Demand for American Treasury Securities

Barry Ritholtz meditates on the conundrum:

The Big Picture: In Long-Term American Treasury Securities They Trust : What does it mean when so many overseas investors -- governmental, corporate, and institutional -- are hungry for US paper? There are a variety of potential explanations: Yield is relatively attractive here, its a safe investment for those looking to move cash away from their native countries. For exporters, buying US Treasuries helps pressure rates down, thus financing additional consumer spending. Floyd Norris writes: "The vast majority of foreign Treasury purchases came from private foreign investors, who presumably were attracted by the yields and by the fact that the dollar gained in 2005 against the Japanese yen, the euro and the British pound, while falling less than 3 percent against the Chinese yuan."

The United States is politically stable (despite red/blue divisions); Nor does it hurt that we have an unblemished track record of paying our sovereign debts -- even with all of the economic imbalances of recent years or the past....

Here's the details, via Norris: "GUESS who's financing the budget deficit of the United States? Hint: Very few Treasury securities are being purchased by American consumers or businesses. The federal government released its calculations this week on net investments in United States long-term securities, and found that foreigners had invested $350.8 billion in Treasury bonds and notes in 2005. They were net sellers of short-term Treasury bills, so their total Treasury holdings grew by just $290.9 billion.... Treasury securities held by the public — that is, by everyone except the Federal Reserve System and other arms of the government — rose by $306.4 billion. That means that 95 percent of the deficit was financed overseas.... The gain last year showed increasing foreign trust in American corporations. While United States government and agency securities got most of the money, the increase largely came from a greater willingness to buy corporate bonds and stocks. Foreigners put a net $391.7 billion into corporate bonds, 27 percent more than they had invested the previous year and the largest amount for any year on record."

Let's hope they don't change their collective minds anytime soon . . .

Ka Ching! Ka Ching! Ka Ching!

Brad Setser writes:

Roubini Global Economics (RGE) Monitor : The 2006 US current account deficit looks to be a bit under $1 trillion.... So it is not at all unreasonable to say that financing the US current account deficit requires that the US raise $20 billion a week, whether by selling debt, selling stocks or selling off real US assets. 52 * $20b = $1040. That is equal to selling one Unocal a week to China (CNOOC was willing to pay $20 billion). Or selling three companies the size of P&O to the Emirates a week.

P&O is a bad example though. It is British company, so its sale finances the UK's current account deficit, not the United States' deficit. And most of the value of the $6.8 billion deal doesn't come from the P&O's American assets. But the broader point still stands. If the US was financing its current account deficit with equity not debt, the Committee on Foreign Investment in the US (CFIUS) - the group that approved the port deal - would be very, very busy. Moreover, if foreigners who already hold dollar-denominated bonds ever decided they wanted to shift into equities, the potential sale of physical US assets would be even larger.

So far the US has financed its deficits with debt - and debt doesn't carry with it the right of control. Though countries that are hooked on debt do sometimes find that their creditors have a bit of influence over their policies. But fundamentally, there is no way the US can sustain $1 trillion deficits - the 2006 deficit is not going away in 2007 or 2008 barring a catastrophe, at best, the deficit won't keep getting bigger - without selling off large pieces of itself to the rest of the world.

Wysocki, Phillips and Schroeder got this -- and much more -- right in their page 1 Wall Street Journal article. My only real quibble with their article: by relying on the US TIC data, they vastly understate the capability of the oil sheiks to acquire US assets. The TIC data shows total Middle Eastern oil exporters hold $121 billion in US securities. That almost certainly understates their dollar holdings....

One thing is pretty clear: the US isn't ready to accept the consequences of sustained $1 trillion deficit. Even if the current account deficit stops rising in nominal terms and starts to fall in real terms, $1 trillion annual deficits imply that the US will sell $10 trillion of US financial assets to foreigners over the next ten years. And unless something changes, the foreigners with cash to spare will in the Middle East and East Asia.

$10 trillion can buy a lot of ports, oil companies, computer companies, consumer brands - you name it. But only if the US allows it. My personal guess is that the US won't. We in the US are willing to sell tons of IOUs to the world, but not tons of US companies. At the same time, there is no evidence the US is ready to take the policy steps needed to reduce its need for financing from China and the world's oil exporters...

Fair Harvard...

Larry Summers's critic J. Lorand Matory speaks:

The Harvard Crimson: "This university is more mine than Larry Summers'," says J. Lorand Matory '1982, professor of Anthropology and of African and African American studies. "I will not let Larry Summers determine that this will become a place where social Darwinism is the leading ideology or leading practice." Matory this semester emerged as one of University President Lawrence H. Summers' most outspoken critics, filing the motion that led to the successful vote of no confidence in the president and becoming one of only three Harvard professors to call publicly for Summers' resignation.

This struck me as odd: A professor who thinks Larry is a social darwinist really has no idea what a 'social darwinist' is at all--and has certainly never met a real one. What's he doing with his time to know so little about social darwinism and other topics in intellectual history?

A quick sweep through the Harvard catalog reveals that this year he is teaching:

African and African American Studies 140z. The Other African Americans Catalog Number: 0300 J. Lorand Matory Half course (spring term). W., 4-6. EXAM GROUP: 9: We survey the history and contemporary experiences of self-identified “mixed-race” groups, as well as voluntary immigrant groups from Africa and the Caribbean, such as Cape Verdeans, Nigerians, Jamaicans, Afro-Puerto Ricans, and Haitains [sic] in the US. Students are introduced to arguments central to the social scientific study of modern societies generally, such as the invention of ethnicity, and negotiation of identity, and the social constructedness of race.

Anthropology 1600 (formerly Anthropology 110). Introduction to Social Anthropology Catalog Number: 8296 J. Lorand Matory (spring term) Tu., Th., at 11. EXAM GROUP: Spring: 13: Introductory exploration of anthropological approaches to society, culture, language, and history. Lectures, readings, and ethnographic films focus on global social and cultural diversity, and the intellectualand ethical challenges of anthropological research on human difference, experience, and complexity, across a wide range of theoretical perspectives and social/cultural topics, including kinship, social and political hierarchy, exchange, gender, language, ideology, religion, and global political economic systems.

They do look like interesting courses. They put J. Roland Matory in the classroom, teaching, for 55 hours total for the 2005-2006 academic yeqar.

JSTOR reports two articles since 1995: J. Lorand Matory (1999), "The English Professors of Brazil: On the Diasporic Roots of the Yoruba Nation," Comparative Studies in Society and History Vol. 41, No. 1 (which I read a couple of years ago: it is quite good); and J. Lorand Matory (1996), "Review: Revisiting the African Diaspora," American Anthropologist New Series, Vol. 98, No. 1 (Mar., 1996), pp. 167-170.

There is also a Princeton University Press book from 2005: Black Atlantic Religion: Tradition, Transnationalism, and Matriarchy in the Afro-Brazilian Candomblé, which describes itself as:

Black Atlantic Religion illuminates the mutual transformation of African and African-American cultures, highlighting the example of the Afro-Brazilian Candomblé religion. This book contests both the recent conviction that transnationalism is new and the long-held supposition that African culture endures in the Americas only among the poorest and most isolated of black populations. In fact, African culture in the Americas has most flourished among the urban and the prosperous, who, through travel, commerce, and literacy, were well exposed to other cultures. Their embrace of African religion is less a "survival," or inert residue of the African past, than a strategic choice in their circum-Atlantic, multicultural world.

With counterparts in Nigeria, the Benin Republic, Haiti, Cuba, Trinidad, and the United States, Candomblé is a religion of spirit possession, dance, healing, and blood sacrifice. Most surprising to those who imagine Candomblé and other such religions as the products of anonymous folk memory is the fact that some of this religion's towering leaders and priests have been either well-traveled writers or merchants, whose stake in African-inspired religion was as much commercial as spiritual. Morever, they influenced Africa as much as Brazil. Thus, for centuries, Candomblé and its counterparts have stood at the crux of enormous transnational forces.

Vividly combining history and ethnography, Matory spotlights a so-called "folk" religion defined not by its closure or internal homogeneity but by the diversity of its connections to classes and places often far away. Black Atlantic Religion sets a new standard for the study of transnationalism in its subaltern and often ancient manifestations.

Google Scholar reports two hits for "Roland Matory." Google proper reports one hit for "Roland Matory".

Matory writes that his next book will be:

Matory: a collaborative effort with my wife, a presidential protocol officer during the rule of Nigerian president Ibrahim Babangida. We have planned it as a culturally sensitive account of the inner workings of the dictatorship that ruled Africa's largest nation from 1985 to 1993. It is intended both as a corrective to standardized journalistic and political science cliches about the nature of autocracy and corruption in Africa and as a historical study of the genesis of Nigeria's current political crisis.

Wikipedia reports:

Ibrahim Babangida - Wikipedia, the free encyclopedia: General Ibrahim Badamosi Babangida (born August 17, 1941), popularly known as IBB, was the military ruler of Nigeria from August 1985 until his departure from office under heavy popular pressure in 1993, after his annulment of elections held that year.... Babangida hails from the Gwari ethnic group and was born in Minna in Niger State, the city in which he has resided since his departure from office. He joined the Nigerian Army's officer corps in 1962.... Babangida once again took up a political position under the administration of General Muhammadu Buhari, whose regime he overthrew on 27 August 1985, promising at the time to bring to an end the human rights abuses perpetuated by Buhari's government, and to hand over power to a civilian government by 1990. He was instrumental to the culture of "settlement"... bribery and corruption in Nigeria. His administration embezelled over $12.5 billion during the gulf war from the oil 'windfall' money. He is probably the most corrupt African leader.

I doubt that Babandiga was the most corrupt African leader.

Unqualified Offerings Is Shrill

We welcome Jim Henley, Grand Heresiarch and High Tentacled One of the Ancient, Occult, and Hermetic Order of the Shrill:

Ia Henley!! Ia Fhtagn!!: Outraged Moderate got hold of Steven Cambone’s handwritten notes of his meeting with Donald Rumsfeld from the afternoon of September 11, 2001. The notes confirm CBS News’ report of September 4, 2002 that, at that meeting, Rumsfeld was already thinking of using the atrocities as an excuse to go to war with Iraq. It’s important to stress: Rumsfeld is not wondering if Iraq did it; he’s wondering if it can look enough like Iraq did it to pin the blame there.

It can’t be stressed enough: the Pentagon was aflame; there was smoke pouring from a hole in the Pennsylvania fields and the World Trade Center complex was belching its ghastly cloud, and already our rulers were thinking not, who is to blame? but what can we get away with? What will the still-bubbling fat of the murdered serve to cook?

Impeach George W. Bush. Impeach Richard Cheney. Impeach Donald Rumsfeld. Do it now.

Why Oh Why Can't We Have a Better Press Corps? (The Washington Times Celebrates Black History Month Edition)

Black Republicans are as rare as Republican academics. Here's part of the reason why: the Washington Times celebrates Black History Month:

The Washington Times: By Peter Cliffe: It is just as well Harriet Beecher Stowe knew nothing about Mary Chesnut. The child of fervently puritanical parents and driven by her abolitionist beliefs to write "Uncle Tom's Cabin," Stowe created an incredibly successful and influential novel although she had no firsthand knowledge of her subject.... Stowe was convinced that all slaveholders were brutish oppressors (as some undoubtedly were), but what would she have made of Mary Boykin Miller, who as a young girl taught slaves on two plantations to read and write although this was strictly forbidden in South Carolina? Both she and the man she married were opposed to slavery. In every regard, Mary Chesnut, as she became, was a remarkable woman.... Hardly likely to revise her beliefs, Stowe probably would have dismissed Mary as an irrelevance, an aberration of the plantocracy....

She was just 17 when in 1840 she married James Chesnut Jr., the son of wealthy parents, and settled at Mulberry, a luxurious plantation home where all the Chesnuts resided. Taking little or no part in the running of the plantation but sometimes acting as a hostess, Mary seems to have been contented enough. James served first in the state legislature and then in 1855 became a U.S. senator.... Mary had a well-attended salon in Washington... a close friend of Varina Davis, future first lady of the Confederacy.... Then came secession. James Chestnut resigned, and back they went to Mulberry before moving to Montgomery and then to Richmond after Virginia left the Union....

Mary never lost her distaste of slavery. As a child on her paternal grandparents' plantation, she had rescued a slave there from illiteracy with her grandmother's consent. It was an establishment where slaves were treated humanely. She again broke the law at Mulberry, also with family permission, by teaching other slaves to read and write.... James may have disliked slavery, but he was an ardent secessionist, serving on Gen. P.G.T. Beauregard's staff, initially as a brigadier general and ultimately as a general. Although he saw action at First Manassas, his were primarily administrative duties.

Mary's voluminous journal was filled with opinions, not always favorable, of those who guided the destiny of the fledgling Confederacy... the privations endured by civilian.... Women could go without fashionable garments, but prices spiraled ever higher, and food became so scarce.... When the Confederacy collapsed, the Chesnuts returned to the wreck of their home.... Mary never referred to her journal as "A Diary From Dixie," which was a title used by the Saturday Evening Post when part of her work was serialized in 1905.... Harriet Beecher Stowe's subsequent novels never achieved anything like the success of "Uncle Tom's Cabin," which President Lincoln had told her started the Civil War.

Alternate History: Iraq

Victor Davis Hanson phones in from whatever alternate universe his deranged brain thinks he is living in--an alternate universe in which George W. Bush is the second coming of Winston S. Churchill:

Victor Davis Hanson: The insurgency in Iraq has no military capability either to drive the United States military from Iraq or to stop the American training of Iraqi police and security forces — or, for that matter, to derail the formation of a new government. The United States air base at Balad is one of the busiest airports in the world.... [T]he terrorists have an invaluable ally in the global media, whose “if it bleeds, it leads” brand of journalism always favors the severed head in the street over the completion of yet another Iraqi school.... During this sort of waiting game in Iraq, the American military silently is training tens of thousands of Iraqis to do the daily patrols, protect construction projects, and assure the public that security is on the way, while an elected government reminds the people that they are at last in charge....

Who will win? The Americans I talked to this week in Iraq — in Baghdad, Balad, Kirkuk, and Taji — believe that a government will emerge that is seen as legitimate and will appear as authentic to the people. Soon, ten divisions of Iraqi soldiers... over 100,000 police... crush the insurgency... a public tired of violence and assured that the future of Iraq is their own.... [T]he American presence in Iraq will... lessen considerably in 2006... reaching Korea-like levels and responsibilities in 2007...

Meanwhile, out in the non-alternate reality of the real Baghdad, Zayed the Dentist keeps his head down and phones to try to get the word out:

Healing Iraq : Fierce streetfighting at my doorstep for the last 3 hours. Rumor in the neighbourhood is that men in black are trying to enter the area. Some armed kids defending the local mosque three blocks away are splattering bullets.... [T]he attackers were fended off in our neighbourhood.... In Adhamiya, armed groups in black crossed the river in boats from neighbouring Kadhimiya and took over the Nu'man hospital. In Khadhraa', a combined force of Interior ministry forces and men dressed in black are surrounding 2 mosques with several families inside, threatening to burn them down on the occupants.... An armed group in 10 vehicles with no number plates entered the Al-Iskan Al-Sha'bi district in Dora... but was turned back by the residents. Eyewitnesses claim that as many as 40 bodies and 5 burnt vehicles.... Another group dressed in black in one Daewoo and two Opel vehicles passed the Interior ministry forces' checkpoint at Abu Dshir square... entered the Yassin mosque with explosives in tin containers. The keeper was killed and the mosque blown up. A Shi'ite armed group carried Sheikh Ghazi Al-Zoba'i in a pickup truck around Sadr city, shouting that they have a Wahhabi terrorist with them, before he was lynched on the streets by the angry mob.

Government officials and spokespersons are deliberately suppressing any news of these ongoing attacks on Sunni neighbourhoods and mosques. The official Al-Iraqiya channel is playing a historical movie, while other channels are playing Shi'ite mourning and Quran. The Interior ministry says it only has reports of 19 mosques attacked and one cleric killed. Go figure.

The FBI phones in from Guantanamo Bay, complaining

E-Mails Show FBI Agents Fretted About Prisoner Abuse - Los Angeles Times : that Defense Secretary Donald H. Rumsfeld's public pronouncements about interrogation policies were misleading. "I know these techniques were approved at high levels within DoD and used" on specific prisoners, said the official, referring to the Department of Defense. The names of the author and recipients of the e-mail were blanked out... no information was provided to indicate how the author knew the techniques were authorized at top levels.... Guantanamo's prison commander, Army Maj. Gen. Geoffrey D. Miller, was described as favoring aggressive methods "despite FBI assertions that such methods could easily result in the elicitation of unreliable and legally inadmissible information."... A Pentagon spokesman described the ACLU documents as "old information," and said that 12 investigations and reviews had found there was no Defense Department policy that encouraged or condoned abuse of detainees at Guantanamo Bay. The FBI memos had been previously released to the ACLU in December 2004, but with most of their contents censored...

William F. Buckley calls upon George W. Bush to acknowledge defeat in Iraq:

William F. Buckley Jr.: [T]he American objective in Iraq has failed.... Iraqi animosities have proved uncontainable by an invading army of 130,000 Americans.... The Iraqis we hear about are first indignant, and then infuriated, that Americans aren't on the scene to protect them and to punish the aggressors. And so they join the clothing merchant who says that everything is the fault of the Americans.... President Bush... postulate[d], from the beginning... that the Iraqi people... would suspend internal divisions in order to get on with life in a political structure that guaranteed them religious freedom... the invading American army would succeed in training Iraqi soldiers and policymkers to cope with insurgents bent on violence.

This last did not happen. And the administration has, now, to cope with failure.... Mr. Bush has a very difficult internal problem here because to make the kind of concession that is strategically appropriate requires a mitigation of policies he has several times affirmed in high-flown pronouncements.... [D]ifferent plans have to be made. And the kernel here is the acknowledgment of defeat.

And John Podhoretz calls for the Bush administration to deal with the situation by mobilizing--Karl Rove:

The Corner on National Review Online : PAGING KARL ROVE--EMERGENCY!... Democrats in Congress are outpolling President Bush on national security. By a margin of 43 to 41 percent, Americans say they trust Congressional Democrats more than Bush when it comes to protecting our national security.... [T]he political consequences could be catastrophic.

Impeach George W. Bush. Impeach Richard Cheney. Donald Rumsfeld, Condi Rice, Stephen Hadley, Porter Goss, Andrew Card too.

We Hear and Obey

Elvis Costello tells us to go listen to Rilo Kiley. Very good advice.

Even the Ministry of Truth Is Alarmed...

Even the Ministry of Truth is alarmed. National Review's. John Podhoretz writes:

The Corner on National Review Online : PAGING KARL ROVE--EMERGENCY! [John Podhoretz] Rasmussen has a new poll up in which -- hold on now -- Democrats in Congress are outpolling President Bush on national security. By a margin of 43 to 41 percent, Americans say they trust Congressional Democrats more than Bush when it comes to protecting our national security. And by a margin of 64-17 percent, they oppose the sale of the ports to Dubai.... Congressional Republicans have no choice but to be extremely aggressive and nasty toward the president and the White House, because they will be properly terrified of looking like Bush's lapdogs on a hugely unpopular matter that goes to the heart of the Republican party's political advantage in the United States. If the White House doesn't handle this well in the next three days, the political consequences could be catastrophic.

Hey, John! Instead of worrying how the Bush administration can *appear* to be a competent guardian of America's national security, how about worrying about how we can get a government that *IS* a competent guardian of America's national security?

I know, I know. That strikes you as a whacky--a weird--a bizarre idea of what we should be worrying about. But it's just a thought.

Lies, Damn Lies, and Gingrichisms

Jonathan Chait makes the mistake of actually *believing* Newt Gingrich:

The Plank: Gingrich expounds at length upon his ideas in a recent interview with Brian Carney of The Wall Street Journal editorial page. At one point Gingrich offers up what Carney describes as a "telling anecdote":

We just got a report yesterday that was in the newspaper that children on Medicaid are six times as likely to be obese as children who are not on Medicaid. Now even for a liberal that should give them some pause as to how bad Medicaid is as a system.

Actually, this is a statistic, not an anecdote...

Actually, Jonathan, it's neither a statistic nor an anecdote. 24% of kids are obese. 34% of kids on Medicaid are obese. 21% of kids not on Medicaid are obese. It's not 6 to 1--it's 3 to 2.

Where does the 6 to 1 figure come from? It comes from a claim by Thomson Medstat that kids on Medicaid are six times more likely to be *treated* for *severe* obesity--about one in a hundred for the Medicaid population, and less than two in a thousand for the non-Medicaid population. Thomson Medstat "wouldn't identify the eight states that provided the Medicaid data because the programs had insisted on anonymity. The report is not being published, but is being presented to the company's clients." In other words, it's not going to be peer-reviewed.

Is Medicaid causing obesity among children--as Gingrich claims? Extremely doubtful. 28% of children in the South are obese, compared to 22% in the rest of the country. 34% of low-income children are obese, compared to 19% of high-income children. One-third of African-American children are obese, compared to one-fifth of white children. We do have a big fat problem here--more serious among the poor than the rich, more serious in the South than elsewhere, more serious among African-Americans than among whites. But there's no sign anywhere that access to Medicaid makes children faster. No sign at all.

Jonathan: next time you are tempted to write about an apparently strange and interesting fact spouted out by some right-winger, *lie down* until the temptation goes away--or at least call somebody like Ken Thorpe of Emory who can figure out what is really going on.

Jack Abramoff

Ah:

Talking Points Memo: by Joshua Micah Marshall: February 19, 2006 - February 25, 2006 Archives: Former Malaysian Prime Minister Mahathir Mohamad confirms that Jack Abramoff was paid $1.2 million to set up his meeting with President Bush.

The Washington Post will soon report that Jack Abramoff directed his Malaysian clients to give money to legislators from both political parties.

Why Oh Why Can't We Have a Better Press Corps? (Washington Post Edition)

George Orwell, please pick up the White courtesy phone:

Jim VandeHei writes:

Bush Calls For More Muscle In Darfur : With memories of the failed 1993 U.S. military operation in Somalia fresh in their minds, many U.S. policymakers have been reluctant to commit U.S. forces unilaterally or through multilateral organizations such as NATO. But Bush brushed aside the resistance of some senior policymakers and sided with White House adviser Michael J. Gerson and others who have been lobbying for more assistance to Darfur...

Matthew Yglesias is bemused at the characterization of Michael J. Gerson:

Process Questions | TPMCafe: Will calling for 7,000 NATO troops to go to Darfur actually have a beneficial impact on the situation over there, or is this just an effort to be seen as "doing something" without really facing up to what one would have to do to achieve anything worthwhile? I'm far from certain, but this doesn't reassure me: "But Bush brushed aside the resistance of some senior policymakers and sided with White House adviser Michael J. Gerson and others who have been lobbying for more assistance to Darfur." Gerson, of course, is a speechwriter. I hope the "others" who agree with him included some people with relevant policy expertise, but the administration's record on that score hasn't been encouraging.

Think of how differently "Bush brushed aside the resistance of the Secretaries of State and Defense and the National Security Advisor and sided with White House speechwriter Michael J. Gerson..." sounds than "Bush brushed aside the resistance of some senior policymakers and sided with White House advisor Michael J. Gerson..."

Cracks in the Euro Face

Edward Hugh observes that the fiscal-stability order underlying the euro continues to crack in Germany:

A Fistful of Euros: Who Will Be The First To Blink? : Methinks the first serious test of the eurosystem is now looming on the horizon. The title of this post refers to an earlier point made by Nouriel Roubini. The FT this morning is reporting that: "The German cabinet will on Wednesday endorse a 2006 budget that breaks the European Union's fiscal rules for the fifth year in a row, amid criticism that Angela Merkel's coalition government is failing to meet its own target to cut spending."If this is confirmed the EU Commission and the ECB will then have to respond. One of these fine days all hell is going to break loose in the financial markets. Will that be sooner or later? We await developments.

Vote! For Michael Berube

Now is your chance to make a difference.

Danger: Godwin's Law Violation in Progress!

Newsweek's Michael Hirsh compares Bush's strategic judgment to Hitler's:

Hirsh: Bush's Poor Leadership in Terror War: Again, lest I'm accused of being partisan (I'm really just a reporter, and a very disappointed hawk), I would just refer you to the rebellion within Bush's own party.... We did not have a clash of civilizations four years ago, but we're getting closer to one now. As violent anti-Western protests sweep the Islamic world, and what remains of the moderate Muslim community is cowed into silence, how unbearably sad it is to cast one 's mind back to the eve of 9/11.... No one had much use for Al Qaeda, even in the Islamic world. Global polls like those taken by Pew and the German Marshall Fund showed a remarkable degree of global consensus in favor of a one-superpower (in other words, American-dominated) world. The silver lining of 9/11 was a chance to reaffirm the legitimacy of America's role as trusted overseer of the international system.... How then did we arrive at this day, with anti-American Islamist governments rising in the Mideast, bin Laden sneering at us, Qaeda lieutenants escaping from prison, Iran brazenly enriching uranium, and America as hated and mistrusted as it ever has been? The answer, in a word, is incompetence. We now have testimony from enough Republicans and Bush loyalists—-from former Treasury Secretary Paul O'Neill to former CIA senior director Paul Pillar--that the administration knew all along how flimsy its WMD case against Iraq was. We also now know, from Berntsen and others, that the administration knew then how solid the intel on bin Laden's and Zawahiri's whereabouts was. So catastrophic was Bush's decision to shift his attention and resources to Iraq, when bin Laden was panting at Tora Bora, that one is tempted to rank it with Adolf Hitler's decision to invade the Soviet Union in June 1941, at a time when Great Britain was prostrate and America was still out of the war (a decision that almost certainly cost Hitler the war then and there)....

Danger: Godwin's Law Violation in Progress!

Newsweek's Michael Hirsh compares Bush's strategic judgment to Hitler's:

Hirsh: Bush's Poor Leadership in Terror War: Again, lest I'm accused of being partisan (I'm really just a reporter, and a very disappointed hawk), I would just refer you to the rebellion within Bush's own party.... We did not have a clash of civilizations four years ago, but we're getting closer to one now. As violent anti-Western protests sweep the Islamic world, and what remains of the moderate Muslim community is cowed into silence, how unbearably sad it is to cast one 's mind back to the eve of 9/11.... No one had much use for Al Qaeda, even in the Islamic world. Global polls like those taken by Pew and the German Marshall Fund showed a remarkable degree of global consensus in favor of a one-superpower (in other words, American-dominated) world. The silver lining of 9/11 was a chance to reaffirm the legitimacy of America's role as trusted overseer of the international system.... How then did we arrive at this day, with anti-American Islamist governments rising in the Mideast, bin Laden sneering at us, Qaeda lieutenants escaping from prison, Iran brazenly enriching uranium, and America as hated and mistrusted as it ever has been? The answer, in a word, is incompetence. We now have testimony from enough Republicans and Bush loyalists—-from former Treasury Secretary Paul O'Neill to former CIA senior director Paul Pillar--that the administration knew all along how flimsy its WMD case against Iraq was. We also now know, from Berntsen and others, that the administration knew then how solid the intel on bin Laden's and Zawahiri's whereabouts was. So catastrophic was Bush's decision to shift his attention and resources to Iraq, when bin Laden was panting at Tora Bora, that one is tempted to rank it with Adolf Hitler's decision to invade the Soviet Union in June 1941, at a time when Great Britain was prostrate and America was still out of the war (a decision that almost certainly cost Hitler the war then and there)....

A Good Article on Larry Summers

James Traub writes:

School of Hard Knocks - What President Summers never learned about Harvard. By James Traub: I, for one, will miss Summers, since university presidents who have something to say that is worth hearing are as rare as hen's teeth. And I worry that an emboldened faculty will push the Harvard Corporation to choose as his successor the reincarnation of Neil Rudenstine. Summers had a worthy cause

Monsters

Alex Tabarrok has some pictures of the deed of some monsters:

Marginal Revolution: Monsters.

European History: The Cheese Approach

Tonight we have:

• Provolone Piccante, because we like sharp, aged provolone.
• Manchego, made from cows herded on the plains of La Mancha, homeland of the fictional Don Quijote--either the silliest of comic or the most pitiful of tragic heroes, depending on how you read the greatest novel in the Spanish language.
• Valterina Casera: everyone who has read C.G. Wedgwood's history of the Thirty Years' War (1618-1648) knows of the critical importance of the valley from whence this cheese comes: the Val Telline, control of which was absolutely vital to the ability of the Habsburgs to reinforce their legions in Germany with fresh Spanish tercios.

Earthly Paradise, Part XLVII

"Why, this is the early paradise, nor am I out of it." Sitting outside in February, basking in the sun, with the temperature in the high 60sF, drinking iced lattes, demanding of passing graduate students that they produce new drafts of their papers, and discussing which are our respective favorite paragraphs in the "Great Contraction" chapter of Milton Friedman and Anna J. Schwarz (1963), A Monetary History of the United States.

Does it get any better than this?*

---

*Yes, it does, but not in a manner that can be described on a G-rated family weblog.

Why Oh Why Can't We Have a Better Press Corps? (Yet Another Washington Post Edition)

Washington Post reporters Jim VandeHei and Jonathan Weisman conclude that the facts--what Bush said--are biased against Bush. They can't have that. So they clean it up.

Here's what Bush said:

Roundtable Interview of the President by the Press Pool: I want those who are questioning it to step up and explain why all of a sudden a Middle Eastern company is held to a different standard than a Great British company.

Here's what they write:

Bush Threatens Veto Against Bid To Stop Port Deal : "I want those who are questioning it to step up and explain why all of a sudden a Middle Eastern company is held to a different standard than a [British] company," Bush told reporters.

Why must the readers of the Washington Post

be protected from knowing that Bush uses "Great British" as an adjective? I know, I know--both Jim and Jonathan are scared of offending Karl Rove.

Dark Matter

The late Rudi Dornbusch said that one of the infallible warning signs that we are near the collapse of an overvalued currency associated with an unsustainable trade deficit is when highly intelligent and respected economists begin evolving plausible theories that--this time--the trade deficit is sustainable.

Now come Hausmann and Sturzenegger (2005), "U.S. and Global Imbalances: Can Dark Matter Prevent a Big Bang?" (Cambridge: Harvard CID Working Paper) with a theory that the U.S. trade deficit is not so big and not so unsustainable after all.

What is their theory? The best way I have found to explain it is to look at the spreadsheet immediately below, which presents what we think will happen on the U.S. capital account side in 2006 in two ways. In column 1 it presents what the Commerce Department's Bureau of Economic Analysis will record as the book value of assets created across countries in 2006. In column 2 it presents what Hausmann and Sturzenegger think should be recorded as the income-producing value of those assets.

In the BEA's book-value accounting, in 2006 U.S. companies will invest $600 billion in foreign direct investment elsewhere in the world--building factories, establishing links in value chains, taking over existing foreign-owned businesses, and so forth. In HS's accounting, that $600 billion in visible FDI will be accompanied by $300 billion worth of "dark matter" organizational and technological know-how that American firms carry to their operations abroad. The FDI flow will thereafter generate as much income as would a pure $900 billion bricks-and-mortar FDI flow.

In the BEA's book-value accounting, U.S. residents will also purchase $600 billion in foreign securities, and U.S. banks and other corporations will acquire $400 billion in loans payable and other credits. The gross overseas asset accumulation of Americans will thus amount to about $1,600 billion (in the BEA's book-value accounting) and to about $1,900 billion of income-producing assets (including the $300 billion of "dark matter" that boosts the income-producing potential of U.S. FDI).

Now let's look at the liabilities side. In the BEA's book-value accounting, in 2006 foreign governments will invest $800 billion acquiring U.S. securities--Treasuries, Fannie Maes, and others. Because the U.S. is at the center of the world monetary system it has the "exorbitant" privilege of being offer to sell its securities at lower interest rates. In HS's accounting, that $800 billion consists of the U.S. providing foreign governments and central banks seeking foreign exchange reserves with $600 billion of income-producing potential and an extra $200 billion of "dark matter" liquidity.

Similarly, foreign private investors will spend $700 billion acquiring U.S. securities, which HS assess as consisting of $600 billion of income-producing potential and $100 billion of extra security--insurance because whatever happens to foreigners' assets in their home countries, their U.S.-housed assets will still be there.

In addition, foreign companies will make $300 billion of FDI investments in America, and foreign banks and companies will acquire $600 billion in loans payable and other credits from U.S. residents. The gross accumulation by foreigners of assets in America will thus amount to about $2,400 billion (in the BEA's book-value accounting), and to about $2,100 billion of incomes-producing potential (plus an extra $200 billion of liquidity and an extra $100 billion of security provided by the superior qualities of ).

Look at this pattern of asset position changes through the BEA's eyes, and you see the U.S. becoming indebted to the rest of the world to the tune of an extra $800 billion every year: a staggering figure that we cannot imagine going on for even a decade. Look at this pattern of asset position changes through HS's eyes, on the other hand, and you see the U.S. becoming indebted to the rest of the world to the tune of an extra $200 billion of income-producing potential every year. That's not a big deal. That's sustainable: the flow of real profits and interest owed on an extra $200 billion is approximately $10 billion a year, and that is only 1/40 of the approximately $400 billion by which U.S. incomes grow every year.

The way that HS see it, U.S. trade is nearly balanced. We are importing some $2,000 billion and exporting some $1,200 billion of regular goods-and-services every year, but we are also exporting (a) $300 billion of technological and organizational knowledge via FDI, (b) $200 billion of liquidity services by serving as reserve banker to the world's central banks and governments, and (c) $100 billion of security services by giving foreign private investors a safer place to plant their wealth. Properly evaluated, HS argue, U.S. trade is nearly balanced.

The debate over HS's "dark matter" claims is rolling around the internet, with Willem Buiter and Ricardo Hausmann exchanging views at Martin Wolf's distressingly ovary-free Martin Wolf's Financial Times Economic Forum, Brad Setser harassing Hausmann and Business Week's Michael Mandel from his perch at Roubini Global Economics, and Michael Mandel parrying at his Economics Unbound.

Do I believe in Hausmann and Sturzenegger's "Dark Matter"? No. This post is in the interest of explicating an interesting line of argument only.

I believe what Rudi Dornbusch said: that when highly intelligent and respected economists begin evolving plausible theories that--this time--the trade deficit is sustainable, that is the time to start running for the hills, because the crash is near.

Sarbanes-Oxley

Volcker and Levitt do not want it relaxed:

WSJ.com - Financial Stars Urge Regulators To Not Dilute Sarbanes-Oxley : A group of financial notables has urged regulators to reject a proposal to exempt thousands of smaller public companies from Sarbanes-Oxley-imposed rules on internal controls. Former Securities and Exchange Chairman Arthur Levitt and former Federal Reserve Chairman Paul Volcker and others warn in a Feb. 13 letter that such a rule relaxation is "misguided" and "simply goes too far" in addressing the concerns of small companies.... A section of Sarbanes-Oxley, a 2002 corporate-governance law, requires public companies to review their financial-reporting systems and safeguards -- so-called internal controls -- to ensure their financial statements aren't susceptible to errors or fraud. Hundreds of companies have spotted internal-control problems and many have had to restate earnings since the internal-controls rules went into effect in late 2004, but smaller companies have complained the rules are disproportionately costly and burdensome for them.

In response, an SEC advisory panel made a recommendation in December that would lead to exempting an estimated 80% of public companies from at least part of the rules. For example, companies with market values below about $125 million would be exempt from the rules entirely; others would face relaxed variations on the rules.... Exempting smaller companies from the internal-controls rules would be a mistake, according to the letter writers. "When new accounting and corporate-fraud scandals develop, as they surely will, people will ask who was responsible for a policy decision resulting in such sweeping exemptions," they wrote. The letter was also signed by John Bogle, the former chairman of Vanguard Group Inc.; John Biggs, the former chairman and chief executive of pension company TIAA-CREF; and Charles Bowsher, former U.S. comptroller general and former head of the Public Oversight Board, the PCAOB's predecessor in regulating the accounting industry...

Dan Drezner Defends the Peninsular and Oriental Steam Navigation Company

Dan Drezner defends the Bush administration's willingness to allow the UAE-OWNED P&O to buy U.S. ports: the FBI and CFIUS have approved it--and they to err on the side of preventing foreigners from buying U.S. businesses where national security is concerned. This is one of the few occasions where the Bush administration appears to be on the side of the angels:

danieldrezner.com :: Daniel W. Drezner :: What's the big deal about the port deal? : I can certainly see why there's some political controversy about a firm owned by the government of the United Arab Emirates helping to run ports on the Eastern seaboard -- but after reading this Christian Science Monitor story by Alexandra Marks, I don't think there's any real basis for the kind of outrage I'm seeing....

P&O is not commenting on the political uproar over the deal. But a source within the company worries that the media and politicians are misrepresenting the arrangements. Other who work within the port communities agree. They note that P&O will not be "managing" the ports, as many news organizations have reported. Instead, the company is one of many that leases terminals at the port. "I've never quite seen a story so distorted so quickly," says Esther de Ipolyi, a public-relations executive who works with the port of Houston. "It's like I go to an apartment building that has 50 apartments, and I rent an apartment. This does not mean I took over the management of the whole building."...

[A]ll the facts were reviewed by the Committee on Foreign Investments in the United States (CFIUS) earlier in the month. People aren't upset that there's been a review -- they're upset because there's been a review and the outcome is one they disagree with on a gut level.... There's been a lot of hot air in the blogosphere on this -- and even hotter air from the United States Senate and local politicians -- but I haven't seen anything approaching a rational, reality-based argument against this deal.

Some Highlights from Larry Summers's Resignation Letter

Some highlights from Larry Summers's resignation letter:

Letter to the Harvard Community: I have reluctantly concluded that the rifts between me and segments of the Arts and Sciences faculty make it infeasible for me to advance the agenda of renewal that I see as crucial to Harvard's future. I believe, therefore, that it is best for the University to have new leadership....

[T]he quality of the experience we provide our students is not fully commensurate with their quality or the quality of the Harvard faculty... student-faculty contact... international opportunities... a start on bringing space for student activities and social life up to the standard of peer institutions....

At a time when the median age of our tenured professoriate is approaching 60, the renewal of the faculty has to be a central concern.... [I]t [is] essential that the University do much better than it has done traditionally to ensure that we are doing everything we can to attract, develop, and retain the most promising emerging scholars...

[E]xtend to all parts of the University the promise that talent, and not ability to pay, is the key to a Harvard education.... We are extending the same philosophy to our graduate and professional schools by making sure that students who choose academic or public service careers are well supported while at Harvard so that they are not unduly burdened if they choose careers whose chief rewards do not come in financial terms... much more... can and should be done to sustain a University-level commitment to financial aid....

[T]he University is in the midst of unprecedented commitments to science and technology. The success of these investments will be crucial over the next several decades to the University's global standing.... We cannot maintain pre-eminence in intellectual fields if we remain constrained by artificial boundaries of departments and Schools. "Each Tub On Its Own Bottom" is a vivid, but limiting, metaphor.... We will not escape its limits unless our Schools and Faculties increase their willingness to transcend parochial interests...

Sixty as the median age of tenured non-emeritus faculty?

Num Sum

And yes, I have been playing with:

Num Sum: Easy, Sharable Web Spreadsheets

Dan Ziblatt Has Finished His Book

Dan Ziblatt did a wonderful job teaching for us here at Berkeley before he managed to grow legs and scramble ashore from the nourishing sea of graduate school onto the dry land of the quest for tenure. His book is now out, and so the pile grows bigger:

Daniel Ziblatt (2006), Structuring the State: The Formation of Italy and Germany and the Puzzle of Federalism (Princeton: Princeton University Press: 0691121672).

Dark Matter

The late Rudi Dornbusch said that one of the infallible warning signs that we are near the collapse of an overvalued currency associated with an unsustainable trade deficit is when highly intelligent and respected economists begin evolving plausible theories that--this time--the trade deficit is sustainable.

Now come Hausmann and Sturzenegger (2005), "U.S. and Global Imbalances: Can Dark Matter Prevent a Big Bang?" (Cambridge: Harvard CID Working Paper) with a theory that the U.S. trade deficit is not so big and not so unsustainable after all.

What is their theory? The best way I have found to explain it is to look at the spreadsheet immediately below, which presents what we think will happen on the U.S. capital account side in 2006 in two ways. In column 1 it presents what the Commerce Department's Bureau of Economic Analysis will record as the book value of assets created across countries in 2006. In column 2 it presents what Hausmann and Sturzenegger think should be recorded as the income-producing value of those assets.

In the BEA's book-value accounting, in 2006 U.S. companies will invest $600 billion in foreign direct investment elsewhere in the world--building factories, establishing links in value chains, taking over existing foreign-owned businesses, and so forth. In HS's accounting, that $600 billion in visible FDI will be accompanied by $300 billion worth of "dark matter" organizational and technological know-how that American firms carry to their operations abroad. The FDI flow will thereafter generate as much income as would a pure $900 billion bricks-and-mortar FDI flow.

In the BEA's book-value accounting, U.S. residents will also purchase $600 billion in foreign securities, and U.S. banks and other corporations will acquire $400 billion in loans payable and other credits. The gross overseas asset accumulation of Americans will thus amount to about $1,600 billion (in the BEA's book-value accounting) and to about $1,900 billion of income-producing assets (including the $300 billion of "dark matter" that boosts the income-producing potential of U.S. FDI).

Now let's look at the liabilities side. In the BEA's book-value accounting, in 2006 foreign governments will invest $800 billion acquiring U.S. securities--Treasuries, Fannie Maes, and others. Because the U.S. is at the center of the world monetary system it has the "exorbitant" privilege of being offer to sell its securities at lower interest rates. In HS's accounting, that $800 billion consists of the U.S. providing foreign governments and central banks seeking foreign exchange reserves with $600 billion of income-producing potential and an extra $200 billion of "dark matter" liquidity.

Similarly, foreign private investors will spend $700 billion acquiring U.S. securities, which HS assess as consisting of $600 billion of income-producing potential and $100 billion of extra security--insurance because whatever happens to foreigners' assets in their home countries, their U.S.-housed assets will still be there.

In addition, foreign companies will make $300 billion of FDI investments in America, and foreign banks and companies will acquire $600 billion in loans payable and other credits from U.S. residents. The gross accumulation by foreigners of assets in America will thus amount to about $2,400 billion (in the BEA's book-value accounting), and to about $2,100 billion of incomes-producing potential (plus an extra $200 billion of liquidity and an extra $100 billion of security provided by the superior qualities of ).

Look at this pattern of asset position changes through the BEA's eyes, and you see the U.S. becoming indebted to the rest of the world to the tune of an extra $800 billion every year: a staggering figure that we cannot imagine going on for even a decade. Look at this pattern of asset position changes through HS's eyes, on the other hand, and you see the U.S. becoming indebted to the rest of the world to the tune of an extra $200 billion of income-producing potential every year. That's not a big deal. That's sustainable: the flow of real profits and interest owed on an extra $200 billion is approximately $10 billion a year, and that is only 1/40 of the approximately $400 billion by which U.S. incomes grow every year.

The way that HS see it, U.S. trade is nearly balanced. We are exporting some $2,000 billion and importing some $1,200 billion of regular goods-and-services every year, but we are also exporting (a) $300 billion of technological and organizational knowledge via FDI, (b) $200 billion of liquidity services by serving as reserve banker to the world's central banks and governments, and (c) $100 billion of security services by giving foreign private investors a safer place to plant their wealth. Properly evaluated, HS argue, U.S. trade is nearly balanced.

The debate over HS's "dark matter" claims is rolling around the internet, with Willem Buiter and Ricardo Hausmann exchanging views at Martin Wolf's distressingly ovary-free Martin Wolf's Financial Times Economic Forum, Brad Setser harassing Hausmann and Business Week's Michael Mandel from his perch at Roubini Global Economics, and Michael Mandel parrying at his Economics Unbound.

Do I believe in Hausmann and Sturzenegger's "Dark Matter"? No. This post is in the interest of explicating an interesting line of argument only.

I believe what Rudi Dornbusch said: that when highly intelligent and respected economists begin evolving plausible theories that--this time--the trade deficit is sustainable, that is the time to start running for the hills, because the crash is near.

On Think "Tanks"

Mark Kleiman asks a question:

The Reality-Based Community: On "think tanks" : A question, in the wake of the latest Heritage Foundation scandal (part of a pattern unearthed by Tom Edsall more than a year ago):

Is there any hope of getting the press to distinguish between (1) the original "think tank" — the RAND Corporation — and comparably respectable universities-without-students (Brookings, the Urban Institute) where real social scientists (and real natural scientists, engineers, mathematicians, historians, and policy analysts) do real research and analysis looking for real answers to real questions and (2) faux "think tanks" (Heritage, Cato, the Institute for Policy Studies, the Center on Addiction and Substance Abuse) set up for the purpose of providing "studies" in support of pre-determined ideological points?

The distinction isn't hard to make. If you have to read the report to know the conclusion, it's a real think tank. If you know the conclusion as soon as you know the topic and where it was written, you're dealing with a phony. (And yes, that's precisely like the distinction between an actual news outlet and Fox News or the Washington Times.)

So is there any hope of getting to the press to stop calling Heritage and its ilk "think tanks"?

No, I didn't think so. But it never hurts to ask.

Ryszard Kapuscinski, "The Shadow of the Sun"

Very much worth reading. Ryszard Kapuscinski loves Africa and Africans and hates their governments (and ours too):

Ryszard Kapuscinski (2001), The Shadow of the Sun(New York: Vintage: 0679779078.

And a Pony!

Zalmay Khalilzad may be the only--the only--person to emerge from the George W. Bush administration with his reputation enhanced. But even he is prone to wishful thinking of "and let's all get free ponies!" type. Here's Matthew Yglesias:

If Wishes Were Ponies | TPMCafe: "The United States is investing billions of dollars" in Iraq's police and army, said the ambassador, Zalmay Khalilzad. "We are not going to invest the resources of the American people to build forces run by people who are sectarian." This is an appropriate sentiment, except that the record of the past indicates that we have, in fact, been investing the resources of the American people to build forces run by people who are sectarian.

Now it would seem that insofar as we insist on linking our aid to a modicum of restraint, the Iraqi government will probably find a way to accommodate us to some extent. But it also seems to me that this doesn't resolve the underlying issue. What's wanted is an Iraqi leadership that genuinely doesn't desire to advance sectarian aims, not a sectarian leadership we're kinda sorta restraining and that's always looking for ways to push the envelop.

But barring some dramatic and unmotivated change of heart on the part of the United Iraqi Alliance, that just isn't the kind of leadership that Iraq is going to have and we're past the point where Khalizad could just conjure one up. So why not look to start moving away from a situation where we're investing the American people's resources into a bad situation? Do the words "permanent bases" ring a bell?

David Irving

Sebastian Holsclaw is right: Holocust denier and Nazi sympathizer David Irving should not be sent to jail:

Obsidian Wings: Free Speech and Other Stuff : David Irving was recently sentenced to three years in prison for Holocaust denial. The man is a moral idiot. He is a Holocaust denier, racist and a modern Nazi sympathizer. But he ought not be in jail. I say that not because I respect his views in any way--they are intellectually and morally bankrupt. I say that not out of any personal sympathy for him--he is loathsome. I say that he ought not be in prison because speaking loathsome thoughts should not be a legal offense in a free society. The government of a free society should not police the loathsome expressions of its citizenry...

Covering the Economy: Readings for February 21: Federal Reserve/Poverty and Income

Federal Reserve: Loose Ends

• Was Bernanke willing to give advice about fiscal policy? Yes http://washingtontimes.com/op-ed/20060217-092129-2949r.htm or no http://www.washingtonpost.com/wp-dyn/content/article/2006/02/15/AR2006021500825_pf.html
• Greg Ip pulls it all together http://delong.typepad.com/sdj/2006/02/covering_the_ec_4.html

---

Poverty and Incomes

• Income, Poverty, and Health Insurance in the United States 2004 http://www.census.gov/prod/2005pubs/p60-229.pdf
• Effect of taxes and transfers http://www.nytimes.com/2006/02/18/national/18poverty.html?_r=1&oref=slogin&pagewanted=print, http://www.census.gov/hhes/www/poverty/effect2004/effectofgovtandt2004.html
• Rising poverty rates http://www.csmonitor.com/2005/0831/p02s01-usec.html
• What are government policies doing? Economic Policy Institute's take: http://www.epi.org/content.cfm/issueguides_poverty_povertyfaq, http://www.epi.org/content.cfm/webfeatures_snapshots_20060217, http://www.epinet.org/issueguides/poverty/ima/hia/table4.gif, http://www.epinet.org/issueguides/poverty/ima/hia/table3.gif, http://www.epinet.org/issueguides/poverty/ima/hia/table2.gif

History of Philosophy Cage Match

Brian Leiter makes it clear that Leon Wieseltier knows nothing about David Hume. It does make one wonder what Wieseltier has been doing with himself--and what Sam Tanenhaus is doing with his book review:

Leiter Reports: Why review a book of philosophy when you can sneer at it? (Leiter): The New York Times has done it again: they've enlisted an ignorant reviewer to review a philosophical book. The reviewer is Leon Wieseltier, the literary editor at The New Republic. The book is Daniel Dennett's latest book, a "naturalistic" account of religious belief....

[Wieseltier writes] "Dennett's misrepresentation of Hume [as an atheist, not a theist]... is noteworthy, therefore, because it illustrates [Dennett's] complacent refusal to acknowledge the dense and vital relations between religion and reason, not only historically but also philosophically."

Has Dennett misrepresented Hume?.... Paul Russell (Philosophy, British Columbia) writes.... "In 1757 Hume published “The Natural History of Religion”, a work that proposes to identify and explain the origins and evolution of religious belief.... Hume's primary objective in this work is to show that the origins and foundations of religious belief do not rest with reason or philosophical arguments of any kind but with aspects of human nature that reflect our weaknesses, vulnerabilities and limitations (i.e., fear and ignorance).... Hume is directly challenging an opposing view... [that] the evidence of God's existence is so obvious that no one sincerely and honestly doubts it...."

What Mr. Wieseltier confidently pronounces Hume's theism is, alas, not so clearly ascribed to Hume according to those who actually know something about Hume. There has been misrepresentation of Hume, I fear, but not by Professor Dennett.

Mr. Wieseltier's confident ignorance extends beyond Hume scholarship.... Mr. Wieseltier... does not seem to realize that an account of the historical genesis of a belief can have bearing on the epistemic status of that belief, that beliefs with the wrong kind of etiology are epistemically suspect....

Mr. Wieseltier complains: "It will be plain that Dennett's approach to religion is contrived to evade religion's substance. He thinks that an inquiry into belief is made superfluous by an inquiry into the belief in belief. This is a very revealing mistake. You cannot disprove a belief unless you disprove its content."

It is true that you cannot show a belief to be false by explaining its origin, but... you can show that holding the belief is not warranted by explaining its origin.... If you believe buying stock in High Tech Miracle, Inc. is a good investment based on recommendation of your broker, and then you discover that your broker recommended it because he is an investor in the company and a beneficiary of its rising stock fortunes, you no longer have a reason to believe it's a good investment.... Hume, Nietzsche, Marx, Dennett and many others exploit this form of argumentation, without making any mistakes, let alone abandoning "reason," as Mr. Wieseltier--whose arrogance may even outstrip his ignorance--remarkably claims...

Giving Count Potemkin a Bad Name

George W. Bush: giving Count Potemkin a bad name.

Stygius: The NREL as Potemkin village : As expected, this Tuesday President Bush is coming to Colorado to deliver the Good News about alternative energy and energy conservation at the National Renewable Energy Lab. This comes just after the neglected NREL has been devastated by layoffs due to budget cuts and funding diversions. If they are expecting Coloradans to suspend their disbelief during the visit, the White House will sadly be mistaken.

It's galling that NREL has become the administration's latest Potemkin village in its permanent public relations campaign. From the Loveland Report Herald:

The senior biochemical engineer had worked for the laboratory for 22 years, converting biomass, such as trees, into fuels and chemicals, such as ethanol. His computer was disabled and his phone turned off; a manager escorted him out of the building at 3 p.m. "How do you expect, after 22 years, to wrap everything up in a few hours?" Mohagheghi said, adding that he lost his job and some dignity that day. "I didn't deserve to be treated this way," he said.

The layoffs came after President Bush's State of the Union address Jan. 31 sparked optimism at NREL. The president said Americans were addicted to oil, and he vowed funding for renewable energy research. Bush plans to visit NREL on Tuesday to reinforce his dedication to renewable energy.

Heightening the visit's surreality is the rank hypocrisy of Congressman Bob Beauprez, who's atrocious record of neglecting NREL accelerated the layoff of its scientists.

Beauprez voted for $28 million in cuts to NREL. NREL is located in his district. In addition, he refused to sign a letter requesting that President Bush restore the funding to NREL. In addition, on November 8, 2005, a bipartisan letter from 100 members of Congress [PDF] was sent to President Bush urging him to "fully fund" renewable energy programs as authorized by the Energy Policy Act of 2005. Beauprez refused to sign that letter.

That isn't stopping "Both Ways" Bob from living up to his monker; for today, in a Rocky Mountain News op-ed, Bob Beauprez has the temerity to lecture us on an out-of-control Congress: "There is no place in the country where the promise of this new technology is more evident than NREL. In the past two years, unfortunately, congressional earmarks have diverted precious resources away from NREL. The diversion of these funds into other institutions has served to undermine the mission at NREL and other national laboratories. I believe this is a mistake that must be corrected."

Indeed it is, Congressman. You, however, are obviously not the man for the job.

More reality, please.

The Legacy of Asbestos

In his essential "Golden State" column, the excellent Michael Hiltzik puts asbestos in perspective:

Golden State: Golden State Column: The Legacy of Asbestos : Even within the specialized world of mass tort litigation, asbestos stands alone. Victims of tobacco, the dangers of which have been widely and clearly disseminated, are arguably if partially complicit in their own disease. The women who were injured by silicon implants and the Dalkon shield necessarily comprise a limited population.

But asbestos could hurt anybody. Although its miners and manufacturers and their insurers knew of its hazards as far back as the 1930s, and possibly the 1910s, no alarms were sounded for the general public and no warnings appeared on the packaging until usage ceased in the 1970s. The victims were in many cases unaware that the material they were exposed to was asbestos and to the extent they were employees in refineries and shipyards, they wouldn't have had the option to avoid it even if they knew.

The Rand Corp. survey of the litigation landscape is deeply mistrusted by the asbestos bar, which views it as an argument to shutter the courthouse doors against innocent victims. This is a misreading. It does document the diversion of resources to legal expenses on a massive scale, but it shows that the money comes out of the pockets of defendants and plaintiffs alike, and it weighs the effect of every alternative on victims' access to justice. As its main author, Stephen Carroll, told me, the fact that more than 60 cents of every dollar spent on the process gets eaten up by the process "doesn't tell you what you should do instead, but shows there's a powerful argument that there should be an instead."...

This floating, glittering nuisance was asbestos. In April 2005, nearly 50 years later, McCann visited a doctor to determine why he was experiencing knife-like pains in his lungs after a lifetime hewing to a fanatical fitness regime. That was when he learned that the cascades of silvery flecks had bestowed upon him an incurable disease called mesothelioma. A few months later, McCann, 71, became an asbestos plaintiff in Los Angeles Superior Court, where he sued 21 manufacturers and marketers of asbestos or their corporate successors. Eight were later dropped from the case, and 12 reached confidential settlements. Opening statements in the trial of the sole remaining defendant, Burns International Services Corp., are scheduled for Wednesday.... Since the 1960s, more than 750,000 people have filed legal claims resulting from asbestos exposure, according to a study by the Rand Corp., and the growth rate has been picking up steam. Cases of mesothelioma, an aggressive lung malignancy of which asbestos is the only known cause, have been increasing by more than 2,500 a year.

The Rand study estimated that defendant companies and their insurers had spent more than $70 billion through 2002, including $21 billion on their own legal expenses and $49 billion in settlements and court awards, of which the plaintiffs received $30 billion. Meanwhile, more than 70 defendant companies have filed for bankruptcy protection (not all because of their asbestos liability).

Asbestos plainly presents an unprecedented challenge to the U.S. court system. Although insurers and manufacturers knew of its health dangers by the 1930s, asbestos products were used extensively in industrial, commercial and residential construction through the 1970s, exposing people in all walks of life. Because its effects can appear 40 years after exposure, the size of the claimant pool is incalculable.

Litigation in state courts, where most asbestos cases are filed, can have wildly varying outcomes: The average California jury award for mesothelioma is $5 million, says McCann's attorney, Roger Worthington, who specializes in such cases. But one of his clients was recently awarded $34 million. The process also imposes an intolerable burden on plaintiffs who may be terminally ill; one of McCann's depositions was a six-hour ordeal in the presence of 16 squabbling attorneys.

Every attempt to find a solution has fallen short. Consider the 1982 bankruptcy of Johns-Manville Corp.... The bankruptcy resulted in the creation of a settlement trust whose billions of dollars in assets seemed to be comfortably adequate to pay the 100,000 claims anticipated over its lifetime. But the trust was quickly overwhelmed. The number of claimants breached the 100,000 threshold in about a year. Soon after, the trust was forced to conserve its resources by slashing payments to 10 cents on the dollar.... Just last week, a Senate plan to create a $140-billion trust fund with money from manufacturers and insurance companies was killed in a procedural vote. The plan had bipartisan support -- and bipartisan opposition. Plaintiffs and their lawyers were concerned that its built-in payment cap of $1.1 million per claimant would leave many victims impoverished by medical costs.... Worthington and other attorneys prefer an approach being pushed in the House, which leaves the courtroom doors open to those with the most severe disease and defers lawsuits by those who can't show significant injury, even if they can prove exposure. But that bill could itself render many worthy claims too costly to interest lawyers....

Seated on the couch in his Dana Point home next to Lucille, his wife of 52 years, McCann can still seem the picture of vigor. When he stands upright, his 5-foot-4 frame projects the compact power that won him his gold medal as a 125-pound wrestler at the Rome Games in 1960. It's only when one sees him shamble painfully from one room to the next that the effects 12 courses of chemotherapy have had on his body become outwardly detectable.... He doesn't conceal his bitterness toward the industry that poisoned him. "I was taught that you run your business in an ethical manner," he says. "If I hadn't seen the documentation that these companies knew what they were doing, I wouldn't have pursued this. But I'm angry."

What Is Wrong with Bjorn Lomborg?

A commentor asks what I think is wrong with Bjorn Lomborg. Here's my answer, from the archives:

Skepticism Toward the Skeptical Environmentalist: Archive Entry From Brad DeLong's Webjournal : I cannot be the only economist who was disappointed by Bjorn Lomborg's column in the New York Times on Monday, August 26 [2002]. Lomborg makes a number of good points: it is definitely the case that we are pumping enough CO₂ and other greenhouse gases into the atmosphere to warm the earth; that many of our environmental problems are the diseases of poverty, early industrialization, and the absence of democracy; that the Kyoto Protocol would be hideously expensive; that it would delay the warming trend for a decade at most; that projected temperature rises up to 2100 are bearable; and that it would almost surely be better to spend the resources that would be sucked up by the Kyoto Protocol on third-world public health and infrastructure instead.

But as I read I kept waiting for another shoe to drop, and it did not. It seemed to me that Bjorn Lomborg's argument was radically and dangerously incomplete. It seemed to me that there were three more critical points that Bjorn Lomborg desperately needed to make, but did not. And because he did not it seemed to me that the net effect of his piece was not to reveal wisdom, but to darkeneth counsel.

So let me make these three missing points:

First, climatologists' model-based central projections of the effects of global warming over the next century are just that: model-based central projections. There is enormous uncertainty about what will happen. It might be the case (although most scientists would bet heavily against it) that our pumping CO₂ into the atmosphere will have little effect on climate--that the CO₂ will be quickly absorbed into the oceans and terrestrial biosphere (making gardening much easier), and that any residual warming will be largely balanced out by the cooling effects of industrial soot. It is likely to be the case that the central projection of a 4 to 5 degree Fahrenheit warming over the next century will be roughly accurate. It might be the case that something horrible might happen--bubbles of methane trapped beneath the sea floor being liberated to greatly increase the greenhouse effect, global warming disrupting the Gulf Stream and causing a local cooling in Europe that would give Rome the climate of Oslo and produce 400 million Europeans anxious to move someplace else. The central projection of the effects of global warming over the next century looks bearable, but the extreme possibilities may well not be. Any approach to dealing with global warming that does not create the capability for massive and swift action should things be worse than currently expected is fatally flawed.

Second, those who will suffer from global warming are largely in the global south. If global warming does (say) increase the magnitude of major typhoons and does raise the sea level a bit, by the latter part of this century more than 100 million people in the Ganges delta will be at risk of drowning if a high tide accompanies the storm surge of a major typhoon in the Bay of Bengal. The managers and shareholders of companies like Halliburton that will gain from inaction on global warming are a different and distinct group from the tropical peasants who stand to lose their health and their lives. Any claim that "instead of Kyoto we should be doing X" has to be accompanied by a plan to actually do X. Otherwise, the claim that inaction on global warming enhances world welfare is likely to be very false indeed, as it is hard to believe that on the scale of human happiness higher incomes in the global north will outweigh nastier, more brutish, and shorter lives in the global south. It is one thing to say that the resources the Kyoto Protocol wants to use to fight global warming could be used to provide first-class public health and economic infrastructure to the global south. It is another to say that these resources, instead, will be used to get every American household a second DVD player and every tenth American household a power boat.

Third, global warming produced by a fossil fuel-burning civilization may be bearable and managable up to the end of the twenty-first century, but the warming trend is unlikely to stop there. Humanity will have to move to greenhouse gas-free industry at some point unless you want to see temperatures rising not by five but by ten or fifteen degrees. We need to start doing the research and industrial development now so that countries developing in 2050 can be offered an attractivge choice of greenhouse gas-free technologies as they industrialize. We don't want the climate in the twenty-second century to be shaped by an industrial China that in 2080 is still burning its brown coal, do we? So Lomborg's argument has to be a call not for inaction, but for rightly-directed action on global warming--which means a lot more money spent starting today on developing the technological alternatives we will need to have available for the end of the twenty-first century.

How do these three points change Lomborg's argument? He may well still be right that inaction on control of greenhouse gas emissions over the next twenty years is the best policy--but that claim needs a footnote warning that we need now to build the institutions and technologies necessary to take swift action if it turns out that things are worse than expected. He may well be right that the resources that Kyoto would suck up would do more for human welfare if spent creating a more human world by boosting public health and economic infrastructure--but that claim needs to be accompanied by a plan to make sure that these resources are devoted to their best alternative use in the global south. "Would" cuts no ice here. "Will" does.

And, most disappointing of all, is Lomborg's failure to even mention the importance of technological development. If it is the best policy to wait for a technological fix to the problem of global warming, then we need first to fix our technology so that it will be able to do what we ask of it when we need it.

It's not my field of expertise, but as a card-carrying economist I can't help but think that Lomborg is probably right when he condemns Kyoto as a low-value use of our precious wealth--as something that would be largely ineffective at fighting global warming and also so expensive as to foreclose options to do other things that would be more useful. Lomborg's flaw, however, is that he doesn't spell out what the "other things" we should be doing are. And that's what he needs to do if he wants to advance the ball.

Why Oh Why Can't We Have a Better Press Corps? (Yet Another Washington Post/Deborah Howell Edition)

From http://blog.washingtonpost.com/washpostblog/2006/02/comments_welcome_1.html:

Brad DeLong: Marky makes a good point:

Until I read it in Howell's column, I had no idea that it was conservatives who objected to Milbank's appearance in a hunting jacket. I thought it was very inappropriate. Frankly, my first reaction was to think that Milbank was trying to help the VP minimize the accident through the use of humor---which is a strategy the White House was clearly employing last week.

I think this is right--IIRC, that was the day that Jeb Bush put an orange sticker on his chest and Scott McClellan wore an orange tie, both saying they were doing so because they had been warned the vice president might show. Cheney originally deployed two lines of spin: (i) it was Whittington's fault for sneaking up behind Cheney, and (ii) it's a not-very-serious accident with a humorous side.

The hunting cap and vest that Dana Milbank wore and that Deborah Howell denounces was Milbank's (a) being funny and (b) reinforcing the White House's desired spin.

The interesting question is why does Howell think that what Milbank did--which was also what Jeb Bush and Scott McClellan did--was "inappropriate" mocking of Cheney and Whittington? Deborah Howell's column implies that it was because Malkin and PowerLine directed their readers to her.

Without knowing--or noticing--or thinking about--the blaze orange tie on Scott McClellan and what this told her about White House media strategy, Deborah Howell, in Jane Hamsher's words, "hops to like a Texas toad."

I'm sure you can think of words to describe Deborah Howell. Here are some that occur to me: powerful keen-eyed ombudsman with a brain that puts Einstein to shame; a rock of journalistic independence; one of the truly incredible wonders of our age.

Why Oh Why Can't We Have a Better Press Corps? (Yet Another Washington Post/Deborah Howell Edition)

From http://blog.washingtonpost.com/washpostblog/2006/02/comments_welcome_1.html:

Brad DeLong: Marky makes a good point:

Until I read it in Howell's column, I had no idea that it was conservatives who objected to Milbank's appearance in a hunting jacket. I thought it was very inappropriate. Frankly, my first reaction was to think that Milbank was trying to help the VP minimize the accident through the use of humor---which is a strategy the White House was clearly employing last week.

I think this is right--IIRC, that was the day that Jeb Bush put an orange sticker on his chest and Scott McClellan wore an orange tie, both saying they were doing so because they had been warned the vice president might show. Cheney originally deployed two lines of spin: (i) it was Whittington's fault for sneaking up behind Cheney, and (ii) it's a not-very-serious accident with a humorous side.

The hunting cap and vest that Dana Milbank wore and that Deborah Howell denounces was Milbank's (a) being funny and (b) reinforcing the White House's desired spin.

The interesting question is why does Howell think that what Milbank did--which was also what Jeb Bush and Scott McClellan did--was "inappropriate" mocking of Cheney and Whittington? Deborah Howell's column implies that it was because Malkin and PowerLine directed their readers to her.

Without knowing--or noticing--or thinking about--the blaze orange tie on Scott McClellan and what this told her about White House media strategy, Deborah Howell, in Jane Hamsher's words, "hops to like a Texas toad."

I'm sure you can think of words to describe Deborah Howell. Here are some that occur to me: powerful keen-eyed ombudsman with a brain that puts Einstein to shame; a rock of journalistic independence; one of the truly incredible wonders of our age.

More Competition for Fafblog!

Commenting on this:

Bush's Chat With Novelist Alarms Environmentalists - New York Times : In his new book about Mr. Bush, "Rebel in Chief: Inside the Bold and Controversial Presidency of George W. Bush," Fred Barnes recalls a visit to the White House last year by Michael Crichton, whose 2004 best-selling novel, "State of Fear," suggests that global warming is an unproven theory and an overstated threat.Mr. Barnes, who describes Mr. Bush as "a dissenter on the theory of global warming," writes that the president "avidly read" the novel and met the author after Karl Rove, his chief political adviser, arranged it. He says Mr. Bush and his guest "talked for an hour and were in near-total agreement. The visit was not made public for fear of outraging environmentalists all the more," he adds...

Bob, in comments, reaches Fafblog-like heights of extravagant lunacy:

Bush Science Policy Department: It's nice that you can pass judgement on [Crichton's novel] as "fiction" when you have never even read it! Might as well take the word of environmental scientists rather than thinking for yourself. Wouldn't want to change your mind on something or be exposed to a different point of view. It's exactly this lack of intellectualism that I expect from the knee-jerk Bush-bashers on the left.

Posted by: Bob | February 19, 2006 at 08:19 PM

Bravo! Bravo!

Why Oh Why Are We Ruled by These Idiots? (Bush Science Policy Department)

Science policy, George W. Bush style. The puzzle is not why so few scientists and academics are Bush-supporting Republicans. The puzzle is why any at all are.

Michael Berube writes, apropos of Bush using Michael Crichton as his science advisor:

Berube: Environmentalists were not the only group Mr. Bush considered during Mr. Crichton’s visit. “They covered the entire spectrum of Crichton’s work,” said Mr. Barnes. “Crichton warned the President that the rapacious Japanese economy would soon crush America, that female executives are often the perpetrators in sexual-harassment cases, and, most important, that the lost city of Zinj is populated by murderous talking gorillas. As in their discussion of global warming, Mr. Bush was in near-total agreement.”

Environmentalists have responded with alarm to the news. “This shows the president is more interested in science fiction than science,” Frank O’Donnell, president of Clean Air Watch, said after learning of the White House meeting. Mr. O’Donnell’s group monitors environmental policy.

Curiously, however, Christian conservatives have also expressed concern. “The president met with Michael Crichton for an hour and they never discussed the dangers of genetic research? That’s an outrage,” said the Rev. James Dobson, founder of Focus on the Family. “While we understand that the president needs to stay informed about global-warming charlatans, sexually predatory women and dangerous talking gorillas, we strongly believe that he should take a stand against scientific research conducted by atheistic madmen. The president needs to reassure Christians that the Culture of Life® will not be threatened by genetically engineered dinosaurs, human-animal hybrids, or deranged robots with Yul Brynner’s face.”

Toxic, rapidly-reproducing crystalline organisms from outer space could not be reached for comment.

The Bush Administration: Worse than She Could Imagine

Sarah Vowell writes:

The Pessimism Deficit - New York Times : My go-to worldview is pessimism. I see a Times Square billboard promoting a musical that has its audience "dancing in the aisles" and I can't help but think, "That is a fire hazard." But it has been my happy experience that if one moves through life in a constant state of low-key dread, then one gets to be continually pleasantly surprised....

I got the feeling that he was asking for reasons to be optimistic about the government Alas, I see my initial worries about the current administration as the greatest betrayal in my whole life by my old pal pessimism. I attended the president's inauguration in 2001. When he took the presidential oath, I cried. What was I so afraid of? I was weeping because I was terrified that the new president would wreck the economy and muck up my drinking water. Isn't that adorable? I lacked the pessimistic imagination to dread that tens of thousands of human beings would be spied on or maimed or tortured or killed or stranded or drowned, thanks to his incompetence. I feel like a fool.

Covering the Economy: Greg Ip on Ben Bernanke's Humphrey-Hawkins Testimony

As is so often the case, the single best summary story of Bernanke's Humphrey-Hawkins testimony I have seen was written by Greg Ip:

WSJ.com - Blunt-Talking Bernanke Warns of Inflation Risks : Making his debut before Congress as Federal Reserve chairman, Ben Bernanke demonstrated continuity with Alan Greenspan's interest-rate policies but broke with his predecessor's style.

Mr. Bernanke told Congress yesterday that inflation still is at risk of quickening because of high energy prices and economic overheating. He thus endorsed the thinking of the Fed at its last meeting, headed by Mr. Greenspan, and suggested the string of rates increases begun under Mr. Greenspan's leadership in June 2004, isn't over.

But his succinct and often blunt answers to questions from members of the House Financial Services Committee and his refusal to comment on many politically contentious issues signaled a stylistic break with Mr. Greenspan, who often spoke opaquely about monetary policy and lucidly about almost everything else.

Why Oh Why Can't We Have a Better Press Corps? (Washington Post Nell Henderson and Neil Irwin Edition)

Nell Henderson and Neil Irwin of the Washington Post mischaracterize Ben Bernanke's testimony. Their article begins:

Bernanke: The U.S. economy is off to a strong start this year and is likely to perform well in the months ahead, despite the risks of a cooling housing market and high energy prices, Ben S. Bernanke told Congress yesterday in his public debut as Federal Reserve chairman. Bernanke's remarks, just two weeks after the retirement of his famous predecessor Alan Greenspan, suggested that Fed officials are increasingly likely to raise their benchmark short-term interest rate next month to keep inflation contained. "The economic expansion remains on track," Bernanke told the House Financial Services Committee, citing recent reports showing that factory production, job growth and retail sales all rose last month.

Bernanke renewed his pledge to maintain continuity with Greenspan's policies but noticeably broke with the former Fed chief's practice of using Capitol Hill appearances to advise Congress on taxes, spending and other fiscal issues. Greenspan, a Republican, urged Congress several times last year to cut federal spending, make the recent tax cuts permanent, reduce the deficit, create private Social Security investment accounts and lower the government benefits promised to future retirees. His past public comments helped win passage of President Bill Clinton's 1993 budget and President Bush's 2001 tax cuts. Greenspan's forays into such territory was criticized by Fed colleagues and others who worried that the public inevitably confused his personal opinions with the positions of the central bank, which is supposed to be politically independent. Bernanke, in response to questions on those and similar topics, begged off...

Reading this, you might think that Bernanke refused to advise congress on fiscal issues, no?

But Bernanke did advise congress on fiscal issues. Here's how the Washington Times puts it:

Washington Times : Mr. Bernanke was disappointing in his steadfast refusal to express an opinion on the proposed restoration of PAYGO budget rules.... Bernanke nonetheless held no punches in warning about the implications of the nation's rising federal budget deficit.... "Increased [budget] deficits are a negative for the economy, certainly," Mr. Bernanke candidly acknowledged. Earlier, he explained that he was "concerned about the prospective path of deficits" because "it does reduce national saving and therefore imperils, to some extent, the prosperity, the future prosperity of our country." Noting that the share of gross domestic product spent on Social Security, Medicare and Medicaid will increase from 8 percent today to 16 percent by the time his college-attending children will be contemplating retirement, he declared that it was "appropriate for me to talk about long-term government spending, taxes and deficits" because "that bears on economic stability and financial stability."... Bernanke warned that there may come a time "when foreigners are not willing to continue to add to their holdings of U.S. dollar assets, and that, in turn, will lead to perhaps an uncomfortable adjustment in the current account." If foreigners do continue financing America's excess consumption and budget deficits, Mr. Bernanke hypothesized, they would likely charge higher prices (i.e., higher interest rates), which "would feed back on the U.S. economy in ways that might be uncomfortable" -- to say the least. As the Fed's Monetary Policy Report to Congress argued, "If not reversed over the longer haul, persistent low levels of [national] saving will necessitate either slower capital formation or continued heavy borrowing from abroad."...

Bernanke is saying that whether the budget should be balanced by raising taxes or cutting spending and whether government spending should be a higher or a lower share of GDP are political and not technocratic decisions that should be made by elected politicians. But Bernanke is crystal clear that the budget should be (approximately) balanced over the course of the business cycle.

That's not Henderson and Irwin's "broke with the... practice of... advis[ing] Congress on... fiscal issues." That's the Washington Times's "Bernanke... held [back] no punches in warning about the... budget deficit."

Bernanke is not giving congress no advice on fiscal issues. He is giving congress different advice than Greenspan gave. A good story could have been written on the reasons for Bernanke's shift away from Greenspan's position: (a) Bernanke's wish to build non-partisan credibility; (b) Bernanke's greater respect for the limitations of the Federal Reserve's role; (c) Bernanke's lack of Greenspan's Randian certainty that a smaller government would be a better government; (d) Bernanke's wish to focus his advice on the most important task facing congress--that of restoring long-run fiscal stability.

But Henderson and Irwin did not write that article. Instead, rely on Henderson and Irwin, and you wind up believing something that is not true.