• Black Swans and Swine Flus


    David Rothkopf critiques the media:

    Swine flu! World Health Organization at alert level 4! Markets rocked by sell-offs! Howie Mandel was right! Never shake hands! Bathe in Purell! See if you can borrow a face mask from Michael Jackson! Or hold your breath whenever you are near a ham sandwich! Armies of pigs in uniform marching on Washington! Orwell was right: the animals have turned on us, become more dangerous than us! Four legs bad, two legs good! Head for the hills!

    Once again, the media is reacting to a potential threat with its usual calm, responsibly recognizing that sensational coverage of diseases can have far worse consequences than the diseases themselves. Or not.

    “Moderation in all things” isn’t exactly the motto of cable news, is it?  To be fair, though, figuring out the right reaction isn’t easy.  Sure, swine flu 1.0 was a bust, avian flu was a bust, and SARS was a bust, so maybe SF 2.0 will be a bust too.  Then again, this might be The One, and we might never know.  After all, if all the hype manages to keep the current strain from mutating into the Andromeda Strain and destroying humanity, we’ll never know, will we?  It’ll just look like another bust.

    (Sort of like the Y2K bug, which is one of my favorite pet peeves.  Here’s a heads-up to everyone who thinks Y2K was all just a bunch of hooey: the reason nothing much happened is because everyone went bonkers and spent tens of billions of dollars rewriting their software.  It’s true that in the end the world’s computers didn’t freeze up and die, but that’s because we fixed them.  Ask my wife if you don’t believe me.)

    So will we ever know if SF 2.0 was The Big One?  If it kills a billion people, yes.  If it doesn’t, no.  We’ll just have to keep wondering.  Which, to my surprise (and to change the subject completely), turns out to be a big chunk of what Nassim Nicholas Taleb writes about in The Black Swan.  After I was (properly) smacked down over my airy dismissal of Taleb a few days ago, I finally decided that maybe I ought to actually read his book instead of relying on the odd blog post about it, and I have to say that it’s not at all what I expected.  So far, anyway.  It’s a real mishmash of odd potted historical anecdotes that go nowhere, interesting insights about human nature, opinions about historical contingency that are strangely unmoored from even an acknowledgment that lots of other people have thought about this subject before, and conventional observations about things like confirmation bias and the limits of induction.  However, Taleb swears that he’s a doer, not an idle idea spinner, and by the time I’m finished I’ll get some genuinely concrete advice about how to deal with uncertainty and the limits of knowledge in real life.

    We’ll see.  I’m a little skeptical based on the first few chapters, but I suppose Taleb himself would warn me that even a long string of mediocre chapters doesn’t mean there won’t be a phenomenal one that will rock my world when I least expect it.  If I finish it this weekend, I’ll report back.

  • Chart of the Day – 4.30.2009


    Ezra Klein points to an intriguing bit of opinion polling from the Kaiser Family Foundation today: 61% of Americans say that in order to fund healthcare reform they’d support higher taxes on “items that are thought to be unhealthy, such as soda, alcohol, junk food, and cigarettes”:

    Problematically, the poll question lumps a lot of different policies together. Paying for health care by taxing cigarettes is actually a common strategy. It’s how we funded S-CHIP, for one. Taxing soda is rather further from the center of the consensus. But there’s no evidence, in this poll at least, that the public instinctually recoils from the idea.

    In a sense, I’m not too surprised by this.  I suspect that most people know that soda and junk food really are a scourge and would like to cut back.  So either through guilt, or maybe a sense that they need someone else to prod them into doing the right thing, they support higher taxes on this stuff.

    Further down, however, there’s a followup question:

    This is a fascinating example of just how thin opinion polling like this is.  The real lesson here is that most people haven’t given this issue even a few seconds thought, and their response to the poll question is practically meaningless.  Faced with even the slightest pushback, large majorities of both supporters and opponents flipped their views almost instantly.

    So the real question isn’t how people feel about taxing junk food now, it’s how they’re likely to feel about taxing junk food after hearing both sides screech about it for a few days or weeks or months.  This is true of most other opinion polling too.  Caveat emptor.

  • Gambling on Fiat


    The Chrysler bankruptcy is now official:

    Once Chrysler restructures, the company would receive $4.5 billion in financing to restart its operations….That is $2 billion more than Mr. Obama initially said the company would receive if it successfully reached a deal with Fiat.

    Chrysler has already received $4.5 billion from the government, under a bailout plan put into effect by the Bush administration in late December….The Canadian government also is expected to provide $1 for every $3 in American support, the official said, meaning Chrysler could receive another $2.6 billion.

    So that’s nearly $12 billion in total assistance.  All to prop up a company that, I’ll bet, won’t last two years.  Compared to the vast sums of taxpayer cash we’re handing over to the banking industry practically for free, I suppose this isn’t really all that much, but it’s still pretty hard to swallow since it seems almost vanishingly unlikely that Chrysler will survive in the end.  I mean, does anyone really think that the management genius of Fiat is going to save them?  Fiat?

     

     

  • Quotes of the Day – 4.30.09


    #1 comes from entertaining Republican loon Michele Bachmann, who apparently doesn’t know that Herbert Hoover was president in 1930:

    FDR applied just the opposite formula — the Hoot-Smalley Act….That’s what we saw happen under FDR. That took a recession and blew it into a full-scale depression. The American people suffered for almost 10 years under that kind of thinking.

    #2 comes from Democratic Senator Dick Durbin, explaining the facts of life:

    And the banks — hard to believe in a time when we’re facing a banking crisis that many of the banks created — are still the most powerful lobby on Capitol Hill. And they frankly own the place.

    We’ve noticed.  #3 comes from Megan McArdle:

    If my husband sacrificed our child to save thousands of people, I might recognize, at some abstract level, that he had done the right thing.  But we wouldn’t stay married.

    Discuss.  Would you stay married?

  • The Party of No


    Mark Schmitt thinks that Barack Obama’s bipartisan tone has worked pretty well, defining the landscape and marginalizing a Republican Party that’s gotten steadily crazier in opposition.  Matt Yglesias isn’t so sure:

    To take just one example, climate change. The administration and the congressional leadership have ruled out the use of the reconciliation process to pass their energy/climate agenda. Since it’s completely inconceivable that you could get 60 votes in the Senate for the sort of cap-and-trade proposal that Barack Obama outlined during the campaign, this means they’ve preemptively surrendered on an agenda that they ran and won on during the course of a two-year presidential campaign.

    ….So you can say that congressional obstruction has succeeded in derailing Obama’s efforts on the most important short-term issue that congress has jurisdiction over, and also derailing his efforts on the most important long-term issue that he’s facing. That’s pretty impressive for a small and unpopular minority!

    I’d sort of agree with this except for one thing: Obama never really campaigned on cap-and-trade in the first place.  Sure, it was part of his energy proposal if you dug down into his website and looked for it, but during the debates, on TV ads, and in speeches, he barely even mentioned it.  It was all windmills and blue skies and green jobs.  He did virtually nothing to build any public support for the tougher parts of his energy plan.

    Now, maybe that was the right thing to do.  Presidential campaigns aren’t notable for going out of their way to highlight tough choices for the electorate.  Still, the result is that there’s essentially no organic public support for cap-and-trade right now, which means it’s wide open to demagoging by Republicans.  This in turn makes it scarier to on-the-fence Dems, which is why a really solid cap-and-trade bill not only can’t get 60 votes in the Senate, it might not even be able to get 50.  Partisan gridlock may be responsible for some of that, but Obama’s unwillingness to risk selling it during the campaign deserves some of the blame too.

  • Chrysler to File Bankruptcy


    According to people “familiar with the talks,” several of Chrysler’s bondholders have rejected the government’s deal, which amounted to paying them off a little more than 30 cents on the dollar.  So that means it’s probably Chapter 11 time.  Blecch.  I hope the holdouts all end up getting less from the judge than they would have gotten from Obama.

  • Swine Flu Update


    It turns out the swine flu outbreak may be a little bit less deadly than we thought.  Here’s the latest from the Los Angeles Times:

    As the World Health Organization raised its infectious disease alert level Wednesday and health officials confirmed the first death linked to swine flu inside U.S. borders, scientists studying the virus are coming to the consensus that this hybrid strain of influenza — at least in its current form — isn’t shaping up to be as fatal as the strains that caused some previous pandemics.

    ….When the current virus was first identified, the similarities between it and the 1918 flu seemed ominous.

    Both arose in the spring at the tail end of the flu season. Both seemed to strike people who were young and healthy instead of the elderly and infants. Both were H1N1 strains, so called because they had the same types of two key proteins that are largely responsible for a virus’ ability to infect and spread.

    Richard Webby, an influenza virologist at St. Jude Children’s Research Hospital in Memphis, told the Times, “This virus doesn’t have anywhere near the capacity to kill like the 1918 virus,” which claimed an estimated 50 million victims worldwide.

    Among those 50 million were my grandmother’s two sisters.  So this is good to hear.  But wash your hands anyway, OK?

  • Obama on Torture


    Interesting comment from Obama right now about why he opposes waterboarding:

    Not because there might not have been information that was yielded by these various detainees who were subjected to this treatment, but because we could have gotten this information in other ways.

    Obama has obviously seen all the internal reports by now, and he’s carefully not saying that waterboarding didn’t work.  This suggests that it may indeed have produced useful information.

    Now there’s a followup question directly asking whether waterboarding produced anything useful.  He’s dodging a little bit (reports are classified, can’t discuss it, etc. etc.), but making it sound as if it probably did.  On the other hand, after a bit of throat clearing toward the end of his answer, he says he’s seen nothing that “would make me second-guess the decision that I’ve made” to ban waterboarding.  Which might suggest either that waterboarding produced only moderate amounts of useful information, or that he’s convinced we could have gotten the same information with other methods.

    Not sure what to make of all that, or even if I’m interpreting it correctly.  Just passing it along.

  • Volcker on Stimulus


    Most liberal economists seem to think that we need a much bigger stimulus package than the one we passed in February.  However, most liberal economists also seem to think that Barack Obama ought to listen to Paul Volcker more than he does.  So now what do they think?

    The U.S. economy is “leveling off at a low level” and doesn’t need a second fiscal stimulus package, said former Federal Reserve Chairman Paul Volcker, one of President Barack Obama’s top economic advisers.

    Volcker, head of Obama’s Economic Recovery Advisory Board, said the 6.1 percent decline in first-quarter gross domestic product reported by the government today was “expected.” More recent data show the contraction in housing, business spending and inventories has slowed, and stimulus spending is only just beginning to hit the economy, he said.

    That’s from Bloomberg Television’s “Conversations with Judy Woodruff,” which will air this weekend. There was also this about regulatory reform:

    Volcker said he and National Economic Council Chairman Lawrence Summers have disagreed about how heavily regulated the financial industry should be.

    “We’ve had a little talk about this,” Volcker said. “I’m sure he’ll recognize the wisdom of my views sooner or later.”

    That’s a conversation it would be interesting to hear more about, wouldn’t it?

  • Are Canadian Banks the Answer?


    David Leonhardt’s interview with President Obama includes a fair amount of conversation about the economy, including a question about whether big banks need to be split up:

    THE PRESIDENT: You know, I’ve looked at the evidence so far that indicates that other countries that have not seen some of the problems in their financial markets that we have nevertheless don’t separate between investment banks and commercial banks, for example. They have a “supermarket” model that they’ve got strong regulation of.

    Like Canada?

    THE PRESIDENT: Canada being a good example….So — that doesn’t mean that, for example, an insurance company like A.I.G. grafting a hedge fund on top of it is something that is optimal….And in that sense I think you can make an argument that there may be a breaking point in which functions are so different that you don’t want a single company doing everything.

    But when it comes to something like investment banking versus commercial banking, the experience in a country like Canada would indicate that good, strong regulation that focuses less on the legal form of the institution and more on the functions that they’re carrying out is probably the right approach to take.

    I’m sort of waffly on the whole question of limiting bank size, but this isn’t an especially persuasive answer.  The experience of Canada is, I suppose, an existence proof that big banks can be regulated effectively, but when Obama says “other countries” he sure seems to be suggesting more than just Canada.  And frankly, I think he’d run out of examples pretty quickly.  After all, big banks Europe are in pretty bad shape.  Ditto for big banks in Japan following their property crash.  And big banks in Russia.  And big banks in Asia following their 1997 meltdown.

    In some sense, I guess this comes down to a belt and suspenders issue.  I suspect Obama is basically right: regulating leverage is more crucial than regulating bank size.  A big bank with reasonable gearing is pretty safe.  But if you really want to be safe, you’ll have a fallback: not only will you regulate leverage, but you’ll limit bank size and complexity as well, so that even if a bank manages to evade the leverage rules it still can’t do too much damage.  It can only do that if it manages to evade two separate sets of rules.

    More to the point, though, I wish Leonhardt hadn’t let Obama off the hook by feeding him the Canada example.  I would have have been curious to hear what Obama had to say without prompting.  Does he really think the banking system in the rest of the world is doing well because it’s better regulated than ours?  I’m not sure the evidence supports that.

  • Hundred Days Summary


    According to CBS News White House correspondent Mark Knoller — who’s apparently an obsessive record keeper — in his first hundred days Barack Obama has held 16 news conferences, given 115 speeches, held one cabinet meeting, signed 12 bills, visited the capitol 8 times, gone on 3 overseas trips, visited Camp David 4 times, flown on Air Force One 34 times, issued 17 proclamations, gone on one golf outing, and attended at least 10 sporting events.  More here.

  • Swine Flu


    Ezra Klein passes along the news that Israel’s ultra-orthodox deputy health minister has some taxonomic concerns about our flu epidemic:

    Yakov Litzman said the reference to pigs is offensive to both religions and “we should call this Mexican flu and not swine flu,” he told a news conference at a hospital in central Israel.

    Both Judaism and Islam consider pigs unclean and forbid the eating of pork products.

    I don’t get it.  Even taking this craziness on its own terms, what’s the problem?  Pigs are unclean, flu is unclean, it makes perfect sense that a bad thing like a flu pandemic would come from a bad thing like herds of swine.  What’s the deal here?

    UPDATE: There’s also this from Dr. Sanne Magnan, Minnesota’s health commissioner: “We’re trying to get away from the term ‘swine flu,’” Magnan said at a press conference today….A possible reason for the name change: The “swine flu” label has the nation’s pork industry squealing, as hog prices plummet in apparent worry over public misperceptions that pork is unsafe to eat.

    Yeesh.  But at least the motivation is pretty obvious here.

  • CNN and Jim DeMint


    This is annoying.  Here is CNN’s Political Ticker today describing an interview with South Carolina senator Jim DeMint:

    DeMint says he isn’t worried. He denied that the GOP has become a southern party, attributing Republican losses in the northeast to some northern voters who have left the region and moved south hoping to avoid labor unions and “forced unionization.”

    I was all ready to bring the snark to the idea that people were moving south to avoid being press ganged into unions, but first I wanted to look up the actual transcript.  Here it is:

    SANCHEZ: Why does it seem like the Republican Party is only going to the South, the Southern states, and the Democratic Party is starting to stay in the Northeast and then maybe branching out into some of the other areas, like Pennsylvania, where Arlen Specter is leaving?  I mean, does that worry?

    DEMINT: Well, it’s not just politically. People are moving from the northeast and from the northern part of the country to the south for a lot of reasons. And I think you see heavy unionization and forced unionization in Pennsylvania and Michigan, these other states. And obviously they’re very much for the Democrat big-government approach. But we see that falling apart with American auto companies. We see it falling apart all across the country.

    Come on.  DeMint may not be doing himself any favors with this kind of head-in-the-sand stuff, and in any case it’s not really true that there’s any serious regional migration between north and south.  Still, he didn’t say people were moving south because of unionization.  He said people were doing it “for a lot of reasons” and then, responding to Sanchez’s question about why Dems were branching out into Pennsylvania, suggested that places like Pennsylvania and Michigan are friendly to the “Democrat big-government approach” because of their high unionization.  And he believes in his heart of hearts that this is falling apart and conservatism will prevail.  This is probably wrong too, but it’s not nearly as risible as the notion that factory workers are fleeing south to avoid closed shops.  CNN’s own summary got it wrong.  DeMint is a troglodyte, but this is fairly ordinary political blather, not the high-octane idiocy they made it out to be.

  • Torture and Civilization


    Christopher Orr weighs in with a utilitarian argument about why torture is bad:

    When a group of combatants are badly outnumbered, or surrounded, or otherwise very, very unlikely to win a conflict, they have a considerable incentive to surrender — but only if they believe they will subsequently be treated with mercy. That is why individuals, and nations, surrender. The humane treatment of surrendered captives, therefore, is a crucial — arguably the crucial — understanding between adversaries if their conflict is to end in any way other than with the wholesale slaughter of the losers.

    If arguments like this persuade anyone, I’m all for them.  Any port in a storm.  But ultimately these exercises in logic chopping never work.  Is torture OK against an enemy that refuses to give up?  Is torture OK in a non-combat setting?  Is torture OK if you somehow convince yourself that it will save the lives of your enemy in the long run by ending the war sooner?  In the end, you can always chop the logic a little bit finer if you’re minded to.  It just doesn’t work.

    I don’t have either the vocabulary or the literary sensibility to explain with any eloquence why I oppose torture, so I usually stay out of conversations like this.  Besides, they depress the hell out of me.  But for the record, it goes something like this.

    I don’t care about the Geneva Conventions or U.S. law.  I don’t care about the difference between torture and “harsh treatment.”  I don’t care about the difference between uniformed combatants and terrorists.  I don’t care whether it “works.”  I oppose torture regardless of the current state of the law; I oppose even moderate abuse of helpless detainees; I oppose abuse of criminal suspects and religious heretics as much as I oppose it during wartime; and I oppose it even if it produces useful information.

    The whole point of civilization is as much moral advancement as it is physical and technological advancement.  But that moral progress comes slowly and very, very tenuously.  In the United States alone, it took centuries to decide that slavery was evil, that children shouldn’t be allowed to work 12-hour days on power looms, and that police shouldn’t be allowed to beat confessions out of suspects.

    On other things there’s no consensus yet.  Like it or not, we still make war, and so does the rest of the world.  But at least until recently, there was a consensus that torture is wrong.  Full stop.  It was the practice of tyrants and barbarians.  But like all moral progress, the consensus on torture is tenuous, and the only way to hold on to it — the only way to expand it — is by insisting absolutely and without exception that we not allow ourselves to backslide.  Human nature being what it is — savage, vengeful, and tribal — the temptations are just too great.  Small exceptions will inevitably grow into big ones, big ones into routine ones, and the progress of centuries is undone in an eyeblink.

    Somebody else could explain this better than me.  But the consensus against torture is one of our civilization’s few unqualified moral advances, and it’s a consensus won only after centuries of horror and brutality.  We just can’t lose it.

  • AmEx Woes


    Apparently some American Express customers are being told they have to send in copies of their tax returns if they want to keep their credit cards.  Gotta be a scam, right?  No one in their right mind would do that.

    Nope.  It’s for real.  AmEx must be in a world of hurt these days.

  • Kathleen Sebelius


    Matt Yglesias ruminates on the meaning of yesterday’s vote to (finally) confirm a Secretary of Health and Human Services:

    It seems to me that if you can only get 65 votes for what should be an uncontroversial HHS appointment, then the odds of a broad bipartisan coalition for big picture health care reform are not so good.

    ….The prevailing spirit within the GOP is clearly that Obama is a very bad president and so they should vote “no” on his initiatives. Which is fine. But it means that if Obama wants to deliver on his campaign pledges, he needs to use every legal means at his disposal to just pass things over the objections of the minority that opposes him.

    I had sort of the same thought yesterday.  I mean, I understand the political/fundraising motivations for voting no on Sebelius as a sop to the pro-life contingent in the GOP, but everyone knew there was no way it would ever make a difference.  It’s not as if Obama would have turned around and nominated a pro-lifer to HHS, after all.  It’s ridiculous.  But nearly the entire Republican caucus voted against her anyway, which means that their desire to work with Obama even at the most basic level of allowing a president to choose his own cabinet is less important than their desire to prove their absolute fealty to the conservative base.

    Not a good sign — although I suppose there’s an alternate reading that’s less dire: if you know that Sebelius is going to be confirmed anyway, voting no is something of a freebie.  So maybe this doesn’t really mean too much after all.  On balance, though, I think I’m with Matt.

  • Economic Update


    So how’s the economy doing?  Let’s take a look!

    New York Times: U.S. GDP shrank by 6.1% in the first quarter, far worse than the “consensus” prediction of 4.7%.

    Bloomberg: A full third of the country’s biggest banks need additional capital, according to leaked preliminary results of the Treasury’s stress tests.

    RGE Monitor: According to a government report leaked to Sueddeutsche Zeitung, bad assets in the German banking system total slightly over a trillion dollars.  Over half of bad assets worldwide are in the European banking system, which has done much less to recognize them than we have in the U.S.

    Wall Street Journal: Business fixed investment in the U.S. was down a whopping 37.8% last quarter.

    Want some good news to go with that?  Sorry!  Apparently personal consumption was up 2.2%, which is probably a mixed blessing, and home prices were down 18% compared to last year, but didn’t quite fall at a record rate.  That’s the best I can do.  Ed Yardeni tries to do better, but one of the green shoots on his list of reasons to feel optimistic is the fact that Portfolio magazine has shut down.  Put me down as unconvinced.

  • Green Shoots


    Tapped glosses an EPI report on green jobs:

    Most notable is its pronouncement that a “green” investment is one of the most stimulative forms of government spending, providing a 1.6:1 return-to-investment ratio. This is greater than generic infrastructure investment (1.59), temporary tax cuts (1.03), and corporate tax cuts (0.3)….Now for the less-than-rosy projection: men would be disproportionately advantaged by this spending, accounting for 75 percent of the total employment gains.

    Actually, that’s not as bad as it sounds — at least in the short run.  As CAP’s Heather Boushey points out, men have absorbed 75% of all job losses during the current recession, so a stimulus program that targets them disproportionately makes some sense.  After all, it’s either that or let them stay home grinding their teeth and taking cues from Fox News about who to blame for all this.  And we don’t want that, do we?

    Overall, EPI’s model projects that $100 billion in green investments would generate 750,000 jobs and raise wages of non-college educated workers by about half a percent per year.  Plus it would help prevent us from turning the planet into a cinder.  So that would be another bonus.  The whole paper is here.

  • Specter and EFCA


    A few weeks ago Arlen Specter announced that he would oppose the Employee Free Choice Act (aka “card check”), labor’s top legislative priority.  But now that he’s a Democrat, what will he do?  Jon Chait speculates:

    Specter says he’ll still oppose EFCA, but I have trouble seeing him really maintain that stance. He has to make it through a Democratic primary now. That’s very hard to do in Pennsylvania when the AFL-CIO is out for your blood.

    Specter’s most likely play is to stay formally opposed to EFCA, but support a compromise along the lines of what some moderate Democrats might favor. He certainly can’t risk being the decisive anti-EFCA vote. Democrats in the Senate may be offering him institutional support in the primary, but primaries tend to be low-turnout operations, and Specter is going to have to work his way into the favor of the partisan Democratic base.

    I think that’s probably right.  Specter won’t completely flip-flop, but there was some wiggle room in his statement announcing opposition to EFCA.  Even without changing his position on secret ballots, then, I could see him working with a few conservative Dems and moderate Republicans to construct a compromise bill that pretty effectively boosts his labor bona fides.  After all, the current version of EFCA is almost certainly dead in the water (and was likely dead before Specter announced his oppostion), so gaining support for even a watered down version would allow him to position himself as the guy who rescued EFCA and got half a loaf where there was nothing previously.

    It might not work, of course, but it’s probably worth a try for him.  I wouldn’t be surprised to see him give it a go.

  • The Photo Op


    I know it’s Arlen Specter 24/7 most places, but I’m still curious: what was the “photo-op” that the White House staged with Air Force One over the streets of Manhattan yesterday?  The Washington Post explains:

    The event was intended to update a stock photo of the presidential plane that is used for distribution to media and others, according to a person familiar with the matter who was spoke on condition of anonymity because he was not authorized to speak publicly. The photo, featuring the Statue of Liberty, is to replace one of the aircraft flying near Mount Rushmore, the person said.

    Jeebus.  They had to provide this explanation on background?  I know it’s embarrassing, but can’t they just fess up to the whole thing in public?