Among the several ways that recession in Europe could hurt the global economy is via the specter of bank deleveraging. As you may recall, one of the proximate causes of the Great Panic of 2008 was the fact that American banks had run up huge amounts of leverage, something that makes the banking system extremely vulnerable to sudden shocks — like, say, a housing bubble bursting.

Well, European banks were even more leveraged than American banks. The top chart on the right, courtesy of a new IMF report, shows that American bank leverage peaked in 2008 at a ratio of about 25:1, and since then has dropped to a much more sustainable 15:1. European banks, even after four years of deleveraging, are still at 25:1. This means they remain vulnerable to sudden shocks — like, say, Spain going bust — so they'll need to continue deleveraging for several more years.

There are basically two ways they can do this. First, they can raise money by selling off assets. This is OK unless it turns into a fire sale, which is always a possibility. Second, they can reduce the amount of credit they make available. The bottom chart on the right shows the IMF's estimate of credit contraction over the next couple of years.

The good news for Americans is that this probably won't affect us directly very much: Most of the credit contraction will happen in Europe, and American corporations have deep access to capital markets to replace whatever they lose from European banks. There is, however, a potential indirect effect via derivative exposure, and also some more general exposure at a macro level if bank deleveraging keeps Europe's economy in a rut.

Still, the IMF doesn't think the credit contraction in Europe is likely to be all that severe: "The implied decline in the credit-to-GDP ratio [] sits between the relatively moderate experience in Japan in the 1990s and the more pronounced credit contraction in the United States in the earlier part of the financial crisis." As long as European banks avoid a "synchronised and large-scale deleveraging" — i.e., a fire sale of assets — things will likely stay under control.

In other words, the big danger remains not sluggish growth in Europe, which everyone has already priced in, but the possibility of panic. And with sovereign debt still extremely wobbly in the south, monetary policy still too tight, austerity still the order of the day, and bank leverage still high — with all that still in front of us, panic remains a distinct option. A eurozone crackup is still a real possibility.

"Green completion" equipment in the field

The Obama administration took a heavy swing in the ongoing battle over fracking today by imposing new rules that would, for the first time, restrict the release of smog-causing pollutants from natural gas wells. But the law turns a blind eye to greenhouse gases released by fracking; the EPA admits fracking accounts for 40 percent of the nation's overall methane (an even stronger greenhouse gas than carbon dioxide) emissions.

By 2015, all fracked wells will be required to implement "green completion" equipment, which catches toxic gases like benzene on its way out of the earth and into the atmosphere. But the rule does not directly limit emissions of greenhouse gases.

David Doniger of the Natural Resources Defense Council said the EPA's move to exclude greenhouse gases from the ruling was likely political: "If you're controlling toxic air pollutants, right-wing ideologues are back on their heels, but when the EPA goes after climate change, all the right-wing nuts come out of the woodwork." Still, Doniger stressed that while the rule could have gone further, the mandated equipment would indirectly take a big bite out of methane emissions.

The announcement has already excited many in the areas of Pennsylvania where fracking is a fact of daily life. "As a resident near a gas field, air pollution is way scarier than water well contamination," said Susquehanna County environmental organizer Rebecca Roter, referring to the other major concern many locals have about fracking.

Matt Walker of Pennsylvania's Clean Air Council stressed that while the rule is a boon for health concerns, further regulation was needed to curb the release of gases, like carbon dioxide and methane, that contribute to global warming. "We need to keep pushing," he said. "We hope the EPA will set standards for greenhouse gases in the future."

Gina McCarthy of the EPA said the mandate would yield a 90 percent reduction in air pollutants released as a byproduct of the fracking process at some 13,000 gas wells nationwide.

"Green completion" equipment is already mandatory in some states, and is already in place at nearly half the nation's natural gas wells, McCarthy said, but the three-year rollout period was requested by industry leaders to allow all well operators time to purchase, install, and train employees on it.

The American Legislative Exchange Council, the once-obscure organization that pairs corporations with state lawmakers to draft pro-business and often anti-union legislation for the state level, is in damage control mode. Corporate members such as McDonald's, Blue Cross Blue Shield, and Mars, Inc. have cut ties with ALEC after taking heat from a coalition of progressive groups angry over ALEC's "discriminatory" voter ID bills and controversial "Stand Your Ground" self-defense legislation that figures into the Trayvon Martin shooting in central Florida.

To push back, ALEC has turned to the conservative blogosphere for help. As PR Watch reported, Caitlyn Korb, ALEC's director of external relations, told attendees at a Heritage Foundation "Bloggers Briefing" on Tuesday that the campaign against ALEC was "part of a wider effort to shut all of us down." She asked the bloggers for "any and all institutional support" in ALEC's fight against progressive groups, especially when it came to social media. "We're getting absolutely killed in social media venues—Twitter, Facebook, Pinterest," she said. "Any and all new media support you guys can provide would be so helpful, not just to us but to average people who don't know much about this fight but are seeing us really get heavily attacked with very little opposition."

Korb educated the bloggers with a handout listing ALEC's positions on a range of issues. PR Watch, one of ALEC's loudest critics, described the handout as "riddled with errors." Here's a list of ALEC statements followed by PR Watch's responses in italics:

  • "The potential solutions discussed at ALEC focus on free markets, limited government, and constitutional division of powers between the federal and state governments." It is hard to discern what voter suppression bills, tax breaks for big tobacco, bans on unionization, protections for companies whose products injure or kill, and "Stand Your Ground/Kill at Will" laws have to do with free markets.

  • "The organization respects diversity of thought; it is a non-partisan resource for its members, which include more than 2,000 Republican and Democratic state legislators." Diversity of thought apparently refers to Republicans talking to Republicans. Although touted as "nonpartisan," when CMD launched ALEC Exposed, out of 104 legislators in leadership positions in ALEC, only one was a Democrat. It's hard to believe that ALEC phone briefs on redistricting are totally nonpartisan.
  • "Unlike in many private sector groups that offer model legislation, elected state legislators fully control ALEC’s model legislation process." As ALEC's public Task Force Operating Procedures" (PDF, p. 8) and other documents reveal, corporate members vote alongside legislators in ALEC task forces.
  • "Each state legislator and their constituents then decide which solutions are best for them and their states." For the most part, constituents have no way of knowing that corporations wrote or approved ALEC legislation behind closed doors.

Blogger outreach isn't ALEC's only response to the campaign against it. ALEC has issued a handful of statements decrying the "coordinated and well-funded intimidation campaign" against it and pledging to keep pushing its agenda. In what some progressives touted as a victory, ALEC announced this week that it is eliminating of its "Public Safety and Elections" task force, the group that pushed voter ID bills as well as Stand Your Ground laws. Korb said ALEC will soon launch a new website called "I Stand With ALEC" to rally support. "We need to start fighting back," she said.

The progressive groups waging war on ALEC, meanwhile, have no plans of letting up. "Corporate membership in ALEC isn't just destructive to democracy, it's also bad for business," Michael Keegan, president of People for the American Way, said last week. "Corporations that currently support ALEC have a choice to make: They can continue to underwrite reckless assaults on our rights and wellbeing, or they can stand up for their customers by leaving ALEC immediately."

Noted Communist Woodrow Wilson.

Rep. Allen West has been on a tear recently trying to defend his assertion that liberal Democrats are actually communists. West's argument focuses not on Democrats' commitment to the dictatorship of the proletariat or the elimination of private enterprise, but the fact that Democrats generally support public assistance and regulation of private industry. 

All of this is ridiculous, but perhaps my favorite West assertion of late is the idea that President Woodrow Wilson was a communist. Here is Mr. West's reasoning, as relayed by TPM's Eric Kleefield:

I think that if you would take the time to study the political spectrum of ideologies, you’d understand that at the turn of the [20th] century, American Communists renamed themselves as progressives. If you study the Woodrow Wilson administration, people referred to the Woodrow Wilson administration as a progressive administration.

So Wilson described himself as progressive, and progressive just means communist, so Wilson was a communist. This is fifth-grade logic.

Tim Weiner's excellent history of the FBI goes into great detail about Wilson's record on communism, but here are a few examples of how President Wilson, in real life, dealt with self-identified communists and socialists:

  • Wilson imprisoned and deported communists, socialists, and leftists for just generally holding views he found subversive.
  • Wilson threw American Socialist Party leader Eugene V. Debs, who had garnered nearly a million votes running against Wilson in 1912, in prison for speaking out against the imprisonment of anti-war leftists.
  • Wilson sent American soldiers to support Czarist forces against Bolshevik revolutionaries during the Russian civil war in 1918.
  • Wilson appointed A. Mitchell Palmer as his Attorney General. The iconic 1920 Palmer Raids resulted in mass arrests and deportations of suspected leftists of all stripes.

How many communists do you have to kill and/or throw in prison to not be considered a communist? It's not like Wilson lacks for actual flaws either, given that he was a huge racist and Confederate sympathizer, among other things.

At this point, you're probably thinking that Wilson, the self-identified progressive, might be better described as an anti-communist than a communist. But that's because you're not looking at the big picture. Wilson's assault on civil liberties eventually resulted in the formation of the American Civil Liberties Union, which—I'm about to blow your mind—was obviously the plan all along.

Partisan derangement is usually directed at a president currently in office; West is gifted in the sense that he's able to maintain a right-wing fever swamp perspective on a president elected a hundred years ago. But if a guy who locks up communists for protesting wars can't catch a break because he supports a federal income tax, the House Progressive Caucus probably doesn't have much of a chance either.  

Our story so far: Last week Hilary Rosen said Ann Romney had "never worked a day in her life." Republicans erupted in faux outrage. Being a mother is work! Rosen apologized. The outrage continued. Then Chris Hayes dug up a video of Mitt Romney saying that mothers on welfare needed to get out of the house: "Even if you have a child 2 years of age, you need to go to work....It'll cost the state more providing that daycare, but I want the individuals to have the dignity of work." Hah! So Republicans think that raising kids is only work for wealthy housewives, not for poor single mothers. Heartless bastards.

So now we have this:

A handful of House Democrats, encouraged by the recent bipartisan agreement that stay-at-home moms should be considered just as hard working as anyone in the workforce, will introduce legislation to apply that standard to mothers on welfare as well.

Under current law, raising children does not count toward the required "work activity" that must be performed by recipients of Temporary Assistance to Needy Families, the federal program that emerged from the 1996 welfare reform....The Women's Option to Raise Kids (WORK) Act, a copy of which was provided to HuffPost in advance of its introduction, would allow mothers with children ages 3 and under to stay at home with their children and continue receiving benefits.

I'm no expert on political theater, but this sure sounds dumb to me. Like it or not, my guess is that a substantial majority of Americans support the idea of work requirements for welfare recipients. And America's stay-at-home moms — many of them persuadable Democratic voters — do not like the idea of being compared to single mothers getting welfare checks. Not one bit.

Maybe this is fair, maybe it isn't. It doesn't matter. Politically it's tone deaf. Liberals would do well to let this whole idiotic affair die a natural death.

Ted Nugent appeals to his target audience.

Today, the Secret Service confirmed that it will interview right-wing shock rocker Ted Nugent in connection with his comments at last week's National Rifle Association convention in St. Louis.

This does not appear to be the first time that the Secret Service has expressed an interest in the Nuge. At the NRA's 2005 conference in Houston, I witnessed Nugent bragging about getting harassed by President George W. Bush's security detail. "I kept getting these phone calls from the Secret Service," he said, wearing fatigues and standing in front of a "Don't Tread On Me" banner on a small stage. "And I'm like, 'Oh shit, what do I do now?'" He recounted that Secret Service agents eventually showed up at a BBQ at his ranch near Crawford, Texas. Nugent thought it was a raid. "I was running around," he recalled. "I thought there was going to be a couple of guys pulling into the BBQ and shooting."

Nugent expressed no qualms about engaging in a gun battle with the heavily-armed agents. "I said, 'I've got a bunch of guys with McMillan assault rifles trained on the back of your head, so if this is a raid, you can just turn right back around.'"

But it turned out that the Secret Service had just stopped by to play target practice. Nugent said he set up bowling pins a few hundred feet away and took aim with a borrowed government rifle and pretended to shoot the director of Bowling for Columbine. "Before I shot, I went, 'In the name of the Father, the Son, and the Holy Spirit.' Michael Moore! And I blew him up. Beautiful!"

It's unclear whether Nugent had exaggerated or fabricated parts of this story, though the part about the Secret Service showing up at his ranch near Crawford seems plausible, given that George W. Bush often vacationed at his own ranch nearby. The Secret Service could not immediately be reached for comment.

"If Barack Obama becomes the president in November, again, I will be either dead or in jail by this time next year," Nugent said at last weekend's NRA convention. Or maybe he'll end up shooting off a few more rounds with the feds.

A few days ago it was Spain. Now it's Italy. Prime Minister Mario Monti announced a new 3-year economic plan today that — surprise! — shows that austerity has been bad for Italy's economy:

The plan, which must be ratified by Parliament and sent to the European Commission in Brussels by the end of the month, forecasts that Italy's gross domestic product will contract by 1.2% this year, almost three times the forecast in December.

....Yet, Italy's fiscal policy is tightening, Deputy Economy Minister Vittorio Grilli said. Rome will post a budget surplus of 0.6% of GDP next year in structural, cyclically adjusted terms....The International Monetary Fund reached a similar conclusion, saying Tuesday that Italy won't balance its budget until 2017, but that next year it will achieve a structural balance—suggesting Italy wouldn't have a fiscal shortfall if the economy were performing at its full potential.

For those who argue that austerity is choking growth, the underlying rigor isn't something to boast about.

No, it's nothing to boast about. After all, lots of countries would have balanced budgets, or something close, if their economies were cranking along at full potential. But that's the whole point: austerity economics is stifling growth, which makes it hard to balance the actual, real-life budget. If the answer to that is even further austerity, you can expect even lower growth.

But austerity is the plan anyway. Hang on tight.

Hey there, swing state resident: Does this ad look familiar?

The video, which got 1.3 million views in the last two weeks, is sponsored by the American Energy Alliance. AEA, as it turns out, is one of several pro-oil and gas interest groups spending oodles of cash on campaign advertisements in 2012, according to a new analysis by Think Progress. (MoJo's Alyssa Battistoni gets into the weeds with—and righteously fact-checks—these ads here.)

Taken together, the AEA (which is partially funded by the Koch brothers) and others have spent at least $16.75 million in advertisements. By contrast, the Obama campaign and his super-PAC have spent a fraction of that defending his energy policies. Here's how the money stacks up:

Mother Jones illustration.: Source: Think Progress; Kantar Media/Campaign Media Analysis GroupMother Jones illustration. Source: Think Progress; Kantar Media/Campaign Media Analysis Group

The Nguyens' daughter, Oanh, shows off a melon.: Photo by Kate SheppardThe Nguyens' daughter, Oanh, shows off a melon. Photo by Kate SheppardGreetings from Vietnam! I'm here for two weeks reporting on climate change adaptation, which can mean many things around the world. In the Thua Duc commune on Vietnam's southeast coast, it's meant the introduction of new watermelons.

Nhan and Chan Nguyen grow melons, peanuts, casava, and turnips here, on a patch of land off a dirt path shooting off of a dirt road that turns off from another dirt road. In other words, they're pretty far out in the rural reaches of Vietnam. Their small, tubular green melons poke out between the vines, shining in the hot afternoon sun. Ditches of stagnant water running beside the field give off a pungent, boggy smell.

For years, the couple used local watermelon seeds. But it's become harder to make money on those plants in recent years. They were prone to disease, and didn't handle screwy rain patterns very well. It used to rain for about six months each year, but now the rains can come for up to nine months out of the year. "In the past the weather was more regular, so we could use the old seeds, no problem," said Nhan. But they realized that growing melons was just getting more difficult. "We were worried and we thought about it a lot. We thought we would have to do something different."

Through a grant from Oxfam, the Nguyens and nine other families were able to start planting a different variety of watermelon instead, a more resilient variety that wouldn't suffer as much in unfavorable weather. And they were able to buy black plastic to cover the rows of seeds after planting, which helps lock water and heat in the sandy soil to coax the vines out of the ground. The project is more about adopting better agricultural methods, something that's needed with or without climate change. But the effect Oxfam is hoping to get from the project is making farmers more resiliant to whatever nature might bring them.

The cost of the projects per family was 3.5 million Vietnamese Dong—which sounds like a lot, but is only about $175 US. But it's a significant amount of money for a farmer who, even when prices are good, can only fetch 5,000 Dong ($0.25) for a kilo of melons. When prices are bad, which they've been recently due to an early storm this year, they can only get about 2,000 Dong, or $0.10. In the first year of the program in 2009, Oxfam worked with 10 families, nine of which were able to turn a profit, ranging from 1.5 million Dong ($75) to 6.9 million ($345). The international aid group has since expanded the project to 50 local families.

The Nguyens were quite excited to show me their products, plucking several small, ripe green melons from the field. They split the sun-warmed melons into eighths, dripping sweet pink juice as they passed them to eagerly awaiting visitors.

The Nguyens' watermelon field: Kate SheppardThe Nguyens' watermelon field: Kate Sheppard

Nhan cuts up melon.: Kate SheppardNhan cuts up melon.: Kate Sheppard

Yesterday I wrote a post about how expensive car batteries are. Today Brad Plumer has a post about clean energy subsidies and how they're fading out. These two things together reminded me about an energy factoid that's always struck me as slightly odd: virtually every form of energy seems to be almost as efficient as burning oil, but not quite.

For example, on either a power/weight basis or a cost basis, batteries are maybe 2x or 3x bigger and less efficient than an internal combustion engine. Not 50x or 100x. Just barely less efficient. And you see the same thing in electricity generation. Depending on how you do the accounting, nuclear power is maybe about as efficient as an oil-fired plant, or maybe 2x or 3x less efficient. Ditto for solar. And for wind. And geothermal. And tidal power.

I'm just noodling vaguely here. Maybe there's an obvious thermodynamic explanation that I'm missing. It's just that I wouldn't be surprised if there were lots of ways of generating energy that were all over the map efficiency-wise. But why are there lots of ways of generating energy that are all surprisingly similar efficiency-wise? In the great scheme of things, a difference of 2x or 3x is practically invisible.

It's tantalizing as hell, too. It doesn't seem like there ought to be a reason that during a century of looking we haven't been able to find a single energy source more efficient than either water wheels or burning oil, but we haven't. I think God is playing games with us.