Part three of our series of charts from the Economic Report of the President is all about banking. Mostly, it's a trip down memory lane. Here's a look at the worldwide market in derivatives over the past couple of decades:

The volume of derivatives went from $10 trillion to $35 trillion in two years starting right before the market crashed. Here's another perspective on that:

In 1990, shadow banking was about the same size as the traditional banking sector. By 2007 it was more than twice as big. Just before the crash, shadow banking comprised two-thirds of the entire banking industry and it was almost entirely unregulated. This is why I was happy that Hillary Clinton at least mentioned shadow banking during the campaign.

Here's how all this affected traditional banks:

In 2007, losses from trading amounted to about $30 billion. By 2009 that had skyrocketed to about $100 billion—and that's in addition to about $40 billion in traditional loan losses. This is what happens when you start with a housing market that's already in bubble territory and then egg it on with insane levels of rocket science derivatives, most of them unregulated bastard offspring of the shadow banking sector.

So what's happened since then? We had a huge crash, the Fed instituted higher capital ratios for "systemically important financial institutions," and we passed the Dodd-Frank reforms. Here's what banks look like now:

Before the Great Recession, the biggest banks (green line) had Tier 1 equity ratios of about 7 percent. That's why they couldn't weather the crash. Today they're above 12 percent. Is that enough? Maybe not. But it's a helluva lot better than it used to be.

Finally, here's an intriguing chart that shows one of the specific consequences of Dodd-Frank:

Most single-name derivatives are now cleared through a central clearinghouse, which makes it easy for traders to cancel out mirror-image positions they hold. This is called "compression," and it reduces the total volume of derivatives and increases the safety of the financial system. Today, derivatives worth $200 trillion (notional) are compressed out of existence each year.

Needless to say, Republicans are hellbent on repealing Dodd-Frank. Sure, it makes the banking system safer and helps protect consumers, but big banks don't like it, so that's that. The party of Donald Trump, the working man's president, will do whatever Wall Street tells them to do. Funny how that works, isn't it?

Bernie Woulda Lost

Andrew Gelman takes issue with my claim that Bernie Sanders would have been a sure loser if he'd run against Donald Trump:

My guess would be that Sanders’s ideological extremism could’ve cost the Democrats a percentage or two of the vote....But here’s the thing. Hillary Clinton won the election by 3 million votes. Her votes were just not in the right places. Sanders could’ve won a million or two votes less than Clinton, and still won the election.

....The 2016 election was just weird, and it’s reasonable to say that (a) Sanders would’ve been a weaker candidate than Clinton, but (b) in the event, he could’ve won.

I won't deny that Sanders could have won. Gelman is right that 2016 was a weird year, and you never know what might have happened.

That said, I really don't buy it. This sounds like special pleading to me, and it relies on a truly bizarre scenario. We know that state votes generally follow the national vote, so if Sanders had lost 1-2 percentage points compared to Clinton, he most likely would have lost 1-2 percentage points in Wisconsin, Michigan, and Pennsylvania too. What's the alternative? That he somehow loses a million votes in liberal California but gains half a million votes in a bunch of swing states in the Midwest? What's the theory behind that?

And lucky me, this gives me a chance to bring up something else: the assertion that Sanders might very well have won those Midwestern swing states that Clinton lost. The argument is that all those rural blue-collar whites who voted for Trump thanks to his populist, anti-trade views would have voted for Sanders instead. After all, he also held populist, anti-trade views.

But this is blinkered thinking. It focuses on one positive aspect of Sanders' platform while ignoring everything else. Take all those white working-class folks who have sucked up so much of our attention lately. Sure, many of them voted for Trump. And sure, part of the reason was his populist economics. But it wasn't just that. They also liked the fact that he was anti-abortion and pro-gun and wanted to kick some ass in the Middle East. Would they also have voted for a guy who opposed TPP but was pro-abortion and anti-gun and non-interventionist and in favor of a gigantic universal health system and promoted free college for everyone and was Jewish? A guy who is, literally, the most liberal national politician in the country?

Sure, maybe. But if that's what you're counting on, you might want to rethink things. It's absolutely true that Hillary Clinton ran 5-10 points behind Obama's 2012 numbers in the Midwest. It's also true that Obama was the incumbent and Mitt Romney was a pro-trade stiff who was easy to caricature as a private equity plutocrat who downsized working-class people out of their jobs. Was there more to it than that? Perhaps, and that's something for Democrats to think about.

Whatever the case, though, Sanders would have found it almost impossible to win those working-class votes. There's no way he could have out-populisted Trump, and he had a ton of negatives to overcome. And that's not even taking account of how Trump would have attacked him. Sanders hasn't had to run a truly contested election for a long time, and he flipped out at the very mild attacks he got from Hillary Clinton. I can't even imagine how he might have reacted to Trump's viciousness.

But I will take this chance to clarify one thing. American politics is so polarized that both parties are pretty much guaranteed about 45 percent of the two-party vote. So when I say Sanders would have lost in a landslide, that's all I mean. Instead of Clinton's 51-49 percent victory in the popular vote, my guess is that Sanders would lost 47-53 or so. In modern presidential politics, that's a landslide.

Part two of our series of charts from the Economic Report of the President is all about higher education. First off, here's the college premium over time:

When I graduated from my local state university in 1981, I had no debt because attending public universities was practically free. On the other hand, my earning prospects were only about 20 percent higher than a non-college grad. Today, college grads often have tens of thousands of dollars in debt, but their earning prospects are 70 percent higher than non-college grads. So who got the better deal? That's not entirely obvious.

Next up is a different measure of the value of a college education:

This helps answer the question, "How high can university costs go?" The answer is, "Pretty high." Even with higher tuition, college is still a great deal. A bachelor's degree, on average, pays off nearly 10:1. That means there's a lot of room to raise tuition and still provide enough of a bargain that anyone who's qualified will be willing to pay. Treating higher education this way may be a bad idea, but nevertheless, this chart suggests that states can continue to raise prices if they want to.

The first two charts have been all about nonprofit schools: community colleges, state universities, and private universities like Harvard and Morehouse. But for-profit institutions—which are typically trade schools—have exploded over the past three decades:

The number of trade schools has skyrocketed since 1987, from about 300 to well over a thousand. And that brings us to our final chart:

At first glance, this chart seems odd: the students with the smallest debt have the highest chance of defaulting. There are multiple things going on here, but the biggest one is that a lot of these students attended trade schools for a semester or a year and then dropped out. Their debts aren't the biggest, but with not even a trade school certificate they can only get low-paying jobs that make it very hard to pay back their loans.

Too often, for-profit schools cajole people into signing up with promises that the government will pay for everything. Unfortunately, a lot of their students just aren't suited for further schooling, so they drop out and end up with less than nothing: no certificate, and a big chunk of debt. The trade schools themselves don't care much, since they get paid whether anyone graduates or not, but it's a helluva bad deal for the students who end up broke. This is why President Obama's recent crackdown on the worst offenders among for-profit trade schools is so welcome.

ERP? Yes indeed. That's what the cool kids call the Economic Report of the President. The 2017 edition is out, so this weekend I'm going to highlight a few of the charts that caught my eye. These are not necessarily the most important topics in the report. They just happened to strike me as interesting and worth sharing more widely. I'm mostly going to present them without much commentary.

In previous times, I would have called this a series of blog posts. Today I suppose I should call it a blogstorm. Gotta keep up with the lingo, after all. Our first topic is income inequality. Here's the impact of the 2009 stimulus bill and the Making Work Pay tax credit:

And here's the impact of changes in tax policy (primarily the effects of the "fiscal cliff" negotiations, which renewed the Bush tax cuts for all but high-income taxpayers):

And finally, here it is all put together: stimulus, tax changes, and Obamacare:

The lowest-income folks saw their after-tax income increase by about 18 percent. The after-tax income of the top 1 percent declined by about 5 percent and the top 0.1 percent declined by about 10 percent.

Not bad. Sadly, nothing infuriates Republicans more than reducing income inequality, and they will do everything they can to reverse this and then some over the next four years. The rich can never be too rich and the poor can never be too poor in GOP land.

Mick Mulvaney, a lunatic budget hawk who entered Congress in the great tea party wave of 2010, will be our new director of the Office of Management and Budget. Most people probably think this is bad because he's a lunatic budget hawk, but I'm not sure how much that matters. After all, Paul Ryan is already a budget hawk—except for budget-busting tax cuts, of course—and defense spending—and anything else that conservatives happen to like. But anyway, he's a budget hawk as that term is currently abused. So Mulvaney probably doesn't add an awful lot to the total weight of budget hawkery that will rule Washington, DC, next year.

But OMB is important for an entirely different reason: It plays a huge role in the regulatory process. Allow me to quote from the OMB website:

The Office of Information and Regulatory Affairs (OIRA) is a statutory part of the Office of Management and Budget within the Executive Office of the President. OIRA is the United States Government’s central authority for the review of Executive Branch regulations, approval of Government information collections, establishment of Government statistical practices, and coordination of federal privacy policy. The office is comprised of five subject matter branches and is led by the OIRA Administrator, who is appointed by the President and confirmed by the United States Senate.

Mulvaney will be the patron saint of "cost-benefit" analysis of federal regulations—which, in Republican hands, normally means totting up the costs and ignoring the benefits. In particular, it means that environmental regulations, even those with immense benefits, will be scored into oblivion and never see the light of day. Lucky us.

Anyway, we're almost finished. We have two Cabinet positions left—Agriculture and Veterans Affair—and two Cabinet-level posts—CEA and trade representative. Tick tick tick.

Health Update

The short version: nothing has changed. The long version: nothing has changed.

Literally. The M-protein level that we track so assiduously has stayed at the exact same level for four months running. The exact same level down to the hundredth of a gram. I'm beginning to wonder if I'm just being humored and they're only pretending to do the lab work. The guy is nuts about his M-protein level. Just mark down 0.58 and forget about it.

Everything else is stable and relatively normal too. My immune system is, of course, compromised by the chemo meds, but it remains in tolerably good condition. My red blood cells are fine. My platelet count is sometimes a little low, but not enough to be worried about. I go through weird cycles of fatigue (Friday was unusually bad, for example), but nothing close to what happened during the initial rounds of chemo. Mostly I just have to take naps more often than I used to. My neuropathy is annoying but seemingly fairly stable. And now that I'm off the evil dex, I'm no longer gaining weight. Sadly, I'm not losing it either. Even cancer can't kill off my weakness for chocolate.

National Review editor Rich Lowry thinks that although Donald Trump's fans love his populist blather, they might start to lose patience with some of the big programs that Congress tries to pass. For example:

Obamacare “repeal” without a replacement, a deficit-increasing traditional Republican “tax cut for the rich,” and even — although this is much less likely — Medicare reform. Trump may find his political capital depleting rapidly in the cause of passing conventional Republican legislation that isn’t as important to him as his populist calling cards.

I don't want to make too much of this, but when was the last time you heard a conservative, let alone the editor of NR, refer to tax reform as a "traditional Republican" "tax cut for the rich"? That's the way liberals jeer at supply-side voodoo. Conservatives insist that tax cuts like Trump's (or Paul Ryan's) are "broad based," "capital deepening," and "job creating." They are most definitely not "tax cuts for the rich."

But now they are. What does this mean?

It's that time of year again—when we beg our readers for tax-deductible donations to support our work.

But we've never been too much into doing things the way they've always been done. Case in point: Clara and Monika's new piece that argues for investigating Donald Trump—and supporting MoJo—includes this appraisal of the media:

"Why was it only now, well past the election, that Trump is being pushed to address how we would deal with banks to which he is in debt, or foreign leaders who have a say over his company's projects? Simply put: Math. Advertising pays fractions of a penny per click, which means that publishers have to pump out buckets of fast, cheap content to make ends meet, and that leaves little opportunity for serious investigation.

....In normal times, right now we'd be in the middle of the kind of routine end-of-year fundraising drive many nonprofits do in December ("We need to raise $250,000 by December 31!"). But these aren't normal times. So enough with the marketing pitches. None of us needs to be motivated by some arbitrary fundraising goal. Covering Trump, and what he represents, will take everything we've got."

Yep. Here's a small sample of my headlines (from this week alone!). If you think pieces like this matter, I hope you'll pitch in a few bucks to help us do it.

  • NBC NEWS: Putin Personally Directed Anti-Clicking Hacking
  • No, the Senate Will Not "Heavily Vet" Trump's Cabinet Nominees
  • Chart of the Day: Republicans Sure Are Warming Up to Vladimir Putin
  • Working Class Hero Donald Trump Sure Has Been Good For Wall Street
  • Russia Ran the Most Epic Ratfucking Operation in History This Year
  • How Putin Got His Pet Game Show Host Elected President
  • Here is Rex Tillerson's Awesome Record at ExxonMobil

And now, as your reward for reading this far (and donating to MoJo), here is Hopper enjoying herself in the garden earlier this week. And don't forget: today is also Beethoven's birthday. Let's all listen to the 7th Symphony.

Conservative Ramesh Ponnuru considers what would happen if Republicans "repealed" Obamacare but left in place the preexisting conditions ban:

This course could cause the insurance exchanges, already in trouble, to collapse entirely. That’s because the Republican bill would scrap the individual mandate while keeping Obamacare’s requirement that insurers treat sick and healthy people alike.

....The Republicans to whom [Philip] Klein talked are blasé about this possibility. If millions of people lose their coverage, these Republicans plan to say that the exchanges were already collapsing before they touched the law. It seems unlikely that the press will go along with this narrative, in part because many health-care experts, liberal and conservative, will tell reporters that it’s false.

What Republicans have not faced is that they don’t have the votes to repeal Obamacare. Calling a bill that doesn’t repeal Obamacare’s central provisions “repeal” is no escape from that dilemma.

It's a sign of the times that Ponnuru has to warn Republicans that the press won't go along with their preferred narrative because it's a lie. It's also a bit starry-eyed, unfortunately. The fact that it's a lie certainly wouldn't stop the right-wing press; wouldn't stop Trump; and would quite likely affect the rest of the press at least to the extent of calling it "controversial" and declining to take sides.

That said, Ponnuru is right. If you repeal some of Obamacare but leave the rest in place, it would cause the entire program to collapse. It might even go further, and cause the entire individual insurance market to collapse. Republicans better think hard about whether they want to be on the business end of something like that happening.

The Economic Report of the President is out, and we should probably take a look at it, if only for old time's sake. The rumor mill says that the next chairman of the CEA will be supply-side TV blatherer Larry Kudlow, and God knows what we can expect from him. Probably a ten-minute YouTube video. Or maybe a tweetstorm. Who knows?

Anyway, this year's report is stocked full of the usual number of interesting charts, but I'm going to highlight their version of my favorite chart. This one shows state and local spending following the Great Recession:

Normally, spending increases after a recession, and this is one of the things that powers the recovery. This time that didn't happen. Thankfully, we at least had a bit of help at the federal level:

Needless to say, Republicans feverishly opposed all attempts at economic stimulus because they didn't want the economy to get too much better. That might have helped Obama's reelection chances, you see.

Oh well. Bygones. I'm sure Trump will fix everything.