scared of as president of the United States."

The anti-Obama taunts and jeers are noticeably louder when McCain appears with Palin, a big draw for GOP social conservatives. She accused Obama this week of "palling around with terrorists" because of his past, loose association with a 1960s radical. If less directly, McCain, too, has sought to exploit Obama's Chicago neighborhood ties to William Ayers, while trying simultaneously to steer voters' attention to his plans for the financial crisis.

The Alaska governor did not campaign with McCain on Friday, and his rally in La Crosse, Wis., earlier Friday was much more subdued than those when the two campaigned together. Still, one woman shouted "traitor" when McCain told voters Obama would raise their taxes.

Volunteers worked up chants from the crowd of "U.S.A." and "John McCain, John McCain," in an apparent attempt to drown out boos and other displays of negative energy.

The Secret Service confirmed Friday that it had investigated an episode reported in The Washington Post in which someone in Palin's crowd in Clearwater, Fla., shouted "kill him," on Monday, meaning Obama. There was "no indication that there was anything directed at Obama," Secret Service spokesman Eric Zahren told AP. "We looked into it because we always operate in an atmosphere of an abundance of caution."

Palin, at a fundraiser in Ohio on Friday, told supporters "it's not negative and it's not mean-spirited" to scrutinize Obama's iffy associations.

But Kathleen Hall Jamieson, director of the Annenberg Public Policy Center at the University of Pennsylvania an author of 15 books on politics, says the vitriol has been encouraged by inflammatory words from the stage.

"Red-meat rhetoric elicits emotional responses in those already disposed by ads using words such as 'dangerous' 'dishonorable' and 'risky' to believe that the country would be endangered by election of the opposing candidate," she said.

___

Beth Fouhy reported from New York. Associated Press writer Joe Milicia contributed to this story from Cleveland.