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China's Newfound Dedication to the Market Falters When the Market Does Something They Don't Like

| Wed Aug. 12, 2015 12:03 PM EDT

Noah Smith on Twitter last night:

I see some people asserting that China is devaluing the RMB to boost the RMB's status as a global currency. I heavily doubt this.

China has two reasons to let the yuan depreciate. The first is self-serving: it makes Chinese exports cheaper and thereby helps the Chinese economy, which is in trouble. The second is their official reason: they have decided to stop setting the value of their currency by fiat. Instead they will let it follow the market, and right now the market thinks the yuan is overvalued.

Smith is telling us not to pay too much attention to the official reason. Yes, a freer exchange rate is necessary if China wants the yuan to become a major global reserve currency. But that's just plausible window dressing to mask the real reason China is letting the yuan fall: to prop up their weakening economy.

Today, the Wall Street Journal reports that Smith is most likely right. After letting the yuan fall for two days, the Bank of China decided that maybe enough was enough—and intervened at the last second on Wednesday to increase the value of the yuan:

In a statement released by the central bank, the PBOC described greater volatility in the yuan’s trading as a “normal phenomenon” and pledged to keep the exchange rate “basically stable.”

But that message largely failed to calm the market, as traders rushed to sell the yuan and businesses flocked to convert their yuan holdings into dollars. The PBOC then instructed state-owned Chinese banks to sell dollars on its behalf in the last 15 minutes of Wednesday’s trading, according to people close to the state banks.

The result: The yuan jumped about 1% in value against the dollar in the last few minutes of trading, bringing it to 6.3870 yuan against the dollar.

It's still possible that once things stabilize a bit, China will let the yuan find its natural value. But Wednesday's intervention suggests something else: when push comes to shove, China will intervene to do whatever it takes to help their economy. If that means letting the market have its way, well and good. If not, then they'll pay no attention to the market.

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Obama Is Playing Hardball, and Guess Who Doesn't Like It?

| Wed Aug. 12, 2015 11:15 AM EDT

The Washington Post is unhappy with the "certitude" with which President Obama is defending the Iran nuclear deal. Normally, the Post would prefer more certitude in Obama's foreign policy, but whatever. Then there's this:

After six-plus years of a presidency in which Mr. Obama has himself been the target of relentless, often unfair, often purely partisan attacks, we can understand why he’s gotten a bit jaded about seeking bipartisan support and feels justified to respond in kind.

....Still, by not sticking to the merits of the deal, Mr. Obama implies a lack of confidence in them. The contrast is striking between the president’s tone today and his 2008 speech accepting the Democratic nomination: Looking ahead to debating his GOP opponent, Sen. John McCain (Ariz.), he pledged that “what I will not do is suggest that the senator takes his positions for political purposes, because one of the things that we have to change in our politics is the idea that people cannot disagree without challenging each other’s character and each other’s patriotism.” There’s a sad progression from that aspiration to an approach that is all about winning, even if it has to be winning ugly.

Let's recap. Obama's opposition doesn't even bother offering any plausible alternative to the deal. Every single Senate Republican opposes it. Every single one—including the supposed moderates. The vast majority opposed it before they even had a chance to read it. Jeb Bush called it "appeasement." Ted Cruz said it was a "fundamental betrayal of the security of the United States." Marco Rubio declared that Obama had offered "concession after concession to a regime that has American blood on its hands." And Rubio was just one of many who said everyone should understand that this was Obama's deal, not a real American treaty, and he would rescind it immediately upon taking office. So much for America's word on the world stage.

It's unclear to me what you can draw from this other than the fact that Republican opposition is (a) noxious and (b) largely politically motivated. Sweet reason is not going to change their minds, so Obama's best hope is to appeal at least partly to partisanship in order to keep enough Democrats in line to get the deal approved.

This is the kind of thing the Post often wishes Obama would do. Be more like LBJ! Figure out a way to get things done. Don't expect that just giving a lovely speech will turn people around.

Well, now he's doing it. Contrary to what the Post says, Obama has, in fact, defended the deal on its merits over and over. But he's also learned that this will get him nowhere with Republicans, especially while a presidential campaign is underway. So he's taking the only option open to him, whether he likes it or not. That means hitting his opponents hard. It means revving up the Democratic base to stand by him. It means using the bully pulpit to counter millions of dollars in advertising from opponents of the deal.

This is politics. This is how presidents get things done. Occasionally it gets a little nasty, and fainthearted folks will tsk tsk. But the Post knows well that there are sometimes no alternatives when the opposition party is as determined to destroy you as the modern Republican Party is. We can all wish things were different, but they aren't. Obama is playing the cards he's been dealt.

Bernie Sanders Is Now Leading in New Hampshire

Stay calm.

| Wed Aug. 12, 2015 10:46 AM EDT

Mark it down. August 11, 2015: the day Bernie Sanders led Hillary Clinton in an early primary state for the first time.

It's just one poll—the polling average still favors Clinton by a lot in the Granite State and nationally. But it's another indication that the enthusiasm that greeted the Vermont senator's candidacy out of the gate has only grown as he's taken his campaign on the road (nearly 28,000 people came to see him in Los Angeles on Monday).

Sanders, for his part, has taken steps to improve on a set of issues that dogged him early in the campaign. In response to feedback from Black Lives Matter activists, who have disrupted two of his events, he recently unveiled a "racial justice" platform. He also hired a Symone Sanders, a young black activist who had criticized his rhetoric on race and inequality, as a national press secretary. It's looking like a campaign that thinks on its feet. And after Tuesday, Team Clinton is officially on notice.

How the Midwest's Corn Farms Are Cooking the Planet

A new study finds that the Corn Belt's emissions of a potent greenhouse gas are way underestimated.

| Wed Aug. 12, 2015 6:00 AM EDT

I've been thinking a lot recently about how fertilizer from the Midwest's big corn farms seeps into streams and causes trouble—fouling water supplies in Columbus, Toledo, Des Moines, and 60 other towns in Iowa, and generating a Connecticut-sized dead zone at the heart of the continental United States' most productive fishery, the Gulf of Mexico. (Farms in the region also plant soybeans, but corn is by far the bigger fertilizer user.) But there's another way the Corn Belt's fertilizer habit damages a common resource: by releasing nitrous oxide (N2O), a greenhouse gas with nearly 300 times the heat-trapping power of carbon dioxide.

Scientists had been undercounting nitrous oxide emission in the Corn Belt by about 25 gigagrams annually—the equivalent of about 1.6 million cars on the road.

It turns out that the region's farms are likely generating much more nitrous oxide than scientists previously thought, according to a new peer-reviewed study by a team of researchers from the University of Minnesota, Yale, and the US Department of Agriculture.

Scientists had assumed that most nitrous oxide emissions from farming occurred at the soil level—some of the nitrogen fertilizer applied onto farmland vaporizes into nitrous oxide. But as citizens of Des Moines, Columbus, and the Gulf coast know well, nitrogen fertilizer doesn't stay in soil; a portion of it leaches into streams. And some of that escaped nitrogen, too, transforms into nitrous oxide.

To measure how much, the team, led by University of Minnesota researcher Pete Turner measured N2O emissions at 19 streams over a two-year period in ag-intensive southeastern Minnesota. They found that standard greenhouse gas emission measures, such as those used by the Intergovernmental Panel on Climate Change (IPCC), have been undercounting these "riverine" emission sources by a factor of nine; and overall N2O emissions from the area are underestimated by about 40 percent.

While they only took measurements in one small part of the US Midwest, the researchers write that other regions of the globe have similar conditions: large swaths of land dominated by fertilizer-intensive farming. Such areas include the rest of the US Corn Belt plus parts of China, Europe, and India. These industrial-scale farming regions, which together make up a landmass of about 580 million acres (nearly six times the size of California), are the globe's most potent sources of nitrous oxide, and we're likely drastically undercounting their total emissions, the study suggests.

Altogether, the paper estimates, typical assessments undercount nitrous oxide emission in the Corn Belt by about 25 gigagrams annually. According to my back-of-the-envelope calculation, that's the equivalent of about 1.6 million cars on the road over a year (assuming that 1 gram of nitrous oxide has the heat-trapping power of about 300 grams of carbon dioxide, and that the average passenger car burns through 4.75 metric tons of CO2 equivalent each year).

So efforts to rein in fertilizer runoff in the Corn Belt aren't just about cleaner water and lower filtration bills for the area's urban residents, or a more vibrant Gulf of Mexico fishery. They're also about stabilizing the climate. Back in 2013, I profiled Ohio farmer David Brandt, who has innovated a method for churning out bumper harvests using much less fertilizer, leading to much less runoff.

Are Your Food Ads Racist?

A new study finds that junk food ads disproportionately target black and Hispanic children.

| Wed Aug. 12, 2015 6:00 AM EDT

Junk food companies are spending a disproportionately high percentage of their marketing budgets on ads for black-targeted television channels, according to a new study from the University of Connecticut's Rudd Center for Food Policy and Obesity.

Spanish-language television is also a draw for junk food companies, although to a lesser degree overall.

The study defines black-targeted TV channels as those with a "high proportion of black individuals in the audience and/or whose ads were viewed disproportionately more by black teens relative to white teens." The contrast is stunning: Black children see at least twice as many ads for sweets and sodas compared with white children.

Check out the results in the infographics below, and to see the full results of the study, click here.

infographic
University of Connecticut Rudd Center for Food Policy and Obesity
infographic
University of Connecticut Rudd Center for Food Policy and Obesity

 

Jeb Bush Just Helped This Dude Make the Worst Mistake of His Life

#Jeb4Prez is not a good look.

| Tue Aug. 11, 2015 5:44 PM EDT

A Pennsylvania man with a strong devotion to Jeb Bush and bizarre viral videos just got the Republican presidential candidate's name tattooed on his neck.

Vic Berger's new ink job is the result of an internet promise he made in July, pledging to go through with the tattoo no one asked for once a Vine he created attracted one million loops.

 

Upon learning of Berger's tattoo goals, Bush actually took to Twitter to encourage followers to help turn this unfortunate stunt into an indelible reality.

Let's just hope Berger's tattoo is a lame temporary one.

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The Brownback Crash Continues in Kansas

| Tue Aug. 11, 2015 5:18 PM EDT

Menzie Chinn updates us today on how things are going in Sam Brownback's Kansas. Answer: not so good. The chart on the right compares Kansas to the rest of the country using coincident indexes, an aggregate measure of economic performance tracked monthly by the Philadelphia Fed. It consists of the following four measures:

  • Nonfarm payroll employment
  • Average hours worked in manufacturing
  • Unemployment rate
  • Wage and salary disbursements deflated by the consumer price index

The index is set to 100 at the beginning of 2011, when Gov. Brownback took office. Brownback instituted an aggressive program of tax cuts and budget reductions, promising that this supply-side intervention would supercharge the state's economy. But the reality has been rather different. Kansas has underperformed the US economy ever since Brownback was elected.

Why is that? Is the Fed using the wrong employment data? Chinn says no: "The decline shows up regardless of whether employment is measured using the establishment or household surveys." Is it the weather? "Drought does not seem to be an explanation to me." How about the poor performance of the aircraft industry? "Evidence from employment data is not supportive of this thesis."

So what is it? "I would argue much of the downturn especially post January 2013 is self-inflicted, due to the fiscal policies implemented." Surprise! I wonder if Kansans will ever figure this out?

Scott Walker's Abortion Flimflam Explained! (Maybe.)

| Tue Aug. 11, 2015 2:00 PM EDT

I had almost given up on anyone helping me understand what Scott Walker meant when he explained why he opposed abortion exceptions not just for rape and incest, but also to save the life of the mother. "There are many other alternatives that can also protect the life of that mother," Walker said during Thursday's debate. "That's been consistently proven."

But then a reader came to my rescue, and it turns out that Jonathan Allen had it right in the first place. It really does derive from the Catholic doctrine of intent in medical care. Bryan Fischer of the American Family Association provides the nickel explanation:

The reality [] is that an abortion is never necessary to save the life of the mother. This is, quite simply, a choice that a mother and her doctor never have to make, and Ms. Kelly has contributed to the already widespread ignorance on this subject.

The nearest circumstance would be what are called ectopic pregnancies, the anomaly in which the fertilized egg attaches to the Fallopian tube and never implants in the womb of the mother. Removal of the Fallopian tube is necessary to preserve the mother’s life and thus is a procedure that indirectly — not directly — causes the death of an unborn child. This technically is not even an abortion, because the procedure is done for the purpose of removing the Fallopian tube, not killing the baby.

As Lauren Enriquez writes, “The abortion procedure is not — ever — necessary to save the life of a mother...[A] true abortion — in which the direct intention is to end the life of a human being — is not a treatment for any type of maternal health risk.

Now this explanation I understand. The key step in this tap dance is to declare that some procedures that terminate a pregnancy aren't "true" abortions. Even if you know ahead of time that a procedure will abort the fetus, it's not really an abortion as long as abortion isn't your intent.

In other words, I just didn't have my cynicism meter turned up high enough. When Walker said there are always "alternatives" that can protect the life of the mother, he was only talking about true abortions. He wasn't talking about medical procedures that kill the fetus only as a side effect. Those aren't true abortions, so they're not part of the class of procedures for which there are alternatives.

Yeesh. If this is really the explanation, it takes political misdirection to a new level. All that's left now is to explain what Walker meant by "This has been consistently proven." That makes it sound very science-y, but this has nothing to do with science. It has to do with the meaning of the word "abortion." Walker has chosen a specific term-of-art definition that's quite different from how most people understand the word. This allows him to say something that seems to mean one thing but actually means another.

Donald Trump, the Tea Party, and Political Correctness Have All Collided in 2015

| Tue Aug. 11, 2015 1:02 PM EDT

Aside from conservatism (duh), Alan Abramowitz says the strongest predictor of support for the Tea Party is racial hostility. Paul Krugman says he thinks Donald Trump supporters are basically just tea partiers. Put these together and you get this:

So maybe Trump’s base is angry, fairly affluent white racists — sort of like The Donald himself, only not as rich? And maybe they’re not being hoodwinked?

Now, you might ask why angry racists are busting out of the channels the GOP constructed to direct their rage. But there, surely, we have to take account of two things: the real changes in America, which is becoming more socially and culturally diverse, plus the Fox News effect, which has created an angry white guy feedback loop.

Maybe. Here's a data point in favor of Krugman's thesis: the rapturous response Trump gets whenever he says he has no time for political correctness. It was one of the biggest applause lines he got in Thursday's debate. And while there are legitimate complaints to be had about some of the more extreme versions of language policing, for most people their real issue with it is that it forbids them from delivering casual slurs—that everyone knows are true—about blacks or women or Muslims or gays or whatever. They've been doing it all their lives, and they think it's ridiculous that they have to watch themselves in public lest someone think they're racists. Trump appeals to that sentiment.

I should add that this is entirely consistent with the notion that Trump's strength comes fundamentally from his appeal to the conservative culture of grievance and resentment. After all, what are tea partiers so resentful of? Wall Street banks? Maybe, but they sure don't seem to favor any serious action to rein them in. Corrupt politicians? Could be, but they keep electing them to Congress even if they grumble about it. Middle-class wage stagnation? Probably, but it can't be too big a deal since they consistently vote for politicians who are dedicated to doing nothing about it.

At a gut level, the answer is that they think "normal" American culture is under attack. Straight, white, Christian men used to run this country and did a pretty good job of it. But now every minority group in the country wants a piece of the pie, and they all blame "white supremacy culture" or "rape culture" or "heteronormative culture" for their problems. And what's worse, no one is even allowed to tell the truth about what this really means. Mexicans come pouring across the border but you get in trouble for just plainly saying what everyone knows: most of them are criminals and should be sent back. Muslims blow up the World Trade Center, but woe betide anyone who makes the common sense observation that we should keep a close eye on mosques because most of them are terrorist breeding grounds. Blacks commit violent crimes at higher levels than whites, but we all have to pretend this is only because whites have been keeping them down for so long. And if you make a harmless joke about some woman having a great body? It's a compliment! But the feminazis will be all over you like bees in a hive.

This is what a lot of them resent. It's even understandable: everyone is uncomfortable being told that something they're used to doing is now considered insulting. Certainly Donald Trump understands it. When he says America no longer has the luxury of worrying about political correctness, his supporters couldn't agree more.

Meet the (Potential) Democratic Candidate Who Thinks Bernie Sanders Isn't Liberal Enough

Harvard's Larry Lessig is exploring a presidential bid. His platform is pretty unique.

| Tue Aug. 11, 2015 11:23 AM EDT

An outspoken Cantabrigian is launching an exploratory committee for president on a platform of breaking a "rigged system" that's fueling runaway inequality. Unfortunately for progressive activists, it's Harvard professor Lawrence Lessig, not Elizabeth Warren.

Lessig, who says he'll jump into the race if he can raise $1 million by Labor Day, has spent much of the last four years fighting what he considers the pernicious influence of money in politics ushered in by the Supreme Court in the Citizens United case. The two leading candidates for the Democratic nomination, former secretary of state Hillary Clinton and Vermont senator Bernie Sanders, have both promised to appoint Supreme Court justices who oppose Citizens United. But Lessig thinks Sanders et al. aren't going far enough. His platform consists of one item—the "Citizens Equality Act of 2017," which is sort of an omnibus bill of progressive wish-list items. It would make election day a national holiday, protect the right to vote, abolish political gerrymandering, and limit campaign contributions to small-dollar "vouchers" and public financing. After Congress passes his bill, Lessig says he'll resign.

Lessig has to hope his newest political venture will be more successful then his 2014 gambit, in which the Harvard professor started a super-PAC for the purpose of electing politicians who supported campaign finance reform. The aptly named Mayday PAC raised and spent $10 million, but only backed a single winner—Rep. Walter Jones (R-N.C.) who was virtually assured of re-election in a deep-red district.

Here's Lessig's announcement video: