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

Paul Krugman, Angry Bear, and Jazzbumpa

Update: Noahpinion takes on the same in How to win arguments by pretending to be stupid.  The comments section offers other points of view.

Ron T. aka Jazzbumpa received an unusual thank you from Paul Krugman for this post on a Mish Shedlock post about debating PK.

Krugman recommended Beverly Mann  on January 15th this year as part of a  recommended reading post.

Other Angry Bear contributors gaining mention and recommendation by name in the recent past that immediately come to mind are Mike Kimel and Bruce Webb.

Despicable Me – Paul Krugman

Funny: Angry Bear finds some of the usual suspects explaining How to Debate Paul Krugman, and the answer appears to be this: invent a straw man who bears no resemblance at all to the economist/columnist of the same name, and ridicule that imaginary person. I have to say, never in my wildest dreams did I imagine that I could play the role of History’s Greatest Monster to so many people. Thank you for the honor!

Aside from the silliness of the exercise, this little exchange is another illustration of a point I’ve noticed before: the way hard-right commentators assume that the other side must be their mirror image. They insist that no government intervention is ever justified; so liberals must support any and all government interventions. They want smaller government, as a principle; liberals must want bigger government, never mind what for. They believe that deficits and printing money are always evil; liberals must be for deficits and money-printing under all circumstances.

An hour spent browsing this blog would quickly refute all of this, together with the bizarre charge that I never look at evidence; you may not agree with my conclusions, but I sure do post a lot of numbers. But obviously looking at what I actually write would just be too painful.

Anyway, thanks guys, you made my day.

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Angry Bear contributor now at Economonitor

Angry Bear contributor Rebecca Wilder has begun writing her own column, The Wilder View, at the internationally prestigious Economonitor (Nouriel Roubini).

The Wilder View at Economonitor

Europe: Why the One-Size-Fits-All Solution Won’t Work and

Linking sovereign risk to corporate credit spreads in Europe

…and is interviewed and quoted by Floyd Norris in the New York Times.

Government Debt Doesn’t Tell the Whole Story
New York Times by Floyd Norris

In Ireland, as in Spain, the government paid down debt while private sector grew,” said Rebecca Wilder, an economist and money manager whose blog at the …

You can follow her there in the sidebar feed for other blog contributions.

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David Streitfeld Knows Better than This

The NYT moves deeply into delusion:

The rolling real estate crash that ravaged Florida and the Southwest is delivering a new wave of distress to communities once thought to be immune— economically diversified cities where the boom was relatively restrained.

In the last year, home prices in Seattle had a bigger decline than in Las Vegas. Minneapolis dropped more than Miami, and Atlanta fared worse than Phoenix. [emphasis mine]

Putting it politely, that is h*rs*sh*t. Anyone who was paying attention in the Atlanta area—or who has been paying attention to Georgia Bank Failures—has described the Greater Metro Area’s housing prices (let alone Atlanta itself) as a bubble. (As I noted at the link above, one of our commenters, Nancy Ortiz, was all over this in June of 2009; and the old Business Week covered it in an article published in October of that year. Does the NYT believe that local banks fail for no reason? As Peter Carbonara wrote in the BusinessWeek piece:

One Material Loss Review released today, for example, describes the death throes of FirstCity Bank, which had $297 million in assets and was based in Stockbridge, Georgia, a town not far southeast of Atlanta. FirstCity, like many other banks in the metro Atlanta area, partook of the state’s late, lamented enormous real estate boom, making a large number of loans to local builders. When the boom turned into a crash in 2007, those loans turned bad. The bank failed on March 20. [emphasis mine]

Minneapolis is another clear case where the locals were talking about a bubble back in late 2006/early 2007. Commenter TrickStar was all over Minneapolis at Barry Ritholtz’s place it in November of 2008. (Indeed, by March of 2010, the S&P/Case-Shiller Index was claiming a “recovery” for Minneapolis [link is PDF]. Talk about “green shoots.”)

That same PDF&again, from 11 months ago, using January 2010 data—discusses Seattle, which had the fifth-largest drop in housing prices during 2009. And that was over a year ago. As the Seattle Bubble blog noted, things only got worse last year.

SEATTLE UPDATE: Even David Leonhardt piles on. Hint to the NYT: Institutional Memory is an Asset only when used. If you need someone to run your Knowledge Management division, give me a call and we’ll talk.

In short, anyone who was paying attention knew that all three cities were prime examples of housing bubbles. The idea that the NYT’s best economics writer doesn’t is frightening at best.

To riff on a phrase from Brad DeLong, Why Can’t We Have a Better-Informed Press Corps?

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The Economics of History, Douthat-Style

I try not to pay attention—and not provide a direct link—to the NYT’s Stupidest Conservative. It’s one of the greatest advantages of having Susan of Texas around: you can go there and see anything I might write, done better, and (in this case) with cute graphics.

But when Brad DeLong falls down on the job—dealing well with the social, but not at all with the economic, aspect—it is time to go once (and, I hope, only once) into the breach.

Douthat, as quoted by DeLong:

Prior to 1973, 20 percent of births to white, unmarried women (and 9 percent of unwed births over all) led to an adoption. Today, just 1 percent of babies born to unwed mothers are adopted, and would-be adoptive parents face a waiting list that has lengthened beyond reason.

First thing to note: these are not necessarily comparable sets, for reasons detailed by Amanda Marcotte (op. cit. DeLong as well). Since the babies of today are conceived more voluntarily (in concept; my perpetual caveat about access certainly abides here), you would expect those eligible to be adopted to decline as well. That is, the 19% drop (or 95% drop in percentage terms) in white babies being adopted (or maybe it’s a 8% drop from 9% to 1%, which would be 89% in percentage terms) is the effect you would expect with fewer “unwanted” births. People don’t offer children for adoption unless they can’t raise them.

So Douthat’s statistics do, if anything, show that overall life is improved since 1973. We can agree that fewer unwanted babies is a good thing, no?

But if I’m reading Douthat’s prose correctly, there’s a far greater structural problem. Concentrating only on “white” babies— that is, conceding that Douthat is considering a bare majority, if that, of the country—we see that the system he fondly remembers produced a 20% surplus of children born out of wedlock for whom the state or its equivalents needed to care.

Even ignoring the conditions under which many of those births occurred, that basically means that for one in every five children born out of wedlock, no more than four were successfully adopted.

The odds are that the ratio is much higher: after all, “births to white, unmarried women” is a large set. Some of those were likely by choice. Some of those likely were followed soon thereafter by marriage. Some of them had “pre-arranged” adoption within the family (or de facto adoption by the woman’s extended family; see Palin, Bristol, for a contemporary example).

I don’t know the numbers, but if you told me that the above accounted for slightly more than half of the category, I wouldn’t be surprised.

But that leaves about 40% of those babies needing to be adopted. And by Douthat’s own data, only 20% of them were.

So the best-case scenario is that, for each one of us who was adopted, there was a minimum of 1/4 of a person who wasn’t—and probably closer to a 1:1 ratio.

In Douthat’s world, women are supposed to feel guilty ex post because they made a decision. Does that mean that adoptees in the U.S. are supposed to feel guilty because they were adopted and someone else wasn’t? Or that our parents should feel guilty because they chose us, and not someone else?

From an economic analysis, the pre-1973 situation was one of significant excess supply, and the current 1% adoption rate is beneficial to the chances of a potential adoptee being adopted, while the “would-be adoptive parents [who] face a waiting list” have both an abundant opportunity to provide a relatively better lifestyle for children born in developing economies and to take interim steps such as fostering to ensure that they really want to change their lifestyle enough to raise children.

No economist in his right mind would consider the pre-1973 environment romanced by Douthat to be more optimal than the current one, unless he really loves human suffering and wasting human capital.

UPDATE: Tom Levenson at Balloon Juice went out and found some numbers that—to no one’s surprise, I trust—don’t support Douthat’s Delusion either.

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In Other News, 90% of VeloNews Readers Consider Themselves Above-Average Cyclist

Floyd Norris discovers a mathematical impossibility:

Asked to rank, on a scale of one (excellent) to five (poor), the ability of their board’s compensation committee to “effectively manage C.E.O. compensation, 83 percent of the directors chose one or two, and only 4 percent picked four or five.

But asked, “In general, do you believe U.S. company board are having trouble controlling the size of C.E.O. compensation?” 58 percent thought the boards were having trouble, while 34 percent disagreed and the rest were unsure.

Since CompComs generally benchmark against the packages of CEOs in “similar” companies, you have to be really stupid or ignorant as a Director to believe you do it right while your competitors don’t.

But don’t think the Directors know they are incompetent:

Even if directors are not doing a good job, it is not a good idea to give others a say, at least to most directors. More than three-quarters are against giving shareholders a vote on C.E.O. compensation….

As for their own pay, the directors split almost down the middle: 45 percent thought pay should rise, and 53 percent thought it should not. The other 2 percent thought director pay should be reduced. If their identities leak, they are unlikely to be renominated.

Michael Jensen is rolling over in his grave, despite not being dead yet.

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The NY Times Jumps the Shark — Again

UPDATE: Tristero piles on the details that I assumed. And Bloix in comments there makes it clear that the diagram which has the Generals’s panties in twists is relatively straightforward compared to a car’s electrical system (as anyone who has used Erwin or Visio or even Powerpoint to build data flow diagrams can tell you).

Why does Elizabeth Bulmiller have a job? Because she writes nonsense quoting Important Sources:

The slide has since bounced around the Internet as an example of a military tool that has spun out of control. Like an insurgency, PowerPoint has crept into the daily lives of military commanders and reached the level of near obsession. The amount of time expended on PowerPoint, the Microsoft presentation program of computer-generated charts, graphs and bullet points, has made it a running joke in the Pentagon and in Iraq and Afghanistan.

“PowerPoint makes us stupid,” Gen. James N. Mattis of the Marine Corps, the Joint Forces commander, said this month at a military conference in North Carolina.

Now, some of my best friends live in North Carolina, so I won’t say Gen. Mattis got cause and effect backwards. But if you really believe that the article’s attached graphic is either a bad representation of the situation in Afghanistan or an impediment to understanding, then you shouldn’t be in a position to command hundreds, if not thousands, of military personnel.

In short, you probably thought it was a good idea to invade in the first place because everything would be perfect and you would be greeted with flowers, not putting them on 5,000+ American graves to date.

Because you didn’t understand that countries are both made up of living organisms and that they, in turn, act as if they are living organisms, with interactions that change depending on the conditions, facilities, and income flows (or, as the graphic says, “narcotics”).

If you don’t understand that, then you don’t understand nation-building, and have no excuse to claim that is what you are doing.

It’s a poor craftsman who blames his tools, and an even poorer reporter who takes those claims at face-value and presents them in “the paper of record.”

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The Drug War Saved the System?

Charlie Stross talks about liquidity:

What we’ve just seen, hidden in the euphemism here, is a confession that drug cartels and other organized criminals have gone on a $352Bn asset-buying spree — and the banks and regulators, world-wide, turned a blind eye to this because the alternative was to allow the banks to collapse. And the corollary is that these investments are now in the system, laundered, whitewashed, and legit. These narcodollars aren’t neatly bundled up inside the mattress any more; they’re in the system, doing their owners’ bidding.

A third of a trillion dollars is a lot of money; it’s enough to fund the US military invading another country halfway around the world, or a manned Mars exploration program. Obviously, there’s no single Mr Big here, no Blofeld investing SPECTREs ill-gotten billions in an ambitious bid to go legit.

But one wonders whether the “organised criminals” have been investing in anything innovative. (Politicians, if they’re smart.) And what the long-term consequences are going to be …

It won’t be Stross’s next novel, but it might be Ben Bernanke’s. Or Larry Summers, whose latest foray into fiction is here.

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We Report, You Lie

NYT headline: Audit Finds TARP Program Effective.

Paragraph six of the same article:

The Treasury’s lack of clarity about the program’s goals, the oversight panel said, made it hard to assess its overall effectiveness. Mr. Geithner is scheduled to testify on Thursday in his quarterly appearance before the five-member panel. [emphasis mine]

Clearly. one of the people to take the buyout was a headline writer who reads the articles first.

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I Tend to Describe this as "Unwarranted Optimism"

The Shrill One (tm – Brad DeLong) as Optimist:

The result, then, will be high unemployment leading into the 2010 elections, and corresponding Democratic losses. These losses will be worse because Obama, by pursuing a uniformly pro-banker policy without even a gesture to popular anger over the bailouts, has ceded populist energy to the right and demoralized the movement that brought him to power.

Despite all this, the midterms probably won’t give Republicans the majority in the House. But the losses will be big enough to deny Obama a working majority for any major initiatives in the rest of his first term. (My guess is that he’ll be reelected thanks to the true awfulness of the Republican nominee). Since Republicans are dead set against any of the things I think could help pull the economy out of its rut, this means more economic stagnation.

Can anyone point to any evidence of either of the bolded statements being likely to be true? (I’ll pre-emptively conceed that the Republican nominee may well be awful—probably a 75% probability, since the current Best Case Scenario is Mittens. But adjust you expectations by what you would have expected the Democratic Party nominee to be in late 2005.

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