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Factoid of the Day: The IMF is 0 for 220 In Predicting Recessions

| Wed Jan. 27, 2016 11:07 AM EST

Larry Summers points us to this remarkable statistic:

Forecasts of all sorts are especially bad at predicting downturns. Over the period [1999-2014], there were 220 instances in which an economy grew in one year before shrinking in the next. In its April forecasts the IMF never once foresaw the contraction looming in the next year. Even in October of the year in question, the IMF predicted that a recession had begun only half the time.

I guess no one likes to be the skunk at the party, even the IMF. But I wonder who did better at predicting recessions? Goldman Sachs? The CIA? A hedge fund rocket scientist in Connecticut? Whoever it is, it sounds like the IMF might want to look them up.

UPDATE: It gets better! Via Twitter, Mark Gimein points me to Prakash Loungani's article 15 years ago about recession predictions during the 1990s:

How well did private forecasters do in predicting recessions in these cases? Quite simply, the record of failure to predict recessions is virtually unblemished. Only two of the 60 recessions that occurred around the world during the 1990s were predicted a year in advance.

....If private sector growth forecasts are of little use in spotting recessions, why not use the forecasts provided free by the official sector?...There is not much to choose between private sector and official sector forecasts. Statistical "races" between the two tend to end up in a photo-finish in most cases.

Loungani doesn't provide a precise number for IMF predictions, but he implies it's roughly the same as private-sector predictions: 2 out of 60. If that's the case, the IMF has gotten even worse since then. A hit rate of 3.3 percent might be pretty lousy, but at least it's better than 0 percent.

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Watch Mike Huckabee Cover Adele in a Campaign Ad

| Wed Jan. 27, 2016 11:06 AM EST

On Wednesday morning, former Arkansas Gov. Mike Huckabee's presidential campaign tweeted its latest campaign video—and it's a cover of pop superstar Adele's hit song "Hello."

Instead of talking about strained relationships, Huckabee's "Hello" focuses on Iowa's highlights and idiosyncrasies. "Amish chairs, Casey's jerky, Quad Cities has quite a port," sings the unnamed, unseen vocalist. 

The ad includes dramatizations of text message exchanges with Hillary Clinton and Sen. Ted Cruz—with the latter sending Huckabee a text claiming he is Canadian. There's really a lot to unpack here. It's probably best to watch it for yourself.

Almonds Are Getting Cheaper, But Here's the Catch

| Wed Jan. 27, 2016 6:00 AM EST

Ye almond-loving hipsters, rejoice! The revered—and lately quite expensive—nut is likely to get cheaper soon. The wholesale price for almonds—the one paid by supermarkets to stock their bulk bins, or by processors to make their trail mixes—has fallen from a high of $4.70 last August down to $2.60, reports the Financial Times.

And the reason has nothing to do with a viral screed against almond milk penned by a certain wag in 2014. Rather, it's the same set of forces that triggered California's massive almond boom in the first place: the vagaries of global demand.

The state's growers, who churn out 99 percent of almonds grown in the United States, have rapidly expanded their almond groves over the past decade and a half.

But that expansion didn't happen just to satisfy your trendy almond-milk latte habit. California farmers are almond growers to the world: They supply about 80 percent of the almonds consumed globally, and export demand has risen steadily for most of the past 15 years. About 70 percent of California's almonds are exported. According to the Almond Board of California, the great bulk of this massive outflow goes to Asia, the destination of 44 percent of California's almond exports, and Western Europe, which gets about 40 percent. 

As a result of that booming global demand, the price farmers get for almonds has risen dramatically despite the big acreage expansion.

But in recent months, the global appetite for almonds has plunged. Here's the Financial Times:

Last year's surge in prices depressed demand, and buyers in China, the Middle East and India, who have led consumption over the past three to four years, have disappeared. Trading has ground to a halt as prices continue to decline and the number of rejected containers by buyers refusing to honor contracts has jumped.

"It's a bloodbath," one California-based nut trader told the Financial Times. What happened was that California's multiyear drought took a bite out of crop yields, making almonds more scarce and pushing up their price. And then, in 2014, the US dollar began to rise in value against major Asian currencies and the euro, making US exports, including almonds, even more expensive in those regions.

"It's a bloodbath," one California-based nut trader told the Financial Times.

To make matters worse, the European economy stagnated, and China—the globe's biggest almond importer—saw its economic growth slow and its stock market tumble. Snack makers in Asia and Europe began to balk at pricey almonds, putting fewer in nut mixes and reducing the portion size of almond offerings, the FT reports. In 2015, almond exports to Asia and Western Europe fell 12 percent and 7 percent, respectively, according to the Almond Board of California.

And now, with a historic El Niño triggering a wet and snowy winter in California, the market expects a big harvest in 2016. Econ 101 tells us that abundant supply and weak demand means lower prices going forward. That likely means you'll soon be getting at least a slight break on that bag of salty roasted almonds you keep at your desk. But what does it mean for California's almond boom?

In previous posts, I've questioned whether the state has the water resources—or access to sufficient bee hives for pollination—to continue devoting ever more land to the crunchy treat. Unlike, say, vegetables or cotton, which can be fallowed during dry years, planting an almond grove requires farmers to commit to finding a steady water source for about 20 years, or risk losing a very expensive investment. (According to the Almond Board of California, establishing an almond grove—paying for land, saplings, an irrigation system, etc.—costs about $8,700 per acre, or about $2.6 million for a new 300-acre grove.)

During the drought, water from California's massive irrigation projects, which deliver melted Sierra Nevada snow to the state's farms, was largely cut off. Farmers responded by fallowing a portion of annual crops like cotton and vegetables and irrigating the rest—including their ever-expanding almond groves—with water drawn from finite underground aquifers. While the current El Niño might spell the end of a drought that has haunted California since 2012, California agriculture has gotten so ravenous for water that aquifers in its largest (and most almond-centered) growing region, the Central Valley, have been declining steadily for decades.

For my deep dive into the almond boom last year, I asked David Doll, an orchard adviser with the University of California Cooperative Extension, how long growers could keep devoting ever more land to almonds despite the long-term water crunch. He told me it would only stop "when the crop stops making money."

If the Asian and European appetite for almonds returns to normal growth rates, the almond boom will likely continue unabated.

I checked back in with him to see what he thought about the current price drop. He said under normal conditions, when water is flowing from the state's irrigation projects, the break-even farmer price for almonds is about $1.45 per pound—at that price, farmers neither lose nor make money. But when water is scarce, farmers face higher irrigation costs, and the break-even price rises to somewhere between $2.60 and $2.85—roughly where prices are now. So even with the current price drop, most almond growers are breaking even. But if we get another wet winter this year, water prices could drop by 2017 and almond farmers will be right back to profitability.

If the Asian and European appetite for almonds returns to normal growth rates, Doll added, the almond expansion will likely continue unabated, which will in turn limit large upward price swings as supply rises to meet demand. The limiting factor, of course, is water. Back in 2014, California shook off a history of Wild West aquifer stewardship and passed the Sustainable Groundwater Management Act, which requires that by 2025, the state's aquifers can't be drawn down faster than they're recharged—a dramatic reversal of the status quo. "From my observations, there are many [almond] operations that are not planning for this policy," Doll said, meaning they're not prepared for a future when aquifers can't be tapped at will.

But 2025 is nearly a decade away. Enjoy those relatively inexpensive almonds, you ignorant hipsters.

Fox News Needs to Show Some Spine

| Wed Jan. 27, 2016 1:30 AM EST

Gabriel Sherman reports on Donald Trump's declaration that he won't participate in the Fox debate on Thursday:

Yuck. Fox's written statement is suitably firm: "Capitulating to politicians’ ultimatums about a debate moderator violates all journalistic standards, as do threats, including the one leveled by Trump’s campaign manager Corey Lewandowski toward Megyn Kelly." But if Ailes and Hannity are really calling Trump to beg him to reconsider—which, admittedly, we have only Trump's word for—it suggests that Trump is winning. They should knock it off. Let him go sulk in his tent.

Planned Parenthood Sting Felony: Using a Fake Drivers License

| Wed Jan. 27, 2016 1:19 AM EST

Today we learned more about the felony charges leveled at David Daleiden, the guy who masterminded the sting videos against Planned Parenthood. The basic charge is a misdemeanor, according to Josh Schaffer, a lawyer for Planned Parenthood in Houston:

Daleiden emailed Planned Parenthood in June [2015], asking to buy fetal tissue for $1,600....Planned Parenthood, Schaffer said, never responded to Daleiden’s email. “He probably didn’t know he was breaking the law,” Schaffer added.

And from a follow-up story: “It doesn’t matter if he intended to buy it,” Schaffer said, “making the request is illegal, even if an offer isn’t accepted.”

But the charge got upgraded to a felony because Daleiden used a fake ID:

Daleiden and an associate breezed past the building’s metal detector, and allegedly presented as identification a phony California drivers license with the name of an alias, Robert Sarkis. In normal cases, the use of a fake ID would not warrant felony charges....But Texas state law includes a provision that elevates this transgression—knowingly using a fake government document—to a second-degree felony if “the intent is to defraud or harm another.” The grand jury decided that Daleiden’s goal was to do just that, by using his cover story to make a covert recording designed to damage Planned Parenthood’s reputation.

So there you have it. Offering to buy fetal tissue is a misdemeanor, whether or not you actually go through with it. And using a fake government ID is a felony in Texas if you use it with intent to harm another—which Daleiden very much intended and hoped to do.

I continue to have some doubts about these charges. As much as I dislike what Daleiden did—and the egregiously deceptive videos he put together after the sting—Texas law seems to make it almost inherently illegal for a reporter or anyone else to try to expose illicit activity. That's often going to require a solicitation to commit a crime; it's frequently going to require some kind of bogus ID; and it's pretty much always done with an intent to harm. But if you put those together, you've automatically got a felony, even if the target of your investigation turns out to be a mafia front.

I dunno. Any lawyers in the audience are invited to chime in here. Maybe I'm overstating how often these three elements come together. But somehow this doesn't quite sit right with me.

POSTSCRIPT: I wonder why Daleiden used a fake ID with a fake expiration date of 2014 for a sting he carried out in 2015? Sloppy.

Donald Trump Steals the Spotlight Yet Again

| Tue Jan. 26, 2016 8:44 PM EST

Donald Trump has figured out yet again how to dominate the news cycle: he's announced that he won't participate in Thursday's debate on Fox because host Megyn Kelly isn't fair to him. It's childish, but it's probably a smart move. The debate likely wouldn't help him much, but with everyone gunning for him there's at least a chance it could hurt him. And since Trump's appeal is mostly rooted in grievance culture, picking a fight like this probably goes over well with his base. Besides, as you can see, his announcement got him a ton of press. Everyone even used the same picture for some reason.

Alternatively, Trump might decide at the last minute to show up after all. This would get him even more attention.

But there's at least one news organization that didn't get the news. Fox News still thinks Trump is going to be center stage. Are they behind the curve, or do they know something we don't?

UPDATE: They're just behind the curve. Fox now has a "Breaking News" banner at the top of their page announcing that Trump won't be participating.

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Does Hillary Clinton Know Her Postbellum History?

| Tue Jan. 26, 2016 5:54 PM EST

I didn't watch the Democratic non-debate last night, but apparently Chris Cuomo asked Hillary Clinton who her favorite president was. She said Abraham Lincoln—a nice, safe choice—but then followed up with a bit of history that shocked everyone. Here's the transcript:

He kept his eye on the future and he also tried to keep summoning up the better angels of our nature. You know, he was willing to reconcile and forgive. And I don't know what our country might have been like had he not been murdered, but I bet that it might have been a little less rancorous, a little more forgiving and tolerant, that might possibly have brought people back together more quickly.

But instead, you know, we had Reconstruction, we had the re-instigation of segregation and Jim Crow. We had people in the South feeling totally discouraged and defiant. So, I really do believe he could have very well put us on a different path.

It's not totally clear to me what Hillary meant by that, but it does seem like a peculiar way of saying whatever she was trying to say. But other people figured it out right away. Here's Matt Yglesias Voxsplaining:

This is the version of history that I read as a kid in Daniel Boorstin's Landmark History of the American People; it reflects a conventional wisdom among historians that became popular in the early 20th century and was later etched into the quasi-official history of the Democratic Party. But by the time I was reading it in the late 1980s, it was already on its way out among academics.

....Clinton is loosely glossing what is known as Dunning School historiography, named after Columbia professor William Archibald Dunning and his students. The key emotional note of the Dunning School was the idea that the Civil War itself, rather than the widespread enslavement that led to the Civil War, was tragic, and that the postwar effort of Radical Republicans in Congress to enfranchise the Southern black population had been "a serious error" that impeded restoration of the Union.

Only once the mixed-race regimes of freedmen, "carpetbaggers" (Northerners who'd moved South), and "scalawags" (pro-Northern Southern whites) had been displaced in favor of white supremacist governments was it possible for the South to be peacefully reincorporated into the nation.

That's what Hillary was getting at? How about that. This is yet another example of a historical "debate" that goes right over my head. Dunning? Never heard of the guy. Reconstruction was a mistake? I went to high school in the 70s, and I've never heard this interpretation except when it's being debunked as gauzy Gone With the Wind nostalgia. The only history I've ever read has made it clear that Reconstruction was a flawed but noble effort, and it failed mainly because white Southerners engaged in a war of terror against black Southerners.

Now, I grew up in California, not the South, so that makes a difference. And by chance, I took almost no history classes that covered the postbellum era in America. I just read about it on my own here and there. But "here and there" means ordinary historical accounts, not modern liberal historiography. Nonetheless, none of them ever so much as put the Dunning notion in my head.

So I somehow missed out on all this. I've never had to relearn my postbellum history. But Hillary Clinton is, I'm sure, very well read on all this, and I doubt that she's unaware of why Reconstruction failed. My best charitable guess is that she didn't really mean to say anything except that Lincoln might have implemented a savvier, more politically durable version of Reconstruction if he had lived. That's perfectly plausible—though I personally doubt that anything could have quelled Southern intransigence much—and fits with her theme that Lincoln was a great man, but also a pragmatic president who knew how to pull the levers of power.

I guess we'll never know. Unless someone asks her, that is.

UPDATE: Someone asked her, and her campaign spokesperson responded:

Her point was that we might have gotten to a better place under Lincoln's leadership. What we needed after the Civil War was equality, justice, and reconciliation. Instead we saw the federal government abandon Reconstruction before real change took hold, which ultimately led to a disgraceful era of Jim Crow.

And as she talks about frequently, too many injustices remain today. Attempts to suppress voting rights go back to racist efforts against Reconstruction, and in fighting for voting rights and equality today we are continuing a long struggle that still has to be fought and won in our own generation.

Pretty much as I suspected.

Here Is What Blogging Has Done To Me

| Tue Jan. 26, 2016 4:38 PM EST

Yesterday I wrote a post that listed a bunch of things people have said about Ted Cruz, along with a bunch of things I made up. But which were real and which were invented? Here was the answer:

All statements whose ordinal number takes the integer form 2n+1 or 2n-1 have been invented. The rest are real.

I got some pushback about this, mostly asking what the hell kind of crap was this, anyway? So here goes. Here's where it came from:

  1. At first I was just going to toss in a few fake statements and put the answer key below the fold. But then I realized that anyone who got here via a direct link would see the answers right away.
  2. So then I figured I'd add eight fakes in all the odd slots. But if your eye drifted down to the answer, you'd see "odd" right away.
  3. So I put it in small type. But even that was readable.
  4. So then I figured that instead of "odd," I'd say that all the fakes were of the form 2n+1. My geeky readers would appreciate it.
  5. Then I looked for a link that defined "odd," so that my non-geeky readers had a fighting chance of figuring things out. The only simple one I found defined odd as 2n+1 or 2n-1. So I changed the text to match.

This was pretty obviously a pointless waste of time. Welcome to my world. This is what blogging has done to me.

Anyway, in case you didn't figure it out, all the odd numbered statement are fakes. The rest are real. The scary thing is that I didn't have any trouble coming up with eight plausible fakes.

Quote of the Day: First Thing We Do, Let's Kill All the Women and Children

| Tue Jan. 26, 2016 3:02 PM EST

From the New Yorker's Ryan Lizza, after attending a Donald Trump rally in Arizona:

I had never previously been to a political event at which people cheered for the murder of women and children.

This is the crowd response to Trump's confirmation that "he meant it when he said that he would 'take out' the family members of terrorists." As usual, it's pure affect. Trump talks big on national security: he's the most militaristic guy you've ever met, he'll ban Muslim visitors and crush ISIS, and other world leaders will unanimously back down under his steely gaze. But when you actually look at the policies he supports—giving him the benefit of calling them "policies" in the first place—Trump has made it clear that he's actually pretty dovish. He doesn't really want to intervene around the world. He doesn't especially want to do the hard dealmaking of negotiating treaties. He wouldn't instantly tear up the Iran deal because, after all, a deal's a deal. He wants to boost military spending, but only because he thinks a big army will scare other countries away from messing with us to begin with.

But he'll kill the families of terrorists, and his fans love it. Booyah.

Maine's Governor Wants to Cut Drug Dealers’ Heads Off in Public

| Tue Jan. 26, 2016 2:48 PM EST

Adding to his impressive record for unpredictable, oftentimes offensive statements, Maine Republican Gov. Paul LePage on Tuesday suggested the state bring back the use of guillotines to publicly execute drug traffickers.

"I think the death penalty should be appropriate for people who kill Mainers," LePage said during his weekly radio address on WVOM.  "We should give them an injection of the stuff they sell."

As the host attempted to wrap up the interview, LePage went further.

"What we ought to do is bring the guillotine back.”

This isn't the first time LePage has called for punishment in the form of public executions. In June, LePage allegedly told a local developer that state lawmakers should be "rounded up and executed in the public square."

Tuesday's bizarre guillotine endorsement comes just weeks after he made racially charged remarks at a town hall event, warning residents about out-of-state drug dealers with names like "D-Money" and "Smoothie." LePage said these drug dealers come to Maine, where state officials are grappling with a growing heroin epidemic, to sell narcotics and to impregnate young white women.

Those controversial comments sparked national outrage, but LePage dismissed accusations that his comments were racist and blamed the media for the backlash.