From today's LA Times:

As he confronts the threat of another recession and turmoil in the financial markets, President Obama is being advised by an economic team that is noticeably short on big-name players — potentially hurting his ability to find solutions and sell them to Wall Street, Congress and the American public.

"When you ask about the economic team, it's kind of like, 'What economic team?'" said Edward Mills, a financial policy analyst with FBR Capital Markets. "They are very thin at a very critical time."....Some analysts worry that the White House might not have enough economic expertise to fashion new proposals for boosting growth.

I get that daily newspapers need to have something new to say each day. Ditto for cable news. And blogs too! But can we please ditch the pretense here? Sure, Obama has lost most of his economic team and hasn't replaced them all. That's a legitimate story. But does anyone seriously think that this is having any effect at all on his ability to "find solutions and sell them to Wall Street, Congress, and the American public"?

Come on. Obama's current team is probably more in tune with Wall Street than the old one, and the American public responds to comforting narratives, not the quality of the economic analysis behind them. (When they respond at all, that is.) But none of that matters anyway. Obama's problem isn't a lack of bright ideas, it's the fact that the Republican-controlled House has no interest in acting on proposals to spur job growth or stimulate the economy. If it doesn't cut taxes on the rich or slash pesky regulations on big corporations, they're not going to give it the time of day. This is not exactly a big secret in Washington.

Barack Obama could have the reincarnated ghosts of Milton Friedman and John Maynard Keynes running his economic policy shop and it probably wouldn't make any difference. Republicans are bound and determined to do nothing to seriously address our faltering economy, and that's that. This is what's standing in the way of getting anything done, and pretending otherwise is a disservice to the news-consuming public.

Today's theme was going to be shadowy cats, but instead it's cats with Marian. It's more cats than Marian, of course, since Friday is catblogging day, not Marianblogging day. Besides, I kind of like being married and don't want to do anything to put that in jeopardy. The cats, however, are their usual camera hog selves and have no problem showing off their feline virtues to the world. So here they are. Have a good weekend, everyone.

Conservative economist Douglas Holtz-Eakin has a chart he's fond of that demonstrates just how ineffective the 2009 stimulus was. Basically, it shows that the stimulus cost $260 billion and produced only an extra $268 billion in GDP. Personally, I'd take even that, but his point is that the stimulus produced no Keynesian multiplier effect at all. It was just a 1:1 replacement of revenue from one source to another.

But as you may recall, the US Bureau of Economic Analysis recently revised its GDP estimates from late 2008 and 2009, and it turns out the economy was doing much worse than we thought. And if you don't recall this, Michael Linden wants to remind you about it today. He also wants to remind Douglas Holtz-Eakin about it. Because it turns out that when you redo Holtz-Eakin's favorite chart using the corrected data, it suggests that the stimulus bill produced about $544 billion in extra GDP. In other words, a multiplier effect of about 2x.

I suppose there are two ways to respond to this. Holtz-Eakin could admit that he was wrong. Or he could invent a reason that his old chart is no good and then scurry back to his computer to produce a brand new chart using a different methodology that, once again, shows that the stimulus didn't work. We'll see which way he chooses.

Here's yet another tea party wingnut blathering on about how regulations are strangling American business:

Due to regulatory morass, the U.S. is not a good place for small hydro companies to do business. In order to build even the smallest facilities, a developer must go through the Federal Energy Regulatory Commission, U.S. Fish and Wildlife Service, Army Corps of Engineers, State Environmental Departments, State Historic Preservation Departments, and many more. Each of these agencies is just doing their job — but the cumulative impact weighs down small hydro and makes projects prohibitively expensive.

“The regulatory environment is not friendly at all. It’s incredibly difficult and expensive to build these facilities,” explains Lori Barg, CEO of Community Hydro, a developer based in Vermont. “It’s absurd, really.” Barg says that federal and state permitting can add up to $2,000 per kilowatt for projects under 1 MW. To put that in perspective: solar PV projects around 1 MW are being built today for about $3,000 a kW, including permitting, labor and equipment.

Oh wait. Sorry. That's not a tea partier who wrote that, it's Stephen Lacey over at ClimateProgress. He says that we have the potential to generate 30,000 megawatts of clean, renewable power via small hydro installations that are either run-of-river (i.e., require no damming) or could be built using existing dams. But they can only be built if the existing regulatory structure is substantially streamlined.

Republicans have made such an insane spectacle of themselves pretending that Barack Obama is some kind of regulatory madman that it's easy to just dismiss them wholesale. Regulatory uncertainty is very plainly not what's holding the economy back right now, no matter how many times conservatives repeat this canned talking point in front of the Fox News cameras. What's holding us back is economic uncertainty: businesses don't think there will be enough customers next year to justify expanding their operations this year, so they're not expanding. Address that problem and businesses will start adding capacity, jobs will open up, and the economy will grow again.

Still, regulations do matter, and regulatory underbrush needs to be cleared away periodically. Nor is there any reason for liberals to fight this: after all, we favor regulations that serve a clear purpose, not regulations for their own sake. The value of clean energy is pretty high, and it might very well outweigh whatever benefits we're getting from the current regulatory thicket. A pair of Republicans have introduced bills that take modest steps to streamline regulations for small hydro projects, and they're probably worth a hard look.

I'd also be pretty willing to take a look at emergency streamlining of other regulations that get in the way of quickly building new infrastructure projects if Republicans were willing to actually fund new infrastructure projects as a stimulus measure. But I don't think I'll hold my breath waiting for that to happen.

Yesterday I wrote about new fuel economy standards for big rig trucks. But Megan McArdle asked a good question: why do we even need them? For ordinary cars, you can argue that consumers aren't especially rational and don't properly consider the long-term cost of operation, so they need to be nudged into saving themselves money. But big rigs are commercial vehicles purchased by steely-eyed operators who look carefully at long-term cost of ownership and are keenly aware of how fuel costs play into this. So if truck manufacturers can make more efficient vehicles, the market should have forced them to do it long ago.

So what's the deal? A reader with experience in the field sets me straight:

You don't understand the market for big rigs. A tractor typically has three types of owners in its life:

  • The original buyer: Either a manufacturer with a private fleet that it uses to get its products to market (e.g., Sherwin-Williams), or one of the very rare firms with enough cash to afford new units. They run it for 1-2 years (or 150,000 miles), when the components go off-warranty and are at risk for breakdowns — and then trade it in.
  • The quality aftermarket: The second or third owners, who can't afford new units. Most big fleets are in this group. They get the best used models and run them until the math stops working for them. (How long this takes depends on the type of trip and cargo hauled. Long-haul is easier than city driving, but a nasty breakdown in Montana can take you off-road for two days. Also, perishable cargo or just-in-time components have to keep moving.)
  • The beaters: The third, fourth or fifth owners, who either can't afford quality yet, don't care, or find it cheaper to fix them.

There's no incentive for a manufacturer to put money into fuel efficiency. Groups two and three care about fuel cost, but they're never buying new trucks. Group one probably doesn't own the unit long enough to recoup even 30% efficiency. Because even the best stuff gets beaten to crap, everyone buys on price. If your first high-efficiency models cost a lot more, sales would drop.

I was assigned to Bendix truck brakes for about a year, and it was a master class in planned obsolescence. Bendix made parts that lasted 3-4 years — best on the market — but nobody wanted them, because they didn't own the models long enough to get a return on the value.

Still, even with that said, wouldn't a carbon tax or increased fuel taxes accomplish the same thing as stricter CAFE standards but more efficiently? Probably. But I'll let Mark Kleiman speak for me on that: "As soon as the Tea Party has been ground into the dust and the GOP transformed into a party capable of seeing reason, we can talk about it. In the meantime, kudos to the President for using his executive powers to do the right thing. And recall that none of his Republican opponents would have done the same."

From Bret Baier of Fox News, following up on Byron York's question at last night's debate about supporting any tax increase at all in order to reduce the deficit. "Is there any ratio of cuts to taxes that you would accept? Three to one? Four to one? Or even 10 to one?"

I'm going to ask a question to everyone here on the stage. Say you had a deal, a real spending cuts deal, 10-to-1, as Byron said, spending cuts to tax increases....Who on this stage would walk away from that deal? Can you raise your hand if you feel so strongly about not raising taxes, you'd walk away on the 10-to-1 deal?

All eight candidates raised their hands immediately. This is now unshakeable dogma within the Republican Party regardless of circumstances and regardless of how it's accomplished. And yet, when the congressional super committee fails to reach agreement on a deficit reduction package later this year? It'll be a failure of "Washington," of course. Some things never change.

Here's the latest on our return to the moon:

The rocket and capsule that NASA is proposing to return astronauts to the moon would fly just twice in the next 10 years and cost as much as $38 billion, according to internal NASA documents obtained by the Orlando Sentinel....That timeline and price tag could pose serious problems for supporters of the new spacecraft, which is being built from recycled parts of the shuttle and the now-defunct Constellation moon program. It effectively means that it will take the U.S. manned-space program more than 50 years — if ever — to duplicate its 1969 landing on the moon.

That is certain to infuriate NASA supporters in Congress....blah blah blah.

Well, hell, is this really a shocker? There are reasons to think that a moon program today should cost less than the original: we know a lot more about building rockets, we have better design technology, we have far better computers and access to lighter-weight components, and so forth. Still, that only provides a modest benefit, and in the end you still have to put together a massive program to build a brand new space vehicle pretty much from scratch. CBO estimated years ago that the Apollo program cost $100 billion in current dollars just for the R&D and management alone, and another $70 billion to build the dozen or so launchers and lunar modules. Given that, why should anyone be surprised that $38 billion is a shoestring budget that will barely fund two flyby missions?

The truth is that a new moon program will probably cost something on the order of $100 billion or more. Personally, I don't think it's a good use of money, but your mileage may vary on that score. Whatever you happen to think of it, though, that's how much you need to count on spending if you want a real program. There's no point in continually being shocked when it turns out that NASA can't really do much of anything for less than half of what it actually needs.

I thought tonight's debate was much closer than the last one. I didn't really see any clear winners or losers. Just in general, though:

Michele Bachmann struck me as more mechanical than last time. She was just too focused on being a fighter and not much else. But by overstressing that, she also highlighted the fact that she's been fighting fighting fighting and losing losing losing. That's not so good in a presidential candidate. If you're presidential timber, you're supposed to fight and win.

Romney was fine, I guess. No mistakes, but also nothing that really helped him. Still the front-runner until someone knocks him off his perch. Something tells me I'm going to be saying that a lot.

Pawlenty continued to be a little soporific, though he didn't make any big mistakes this time around. So in that sense it was an improvement over last time. But he still doesn't know how to credibly sound tough. And that joke about mowing Mitt Romney's lawn? Please. Frank Luntz apparently loved it, but I thought it seemed way too obviously prepped and staged. For that kind of thing to work, it has to sound spontaneous, and Pawlenty just doesn't seem to have the ability to sound spontaneous.

Santorum was way too whiny. Quit complaining about how much camera time you get!

Jon Huntsman didn't really distinguish himself, but also didn't pander as much as the rest of the field. I still maintain that he's running for 2016, not 1012.

Gingrich proved once again that he knows how to turn a phrase, but that's about it. He reeled off some good applause lines, including his faux outrage over gotcha questions, but honestly, he still doesn't look like he's treating the whole thing seriously. At the very least he could try standing up straight instead of slouching rakishly over the lectern.

Ron Paul, Herman Cain: give it up guys.

Standard caveat: I'm obviously not the target audience for these folks, so it hardly matters what I thought about them. Still, what's so striking about this group is that aside from Ron Paul there's hardly any real daylight between them. The questioners tried mightily to provoke some arguments, and they did manage to get a few small ones going over relative minutiae, but for the most part they're still just trying to out-tea party each other.

Nonstandard caveat: I had to go out to pick up a pizza partway through, so I didn't see the whole thing. I might have missed the best zingers and most substantive discussions of the night, for all I know.

Next: Rick Perry shakes things up! And when he does, I guess I'm going to have to explain further why I'm so sure that he can't win next year. Either that or I'll have to change my mind. I'll bet you can't wait to see which way I go.

So how is California's fabulous high-speed rail project between LA and San Francisco going? You know, the one approved by California's fabulous voters as part of California's fabulous initiative process. Well, a new estimate for the nice, easy part between Merced and Bakersfield puts the cost at $10-$14 billion, up from earlier estimates of $6.8 billion made a mere three years ago:

If the cost of the entire project balloons at the same pace as the Central Valley section, the San Francisco-to-Anaheim railroad would cost from $63 billion to $87 billion, similar to what independent analysts have been predicting. And those figures do not include inflation, which could push the final cost toward a staggering $100 billion. When California voters approved the project in 2008, the state said it would cost $33 billion, but it soared to $43 billion a year later.

I'm no engineer, but I'm willing to risk a few C-notes that this project ends up at $100 billion or more in 2011 dollars. Any takers? This is a very long-term bet, of course, since the line isn't scheduled to be finished until 2020—and I'm willing to put up a few more C-notes that it'll be more like 2025 or 2030. Or never.

Look, I'm sorry, HSR lovers. I love me some HSR, too, but this project is just a fantastic boondoggle. It didn't even make sense with the original cost estimates, and it's now plain that it's going to cost three or four times more than that. What's more, the ridership estimates are still fantasies, and it won't be able to compete with air travel without large, permanent subsidies. This is just too much money to spend on something this dumb. It's the kind of thing that could set back HSR for decades. Sacramento needs to pull the plug on this, and they need to pull it now. We have way better uses for this dough.

Last year Michael Lewis wrote a much-lauded piece about Greece, and because it's Michael Lewis it was indeed a great piece. Michael Lewis could probably make a grocery list sound fascinating.

Unfortunately, buried within its 10,000 words or so was....nothing. Greece's finances are in terrible shape, he said, because Greeks don't pay their taxes. That's it. I think I'm summarizing the piece pretty fairly when I say there was virtually nothing else to it aside from scenery.

This month in Vanity Fair Lewis takes on Germany. And again, it's a great read. But also again, there's practically nothing there. The piece is built around an extremely strained extended metaphor about the German fascination with shit and excretion — because, you see, all those toxic assets in the Wall Street securities they bought were shit, which makes it no wonder they ended up with so much of it. Get it? Now, this produces a few funny riffs, but it's also completely ridiculous. This is not why German bankers bought lots of CDOs stuffed with crappy subprime loans. (Hah! Crappy loans. He's got me doing it too!) How did VF's editors let him get away with this nonsense?

The rest of the essay, aside from a few paragraphs explaining some technicalities about how the ECB works, tells us nothing. Germans, apparently, are prudent, rule-bound, gullible, guilt-ridden, and punctual. Prudent explains why their economy is still in good shape. Rule-bound explains why they were willing to buy so many AAA-rated securities without looking very carefully at what they contained. Gullible explains how Wall Street's sales force was able to pull the wool over their eyes for so long. Guilt-ridden explains how they got suckered into adopting the euro. And punctual is just there to add some color.

For what it's worth, I have to say that gullible isn't really one of those stereotypical German traits that you find on postcards. The rest are, though, and if this bit of armchair cultural psychoanalysis satisfies you, then I guess you're just easily satisfied. In my case, though, I want to know what's happened to the real Michael Lewis, the one who actually digs into complex financial issues and explains them with flair and wit and telling detail? I don't care how many people call his latest piece brilliant, the truth is that it's just lazy. He's now done this schtick for Iceland, Ireland, Greece, and Germany, and he's getting worse with each country. I suppose Italy must be next, but I can't say I'm looking forward to it.