hard heads soft hearts

a scratch pad for half-formed thoughts by a liberal political junkie who's nobody special. ''Hard Heads, Soft Hearts'' is the title of a book by Princeton economist Alan Blinder, and tends to be a favorite motto of neoliberals, especially liberal economists.

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Monday, December 26, 2011
Arthur Silber - ONCE UPON A TIME...
. . .Besides, I'm very sick right now. My major concern is trying to avoid having to call 911. For the third time. I don't want to do that. . .

Susie Madrak - Syria

There are 2 questions re: Manning. One, did he do a good or bad thing? On this, reasonable people can disagree. Second, if it was bad, how bad was it? This is the question on which the US government has lost its mind, its bearings, its morality. It has whipped itself into a hysteria, and allowed itself to become evil. Ali Soufan's recent interview with Charlie Rose exemplifies what good national security work looks like, as opposed to the chilling control-freak excesses of the Manning (and Aaron Swartz) prosecutions.

Glenn Greenwald - must-read piece comparing Manning and Ellsberg

KEVIN GOSZTOLA - Manning is charged with aiding terrorists
[Fein] Manning “knowingly gave intelligence through WikiLeaks to the enemy.” He “wantonly caused the release of this information.” It was “not just good for declared enemies” but also accessible to “all other enemies with Internet access.” . .

. . .Now, it is clear: the effect of Manning’s prosecution has the potential to criminalize national security journalism. . .

If you accept the prosecution's argument, is there any difference between "informing the enemy" and "informing the American people"?

Kevin Jon Heller - Did Bradley Manning “Aid the Enemy”? Did The New York Times? (Updated)

Paul Krugman - Springtime for Toxics
. . .mercury is nasty stuff. It’s a potent neurotoxicant: the expression “mad as a hatter” emerged in the 19th century because hat makers of the time treated fur with mercury compounds, and often suffered nerve and mental damage as a result.

. . .a lot of mercury gets into the atmosphere from old coal-burning power plants that lack modern pollution controls. From there it gets into the water, where microbes turn it into methylmercury, which builds up in fish. And what happens then? The E.P.A. explains: “Methylmercury exposure is a particular concern for women of childbearing age, unborn babies and young children, because studies have linked high levels of methylmercury to damage to the developing nervous system, which can impair children’s ability to think and learn.”

The new rules would also have the effect of reducing fine particle pollution, which is a known source of many health problems, from asthma to heart attacks. In fact, the benefits of reduced fine particle pollution account for most of the quantifiable gains from the new rules. The key word here is “quantifiable”: E.P.A.’s cost-benefit analysis only considers one benefit of mercury regulation, the reduced loss in future wages for children whose I.Q.’s are damaged by eating fish caught by freshwater anglers. There are without doubt many other benefits to cutting mercury emissions, but at this point the agency doesn’t know how to put a dollar figure on those benefits.

Even so, the payoff to the new rules is huge: up to $90 billion a year in benefits compared with around $10 billion a year of costs in the form of slightly higher electricity prices. This is, as David Roberts of Grist says, a very big deal. . .

Diane - A Sign Of Hope

(Via Hannah Mae) I.A.R. Wylie - "The Little Woman" (November 1945)

THOMAS B. EDSALL - The Anti-Entitlement Strategy

THOMAS B. EDSALL - The Trouble With That Revolving Door

I think it was Michael Barone who called Edsall a "gloomy Irishman", a political pessimist who, because he was liberal, kept writing articles about the problems with or obstacles to liberalism. Anyway, a very good political journalist.

Matthew Yglesias - Central Banking & Humility

Scott Sumner - Central Banking & Ego

Modeled Behavior (Karl Smith) - Why Not Plutocracy: Apathy Runs Deep Edition
. . twitter was ablaze a few weeks back over the fact that Jamie Dimon objected to his taxes being raised, but thought that he was already paying what Obama proposed raising his tax rate to.

This makes perfect sense if you note that Jamie doesn’t care about his tax rate. He cares about his taxes being raised. . .

. . .Here at the state level I can safely say that virtually no one has any idea what they are doing. That is, for the most part the lobbyist do not know and indeed are not particularly interested in what is in the best interest of their clients.

Further, this seems to stem from the fact that the clients are not particularly interested in what is in their best interests.

What they are very interested in is whether legislation is pro them or anti them. However, if you begin to talk about the economy as a complex system full of unintended consequences where anti legislation could be in their best interests their eyes glaze over. . .

One example my Dad gives is when a regulated monopoly was forced to lower their rates, to their surprise, profits increased. You would have assumed they would already be maximizing profits, but you would have assumed wrong.

Noahpinion - The liberty of local bullies

Monday, December 19, 2011
Violet Socks - Reclusive Leftist

Paul Krugman - But I do know one and one is two. . .

Bill Keller (NYT) - The Pakistanis Have a Point
[Malik]: “If you are not able to close the Mexican border, when you have the technology at your call, when there is no war,” he said, “how can you expect us to close our border, especially if you are not locking the doors on your side?”

IAN AYRES and AARON S. EDLIN (NYT) - Don’t Tax the Rich. Tax Inequality Itself.

There may be better schemes, but Ayres & Edlin's proposal would be an improvement over the status quo.

TAMAR LEWIN (NYT) - M.I.T. Expands Its Free Online Courses

russell (Obsidian Wings) - will the last person to leave please turn out the lights....

Susie Madrak - Distress signal
Diane at Cabdrollery is in trouble, hanging by a financial thread. If you can spare even $10, go help.

DIANE - Will Blog For Food

The hammer fell again, this time harder than usual. The landlord has given me a 3 day notice, and I barely have enough money to get to the local DPSS office to see if I can get a Department 8 grant for this month and next month to offset some of the balance I now owe.

As some of you know, I've not been working for the past 6 weeks at all, which leaves only my Social Security, which would have been fine if I hadn't had a serious pulmonary problem develop, which even with Medicare has tapped me out with all the co-pays for the specialists, tests, and medications. I also have state bar dues to pay if I want/am able to work next year. The main problem is that I only have enough money for that visit to Pasadena tomorrow. The cat has food. I have very little.

What I need is a bunch of small donations from a lot of people. I know it's the wrong time of the year to be asking for this kind of help (as if there's a right time), but I need it and I need it quickly. Please help if you can.

This time I'm really scared.

Susie Madrak - Ash Wednesday

James Herriot - The best of James Herriot: favourite memories of a country vet
. . .The card dangled above the old lady's bed. It read `God is Near'. . .

. . .There wasn't much more Miss Stubbs could see; perhaps a few feet of privet hedge through the frayed curtains but mainly it was just the cluttered little room which had been her world for so many years. . .

. . .I had been visiting regularly for over a year and the pattern never changed; the furious barking, then Mrs Broadwith who looked after Miss Stubbs would push all the animals but my patient into the back kitchen and open the door and would go in and see Miss Stubbs in the corner in her bed with the card hanging over it.

She had been there for a long time and would never get up again. But she never mentioned her illness and pain to me; all her concern was for her three dogs and two cats. . .

. . .It was the usual scenario for the many cups of tea I had drunk with Miss Stubbs under the little card which dangled above her bed.

`How are you today?' I asked.

`Oh, much better,' she replied and immediately, as always, changed the subject. . .

. . .The things I had heard in the village came back to me; about the prosperous father and family who lived in the big house many years ago. Then the foreign investments which crashed and the sudden change in circumstances. `When t'owd feller died he was about skint,' one old man had said. `There's not much brass there now.'

Probably just enough brass to keep Miss Stubbs and her animals alive and to pay Mrs Broadwith. Not enough to keep the garden dug or the house painted or for any of the normal little luxuries. . .

. . .`Well, it was quick, Miss Stubbs, I'm sure the old chap didn't suffer at all.' My words sounded lame and ineffectual. . .

`You know, Mr. Herriot,' she said casually, `It will be my turn next.'. . .

. . .`I'm not afraid,' she said. `I know there's something better waiting for me. I've never had any doubts.' There was silence between us as she lay calmly looking up at the card on the gas bracket.

Then the head on the pillow turned to me again. `I have only one fear.' Her expression changed with startling suddenness as if a mask had dropped. The brave face was almost unrecognisable. A kind of terror flickered in her eyes and she quickly grasped my hand.

`It's my dogs and cats, Mr. Heriot. I'm afraid I might never see them when I'm gone and it worries me so. You see, I know I'll be reunited with my parents and my brothers but. . .but. . .'

`Well, why not with your animals?'

`That's just it.' She rocked her head on the pillow and for the first time I saw tears on her cheeks. `The say animals have no souls.'

`Who says?'

`Oh, I've read it and I know a lot of religious people believe it.'

`Well I don't believe it.' I patted the hand which still grasped mine. `If having a soul means being able to feel love and loyalty and gratitude, then animals are better off than a lot of humans. . .

. . .The tension left her face and she laughed with a return of her old spirit. `I'm sorry to bore you with this and I'm not going to talk about it again. But before you go, I want you to be absolutely honest with me. I don't want reassurance from you - just the truth. I know you are very young but please tell me - what are your beliefs? Will my animals go with me?'

She stared intently into my eyes. I shifted in my chair and swallowed once or twice.

`Miss Stubbs, I'm afraid I'm a bit foggy about all this,' I said. `But I'm absolutely certain of one thing. Wherever you are going, they are going too.'

She still stared at me but her face was calm again. `Thank you, Mr. Herriot, I know you are being honest with me. That is what you really believe, isn't it?'

`I do believe it,' I said. `With all my heart I believe it.'. . .

MIT Shakespeare homepage - Hamlet
It faded on the crowing of the cock.
Some say that ever 'gainst that season comes
Wherein our Saviour's birth is celebrated,
The bird of dawning singeth all night long:
And then, they say, no spirit dares stir abroad;
The nights are wholesome; then no planets strike,
No fairy takes, nor witch hath power to charm,
So hallow'd and so gracious is the time.

So have I heard and do in part believe it.
But, look, the morn, in russet mantle clad,
Walks o'er the dew of yon high eastward hill:
Break we our watch up; and by my advice,
Let us impart what we have seen to-night
Unto young Hamlet; for, upon my life,
This spirit, dumb to us, will speak to him.
Do you consent we shall acquaint him with it,
As needful in our loves, fitting our duty?

Let's do't, I pray; and I this morning know
Where we shall find him most conveniently.


Tuesday, December 13, 2011
Arthur Silber - Power of Narrative
. . .But I still have to pay an electric bill, my Internet provider, and ... well, food and stuff. After I've paid for that, I'll be close to totally broke. I mean, except for about a hundred dollars, I'll be totally broke. . .

. . .Have a listen to Leontyne Price singing "O Holy Night." That comes from one of the most beautiful Christmas albums I've ever heard: treat yourself to it. And Cyrano imploringly says: "Keep the Friskies away!" (C'mon, don't sue us. It's just his opinion. Besides, we're judgment-proof.). . .

Violet Socks - Fundraiser to keep my health insurance from being cancelled
I have been scrambling like mad to earn money this fall, but work is the slowest it’s ever been in my entire life. I’ve taken on every kind of job I can, tried to sell stuff, etc., etc., but there is just nothing moving out there.

The main thing I have to pay is my health insurance, which is crappy and has gigantic coinsurance but is better than nothing. And so here’s the deal: at this point I’m exactly $652.23 short of what I need to cover the premium and keep things going into January.

That’s the amount I need to raise somehow: $652.23. If any of you happen to be flush this month and feel like throwing some Christmas cheer my way, I would be beyond grateful for any contribution you can make. . .

. . .I’ll post updates here on the status and let you know when (fingers crossed) the goal is reached. If I can raise this money I will be so overjoyed and relieved, you won’t be able to stand me. I will host a virtual Christmas blog party to celebrate!

John Wildermuth, Chronicle Staff Writer - Benioffs pitch in to help homeless S.F. families

Susie Madrak - Catch 22
So they can’t find the money that’s missing, they just know it isn’t mixed in with the money that’s left. . .

Tell me again why companies in bankruptcy are allowed to choose the people who oversee their bankruptcy?

Corrente (Lambert) - Excellent interview with David Graeber

Juan Cole - Top Ten Things Americans can be Thankful for 2011 (US troops out of Iraq)

Informed Comment - Support this Site! (annual fundraiser)

Glenn Greenwald - Blog news (annual fundraiser)

Elizabeth Goitein - Bradley Manning

David Goldstein (McClatchy) - As U.S. troops leave Iraq, what is the legacy of eight years of war?

Paul Krugman - Receding Inflation In Britain

If there's one good thing about the MF Global debacle, it's a timely reminder to be wary of listening to the ratings agencies:

AZAM AHMED, BEN PROTESS and SUSANNE CRAIG (NYT) - A Romance With Risk That Brought On a Panic
. . .Moody’s Investors Service and Standard & Poor’s had applauded Mr. Corzine’s effort to overhaul the firm, a move that included ratcheting up risk.

“We consider the most recent strategic plan of the new C.E.O. Jon Corzine to be sound,” S.& P. said in 2010, while acknowledging the plan “will incrementally increase the firm’s risk profile.”

. . .A week later, Moody’s cut its rating on MF Global to a notch above junk, pointing to the European debt holdings.

The reversal angered some executives at MF Global, who felt it was disingenuous for the agency to change its mind so suddenly. . .

It's also a reminder that being clever, being rational, and even being right do not necessarily entitle you to great wealth through exploiting the perceived irrationality of others.

Andrew Tobias - The Only Investment Guide You'll Ever Need
p. 171:

. . .David Dreman, author of The New Contrarian Investment Strategy, writing in Barron's, made a good case against random walk. He pointed out that stock markets have always been irrational and concluded that a rational man could therefore outdo the herd. "Market histort gives cold comfort to the Random Walkers," he writes. "`Rational' investors in France, back in 1719, valued the Mississippi Company at 80 times all the gold and silver in the country - and, just a few months later, at only a pittance."

It is true, I think, that by keeping one's head and sticking to value one may do better than average. But it's not easy. Because the real question is not whether the market is rational but whether by being rational we can beat it. Had Dreman been alive in 1719, he might very reasonably have concluded that the Mississippi Company was absurdly overpriced at, say, three times all the gold and silver in France. And he might have shorted some. At six times all the gold and silver in France he might have shorted more. At twenty times all the gold and silver in France he might have been ever so rational - and thoroughly ruined. It would have been cold comfort to hear through the bars of debtors' prison that, some months later, rationality had at last prevailed. A driveling imbecile, on the other hand, caught up in the crowd's madness, might have ridden the stock from three times to eighty times all the gold and silver in France and, quite irrationally, struck it rich.

Fast-forward 281 years to the dot-com bubble. One very smart Wall street trader I know took a slam-dunk shot writing naked calls on Amazon.com, meaning that he pocketed $50,000 or so for taking on a minuscule risk for a week or two - the stock, already wildly overpriced, would have to rise more than 50 points in a week for him even to begin to feel any pain. He was completely right and Amazon stock soon fell precipitously - but not before a final for-the-record-books spurt that totally wiped out every penny he had worked his whole life to earn. He didn't jump - but he thought about it. . .

Question for debt-as-indulgence, prosperity-through-thrifty-idleness types: How is it possible for Japan to have a debt/GDP ratio of 200%, a deficit of 8% of GDP, interest rates of less than 2%, and inflation of less than 2%? Not suggesting that US follow a similar policy, but how could such a thing even be possible, if the deficit-hawk view of the world is correct?

Wednesday, December 07, 2011
Arthur Silber - Once Upon a Time. . .

Violet Socks - Reclusive Leftist
. . .It’s being reported that this is the first time ever that a health secretary has overruled the FDA. It’s amazing, isn’t it?. . .

It really does look like the point of this Obama Plan B decision is simply to make liberals squeal, so moderate conservatives can conclude "if he's pissing off liberals, he must be doing something right". "I-Shot-A-Man-In-Reno" politics. Don't think it will be very successful, nor should it be.

Suburban Guerrilla (odd man out) - Banksters spooked by ‘Occupy Our Homes'

No reason to foreclose unless investors would get more money from a foreclosure than a principal modification/short sale. And given that investors have been bailed out so much, it's reasonable to have a rule that no foreclosures unless investors would get $20000 dollars more from a foreclosure than a principal modification / short sale.

Hannah Mae - The Shantoose of the Banjo Club

Krugman - British Debt History

(Via Wonkblog (Suzy Khimm)) - Haunting, candid photos of women on death row in China.

One of the condemned prisoners has a very simple, ingenuous face, and seems to be very happy and jolly in the first few slides. I think this was partly because she was genuinely happy, partly because she was trying to make the best of the time she had left, and partly, also, because in the back of her mind was  the feeling that if she was very jolly and friendly, and people liked her, perhaps they would give her a reprieve / extend her term. The last is an emotion very familiar to temp workers / contractors anxious to get renewed. In one of the slides she breaks down, and is comforted by a prison guard, and recovers her composure somewhat. I don't know what crime she was condemned and executed for, nor the other prisoners, including one who looked somewhat stoic and resigned.

My preferred BCS plan:

1.  Of the 4 BCS bowls, 2 act as semifinals for the BCS championship game,  #1 against #4 and #2 against #3.

2. If a Pac-12 or Big-10 team is in the top 4, the Rose Bowl gets the semifinal game with the highest ranking Pac-12 or Big-10 team. Otherwise, it gets the traditional Pac-12 versus Big-10 game. This would lead to very nice rule, "The best Pac-12 & Big-10 team always plays in the Rose Bowl"

3. Perhaps there could be similar special rights for the Sugar Bowl. In the case of a conflict between Rose & Sugar, the the higher ranked team wins. This would lead to a somewhat less nice rule, "The best Pac-12 & Big-10 & SEC team always plays in either the Rose or Sugar Bowl"

4. The other semifinal games are distributed among the other BCS bowls.

5. The BCS bowl games are played up to either Jan 1. or Jan 2.

6. The BCS championship game is played on the second Saturday after the last BCS bowl game.  i.e. For 2012 that would be Jan. 14, instead of the current date of Jan. 9. Though the championship game would be pushed back a few days,  fans would also see the best teams in the country play on and around New Year's Day, instead of having to wait until Jan. 9.

7. I believe the best college football game of the year should be played on a Saturday afternoon. Play is for players, and fans, not television. But if the conflict with pro-football is too big a problem, the game could be played on the second Friday, or  second Thursday, after the last BCS bowl game instead.

Under these rules, the current season would have a Sugar Bowl of LSU versus Stanford, an Orange or Fiesta Bowl of OSU versus Alabama, and a Rose Bowl of Oregon versus Wisconsin.

And if the seeds won out, you'd top it off  a with a rematch of LSU versus Alabama: 4 great games with genuinely unpredictable outcomes, compared to the current system of 3 great games and a lingering disappointment that the Alabama / OSU debate was not settled properly.

Friday, December 02, 2011
Violet Socks - Success!

Hilary - Update 3: The goal has been reached!

Paul Krugman - Debt History

Atrios - They Know Even Less Than What They Say

Suburban Guerrilla (odd man out) - Reich’s radical proposal — decent wages

Obsidian Wings (Doctor Science) - The The Labor of the Harvest

Corrente (Lambert) - It's live! (What happened....)

dsquareddigest talks about a culture of tax avoision in Greece, but it's revenue is not that low: 40% of GDP. It's spending is high but not outlandish: 50% of GDP, but a lot of that is debt servicing. What is eye-popping is the debt/GDP ratio: 140% of GDP. Has any country ever gotten out of a debt/GDP ratio that high without defaulting? How did they do it? Japan, I guess, but their solution is to have very, very, very low interest rates, an option that does not seem open to the Greeks.

Anyone have strong opinions on where on the 40-50 scale Greece should aim for? (i.e. assuming a balanced budget, aiming for 47% GDP means 3% spending cuts, 7% tax increases, 42% means 8% spending cuts, 2% tax increases, etc).

In any case, all other countries except Greece and Ireland are liquidity problems, not solvency problems. For Italy, the ECB can solve the problem in a day by announcing that it will not allow the Italian-German spread to rise above 2.5%, and it will not allow the Italian bond to rise above 5.5%. It should do so, and should implement similar policies for other countries. If the ECB won't do it, the Fed should. Just like Clinton's Treasury in 1994 for Mexico, the Fed should not hesitate to intervene in a foreign credit crunch, if it is in US interests.

To those opposed to a simple & easy solution to a not very difficult problem, it should perhaps be suggested that if the desired goal is to teach discipline, continence & sacrifice, coked-up bond traders are not the ideal vehicle for delivering that message. Also, that there are better, truly difficult problems for humanity to attack, rather than inventing, then dealing with, the artificial problem of how to handle a bank run without activist policy to prevent interest rates from getting out of control.

That leaves, Greece, which is (possibly) a solvency problem. 3 numbers the political system needs to find: 1) the maximum GDP number the Greeks can be expected to spend on debt servicing. (my guess: 6-8%) 2) the minimum amount the debt/GDP ratio needs to decrease annually (my guess: 2%) 3) the acceptable range of interest rates the market will demand/ECB will allow for Greek bonds (no idea)

Together, these 3 numbers determine the minimum amount of principle reduction Greece may need in order to make life in the Eurozone tolerable. The hit to principle should be absorbed partly by bondholders, partly by wealthy Greeks. If the ECB/political system wants to prevent bondholders taking losses, that's fine, possibly desirable.

An aside: the one fact about Greece that has captured the public imagination is the "retiring in their fifties" theme. Everyone seems to think that if the Greeks retired at 65, their problems would be solved. No idea if it's true.

An interesting Wikipedia page:

National debt by U.S. presidential terms

which in turn links to an interesting excel file:

White house 2012 budget - Table 7.1 — FEDERAL DEBT AT THE END OF YEAR: 1940–2016