Via Tyler Cowen, Randall Kroszner writes in the Financial Times about the delicate role the Fed has to play as we (hopefully) exit the current recession.  If they keep monetary policy loose too long, they risk long-term inflation.  But if they tighten too fast, they risk cutting off the recovery too soon, as they did in 1937.  What to do?

Just last autumn, Congress gave the Fed a new tool that will play a crucial role as it exits from its unusually accommodative monetary policy: the ability to pay interest on reserves. Previously, a recovery would mean more opportunities for banks to lend and so they would draw down non-interest-bearing reserves and expand credit and hence the money supply. Interest on reserves, however, can cut that logic short by providing incentives for banks to hold reserve balances rather than lend them out, as the Federal funds rate target rises. The Fed now has a greater control over the reserve choices of banks because it can raise the return on reserves relative to banks’ lending opportunities, and thereby better manage credit and money growth in a recovery.

The basic idea here is simple: if the Fed raises the rate it pays on bank reserves, banks will park money at the Fed.  That reduces the amount of money they lend out.  Cut the rate and banks will pull their money out and find a better use for it.  Lending will increase.

Fine.  That makes sense and always has, as long as you trust the Fed to handle this particular monetary knob properly.  But what I still don't get is why you'd turn this knob up during a crisis, as the Fed did last year.  That reduced bank lending at a time when credit had already dropped off a cliff and was threatening to choke off the economy completely.  Is there some triple bank shot (no pun intended) here that I'm not getting?  Did the Fed figure that banks just flatly weren't going to loan out funds no matter what, so they might as well pay them interest as a backdoor way of recapitalizing them?  Or what?  I'm still confused.

Betsy Yet Again

The intellectual superstructure for the "death panel" nonsense — such as it is — derives partly from sections of the House bill related to living wills and partly from the academic writings of Ezekiel Emanual.  Zeke is Rahm Emanuel's brother, a sometime advisor to the White House on healthcare, and a longtime medical ethicist who has written extensively on some of the most difficult kinds of healthcare decisions.

That was enough to make him a poster boy for the death panel crowd.  The heavy lifting, unsurprisngly, was done by our old friend Betsy McCaughey.  Michael Scherer explains:

In her Post article, McCaughey paints the worst possible image of Emanuel, quoting him, for instance, endorsing age discrimination for health-care distribution, without mentioning that he was only addressing extreme cases like organ donation, where there is an absolute scarcity of resources. She quotes him discussing the denial of care for people with dementia without revealing that Emanuel only mentioned dementia in a discussion of theoretical approaches, not an endorsement of a particular policy. She notes that he has criticized medical culture for trying to do everything for a patient, "regardless of the cost or effects on others," without making clear that he was not speaking of lifesaving care but of treatments with little demonstrated value. "No one who has read what I have done for 25 years would come to the conclusions that have been put out there," says Emanuel. "My quotes were just being taken out of context."

The whole piece is worth a read.  McCaughey and her ilk obviously don't care about any of this, but it's worth understanding how it all happened.

In the course of fact-checking Anna Lenzer's excellent piece on Fiji Water, and in writing my own sidebars to the piece, I drank a lot of water. And truthfully, I liked the taste of the stuff coming out my San Francisco tap better than the Dasani or Arrowhead I bought from the bodega. So I got to wondering: Can all these bottled waters on the shelf really taste that differently from one another? Are they better than tap? Could I even tell the difference between Volvic and Voss? To find out, I bought eight bottles of water at my local Whole Foods and had a blind taste test in the Mother Jones office with several editors, interns, fellows, and art staff. For a good measure, we also included filtered and unfiltered San Francisco tap in the test.

The results: Fiji Water, for all its claims of purity, tasted okay to our staff. One or two people out of about ten said it was their favorite. "I actually liked Fiji best," said one staffer, who will remain anonymous.

Over at Politics Daily, MoJo's DC bureau chief, David Corn, points out that all the fuss over death panels and granny-killing government health care has overshadowed some very disturbing economic news. The congressional oversight panel monitoring the bank bailout, or Troubled Assets Relief Program (TARP), released a report Tuesday on the toxic assets that helped suck the country into an economic vortex. And, as David writes, the panel found that "the Treasury Department has not used its TARP billions to purchase this junk—which includes both lousy commercial and residential mortgages and securities based on lousy mortgages—and that billions of dollars of toxic assets remain on the books, threatening the security of numerous financial institutions."

So far, David observes, the news that TARP's billions have not been used as intended, and that the economy remains at real risk, has barely registered on the media's radar. Read the rest of the column here.

 

It’s looking increasingly likely that the pharmaceutical industry will escape price regulation under any new health care reform. For its part, the drug makers have promised $30 million in special price reductions to support Medicare recipients--a move that, as I've written before, is really a backdoor method of keeping seniors hooked on brand-name drugs.

Brand-name drugs are required by federal law to be safe and efficacious. We often rely on independent medical journals to provide important information and analysis to make the case for their use. We trust the editors of these journals and the experts who write the articles for expertise and sound judgement. And it’s not just the general public who relies on these respected sources. Doctors also use these articles in deciding whether or not to prescribe a drug.

So it comes as something of a shock to many people to learn that these articles aren’t always written by the people who sign them. Earlier this month, the New York Times reported that ghostwriters employed by drug company Wyeth produced 26 articles in medical journals to promote Premarin and Prempro, two controversial estrogen-replacement therapy drugs later linked to serious health problems in menopausal women. Dr. Adriane Fugh Berman, a doctor at Georgetown University and a colleague of mine in a publically funded project called Pharmedout.org, is making public some of these internal documents.

Staff Sgt. Greg Talley prepares to hook up electronic blasting caps to a control box that he will use to destroy a cache of weapons, including discarded Soviet munitions from the 1970s, Aug. 2 at an ordnance disposal site near Bagram Airfield, Afghanistan. Sergeant Talley is an explosive ordnance disposal technician with the 755th Air Expeditionary Group, and deployed from Dyess Air Force Base, Texas. (U.S. Air Force photo/Tech. Sgt. John Jung)

Ch-Ch-Changes: More from Kevin Drum on healthcare.

Graphic Content: A new map shows which congressional aides have turned healthcare lobbyists.

Cruisin': The electric Chevy Volt will get 230 miles per gallon, says GM. [Wall Street Journal]

Bird Flu Discovery: New research shows a link between bird flu and Parkinson's. [AAAS]

Greening China: China's dire pollution is pushing it toward green solutions. [Christian Science Monitor]

 

 

Some must-reads from around the web:

Surprise, surprise: Judiciary Committee document dump reveals that Karl Rove was more involved in the US Attorney firings than has previously been acknowledged.

US general says Bagram needs less Popeyes, more cultural outreach.

Are the tea-baggers ripping a page from the Saul Alinsky playbook?

Extreme makeovers, Wall Street Journal style.

America's last late-term abortion doctor.

The families of three hikers detained by Iran, one of whom is Mother Jones contributor Shane Bauer, issued a statement on Tuesday. Here is Bauer's new MoJo piece, an investigation of the Pentagon's "make-a-sheikh" program; editors-in-chief Clara Jeffrey and Monika Bauerlein provide further context here.

David Corn, Mother Jones' DC bureau chief, is on twitter, and so are my colleagues Daniel Schulman, Nick Baumann, and our editor, Clara Jeffery. You can follow me here. The magazine's main account is @motherjones.

Just a few days into her reporting trip to Fiji to check out the source of America’s No. 1 imported bottled water, MoJo freelancer Anna Lenzer was arrested, hauled to police headquarters, and threatened with imprisonment... or worse. She stuck it out, and the results of her investigation cast a sharp light on a celebrity-beloved brand. Fiji Water,  her MoJo cover story points out, is produced under a military dictatorship, processed in a diesel-fueled plant and shipped across thousands of miles of ocean in bottles that use twice as much plastic as many competitors (yes, our intrepid factcheckers weighed them--and calculated how far some other brands travel to US store shelves. And then they sacrificed themselves and did a bottled water taste test.). Yet it’s focused its marketing on winning huge credibility with eco-conscious consumers, even claiming that to drink Fiji Water is to fight global warming. Lenzer’s story, “Spin the Bottle,” captures the contradictions and dilemmas of a “green” business. Check it out and let us know what you think in the comments!

Speaking of comments, we suspect this piece will kick off plenty of discussion, so we're pulling together bottled water experts, industry reps, and critics, together for a live discussion/online forum, likely August 17. Stay tuned for the details--we'll promote it on the home page and also post the info here in the blog.

U.S. Attorney Finale

The Washington Post reports on the release of internal White House documents from the Bush era related to the mass firings of U.S. Attorneys:

The dismissal of U.S. Attorney David C. Iglesias of New Mexico in December 2006 followed extensive communication among lawyers and political aides in the White House who hashed over complaints about his work on public corruption cases against Democrats, according to newly released e-mails and transcripts of closed-door House testimony by former Bush counsel Harriet Miers and political chief Karl Rove.

A campaign to oust Iglesias intensified after state GOP officials and Republican members of the congressional delegation apparently concluded that he was not pursuing the cases against Democrats in a way that could help then-Rep. Heather A. Wilson (R) in a tight reelection race in New Mexico, according to interviews and Bush White House e-mails released Tuesday by congressional investigators.

....Miers told investigators that Rove called her in September 2006, "agitated" about the slow pace of public corruption cases against Democrats and weak efforts to pursue voter-fraud cases in the state. In the call, Miers said, Rove described Iglesias as a "serious problem" and said he wanted "something done" about it.

Just to give you a taste, here's one of the emails in question.  The chairman of the New Mexico GOP, after attending an RNC meeting, emails the White House to say that Iglesias has been unhelpful in ginning up voter fraud cases against Democrats.  "To be perfectly candid, he was 'missing in action' during the last election," he says.  Rove's response? "Talk to the counsel's office."  After all, if a U.S. Attorney can't be counted on to help out during the election cycle, what good is he?