Relevant and even prescient commentary on news, politics and the economy.

Best Take Yet on the Stalker

I’m sure most of you have seen that self-proclaimed poor, stupid, and Krugman-stalking Don Luskin had his lawyer send a letter to Atrios demanding that Atrios remove a post that (accurately) mocked Luskin, and that the accompanying comments also be removed. I don’t have much to add on this; Luskin is both clearly an idiot and clearly wrong.

The Poor Man, however, has the best take yet on this. Go read it.


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Up is Down

Here at Angry Bear, when we make reference to “up is down” or “down is up,” we’re usually referring to some new Orwellian step by the administration (seriously, Karl, 1984 was a warning, not an instruction manual).

This morning, Kash showed how “… the BLS has magically discovered a way for jobless claims to drop week after week, without the number of jobless claims ever actually falling.” When I first read that, I thought to myself, “hey, that defies logic.” But my confusion was due to a lack of vision, as demonstrated by this illustration that reader Jason G. sent me today:


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The Daily Show

Thursday night:

JOHN: Isn’t a mistake for the President to blame the Navy for hanging the “mission accomplished” sign up there.

ROB:Absolutely not, John. The President didn’t even want it up there at all. But, as you know, he’s got no control over the Navy.

JOHN: Rob, he’s the Commander in Chief, he’s got complete control of the Navy.

ROB: Yeah, the regular Navy. Yes. But not the elite Sign Hanging Units. Those guys are cold-blooded sign-hangers, John. Put a sign out there and they’ll hang it whether you like it or not.


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Treasury’s Nonsense about China’s Exchange Rate

The Treasury Department issued their annual report this morning examining whether any countries are using their exchange rates to unfairly take advantage of the US. Unsurprisingly, the report discusses the politically important issue of China’s exchange rate vis-à-vis the US in some detail. (If you want some background on the China exchange rate issue, go to earlier posts here and here.) The report contains some rather disingenuous tidbits.

China has pegged its currency since 1994 at 8.28 to the dollar. This policy is not appropriate for a major economy like China and should be changed.

I’m slightly puzzled as to why a fixed exchange rate is no longer “appropriate” for a major economy. Depending on the situation, there can be perfectly good reasons to have a fixed exchange rate, just as there are sometimes perfectly good reasons to have a flexible exchange rate. It’s interesting to note that the US had a fixed exchange rate with its largest trading partner through most of the 19th century, and again during the period of remarkable economic growth from 1945-1970. Here’s a helpful graph:

The bits on the graph that are essentially flat represent periods when the US had a fixed exchange rate. Judging by how long the fixed exchange rate was maintained and how much the US economy grew during those periods, a reasonable conclusion is that fixed exchange rates worked pretty well for the US during its development.

Another bit of misdirection contained in the report is this:

Greater exchange rate flexibility would also allow China greater scope to maintain a low-inflation, pro-growth monetary policy.

I’d be very curious to know why they think that China needs a flexible exchange rate in order to achieve low inflation and high growth. Over the last 3 years China’s GDP growth has averaged about 7% per year. It’s inflation rate has averaged about 0%. Does China really need help achieving high growth with low inflation?

There may well be some valid reasons that China should change its peg, but let’s be honest here. The reasons contained in this Treasury report are nonsense.


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The Perpetual Declining Unemployment Machine

This week’s initial unemployment claims, in another report released this morning, were 386,000. Since the revised figure for last week is 391,000, headlines can justly read “Jobless Claims Drop,” even though last week’s initial estimate was 386,000.

Interestingly, “Jobless Claims Drop” is exactly what the headlines also read last week, when the number of unemployment claims was… 386,000. The week before, the headlines also read “Jobless Claims Drop,” since initial unemployment claims were 384,000. The week before that? You guessed it, “Jobless Claims Dropped” down to a level of 382,000. We’ve now had 4 weeks in a row with headlines stating that “Jobless claims drop,” though the initial estimate of claims has gone from 382,000 to 386,000 over that period.

The reason? Every week the number from the week before is revised up to a number higher than the current week’s initial estimate. So the BLS has magically discovered a way for jobless claims to drop week after week, without the number of jobless claims ever actually falling.

By the way, I wonder if it’s worth mentioning to the BLS that they should probably revise their methods for reaching a preliminary estimate. Over the past 4 weeks, the estimate has been revised up by 6 thousand, 6 thousand, 6 thousand, and 6 thousand. Anyone detect a pattern?


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GDP Shocker

The GDP numbers were really impressive this morning. The preliminary estimate of overall level of GDP growth during the period July-September was 7.2%, which is the fastest rate of GDP growth since 1984.

It’s worth checking out the original report for some details. What caused such rapid GDP growth? Surprisingly, it was pretty broad based. Here’s the breakdown:

Change due to:

– Increased consumer spending: +4.66%

– Increased housing construction: +0.92%

– Increased business spending: +1.12%

– Decreased inventories: – 0.67%

– Increased net exports: +0.84%

– Increased government spending: +0.27%

TOTAL: +7.2%

A lot of this GDP growth seems to be due to the tax cut, since the biggest increase by far was due to higher purchases by consumers. But business spending was also growing robustly, so some of it is probably also due to improved business expectations. The big question is whether consumers and businesses will keep spending at these extremely high rates for more than a quarter or two…

I would definitely not want to be in the bond market today.


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Deeply Conflicted 4th Circuit Nominee

Under questioning from Democrats yesterday, Claude Allen said he did not intend to insult homosexuals when as a campaign press aide to then-Sen. Jesse Helms (R-N.C.) he referred to “queers.” He also said he was “deeply conflicted” about a Helms filibuster against creation of a federal holiday for the Rev. Martin Luther King Jr., saying King was “a hero for me and my family.”


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Falsifiability and Pangloss

First, you weren’t seeing enough of the good news. Now, the bad news is good news. Here’s President Bush, implying that the attacks are a sign that things are going well:

“The more progress we make on the ground, the more free the Iraqis become, the more electricity that’s available, the more jobs are available, the more kids that are going to school, the more desperate these killers become”

Bush also directly stated a causal relationship between success on the ground and more resistance:

“The more successful we are on the ground, the more these killers will react.”

I know science and the scientific method are not a high priority with this administration (e.g., see Salon today), but seriously, come on. We can all agree that no attacks would in fact constitute good news. We are now told that the current level of attacks is also good news, and that when the attacks escalate, that’s a sign of more success on the ground. Bertrand Russell and Karl Popper had it wrong, while Candide’s devoted advisor Pangloss had it right the whole time:

“It is demonstrable,” said he [Pangloss], “that things cannot be otherwise than as they are; for as all things have been created for some end, they must necessarily be created for the best end. Observe, for instance, the nose is formed for spectacles, therefore we wear spectacles. The legs are visibly designed for stockings, accordingly we wear stockings. Stones were made to be hewn and to construct castles, therefore My Lord has a magnificent castle; for the greatest baron in the province ought to be the best lodged. Swine were intended to be eaten, therefore we eat pork all the year round: and they, who assert that everything is right, do not express themselves correctly; they should say that everything is best.”

New and improved epistemology coming soon to science textbooks near you!


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Daily Howler

Somerby is good today, if I bit more perturbed by the media than usual (“EXTRA! IT’S TIME FOR NAGOURNEY TO GO: Adam Nagourney needs to be fired for his work in this morning’s New York Times”). Why? Nagourney, whose work I often like, is faking quotes. Here’s what Nagourney has Clark saying (quote doctored to make it look like Clark “appeared to struggle”):

“No, I always — I’m a fair person. And when this administration’s done something right, well, if they were Russians doing something right, Chinese doing something right, French doing something right or even Republicans doing something right, I’m going to praise them.

“Right after 9/11, this administration determined to do bait and switch on the American public,” he said. “President Bush said he was going to get Osama bin Laden, dead or alive. Instead, he went after Saddam Hussein. He doesn’t have either one of them today.”

Note that not only are there no ellipses anywhere, the closing quote in the first paragraph is also missing. Why no ellipses? Because ellipses do not imply time travel.

From the transcript of the debate, the latter half of the quote (“Right after 9/11 …”) precedes the first half of the quote and is in response to a different question!

Now let’s take a look at Nagourney, as he “struggles” to make sense. This is an exact quote of Nagourney’s first paragraph in the article:

Rough and intensively, and if the congress should have authorized $87 billion which would help the democratic candidates of president, here discussing, other Sunday one harms on the intelligence to maintain president Bushs of the invasion making of Iraq the effort of war.(*)


(*) Actual text, translated into German, then French, then back to English using BabelFish. With sufficient creative license, it’s easy to make anyone sound like they’re “struggling.”

UPDATE: Thanks to Jay, I see that the NYT has added this “correction”:

An article on Monday about a debate in Detroit by Democratic presidential candidates referred incorrectly to a response from Gen. Wesley K. Clark: “Right after 9/11, this administration determined to do bait-and-switch on the American public. President Bush said he was going to get Osama bin Laden, dead or alive. Instead, he went after Saddam Hussein. He doesn’t have either one of them today.” The comment responded to a question about where he stands on the war in Iraq, not to the question “Are we to understand that what you’re saying now is that those things you have said that were positive about the war was not what you meant?”

I think that’s a pretty sorry excuse for a correction in that it completely mis-states the original error and hides the intentional mendacity of the authors.

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