From Ben Bernanke, at a press conference today:

We are trying to do our best to support economic growth and job creation. It would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs.

Bernanke's comments about Congress and its budget-cutting mania keep getting more pointed every time he speaks. It's not likely to do him any good, of course, but at the rate he's going I predict that sometime around April of next year he's just going to give up and say something like, "Will you guys stop griping about the damn budget, get off your butts, and build a few effin bridges instead? Jesus." I have helpfully illustrated this progression below with quotes helpfully compiled by Steve Benen.

Aaron Carroll is unimpressed by a Politico piece suggesting that getting rid of the hated individual mandate might take some of the steam out of opposition to the healthcare reform law:

Here’s what I think. Support for the law likely closely tracks support for a political party....I have yet to see any convincing data that show there’s a significant portion of America that loves the ACA, but hates the mandate. I see no politicians running on a platform of removing the mandate, but leaving the rest of the law intact. I see no reason to believe that dropping the mandate will do anything to increase support for the President, the Democrats, or the ACA.

Roger that. Opposition to ACA is as much down to cultural markers as it is to substantive objections to what the law does. On the other hand, I'm not sure the chart on the right makes quite the point Aaron implies. What it shows is that if the mandate is overturned, premiums will go up for everyone who does buy health insurance. In theory, that's a point in favor of the mandate: it keeps average premium costs lower. In reality, it means that if the mandate is overturned, opponents will simply have one more rock to throw at ACA. They said premiums would be affordable, but look! They're out of control! The only answer is to repeal the whole law.

Which is more or less what Aaron thinks opponents will say regardless of any actual facts or evidence. And he's right.

Atrios has a complaint:

It's time to do away with the term "technocratic." It creates a category of policies which are The Right Thing To Do, yet the rightness of the policies aren't tested against anything. They aren't tested against democracy (messy pesky voters!) or results (the economy sucks, technocrats, and this is your doing). But merely say the word and we've conjured up images of very sensible highly educated wonky people doing the right thing, even as they destroy the world.

All of that technocratic management has achieved wonders and now messy politics is daring to intrude. Technocrats are doing their best to destroy the world. Intervene, politics, intervene!

Maybe this is just me, but I'd say the word "technocrat" now has mostly negative connotations, conjuring up visions of Robert McNamara more than, say, Jean Monnet. Mitt Romney and Jimmy Carter are widely viewed as technocrats, and not as a compliment. It suggests little men in gray suits scurrying around and staring at their computer printouts without regard to the actual people behind the policies they propose.

It's true, I think, that it also suggests a kind of person who's not influenced by the corruption of politics and has no partisan axe to grind, so in that sense it's positive. But overall, I'd guess that very few people in public life would actually want to be called technocrats these days. It says "out of touch" at least as much as it does "empirical and data driven."

Yes? No? Tell me in comments if you generally have positive or negative feelings when you hear that someone is "primarily a technocrat" or some such.

Andrew Sullivan points to this jaw-dropping exchange on PBS two days ago:

JUDY WOODRUFF: Do you view China as a potential military threat to the United States?

HERMAN CAIN: I do view China as a potential military threat to the United States....They've indicated that they're trying to develop nuclear capability and they want to develop more aircraft carriers like we have. So yes, we have to consider them a military threat.

I know, I know, who cares? Herman Cain is a clown. But that's not why I'm posting this. What I want to know is this: How on earth can a presidential candidate sit down for an interview with Judy Woodruff, spout a howler about China "trying to develop" nuclear weapons, and not get a followup question to suss out whether he has any idea that China has had nuclear capability for nearly half a century? Did Woodruff really not consider that worth drilling into a little bit?

Suzy Khimm points us to a new Pew report outlining the continuing cost of long-term unemployment during the recession. Both unemployment and long-term unemployment get worse among the least educated, and long-term unemployment gets worse with age. "The data show that once they lose their jobs, older workers are the most likely to remain out of work for a year or longer. In the third quarter of 2011, more than 43 percent of unemployed workers older than 55 had been out of work for at least a year."

In other words, although raw levels of unemployment are lower among older workers, if you do lose your job when you're in your 40s or above, there's a very good chance you're going to stay unemployed for at least a year. That's the price we're paying for our political unwillingness to do anything serious to cut the recession short.

We haven't had an excuse to talk about Republican abuse of the filibuster lately, so here's a nice chart for you that spells it out. It comes from JS, a regular reader, and instead of just showing the rise in the filibuster over the past 50 years, it color codes each Senate session to represent the party in the minority. As you can see, Democrats have been responsible for only a tiny part of the increase. The big changes came in the early 70s, the late 80s, and then in the late aughts after Republicans lost the Senate in the 2006 elections. When you add up all the red segments, they represent virtually the entire increase in the use of the filibuster over the past half century.

This isn't a big surprise or anything, but now you have the color-coded data to show to all your friends and relatives. Republicans are the party of obstruction, and they have been for more than four decades now.

The European Central Bank

Here's a cleaned-up version of a conversation I just had about Greece's sudden U-turn on the rescue deal negotiated last week. Enjoy.

Are the Greeks crazy?

No, they're just at the end of their tether. Europe is asking them to adopt more austerity than they're willing to bear.

Okay, but they're spending too much money. Surely they know they have to cut back?

Sure, but the deals on offer are pretty unattractive. Europe wants to forgive half of Greece's debt and put them on a brutal austerity plan. The problem is that this is unrealistic. Greece would be broke even if all its debt were forgiven, and if their economy tanks they'll be even broker.

But that's the prospect they're being offered: a little bit of debt forgiveness and a lot of austerity.

Well, them's the breaks.

But it puts Greece into a death spiral. They can't pay their debts, so they cut back, which hurts their economy, which makes them even broker, so they cut back some more, rinse and repeat. There's virtually no hope that they'll recover anytime in the near future. It's just endless pain. What they need is total debt forgiveness and lots of aid going forward.

That doesn't sound like a very attractive option for the rest of Europe.

No, it's not.

So maybe they should just let Greece default and wash their hands of them.

Here's the thing, though: Greek debt is largely held by German banks that made the loans. [See update below.] If Greece has been irresponsible, so were the German banks that happily loaned out the money. So if Greece defaults, the banks go kablooey. But they're too big to fail, which means the German government would be forced to bail them out. And guess where the bailout money comes from? Tax dollars.

This means that German taxpayers have a bleak choice. They can shovel lots of money to Greece to keep them from defaulting, or they can refuse, and then shovel lots of money into German banks to keep them from collapsing. Either way, German taxpayers are going to foot the bill. They just haven't quite accepted this in their gut yet, and it's hard to blame them. They're pretty badly screwed no matter what.

Hmmm. Given that choice, they might decide they'd rather give their money to German banks than to Greek civil servants. What happens then?

Greece defaults. And that almost certainly means that Greece exits the euro.


It's the growth thing again. If Greece defaults, nobody will loan them any money. That means huge cutbacks, which means the economy will tank, which means even more cutbacks, etc. The traditional way out of this spiral is a massive devaluation of your currency. But Greece doesn't have a currency. It has the euro.

So if they want their economy to grow again, they have to (a) default, (b) exit the euro and readopt the drachma, and (c) devalue the drachma. This will cause massive amounts of pain, but it will also make Greek exports super cheap, which will eventually revive their economy.

So why not just let that happen?

It's just too catastrophic to consider. German banks, of course, would collapse and have to be bailed out. Ditto for banks in other countries that have lots of exposure to Greek debt. But that's not the worst of it. If Greece exits the euro, it will become terrifyingly obvious that other weak countries might exit too. Portugal, Spain, and Italy are the obvious candidates. Investors, spooked at the thought of their money being stuck in a country that might exit the euro and devalue all its bank deposits, would start huge runs on banks in those countries. The ECB would have to intervene and provide liquidity without limit. It would be a disaster.

So exiting the euro can't be allowed?


But if there's no exit, there's no devaluation, and Greece is pretty much screwed forever.


So who wins?

It depends on who blinks. Exiting the euro would be no picnic for Greece. But they could decide it's better than endless indenture and threaten exit in order to get a better deal from the Germans. Then the Germans have to decide whether to call their bluff.


Exactly. Wow. Everyone knows that somebody's going to lose a huge pile of money over this. What's really happening right now is a very high-stakes negotiation to figure out just how the losses are going to be parceled out. Stay tuned.

UPDATE: It's actually a little unclear just which country has the biggest exposure to Greek debt. Maybe Germany, maybe France, maybe Switzerland. See here, here, and here. And the ECB owns a lot of Greek debt these days too. But the general principle doesn't change much. One way or another, Europe's big countries have to decide whether to bail out Greece or whether to let them default and then bail out their own banking systems.

I couldn't rouse myself yesterday to comment on the allegations of "inappropriate behavior" that were lodged against Herman Cain a decade ago and have now come to light thanks to — well, thanks to some enterprising oppo shop, probably. We really don't know. In any case, today Jon Chait digs into my subconscious and explains to me why I didn't care: it's because I know perfectly well that Cain isn't really running for president. His "campaign" is just a put-on:

Cain is executing a business plan. It’s an excellent plan. The plan involves Cain raising his profile as a conservative personality, which he can monetize through motivational speaking, book sales, talk shows, and other media. Cain’s selling point is that he’s a black conservative who can capitalize on the sense of white racial victimization that has mushroomed during the Obama era. Accordingly, Cain assures conservatives that they are not racist, as proven by their support for him. Indeed, it is the liberals who are racist, as evidenced by their opposition to Cain.

If Cain were campaigning to be president, the scandal would hurt him. Since he is instead campaigning to boost his profile, it will help him.

Herman Cain will not be our next president. However, conservatives have already convinced themselves — in defiance of both logic and common sense — that the charges against Cain emanated from some lefty organization terrified of the possibility that Cain might win the GOP nomination and run against President Obama. In fact, I think I can safely speak for the entire liberal community when I say that we'd barely be able to control our collective delight if Cain won the nomination. We love the idea of Cain winning the nomination. And if we had a bombshell like allegations of sexual misconduct? Believe you me, we'd keep said bombshell safely in our pockets until, oh, late August of 2012, let's say, and then drop it on the press just before the Republican convention opens. That would be great!

Anyway, yes: Cain's schtick is to sell books, maybe get himself a gig on Fox News, and raise his lecture fees. Among the true believers he appeals to, charges of misconduct are like manna from heaven, just more proof that white liberals are the real racists while they themselves, by sticking with their main, are the true avatars of racial tolerance in America.

Hell, maybe Cain himself leaked this stuff. Considering how much money it's likely to make him, I wouldn't put it past him. He is a successful businessman, after all.

The 2011 NAEP reading and math scores were released today for 4th and 8th graders, and unsurprisingly, they aren't very different from the 2009 scores. It's only been two years, after all. Here's the basic 20-year trend:

Since 1992, average scores have gone up four points in 4th grade and five points in 8th grade. Using the usual rule of thumb, that's an improvement of about half a grade level. Black and Hispanic students have done a bit better, improving their scores by roughly a full grade level since 1992. Here's a breakdown by reading proficiency levels:

This is not spectacular progress, but it's progress. Since 1992, the number of students testing "Below Basic" is down significantly in both grade levels for all ethnic groups, and the number of students testing "Proficient" or above is up a fair amount.

Test scores for 11th graders are usually not as encouraging: most of the gains in 4th and 8th grade seem to wash out in high school. But we'll have to wait a bit to see those scores. For the time being, it appears that we're continuing to make steady but slow progress. Whether that's good enough is a different question, and not one that the NAEP can answer. This is just a bit of raw data for your consideration.

The details of what happened at Jon Corzine's MF Global seem depressingly familiar. MFG borrowed a ton of money and then bought some European bonds that paid more than the interest on the loan. Profit! Of course, everything was hedged to within an inch of its life, so there was no risk of loss even if, say, Europe's debt crisis spun out of control and their bond yields gapped out. It was, as usual, a riskless moneymaking machine.

But guess what? There's no such thing as riskless. When European bonds began going south, and seemed likely to keep going south, lenders started getting nervous and demanded additional collateral. But MF Global was leveraged to its eyeballs and couldn't come up with any. This led to the usual dispiriting death spiral we've gotten so accustomed to.

Most of the talk about MF Global right now is about whether this is another "Lehman moment." Probably not. In any case, it seems to me more like another "Long Term Capital Management moment." The details of the trades are different, of course, but the overall bets are similar, the leveraging is similar, the collateral calls are similar, and even the proximate causes of collapse are similar (Russia for LTCM, Europe for MF Global). Plus, just to put a cherry on top, there's now a suggestion that MF Global might have been dipping into customer accounts to pay its bills. At least LTCM never did that.

So what are the lessons? All the usual ones that we pretend to learn every time this happens but never do. Extreme leverage is toxic. There are no riskless trades. Hedging is never perfect. Sovereign debt is just another kind of debt. That was the lesson of LTCM in 1998 and it was the lesson of 2008. The financial industry keeps saying that this time they've learned their lesson for sure, but guess what? They never do. They just can't stay away from the Great Casino, and unfortunately, unlike some poor schlub who loses his savings account in Vegas and only has to face the wrath of his wife when he gets home, when Wall Street loses, it loses big enough to cause problems for the entire global financial system. And we all pay the price for that.

Thus the need for regulation. Not because Wall Street is full of evil people, but because it's full of testosterone-fueled optimists who are convinced they can never lose. That's fine as long as they do it with their own money. But when they do it with mountains of debt it's not. The only question then is who's going to collapse next and how much damage they're going to leave in their wake, not whether anyone is going to collapse.

This may not be another Lehman moment. Not yet. But it does suggest that American exposure to Europe's problems is greater than anyone wants to acknowledge. It all depends on how many more MF Globals are hiding in the woodwork.