Reading Around: 20060630

Things worth reading, 20060630:

New Economist: Did abortion lower the crime rate? The evidence from England: Since Donohue and Levitt's 2001 QJE article "The Impact of Legalized Abortion on Crime" there has been quite a controversy in the United States about a possible causal relationship between higher abortion rates and the fall in crime.... Leo H. Kahane... David Paton... and Rob Simmons... "The Abortion-Crime Link: Evidence from England and Wales."... The authors have two robust findings: "Of the many results presented in this paper, there are two things we can say with confidence. First, increased unemployment rates are associated with increased crime. Second, the greater the proportion of children in care (our proxy for 'social deprivation'), the greater the crime rate. These results are remarkably consistent and robust to various estimation methods...

A Big, Bad Idea | TPMCafe: By Matthew Yglesias: Man. A while back I wanted to write an awesome takedown article on China hawks. But I could never come up with a really good news peg. And, what's worse, I became obsessed with trying to devise a counter-term for "panda hugger" which is what they call people who don't want to start a war with China. Well, via Kevin Drum, Soyoung Ho at The Washington Monthly has done the job masterfully with a hit piece on "Panda Slugger" Michael Pillsbury. Give it a read and I'll say no more about China policy...

JustOneMinute: GD Hamdan - Careful What You Wish For: The Supreme Court's ruling in Hamdan may represent a Pyrrhic victory for the Democrats - since Bush is now likely to go to Congress for enabling legislation, Dems may be forced into a series of potentially awkward votes just a few months before the election...

Georgetown University Law Center Faculty Blog: Hamdan: Preliminary Observations by Mark Tushnet: So, as the Court analyzed Hamdan, the case involved proceedings that had not been authorized by Congress. Indeed, the thrust of the Court%u2019s opinion is that, Congress having provided for military tribunals in the Uniform Code of Military Justice, the President could not put into effect alternative procedures inconsistent with what Congress had authorized. In the jargon of separation of powers law, the absence of authorization in Hamdan did not place the case in Justice Jackson%u2019s Category Two, where the President acts in the absence of congressional authorization, but rather in Jackson%u2019s Category Three, where Congress%u2019s actions, fairly read, prohibited the action the President took...

A Spat Over Iraq Revealed On Tape: By Glenn Kessler: MOSCOW, June 29 -- The official State Department version is that "there was absolutely no friction whatsoever" between Secretary of State Condoleezza Rice and Foreign Minister Sergei Lavrov during a meeting of foreign ministers in Moscow on Thursday. But a recording of the ministers' private lunch, made when an audio link into the room was accidentally left on, showed that "Condi" and "Sergei" -- as they called each other -- had several long and testy exchanges over Iraq. The disputes concerned relatively minor wording changes in the five-page statement issued after the meeting, but grew out of basic differences between the two governments over how to proceed on Iraq...

Armchair Generalist: Casual Fridays: I finished reading "Cobra II" by Michael Gordon and Bernard Trainor this week, and I am impressed. Initially, I had seen Michael Gordon's interview on The Daily Show, and I didn't think he really sold the book's thesis - he played up to the show's anti-Bush attitudes. When I flipped through the book at the bookstore, it didn't immediately grab me. But upon closer examination, this book is quite possibly the best one out there at explaining the story of how our military got mired in the Gulf. Let me get the main thoughts here up front. The authors focus more on Rumsfeld and his staffers rather than the White House's decisions, but refuse to give the military leadership any breaks. Gen (ret) Jack Keane notes that the Joint chiefs of Staff, the Vice Chiefs (to include himself), and General Tommy Franks all share responsibility for the problems in Iraq by not considering that guerrilla warfare was a serious possibility. It's clear that none of the generals responsible for the ground war were comfortable with Rumsfeld's chopping down the size of the force or with his micromanaging the force flow, but they were all good soldiers and did the best they could do. It's also clear that General Franks could be a real son of a bitch with his temper, and vocalized when he was not getting what he wanted...

Obsidian Wings: Hamdan: The Bigger Picture: As I read the Hamdan decision, it does require that the protections of Article 3 of the Geneva Conventions be extended to all detainees, including these. However, there doesn't seem to be any way at all for this requirement to be enforced. It's not just that it's unclear either that Hamdan allows for an individual cause of action based on the Geneva Conventions, or that the arguments the court made in Rasul would apply to detainees held in Afghanistan. The more serious problem is: if no one other than the ICRC, which has a policy of strict confidentiality, is allowed to visit this facility; if the names of detainees are not released; if no one outside the government has any clue what's going on there, or to whom, then how on earth can anyone try to enforce the law there?...

Roubini Global Economics (RGE) Monitor: Levered long/ long funds Brad Setser | Jun 29, 2006: An anonymous partner at a mid-sized London hedge fund expressed something I was trying to say a couple of weeks ago fair better than I could have. From the Financial Times: "'A lot of managers have gone from being long-short funds [funds that make bullish and bearish bets on stocks] to being long-long funds with leverage, which removes the whole point of hedge funds offering protection in the event of a downturn', said a partner at a mid-size hedge fund in London." I expressed my argument somewhat less elegantly %u2013 saying that that some hedge funds were not really hedged. And many of my readers pointed out -- quite correctly %u2013 that no one that is fully hedged makes money. But what I was getting at was that it was quite costly to hedge say a long position in an emerging market equity market with an offsetting short position in the same equity market. Funds that hedged in the same market didn't do as well as funds that did not hedge. Until May, a rising tide was lifting all boats. And punishing shorts. So there was a temptation to become a long/ long fund. Or to find proxy hedges that didn%u2019t cost you an arm and a leg...

Fed Raises Rates, but Scales Back Talk of Inflation - New York Times: By EDMUND L. ANDREWS: WASHINGTON, June 29 %u2014 The Federal Reserve raised interest rates for the 17th consecutive time on Thursday, but kicked off a powerful celebration in the stock market by lowering its alarms about inflation. As expected, the central bank raised its crucial lending rate another quarter-point, to 5.25 percent, and left itself room to raise it again before stopping. But for the first time since it began lifting rates two years ago, the Fed stopped short of signaling that further interest rate increases were all but certain. In what traders described as a huge "relief rally," the Dow Jones industrial average surged 217 points, or 2 percent, in its biggest one-day jump in three years. Other stock and bond market indicators also rose, as interest rates on long-term bonds edged down. The dollar fell against major currencies, with foreign investors reducing their calibrations for interest rates in the United States...

Economist's View: Paul Krugman: How To Be a Hack: Portrait of a hired gun.... How can you tell the hacks from the serious analysts? One answer is to do a little homework. Hack jobs often involve surprisingly raw, transparent misrepresentations of fact.... But there is another telltale clue: if a person, or especially an organization, always sings the same tune, watch out. Real experts, you see, tend to have views that are not entirely one-sided. For example, Columbia's Jagdish Bhagwati, a staunch free-trader, is also very critical of unrestricted flows of short-term capital. Right or not, this mixed stance reflects an honest mind at work. You might think that hacks would at least try to simulate an open mind... But it almost never happens. Of course, honest men can disagree, and they can also make mistakes. But it's still a good idea to tune out supposed experts whose minds are made up in advance...

Choice, Chance, and Wealth Dispersion at Retirement: Steven F. Venti, David A. Wise NBER Working Paper No. 7521 Issued in February 2000: People earn just enough to get by' is a phrase often used to explain the low personal saving rate in the United States. The implicit presumption is that households simply do not earn enough to pay for current needs' and to save. We show in this paper that at all levels of lifetime earnings there is an enormous dispersion in the accumulated wealth of families approaching retirement. It is not only households with low incomes that save little; a significant proportion of high income households also saves little. And, a substantial proportion of low income households save a great deal. We then consider the extent to which differences in household lifetime financial resources explain the wide dispersion in wealth, given lifetime earnings. We find that very little of this dispersion can be explained by chance differences in individual circumstances largely outside the control of individuals' that might limit the resources from which saving might plausibly be made. We also consider how much of the dispersion in wealth might be accounted for by different investment choices of savers some more risky, some less risky given lifetime earnings. We find that investment choice is not a major determinant of the dispersion in asset accumulation. It matters about as much as chance events that limit the available resources of households with the same lifetime earnings. We conclude that the bulk of the dispersion must be attributed to differences to in the amount that households choose to save. The differences in saving choices among households with similar lifetime earnings lead to vastly different levels of asset accumulation by the time retirement age approaches...