Kevin Drum

Putin: Eastern Ukraine is Really "Novorossiya"

| Thu Apr. 17, 2014 7:36 AM PDT

The Guardian reports that Vladimir Putin held a long, "meticulously stagecrafted" press conference today:

Accusing the Kiev authorities of pulling the country into an "abyss", he called on Ukraine to pull back its heavy artillery from the east of the country, asking: "Who are you going to use it against? Have you completely lost your marbles?"

....Putin referred to the region in question by its tsarist name "Novorossiya", or "New Russia", as it was referred to in the 19th century under tsarist rule, and suggested it was a historical mistake to hand it over to Ukraine.

"It's new Russia," he told millions of watchers "Kharkiv, Lugansk, Donetsk, Odessa were not part of Ukraine in Czarist times, they were transferred in 1920. Why? God knows. Then for various reasons these areas were gone, and the people stayed there — we need to encourage them to find a solution."

That does not sound very promising, does it?

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Invading Crimea May Have Cost Russia $200 Billion So Far

| Wed Apr. 16, 2014 9:07 PM PDT

Russia's military actions are costing it dearly:

Russia's annexation of Ukraine's Crimea region last month and the instability it created in Russian financial markets were cited by government officials for record capital flight and sharply downgraded growth forecasts for the country. Finance Minister Anton Siluanov said that instead of projected 2.5% growth this year, Russia's economy might show no growth at all.

....U.S. and European sanctions to punish Russia for occupying and annexing Crimea have so far targeted only a few dozen officials and businessmen. But the prospect of broader penalties, such as a Western boycott of Russian oil and gas, have scared investors into cashing out their ruble-denominated assets for hard currency and taking their money abroad. Russia's foreign exchange reserves were drained of a record $63 billion in the first quarter of the year, Economic Development Minister Alexei Ulyukayev said Wednesday in an address to the lower house of the parliament.

....Russian stocks fell 10% last month, wiping out further billions in capital. The ruble has lost 9% of its value since the start of the year, boosting prices for the imported food and manufactured goods on which the Russian consumer market is heavily dependent. "The acute international situation of the past two months" was the cause, Ulyukayev said, referring to the Ukraine unrest.

That's a helluva big drop in economic growth. Just by itself, it represents a cost of $50 billion. Add in the flight of cash and the stock market decline, and you're somewhere in the neighborhood of $200 billion.

Is that enough to make Russia blink? Maybe not. But it hurts, and the prospect of losing even more has got to be enough to give even Vladimir Putin a few second thoughts.

An Update From Our 1 Percent World: Southern California Housing Edition

| Wed Apr. 16, 2014 11:24 AM PDT

The LA Times reports that the Southern California housing market is once again getting frothy:

But a deeper look at the market reveals a recovery divided between the rich and everyone else.

The market for high-dollar homes is hopping, with sales on the rise and buyers launching bidding wars. But sales of low- to medium-priced homes have plummeted during the same period — with many potential buyers priced out....Those declines came even as sales of high-end homes increased. Sales of homes costing $800,000 or more grew 12%, while sales of homes costing less than $500,000 fell at twice that rate.

...."We're getting multiple offers on just about everything," said Barry Sulpor, an agent with Shorewood Realtors in Manhattan Beach, where he said there is a new wave of tear-downs and new construction in prime beachfront locations. "The market is really on fire."

I think partly this is a bit of a statistical artifact: a lot of investors were buying cheap houses a year ago, figuring they could rent them out and make a killing. That didn't work out so well, and now a lot of those houses are back on the market. Long story short, some of the increase in low-end housing prices over the past year or two has been a bit of an investor-fueled mirage, and now reality is catching up to that.

Still, the overall picture is clear: At the lower end of the market, ordinary people have been increasingly locked out for a while, and that's still the case. Nor is it any surprise. After all, median wages have stagnated during the entire period that we so laughingly refer to as a "recovery." As always in our brave new 1 percent era, things are going pretty well for the rich. For the not-so-rich, not so well.

In Red States, the Uninsured Are Up the Creek

| Wed Apr. 16, 2014 10:03 AM PDT

Gallup has previously reported a drop in the uninsurance rate among Americans following the rollout of Obamacare last year. Today, they broke down these numbers between states that embraced Obamacare by setting up their own exchanges and expanding Medicaid vs. states that have resisted implementing the law.

The results are no surprise. States that embraced Obamacare—which presumably were more committed to public health in the first place—had lower uninsurance rates to start with and saw bigger declines. The states that resisted were the ones with the biggest uninsurance problems to start with and saw only token declines. In fact, the decline in states that embraced Obamacare was more than triple that in the other states, 2.8 percent vs. 0.8 percent.

These numbers will change a bit over the next couple of months as things settle down and signups are complete, but the relative differences will almost certainly remain huge. Republican governors have been almost unanimously dedicated to sabotaging Obamacare and withholding health care from their own residents, and they've been successful. I hope they're proud of themselves.

LBJ Was Great. LBJ Was Horrible. Deal With It.

| Wed Apr. 16, 2014 8:43 AM PDT

David Greenberg and Michael Kazin are arguing about whether LBJ was a great president. Here is Greenberg's wrap-up:

Maybe our differences really come down to this: For Michael, the enormity of the Vietnam debacle is so great that LBJ must remain forever confined to a historical doghouse. In contrast, I would submit that we have to hold both Johnson’s great deeds and his terrible deeds in our minds at the same time. This uneasy position, I think, does more to invite or even demand continued attention to LBJ’s presidency from historians. And it implies a moral verdict on the man that is, in my view, ultimately more unsettling than a tout court denial of any esteem for him whatsoever.

Yes. A thousand times yes. There's no need to rate LBJ or any other president on a scale from 1 to 10. He was a great president in some areas and a terrible one in others. That's it. You can't put those two things in a blender and come to a single, homogenized conclusion, no matter how badly you want to.

This isn't like Mussolini making the trains run on time, or Hitler building the autobahn, trivial achievements that simply don't bear on either man's place in history. LBJ's domestic achievements were gigantic. His foreign policy failures were equally gigantic. That's it. That's what happened, and that's who he is. We just have to live with it.

In War, Truth Is the First Casualty

| Wed Apr. 16, 2014 8:00 AM PDT

David Herszenhorn reports that Tuesday marked yet another day of "bluster and hyperbole, of the misinformation, exaggerations, conspiracy theories, overheated rhetoric and, occasionally, outright lies" that have marked the Russian response to the crisis in Ukraine:

It is an extraordinary propaganda campaign that political analysts say reflects a new brazenness on the part of Russian officials. And in recent days, it has largely succeeded — at least for Russia’s domestic audience — in painting a picture of chaos and danger in eastern Ukraine, although it was pro-Russian forces themselves who created it by seizing public buildings and setting up roadblocks.

....To watch the television news in Russia is to be pulled into a swirling, 24-hour vortex of alarmist proclamations of Western aggression, sinister claims of rising fascism and breathless accounts of imminent hostilities by the “illegal” Ukrainian government in Kiev, which has proved itself in recent days to be largely powerless.

The Rossiya 24 news channel, for instance, has been broadcasting virtually nonstop with a small graphic at the bottom corner of the screen that says “Ukrainian Crisis” above the image of a masked fighter, set against the backdrop of the red-and-black flag of the nationalist, World War II-era Ukrainian Insurgent Army, which inflicted tens of thousands of casualties on Soviet forces.

Over the course of several hours of coverage on Tuesday, Rossiya 24 reported that four to 11 peaceful, pro-Russian “supporters of federalization” in Ukraine were killed near the town of Kramatorsk in eastern Ukraine when a mixed force of right-wing Ukrainians and foreign mercenaries strafed an airfield with automatic gunfire from helicopter gunships before landing and seizing control.

In fact, on the ground, a small crowd of residents surrounded a Ukrainian commander who had landed at the airfield in a helicopter, and while there were reports of stones thrown and shots fired in the air, only a few minor injuries were reported with no signs of fatalities.

Thank God we live in America, where this kind of thing doesn't happen.

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Unsportsmanlike Conduct in the NBA Follows an Inverted U-Shaped Curve

| Tue Apr. 15, 2014 10:56 PM PDT

Over at 538, Benjamin Morris asks "Just How Bad Were the Bad Boys?" The bad boys in question are the Detroit Pistons basketball team of the late 80s, who had a reputation for being unusually aggressive on the court. Did they deserve their reputation? To test this, Morris looks at how many technical fouls they racked up, a good measure of unsportsmanlike conduct. In fact, he takes a look at the total number of technical fouls for the entire league, and finds that the number rose steadily until 1995 and then started a long-term decline.

I promise this is just for fun, but I've overlaid another line against Morris's chart. Not a perfect fit, granted, but not too far off, either. I'm sure a few of you can guess what it is, can't you?

Medical Inflation Is Up, But It's Probably Just a Blip

| Tue Apr. 15, 2014 6:25 PM PDT

Sarah Kliff reports that health care spending ticked upward at the end of 2013:

A four-year slowdown in health spending growth could be coming to an end....Federal data suggests that health care spending is now growing just as quickly as it was prior to the recession.

....The Altarum Institute in Ann Arbor, Mich. tracks health spending growth by month. It saw an uptick in late 2013 that has continued into preliminary numbers for 2014. Separate data from the Bureau of Economic Analysis, which tracks the growth or consumer spending by quarter, shows something similar: health spending grew by 5.6 percent in the last quarter of 2013, the fastest growth recorded since 2004.

Inflation in the final quarter of 2013 ran a little over 1 percent, which means health care spending rose 4.5 percent faster than the overall inflation rate. That's a lot. But it's also only one quarter, and it's hardly unexpected. Take a look at the chart on the right, which shows how much per capita health care spending has increased over and above the inflation rate for the past 40 years. There are two key takeaways:

  • Medical inflation has been on a striking long-term downward path since the early 80s.
  • There's a ton of noise in the data, with every decline followed by a subsequent upward correction.

The HMO revolution of the 90s sent medical inflation plummeting. Then a correction. Then another big drop. And another upward correction. Then another drop. If that's followed by an upward correction for a few years, it would hardly be a surprise.

Nonetheless, the long-term trend is pretty clear, and it shows up no matter how you slice the data. For many years, medical inflation was running as much as 4-6 percent higher than overall inflation. Today that number is 1-2 percent, and the variability seems to be getting smaller. What's more, that 1-2 percent number matches the long-term trend during the entire postwar period (see chart below). There's good reason to think that it might be the natural rate of medical inflation, with the 80s and early 90s as an outlier. That's where I'd put my money, anyway.

Donald Rumsfeld Will Never Overpay His Taxes

| Tue Apr. 15, 2014 2:52 PM PDT

Via Steve Benen, I see that Donald Rumsfeld sends the IRS a letter every year when he files his taxes. Here it is:

I have sent in our federal income tax and our gift tax returns for 2013. As in prior years, it is important for you to know that I have absolutely no idea whether our tax returns and our tax payments are accurate. I say that despite the fact that I am a college graduate and I try hard to make sure our tax returns are accurate.

The tax code is so complex and the forms are so complicated, that I know I cannot have any confidence that I know what is being requested and therefore I cannot and do not know, as I suspect a great many Americans cannot know, whether or not their tax returns are accurate. As in past years, I have spent more money that I wanted to....

Etc. Two things here:

  • As a longtime feeder at the public trough, Rumsfeld is surely aware that the IRS isn't responsible for the complexity of the tax code. Congress is. He needs to write an annual letter to his representative in Congress instead. As a resident of Washington DC, of course, he doesn't really have one, but that's a whole different story. However, I'm sure Rep. Eleanor Holmes Norton would be delighted to receive his letter anyway.
  • The big reason taxes are complicated is because people do complicated things with their money—often with the express aim of lowering their taxes. Nobody is forced to do this. If you want, you can just add up all your income and pay the statutory rate without worrying about deductions and loopholes and capital gains rates and so forth. That will make your taxes easy. But if you're the kind of person who has enough money to hire expensive accountants to manage your carefully tailored investments, then you have enough money to pay those accountants to do your taxes too.

In any case, none of this really matters. No matter how much Rumsfeld pays in taxes, it will never be enough to make up for the damage he's done to this country over his lifetime. He should stop whining. He owes us.

Google Ponders Using Its Search Algorithms to Encourage Encryption

| Tue Apr. 15, 2014 10:14 AM PDT

From the Wall Street Journal:

In a move that experts say could make it harder to spy on Web users, Google is considering giving a boost in its search-engine results to websites that use encryption, the engineer in charge of fighting spam in search results hinted at a recent conference.

The executive, Matt Cutts, is well known in the search world as the liaison between Google’s search team and website designers who track every tweak to its search algorithms....Google uses its search algorithm to encourage and discourage practices among web developers. Sites known to have malicious software are penalized in rankings as are those that load very slowly, for instance. In total, the company has over 200 “signals” that help it determine search rankings, most of which it doesn’t discuss publicly.

I don't want to make too big a deal out of this, but I'm a little nervous about the power Google is demonstrating here. Google has a two-thirds share of the search market, which makes it an effective monopoly in this space, and they're none too transparent about just how they exploit this dominance. Encrypting web sites is probably a good thing to encourage, but it's hardly necessary for every site. Nor is it clear just what Google would decide counts as proper encryption. Do some encryption standards and suppliers stand or fall based on whether Google's algorithm recognizes them?

I haven't given this a ton of thought, so just take this as a bit of noodling. To the extent that Google's algorithms are genuinely aimed at producing the most useful results for people, it's hard to fault them. When they start to go beyond that, though, things get a little gray. What comes next after this? It's worth some thought.