Saturday, June 25, 2011

Ethanol Fuel Sucks

So says Steven Rattner:
Eating up just a tenth of the corn crop as recently as 2004, ethanol was turbocharged by legislation in 2005 and 2007 that set specific requirements for its use in gasoline, mandating steep rises from year to year. Yet another government bureaucracy was born to enforce the quotas.
To ease the pain, Congress threw in a 45-cents-a-gallon subsidy ($6 billion a year); to add another layer of protection, it imposed a tariff on imported ethanol of 54 cents a gallon. That successfully shut off cheap imports, produced more efficiently from sugar cane, principally from Brazil.
Here is perhaps the most incredible part: Because of the subsidy, ethanol became cheaper than gasoline, and so we sent 397 million gallons of ethanol overseas last year. America is simultaneously importing costly foreign oil and subsidizing the export of its equivalent.
That’s not all. Ethanol packs less punch than gasoline and uses considerable energy in its production process. All told, each gallon of gasoline that is displaced costs the Treasury $1.78 in subsidies and lost tax revenue.
Nor does ethanol live up to its environmental promises. The Congressional Budget Office found that reducing carbon dioxide emissions by using ethanol costs at least $750 per ton of carbon dioxide, wildly more than other methods. What is more, making corn ethanol consumes vast quantities of water and increases smog.
Ethanol may suck as fuel, but it is great as drink.

Chart of the Day

From Krugman, Federal Revenue versus GDP:

Federal taxes near a historic low.  Is that what the Tea Party says?

The Beer Archaeologist

at Smithsonian magazine, via Ritholtz:
At last, Patrick McGovern, a 66-year-old archaeologist, wanders into the little pub, an oddity among the hip young brewers in their sweat shirts and flannel. Proper to the point of primness, the University of Pennsylvania adjunct professor sports a crisp polo shirt, pressed khakis and well-tended loafers; his wire spectacles peek out from a blizzard of white hair and beard. But Calagione, grinning broadly, greets the dignified visitor like a treasured drinking buddy. Which, in a sense, he is.
The truest alcohol enthusiasts will try almost anything to conjure the libations of old. They’ll slaughter goats to fashion fresh wineskins, so the vintage takes on an authentically gamey taste. They’ll brew beer in dung-tempered pottery or boil it by dropping in hot rocks. The Anchor Steam Brewery, in San Francisco, once cribbed ingredients from a 4,000-year-old hymn to Ninkasi, the Sumerian beer goddess.
“Dr. Pat,” as he’s known at Dogfish Head, is the world’s foremost expert on ancient fermented beverages, and he cracks long-forgotten recipes with chemistry, scouring ancient kegs and bottles for residue samples to scrutinize in the lab. He has identified the world’s oldest known barley beer (from Iran’s Zagros Mountains, dating to 3400 B.C.), the oldest grape wine (also from the Zagros, circa 5400 B.C.) and the earliest known booze of any kind, a Neolithic grog from China’s Yellow River Valley brewed some 9,000 years ago.
Widely published in academic journals and books, McGovern’s research has shed light on agriculture, medicine and trade routes during the pre-biblical era. But—and here’s where Calagione’s grin comes in—it’s also inspired a couple of Dogfish Head’s offerings, including Midas Touch, a beer based on decrepit refreshments recovered from King Midas’ 700 B.C. tomb, which has received more medals than any other Dogfish creation.
“It’s called experimental archaeology,” McGovern explains.
These guys are definitely hard core, but it is fascinating.

Friday, June 24, 2011

Columbo Dies

Everett Collection
Peter Falk was best known for playing the rumpled star of crime drama "Columbo."
Actor Peter Falk, known to millions as the rumpled star of television crime drama "Columbo," has died, reports. The actor was 83.
He reportedly was suffering from Alzheimer's disease.
Falk first played Lieutenant Columbo (his first name was never clearly announced, though one badge image lists it as "Frank") in a 1968 TV movie. Its popularity led to a second film and then to the series, which ran from 1971 to 1978. Even after the show was canceled, Falk would play the laid-back detective in "Columbo" TV movies.
"He looks like a flood victim," Falk once said of his famous character. "You feel sorry for him. He appears to be seeing nothing, but he's seeing everything. Underneath his dishevelment, a good mind is at work."
I would guess that my college roommate thought of me when he heard the news.  That's because when we were freshmen and the Fab Five at Michigan were scheduled to play Duke on a Saturday night, tons of guys were crammed into the basement lounge to watch the game.  I looked at him and asked, "Everybody's here to watch Columbo, right?"  He thought that was hilarious, and he would bring up Columbo occasionally after that.  It probably shows that folks from Iowa are pretty sheltered, and don't know what funny jokes are.

Foghorn Leghorn Speaks

Haley Barbour on Sarah Palin's fundraising ability (h/t the Dish):
“She can raise enough money to burn a wet mule,”
Compare that to this post.

Republicans and Tax Increases

Bruce Bartlett at Fiscal Times, via Ritholtz:
Back in 1982, Ronald Reagan was persuaded that the deficit was such a severe impediment to growth that a tax increase to reduce it would be economically beneficial. Many in his party strenuously objected, citing research by Republican economists. For example, on August 12, 1982, U.S. Chamber of Commerce president Richard Lesher sent to Congress an analysis of the proposed tax increase. Said Lesher:
“If H.R. 4961 is passed in these troublesome economic times, we have no doubt that it will curb the economic recovery everyone wants. It will mean a lower cash flow as more businesses pay more taxes, with a depressing effect on stock prices. It will reduce incentives for the increased savings and investment so badly needed to improve productivity and create more jobs. It will mean higher prices for many products and services. It will increase government costs in caring for those who, because the economy is held down, cannot find employment.”
It would be hard to find an economic forecast that was more wrong in every respect. Looking at real gross domestic product, it grew 4.5 percent in 1983 and 7.2 percent in 1984 – an exceptionally strong performance. The stock market had one of its best years ever in 1983 – both the Dow Jones Industrial Average and the S&P 500 Index rose 35 percent. There was no increase in the rate of inflation, which was exactly the same in 1983 and 1984 as it was in 1982. The unemployment rate fell from 10.6 percent in December 1982 to 8.1 percent by December 1983 and 7.1 percent in December 1984.
The Chamber was not an outlier. Virtually every Republican economist made similar dire predictions. Economist Arthur Laffer told his clients on July 26, 1982, that the Tax Equity and Fiscal Responsibility Act, which raised taxes by about one percent of GDP, “will stifle economic recovery,” “retard economic growth,” and undercut “the economy’s ability to enter into a period of expansion.” On August 20, 1982, he told his clients that TEFRA “will tend to lengthen and deepen the recession.” Writing in the New York Times on September 12, 1982, economist Norman Ture said the administration’s claim that TEFRA would promote economic growth was “bizarre.” He said it would “weaken the impetus for economic growth” and make the economic recovery “less certain and less vigorous.”
Despite these erroneous predictions, Republican economists said pretty much the same thing when Bill Clinton proposed a tax increase in 1993. On April 12, 1993, the Republican members of the Joint Economic Committee predicted that the unemployment rate would be 0.3 percent higher in 1994 and 1995, 0.5 percent higher in 1996, and 0.6 percent higher in 1997. Real GDP growth would be 0.4 percent slower in 1994, 0.5 percent slower in 1995, 0.8 percent slower in 1996, and a full percentage point lower in 1997.
On August 20, 1993, Laffer told his clients, “Clinton’s tax bill will do about as much damage to the U.S. economy as could feasibly be done in the current political environment.” He said that interest rates would rise and the stock market would fall.
Once again, it would be hard to find a forecast that was more completely wrong.
Arthur Laffer was wrong?  No way.  Republicans were wrong?  Naaa.  Let's see, if they were wrong each of the other times, think they are wrong today, saying the exact same thing? Hmmmm.  Well, it is important to remember that Bartlett worked with Laffer over the years, especially in the Reagan administration, and might very well know that Laffer is a clown.  I've picked up on that, and I've never met the guy.  The Republican insistance on not raising taxes at all to amelierate the deficit is totally asinine, and a good reminder why I can't in good conscience vote for those morons.

More on La Nina

Elwynn Taylor posted the following picture on Twitter:

I just wanted to highlight that, after this post.

Naked Capitalism Link of the Day

Today's link: Europe's return to Westphalia, at the Financial Times
A little while ago I spoke at a small gathering hosted by Portugal’s Fundação Oriente at the Arrábida monastery near Lisbon. I called my contribution “Europe’s return to Westphalia”. The thesis – that the Union is turning back the clock a few hundred years as it succumbs to the pressure of resurgent nationalisms – was intended as a provocation. As I watch Europe’s leaders stumbling through the debt crisis I am increasingly persuaded that this is no more than a simple description of present reality.
The modern European state was born with the peace of Westphalia in 1648. The doctrine of state sovereignty replaced the waning supranational authority of the church. As the distinguished Brussels diplomat Robert Cooper has observed, Europe’s rulers purchased domestic order and popular consent at the price of more competition between states.
This system endured until the middle of the 20th century, when the appalling devastation wrought by the second great war within 30 years finally persuaded the continent’s leaders that the cost of sustaining a European order based on the balance of power had become too high.
Europe’s postmodern experiment in shared sovereignty has so far lasted 60 years. Now the bargain is unravelling as governments once again separate narrow national from wider mutual interests. The world has globalised, but politics remains local. Europe’s states are responding to domestic pressures by seeking to reclaim Westphalian independence.
Not long ago the Union was held up as the model for the new multipolar international order. By pooling sovereignty, Europe had cracked the big challenge of globalisation: how to marry cross-border interdependence with national politics. Integration turned a zero-sum game into a positive-sum game.
A little history for the morning.  It appears that the Euro's potentially fatal flaw, which mirrors the United States system at an earlier point in history, is that the individual nations are tied by a single currency, but a single central bank controls monetary policy.  Therefore, the problems in the PIIG countries can't be alleviated by each individual state weakening its currency.  This is the same sort of financial union in which U.S. states are combined, but the states don't have hundreds of years of state sovereignty to overcome in a short period of time.  The Euro is an important improvement in European history, but it may have been rushed into without the proper preparations and compromises made.  I hate to see it go, but it may be doomed.  The return of nationalism to Europe probably won't work out well.

More on the Minot Flood

From mistermix at Balloon Juice:
They call it the Souris in Canada, the Mouse in North Dakota, and it’s having the biggest flood in recorded history this Spring and Summer. A couple of weeks ago, the city of Minot seemed to have been spared because of heroic efforts to add clay to the top of the dikes that line the river. With 4-6 inches of rain falling earlier this week in Saskatchewan, and heading down the river, the dams that protect Minot are all full and releasing tremendous amounts of water.

“What’s happening here,” explained [Weather Service hydrologist] Schlag, “is that the Souris has finally gone so far out of its banks that we are seeing significant flow short-circuiting the normal meandering course of the river. It is now wall-to-wall throughout the valley and is traveling in a straight line.”

Over one-quarter of Minot’s 41,000 residents have now been evacuated, and all they can do now is watch their houses fill up with water.
When you hear “North Dakota flood”, you might think about Fargo and the Red River valley, which floods regularly. This is a different place—Minot had a major flood in 1969 and built a series of levees that protected the city for more than 40 years. This is the first flood since then, and the river is 8 feet higher than any level recorded in 130 years. To put the recent 4-6 inch rainfall in perspective, that part of the country normally gets 15-18 inches of rain per year.
4 to 6 inches of rain in an area which normally gets 15-18 inches of rain per year.  That is incredible.  Again, I don't know if La Nina plays a role in that, but that is what I figure is making our spring really wet, just as it may be causing the drought in Kansas, Oklahoma and Texas.  This is supposed to be the strongest La Nina in fifty years, but I'm just curious if global warming will make the El Nino/La Nina effect stronger, weaker or not be an influence?

The Roots of Financial Crisis

via Mark Thoma, Paul Krugman and Robin Wells review Age of Greed: The Triumph of Greed and the Decline of America, 1970 to the Present, by Jeff Madrick:
The first thing you need to know about the cycle of financial overreach, crisis, and bailout is that it was not always thus. The United States emerged from the Great Depression with a tightly regulated financial sector, and for about forty years those regulations were enough to keep banking both safe and boring. And for a while—with memories of the bank failures of the 1930s still fresh—most people liked it that way. Over the course of the 1970s and 1980s, however, both the political consensus in favor of boring banking and the structure of regulations that kept banking safe unraveled. The first half of Age of Greed describes how this happened through a series of personal profiles.
To some extent Madrick covers familiar ground here. He recounts the economic turmoil of the 1970s, as the country was caught in the grip of stagflation. And as he points out, Nixon and Ford—like today’s Republicans—blamed the economy’s troubles not on the true culprits but on big government. Madrick stresses a key point that is often forgotten or misunderstood to this day: the surging inflation of the 1970s had its roots not in some general problem of “big government” but in largely temporary events—the oil price shock and disappointing crop yields—whose effects were magnified throughout the economy by wage-price indexation. Yet constant policy shifts by the Treasury and the Federal Reserve (remember wage-price controls?) under Nixon, Ford, and Carter, Madrick argues, made the American public lose faith in government effectiveness, creating within it a ready acceptance of the antigovernment messages of Milton Friedman and Ronald Reagan.
While we believe that there were deeper reasons for Reagan’s rise, Madrick is right that the economic malaise of the 1970s gave Reagan his big opening. As Madrick describes, Reagan’s enormous capacity for doublethink and convenient untruths enabled him, the front man for business interests, to convince a credulous public that “government had become the principal obstacle to their personal fulfillment.” In possibly the best chapter of the book, Madrick recounts the irony of how Reagan, the great moralizer, made unchecked greed and runaway individualism not only acceptable, but lauded, in the American psyche.
Madrick also does an especially persuasive job of demythologizing Milton Friedman, who provided intellectual heft for the antigovernment movement. As Madrick points out, although Friedman offered some important economic insights, he often shoehorned real-life data to fit into a one-sided narrative, gaining his theories wider acceptance than was ultimately justified. And Friedman, like Reagan, preferred “overly simple assertions of free market claims,” discarding the caveats.
The whole review is worth a read, and the book sounds like it will be worthwhile too.  This is a pretty good summary of the big changes which took place beginning in the turmoil of the seventies, but really taking root in the eighties and have grown monstrously since.  The transfer of the banker from staid conservative to freewheeling gambler is at the heart of the crisis, along with the ever more endebted consumer, trying to hold on to an assumed standard-of-living which is increasingly outside of his means.  These forces have combined to place us in a no-win situation, with pain and negative consequences in every direction.  So far, we have bailed out the wealthy at the expense of everyone else.  Now, I think the least damaging outcome is to have the wealthy join in sharing the pain, to mitigate the suffering of the many. What are the odds of that outcome coming to fruition?

Charts of the Day

From Minyanville, via Ritholtz, first, Ethanol Distillation Margins:

Then, Ethanol Cost vs. Gasoline:

From the article:
Yet despite all of this, the Senate came dangerously close to ducking an opportunity to taking a stand against a policy that had resulted in 40% of our corn crop going to feed yeast to make a more expensive low-grade motor fuel. Yes, while the distillers’ dried grains sold back by ethanol plants can be used as a livestock feed, only an imbecile should not understand DDG’s have a lower food content than the original corn, and that is before we have to account for the processing and transportation losses.
I've got to agree.  The subsidy is just bad policy.  The high cost of gasoline is just passed into the grain market, causing food inflation, without making a significant dent into oil consumption or oil imports.  It just doesn't work.

Thursday, June 23, 2011

Deep-Fried Kool-Aid is a Hit

San Diego Union-Tribune:
The deep-fried Kool-Aid is selling like deep-fried hot cakes, according to their famed creator, "Chicken" Charlie Boghosian.
Chicken Charlie's is a staple of fried rations at fairs across the country. It sold 400 to 600 orders of deep-fried Kool-Aid per day the first weekend of the San Diego County Fair. That's about double the rate of previous debut items, Boghosian said.
"That's because it tastes so darn good," Boghosian said of the Kool-Aid.
The deep-fried novelty takes the shape of a doughnut-hole. There are five per order. That breaks down to as much as 9,000 balls of deep-fried Kool-Aid eaten over opening weekend.
Boghosian said Chicken Charlie's has already gone through 150 pounds of Kool-Aid powder and 1,500 pounds of flour. Chicken Charlie's debuted deep-fried Klondike Bars and Pop Tarts in past years.
Fairgoers on Tuesday were also buying up the deep-fried Kool-Aid.
"It starts off tart and tangy, and then finishes really sweet... I love this stuff," said Seth Baldwin of Vista.
"It tastes just like a doughnut ball," said Rashed Karram, who said he prefers the deep-fried Klondike Bars.
I'll stick with the deep-fried twinkies myself, although the deep-fried thin mints were something I was considering trying.  Looks like Chicken Charlie beat me to it.

Western Ohio State Representative Has Problem With Numbers

Columbus Dispatch:
A debate saturated with partisanship over the future of Lake Erie ended in a split along party lines in the Ohio House yesterday.
The resulting 60-37 vote sent House Bill 231 to the Ohio Senate.
The measure establishes rules about withdrawing water from Lake Erie in line with the Great Lakes Compact, adopted by Ohio in 2008. Seven surrounding states also signed the compact, which was designed to stem the flow of water out of the Great Lakes region.
The bill would require permits for businesses that tap more than 5million gallons of water a day from Lake Erie, 2 million from rivers or groundwater supplies, or 300,000 a day from rivers deemed "high quality."
Permits are not now required for water withdrawal, but all eight states in the compact must submit water-use plans in the next two years. Ohio draws 3.5 billion gallons a year from Lake Erie, mostly for power plants, industry and drinking water......
More water is flowing into Lake Erie than is being drawn out of it, Rep. Jim Buchy, R-Greenville, said.
Buchy said 122 billion gallons of water a year flow into Lake Erie from the Detroit River. An additional 15 billion gallons come from runoff, making the total 137 billion gallons.
He said Ohio and other states draw 11 billion gallons a year from the lake and about 17 billion gallons evaporate. Add those to 66billion gallons that flow over Niagara Falls, and the total flow out of the lake is 94billion. He said that leaves a 43 billion-gallon surplus. (emphasis mine).
I call shenanigans.  Buchy says that 137 billion gallons of water flows into the lake and 94 billion gallons flow out.  That leaves 31% of all the water flowing into the lake remaining there.  This would indicate that Lake Erie is rising annually.  I don't think his numbers are anywhere near accurate.  The New York Power Authority, which produces hydroelectric power from the Niagara River, states that on average 1.5 million gallons of water enter the Niagara River from Lake Erie every second.  That computes to 47 trillion gallons per year, slightly higher than the 137 billion gallons Buchy claims are flowing in.  Heck, an inch of rain, falling only on the surface area of the lake, would add 172 billion gallons of water to the lake, assuming evaporation at one end of the lake didn't contribute to the rainfall at the other end of the lake.

I find it interesting that Representative Buchy got all these numbers from somewhere, put them out as facts, but doesn't have the common sense to realize that they probably should balance out to near zero, not that the lake is acculumating 31% of the annual inflow into the basin.  Count me as not impressed.

Worst Spring Ever?

Not at this farm.  1996 beats 2011.  In 1996, our first field of corn was finished on May 20, and our last field of beans was completed June 21.  Compare that to this year, when our first field of corn was planted May 11, and our last field of beans was completed June 6.  Back then, we were using a 6 row corn planter and a 15' drill to plant approximately 700 acres, as compared to a 12 row corn planter and 15' drill to plant approximately 900 acres (800 this spring), which contributed to the longer season.  But the poor weather continued for a longer period in 1996.  Our last day planting corn in 1996 was June 1, as rain after that date pushed us beyond the prevented planting date.  We ended up switching 150 acres of corn to beans in 1996, and yields were poor.  Hopefully the yields will be better this time around.

Minot Sees Record Flood

Minot, the fourth-largest city in North Dakota, is about 90 kilometres south of the Canadian border, almost directly below the Manitoba-Saskatchewan boundary.
The Souris river and torrential rains feeding into it have also caused havoc across southeastern Saskatchewan, where a number of communities have declared states of emergency as they deal with flooded homes, businesses and crumbling roads.
In the coming days, the river through Minot is expected to expected to dwarf the major flood of 1969. That's when the Souris reached 474 metres above sea level. It's expected on the weekend to hit nearly 476 metres, surpassing even the historical record level of 475 metres, set in 1881.
"In two days' time, it will be a rapid, rapid rise," Gov. Jack Dalrymple said.
The 1969 flood prompted the Army Corps of Engineers to build a dike system that has been beefed up several times this spring.
But those levees are unable to handle flows from Saskatchewan of approximately 28,000 cubic feet per second.
It is stunning how much flooding there has been in the Dakotas this spring.  I don't know if it is caused by La Nina, but she's my expected culprit.

Naked Capitalism Link of the Day

Today's link: University of Minnesota engineering researchers discover source for generating 'green' energy, at e! Science News:
To create the material, the research team combined elements at the atomic level to create a new multiferroic alloy, Ni45Co5Mn40Sn10. Multiferroic materials combine unusual elastic, magnetic and electric properties. The alloy Ni45Co5Mn40Sn10 achieves multiferroism by undergoing a highly reversible phase transformation where one solid turns into another solid. During this phase transformation the alloy undergoes changes in its magnetic properties that are exploited in the energy conversion device.
During a small-scale demonstration in a University of Minnesota lab, the new material created by the researchers begins as a non-magnetic material, then suddenly becomes strongly magnetic when the temperature is raised a small amount. When this happens, the material absorbs heat and spontaneously produces electricity in a surrounding coil. Some of this heat energy is lost in a process called hysteresis. A critical discovery of the team is a systematic way to minimize hysteresis in phase transformations. The team's research was recently published in the first issue of the new scientific journal Advanced Energy Materials.
 Very interesting properties.  So an allow of nickel, cobalt manganese and tin can turn heat to electricity.  It almost sounds like John Galt's static electricity generator, except this is research done at a state university.  I doubt that this is the solution to all our problems, but it is pretty amazing.

More on "Job Killing" Government Spending

Andrew Samwick:
Why has the opposite view begun to take hold? In part, Samwick argued, it's thanks to the efforts of congressional Republicans, who want budget cuts and lately have hammered home the view that government spending has stymied growth. "You have the Speaker of the House talking about job-killing government spending," said Samwick, now a professor of economics at Dartmouth College. "But they have not been tasked with making clear exactly how the government is killing jobs."
If the conjecture means that employment goes up when government spending goes down, you would have to persuade me that a person is more likely to be employed if the government stops spending money to purchase things that he would make if employed.  That makes no sense.
If the conjecture means that employment goes up when there is a revenue-neutral reduction in government spending, then that could be true, depending on whether the government spending or the private spending that might occur with a lower tax burden is more labor-intensive.  But that hardly seems like the context for the question.  Alan Blinder provides a more articulate response to the conjecture in yesterday's Wall Street Journal.
I am not saying that any government spending is justified merely for the sake of employing labor and capital.  It is justified if it serves a need that society has and that the government is typically responsible for meeting.  In that case, the current economic environment is one in which the need could be met on the cheap, precisely because the costs of employing labor and capital are lower than they are likely to be in the future.  This is nothing new -- it is what I have been saying for nearly 3.5 years.
The Republican argument makes no sense, and yet, much of the country buys into it.  I don't know what they think happens to government spending, does it get put in a crate and sent to China?  If you want to look at spending that doesn't grow our economy, look at money spent on oil imports.  That money ends up in other countries and only gets recycled back through Treasury purchases.  In other words, that money goes to other countries, then returns to be used in the same government spending the Republicans say is job-killing.

Financial Players Threaten Democracy

Amartya Sen (h/t Mark Thoma):
Two distinct issues need to be separated. The first concerns the place of democratic priorities, including what Walter Bagehot and John Stuart Mill saw as the need for "governance by discussion". Suppose we accept that the powerful financial bosses have a realistic understanding of what needs to be done. This would strengthen the case for paying attention to their voices in a democratic dialogue. But that is not the same thing as allowing the international financial institutions and rating agencies the unilateral power to command democratically elected governments.
Second, it is quite hard to see that the sacrifices that the financial commanders have been demanding from precarious countries would deliver the ultimate viability of these countries and guarantee the continuation of the euro within an unreformed pattern of financial amalgamation and an unchanged membership of the euro club. The diagnosis of economic problems by rating agencies is not the voice of verity that they pretend. It is worth remembering that the record of rating agencies in certifying financial and business institutions preceding the 2008 economic crisis was so abysmal that the US Congress seriously debated whether they should be prosecuted.
Since much of Europe is now engaged in achieving quick reduction of public deficits through drastic reduction of public expenditure, it is crucial to scrutinise realistically what the likely impact of the chosen policies may be, both on people and the generating of public revenue through economic growth. The high morals of "sacrifice" do, of course, have an intoxicating effect. This is the philosophy of the "right" corset: "If madam is at all comfortable in it, then madam certainly needs a smaller size." However, if the demands of financial appropriateness are linked too mechanically to immediate cuts, the result could be the killing of the goose that lays the golden egg of economic growth.
This is an interesting perspective, and I think the run-on effects of austerity are going to be the opposite of what the pain caucus promises.  The case of Ireland, moreso than Greece, is one in which the financial players are getting private debt bailed out by the government and taxpayers.  At least in Greece it is the actual government which ran up the debts.  The Irish case is an even worse deal for the Irish people, and it is a disgrace that Tim Geithner used U.S. power to protect creditors from haircuts.  While the Eurozone is a special case, I think the creditors' insistence on being made whole is a joke.  Buying bonds comes with risks, taking haircuts is part of that risk-taking.  The power the IMF has, typically on developing countries, must be questioned.  It is a threat to democracy to give developed nations the power to order around developing countries, just so the developed countries banks don't lose money.

Chart of the Day

From Krugman:
Federal Reserve Forecast for Unemployment
I'll bet on the light blue section on the top side.  That is, if it doesn't start climbing back up.  Note that the worst prediction on the chart is still an improvement over the existing data.  I take it back, I think the top light blue section is an optimistic case.  We are screwed.

Whitey Bulger Finally Arrested

Kennebec Journal (AP):
Boston mob boss James "Whitey" Bulger was captured near Los Angeles after spending the last 16 years on the run during an epic manhunt that served as a major embarrassment to the FBI and made the fugitive a global sensation as he constantly found a way to elude authorities.

The FBI finally caught the 81-year-old Bulger Wednesday at a residence in Santa Monica along with his longtime girlfriend Catherine Greig, just days after the government launched a new publicity campaign to locate the fugitive mobster, said Steven Martinez, FBI's assistant director in charge in Los Angeles. The arrest was based on a tip from the campaign, he said.
The FBI had been conducting surveillance in the area where the arrest was made, said police Sgt. Rudy Flores, who gave no details of the arrest.
FBI agents swarmed around Bulger's building late Wednesday, hours after the arrests in a neighborhood of two and three-story apartment buildings.
Bulger lived on the third floor of The Princess Eugenia, a three-story, 28-unit building of one and two-bedroom apartments three blocks from a bluff that overlooks the Pacific Ocean. Neighbors said the couple did not stand out.
Barbara Gluck, who lives on the same floor as Bulger and Greig, said she didn't know their names but recognized them from photos on the Internet after she heard about their arrest.
Gluck described Greig as "sweet and lovely" and said they would have "girl talk" when they ran into each other in the building. Bulger became angry whenever he saw the two of them talking, and would say, "Stop talking to her," Gluck said.
16 years after being tipped off by the FBI agent working his case, Whitey Bulger is under arrest.  I can't say that spending your early retirement on the lam is in any way worse than being in prison, but I don't think he'll be able to avoid prison now unless he pulls off a jail break or commits suicide.  While the trial will bring into the media a lot of headlines embarrassing to the FBI, at least they finally found him, and can close a long, sordid chapter of FBI and Beantown history.

Ernie Shore's Unofficial Perfect Game

Ernie Shore

June 23, 1917:
Boston pitcher Babe Ruth started a game against the Washington Senators.
Ruth walked lead-off batter Ray Morgan, griping to plate umpire Brick Owens after each pitch.
On ball four, Ruth became so enraged that he punched Owens, in the face and was ejected.
Ruth is not fined, but draws a 10-day suspension.
Ernie Shore came in to replace Ruth. Morgan was caught trying to steal.
Then Shore retires all 26 men he faces in a 4-0 win.
Because he didn't start, his perfect game is not considered official.
From the SI archive:
Ernie Shore, a tall, lanky pitcher from North Carolina, made himself comfortable in the corner of the Red Sox dugout at Fenway Park in Boston. It promised to be a long, lazy afternoon for Shore—that afternoon of June 23, 1917. The Red Sox were playing the Washington Senators in a doubleheader, and Shore, who had pitched against the Yankees two days before, expected to watch both games from his cozy spot on the bench. The Red Sox pitchers were Babe Ruth and Dutch Leonard, and against Washington, then as now, it seemed certain they would be sufficient.
Ruth, starting the first game, walked Ray Morgan, Washington's lead-off hitter. Ruth had argued with Umpire Brick Owens on the ball three pitch and now he stalked off the mound toward the plate. Owens whipped off his mask and advanced to meet him, whereupon Ruth threw a looping right-hand punch. Some say the punch caught Owens on the jaw, others say the left ear but, in any event, both Ruth and his catcher, Chet Thomas, were thrown out of the game.
Black Jack Barry, the Red Sox manager and second baseman, spotted Shore in the corner of the dugout. "He asked me if I'd pitch until he could get someone else warmed up," Shore recalls. "In those days you were only allowed five practice pitches. Sam Agnew went in to catch."
On Shore's first pitch, Morgan tried to steal second. "It was a good move," says Shore. "Morgan figured I wouldn't be able to get much on the pitch and that Agnew wouldn't be ready. But Sam threw him out."
The next two batters hit the ball directly at Boston infielders, and Shore was out of the inning. "Barry asked me if I wanted to continue and I told him sure. I went down to the bullpen and threw and by the time the second inning began I was loose."

Wednesday, June 22, 2011

The Great Con of Libertarianism

Slate, via Ritholtz:
Calling yourself a libertarian is another way of saying you believe power should be held continuously answerable to the individual's capacity for creativity and free choice. By that standard, Thomas Jefferson, John Ruskin, George Orwell, Isaiah Berlin, Noam Chomsky, Michel Foucault, and even John Maynard Keynes are libertarians. (Orwell: "The real division is not between conservatives and revolutionaries but between authoritarians and libertarians." Keynes: "But above all, individualism … is the best safeguard of personal liberty in the sense that, compared with any other system, it greatly widens the field for the exercise of personal choice.") Every thinking person is to some degree a libertarian, and it is this part of all of us that is bullied or manipulated when liberty is invoked to silence our doubts about the free market. The ploy is to take libertarianism as Orwell meant it and confuse it with libertarianism as Hayek meant it; to take a faith in the individual as an irreducible unit of moral worth, and turn it into a weapon in favor of predation.
Another way to put it—and here lies the legacy of Keynes—is that a free society is an interplay between a more-or-less permanent framework of social commitments, and the oasis of economic liberty that lies within it. The nontrivial question is: What risks (to health, loss of employment, etc.) must be removed from the oasis and placed in the framework (in the form of universal health care, employment insurance, etc.) in order to keep liberty a substantive reality, and not a vacuous formality? When Hayek insists welfare is the road is to serfdom, when Nozick insists that progressive taxation is coercion, they take liberty hostage in order to prevent a reasoned discussion about public goods from ever taking place. "According to them, any intervention of the state in economic life," a prominent conservative economist once observed of the early neoliberals, "would be likely to lead, and even lead inevitably to a completely collectivist Society, Gestapo and gas chamber included." Thus we are hectored into silence, and by the very people who purport to leave us most alone.
Thanks in no small part to that silence, we have passed through the looking glass. Large-scale, speculative risk, undertaken by already grossly overcompensated bankers, is now officially part of the framework, in the form of too-big-to-fail guarantees made, implicitly and explicitly, by the Federal Reserve. Meanwhile, the "libertarian" right moves to take the risks of unemployment, disease, and, yes, accidents of birth, and devolve them entirely onto the responsibility of the individual. It is not just sad; it is repugnant.
The article is well worth the read.  We have to bring back the discussion of the common good.  Individual liberty at the expense of the general welfare becomes serfdom for the masses, Hayek's premise turned on it's head. 

More From Bill Gross

via Ezra Klein:
Bill Gross is the manager director of PIMCO, which makes him one of the most important bond traders in the world, if not the most important. And so his exit from the Treasury market a few months ago, plus his intense and very public concern over the deficit, has attracted a lot of concern. “Keep that in mind when you hear people arguing about austerity,” wrote Megan McArdle. “People like Bill Gross are the ones we ultimately need to convince, because they’re the ones whose defection will precipitate a crisis. And he’s not buying either supply-side claims that tax hikes will cause disaster, or the super-Keynesian argument that we can’t cut spending because the economy will contract so fast that we’ll actually end up with a bigger deficit.” Or so we thought. But in an unusual mid-month note to his investors, Gross hammered the “anti-Keynesians” in both parties who believe “that fiscal conservatism equates to job growth.” The truth, he says, is just the opposite. “Fiscal balance alone will not likely produce 20 million jobs over the next decade. The move towards it, in fact, if implemented too quickly, could stultify economic growth.”
Gross goes on to spend some time mocking the “ivory tower theorem” that deficit reduction will convince consumers to spend more now because they’ll worry less about taxes and service cuts later. “I know of no family,” he writes, “who, after watching the Republican candidates’ debate in New Hampshire, went out the next day and bought themselves a flat screen under the assumption that their Medicare entitlements would be cut in future years and the U.S. budget balanced.” That theory belongs “in the trash bin of theses and research aimed more towards academics than a practical remedy to America’s job crisis.”
With actual investors saying such things, do you think Republicans will respond.  I'll go with no.  Theories and beliefs are much more significant than actual results to them.  They don't care if they cripple the economy, because they can remain ideologically pure.  Screw them.  Stupidity doesn't make good ideology, or good public policy.

Naked Capitalism Link of the Day

Today's link: The Bankers Who Cried Wolf: Wall Street's History of Hyperbole About Regulation, at the Huffington Post:
Coming from all over the country, hundreds of investment bankers from financial powerhouses like J.P. Morgan gathered for dinner at the Waldorf-Astoria to discuss their shared concerns. Chief among them: The spread of investor protection laws, which they denounced as "foolish, crude and unconstitutional." Bond broker Warren S. Hayden said the laws were paternalistic and wrong in theory, arguing that they would hurt the industry by limiting the activity of securities dealers. Bank attorney Robert R. Reed called the new rules an "unwarranted" and "revolutionary" attack upon legitimate business.
That was almost 100 years ago at the inaugural meeting of the Investment Bankers Association in New York City. The group was opposed to laws passed by Kansas and other states that sought to protect investors from fraudulent sales and practices by requiring companies issuing securities to register and receive a permit before selling stocks.
These "blue sky laws" were prompted by an epidemic of securities fraud. Hucksters, who were so dishonest that it was said they would sell "building lots in the blue sky," ripped off thousands of unsuspecting farmers in the Midwest during in the first decade of the 20th century. The laws were supported by small- and community-banks and were popular with the public.
By 1913, two years after Kansas passed the first investor protection law, 22 other states passed similar regulations. An effort to enact a federal version failed amid intense pressure by Wall Street executives, who claimed that it would have a disastrous impact on the financial services industry. Bankers magazine warned that such laws would create "a nation of fools and weaklings" by protecting people against their own mistakes.
But those predictions proved mistaken. Bank profits grew in the five years after the adoption of the most stringent blue sky laws, according to research by University of Virginia School of Law professor Paul G. Mahoney. And the big national banks that opposed the laws mushroomed in size, with average total individual deposits increasing more than 25 percent from 1914 to 1916. (Much of that can also be attributed to a flood of European money amid the First World War.)
It is kind of weird to reflect back on when Kansas was the forefront of populist/progressive legislation.  Those days are long gone.  The rise of agribusiness and the virtual elimination of the small farmer have made Kansas one of the most reactionary states in the United States.  It is a damn shame that rural America has become the enabler of the greedy rich in our financial system, helping them to take over our economy and our political system to steal more and more from the average worker.  I have my theories for why this is the case, but it is extremely detrimental to our rural areas, and is paving the way for a collapse of standard-of-living for the majority of Americans from which we won't be able to recover.  The disinvestment which is ongoing in our national education system and infrastructure systems will damage our standing beyond repair.  Why is it occurring?  Because the ultra-wealthy want to keep more for themselves, and can only see in the shortest-term time frame.  This short-term thinking brought about the financial disaster we are now in the midst of, and more of the same will cripple the nation for the foreseeable future.  The financial elite have never been truthful or accurate in their predictions, they are just able to reach into the national treasury and bail themselves out.

Bill Gross on the U.S. Economy

From Ritholtz:
Not exactly a blinding insight, but interesting regarding who its coming from:
Those who advocate that job creation rests on corporate tax reform (lower taxes) or a return to deregulation of the private economy always fail to address dominant structural headwinds which cannot be dismissed: 1) Labor is much more attractively priced over there than here, and 2) U.S. employment based on asset price appreciation/financed as opposed to manufacturing can no longer be sustained. The “golden” days are over, and it’s time our school and jobs “daze” comes to an end to be replaced by programs that do more than mimic failed establishment policies favoring Wall as opposed to Main Street.” (emphasis in original)
-Bill Gross
That is significant.  The idea that Wall Street getting richer helps the rest of the country is complete bunk.  We need to continue to make things here.  Trading paper isn't productive, and yet it has grown as a percentage of GDP faster than any other activity.  The FIRE sector is robbing from the rest of the economy, and the nation is poorer.  We need an industrial policy to compete with Germany and China.  We need better pay at the low end of the scale, and less money going to the moneychangers in New York and London, who are only giant leeches sucking the lifeblood out of the body politic.  More deregulation and lower taxes are not the answer, they are part of the problem.  30 years after Reagan, it is clear that his pronouncement's time is up.  Government isn't the problem, government is the solution.  Now we need to govern competently.

A History Primer on German Debt Default-20th Century Edition

in Der Spiegel, (h/t Mark Thoma):
SPIEGEL ONLINE: Mr. Ritschl, Germany is coming across like a know-it-all in the debate over aid for Greece. Berlin is intransigent and is demanding obedience from Athens. Is this attitude justified?
Ritschl: No, there is no basis for it.
SPIEGEL ONLINE: Most Germans would likely disagree.
Ritschl: That may be, but during the 20th century, Germany was responsible for what were the biggest national bankruptcies in recent history. It is only thanks to the United States, which sacrificed vast amounts of money after both World War I and World War II, that Germany is financially stable today and holds the status of Europe's headmaster. That fact, unfortunately, often seems to be forgotten.
SPIEGEL ONLINE: What happened back then exactly?
Ritschl: From 1924 to 1929, the Weimar Republic lived on credit and even borrowed the money it needed for its World War I reparations payments from America. This credit pyramid collapsed during the economic crisis of 1931. The money was gone, the damage to the United States enormous, the effect on the global economy devastating.
SPIEGEL ONLINE: The situation after World War II was similar.
Ritschl: But right afterwards, America immediately took steps to ensure there wouldn't be a repeat of high reparations demands made on Germany. With only a few exceptions, all such demands were put on the backburner until Germany's future reunification. For Germany, that was a life-saving gesture, and it was the actual financial basis of the Wirtschaftswunder, or economic miracle (that began in the 1950s). But it also meant that the victims of the German occupation in Europe also had to forgo reparations, including the Greeks.
SPIEGEL ONLINE: In the current crisis, Greece was initially pledged €110 billion from the euro-zone and the International Monetary Fund. Now a further rescue package of similar dimensions has become necessary. How big were Germany's previous defaults?
Ritschl: Measured in each case against the economic performance of the USA, the German debt default in the 1930s alone was as significant as the costs of the 2008 financial crisis. Compared to that default, today's Greek payment problems are actually insignificant.
SPIEGEL ONLINE: If there was a list of the worst global bankruptcies in history, where would Germany rank?
Ritschl: Germany is king when it comes to debt. Calculated based on the amount of losses compared to economic performance, Germany was the biggest debt transgressor of the 20th century.
We are living in interesting times.  Will the Germans show as much forbearance with southern Europe as the United States showed with them in the twentieth century?  I don't know, but the fate of the Euro hangs in the balance.  In the end, I think this has less to do with the German people, and more to do with the giant banks and hedge funds who have been gambling buying soveriegn debt on margin, and buying and selling derivitive contracts on the likelihood of default.  The holders of capital have put too much in play in these countries, and they don't want to lose anything.  They want taxpayers to bail them out, and suffer all of the pain.  I think the bondholders should take haircuts.  There should be a risk premium attached to bonds, because there is a reasonable chance of default.  That chance of default is real.

OSU Hides Behind BMV Report on Car Sales

An investigation by the Ohio Bureau of Motor Vehicles of two Columbus-area automobile dealerships found that no state laws were broken in the recording or pricing of some of the used car deals given to Ohio State football players and family members.
Looking at one aspect of players' access to local cars, the BMV examined 25 purchases between 2006 and 2010 at Jack Maxton Chevrolet and Auto Direct, dealerships where salesman Aaron Kniffin had worked. Kniffin has said he sold about 50 cars to athletes and their relatives.
In May, the Columbus Dispatch raised questions about whether athletes had received special discounts on cars, based on their status as athletes. The BMV did not address whether any NCAA rules were broken -- that is outside the department's purview -- but in its summary report said that only one of the used cars was sold at a loss.
"The only vehicle on which Jack Maxton lost money was a car that had been in inventory for more than 150 days," the report states. "In such cases, the dealership provides incentives to its sales force to sell the vehicles, even at a loss."
In one of the attached exhibits, a BMV investigator notes that the average markup on the cars at the Maxton dealer was $1,211 and that "six vehicles sold at a negative profit."
However, that statement was not correct, BMV spokeswoman Lindsey Bohrer said after the release of the report.
Asked by ESPN if the BMV could provide an unredacted version of the Maxton document, listing the dealer cost of and profit on each car sold to an Ohio State athlete or family member, Bohrer declined, citing state privacy law.
Later Tuesday, Ohio State said it is dropping its own review of the purchases by players and family members.
So because the BMV says the cars were sold for reasonable prices, Ohio State drops their investigation.  How about whether some booster was financing the cars for the players?  It seems surprising that football players would be driving nicer cars than anyone else on campus.  How about Terrelle Pryor and his loaner cars?  I see the university trying to use this report to sweep questionable stuff under the rug.  This program is dirty, just like USC.

Operation Barbarossa

Hitler's greatest miscalculation began 70 years ago today:
Operation Barbarossa (German: Unternehmen Barbarossa, for Frederick I) was the code name for Germany's invasion of the Soviet Union during World War II that began on 22 June 1941.  Over 4.5 million troops of the Axis powers invaded the USSR along a 2,900 km (1,800 mi) front.  In addition to the large number of troops, it also involved 600,000 motor vehicles and 750,000 horses.   Planning for Operation Barbarossa started on 18 December 1940; the secret preparations and the military operation itself lasted almost a year, from spring to winter 1941. The Red Army repelled the Wehrmacht's strongest blow, and Adolf Hitler did not achieve the expected victory, but the Soviet Union's situation remained dire. Tactically, the Germans had won some resounding victories and occupied some of the most important economic areas of the country, mainly in Ukraine.  Despite these successes, the Germans were pushed back from Moscow and could never mount an offensive simultaneously along the entire strategic Soviet-German front again.
Operation Barbarossa's failure led to Hitler's demands for further operations inside the USSR, all of which eventually failed, such as continuing the Siege of Leningrad,  Operation Nordlicht, and Battle of Stalingrad, among other battles on the occupied Soviet territory.
Operation Barbarossa was the largest military operation in human history in both manpower and casualties.   Its failure was a turning point in the Third Reich's fortunes. Most important, Operation Barbarossa opened up the Eastern Front, to which more forces were committed than in any other theatre of war in world history. Operation Barbarossa and the areas that fell under it became the site of some of the largest battles, deadliest atrocities, highest casualties, and most horrific conditions for Soviets and Germans alike — all of which influenced the course of both World War II and 20th century history.
We in the West tend to look at D-Day as the beginning of the end of Nazi Germany, but this decision by Hitler, and the failure it engendered, sealed the fate of the Germans.  The army of the USSR suffered greatly in fending off and then grinding up the Nazis, and their sacrifices should be better remembered in the West.  U.S. equipment granted through Lend-Lease, helped keep the Soviets going, but their citizens and military lived (and died) through unimaginable conditions to turn the tide of the war.

Some stats:

Strength of the opposing forces on the Soviet Western border. 22 June 1941
Germany and alliesSoviet UnionRatio
Divisions1661901 : 1.1
Personnel4,306,8003,289,8511.3 : 1
Guns and mortars42,60159,7871 : 1.4
Tanks (incl assault guns)4,17115,6871 : 3.8
Aircraft4,38911, 5371 : 2.6

The war on the Eastern Front went on for four years. The death toll may never be established with any degree of certainty. The most recent western estimate of Soviet military deaths is 7 million that lost their lives either in combat or in Axis captivity. Soviet civilian deaths remain under contention, though roughly 20 million is a frequently cited figure. German military deaths are also to a large extent unclear. The most recent German estimate (Rüdiger Overmans) concluded that about 4.3 million Germans and a further 900,000 Axis forces lost their lives either in combat or in Soviet captivity. Operation Barbarossa is listed among the most lethal battles in world history.
Military casualties for the Wehrmacht:
By Front (Per R. Overmans)
FrontTotal Dead
Eastern Front until 12/31/442,742,909
Western Europe until 12/31/44339,957
Final Battles in Germany 19451,230,045
Other (including Sea and Air War Germany)245,561
The Balkans103,693
Northern Europe30,165
Prisoners of War459,475

Overmans believes that there is not sufficient data to breakout the 1,230,045 deaths in the 1945 Final Battles in Germany between the Western Allied invasion of Germany and Eastern Front in 1945, although he estimates that 2/3 of these casualties can be attributed to the Eastern Front. Soviet sources claimed that “In 1945 the German Army lost more than 1,000,000 men killed on the Soviet-German front alone.”
Russian figures for German losses on the Eastern Front Total 6,923,700: Killed 4,137,100, taken prisoner 2,571,600 and 215,000 dead among Russian volunteers in the Wehrmacht. Deaths of POW were 450,600 including 356,700 in NKVD camps and 93,900 in transit.
All in all, the Soviets did a lot of Nazi-killing.

Update:  This also marks the 67th anniversary of the beginning of Operation Bagration, in which the Soviet army pushed the Nazis out of Belorussia and Eastern Poland in their drive to Berlin.

Tuesday, June 21, 2011

Happy Midsummer's Night

Today is as long as a day gets.

Good Riddance to Sodium Vapor Lights

Hal Espen:
When I was growing up in suburban California in the 1960s and ’70s, the world after dark was lit by warm incandescence and whitish mercury-vapor street light. Although the latter had a spectral signature with vampiric overtones, turning reds to black and casting a blood-drained pallor on white skin, it still approximated something akin to plain white light. But after the energy shocks of the 1970s, high-pressure sodium lights gradually took over the night. Following the economic imperative to use the most cost-effective lighting—high-pressure sodium lights consume half as much energy as mercury-vapor lamps and can last up to 16,000 hours longer—transportation departments and cities embraced sodium light. It was as though someone said “Fiat lux sulfurea—“Let there be light from hell.” The relentless spread of sodium streetlights is documented in NASA night photographs from space: New York City and Los Angeles are circuit boards of glowing orange, and Long Beach, one of the world’s busiest ports, is a flare of tarnished gold. It’s even worse in the United Kingdom, where 85 percent of streetlights use sodium. The jaundiced weirdness of sodium light has become a vexing challenge to photographers (one filmmaker, Tenolian Bell, called it “the ugliest light known to the cinematographer”); movie cameras simulate its color by using a gel filter named Bastard Amber. Significantly, retailers have avoided inflicting the unpleasantness of sodium lights on their customers—most commercial parking lots and shopping malls use the costlier white metal halide lights.
Our forced acceptance of sodium light’s ghoulish tint, an accident caused by the electrical vaporization of sodium metal in a gas-filled tube, makes outdoor lighting an example of a “bossy technology,” to borrow a term from Kevin Kelly’s recent book, What Technology Wants. Even worse than this inherent bossiness is the larger problem of light pollution. “Mankind is proceeding to envelop itself in a luminous fog,” wrote the authors of a paper on artificial night-sky brightness in 2001. This “perennial moonlight” that we’ve created enhances our safety and security, but it also dims our view of 10,000 stars and destroys the dance of light and dark.
But now we have a chance to bid good riddance to sodium vapor, and perhaps even resist the heedless trend of adding more and more light. The color of night is changing again.
In the next decade, a large percentage of America’s 37 million streetlights will be equipped with light-emitting diodes, or LEDs, and other kinds of solid-state lighting. Once again, energy-saving is the driving force. “We’re still at the front end of the wave,” says Mark S. Rea, the director of the Lighting Research Center at Rensselaer Polytechnic Institute, “but LEDs are inevitable as a replacement technology.” He predicts that LEDs, which are already 10 to 20 percent more energy-efficient than high-pressure sodium lights, will have a 40 percent advantage within a year or two.
Like Hal Espen, I hate sodium vapor lights.  I also hate mercury vapor lights.  I just prefer the barnyard to be dark.  I'm not too concerned what's going on out there after dark, and I like going without outdoor light.  I don't have the crime concerns of the city, so I'm a-ok with darkness.  LED or not, I'm not interested.

Yuengling Comes To Ohio

Akron Beacon-Journal (h/t Cubs Dad):
 D.G. Yuengling and Son will enter the Ohio market later this year — possibly as early as October. “It’s going to be so exciting,” said Pat Noone, the brewery’s business development manager and the one spearheading the move into the Buckeye State.” The launch in your state is going to be huge. It’s probably going to be the most successful launch in Yuengling’s history.”
Yuengling is the oldest operating brewery in America and has a cult following for its popular brands, which include Traditional Lager, Original Black & Tan, Porter and Lord Chesterfield Ale. The company — which is in 14 states now — isn’t distributed in Ohio, forcing hardcore fans to drive to neighboring Pennsylvania to stock up.
“The reason we haven’t been in the state is because we haven’t had the beer to service the state,” Noone said. “Ohio is one of largest states in the country and in terms of beer consumption, and we needed to make sure that when we did come, we were able to service the state properly.”
Now that it will be legally sold here, I predict the novelty will wear off.  Sales will increase a while, then plateau and drop, as another fad catches on.  Is anybody drinking Coors these days?  Don;t get me wrong, it's good beer, but not that good.

Chart of the Day

Where did those productivity gains go? From Mother Jones, via Ritholtz:

Well, I'm glad that clears that question up.  I say tax it back from them, the thieves.

The Shortcomings of Intrade Gambling on the GOP Primary

Via Ritholtz, the New Republic:
InTrade, for those unacquainted, is a website where betters trade “contracts” on whether an event, from a raised debt ceiling to a Charlie Sheen arrest, will or will not occur. If the event comes to pass, the contract pays out $10 to its owner; if it doesn’t, the contract becomes worthless. For example, if lots of people think that Mitt Romney will get the nomination, a contract predicting as much will be in demand, and its price, translatable into a probability, will go up accordingly. The idea—using the same collective judgment that sets prices on Wall Street to forecast the future—is tantalizing, and many media outlets have been serving up spreads from the website for months now, including Dave WeigelThe Hill,BloombergSalonThe Spectator, and even the venerable quant Nate SilverBusiness Insider is the most enthusiastic; last Tuesday following the GOP debate, it reproduced the latest InTrade numbers under the headline, “Ranking the Republican candidates: Here Are Their Odds Of Winning.”
But in the context of the GOP nomination, InTrade simply isn’t up the task. The first and biggest problem with the predictions market is its tiny trading volume. As of this piece, the site reports that only 74 contracts were traded on Monday on the nomination of frontrunner Mitt Romney. Moreover, the bets wager no more than $4 apiece. In other words, in a barely-begun race between many candidates, there simply isn’t the volume or risk necessary for InTrade’s market to work its supposed magic. As Yale economist and electoral predictor Ray Fair explained to me, this is the site’s Achilles heel. In general, Fair says, low volume is a problem for all the bets placed on the website, but “for small contracts like [the GOP nomination], it’s even worse.” Mark Perry, a University of Michigan-Flint financial economist and American Enterprise Institute scholar, agreed, arguing that “with a thin market like that, you have less information transmitted through the odds.” And financial journalist Felix Salmon made the same argument to explain why he quit the site. 
They go on to make another couple good points.  This really is more about entertainment than actual prediction, but it plays to people's bias that markets can be rational predictors.  I don't buy it.

Job-Killing Government Spending?

Alan Blinder points out that Republican claims don't make sense:
The generic conservative view that government is "too big" in some abstract sense leads to a strong predisposition against spending. OK. But the question remains: How can the government destroy jobs by either hiring people directly or buying things from private companies? For example, how is it that public purchases of computers destroy jobs but private purchases of computers create them?
One possible answer is that the taxes necessary to pay for the government spending destroy more jobs than the spending creates. That's a logical possibility, although it would require extremely inept choices of how to spend the money and how to raise the revenue. But tax-financed spending is not what's at issue today. The current debate is about deficit spending: raising spending without raising taxes.
For example, the large fiscal stimulus enacted in 2009 was not "paid for." Yet it has been claimed that it created essentially no jobs. Really? With spending under the Recovery Act exceeding $600 billion (and tax cuts exceeding $200 billion), that would be quite a trick. How in the world could all that spending, accompanied by tax cuts, fail to raise employment? In fact, according to Congressional Budget Office estimates, the stimulus's effect on employment in 2010 was at least 1.3 million net new jobs, and perhaps as many as 3.3 million.
More people need to call shenanigans on Republican bullshit.  Their arguments don't make any damn sense, but people believe it because it makes them feel better.  Hey, guess what folks, Fox News is lying to you.

Huntsman Joins GOP Field

AP at Denver Post:
Former Utah Gov. Jon Huntsman is joining the fast-growing pack of Republicans battling to take on President Barack Obama.
Huntsman, who was Obama's ambassador to China until a month ago, will make his formal announcement next Tuesday—with the Statue of Liberty as the backdrop, his campaign team said. Though he served in Washington for three Republican presidents, he faces a challenge in making himself known nationally and winning over GOP primary voters.
Still, the fact that he's entering the race shows the turmoil that still fills the Republican field as time ticks down to the first 2012 primaries and caucuses.
Unfortunately, Huntsman has joined in with the other GOP candidates who are fiscally crazy, as the Frum Forum highlights:
The same fate seems to be overtaking Jon Huntsman, alas. Having bucked the party on greenhouse gases and same-sex unions, Huntsman has signed up for 100 percent endorsement of the Ryan plan.
I can see the logic. Genuflecting at the Ryan altar is deemed inescapable and essential for credibility in 2012. A social conservative like a Mike Huckabee might (barely) evade the obligation, but a libertarian-stye candidate like Huntsman cannot and dare not. To the extent that Huntsman has his eye on a second run in 2016 — well by then the Ryan plan will be forgotten by the general electorate even as it pays dividend in continuing fiscal credibility with the party faithful. So: I get it.
The trouble is, however, that this solution defines the problem in purely party-political terms. The Ryan plan answers a narrow Republican concern: how do we push taxes even lower in the face of the impending retirement of the baby boom). It disregards the broader national concern: how can we sustain and enhance the standard of living of the American middle class against the downward trend in middle-class incomes of the past dozen years? The Ryan plan tragically abdicates this question. (emphasis mine)
This is exactly right.  The Ryan plan sacrifices the middle class and working class for the benefit of the ultra-wealthy.  This isn't responsible governance, it is idiotic cruelty toward the vast majority of Americans.  Some middle class people may welcome this freedom from "socialism," but I bet they won't be too excited when they find out what it actually costs them.

Corporations Win Again

Wal-Mart wins in sex-bias case:
The ruling was cheered by the U.S. Chamber of Commerce business group as the most important class action case in more than a decade but denounced by women's groups.
It represented a major victory for Wal-Mart, which also has faced legal battles including an attempt to unionize and to block the giant retailer from opening stores in New York and other places.
"We are pleased with today's ruling and believe the court made the right decision. Wal-Mart has had strong policies against discrimination for many years," the Bentonville, Arkansas-based company said in a statement.
While the justices rules unanimously against the class determination, the justices split 5-4 on whether to send the case back to the lower court.  The Roberts Court is going to make governing corporations impossible, and the middle class will be eliminated from this country.  Corporations win, humans lose. 

Naked Capitalism Link of the Day

Today's link: The commodity bubble, at MacroBusiness:

His analysis reads:
We really need to define our terms here. What are these “fundamentals”? We began the paper by describing how it is that markets that have inelastic supply have increased volatility. The reason for that is that as the supply shortage is recognised, regular buyers begin to hoard, and speculators move in to take advantage of higher prices. Buyers then hoard more and speculators buy more still. Prices rise until supply responds (usually over responds) and prices crash. Hence volatility. It’s is logically inconsistent for this paper to simultaneously claim that there is reason to the volatility but no speculation in that reason. If fundamentals are as strong as this paper supposes, then it is silly to not expect speculators to be jumping all over commodities.
I think this gets at the heart of it.  There are fundamental issues driving prices higher.  That leads to inflation concerns, which leads to speculators coming in to buy, which leads to higher prices, which leads to inflation concerns, etc.  Kind of what I was getting at here.

Are Taxes Too High?

Bruce Bartlett says no:
A typical middle-class family, on the other hand, is paying less in federal taxes than it has since 1967. Its marginal rate is also down substantially since it peaked in 1982 at 31.7 percent. The well-to-do family, too, has seen its average and marginal tax rates decline substantially.
Of course, these data do not prove that taxes are not too high. That is a subjective judgment related to issues of fairness and the value that people assign to the government benefits they receive in return. Many in the Tea Party talk as if the value of government is zero; consequently, they would probably complain about any tax level above zero.
Nevertheless, it is clear that federal taxes have not been rising and are, at least in historical terms, lower for most taxpayers than they have been since the 1960s. Those who assert that taxes are rising or are at confiscatory levels simply do not know what they are talking about.
I've got to agree that with tax cuts in the past thirty years, effective tax rates are lower.  The rich have inordinately benefitted from the Bush tax cuts, and taxes on unearned income are much lower.