Mohamed El-Erian says that instead of being bailed out, Ireland should default on its debts and devalue its currency:

In a wider policy debate, debt restructuring would be considered as a possible pre-emptive option rather than a disorderly inevitability; thought would be given to the possibility of the weakest Euro-zone members taking a type of sabbatical from the club and rejoining on a stronger and more sustainable basis.

That sounds great — though whether Irish leaders think it sounds great is another thing entirely. What's more, it seems to me that this has been considered before. Here is Felix Salmon's take:

Right now [...] it’s possible to structure a default and devaluation in such a way that the country concerned emerges in a strong fiscal position and with a healthy growth outlook. But the longer we wait, the harder that becomes.

I do think that it would be grossly unfair should the lenders to Ireland’s insolvent banks find themselves getting bailed out by Irish and EU taxpayers at 100 cents on the dollar. Is a sovereign debt restructuring the only way to avoid that? I’m not sure. And it’s also politically all but impossible to build a mechanism into the eurozone allowing countries to exit and re-enter again at a more competitive level, now that the currency union has been deliberately designed without that possibility in place.

Well, I'm confused. A debt default is certainly possible — default is always possible — but exiting and re-entering the eurozone is more than just politically difficult, isn't it? Once something like that happens, there just isn't a eurozone anymore. No one will believe it. If Ireland leaves (and I'm not even sure how that would work technically), it needs to be gone for good.

And who knows? If there's a way to pull that off, maybe that's what will happen. But that's always been the core of the problem. Countries have defaulted on debt lots of times, and often it works out just fine. But it has to be accompanied by devaluation, and that can't happen in a country that's part of a wider currency union and has no control over its exchange rate. Or am I missing something here?

COICA To You Too

Yesterday the Senate Judiciary Committee unanimously approved the Combating Online Infringements and Counterfeits Act, which allows the Attorney General to summarily blacklist internet domain names that are "dedicated to infringing activities." Meaning, of course, copyright infringement. Tim Lee is unimpressed:

Under COICA [...] the courts would issue orders not against the owners of the domain name (who may be overseas) but against domain-name registrars and the operators of DNS servers here in the United States. This means that thousands of systems administrators would be required to maintain a large and constantly-changing list of blacklisted domains. This is a significant and unfair administrative burden on private parties who have absolutely no connection to infringing activities.

The legislation falls far short of constitutional due process requirements. Legal injunctions would be issued upon the attorney general’s mere accusation of “infringing activities.” Not only would the owner of the domain name not have an opportunity to contest the allegations, he would not even have to be notified. And the parties who would receive notice under the legislation—DNS registrars and server administrators—will typically have no knowledge of or connection to the accused domain, which means they would have neither the knowledge or the motivation to dispute unreasonable orders.

This, apparently, is something important enough to try to ram through the lame duck session. That shows a truly excellent sense of priorities, doesn't it?

I meant to link to this yesterday but forgot. Dave Weigel has a genuinely interesting Slate piece about TSA's security procedures that sheds some light on the partisan origins of today's backlash:

According to Tom Blank, the deputy administrator of TSA in the post-9/11 years, the agency was always cognizant of how unpopular scanning could be.

"I used to sit around and look at these images, dial them back, and ask myself how do I take this to Capitol Hill and not be thrown out on my head?" said Blank. "When [Bush's second TSA administrator] Kip Hawley came in [in 2005], he changed that. He saw the politics of it and deep-sixed the program. He deep-sixed it. It got revived after the Christmas bomber."

The point about how full-body scanning got restarted is essential—it was the Obama administration picking up an idea that Republicans had cooled on. Republicans accused the administration of degrading security by dialing back war-on-terror prosecutions in the name of human rights; the response was a security measure that would affect all travelers randomly.

There's much more at the link. Basically, Dave suggests that the libertarian/conservative wing of the Republican Party has long been skeptical of TSA's powers, but felt constrained to shut up and support President Bush while he was in power. So they didn't say much of anything. Now, though, there's nothing stopping them: "The return of [their mistrust and fear of TSA] is a lagging reaction to the fact that Republicans no longer have to toe the party line on homeland security. They can say what they think, which is that the state can't be trusted." Interesting stuff.

Obama in 2011

A couple of days ago I ran a quote from Thomas Mann wondering when Obama was going to finally figure out that Republicans had declared war on him and had no interest in negotiating over legislation. Greg Sargent went back and followed up with another question: what should Obama actually do? Mann's answer:

During his first two years in office, Obama had an ambitious legislative agenda to pursue. He had to adapt his strategies to the realities of Congress, most importantly the promiscuous use of the filibuster by Republicans in the Senate and the unreliability of support on many difficult issues of a half dozen or more Democratic senators. Repeated and extended efforts at negotiations with Republicans were essential, if only to deliver all 60 Democrats/Independents once Franken was elected and Specter switched parties. His campaign rhetoric on a postpartisan politics, however naive or disengenuous, had to be given a try.

The context in the 112th Congress is entirely different. With no expectations of passing important new legislation or of garnering anything from Republicans in Congress but political bait, he should pursue his substantive agenda where he can act on his own and use Congress as a place to submit a genuinely serious set of proposals to deal with the country's more serious challenges (with no expectation that any will pass) and couple them with high visibility straight talk to the American people about the course he is proposing.

That sounds about right, if only because Obama has no real choice in the matter. The more interesting question is how effective he can be in fighting back against the conservative media machine. He hasn't shown much talent at that so far.

That still leaves the lame duck session, though, and I'm surprised there hasn't been more movement there. Obama wants to pass DADT repeal, New START, and raise the debt ceiling. Conservatives want permanent extension of all tax cuts. That sure sounds like fertile ground for a deal to me. I'd be pretty surprised if there weren't half a dozen Republicans basically willing to make a trade: their votes on the Dem priorities in return for Dems agreeing to hold a vote on permanent extension of the tax cuts. After all, none of the three Dem priorities are real killers for moderate Republicans in safe seats (or seats not coming up for reelection soon).  And permanent extension of the tax cuts isn't that big a deal for Dems. I'd trade it away for those other three things and live to fight another day on taxes.

Maybe there's just not enough floor time for all those things. I don't know. But it sure seems as if a deal here is doable.

Via Ryan Avent, here's a nice map from the BEA showing which states are recovering best from the recession. It's all 2009 data. I suppose I can take some cold comfort from the fact that California isn't actually at the very bottom of the list. In fact, we're about 20th from the bottom. That's a little surprising given the depth of the housing crash here and the parlous state of our finances. In less surprising news, Nevada has the worst performance, but longer term it's Michigan that's actually in the worst shape. Ryan has more at the link, including the Texas-California comparison that everyone is dying to see.

A few days ago I confessed that I was getting a little tired of all the TSA criticism. We already know what we don't like, after all: patdowns, scanners, liquid limits, shoe removals, etc. etc. Let's move on. What would a good airport security plan look like?

Luckily for me, MoJo doesn't just employ bloggers, it employs actual reporters who can ask people about this. So Nick Baumann talked to three airport security critics and asked them what we should do:

After speaking to them, I think Kevin is missing the point: the elimination of existing useless security procedures is the heart of the plan. It's not about doing something "instead" of the current system—it's about not doing things that are wasting money and time and not making us safer. It's quite possible that we're already as safe as we're going to get—and every subsequent airport security "improvement" is just reducing our freedom without improving security.

There's more than just that. Nick also produced a list of five positive suggestions from the critics: (1) Enhance baggage security, (2) Pay more attention to airport workers, (3) Randomize enhanced screenings, (4) Make security lines less vulnerable, and (5) Replicate parts of the Israeli model. To be honest, this doesn't sound super impressive. #1 is already in progress, #3 doesn't sound worthwhile, #4 might be a good idea but doesn't address airplane security, and #5 is also in progress. That leaves #2, which is also in progress but perhaps needs more attention.

Anyway, read the whole thing. To be honest, it leaves me with the impression that no one really has any big bright ideas about this. As Nick says, maybe we're already about as safe as we're going to get.

Bernanke vs. China

This is great:

Ben S. Bernanke, the Federal Reserve chairman, argued Friday that currency undervaluation by China and other emerging markets was at the root of “persistent imbalances” in trade that “represent a growing financial and economic risk.”

....For the last two weeks, the Fed has been criticized for its Nov. 3 decision to inject $600 billion into the banking system through next June, resuming an effort to lower long-term interest rates....By defending the Fed’s actions, calling for global rebalancing and hinting that more fiscal stimulus might be needed, Mr. Bernanke’s remarks amount to an endorsement of crucial elements of President Obama’s economic approach.

But that endorsement, in turn, could further stoke criticism by Congressional Republicans, who say the Fed is defying voters’ skepticism about large-scale government intervention in the economy and setting the stage for inflation later.

It's not great that Bernanke has to do this. But it's great that he's putting his cards on the table. I'm truly curious about just how far Republicans are willing to go to overtly take the side of China against monetary policy designed to help the American economy. I guess we'll soon find out.

Here is Atrios a few days ago on plans to shore up Social Security's finances:

The other fantasy is that if you pass some sort of plan which gets Social Security in surplus for the next 75 years according to the SSA then you get credit for "saving" Social Security and that the issue will be then off the table until the end of time. What will happen in practice is that the trustees will inevitably make minor and completely reasonable tweaks to the assumptions underlying their projections so they can once again have the trio of "nightmare," "middle ground," and "everything's awesome" scenarios, with the middle ground scenario showing problems at some point in the future. Then the pain caucus will be back to tell us just how much granny needs to starve and Wall Street will return to siphon up all the money into their gaping maws.

This is a pretty common sentiment in the progressive community, but I really don't think it's right. It's true that a certain contingent of conservatives will never give up on attacking Social Security. They'll release white papers, write periodic op-eds for the Wall Street Journal, broadcast Facebook rants about Ponzi schemes to the faithful, and agitate forever for privatization. This will never stop.

But it won't gain any traction if the official reports show that Social Security is solvent. The fact is that the middle scenario of the Social Security trustees hasn't changed dramatically over the years. In 1985, they projected that outlays would exceed revenue by 2.5 percent of taxable earnings in 2060. Last year, the forecast for 2060 showed an imbalance of about 3.5 percent of taxable earnings:

So yes: The trustees make tweaks, and those tweaks have caused the lines to move up and down over the years. But not by a huge amount. Put together a plan that closes the long-term gap on a pay-as-you-go basis—that is, without playing trust-fund games this time—and it will probably remain in pretty good shape for decades at a minimum.

That won't satisfy Cato or the Heritage Foundation, but they aren't the real opinion movers on this. The Beltway consensus is formed much more by the Washington Post editorial page and the Pete Peterson folks, and they've always been willing to accept the trustees' projections as meaningful. So once the trustees produce a chart showing Social Security in balance, all the oxygen gets taken out of the debate. The privatizers won't give up their crusade, but nobody will be listening anymore. Privatization is fundamentally unpopular, and it only edges its way into the public discourse if it can plausibly appeal to an oncoming crisis. Remove the crisis, and they've got nothing left.

This is why progressives should be more open to trying to cut a Social Security deal. It might not work, of course, but with deficit reduction in the air it's worth trying. Right now, we have multiple deficit reduction plans on the table that provide reasonable starting points for discussion; none of the plans involve privatization, and a bipartisan deal would put a stake through privatization for good; it would remove a distraction and allow us to devote our attention to more important things; and it would be good for the country and good for Social Security beneficiaries to shore up the program permanently and put the doom mongers out of business. Better now than when President Palin is in office.

Front page image courtesy of Flickr user Seth Anderson.

Stuxnet Update

Here's the latest on the Stuxnet worm:

The paternity of the worm is still in dispute, but in recent weeks officials from Israel have broken into wide smiles when asked whether Israel was behind the attack, or knew who was. American officials have suggested it originated abroad.

The new forensic work narrows the range of targets and deciphers the worm’s plan of attack. Computer analysts say Stuxnet does its damage by making quick changes in the rotational speed of motors, shifting them rapidly up and down.

....Those fluctuations, nuclear analysts said in response to the report, are a recipe for disaster among the thousands of centrifuges spinning in Iran to enrich uranium, which can fuel reactors or bombs. Rapid changes can cause them to blow apart. Reports issued by international inspectors reveal that Iran has experienced many problems keeping its centrifuges running, with hundreds removed from active service since summer 2009.

Pretty clever of the Israelis, no?

I'm not sure how seriously to take this, but Marcy Wheeler retweets this from petulantsage:

Every person I've talked to over the past 48 hours, who works for a 3 & 4-star agrees: it's open warfare. USMC and AF will kill repeal.

No surprise, I guess. The Marine Corps (too red-blooded for gays) and the Air Force (too evangelical Christian for gays) have always been the most opposed to repeal of DADT. We'll see who wins the war shortly.