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Tuesday, September 30, 2008

At times like this, I shouldn't remember old quarrels but Jonathan FBD Weisman outdoes himself in this article.

headling (not by him)

House Leaders Vow to Seek Compromise

After $700B Bailout Is Rejected, Lawmakers Blame Each Other

paragraph 6 count them 6 !

On the 228 to 205 congressional vote, 140 Democrats voted yes and 95 voted no; 133 Republicans opposed the measure, while 65 approved.

If this is a blameworthy event, it is clear that the Republicans are to blame.

The headline isn't even a "opinions on shape of earth differ" headline, because even the Republicans admit that the Democrats aren't to blame.

From the article by
Paul Kane and Lori Montgomery
which got a smaller headline "How the Numbers Failed the Leaders"

Republicans initially lashed out at House Speaker Nancy Pelosi (D-Calif.), accusing her of delivering a partisan speech before the vote and costing them a dozen votes. But later, in interviews after tempers cooled, GOP leaders said they had been fighting an uphill battle from the start -- too many conservatives rejected the idea of a large, taxpayer-funded intervention, and too many moderates came from swing districts where constituents were up in arms over the bailout. wrote a he said she said headline after he (and what a he) admitted that his accusation was false.

Monday, September 29, 2008

John Quiggin proposes a free market exchange.
Who was regulating AIG

The New York Times has a big article on the AIG failure.

I wonder how AIG was allowed to destroy itself. What about prudential regulation ?

Because it was not an insurance company, A.I.G. Financial Products did not have to report to state insurance regulators. But for the last four years, the London-based unit’s operations, whose trades were routed through Banque A.I.G., a French institution, were reviewed routinely by an American regulator, the Office of Thrift Supervision.

WHAAAT the office that regulates S&Ls ?!? how could they possibly be competent to regulate CDSs ? That does not seem to me to have been a reasonable approach to regulation. However it does give me an excuse to re re post this photo


The man with the chain saw is James Gilleran then director of the Office of Thrift Supervision.
I Guess we have to Trust Paulson

Even reading the finest print in the actual bill, I can't tell if the Bailout bill requires that the Treasury get an equity stake large enough so that it will profit or requires only a figleaf on a give away.

For example, when buying toxic waste Paulson will be required to (

"Make such purchases at the lowest price that the secretary determines to be consistent with the purposes of this act"

That's ironclad all right.

Now how about warrants ? The key issue is can Paulson just buy troubled assets as he proposed or must he obtain warrants which will make the return on the investment non-negative unless the firm from which he buys the assets goes banrkupt ?

Reading the bill, I'd say Paulson got whatever he wants. On the *amount* of such warrants (or senior bonds if the firm is not publicly traded)

(2) Terms and Conditions

[blah blah]

(A) Purposes.- Such terms and conditions shall at a minimum be designed -
(i) to provide for reasonable participation, by the Secretary, for the benefit of taxpayers, in equity appreciation in the case of a warrant, or a reasonable risk premium in the case of a debt instrument; and
(ii) to provide additional protection for taxpayers against losses from the sale of assets by the Secretary under this Act and for the administrative expenses of the TARP.

No numbers, no formulas, just words. And the words which would limit Paulson are "reasonable", "reasonable" and "additional".

There is nothing in the bill on the size of the equity stake. Paulson has the authority to decide that a warrant to buy one share is sufficient.

Now Paulson was ruthless with AIG shareholders. On the other hand he was not ruthless with an AIG counterparty -- Goldman Sachs -- whose CEO was present when he decided to go back on his brief no bailouts position and whose shareholders include uhm Mr Paulson. Do I trust him ? Do I have a choice. You go to financial crisis with the Sectretary of the Treasury you have not the Secretary of the Treasury you want.

Sunday, September 28, 2008

Policy Proposals Based on Sound Economic Theory: An Infantile Disorder

Brad DeLong has argued

1) a Sound approach to the financial crisis would be temporary nationalization troubled banks
2) Republicans would oppose this, but trying to compromise with Republicans is a fools game


3) The Democrats should propose this and dare Bush to veto it.

Matt Yglesias is enthusiastic.

So far all good fun, but now Paul Krugman is making sympathetic noises.

Such Nordtopian dreaming has no place in serious blogs.

I stand athwart economic theory and shout stop !

If one asks what should America do, then the answer probably is "whatever Sweden did is a lot better than anything US policymakers come up with". In this particular case, the proposal is to follow the approach which has been standard operating procedure since the (last) great depression and even conservatives tend to try to change the topic if asked if they think the timing is a coincidence. The arguments made by DeLong, Yglesias and followers (sorry Paul I *had* to type that) are irrefutable.

So ?

First if one is nationalizing it is best to nationalize quickly. Months or even weeks of struggle with Republican obstruction will give greedy bankers plenty of time to bail out with their golden parachutes. The stuff which they leave behind will be worth much much less than nothing.

Second, trying to legislate with blue dogs is a game for people too foolish to try to compromise with Republicans.

Third, if you are dealing with insane people don't call their bluffs.

Fourth, never let good advice to the social planner influence your thinking on politics.

Fifth we are not in the Republic of Pericles. We aren't even in the sewer of Romulus. Caligula had better sense than the current crop of Republicans.
I don't think that word means what she thinks it means

Sheryl Gay Stolberg writes in the New York Times: "It was an implosion that spilled out from behind closed doors into public view in a way rarely seen in Washington

via Froomkin the younger

She goes on

"It was the very outcome the White House had said it intended to avoid, with partisan presidential politics appearing to trample what had been exceedingly delicate Congressional negotiations."


I mean if they can't even write an unmixed metafor what are they phor ?
Annals of Absurd Anonymity

ALEXANDER BURNS & DAVID PAUL KUHN at Politico quote someone sticking his or her neck out commenting on Palin's CBS interview.

Asked about Palin's performance in the CBS interview, a McCain official briefing reporters on condition of anonymity said: "She did fine. She's a tremendous asset and a fantastic candidate."

Look I can see how if a McCain official demands anonymity to comment on that interview, a reporter grants it. However, when the official gives the official line, there is no reason to quote the official.
Jonathan FBD Weisman has an article so juicy that even BD says it's "interesting--and possibly true"

The article does seem to be well sourced. It makes John McCain look very very bad. Key passage

McCain "burst into the Senate Republican policy luncheon. Over a Tex-Mex buffet, Sens. Robert F. Bennett (Utah) and Judd Gregg (N.H.) had been explaining the contours of a deal just reached. House Republicans were not buying it. Then McCain spoke.

"I appreciate what you've done here, but I'm not going to sign on to a deal just to sign the deal," McCain told the gathering, according to Graham and confirmed by multiple Senate GOP aides. "Just like Iraq, I'm not afraid to go it alone if I need to."

Note sourced to his best buddy and numerous others. In defense of senator McCain, I should note that he did not refer to his having been a POW when explaining why he wouldn't vote for the Paulson-Dodd-Frank plan. He evidently didn't refer to the content of the plan either, or demonstrate any understanding of the difference between opposing the plan and advocating the surge.

This is even more damaging but based on a single anonymous source (who was clearly not an ear witness)so take with a ton of salt

"McCain also spoke in the starkly personal terms of a presidential candidate in trouble: 'You all put me on the hook for $700 billion,' he told his colleagues, according to an aide familiar with the lunch."

Actually, I think any reasonable person must assume that the idea that McCain said that he thought it was about "me" is slander. He's egocentric, impulsive and dumb, but not that dumb.

Also Boehner makes McCain look like a statesman. First, it is a matter of public record (as Weisman briefly reminds readers) that house Republicans including Boehner argued that the Paulson plan should be passed as proposed. Their slogan was "clean bill." Now after modifications as advocated by Dodd, Frank, Obama *and* McCain, but without the modifications opposed by Boehner et al it is no longer any good.

The seriousness of the House Republicans is shown by the speed with which they got to work.

On Wednesday afternoon, Boehner appointed a new working group, led by Cantor, Ryan and Republican Study Committee Chairman Jeb Hensarling (R-Tex.), and including some moderates, to see if they could put together an alternative proposal. McCain's impending arrival shifted that effort into high gear. By the time McCain arrived in Boehner's office Thursday, the principles of a new plan were ready.

Indeed in the White House meeting, Boehner refused to present an alternative and didn't even pretend to care about policy. He didn't advocate the House Republicans' proposal, because 1) it was one tenth baked and 2) he didn't know what it was

Boehner was blunt. The plan Paulson laid out would not win the support of the vast majority of House Republicans. It had been improved on the edges, with an oversight board and caps on the compensation of participating executives. But it had to be changed at the core. He did not mention the insurance alternative, but Democrats did. Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee, pressed Boehner hard, asking him if he really intended to scrap the deal and start again.

No, Boehner replied, he just wanted his members to have a voice.

Just think. They demand "a voice," but they don't have anything in particular to say. It doesn't get anymore obvious than that.

Anyway it appears that Boehner and McCain have caved.

The concession is an add on

Meanwhile, House Republicans won a major victory, persuading negotiators to include a provision that would require the Treasury Department to create a federal insurance program that would guarantee banks and other firms against loss from any troubled asset, the official said.

Now I don't have much in common with Boehner and McCain, but I do think we three have one thing in common. I don't think any of us has any clear idea what Pence and Cantor had in mind. I assumed it was a give-away in which the Federal government acted as an insurance company -- taking premiums and paying claims with no limit. If the final add on is like that, it could be a huge problem. Other people assumed that the idea was just to have the Federal Government administer a pool where all the money to pay claims came from premiums. As a rescue plan that would be totally crazy, in Kevin Drum's words "like a bunch of skydivers forming a circle and thinking they can all pull each other up." The fact that it makes no sense makes it plausible that it is the Pence plan. In any case, as an add on, it would be harmless as banks just won't participate.

Now it would have been much better if the Federal Government had used the crisis to remove control of our financial system from the arrogant reckless greed heads who will now find some new way to destroy it. The bill doesn't even include bankruptcy re-reform. However, the Democrats were bargaining with the immense disadvantage of being responsible people, while the Republicans were willing to destroy the economy out of pique, so I guess its as good as could have been hoped for.
Gambling McCain

JO BECKER and DON VAN NATTA Jr. have the goods on John McCain and Indian gaming, but for some reason, they bury the lede.

On page 2 of the article.

Down on the Coushattas reservation, bills related to the investigation kept coming. After firing Mr. Abramoff, the tribe hired Kent Hance, a lawyer and former Texas congressman who said he had been friends with Mr. McCain since the 1980s.


Records also show that Mr. Hance had Mr. Weaver — who was serving as Mr. McCain’s chief strategist — put on the tribe’s payroll from February to May 2005.

It is not precisely clear what role Mr. Weaver played for his $100,000 fee.

Mr. Stewart said Mr. Weaver was hired because “he had a lot of experience with the Senate, especially the new chairman, John McCain.” The Hance firm told the tribe in a letter that Mr. Weaver was hired to provide “representation for the tribe before the U.S. Senate.”

But Mr. Weaver never registered to lobby on the issue, and he has another explanation for his work.

“The Hance law firm retained me to assist them and their client in developing an aggressive crisis management and communications strategy,” Mr. Weaver said. “At no point was I asked by Kent Hance or anyone associated with him to set up meetings with anyone in or outside of government to discuss this, and if asked I would have summarily declined to do so.”

Oh my. These are the Coushattas ground zero of the Abramoff scandal paying a McCain political aid $100,000 for who knows what while McCain is investigating Abramoff and them. And note Weaver's Rick Davis like defense. "I was close to McCain. They paid me. I didn't give them anything in particular for the money".

And why "meetings" wouldn't the Coushattas benefit more if McCain's strategist advised McCain to present them as victims (as he did and as they were) not bribers (which they also were).

Then there is the case of the tribe non-tribe the Schaghticoke Tribal Nation. Even jucier than Weaver, even further down in the article. The Schaghticokes wanted to use their new tribal status to open a third casino in Connecticut cutting into the business of the Pequots and Mohegans. Joe Leiberman was opposed. McCain held a hearing.

Chief Richard F. Velky of the Schaghticokes


said he felt worse when the e-mail messages between the tribe’s opponents and Mr. McCain’s staff surfaced in a federal lawsuit. “Is there a letter telling me how to address the senator to give me the best shot?” Mr. Velky asked. “No, there is not.”

After the hearing, Pablo E. Carrillo, who was Mr. McCain’s chief Abramoff investigator at the time, wrote to a Barbour Griffith & Rogers lobbyist, Brant Imperatore. “Your client’s side definitely got a good hearing record,” Mr. Carillo wrote, adding “you probably have a good sense” on where Mr. McCain “is headed on this.”

“Well done!” he added.

After that it just gets worse. Amazing stuff. What a crook.
Look at that time stamp !

Congress leaders, Bush administration reach tentative deal on financial bailout deal

AP News

Sep 28, 2008 00:38 ESTรน

Our conscript fathers (and Nancy Pelosi) are actually earning their pay this weekend.

Recall Barney Frank predicted a deal by Sunday.

I have a new plan. My old plan was to make Paulson get Frank's signature on every deal. My new plan is to have Frank run the financial system. With timing like that, he won't need any bailouts.

The plan roughly is as predicted before the absurd Boehner McCain grand standing.
Democrats cave on bankruptcy re-reform but get oversite, limits on CEO compensation, the 700 billion in tranches, a promise from the Treasury to be nice to homeowners if it happens to come into the possession of whole mortgages and, the provision that counts, Warrants*.

The House Republicans get to claim that they had input on the bill

At the insistence of House Republicans, who threatened to sidetrack negotiations at midweek, the insurance provision was added as an alternative to having the government buy distressed securities. House Republicans say it will require less taxpayer spending for the bailout.

But the Treasury Department has said the insurance provision would not pump enough money into the financial sector to make credit sufficiently available. The department would decide how to structure the insurance provisions, said Sen. Kent Conrad, D-N.D., one of the negotiators.

OK so there will be a program including the word "insurance" to be designed without further input from the House Republicans. This shows, in case anyone had any doubts, that they don't care about policy and just care about bragging rights.

Now this could still be a deadly drain on the Treasury. The house Republicans have made Paulson look like a relatively good guy. He can now sell insurance for absurdly low premiums and privatize a lot of public money.

*Doesn't fully make up for giving up on warrants in the appalling FISA cave. Why are these words so similar ?

Saturday, September 27, 2008

AP back to being All Partisan

Briefly the extreme bias of the facts overwhelmed the Associated Press's quest for Ballance.


In one small sign of progress, House Republicans dispatched their second-ranking leader, Rep. Roy Blunt of Missouri, to join the talks after their objections to an emerging compromise had brought negotiations to a standstill the day before. They also demanded "serious consideration" for a plan of their own, involving less government intrusion and lower cost to the taxpayers than the $700 billion that Treasury Secretary Henry Paulson has been seeking.

So how do they know that the House Republicans' plan will cost taxpayers less ? Why the House Republicans said so, so it must be true. I think it is obvious that it will cost much more than the Dodd-Frank plan *and* create new risks for the financial system.

The AP has gone back to stating completely unsupported partisan assertions as facts, so long as the partisans are Republicans who don't know anything about the issues (Matt Yglesias has the goods but the thinkprogress hamster is tired)

Alarmingly and unsurprisingly the Democrats are caving and proposing a totally crazy dog's lunch compromise "Democrats and Bush officials said the insurance proposal was acceptable as an option but not as a replacement for the administration's more sweeping approach." That is, OK we'll give bankers and capital gains tax payers more public money, if you just let us give them the 700 billion the way we want to.

Of course the insane compromise will have the advantage of showing that partisan bickering is always good for the partisan bickerers and making it clear that one is a grown up is always punished in Washington.
Useful Advice From Matthew Yglesias to John McCain

The press likes the unusual. The man bites dog story. The maverick senators who do weird stuff. But just because men who bite dogs make for good copy doesn’t make biting a dog a good idea.

Wish I'd written that.

I'm sure the dogs of the world are relieved (dogs are loyal, but no very bright, and don't understand how improbable it is that John McCain will follow advice from Matt Yglesias).

Friday, September 26, 2008

Mark Kleiman Proposes a Plan C to save the financial system.

To me it mostly sounds similar to, but much more radical than, my "If Warren Beffet can do that why can't we ?" plan (non-expert minds think alike ?).

Kleiman is much much tougher on the banks and bankers but, in exchange, offers a sweetener, which he also considers a good idea.

3. In return, the bank gets "deposit insurance" on its new interbank borrowings up to some limit, set as a multiple of the equity investment. That makes that bank's overnight paper (up to its limit) as good as T-bills. We also take the $100,000 limit off federal deposit insurance.

4. The bank pays the Treasury an insurance fee of (to make up a number) 100 basis points on those borrowings.

5. The law makes the new, insured debt senior to all other debt. (Of course, depositors and CD holders are already insured.)

First I had trouble understanding point 4. I think the problem is I didn't understand what Kleiman means by "gets 'deposit insurance'". I would say that I have deposit insurance (I have a US checking account) and my bank doesn't. He would say that my bank gets "deposit insurance" from the FDIC.

Anyway the point is that the treasury gaurantees the banks "new interbank debt" up to some limit for a fee.

Now my problem is that if this fee is too low, then banks can just retire old debt and issue new debt. That is, I don't see a way to make sure that debt is really new. Obviously the normal rule is that seniority has something to do with being old not young. I loan and say this debt has to be senior to all debt incurred in the future. The bank can't cheat me without backdating loan contracts with other parties. Repaying an old loan and making a new one is legal unlike backdating a contract. A doomed bank can transfer a whole lot of cash to another bank by borrowing at a very high interest rate, then defaulting and making the Treasury pay. Officers of doomed banks have very good reason to do nice things for officers of non-doomed banks.

I do note that Kleimans point 2 prevents point 3 from creating new over-insurance and really highly profitable financial arson opportunities as no private credit default insurance can be issued on these new loans (even if they are really old wine in new bottles). Still I'd stay out of bank to bank insurance.
The debate format is totally unfair to John McCain.

It would be completely unreasonable to expect Senator McCain to show up in Oxford for the debate given the absurd ground rules. Every child knows that two against one is totally unfair. Senator McCain is expected to be able to debate not only Barack Obama but also himself.

Just on the economy and the bailout he would have to argue with not only Obama but also the guy that said the fundamentals of the economy are sound (or the one who said this is the worst crisis since WWII) and the one who said the problem was greedy bankers hiring lobbyists to avoid deregulation (or the one who said the solution is deregulation) and the one who said yes to the Paulson bail out *and* the one who said yes if Dodd/Frank like conditions are met and ...

Not to mention the other issues.

Look I don't want the debate to be fair, but I do want to give Senator McCain half a chance. I propose that Obama be required to wear a gag.

Thursday, September 25, 2008

Notable "Quotes"

"We can't afford checks and balances, because I have to focus on cheques and balance sheets" -- Hanky Panky Paulson

"The bear market ate my homework" John McSame

"I'll try to find you some and I'll bring them to you." Sarah Palin
McCain Calls Time out

Says he's too busy not making up his mind on the bailout to prepare properly to debate Obama.

Matt Yglesias is too young to understand

"I think walking and chewing gum at the same time is part of the president’s job."

I can understand very well why McCain wants to pause his campaign which, so far this week, has consisted of denouncing failed CEOs with golden parachutes, Bankers whining for bailouts and, especially, lobbyists for Fannie Mae and Freddie Mac.

Wednesday, September 24, 2008

My additions to the Dodd plan

William H Gross argues that the Treasury will profit while saving the banking system.
He is not disinterested.

I estimate the average price of distressed mortgages that pass from "troubled financial institutions" to the Treasury at auction will be 65 cents on the dollar, representing a loss of one-third of the original purchase price to the seller, and a prospective yield of 10 to 15 percent to the Treasury. Financed at 3 to 4 percent via the sale of Treasury bonds, the Treasury will therefore be in a position to earn a positive carry or yield spread of at least 7 to 8 percent.

via Kevin Drum.

I'm sure the Treasury could buy toxic waste for 65 cents on the dollar, but I'm not sure I trust them to do so. They sure seem eager to give public money to banks. How about 2 clauses in the authorizing bill saying
a) they can't pay more than 70 cents on the dollar
b) they can't buy any assets repackaged after the bill passed.

b is so banks can't stamp a fake face value on a new security to evade a.

Now this means the treasury will get the most toxic of the sludge and won't be able to reassemble mortgages and deal with homeowners who have fallen behind on payments. That means that there would be more need to authorize judges to step in (as proposed in the Dodd bill) than their would be if the Treasury also bought the more senior tranches, which won't be for sale for 70 cents on the dollar.

Also I still like

2) bank officers skin in the game.

The banks are in financial distress and might be willing to sell assets for less than they are worth to a non-liquidity constrained investor like The Treasury or Berkshire Hathaway.

Officers of the troubled banks have done very well indeed during the bubble. They should have a lot of cash (or they are too profligate to be trusted as officers of banks). If the rescue plan is profitable to the treasury, it should be profitable for officers of banks to participate as investors.

I think they should be required to kick in 1 cent for every 99 cents contributed by the Treasury and own 1% of the proceeds on the transaction with their firm. This creates gross conflict of interest between the officers of the bank and the shareholders. Right. If they are being bailed out, the normal rules don't apply and we don't want them to do everything they can to transfer wealth from the treasury to their shareholders.

Tuesday, September 23, 2008

How much should we be willing to pay to save the US financial system ?

I would say much less than nothing. My sense is that there is a huge profit opportunity for any organization which can borrow for 3 months paying 0% interest and for which a standard deviation of wealth of $700 billion or so is no big deal.

That would be the US treasury and no one else.

There are many essentially equivalent ways to show that the US Treasury can make money out of Wall Street right now.

One is the good old ted spread now down to 2.36 percent. This means that, provided banks don't actually go bankrupt in the next three months, the Treasury could make a profit of 0.78 % or 0.79% of its investment in 3 months just by selling 3 month t-bills and loaning the money to banks.

Now of course the chance of the banks failing is positive, but it is not that high unless bankers are still irrationally optimistic. This is mainly because when deciding whether to loan to another bank or buy t-bills, banks have to consider that they will desperately need money exactly when their counterparty defaults and everyone wonders if they will too. This is not a problem for the Treasury, so loaning to banks should be significantly more attractive to the treasury than to other banks. That's a profit opportunity.

Another way of looking at it is that there are banks which have a high chance of failing if the treasury does nothing. Their shares currently have positive value. Their shareholders will have nothing if they fail. They should be willing to split the difference with the treasury -- another profit opportunity (or maybe the same one again)

Finally there is an increasing supply curve in shares of such banks -- their shares will be worth more if they recapitalize by selling shares. The treasury is big enough to act as a monopolist with a deal that it will buy shares at a price between their current value and their value if the bank recapitalizes.

I'd say that saving the banking system should cost the treasury negative tens of billions (at least).

Monday, September 22, 2008

Fact check check Tenses getting Tenser

Michael Dobbs gets a bit beyond ballance this time. I think I need a new word Balllance which is breaking the rules to achieve a conclusion more favorable to Republicans than to Democrats.

Dobbs has few rules for his Pinocchio test, but he did recently assert one -- inappropriate verb tense (in particular present when past is warrented) counts for 3 Pinocchios.

"I awarded the McCain campaign three Pinocchios for mixing up its verb tenses over the Iraq surge in May. Consistency demands the same verdict for Barack Obama"

Now he awards two Pinocchios for the following claim based on the following fact


"Obama has no background in economics. Who advises him? The Post says it's Franklin Raines, for "advice on mortgage and housing policy." Shocking. Under Raines, Fannie Mae committed "extensive financial fraud." Raines made millions. Fannie Mae collapsed. Taxpayers? Stuck with the bill."

--McCain video release, September 18, 2008.


It turns out that the three items (including an editorial) all rely on the same single conversation, between Raines and a Washington Post business reporter, Anita Huslin, who wrote a profile of the discredited Fannie Mae boss that appeared on July 16. The profile reported that Raines, who retired from Fannie Mae four years ago, had "taken calls from Barack Obama's presidential campaign seeking his advice on mortgage and housing policy matters."

So the McCain took a statement in the past tense and converted it to the present. This is worth three Pinocchios when the Obama campaign did it. So Dobbs awards 2 Pinocchios.

I stand by my interpretation of the present tense (arguing against the three Pinocchios)

"Yes Mr Dobbs verb tenses do matter and "lobbies" does not mean the same thing as "is lobbying". Although the first is called the English present tense, the second is used to assert that an activity which is happening right now. The present tense is also used to refer to having the characteristic of doing something regularly (half an hour ago I could honestly say "I blog" but not "I am blogging"). Black lobbies means Black has lobbied and presumably will lobby again, it does not mean that Black is lobbying right now."

The McCain campaign must claim that Raines advises the Obama campaign regularly and will presumably do so in the future in order to justify the present tense. "A couple of calls" justify a statement in the past perfect not in the present tense.

But way way beyond that "it's" is not the same as "it includes". The McCain campaign claimed that Raines is Obama's only source of advice on "advice on mortgage and housing policy."

The following statement is clearly false

Who reads Michael Dobbs ? It's Robert Waldmann.

I do read Michael Dobbs but I am not the only one. Unless the McCain campaign can justify the claim that no one but Raines advises Obama on mortgages and housing policy, they are lying.

I'd say 4 Pinocchios, but I'd settle for three.

Thursday, September 18, 2008

An unsophisticated debate On the McCain health care plan.

Tom Bozzo makes an excellent contribution to the sophisticated debate over at AngryBear. I am writing about campaign politics here, and I think that Bozzo concedes to a valid argument for the McCain campaign which is politically irrelevant, because people won't believe it.

An unsophisticated version of the plan. Employer provided health insurance is counted as individual income for tax purposes (at cost per employee equally to employees if all have the same coverage). Individuals who purchase insurance on the individual market get a $2,500 refundable tax credit. Families who purchase insurance on the individual market get a $5,000 refundable tax credit.

Pro: This is plugging a loophole in the tax code, which is only fair to people who don't have employer provided health insurance and which increases efficiencies as firms and workers have agreed to do inefficient things to maximize the value to them lf the loophole. The tax credit will help the currently uninsured get insurance.

Con: Wait insurance for a family costs way more than $5,000. If my employer contintues to provide insurance, I lose because I pay more in taxes. If my employer doesn't, I lose the cost of insurance minus $5,000

Pro: You are implicitly assuming that the incidence of the new tax is more than %100 on the worker. The more reasonable assumption is that, if your employer drops health insurance, he she or it will increase your salary by the same amount he she or it paid to insurance companies.

Con: Yeah Sure. You trying to sell me a bridge in Alaska ?

My guess is that this is how it would go. The Pro response makes sense as economic theory, but won't convince people. I'd say the Con argument is politically a big winner. Providing information on how much the average premium for a family is on the individual market (about $12,000 I think) will make the con argument more convincing. Arguing that insurance companies will charge more than that for a plan as generous as a typical employer provided plan will be true and make the con argument more convincing. As summarized by Tom Bozzo (but hey at least I admitted it) Buchmueller et al, argue that a typical employer provided plan costs the employer $12,000 per family but would cost $14,000 on the individual market

Now I see no reason why the incidence of the tax on employer provided health insurance would be more than %100 on the worker. Plus I don't think that a reduction of real wages would be a pure transfer from workers to firms as I assume employment would increase. However, I think the McCain campaign would have better luck selling that bridge in Alaska than selling that argument from neoclassical economics.

Wednesday, September 17, 2008

Kid Bitzer commenting over at Edge of the West reminds me that it is time to republish this photo.


To which the one and only Paul Krugman linked

Actually, there was plenty of coordination — a coordinated effort to destroy effective regulation:

Consider the press conference held on June 3, 2003 — just about the time subprime lending was starting to go wild — to announce a new initiative aimed at reducing the regulatory burden on banks. Representatives of four of the five government agencies responsible for financial supervision used tree shears to attack a stack of paper representing bank regulations. The fifth representative, James Gilleran of the Office of Thrift Supervision, wielded a chainsaw.

The lack of oversight, in short, was no oversight: it was part of the plan.

and that was to the black and white version.

banking regulators and bankers
Rasmussen Just Changed the Rules mid game

They will add roughly 1% 2% to McCain minus Obama compared to what the results would have been if they had stuck to the system they always said without qualification that they use. Now they "Generally" weight so sample party affiliation matches the three month average,

However, from now through Election Day, we are making two adjustments to that process. First, due to potentially changes in the political environment, we will now base our targets upon survey interviews conducted over the preceding six weeks, rather than three months. Second, we will update the targets weekly, rather than monthly.

Makes some sense to me. The number of observations in the six week average is huge and party affiliation is not constant. However, I am not thrilled about suddenly changing the method.

The effect ?

For polling data released during the week of September 14-20, 2008, the new targets are 38.7% Democratic, 33.6% Republican, and 27.7% unaffiliated. For the first thirteen days of September, the targets were 39.7% Democrat, 32.1% Republican, and 28.2% unaffiliated. It should be noted that these figures indicate an improvement for Democrats since the beginning of the year.

So they just rejiggered their numbers 1.0 from Dem to Rep (about 0.85 0.8 % for McCain) and 0.5 unaffiliated to rep (about 0.15% for McCain)

Also they Kant spell.

"A one-percentage point decrease in the number of Democrats would half the same impact. "

update: and a similar 0.9 to 1% from Obama so a change in McCain-Obama of about 2% Robert you bozo.

This means that efforts to determine whether Obama has gained statistically significant ground on McCain recently have to add about 2% to Sunday and later released Rasmussen results to make them comparable to Saturday and before.

Unweighted average of the 4 most recent at is Obama + 1 now corrected to Obama +1.5 (just for comparison with the past the new weights are probably better).

Older 4 + then values of trackers (data through 9/10) are (0+4+4+3-1+4+2)/7 = Obama - 2.3

Var of the avg of 4 = roughly (1/3000+1/3000+1/1000+1/1000)/16 = 1/6000

Of the older more like (2/3000+5/1000)/49 = about 1/9000 so sum of vars about
5/18000 so se around 1/60 so z-score 2.28 so the correction to the Rasmussen revision just pushes it over 2 (would be 1.98 without).

Boarderline significant evidence that Obama has gained on McCain.

Now weighting by sample size and using new Rasmussen weights implies exactly even (also if you include recent polls with Barr and Nader which average to zero Research 2000 Obama +3 ARG Obama -3).
Out of the Loop

Nancy Moran and Hans Nichols Bloomberg reports that John McCain opposed a bailout of AIG soon before the bailout plan was announced.

The Arizona senator said on NBC's ``Today'' show that taxpayers should not be ``on the hook'' for AIG, which may be on the verge of collapse. He praised Treasury Secretary Henry Paulson for denying requests for a bailout, saying Paulson ``has been correct'' in asserting taxpayers aren't responsible for business failures.

Ooops. Now this is odd. I assume McCain is ill informed about most things, but I would have guessed that the Bush administration would have clued him in before it informed the public just to help The Party.

If I were McCain I would be even more angry with Paulson than with Fiorina.

As Mark Kleiman notes, this shows (again) that McCain is unqualified to be President. To him, it is always a moral issue, where relatively easy options are to be rejected. No bailout. Face the music. Be resolute even in the face of impossible odds. Endure.

Not good principles when the worlds largest insurance company might go under and when it is possible to resolutely make them face the music without bankruptcy. The US government and in particular the FED demanded an 80% stake in AIG as part of the bailout. The shareholders were left with something, but not enough to make them look for another company playing heads I win tails ... omigod I thought insurance companies were about the safest investment there is.

Also that would give the FED authority to decide on executive compensation wouldn't it ? I mean Robert Willumstad is now making considerably more than his superiors. Is that going to last ?

McCain's logic is Herbert Hoover's logic (but at least Hoover was honest as well as moralistic). It makes no sense in a modern economy.

I am fairly sure that most US economists and businessmen are prepared to argue that the AIG bailout was necessary. I am looking forward to some being asked what they think of McCain after they explain what chaos would have occurred without the bailout.

Via Mark Kleiman who is being even more brilliant than usual. Did you click the Fiorina link ? Brief and brilliant.
Never Try to Push Poll Jews

That is the lesson I draw from the story of the investigation into whether the Republican Jewish Coalition poll of Jewish Americans was a push poll.

Clearly it wasn't. The point of a push poll is to lie to people with the added credibility of claiming you are polling not advocating.

So how many Jews were pushed ? "Brooks said the RJC, whose board includes advisors and fundraisers for Senator John McCain, had placed 750 calls to Jewish voters in five states: Florida, Michigan, Ohio, Pennsylvania, and New Jersey. "

Lying to 750 people is not worth the bother. The McCain campaign usually lies to millions. Tens of thousands at a time just at their rallies according to them (thousands according to everyone else).

The poll lasted 15 minutes. As David Kurtz and others explained, spending 15 miutes on the phone lying to someone is a very inefficient way to seek votes.

So what happens when you say nasty things about Obama to 750 Jews. Well you better watch out. "Some Jewish Democrats who received the poll – including a New Republic writer who lives in Michigan – were outraged by the poll, describing it in interviews as "ugly" and disturbing." Better to push poll evangelicals or something, many fewer of them are journalists.

There is just no way you can whisper to significant numbers of Jewish Americans and stay under the radar. Too many of them man the radar stations.
Ballance at CNN

Jed sent me over to this clip from CNN, which he describes as "a fairly brutal appraisal of McCain's pathological campaign:"

It is and I am certainly not one tenth as passionately for Obama as Jed is (my practical contribution was to propose at dailykos setting up a JedPac to put his youtube videos on the air. Much enthusiasm. No one did any more than I did).

However, I am struck by CNN's dishonest search for just a bit of Ballance.

Because of the lies of McCain and Palin, the media in general and CNN in particular have decided that Obama was dishonest about McCain's "maybe a hundred" years in Iraq line. Now the Obama campaign make an ad in which the video was cut after the word "hundred" deleting McCain's effort to dodge the question *after* he had answered it. The deleted words were not responsive to the question. They were an escape into fantasy land. McCain said if Iraq were peaceful it would be OK to keep US troops there for 100 years. That's a big if.

The CNN reporter introduces the devastating list of lies and disproofs by saying Obama has been accused of dishonesty too

"like telling voters McCain wanted to spend one hundred years in Iraq
troops should stay in non-combat roles as long as it takes
Not that he wanted one hundred years of war"

She is distorting what McCain says (more I think than the Obama campaign ever did). There is a huge difference between soldiers being in "non combat roles" and there not being "casualties" (McCain's ex post assumption which he did not describe then or ever as a necessary condition for staying one hundred years). A non combat role implies that one doesn't (normally) try to kill even if the other side is fighting. McCain just said he hopes that the other side stops fighting. Neither then nor later did McCain give a number of years of war that he would consider too many so that we would have to accept something less than total victory. He just said that once we achieve total victory, there would be OK (since milatary spending isn't spending and the US military doesn't have anything to do outside of Iraq to keep soldiers there).

To make the claim that Obama distorted what McCain says, CNN tells a gross monstrous absolute lie about what the Obama campaign said. Obama never said that McCain hopes that the Iraqi insurgents keep on fighting because he wants the war to go on. If McCain wanted one hundred years of war in Iraq, he would not want peace through victory. That would be insane, even more insane than McCain is. The lie about what the Obama campaign said is the only way to argue that they said something materially different from a full and fair analysis of McCain's complete answer.

Now CNN didn't actually say that the Obama campaign said McCain wanted 100 years of war. They just said that the Obama campaign said something arguably false, then two sentences later argued against an insane claim which they did not explicitly attribute to Obama. To me this is no defense. In context it only makes sense to reject the insane claim if the Obama campaign made it. They didn't. CNN lied.

Then the closing line was

"and Anderson you know it's getting pretty ugly on both sides."

Well maybe Anderson does, but CNN viewers sure don't as all the evidence presented in the service was evidence that the McCain campaign has gotten ugly. In fact, I don't know it either, because although I follow the campaign obsessively I haven't noticed the Obama campaign getting ugly. It was simply an unsupported assertion that the reality is balanced which, I think, can only have been added because CNN is ballanced.

Tuesday, September 16, 2008

John McCain not only lies More than Nixon, but is also more determined to say "9/11" thank Giuliani.

McCain said he wants an inquiry into what led to the current mess, though he did not offer details.

"We're going to need a '9/11 Commission' to find out what happened and what needs to be fixed," he said.

Now Giuliani would probably not have mentioned 9/11. More likely, he would have described how he prosecuted insider traders.

update: A longer quote is much much more absurd.

We're going to need a '9/11 Commission' to find out what happened and what needs to be fixed," he said. "I warned two years ago that this situation was deteriorating and unacceptable. And the old-boy network and the corruption in Washington is directly involved, and one of the causes of this financial crisis that we're in today. And I know how to fix it, and I know how to get things done.

So sentence 1 we need a commission to find out how to fix it and by sentence three he already knows how to fix it. So does he already know the answer or not ? That is a record speed flip-flop.

Sentence 2 about Washington insiders who helped make this mess and benefited personally for their efforts is valid and on point. The number one target would have to be Phil Graham ... ooops.

John McCain

More addicted to lies than Richard Nixon

More addicted to 9/11 than Rudolph Giuliani

More determined to stay in Iraq than George Bush (also no better informed and less humble see update above).

Got more out of adultery than Bill Clinton

Depended more from the advantages of his birth than George Bush Sr

Older and less able to avoid goofs than Ronald Reagan

More self righteous that Jimmy Carter

Less athletic than Gerald Ford

More stubborn than Lyndon Johnson

Gained more from being a press darling than John Kennedy

Less able to understand the difference between being President and being an army officer than Dwight Eisenhower (also probably insists on even briefer briefings).

Done less for reform than Harry Truman had done before he became President.

More in love with his own voice than Franklin D Roosevelt

More out of touch than Herbert Hoover

More anti-worker than Calvin Coolidge

OK you stumped me.

But still he would be the worst President in every way, since Warren Gamaliel Harding.

Worse public speaker than Warren G. Harding and more in bed with corrupt lobbyists.

Less realistic foreign policy than Woodrow Wilson. Also see above on stubborn and self righteous (but probably wouldn't segregate rest rooms by race I'll grant you that).

More out of touch than Howard Taft

More imperialist than Theodore Roosevelt.

More likely to be remembered only for something to do with Alaska than McKinley.

Shown less gonadal discipline than Grover Cleveland

More dependent on faded military glory than Harrison (even though Harrison II was the grandson of tippicanoe Harrison).

Shown more respect for the confederate flag than Cleveland

More in bed with corrupt lobbyist than Arthur

Contributes more to funny cartoons than Garfield (It's hard to find fault with a guy who was shot as soon as he took office).

Has same attitude towards stolen elections and Hayes but is more willing to give up on crucial policy issues to get the White House.

Relies on a more dangerous drug than Grant

Will confront congress more than Johnson

More willing to send US soldiers to their deaths thank Lincoln
(sorry hard to find a fault with Lincoln so I fault his times)

OK you got me, less likely to lead the country to civil war than Buchanan.

Now worst President in every way since Buchanan.
Fiorina: Palin not qualified to run company

From CNN Political Producer Peter Hamby

WARREN, Ohio (CNN) – Carly Fiorina, the former Hewlett-Packard CEO turned John McCain Victory chair, said Tuesday that Sarah Palin isn’t qualified to run her old company.

Appearing on a KTRS Radio show in St. Louis, Fiorina was asked by the host, “Do you think she has the experience to run a major company like Hewlett Packard?”

“No, I don’t,” Fiorina answered. “But that’s not what she’s running for. Running a corporation is a different set of things."

"I would just remind you that it is Barack Obama who is running for president," she continued. "John McCain who is running for president.”

Yes and John McCain's first Presidential decision was that Sarah Palin was, according to his description of the rule for choosing a vice President which is the only one a true patriot would consider, the person best qualified to be President.

Now I don't want to try to read Carly Fiorina's mind (I can't and wouldn't want to succeed) but I can't help wondering if her frankness about Palin is due to

1) well there are some lies that are so obvious that even McCain surrogates are embarrassed to utter them


2) Carly Fiorina assumed that the ten times Sarah Palin said she said "thanks but no thanks" to congress on the bridge to nowhere that they were, at worst, normal lies and not totally bizarrely extreme lies, so she confidently claimed that Alaska sent the money offered by congress back. Of course, in effect, Palin said something like "thanks but don't think we are stupid enough to kick in state money for a worthless project, we'll just keep the money and spend it on projects where the state doesn't have to contribute".

Fiorina was seriously humiliated being left speechless on national TV.

via firedoglake

I can't help thinking this is partial pay back.

Oh and KTRS nice scoop. I'd really rather link to you than to CNN writing about your scoop, but, you know, the fact that when I (finally) managed to click fast enough at your neurotic web site to get to "election coverage" I got the ap wire and "News and Information" is all local and stuff gives me no choice.

Don't want to be harsh, but you won the lottery and lost the ticket.

update: Neither can McCain says Fiorina.

As I argued in comments, neither can Fiorina. Stolen from Ian Welsh at firedoglake (with a correction)

Carly Fiorina Couldn’t Run a Major Company Either
By: Ian Welsh Tuesday September 16, 2008 9:15 pm

So yeah, Carly got herself in hot water by saying that John McCain couldn't run a major company, and tried to rescue herself by saying that none of the candidates could.

How would she know though? Because Carly couldn't run a major company either. In six years she laid of almost 18,000 workers, lost half the value of the company, paid herself a 10 million dollar bonus for shoving through a merger with Compaq which didn't work, and was forced out in 2005 for wiretapping her own board members. She then got a nice 42 21.4 million dollar severance package for driving the company into the ground.

Carly Fiorinia: Incompetent, but thinks she's a genius. Yeah, that's change we can believe in. Is there anyone competent on, or advising the McCain ticket.


David Cutler, Brad Delong and Anne Marie Marciarille
Boldly Charge Into Enemy Territory with this awesome op-ed in the Wall Street Journal.

It is so good at a) explaining economics in plain English and b) presenting hard heading and clearly valid arguments that show that Obama's plan is more efficient no matter how one defines efficiency, that it might even convince one or two regular readers of The Wall Street Journal's editorial pages (it's never to late to mend and hope springs eternal).

Three cheers.

Given the excellence of the Obama plan and the awfulness of the McCain plan, only a total fool would rake over old tired arguments about mandates which are not the topic of the current debate anyway.

I am that total fool.

OK so here goes.

Cutler, DeLong and Marciarille write

- Pooling. The Obama plan would give individuals and small firms the option of joining large insurance pools. With large patient pools, a few people incurring high medical costs will not topple the entire system, so insurers would no longer need to waste time, money and resources weeding out the healthy from the sick, and businesses and individuals would no longer have to subject themselves to that costly and stressful process.

For small firms, this makes sense (although if it makes that much sense for all concerned I don't know why insurance companies can't make money setting up such pools). For individuals less so.

The problem with insurance which pooling addresses is adverse selection -- sick people are those most eager to buy health insurance. This can lead to a case in which, even if everyone would benefit from universal insurance, insurance can't take off as the first to sign up are the sickest and that means premiums have to be so high that healthy people don't join. Even if there is insurance now, it can vanish due to the adverse selection death spiral where the healthiest decide to go without, so costs per client increase, so the second healthiest decide to go without so etc till we're all on our own.

Here free choice for each consumer, each individual is free to sign up with each insurance company, implies that all consumers end up without something that they all want.
If people were in pools assembled at random and each pool voted on whether to get insurance, all would get insurance and the problem would be solved. However if individuals are free to join pools or not, I don't see any improvement over the current individual market. There is just one more layer of organization. With pools insurance companies can't exclude individuals and don't have to worry about only the sickest signing and the problem is solved so long as the pools can't exclude individuals and don't have to worry about only the sickest showing up.

So far, the claim seems to be that renaming an agent a "pool" not an "insurance company" magically solves the problem. Obama decided to leave people free to choose (knowing that they are free to choose someone other than Obama for president and hate the word mandate). There is only so much he can do about adverse selection.

Now the Obama plan is better than a Wall Street Journal op-ed regular readable 700 word summary. I think the point of the pools is that they will be non-profit monopolies not competitive firms. I described adverse selection for a monopolist, but the problem is much worse if competing firms poach the healthiest clients from each other. It is also worse if the firms set premiums to maximize profits and not to cover costs (same if there were perfect competition higher with lower coverage possible spiraling to zero in the real world of imperfect competition).

Obama proposes pools because he believes that regulated monopolies will deliver a more efficient outcome that competing profit maximizing firms. Economic theory suggests that he is right. Common sense convinces Cutler, DeLong and Marciarille that they better not try to convince Wall Street Journal Op-Ed readers of that one.

update: This is awesome too. Bob Herbert explains the adverse selection death spiral and why McCain's plan would be a disaster. Oh and Sharry Glied might not remember this, but she smiled and winked at me once (not a hint just being polite, actually less than saying hello but I remember).
Fact Check Check: Tense tension.

Longtime readers of this blog will be familiar with the fact that I criticize Michael Dobbs Washington Post Fact Check.

Just below I praised it as Dobbs courageously stood up to cticicism that he must be biased, because he had criticized the McCain campaign many times since he last criticized the Obama campaign. That was then.

Now he provides ballance awarding Obama 3 pinocchios for saying ""John McCain's chief advisor lobbies for oil companies, even from Russia and China. His campaign manager lobbies for corporations outsourcing American jobs." when, according to Dobbs he should have said "lobbied" or "has lobbied" because they are currently on leave from their lobbying firms. He writes

Excuse me, but verb tenses matter. "Lobbies" and "lobbied" or "has lobbied" carry two different meanings. I took McCain to task back in May when he claimed that "we have drawn down to pre-surge levels" in Iraq. It turned out that he was speaking prematurely: the full drawdown was still a couple of months away. The McCain campaign offered the "verb tense defense" to justify the senator's claim, ridiculing the distinction between "have" and "will" as a "matter of semantics."

Yes Mr Dobbs verb tenses do matter and "lobbies" does not mean the same thing as "is lobbying". Although the first is called the English present tense, the second is used to assert that an activity which is happening right now. The present tense is also used to refer to having the characteristic of doing something regularly (half an hour ago I could honestly say "I blog" but not "I am blogging"). Black lobbies means Black has lobbied and presumably will lobby again, it does not mean that Black is lobbying right now.

I suppose that, even if they weren't on leave, would Dobbs have objected, because the ad is shown at all hours and the guys must sleep sometimes so they can't be lobbying at all hours of the day and night. Notice they can lobby at all hours of the day and night, just not for all hours of the day and night for several consecutive days.

Notice I deliberately made a claim identical to Obama's above. I wrote "I criticize" even though my last post on Dobbs contained no criticism and I was explicitly ruling out this post as a possible referent)

The difference between the past tense and the future tense is not ambiguous in this way.

Would Dobbs nail himself if he wrote "has lobbied" when he should have written "lobbied" ? The meanings are not identical ("he has lobbied" has exactly the same meaning as "he has lobbied at least once in his life" while "he lobbied" does not have exactly the same meaning as "he lobbied at least once in his life" which is a very strange sentence which a native English speakers are much less likely to use than "he has lobbied at least once in his life" (and that is damn unlikely)).

Michael Dobbs' argument is just silly. His reason for making it is clear "I awarded the McCain campaign three Pinocchios for mixing up its verb tenses over the Iraq surge in May. Consistency demands the same verdict for Barack Obama." This is only true if the distinctions between all verb tense"

Not consistency, ballance.

Dobbs pretends that all tense distinctions are similar, because he is under great pressure to pretend that both Presidential campaigns are more similar than they are.
Easy Answers to Easy Questions

Brad DeLong asks


Did John McCain really stand next to Carly "They Paid Me $21 Million to Go Away" Fiorina this morning and denounce greedly overpaid Wall Street CEOs and their golden parachutes?



This has been another episode of easy answers to easy questions.


You did click on the link below to ironies very last gasp didn't you ? At least it went out with a bang.
On Sunday the Washington Post published a long article by Donald Luskin arguing that the economy is fine and the Lehman salvage plan fell through.

How did Brad DeLong resist writing about the stupidest man alive contributing to the death spiral of the Washington Post which friends don't let friends read ?

Others are writing

Kevin Drum

"So here's my guess: the Post wanted to run a "balancing" piece in the Outlook section arguing that the economy was basically OK and Bush had done a good job running it. Apparently no one smarter or more intellectually honest than Luskin — which includes just about everyone — was willing to do it. Which should tell you something."

The eternal optimist, I assumed they were just trying to say "Fuck Brad DeLong" without using a four letter word.

Matthew Yglesias

"The weird thing about Luskin is that he isn’t just a right-wing propagandist; he actually seems to run a business where real people pay him real money for financial advice. It’s a strange world."

My theory is that they do the exact opposite of whatever he advises them to do. In fact, I might want to buy some financial advice from Mr Luskin, the man's timing is uncanny.

Monday, September 15, 2008

George Orwell might say

I sure wish I'd written that.
Mark Kleiman Praises Service Dogs

I still can't comment there, whenever I try to log in to typepad at his site as required, so I note here that a dog just called 911 when its owner was having a seizure.

Even Lassie didn't know how to dial a phone.

Maybe Prof. Kleiman can find a trained dog to debug his blog (or to explain to me what I am doing wrong).
AngryBear Commenter Mooser Gives Some Financial Advice

When Bush was elected, we paid off the house and took our money out of investments and into insured accounts. I advise others not to do the same. When you have no house payment, you feel like you are living in somebody else's house. It's a very anxious feeling, and it's putting a strain on my marriage. In addition, there is no shorter path to ostracism in the workplace than carrying no (or very little) debt. I've got nothing to talk about with co-workers, and they suspect I have ties with affluent and generous terrorists.

A country talking about its debts. Grim.
Making Rape Victims Pay for Rape Kits

Jakob Alperin-Sheriff has the goods on Sarah Palin.

He spokesman denies, of course, that she had anything to do with the fact that the Wasilla police department charged rape victims for rape kits while she was mayor. You know Wasilla is a big place and a mayor can't know about every little detail known to the state legislature which forced Wasilla to pay for the rape kits.

The Police Chief she fired noted that before she became mayor, they were bought with money authorised the public safety contingency line item.

Now Jakob Alperin-Sheriff has found her signature on a budget report where spending from the public safety contingency line item totaled $250 which is less than the cost of one kit (on page 65 of the report).

Sarah Palin signed off on the budget report.

Sunday, September 14, 2008

Rasmussen Vs Daily Kos/Research 2000 tracking polls

Rasmussen has McCain ahead by 3%

Research 2000 has Obama ahead by 2%

Why do they differ ? The difference is not statistically significant, but it is interesting.

The reason is that the internals don't explain the difference

Rasmussen reports says "McCain is supported by 90% of Republicans and has a six-point edge among unaffiliated voters. Eighty-two percent (82%) of Democrats say they’ll vote for Obama.

DailyKos says that

McCain is supported by 91% of Republicans and has a five point edge among independents and Obama is supported by 83% of Democrats.

Given the limited information from Rasmussen reports, my best guess is that the internals explain less than 1% of the difference and the rest is due to different estimates of the numbers of Republicans, Democrats and Independents.

To me this is interesting news, because Rasmussen uses a three month average for this number, while research2000 uses the same recent data as for the presidential preferences.

Thus there is rather less than no evidence of a recent increase in Republican affiliation.
Karl Rove on Fox News admits that McCain's ads aren't "100%" true

The McCain campaign is lying so much that Karl Rove says they've gone too far.

Via Steve Benen

Via Jed
A Blogger Makes the Big Time ! The New York Times.

four months ago, a Wasilla blogger, Sherry Whitstine, who chronicles the governor’s career with an astringent eye, answered her phone to hear an assistant to the governor on the line, she said.

“You should be ashamed!” Ivy Frye, the assistant, told her. “Stop blogging. Stop blogging right now!”

Ms. Palin walks the national stage as a small-town foe of “good old boy” politics and a champion of ethics reform.


Also awesome is the fact that the Governor, the blogger, the intimidating friend and the Crony agricultural commissioner all appear to be women. It's not "good old boy" politics it's "tough young woman" politics.

Damn big time tooo big time, I can't find Whitstine's blog -- google sends me to newspaper article after newspaper article quoting her and it doesn't appear when I search blogs for Whitstine (very odd).

Pulled back from comments

This seems to be her blog:


Thanks anonymous. How did you find it ?
Washington Post FactCheck Check

Looks like Michael Dobbs has sworn off ballance.

He awarded John McCain 4 Pinocchios for a flat out lie.

More to the point he has this to write about calls for ballance

Some readers have complained that I have been soft on the Democrats over the last week, while awarding a string of Pinocchios to the McCain campaign. I would like to think that this simply reflects the current state of the campaign: the McCainites have been on the offensive over the last week, tearing into Obama with a series of questionable TV ads. If you think it reflects bias on my part, there is a simple remedy: send in specific examples of Pinocchio-esque statements by Obama and the Dems, and I will check them out.

heh indeed.

Saturday, September 13, 2008

McCain Campaign vs Nixon Campaign

I think a comparison of the McCain campaign's arguments and assertions with those of the Nixon campaigns might be informative. I don't remember the Nixon campaigns perfectly (I was young at the time) but I have no doubt that, compared to McCain, Nixon made substantive and honest arguments (in public).

Now Nixon said very different things in private, but we haven't heard McCain's private conversations have we ?
Worm Turning

The AP reports that John McCain says things that aren't true. Recall that the ap bureau chief Ron Fournier seriously considered working for the McCain campaign before returning to the AP.

On the web, I found two links to this article each noting that the AP had mildly noted that McCain said something that wasn't true. I thought there might be two such articles. The article is very brief and basically consists of noting that McCain said something which is totally false and that his campaign's ads have been refuted by fact checkers.

To me the key evidence that the AP is calling McCain for real is their version of his rebuttal (which must be edited ... well no this is McCain and he talks that way).

""They're not lies," McCain said."

That seems to me to be along the lines of someone else who ran much more substantive and honest campaigns and said "I am not a crook." If McCain can't manage anything better than the simple assertion, he is in some trouble. If the AP chose to edit his reply down to a simple assertion, he is in deep trouble.

Look I have this sick feeling that it's happening again just like many people do. I also assume that MSM journalists have the same feeling and don't like it. They know what happened in 2000 and 2004 (and 2003 and well again and again). They can't like it. I think that they can destroy McCain just by reporting the truth, and I think that many of them are very very angry with him.

update: here's another one from AP which makes it very clear that McCain says many things which just aren't true.

Here's yet another one from AP.

Charles Babbington doesn't quote anyone not associated with the McCain campaign who denies that they lie a lot. He reports only the bare claim that they don't from the campaign "McCain spokesman Tucker Bounds defended the campaign's statements. "We include factual backup in every one of our TV spots," he said Thursday." Finally he closes with a former McCain aid admitting that McCain is lying and saying he had to because otherwise he wouldn't win.

The ballance on Obama is far down in the article. It is very mild as Obama is very honest. There was the mistake about whether there are more African American men in prison or in college (probably an honest mistake) and the miss use of "worked his way" though college. Then, there is the absolutely feeble effort to claim that Obama took McCain's maybe a hundred line out of context which shows how it's done. The quoted words are "100 years," that is, no evidence is presented that Obama mischaracterized McCain's statement (because he didn't). Now the ballance is clearly required by the rules somehow, and the extreme brevity, positioning and, well, liberal bias of the facts, makes it harmless this time.

I think a decision has been made at AP to not sacrifice their credibility for John McCain.

Friday, September 12, 2008

Mister Kurtz Sees Red.

Howard Kurtz writes that the McCain campaign has angered many journalists by lying a lot "News outlets are increasingly challenging false or questionable claims by the McCain campaign,." He even makes a strong claim in his own voice "The lipstick imbroglio is evidence that the Drudge/Fox/New York Post axis can drive just about any story into mainstream land. Does anyone seriously believe that Barack Obama was calling Sarah Palin a pig?"

If McCain has lost Kutz he's lost his base. This is extreme.

As usual I guess (I can't usually stand to read Kurtz) he mostly makes his case while hiding his voice by quoting others. This time, Joe Klein, Josh Marshall, Kevin Drum and John Hinderaker get quoted a lot. I assume readers of this blog have already read Marshall and Drum directly and Klein quoted by others so let's listen to Hinderaker

""I have mixed feelings about it. Watching the video, I think it's plausible for Obama to say that he wasn't talking about Governor Palin. On the other hand ..."

OK look when John Hinderaker admits to mixed feelings about an argument made by a Republican, we can conclude that the Republican has gone too far.

The MSM can't deny that they understand what is going on. McCain has utter contempt for them and assumes that he can lie just as much as he likes without the voters noticing either because journalists won't call him on it or because voters don't care about journalists. If he succeeds he proves that the political press is completely irrelevant. I'm pretty sure that they will try to convince the public that the McCain campaign has been a disgraceful mass of lies. I wonder if they will succeed or are totally irrelevant.

update: Silly me. Of course they might just play along. Did mistah Kurtz's employer just roll over ?

2nd update: Here is the article which temporarily vanished. There is an explanation of the delay, Gosinski, the source, temporarily chickened out (although I still don't see how a source can take statements off the record). The article as printed is no blockbuster -- Cindy McCain abused drugs long ago, but the article doesn't even claim that John McCain abused his office to interfere with the investigation. I'd say nothing to see there. My tinfoil hat says that the Washington Post had something explosive and decided to suppress it, but I don't listen to my tinfoil hat.

Thursday, September 11, 2008

Ballance At The Washington Post now after the jump.

Jonathan fbd Weisman wrote a very good page A1 article on the McCain campaign's shameless lying, then he wrote a very bad ballancing section after the jump. I think this is great progress. To put the crap on the Walter Pincus pages and the facts on page A1 is an innovation I much appreciate.

However, a lipsticked pig after the jump is still a pig.

Weisman struggles to find Obama campaign lies, because the conclusions must be ballanced even if the facts are biased against McCain.

He shows false claims not made by the McCain campaign, but they are false claims made by Jonathan Weisman.

First he notes false claims made on the internet. This is irrelevant to an article on dishonesty by presidential campaigns. There is a hint that there is some parallel between the McCain campaign's lies and false statements made by people you've never heard of which somehow must reflect on the Obama campaign, because Weisman just can't admit that they are honest.

Then he writes "Obama and the Democratic National Committee asserted for months that McCain wanted to keep U.S. troops fighting in Iraq for 100 years, when, in fact, the context of McCain's 100-year statement was a comparison to U.S. bases in Japan and Germany. McCain explicitly said the troops would be there only if the country was at peace and there were no casualties associated with their presence. " The key word that makes the claim by Obama and the Democratic Committe false is "fighting". Weisman argues that McCain wanted to keep them there but not if they were fighting. Weisman does not present a quote of Obama, an Obama approved ad, an Obama surrogate or anyone associated with the DNC which shows that they lied by adding the word "fighting" when it was not spoken by John McCain. If he can find dozens of such quotes over a period of months, then he is not guilty of exactly the dishonesty of which he accuses Obama. I don't know everything written and said by the Obama campaing and the DNC, but I have no recollection of their slipping the word fighting in -- nor do I see why they would have. It would have been not only dishonest but totally stupid. If Weisman has the quotes (not just one but many over months) then I wonder why he didn't put at least one in his article. If he doesn't, then he is being dishonest and stupid.

Then Weisman writes "A McCain quote Obama has often used -- that the economy is fundamentally sound -- is months old. Since he said that, McCain has said almost daily that the economy is struggling." Matthew Yglesias writes "Here’s John McCain on August 20 talking to Laura Ingraham: “I still believe the fundamentals of our economy are strong.”"
So Obama's claim is not based solely on an out of date quote and Weisman can be right only if McCain is constantly contradicting himself (which I admit is very possible).

And finally, the clincher "As for exaggerations, Obama said yesterday that he had supported a measure in the Illinois Senate to double the number of charter schools in Chicago. In fact, he was one of 14 state senators co-sponsoring a non-controversial measure that passed unanimously. " that is Obama said he had supported a measure which he had supported.

I think that Weisman is not only addicted to ballance but also not as careful and hard working as he should be, so I don't consider his article to constitute absolute proof of Obama's absolute spotless imacculate 100% perfect honesty. However, I don't think a argument in favor of that proposition could possible give it as much support as Weisman's feeble efforts to construct an argument against did.

Wednesday, September 10, 2008

Public and Private health care spending and infant mortality

Based on work by Tilman Tacke and Robert Waldmann

We don't know if someone else has noticed this amazing fact: in a cross country regression, the ratio of public health care spending to GDP is negatively correlated with the infant mortality rate as one would expect, but the share of private health care spending in GDP is positively correlated. In a simple regression with including only log per capita GDP (corrected for PPP) as an additional explanatory variable, both coefficients have large t-statistics.

The positive coefficient on private health care spending becomes insignificant when other variables are included, but it does not become negative. The result is not due to the USA which is an extreme outlier in private health care spending over GDP.

The result is not simply due to a correlation between high public spending and low income inequality as it holds when log per capita GDP is replaced by log per capita income of each of the lower 4 quintiles (this is our original regression hence the low number of countries in the sample).

Update: I hope this version of the table is legible


update: an illegible version of the table above was deleted.

OK two plots

Infant mortality and Public health care spending


the one above is of residuals of ln infant mortality on ln pc GDP, the year and private health care spending as a percent of GDP on residuals of public health care spending as a percent of GDP on those variables

The other (below) is of residuals of ln infant mortality on ln pc GDP, the year and public health care spending as a percent of GDP on residuals of private health care spending as a percent of GDP on those variables

infant mortality and Private health care spending

lnim private health care spending AV plot

Note two countries with high leverage due to very high private health care spending compared to what one would expect given the other variables. The most extreme is the USA which also has higher infant mortality than one would guess given per capita GDP, the year and public health care spending. The second most extreme is Uruguay which has the infant mortality one would expect given the other variables.

If I drop them the coefficient on private health care spending as a fraction of GDP goes up (you can see that it would in the scatter) to 0.150 from 0.134. The t-stat *increases* from 3.12 to 3.16 which is not what I expected.

dumping just the USA (which I have done ten times by now) gives a coeff of 0.117 and a t-state of 2.85.

The country with the highest infant mortality residual is South Africa. Adding HIV prevalence to the regression is one of the things that reduced the size of the strange coefficient on private health care spending. Dropping the USA and South Africa gives a coefficient of 0.0916 with a t-stat of 2.16, that is the USA and South Africa together provide a substantial part of the apparent evidence that private health care spending is bad for health (which I repeat I think is due to omitted variables bias but I also think that there is robust evidence that public health care spending is more effective in reducing infant mortality than is private health care spending).

After the jump I will report regressions done partly in response to comments. Right now I will not even try to make them easily readable (sorry) but just cut and paste STATA output with minimal explanation of variable names. Sorry. Click at your own risk

In response to comments partly.

First comment "why only 71 countries". The answer is that we were looking at income distribution and infant mortality so we only used countries where we had estimates of quintile shares of income (q1 is share of first quintile, q2 second etc). Without consulting Tilman, I decided to replace the log per capita real income (corrected for ppp) of different quintiles with log per capita real GDP (corrected for PPP) to make a simpler table and to focus on health care expenditures. This causes the strange positive t-stat on private spending to become alarmingly large, that is, part of the positive coefficient is due to correlation of private health care spending and inequality. In my original post, I wrote that the coefficient was very non robust. This is partly because I only really think about regressions which control for inequality. Ignoring inequality (which is crazy) it is robust to many other variables with the exception of continent dummies and a combination of infant mortality related variables (each one doesn't do it see comment thread for details).

Our original regression

reg lnim lnq1 lnq2 lnq3 lnq5 hexprivate hexpublic year

Source | SS df MS Number of obs = 71
-------------+------------------------------ F( 7, 63) = 53.05
Model | 55.8407871 7 7.9772553 Prob > F = 0.0000
Residual | 9.47313907 63 .150367287 R-squared = 0.8550
-------------+------------------------------ Adj R-squared = 0.8388
Total | 65.3139262 70 .933056088 Root MSE = .38777

lnim | Coef. Std. Err. t P>|t| [95% Conf. Interval]
lnq1 | .1210792 .4716871 0.26 0.798 -.8215122 1.063671
lnq2 | -.0061793 .8658731 -0.01 0.994 -1.736488 1.72413
lnq3 | -.9650523 .5634675 -1.71 0.092 -2.091052 .1609477
lnq5 | .1299795 .2405159 0.54 0.591 -.3506532 .6106123
hexprivate | .0776184 .0389142 1.99 0.050 -.0001453 .1553822
hexpublic | -.1030077 .0416674 -2.47 0.016 -.1862733 -.019742
year | -.01175 .0529402 -0.22 0.825 -.1175424 .0940425
_cons | 31.50754 105.8999 0.30 0.767 -180.1165 243.1316

lnq1 is the log of the real pc income of households in the lowest quintile. Hex stands for health care expenditures as a percent of GDP.

Now to me, the interesting question is "Is private health care spending less effective than public health care spending" and certainly not " is it actually harmful as suggested by this silly regression".

To answer the interesting question we (OK Tilman) ran regressions including total health care spending and just private health care spending. the coefficient on private spending should measure the difference in effectiveness private minus public.

reg lnim lnq1 lnq2 lnq3 lnq5 hextot hexprivate year

Source | SS df MS Number of obs = 71
-------------+------------------------------ F( 7, 63) = 53.05
Model | 55.8407871 7 7.9772553 Prob > F = 0.0000
Residual | 9.47313909 63 .150367287 R-squared = 0.8550
-------------+------------------------------ Adj R-squared = 0.8388
Total | 65.3139262 70 .933056088 Root MSE = .38777

lnim | Coef. Std. Err. t P>|t| [95% Conf. Interval]
lnq1 | .1210792 .4716871 0.26 0.798 -.8215122 1.063671
lnq2 | -.0061793 .8658731 -0.01 0.994 -1.736489 1.72413
lnq3 | -.9650522 .5634675 -1.71 0.092 -2.091052 .1609477
lnq5 | .1299795 .2405159 0.54 0.591 -.3506532 .6106122
hextot | -.1030077 .0416674 -2.47 0.016 -.1862733 -.019742
hexprivate | .1806261 .0545836 3.31 0.002 .0715495 .2897027
year | -.01175 .0529402 -0.22 0.825 -.1175424 .0940425
_cons | 31.50754 105.8999 0.30 0.767 -180.1165 243.1316


the t-state on private health care expenditures is huge 3.31 (I know it is hard to see in the table).

This stands up to inclusion of a huge number of variables including dummies for regions

tab region2

region2 | Freq. Percent Cum.
East Asia & Pacific | 5 6.85 6.85
Europe & Central Asia | 31 42.47 49.32
Latin America & Caribbean | 19 26.03 75.34
Middle East & North Africa | 3 4.11 79.45
North America | 1 1.37 80.82
South Asia | 4 5.48 86.30
Sub-Saharan Africa | 10 13.70 100.00
Total | 73 100.00
reg lnim lnq1 lnq2 lnq3 lnq4 hextot hexprivate year femlit reg2* hiv doctors saniurban
> sanirural waterurban waterrural fobesity femalesmoking

Source | SS df MS Number of obs = 65
-------------+------------------------------ F( 22, 42) = 17.65
Model | 50.353018 22 2.28877354 Prob > F = 0.0000
Residual | 5.44750771 42 .129702565 R-squared = 0.9024
-------------+------------------------------ Adj R-squared = 0.8512
Total | 55.8005257 64 .871883214 Root MSE = .36014

lnim | Coef. Std. Err. t P>|t| [95% Conf. Interval]
lnq1 | .0883713 .6329048 0.14 0.890 -1.188882 1.365625
lnq2 | -.0743277 1.134967 -0.07 0.948 -2.364785 2.216129
lnq3 | -.8936729 2.256105 -0.40 0.694 -5.446678 3.659332
lnq4 | .413619 1.592167 0.26 0.796 -2.799505 3.626743
hextot | -.1096067 .0445435 -2.46 0.018 -.1994991 -.0197143
hexprivate | .1511602 .0677885 2.23 0.031 .0143575 .2879629
year | -.0110253 .0642753 -0.17 0.865 -.1407381 .1186874
femlit | -.0010556 .0059176 -0.18 0.859 -.0129977 .0108866
reg21 | -.1253023 .4024909 -0.31 0.757 -.9375617 .6869572
reg22 | .289227 .4351484 0.66 0.510 -.5889381 1.167392
reg23 | .1065467 .3954925 0.27 0.789 -.6915895 .9046829
reg24 | .1840681 .4318435 0.43 0.672 -.6874274 1.055564
reg25 | .4121691 .6886778 0.60 0.553 -.977639 1.801977
reg26 | .0590227 .3634298 0.16 0.872 -.6744084 .7924538
reg27 | (dropped)
hiv | .0433275 .0307031 1.41 0.166 -.0186339 .1052888
doctors | -.0190481 .0762125 -0.25 0.804 -.1728513 .134755
saniurban | -.0039519 .0064778 -0.61 0.545 -.0170245 .0091208
sanirural | -.0092739 .0041118 -2.26 0.029 -.0175719 -.0009759
waterurban | -.0176387 .0130958 -1.35 0.185 -.0440672 .0087897
waterrural | .0052071 .0046397 1.12 0.268 -.0041561 .0145703
fobesity | .0013884 .0072406 0.19 0.849 -.0132237 .0160005
femalesmok~g | -.0019532 .0079665 -0.25 0.808 -.0180303 .0141239
_cons | 30.54749 128.6271 0.24 0.813 -229.0326 290.1275

The result is not not not due to the USA the variable reg25 is a dummy variable for the USA, since the USA is the only North American country in the sample. Dropping the USA from the regression has no effect on the results except that no coefficient on reg25 can be estimated (really zero effect I checked because I wasn't thinking).

I would say that the evidence that private health care spending has a lesser effect on infant mortality than public health care spending is quite robust. There is no way to reliably determine the direction of causation or rule out omitted variables bias, but the robustness to inclusion of other variables convinces me that neither is the full explanation. This is relevant to reverse causation too if the newly included variable is the original cause of bad health which then causes high private health care spending. There is evidence in the data set that high HIV incidence causes high private health care spending. Including HIV incidence (the variable called hiv) does not zap the t-stat, so that's not the whole story.