Kevin Drum

Quote of the Day #2

| Mon Nov. 16, 2009 4:41 PM EST

From Mark Shields, on President Obama's long process of trying to figure out what to do in Afghanistan:

It makes me nostalgic for those days when we had a manly man in the White House who could say, “Let’s kick some tail and ask questions afterwards” you know? That’s what we really need instead of any reflection.

You know, it's not that I don't sympathize at all with Shields here.  It's true that Obama really has drawn out this process for an awfully long time.  And who wouldn't want to just kick some tail if that was all it took to finish things up and bring the troops home?  But it's time to grow up.  Kicking tail is the easy part.  It's figuring out what to do afterwards that's the problem.  That's what Obama is trying to do.

UPDATE: Uncle! I admit it: I just read the quote online.  I didn't watch the video and I didn't read any of the comments at ThinkProgress.  Now that I have, yes, it's pretty obvious that Shields was being sarcastic.  Sorry about that.

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Quote of the Day

| Mon Nov. 16, 2009 4:33 PM EST

From Ben Bernanke, in a speech to the Economic Club of New York:

The best thing we can say about the labor market right now is that it may be getting worse more slowly.

Hey, you know what would be great right about now?  Federal aid to states to keep them from going bankrupt and making the labor market even worse.  There must be a branch of the government out there somewhere that could do something along these lines.  Thinking it starts with an L.....

Chart of the Day

| Mon Nov. 16, 2009 1:55 PM EST

Via Kaus, here's a Pew map comparing California's disastrous economic situation to everyone else's.  Congratulations to Rhode Island and Arizona for their close second place finishes!  How's your state doing?

iPhones in China

| Mon Nov. 16, 2009 12:47 PM EST

Have you been sitting around wondering why Apple's launch of the iPhone in China has gone so miserably?  Me neither.  But here's the answer anyway: it hasn't.  Chinese consumers are buying plenty of iPhones, but because the official China Unicom version has WiFi disabled, they're mostly buying them on the gray market instead:

They are for sale at stalls in every cybermall and market in every Chinese city, and come in two varieties: The most expensive ones (at around 6000 RMB in Shanghai for a 16GB 3GS, or 880 USD, depending on your haggling skills) come directly from Hong Kong, where the factory-unlocked model is available from the Apple store for around 4800 RMB....The distribution model is extensive and robust, and in fact most Chinese buy their mobile phones from stalls like this. There are no iPhone shortages, as prices fluctuate to meet demand. The received wisdom is that around 2 million iPhones are in the Chinese wild; I’ve personally seen a good many of them here in Shanghai, where they are much in evidence among the eliterati.

....China Unicom stores all have iPhone banners up; I’ve passed several China Unicom road shows stopping by Shanghai extolling the iPhone. The iPhone is being talked about widely. But so is the fact that the China Unicom iPhone is crippled — the Chinese are sophisticated consumers; forget this at your own peril.

The upshot: anecdotal reports tell of aftermarket prices increasing for Hong Kong iPhones these past few weeks, as demand increased. Clearly, the advertising is working, even if China Unicom’s sales of wifiless iPhones are anaemic.

So: Apple has done an official deal with China Unicom, which isn't producing much in way of official sales but is producing increased marketing and awareness.  Apple's hope, apparently, it that eventually the whole situation will get a little too ridiculous and the Chinese government will cave in to public pressure.  Then they'll start selling unlocked versions through official channels and make a ton of money.  Now you know.

(Via Felix Salmon.)

Missing the Story

| Mon Nov. 16, 2009 12:08 PM EST

Can a city use its power of eminent domain in order to seize property and then turn it over to a private developer?  In Kelo vs. New London the Supreme Court ruled that it could, but by the time the case was finally decided in 2005 the private development project in question had already started to run out of steam.  Last week, in an ironic coda to the story, Pfizer, which the city of New London had hoped would build a headquarters building on the land, pulled out of New London completely.

Over at CJR, Ryan Chittum says this is a great story that the press completely whiffed on:

The Hartford Courant, fifty miles up the road, wrote a 900-word story the next day on Pfizer’s moves and barely mentioned the whole Supreme Court controversy that roiled the city and country for months. Neither did the Associated Press in a brief. The Wall Street Journal ran with 600-plus words on C3 and didn’t mention Kelo.

....Finally, today, the fourth day of the story, we have major papers covering the Kelo angle. The Daily News hits it, while The New York Times admirably puts its story —and it’s a good effort—on page one.

What took so long and why have other papers been missing on this? Are our institutional memories that short? Are we staffed that thin? Are we that disconnected from our readers?

Believe me, they remember Kelo.

I wonder about that.  Sure, lots of political junkies remember Kelo, but I'll bet that something like 99% of the country couldn't distinguish it from a brand of corn syrup.  Nor do they care about the town of New London, or about Pfizer, or even about the eminent domain issue in question.  The facts of the case make it an interesting topic for a feature story — hubris, irony, hard times, etc. — but in a straight news piece of a few hundred words I'm not really surprised the Supreme Court case didn't get much of a mention.  After all, Suzette Kelo is no Michael Jackson.

CMS Report Revisited

| Mon Nov. 16, 2009 11:17 AM EST

My post last night about the CMS report on healthcare reform may not have been a model of clarity.  For more, see Ezra Klein here and Jon Gruber here.  Combined with my post and this Wonk Room post, you should get a pretty good idea of what's up.

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Trade and China

| Mon Nov. 16, 2009 1:35 AM EST

The yawning U.S. trade deficit, which was one of the factors that helped fuel the recent credit bubble, declined sharply in the aftermath of last year's economic meltdown.  But it never came anywhere close to zero, let alone positive, and it was mostly an illusion anyway, the result of a temporary collapse in demand for durable goods.  Paul Krugman:

But with the financial crisis abating, this process is going into reverse. Last week’s U.S. trade report showed a sharp increase in the trade deficit between August and September. And there will be many more reports along those lines.

So picture this: month after month of headlines juxtaposing soaring U.S. trade deficits and Chinese trade surpluses with the suffering of unemployed American workers. If I were the Chinese government, I’d be really worried about that prospect.

Unfortunately, the Chinese don’t seem to get it: rather than face up to the need to change their currency policy, they’ve taken to lecturing the United States, telling us to raise interest rates and curb fiscal deficits — that is, to make our unemployment problem even worse.

And I’m not sure the Obama administration gets it, either. The administration’s statements on Chinese currency policy seem pro forma, lacking any sense of urgency.

I don't know if Obama gets it, but the Chinese sure don't seem to:

Liu Mingkang, chairman of the China Banking Regulatory Commission, said that a weak U.S. dollar and low U.S. interest rates had led to "massive speculation" that was inflating asset bubbles around the world. It has created "unavoidable risks for the recovery of the global economy, especially emerging economies," Mr. Liu said. The situation is "seriously impacting global asset prices and encouraging speculation in stock and property markets."

....Early Monday, a spokesman for China's Ministry of Commerce added further criticism of the Obama administration, targeting recent measures by Washington against Chinese exports. "We've always known the U.S. and the West as free market economies. But now we're seeing a protectionist side," the spokesman, Yao Jian, told a monthly press briefing. Mr. Yao also rejected criticism of China's currency policy, saying the yuan's exchange rate has little to do with trade imbalances with the U.S. and that China should keep the exchange rate stable.

At some point our trade deficit has to turn around.  The Chinese obviously don't want to be the ones to take the hit for this by strengthening their currency and damaging their export-based economy, but they really don't have much choice about it.  The global economy is going to be rebalanced one way or another, and it can either happen gradually or it can happen suddenly. The latter would be no fun for anyone, China included.  Better to take Door #1 instead.

Payback Time

| Mon Nov. 16, 2009 12:55 AM EST

According to "a source familiar with the matter," General Motors is planning to pay off its government loan earlier than expected:

The nation's largest automaker plans to pay $1 billion per quarter until the $6.7 billion loan is repaid, according to a source familiar with the matter.

...."This is a result of the company performing modestly above expectations," said the source, who spoke on the condition of anonymity to discuss the situation. "Obviously, the company has a long way to go and a lot of important things to execute on."

....The $6.7 billion debt is not due to be repaid until July 2015, but the company has exceeded projections, partly by going through bankruptcy more rapidly than it thought it would, and partly by cutting costs.

Am I the only one who thinks this is dumb?  Is GM really that convinced that it's out of the woods and won't be running short of cash anytime in the next few years?  Why?  Has the business cycle suddenly been repealed without anyone telling me?  Are customers suddenly swooning over GM cars?  What's going on?

Fonts and You

| Sun Nov. 15, 2009 5:53 PM EST

A few years ago I was reviewing an installation app with some engineers.  We were going from screen to screen, with me occasionally commenting on something, and on one screen I told them everything looked fine except for the font in one of the sentences.  It needed to match the others.

They looked at me strangely.  They're all the same.  No they aren't.  Just look.  Sure they are.  No they aren't.  Etc.  They said they'd check and we moved on.

An hour later one of them came up to me and said, "You were right! I can't believe you noticed that."  But I couldn't believe no one else noticed it.  They might as well have been in different colors to me.  I don't remember the fonts in question, but they were about as similar as, say, Times and Palatino — not wildly different to someone who doesn't care about such things, but still, pretty different.

But even I have a hard time with this from Alice Rawsthorn:

Dirt. Noise. Crowds. Delays. Scary smells. Even scarier fluids swirling on the floor. There are lots of reasons to loathe the New York City subway, but one very good reason to love it — Helvetica, the typeface that’s used on its signage.

Seeing the clean, crisp shapes of those letters and numbers at station entrances, on the platforms and inside the trains is always a treat, at least it is until I spot the “Do not lean ...” sign on the train doors. Ugh! There’s something not quite right about the “e” and the “a” in the word “lean.” Somehow they seem too small and too cramped. Once I’ve noticed them, the memory of the clean, crisp letters fades, and all I remember are the “off” ones.

A couple of comments here.  First, Helvetica is a fine font, but hardly something to swoon over.  I mean, come on.  Second, the "e" and the "a" in the subway sign look fine to me.  Am I just not observant enough?  Are there some bad signs and some good ones?  Did the offending sign have some crude repairs on it?  Or what?  I'm a little stumped here.

On the other hand, Rawsthorn also includes some interesting stuff about the misuse of typography on Mad Men, which prides itself on period authenticity.  Who knew that all the office signage was done in Gill Sans?

Saving Money via the Public Option

| Sun Nov. 15, 2009 5:06 PM EST

As long as we're on the subject, here's another statement from the CMS report that I blogged about below:

We estimate that the public plan would have costs that were 5 percent below the average level for private plans but that the public plan premiums would be rought 4 percent higher than private as a result of antiselection by enrollees.

If this is true, it means that the public option would save the government some money but is unlikely to put pressure on private health insurers to lower their premiums.  We'd all keep paying the same prices we are today.  Bummer.

Overall, however, this is still a net positive for healthcare legislation.  Consumers might not save any money directly, but since we've apparently decided that a 10-year cost of $900 billion has been handed down on stone tablets and can't be changed, that means that saving the government some money via the public option would allow more to be spent on other things.  Like, say, higher subsidies for low-income families.

That's sort of a roundabout way of getting to higher subsidies, and as a big fat tax-and-spend liberal I'd opt for simply combining both the House and Senate tax increases and using the money directly.  But any port in a storm.  If $900 billion is untouchable, then the public option is a good way to free up a little extra dough.