2010 - %3, January

Chart of the Day: Housing Bubbles

| Mon Jan. 4, 2010 1:48 PM EST

Ben Bernanke is famous as the originator of the theory of the "global savings glut" as a partial explanation for the previous decade's1 housing bubble, and in his speech yesterday at the American Economic Association he put up this chart to demonstrate his point. Basically, it shows that big current account deficits are moderately correlated with housing bubbles in various countries around the world. Spain, Britain, and the United States ran big deficits, which means that lots of overseas money was flowing in and helping to finance a boom. Germany and Switzerland ran big surpluses, which means that money was flowing out and housing prices stayed fairly flat.

That's only part of the story, of course, but it's always struck me as an important part. If huge amounts of cheap money are flowing into an economy, then all the rules in the world aren't going to stop it from inflating something, and housing is always a good candidate. At the same time, it's also incomplete. Ireland ran a mostly balanced current account and suffered one of the biggest housing bubbles anyway. What's more, in a sense it doesn't matter as much as it once did since this kind of contagion spreads so fast now. Germany may have run current account surpluses, but its banks bought up plenty of American mortgage securities and insured them using credit default swaps from American insurance companies, so when the bubble burst they were hurt every bit as badly as we were.

And of course, although rules can't stop hot money from inflating assets completely, they can moderate its effect. As Paul Krugman says: "Bernanke should have been more forthright about the Fed’s undoubted failures: Greenspan’s rejection of advice about the risks of subprime lending, and the failure of top officials, BB included, to recognize the housing bubble in real time." America needs to get its long-term trade deficit under control, but we also need to get a whole lot more serious about regulating leverage throughout the entire economic system in simple and transparent ways. These aren't competing goals, they're complementary ones.

1Isn't it nice to finally be able to refer to this cleanly as the "previous decade"?

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Obama on Terror

| Mon Jan. 4, 2010 12:21 PM EST

Peter Baker reviews Barack Obama's anti-terror strategy in the New York Times magazine:

Perhaps the biggest change Obama has made is what one former adviser calls the “mood music” — choice of language, outreach to Muslims, rhetorical fidelity to the rule of law and a shift in tone from the all-or-nothing days of the Bush administration. He is committed to taking aggressive actions to disrupt terrorist cells, aides said, but he also considers his speech in Cairo to the Islamic world in June central to his efforts to combat terrorism. “If you asked him what are the most important things he’s done to fight terrorism in his first year, he would put Cairo in the top three,” Rahm Emanuel, his chief of staff, told me.

The policies themselves, though, have not changed nearly as much as the political battles over closing the prison at Guantánamo Bay and trying Khalid Shaikh Mohammed in New York would suggest. “The administration came in determined to undo a lot of the policies of the prior administration,” Senator Susan Collins of Maine, the top Republican on the homeland-security committee, told me, “but in fact is finding that many of those policies were better-thought-out than they realized — or that doing away with them is a far more complex task.”

....Michael Hayden, the last C.I.A. director under Bush, was willing to say publicly what others would not. “There is a continuum from the Bush administration, particularly as it changed in the second administration as circumstances changed, and the Obama administration,” Hayden told me. James Jay Carafano, a homeland-security expert at the Heritage Foundation, was blunter. “I don’t think it’s even fair to call it Bush Lite,” he said. “It’s Bush. It’s really, really hard to find a difference that’s meaningful and not atmospheric. You see a lot of straining on things trying to make things look repackaged, but they’re really not that different.”

Most former Bush officials, Baker says, aren't willing to admit this because they're afraid of retaliation from the Cheney wing of the party. But it seems largely true to me. And even though I'd prefer a little more in the way of concrete changes, those "atmospherics" are probably more important than Carafano gives them credit for, since the fight against terrorism is very largely one of moderating the conditions that allow groups like al-Qaeda to recruit and function in the first place. Technically, it might not matter whether we keep terror suspects in Guantanamo or Illinois, but if closing Gitmo deprives Osama bin Laden of a rallying point for his troops then it's worth a thousand drone attacks in the hinterlands of Afghanistan.

On another note, conservative moderates are a real bunch of cowards, aren't they? Liberal moderates sure don't have any problem pissing off the lefty wing of their party.

Is the NFL a Monopoly?

| Mon Jan. 4, 2010 11:42 AM EST

The Supreme Court is slated to hear an appeal soon from a company that lost an NFL contract:

On Jan. 13, the pro football owners will be asking the high court to rule for the first time that the NFL is shielded from antitrust laws because, while its teams compete on the playing field, they function in business as a "single entity."

....In its appeal, the NFL asked the justices to rule broadly that a pro sports league can be "deemed a single entity" and is thereby immune from the antitrust laws "with respect to core venture functions." This should include matters such as "where to locate its clubs" and "the terms and conditions of player employment," the league's lawyers said.

Obviously I'm confused about something, but if the NFL is a "single entity" — i.e., the only pro football entity in America — shouldn't that mean they're especially subject to antitrust laws, not immune from them? What am I missing here?

After Flight 253, Should Obama Ramp Up on Terrorism Politics?

| Mon Jan. 4, 2010 11:00 AM EST

Simon Rosenberg, who heads the New Democratic Network, has an interesting take on the failed Christmas Day terrorism attack. He notes that this bungled al Qaeda-linked attempt to blow up an airliner flying to Detroit from Amsterdam "could radically impact Washington's agenda in 2010" and "may very well knock other important priorities off the legislative calendar." That calendar is already overflowing with the completion of health care reform, financial reform, climate change legislation, and Obama's top priority for the election year of 2010: jobs, jobs, and jobs. But Rosenberg contends this could be a blessing: 

Rather than fighting the consolidation of the 2010 agenda it may be in the interest of the governing party to embrace it, and not look defensive, as if they have other things they would rather be talking about. Peace and prosperity drive most elections in the US, and 2010 may end up being no different. The Republicans are already jumping on the Christmas Day attempt, and will no doubt spend the year ahead trying to reorient the national discussion to an area—national security—they feel will advantageous for them. But given their actual record in the decade just past, and the extraordinary mess they left for others to clean up, the Republicans may rue the day the debate became about national security, for there is no way to have this debate without talking about the epic foreign policy and security failures of the Bush era, something they simply cannot disown.

So rather than wishing this new issue environment away, the President and the Democrats might decide rather to make it their own, and spend their political year making their case for how they hope to bring peace and prosperity to a country desperately seeking it.

Perhaps. The problem that Democrats may encounter is that it is easy for Republicans to out-war them. If President Barack Obama does embrace this issue as a top-of-his-list priority, regardless of the actions he takes, GOPers will claim it is not enough and he should do more (such as keep Gitmo going). It doesn't matter that Bush, Cheney & Co. screwed up big-time on Iraq, Afghanistan, and the battle against al Qaeda. When it comes to national security, it's too easy for demagogues to out-shout anyone who takes a reasonable approach. Certainly, Obama must do everything he can to make sure air travel is safe—and to demonstrate that protecting Americans is the top priority of this White House. (His initial response was far more fierce than George W. Bush's reaction to the infamous shoe bomber.) But Obama will have to keep pushing ahead on other fronts: the economy, climate change, health care, Afghanistan, financial reform. An opportunity or not, Flight 253 has handed Obama's over-burdened presidency yet one more heavy obligation.

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5 Creative Uses for: Eggs

| Mon Jan. 4, 2010 7:00 AM EST

Happy new year! My first resolution for 2010: Clean my fridge. Which, after a holiday season full of goodies, is kind of an archaeological undertaking. I'm going to compost as much as possible, and when it's not too gross, reuse things in other way. Eggshells are especially versatile. If you have eggs that have passed their expiration date, don’t chuck 'em. Try one of these ideas instead, courtesy of AltUse.com:

  1. Grow seedlings. Break eggs so that you have about two-thirds of the bottom part of the shell in tact. Rinse out. Poke a hole in the bottom with a pushpin. Fill each egg with some soil, and plant a few seeds in each egg. Place eggs back in the carton. Once the seeds are big enough to plant, put them into the ground, shells and all. The shells will act as fertilizer.
  1. Clean your disposal. Put an egg or two down your disposal—the sharp shells clean the blades.
  1. Fertilize plants. Crush five dry eggshells into a powder and add to soil before planting. Since eggs are made up mostly of calcium and magnesium, they're great for plants. To make a liquid fertilizer, just keep your eggshells in a watering can. Add water, soak for several days, then use the water for your plants. Water from boiling eggs works, too.
  1.  Scrub pots and pans. Use crushed eggshells instead of steel wool. 
  1. Make better coffee. Add a few crushed eggshells to your coffee before brewing for a smoother taste. An old cowboy trick.

Music Monday: 15 Minutes With Alex Ebert (aka Edward Sharpe)

| Mon Jan. 4, 2010 7:00 AM EST

When Alexander Ebert performs with his new, 10-plus-member band Edward Sharpe and the Magnetic Zeros, he does so barefoot, sometimes shirtless, and with his long wavy hair tousled into a messy bun of sorts. (Rolling Stone referred to the ensemble as an "L.A. hippie clan.") Ebert's lack of footwear and clothing facilitate his desire to gleefully jump about the stage leading a unique ensemble of vocalists and horn, piano, accordion, tambourine, and banjo players that put on warm yet captivating live shows. After releasing their debut album Up From Below last August, the Zeros launched a cross-country tour and sold out nearly every show to hand-clapping, foot-stomping fans who can't get enough. Now, they're working on an epic, 12-part rock opera and hoping to put out one, if not two new albums this year. I spoke with Ebert, 31, about the origins of his talents, the dark side of signing to Virgin Records with Ima Robot, and what it means to be driving what some consider a folk-rock revolution.

Mother Jones: How did you first become interested in music?

Alexander Ebert: I took a lot of long summer road trips with my dad, and the mix of music we listened to on the road skipped around from classical to Western to new age to hyper-cinematic. You know, Patsy Cline, Willie Nelson, Johnny Cash, and 100 others. But when I was 7, I got really into hip-hop and was all about rapping and tagging. When I was 13 or 14, I started taking rap more seriously. I had loose affiliations with other hip-hop groups and some inroads, but I was too young and I lost interest. After '94 I became totally disenchanted. The music coming out at that time was redundant and boring to me. It was no longer about the grit of making money. It was about the gloss and floss of having too much money.

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Jonathan Mann's 365 Songs in 365 Days

| Mon Jan. 4, 2010 6:30 AM EST

Jonathan Mann, a.k.a. the Song A Day guy, has more than a little musical chutzpah. Not only did the Berkeley, California, songwriter compose a new ditty every single friggin' day during 2009, rain or shine, in sickness or health, but he also created daily music videos to post on his website, called (WTF?) RockCookieBottom.com. Some are simple, some reasonably ambitious; a handful are truly inspired while another handful are shameless ploys to win contests or get media attention—and he's gotten his share, particularly on MSNBC. When you write a song every day, as Mann intimated to Rachel Maddow—who'd invited him on her show to perform his ode to economist Paul Krugman—a few of them are bound to be pretty lame. But occasionally you'll get a gem.

Rather than go back and listen to all 365 songs Mann wrote in 2009, I invited him to sum up the year for Music Monday, giving us his best and worst for each of the past 12 months. By the by, what began as a motivational experiment begat a lifestyle. Logging into my email on New Year's Day, I found a message from Mann in my inbox. Subject: "Song A Day #366!" In the past year, Mann also formed a band—the Rock Cookie Bottoms—with whom he performed his best creations live at an Oakland club. Recently the group went into the studio to record a five-song EP titled Barefoot in the Family Tree. You can download any of his songs, and will soon be able to purchase the EP, through his other website. And now, heeeere's Jonny….

We're Still at War: Photo of the Day for January 4, 2010

Mon Jan. 4, 2010 6:05 AM EST

Army Chief of Staff Gen. George W. Casey Jr. displays some holiday spirit Dec. 21, as he speaks to the Soldiers of 1st Armored Division in Germany, about their role in their upcoming deployment to Iraq and how the Afghanistan troop surge will affect it. (army.mil.)

Need To Read: January 4, 2010

Mon Jan. 4, 2010 5:58 AM EST

Today's must reads:

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Ping Pong Update

| Mon Jan. 4, 2010 12:16 AM EST

Will House and Senate Democrats convene a conference committee to hash out differences between their healthcare bills? Or will the House simply vote on the Senate version and be done with it? Jon Cohn says it's going to be neither — and both:

According to a pair of senior Capitol Hill staffers, one from each chamber, House and Senate Democrats are “almost certain” to negotiate informally rather than convene a formal conference committee....“There will almost certainly be full negotiations but no formal conference,” the House staffer says. “There are too many procedural hurdles to go the formal conference route in the Senate.”

....“I think the Republicans have made our decision for us," the Senate staffer says. "It’s time for a little ping-pong.”

“Ping pong” is a reference to one way the House and Senate could proceed. With ping-ponging, the chambers send legislation back and forth to one another until they finally have an agreed-upon version of the bill. But even ping-ponging can take different forms and some people use the term generically to refer to any informal negotiations.

If this turns out to be true, then presumably one chamber or the other will pass the renegotiated bill and then send it directly to the other chamber. At least, that seems more likely to me than literally ping-ponging the bill back and forth several times.

In any case, this seems like a reasonable plan. Republicans have made it clear that they plan to erect every possible procedural hurdle they can think of, even including objections to routine things like naming conference committee members. So, since they've plainly given up on trying to influence the bill itself and are merely trying to obstruct and delay, there's really no reason why Democrats shouldn't play by the same rules and try to avoid obstruction any way they can. Congress has other things to do, after all, and spending weeks playing procedural games with Republicans keeps them from getting to it. It's time to put healthcare to bed and start spending time on climate change, financial regulation, and the 2011 budget instead. Enough's enough.