Kevin Drum

Hispanics and the GOP

| Sun May 2, 2010 9:34 PM EDT

Least surprising headline of the day:

Conservative Latinos Rethink Party Ties

"Many Hispanic-Americans," says this WSJ story about Arizona's new immigration legislation, "say they feel stung by a law they allege invites racial profiling, incites hatred and discriminates against all Latinos." Ya think?

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Behind the Scenes at Copenhagen

| Sun May 2, 2010 6:58 PM EDT

In yet another case of politicians forgetting to turn off a microphone, it turns out that some of the private negotiations on the final day of the Copenhagen summit were accidentally recorded. All the big guns were there: Barack Obama, German chancellor Angela Merkel, French president Nicolas Sarkozy, Indian Prime Minister Manmohan Singh, and a Chinese negotiator, He Yafei. From a story in last week's issue of Der Spiegel, here's part of the conversation:

"The IPCC report comes to 2 degrees," said Merkel. "And it also says that we have to reduce (carbon dioxide emissions) by 50 percent."

She wanted to make it clear to Chinese delegation leader He Yafei and Indian Prime Minister Singh that they also had to do their part to achieve the 2-degree target. "Let us suppose there is a 100 percent reduction — (e.g.) no CO2 in the developed countries anymore," even then you would have to "reduce carbon emissions in the developing countries" in order to reach the 2-degree goal, the visibly irritated chancellor said. "That is the truth."

When the Indian leader absolutely refused to accept any concrete targets in the Copenhagen Protocol, Merkel dropped the diplomatic etiquette. "But then you do not want legally binding!" she yelled at the leader of a nation with over a billion people. Singh literally shouted back: "That's not fair!" His Chinese colleague, Deputy Foreign Minister He Yafei, added calmly and in polished English: "The current formulation would not be agreed."

And here, via Google Translate, is the rest of the conversation in this week's issue:

Then Sarkozy reacted sharply and accused China lack of will for climate protection. "In aller Freundschaft" and "with all due respect to China," the West has committed to cut greenhouse gases 80 percent. "And in return, China, which will soon be the largest economy in the world says to the world: engagement apply to you, but not for us." Then Sarkozy, added: "That is not acceptable!" This is about the essentials. "We must respond to this hypocrisy."....[He Yafei responded]: "I heard President Sarkozy to talk about hypocrisy. I avoid such concepts."

I'll bet American politicians wish they could just airily dismiss criticism by saying they "avoid such concepts."

In any case, this recording suggests that the initial reports were more or less right: the Chinese and the Indians were just flatly not willing to make any commitments. As a result, according to the story from last week, Merkel has pretty much given up on climate change:

The collapse of the Copenhagen summit has permanently shaken up Merkel. She [...] left Denmark feeling frustrated. She had rarely experienced such a humiliation. She won't let that happen to her again, she has told herself ever since. Irregularities committed by the Intergovernmental Panel on Climate Change (IPCC) also annoyed the chancellor. Although these errors have not altered the urgent and key messages, she has angrily said among her close advisers that the IPCC's poor communication has made it more difficult to promote climate protection.

Yeesh. Things are really grim on the climate front all over. (Via David Roberts on Twitter.)

CBO vs. CMS on Healthcare Reform

| Sun May 2, 2010 5:13 PM EDT

Last week the CMS actuary released a report about the cost of healthcare reform that seemed to come to more negative conclusions than the CBO. I didn't post about it because, to a first estimate, it seemed pretty similar to the CMS actuary's report from last November. We already went through a big left-right brouhaha about what it meant back then, and I didn't really feel like going through it again.

But Jim Lynch, a professional actuary who I've corresponded with before, was annoyed that no one was really trying to compare the CMS and CBO reports on an apples-to-apples basis, so he went ahead and did it himself. Result: contrary to what you may heard, it turns out they both pretty much agree with each other. He's got the overall results in both table and chart form, so naturally I'm reproducing the prettier chart here. You can click the link for the whole story, but here's the meat of it:

The table tells you that the two arbiters were within 1% on the cost of new coverage — stuff like Medicaid and CHIP expansion. CBO saw things slightly rosier than the Office of the Actuary. It also tells you that the actuarial office projected more cost savings and a lower net cost than the CBO did,

....If anything, the Office of the Actuary seems to like the bill more than CBO. This is particularly true if you look at coverage cost by year, as the following chart does....The table shows that the costs don’t really start building until 2014. For the first two years, the actuaries project higher costs, as the red line is above the blue one. But starting in 2016, the actuaries project lower costs. That’s why the red line falls below the blue one.

To summarize: The actuaries project lower coverage costs overall, and they project costs to decelerate faster than CBO does.

It's worth noting that a big part of the supposed disagreement between CBO and CMS involves the question of whether the cost saving measures in the healthcare bill will work. But that's an issue where neither agency really has any more expertise than anyone else. It's mostly a question of pure political will, and on that score your guess is as good as mine — or theirs.

In any case, the bottom line is that there's very little disagreement here. Roughly speaking, we'll see a trillion dollars in increased costs and half a trillion dollars in cost savings. The remaining cost is paid for via a variety of taxes and fees. Pretty simple.

Working in the Cloud

| Sun May 2, 2010 12:54 PM EDT

So I've been reading more about cloud computing and just generally thinking about the whole thing, and for some reason I've gotten sort of intrigued with it. Here in the U.S., our web infrastructure sucks so badly that I don't think it's really very feasible as a full-time lifestyle yet, but it's getting there. Eventually we'll have routine access to, say, 10mbs wireless everywhere and 100 mbs in most places, and then it becomes a real option.

As part of all this, I've been trying to figure out if I can do away with all desktop applications except my browser. A few years ago this wouldn't have been anywhere near feasible, but I'm not much of a power use these days and my needs are simpler. (Plus browser-based apps have gotten a lot better.) So I started simplifying, and to my surprise it turned out to be easier than I thought it would be. My email is already browser-based since I use Opera, and of course my RSS feeds are too (Google Reader). Google Maps replaced my mapping software a long time ago. I turned off TweetDeck and loaded HootSuite instead. I got rid of Word and Notepad and set up Google Docs. I started using Pixlr as a replacement for Photoshop. I'm still saving documents locally, but changing that would obviously be an easy task.

So how's it working out? I've only been doing this for a few days, but it's (a) suprising how easy it was and (b) frustrating that the web apps all have some drawbacks. HootSuite basically works fine, but its use of real estate is atrocious and it doesn't have an option to pop up a window when new tweets come in. But maybe that's a crutch I don't need anymore. We'll see. Google Docs is Google Docs, and basically works fine — though it lacks features here and there that you get in Office. And if all I want to do is to make a quick note, it takes a lot more clicks and a lot more time than just powering up Notepad for a few seconds. Pixlr is an amazing program, built to look and act like Photoshop and with a pretty stunning array of features. I'm sure it lacks some of Photoshop's advanced features, but so far I haven't found a single thing I need that it doesn't do — and one or two minor things that it does better. Unfortunately, it's Flash-based. As a demonstration of what you can accomplish with Flash it's pretty amazing, but hey — it's still Flash. So it crashes my browser whenever I save an image. And it has no access to the clipboard. Until I figure out what's going on, I'll have to stick with Photoshop. [Update below.]

So what does that leave? Video editing, which I haven't checked into yet. And general media manipulation (iTunes/Media Player), which I also haven't checked into yet. But I assume browser-based versions of both are available, especially for the simpleminded kind of work I occasionally do.

All in all, I was surprised at just how competent all this stuff was. Pixlr, in particular, is pretty stunning if I could just figure out how to keep it from crashing. But it looks to me like anyone who's not a power geek — and maybe even the geeks — could use free online apps for a surprising amount of their daily routine. At this point, then, I guess the next step is to check into online storage. I've had an ADrive account forever, but I really only use it when I need to send friends files that are too large to email. Ideally, especially while I'm still experimenting, I suppose I'd like some way to replicate my directory structure somewhere and save files simultaneously both locally and remotely when I work on them. I'm not sure yet if anyone provides a simple way of doing that.

Right now I'm just playing around, trying to see how well life with just a browser works. I'm so deskbound that this doesn't matter much in a practical sense, but if I were a mobile user it would. So how's all this stuff working out for you road warriors out there?

UPDATE: Hey, pretty good tech support from the Pixlr creator! Turns out I needed to install a new version of the Flash viewer, and after that everything worked fine. So I'll be road testing it for the next week or so after all.

Election Season in California

| Sun May 2, 2010 12:05 PM EDT

Michael Hiltzik today on the hell we can expect from upcoming elections here in California:

To recap, this year stands to yield one of the greatest bumper crops in history in self-serving electoral cash.....Pacific Gas & Electric continues to outdistance the field, having spent $28.5 million so far on what I like to think of as the "Immunize PG&E from Competition" initiative, or Proposition 16 on the June 8 ballot. By PG&E standards the runner-up, Mercury Insurance, is a piker — it has donated only $3.5 million to what I've deemed the "Let Mercury Trash Consumer Protection Laws" initiative, or Proposition 17.

Bringing up the rear but running very strong is the oil industry, which has raised $1.2 million to collect signatures for an initiative, aimed for the Nov. 2 ballot, which would suspend the state's greenhouse gas restrictions.

And this doesn't even count the unbelievable money-fest going on between Silicon Valley zillionaires Meg Whitman and Steve Poizner to win the Republican primary for governor. Luckily, since I'm not a Republican, I can view their contest philosophically.

Anyway, read the whole thing, just to get sense of how completely screwed up the political culture in California is. Pay special attention to Proposition 16, which is one of the sleaziest efforts I've ever seen — and I've been voting in California for three decades now.

Friday Cat Blogging - 30 April 2010

| Fri Apr. 30, 2010 2:53 PM EDT

Today is "favorite things" day. (Actually, that's most days around here.) On the left, Domino is stretched out in the 10 am sunny patch and looking at me suspiciously because she wants to get on with her nap. On the right, Inkblot is eating breakfast. This is, I admit, not the most flattering picture I've ever taken of him, but I thought everyone would enjoy the hint of tongue action. Happy weekend, humans!

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Quote of the Day: Laura Bush

| Fri Apr. 30, 2010 2:29 PM EDT

From Laura Bush, in an interview with Ladies Home Journal:

George loves to tell the story of how all his Midland friends would come to the Oval Office and say, "I can't believe I'm here." And then they looked at him. Couldn't believe he was there either.

I think I understand how they felt.

Prop Trading and the Volcker Rule

| Fri Apr. 30, 2010 2:11 PM EDT

Mike Konczal interviews Jane D’Arista, a research associate at PERI, about the Volcker Rule and its proposed ban on proprietary trading by banks, the part of their business in which they borrow money to trade on their own accounts:

Prop trading only works if [banks] can borrow enough to substantially leverage their own capital. They have to set up a situation in which the cost of borrowing is lower than the return on the assets or derivatives in which they are investing. One example is what they are doing right now — borrowing very cheaply from the Federal Reserve and earning 200 basis points, let’s say, on buying Treasury securities.

....The only way prop trading is profitable is if the scale is enormous, especially in periods of low interest rates when margins are thin. Also because there is — has to be — a maturity mismatch to generate that margin. Except in rare periods when yield curves are inverted, low interest rates are available if borrowing is short-term lending and the desired higher rates on investment are available on longer-term assets. There is a liquidity risk if something happens in the market and the cost of rolling over the short-term borrowing rises....Every time there’s been a shock — Franklin National in 1975, Continental Illinois in 1984, Long Term Capital Management in 1998 — one or more big institution was not able to cover its position because its short-term funding disappeared and central bank liquidity had to be rushed to the rescue.

....Now people might say if we remove the prop trading desk from the firm its no less risky because it will be outside the firm, its like were not going to make it less risky, it will just move it around. What should people think in terms of taking the prop desk out of firms that have access to the fed window?

....What’s important about the ban on banks is that you end the channel through which the backup to the Fed creates the moral hazard that supports excessive risk. If the amount of funding banks can supply to one another and to other financial institutions is curtailed, prop trading will have to shrink because the repo market will shrink.

That’s what section 610 of the Dodd bill would do, shrink the repo market. It would restrict loans by banks to other financial institutions, requiring that the same limit on loans to a non-financial borrower in relation to capital that has been in effect for over a hundred years also apply to financial borrowers. In the case of financial institutions, the limit would apply to credit exposures involving repos, securities purchases and sales and a very broad list of derivatives.

....The growth of the offshore banking market and the invention of the domestic repo market [in the 90s] dramatically raised the amount of intra-sectoral borrowing and brought the issue into focus....About the same time, the Gramm-Leach-Bliley act gave permission to banks to borrow more for both necessary and other reasons — that is, to increase the share of non-deposit liabilities on their balance sheets. So they set up this whole interconnection game in which they borrow from one another and, in the process, are creating liquidity by monetizing debt. Of course, its all on paper — its all a pyramid — and in the end it can collapse and did.

The solution is to limit the funding that goes into prop trading as well as banning the trading itself for those institutions that have access to the Fed. And if that were done — if section 610 became law — even the investment banks wouldn’t be able to engage in excessive proprietary trading because they couldn’t get the funding to do so.

The whole thing is a little long and wonky, but worth a read. And while you're at it, if "off balance sheet" is a mystery to you, you might want to check out Mike's interview with UMass lecturer Jennifer Taub as well. It's good tutorial stuff.

Do Republicans Want to Win?

| Fri Apr. 30, 2010 1:39 PM EDT

Ramesh Ponnuru comments on the upcoming midterm elections:

Do House Republicans actually want to take the majority? I have asked that of nearly every House Republican I have met since January 2007. Life in the minority is just as satisfying if you're in it for the perks; more satisfying, actually, since you don't have to make appropriations bills go out on time, run committee hearings, etc. Only once, a few weeks ago, have I heard anyone say that more than half of the conference wants the majority. That congressman said that his colleagues do want to be in the majority but are not yet ready to do what it would take. But he thinks they're getting there.

Wow. I mean, technically, sure, I guess that being in the minority is less stressful. But everything I've ever heard on this subject suggests that, overall, being in the minority just absolutely sucks. You get nothing. You have no ability to do anything. You're shut out of decisionmaking completely. Your staff is minuscule. Etc. etc. The only way in which it's better than being in the majority is if you just like having the doorman call you "congressman" and literally don't care about the process of lawmaking at all.

But apparently virtually no one in the GOP House caucus thinks that even a majority of their fellows wants to take control in November. I could understand a few slackers not wanting the aggravation, but a majority? Holy cow.

Rush: "I'm Just Noting the Timing Here"

| Fri Apr. 30, 2010 12:23 PM EDT

Me, in email with a friend last night about the Louisiana oil spill:

I can't wait until Rush figures out how this is all actually Obama's fault. 

Honest to God, I didn't know he'd said this a few hours earlier:

I want to get back to the timing of the blowing up, the explosion out there in the Gulf of Mexico of this oil rig....Now, lest we forget, ladies and gentlemen, the carbon tax bill, cap and trade that was scheduled to be announced on Earth Day. I remember that. And then it was postponed for a couple of days later after Earth Day, and then of course immigration has now moved in front of it. But this bill, the cap-and-trade bill, was strongly criticized by hardcore environmentalist wackos because it supposedly allowed more offshore drilling and nuclear plants, nuclear plant investment. So, since they're sending SWAT teams down there, folks, since they're sending SWAT teams to inspect the other rigs, what better way to head off more oil drilling, nuclear plants, than by blowing up a rig? I'm just noting the timing here.

Plus there's this, from the friend I was emailing with: "Maybe not Obama, but the WSJ snuck it in their story yesterday: you know, if the environmentalists didn't make us drill so deep, so far out from shore, this wouldn't have happened." I haven't seen that story, but I wouldn't be surprised if this meme picks up steam in the days to come.