Lunchtime Photo

This is our new Hello Kitty Cafe at the Spectrum shopping center. You're jealous, aren't you? You wish you had a Hello Kitty Cafe.

This picture was taken shortly before I was kicked off the property.1 Snapping pictures with cell phones is fine, it turns out, but the security guards are told to watch out for anyone with a "high end" camera. No management pass, no picture taking.

1Not really kicked off, actually. Just told to stop taking pictures by the security guard, who was very nice. But there was no point in staying if I couldn't take any pictures.

Roger Cohen writes about the Trump-Merkel meeting a couple of weeks ago:

When Donald Trump met Chancellor Angela Merkel of Germany earlier this month, he put on one of his most truculent and ignorant performances. He wanted money—piles of it—for Germany's defense, raged about the financial killing China was making from last year's Paris climate accord and kept "frequently and brutally changing the subject when not interested, which was the case with the European Union."

…Trump's preparedness was roughly that of a fourth grader…Trump knew nothing of the proposed European-American deal known as the Trans-Atlantic Trade and Investment Partnership, little about Russian aggression in Ukraine or the Minsk agreements, and was so scatterbrained that German officials concluded that the president's daughter Ivanka, who had no formal reason to be there, was the more prepared and helpful.

Merkel is not one to fuss. But Trump's behavior appalled her entourage and reinforced a conclusion already reached about this presidency in several European capitals: It is possible to do business with Trump's national security adviser, Lt. Gen. H. R. McMaster, with Secretary of Defense Jim Mattis, and with Secretary of State Rex Tillerson, but these officials are flying blind because above them at the White House rages a whirlwind of incompetence and ignorance.

I'm sure glad that Republicans are restoring the respect for America that we lost after eight years of that empty suit Barack Obama.

It's been one of those mornings. My best source to capture the flavor of the news today is my Twitter feed. In no particular order:

Um, sure, except that Nunes won't show us the substance of the leak and misled everyone about where it came from. Other than that, spot on. And as long as we're on the subject of Nunes:

Back to the White House now. Here is April Ryan, Washington Bureau Chief for American Urban Radio Networks:

Huh? What's that about? Oh:

Got anything else for us today, Sean?

Roger that. Let's move on to someone else in the White House:

So they've moved on from denying climate change, and are now denying that they're even aware of what scientists say about climate change. Where are they going to be by 2020?

Finally, on a completely different subject:

Unfortunately, yes, I think it is.

Rep. Adam Schiff, the ranking minority member on the House Intelligence Committee, has called for Devin Nunes to recuse himself from further involvement in the Russia probe. This comes after Nunes' bizarre unveiling of supposed evidence that the Obama White House really did surveil Trump aides during the transition. Nunes still hasn't shown his evidence to anyone, and it appears increasingly likely that it doesn't really show anything at all. Nor will he tell us who he met with on the White House grounds to procure his evidence. Here is Michael Isikoff:

The Schiff statement came as panel staffers speculated on the possible identity of Nunes’ White House source, focusing on Michael Ellis, a lawyer who worked for Nunes on the intelligence panel and who was recently hired to work on national security matters at the White House counsel’s office. A White House official and spokesman for Nunes declined to comment on whether Ellis was involved in providing information to Nunes, as did a spokesman for Schiff. White House press secretary Sean Spicer insisted that White House officials were not aware of Nunes’ secret trip to meet his source and referred all questions to Nunes’ office.

Democrats have been furious that Nunes has yet to describe precisely the classified intelligence he has seen. Nor has he shared any documents with others on the House intelligence panel. Nunes, for his part, defended his previously undisclosed trip to the White House grounds, telling CNN’s Wolf Blitzer that he had to view the classified documents in an executive branch location because the intelligence community had not yet provided them to Congress.

Michael Ellis is a former editor-in-chief of the Dartmouth Review and a longtime "promising young conservative." Sadly, he's not related to the Ellis side of the Bush family, which would have been great.

One of my complaints about Hillary Clinton during the email affair was the fact that she sometimes acted guilty even when she wasn't. Now it's Donald Trump's turn. Here is the Washington Post today:

The Trump administration sought to block former acting attorney general Sally Yates from testifying to Congress in the House investigation of links between Russian officials and Donald Trump’s presidential campaign, The Washington Post has learned, a position that is likely to further anger Democrats who have accused Republicans of trying to damage the inquiry.

....Yates and another witness at the planned hearing, former CIA director John Brennan, had made clear to government officials by Thursday that their testimony to the committee probably would contradict some statements that White House officials had made, according to a person familiar with the matter who spoke on the condition of anonymity. The following day, when Yates’s lawyer sent a letter to the White House indicating that she still wanted to testify, the hearing was canceled.

Yates, you'll recall, was the acting attorney general left over from the Obama administration who Trump fired for refusing to defend his first immigration order in court.

This whole Russia thing is crazy. Whenever I start believing there's really something there, I feel like I'm turning into a nutball conspiracy theorist. But if there isn't anything there, it's plenty odd that the Trump team keeps acting as if there were.

I'm a big fan of higher capital ratios (i.e., lower leverage) as a way of making the banking system safer, so I was disturbed when Tyler Cowen pointed to a new paper suggesting that high capital ratios don't reduce the likelihood of financial crises. Instead, a team of researchers suggests that what's more important is the type of capital a bank has. Deposits are the most stable source of funding for any bank, and liquidity is king. Put these together, and what's important is the loan-to-deposit ratio:

As you can see, the LtD ratio rose steadily in the postwar era, doubling from 50 percent to over 100 percent by 2008. This indicates that credit was expanding, with banks making more loans for every dollar in deposits they took in. This, the authors say, is a better predictor of financial crises than raw leverage:

In this triptych, capital ratios are in the middle, and they don't change much before and after a financial crisis (denoted by Year 0). However, right before a financial crisis there's a steady decline in deposits as a percentage of total assets (which indicates a decline in the quality an;d stability of a bank's capital base) and a steady rise in the loan-to-deposit ratio. These are the indicators that seem to be associated with financial crises.

So is there any point to higher capital standards? Yes indeed: they may not prevent financial crises, but they make recovery from a financial crisis much quicker. Just compare the green line and the red line in the charts below:

Both of these charts show the same thing: in countries with higher capital ratios, recovery from a financial crisis was far faster. Five years out, the difference was a full 13 percentage points of GDP per capita.

If these researchers are right—and I'll add the usual caveats about this being only one study etc.—then the key to a strong, resilient banking system is twofold: a low loan-to-deposit ratio produces a liquid capital base that helps avoid financial crises, while a low leverage ratio produces the necessary capital to recover quickly if a financial crisis hits anyway.

Leverage and liquidity are key. In one sense, this is nothing new, since anyone could have told you that. But this paper suggests that they're important for slightly different reasons than we thought.

This is all completely expected, but it's still depressing as hell. The Trump administration has already approved two new pipelines and said it will reconsider tougher fuel economy standards that Barack Obama put in place, but that was just the start. The LA Times reports that Trump's willful destruction of the planet will kick into high gear tomorrow:

President Trump on Tuesday will order the Environmental Protection Agency to dismantle his predecessor’s landmark climate effort, backing away from an aggressive plan to cut emissions at power plants that had been the foundation of America’s leadership on confronting global warming....The directive that administration officials said Trump will issue takes aim at the Clean Power Plan, a far-reaching initiative former President Obama signed in 2015.

....Trump’s plans to curb climate action also reach well beyond power plants. A pioneering EPA rule that sets a “social cost” for carbon, placing a dollar value on the long-term damage caused by each ton of carbon dioxide released into the atmosphere, will be eliminated. An Obama-era requirement that all government agencies factor climate effects into their decision making, particularly as they launch new projects, is also targeted. Trump will also lift a moratorium on coal leasing on federal land.

Oh, and apropos of Trump gutting climate change rules because climate change totally isn't a real thing, a paper published today suggests that climate change is permanently altering the jet stream in a way that produces conditions during the summer that are more favorable to long episodes of extreme weather. That means more extreme droughts, more extreme heat waves, more extreme rain, and so forth. No worries, though. Trump will be sure to take care of everyone affected by this stuff. You can count on it.

This is so intensely adorable.

And  I want you to know that I do not find most things adorable.

People might tell you that I find things adorable or that I may have found things adorable in the past but people lie. People LIE. It's what they do.

Liars, the lot of them.

Never in my life have I found anything cute or adorable.

Cynical! That's my bag, doll. I dance to the beat of a heartless drum. Sad, worn-out, on my own. When I was young I would go from town to town and witness all the things collected in the local papers that were said to be cute or adorable and I would be unmoved by them. The townsfolk, they would say, "here comes that unmovable machine who feels not for cute things. For he is the bane of our existence! Never admitting how adorable or cute our things are!" And I would try to explain to them that it wasn't personal. "It's a calling, not a job."

But they wouldn't hear. Or at least couldn't forgive.

Yet, here I am. Captain Cynical, voted most cynical 3 years running in the Blaine County (Idaho) Cynics' Fare, which you shouldn't try to look up because though it is a real thing that existed when I lived in Blaine County in the early aughts the records were destroyed in a flood. Don't look up the flood either. The records of the flood were destroyed in a fire—HEY MAYBE YOU SHOULD GET OFF MY BACK, YEAH?

I didn't come here for a Spanish inquisition. I came here on a mission from the Care Bears to warm your cold hearts.

Anyway, here's the video. I don't know anything about it. Could be fake. Maybe the kid is an actor. Maybe the robot is an actor. Maybe I'm an actor. Maybe acting is a construct. Maybe we should talk about this at Burning Man.

Have a great night.

It's been...weeks, at least, since I've mentioned lead and crime, and today I got two nice little anecdotes at once. The first is from lead researcher extraordinaire Rick Nevin, who directs our attention to this chart:

As predicted by the lead-crime theory, the prison population of younger cohorts (15-25) has dropped the most. The 26-30 cohort is flat, and the older cohorts are making up a bigger proportion of the total prison population. Why? Because everyone under 30 grew up in a fairly lead-free environment, so they're less likely to commit serious crimes than similar cohorts in the past. 35-year-olds grew up at the tail end of the lead era, and are still moderately crime prone. Older cohorts were heavily lead poisoned as kids, and they've remained more crime prone even as they've grown older.

If you have a good memory, you may also recall a post I wrote four years ago explaining that lead poisoning affected blacks and Hispanics more than whites because they were more likely to grow up in dense urban environments with a lot of auto exhaust. Because of this, during the great crime wave of the 60s and 70s, their crime rates went up faster than white crime rates. The flip side of this is that with lead mostly gone, their crime rates are dropping faster than they are for whites. We can see this in the declining share of the jail population made up by blacks and Hispanics. Keith Humphreys shows us the mirror image of this, the rising share of the jail population made up by whites:

The lead hypothesis predicts that young cohorts are less crime prone than older cohorts, so their share of the jail and prison population should decline. It predicts that black crime rates will drop faster than white crime rates. And it also predicts that small-city crime rates will drop faster than big-city crime rates. All of these things have turned out to be true.

Lunchtime Photo

We have our first baby waterfowl of the season! These are baby Egyptian geese, which the Nestor of the 21st Century informs me are actually ducks. Shelducks, to be exact. Aren't these little shelducklings adorable?