GDP Meltdown

Now we know why the economy feels a whole lot worse than the official statistics suggest — and it's not because our feelings are off kilter:

The economy at the end of last year contracted at a far faster rate than initially estimated, a government report released Friday said.

....Output fell 6.2 percent at an annualized rate in the fourth quarter of 2008, revised downward from a previous estimate of a 3.8 percent decline. The drop was even steeper than many economists had feared — the consensus estimate had been a 5.4 percent decline — and was much lower than the 0.5 percent contraction from the previous quarter.

That's an enormous revision.  I wonder how Commerce screwed up so badly?

Apparently the answer is that they miscounted business inventories.  No telling how.  But the good news, such as it is, is that this means inventories are lower than we thought.  And since inventory overhang keeps businesses from ordering more stuff, the lower number means that maybe things will pick up slightly more than we expect this quarter.  Maybe.

CPAC: Bumper Stickers from the Far Side

The Conservative Political Action Conference, the nation's largest annual meeting of conservative activists, brings together right-wingers of different backgrounds, viewpoints, and levels of respectability. A good way to get a sense of the milieu at the conference, which is going on now in Washington DC, is to walk the exhibition hall, where exhibitors try to convince passers-by that the gays, the immigrants, the baby-killers, the UN, the Muslims, Al Gore, and/or Barack Obama are trying to ruin America. Below, a collection of bumper stickers, fliers, and handouts gathered from the hall.

Cap and Trade Revenue

This is from the budget outline released by the Obama administration on Thursday:

After enactment of the Budget, the Administration will work expeditiously with key stakeholders and Congress to develop an economy-wide emissions reduction program to reduce greenhouse gas emissions approximately 14 percent below 2005 levels by 2020....

I wonder what their economic assumptions are here?  Here's the revenue timeline, starting in 2012:

At first glance, this strikes me as odd.  With only slight variations, it assumes $80 billion in revenue every year between 2012 and 2019.  But that doesn't really make sense.  What you normally expect with a carbon trading program is that you begin with a high cap (carbon emissions in 2012 will probably start out 10% higher than 2005 emissions) and then ratchet the cap down every year after that.  As the cap goes down, the price of permits goes up.  It's true that the number of permits goes down at the same time, but this shouldn't be enough to make up for the higher permit price.  Overall, until the green technology buildout hits a critical mass, the revenue from the program should go up considerably over time.

But not in this one.  I wonder why?

Medicaid, Sexing It Up Since 2010

Obama's 2010 budget overview is out, and rest assured the religious right will make hay from certain HHS family planning provisions. Says RH Reality Check:

While the overview is generally non-specific, it does make clear that the Medicaid family planning expansion—which would extend Medicaid coverage for family planning services to non-pregnant women–is included (see page 127). The expansion, which would enable states to extend coverage to non-pregnant women without first seeking a waiver from the federal government, was first included in the economic stimulus package

Will the feds also drop their finger-wagging insistence on abstinence-only sex-ed? It's possible, since the budget outlines "fund[ing] models that stress the importance of abstinence while providing medically accurate and age-appropriate information to youth who have become sexually active."

It's a start. And even though Tay Wiles' latest reproductive health legislation updates are freaking me out, at least Obama's HHS Secretary isn't blogging about how anti-abortion he is, yes?

View the full 2010 Budget overview here. (pdf)

Ships Spew Killer Pollution

In fact ships pollute nearly half as much as all the world’s cars. We're talking smog-type pollution. The kind that causes premature deaths from heart disease and asthma. A new study [pdf] estimates the total contribution of commercial maritime shipping and it adds up to about 2.2 million pounds of particle pollution a year.

Since more than 70 percent of shipping traffic takes place within 250 miles of the coastline, ship spew is a serious health issue for nearly half the people of the world—the number who live near the coast [pdf]

The problem starts with sulfates, the same gunk emitted by diesel engines on land. Sulfates already have some measure of regulations attached to them. But more than half of shipping pollution comes from organic pollutants and sooty black carbon. These aren't targeted by today’s regulations.

When you consider that our world is a giant fluid dynamics experiment, then it makes sense that what happens at sea flows ashore. And vice versa. There are all kinds of ways to address this problem. Kevin Drum talks cap and trade and that could work for shipping too. But keep in mind that one upside to the global downturn in the economy is decreased shipping and therefore cleaner air. So why not recast the recession as a long-overdue refreshment for our weary planet?

Palin's Media Bash-a-thon Continues

Recently, clips of an interview Sarah Palin gave to conservative filmmaker John Ziegler caused a stir because of Palin's comment that the media was on a mission to "seek" and "destroy" her vice presidential candidacy. At the Conservative Political Action Conference on Thursday, Ziegler was on hand to show the full, unedited interview he did with Palin on January 5th in the governor's Wasilla, Alaska, home. Lasting roughly 40 minutes, the interview is full of fusillades launched at the mainstream media, many of most of which have already become public but some of which have not. Below are some moments from Palin – she calls the scandal surrounding the birth of her son Trig "the epitome of stupidity," defends her interview with Charlie Gibson, and says that she would do it all over again.

Tattoo Removal

Greg Sargent watches wingnut TV so you don't have to:

Conservatives are hammering the House’s new $410 billion spending bill because it contains $200,000 for what they’re derisively referring to as “tattoo removal.” Fox News’ Sean Hannity, Drudge, and at least one GOP official on MSNBC, among others, have been all over this today.

....The tattoo pork story kicked off in earnest when the New York Post flagged the “tattoo removal” pork in a story this morning. It was subsequently pushed by Drudge with the headline: “Congress: Big Bucks To Canoes And Tattoos.”

I hardly need to tell you that this is yet another crock to go along with volcano monitoring, field mouse protection, and the train to Las Vegas.  Read Greg for the whole story.  But I suppose resistance is futile.  Nothing is going to stop conservatives from combing through this bill forever looking for minusucle items to fan up some faux outrage over.  They're a tired bunch these days, and this is pretty much all they've got left.

Raining Money

James Kwak explains why the latest Treasury rescue plan is great for Wall Street, not so great for the rest of us:

There is nothing inherently wrong with convertible preferred stock. In Silicon Valley, for example, venture capitalists almost always invest by buying convertible preferred. The idea is that in the case of a bad outcome, the VCs are protected, because their shares have priority over the common shares held by the founders and employees....However, in a good outcome, the VCs can exchange their preferred shares one-for-one for common. So if the company gets sold for $100 million, the VCs convert, and they now own 50% of the common stock, so they get $50 million.

....The key in the Silicon Valley example is that the VCs have the option to convert or not. The Treasury Department's new Capital Assistance Program has this precisely backwards....The bank, AT ITS OPTION, can choose to convert the preferred shares into common, at 90% of the average closing share price during the 20 days ending on February 9.

....What's wrong with this? Well, nothing, if your goal is to give banks money. What you've just done is stick the government with the downside risk — we could get paid back in worthless stock — while the bank shareholders get all the upside potential. You've done this by giving the bank, for free, an option that has value. Back of the envelope, Peter [Boone] thinks this option is worth about 65 cents per dollar of money invested. (It's worth so much because bank stocks are so volatile these days.) Put another way, for every $10 billion of capital we invest this way, we are giving away another $6.5 billion.

The rest is a little complicated but worth reading anyway.  "There are some very clever people in Treasury these days," Kwak says, and they're expending a lot of brainpower figuring out ever more elegant ways to spend taxpayer dollars in ways that won't offend the delicate sensibilities of the folks getting the checks.

Obama's Budget: $3.5 Trillion Well Spent?

President Obama outlined his $3.55 trillion budget (PDF) for fiscal year 2010 Thursday. Not surprisingly, Democrats and Republicans almost immediately began wrangling over the spending plan: House Minority Whip Eric Cantor called it "misguided" and dangerous," and while Nancy Pelosi applauded the end of the Bush tax cuts for the wealthy, she said she'd prefer to see them ended sooner.

But at least one economist thinks it's money well spent. Robert Greenstein, executive director of the Center on Budget and Policy Priorities, was almost effusive in his praise of Obama's budget: