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Yglesias

Devaluation vs Deflation

By Matthew Yglesias on Dec 21, 2010 at 6:28 pm

Paul Krugman has more on the madness of citing the Baltic economies as a model to be emulated for what to do when crisis hits:

The Baltics have done much worse than Iceland. And the employment numbers are just part of it. Iceland, as even the IMF says, has been able to “preserve the Nordic social model”; there has been a lot of distress, but not much extreme hardship. Meanwhile, the impact on Baltic society has been devastating.

Now it’s true that the Baltic countries have been able to maintain their fixed exchange rates. And this is crucial because ….?

One way to think about this is that when your country is hit by a shock, having your currency decline in value is a nicely automatic way of ensuring that the negative impact is spread evenly. The value of the money in your wallet declines. The value of your salary declines. The value of a pensioner’s pension declines. And the negative impact on salaries is the same whether you’re in the public sector or the private sector, a union or not, whatever. Iceland takes a hit, and so everyone takes a hit. Then if the result of the hit is that your compensation is way lower than your productivity, you find yourself in a position to negotiate for nominal wage increases.

If you can’t devalue, each and every step in the adjustment process needs to be the result of some deliberate choice. Parliaments need to vote for pension cuts. Firms try to renegotiate contracts. You get debates about the “fair price” for public sector workers that has little to do with an economically rational discussion of productivity. Incumbents try to press for “last hired, first fired” layoffs as an alternative to salary cuts. The adjustment proceeds very unevenly and very inefficiently. This means that in addition to the big initial bad blow, you end up suffering a series of secondary and tertiary blows resulting from misalignments .

Politics

Fox News’ Shep Smith Shames Coburn For Blocking 9/11 Bill: ‘This Is The Senator’ Blocking ‘Necessary Funding’

By Alex Seitz-Wald on Dec 21, 2010 at 5:21 pm

It appears even loyal Fox News has turned on Senate Republicans for their obstruction of the 9/11 first responders bill. Fox & Friends demanded the bill be passed; conservative guests have criticized Republicans’ opposition; and yesterday, host Shep Smith called out a dozen GOP senators by name who had refused to appear on his program to discuss the bill. Today, Smith zeroed in on Sen. Tom Coburn (R-OK), who has said he will block the bill, even if it means 9/11 responders have to wait until next year for benefits. In an act of public shaming, Smith displayed a photo of Coburn as if it were a wanted poster, urging his viewers to get a good look at “the man who is vowing to slow this down or block it, so the necessary funding for the illnesses of the first responders…doesn’t make it through”:

SMITH: Again, this is the picture of Senator Tom Coburn, Republican of Oklahoma. He is the man who is vowing to slow this down or block it, so the necessary funding for the illnesses of the first responders who made it to Ground Zero to try to save lives on the day that America changed — remember? This is the senator who is vowing to block it. So that it doesn’t make it through. Senator Tom Coburn, Republican of Oklahoma, the man who vows today to block or delay the 9/11 first responders bill despite the fact that Senator Kirsten Gillibrand of New York and Senator Chuck Schumer of New York say they have the votes to get it done.

Watch it:

Climate Progress

EIA Projects Climate Catastrophe

By Brad Johnson on Dec 21, 2010 at 5:12 pm

The U.S. Energy Information Administration has projected that the United States will lead the world into catastrophic global warming over the next twenty five years. In its 2011 Annual Energy Outlook, the EIA predicts that energy-related CO2 emissions will “grow by 16 percent from 2009 to 2035,” reaching 6.3 billion metric tons of carbon dioxide equivalent (or 1.7 GtC):

The fuel mix the EIA projects remains predominantly coal and oil, with a moderate rise in renewable energy, whose pollution benefits are offset by growth in energy demand:

This pathway would almost certainly commit the world to catastrophic climate change, including rapid sea level rise, extreme famine, desertification, and ecological collapse on land and sea. Right now, the United States, with less than five percent of global population, produces 20 percent of global warming pollution. Center for American Progress senior fellow Joe Romm published in Nature in 2008 that humanity “must aim at achieving average annual carbon dioxide emissions of less than 5 GtC [5 billion metric tons of carbon, or 18 billion metric tons of carbon dioxide] this century or risk the catastrophe of reaching atmospheric concentrations of 1,000 p.p.m.” To do so, he said, humanity needs to adopt a “national and global strategy to stop building new traditional coal-fired plants while starting to deploy existing and near-term low-carbon technologies as fast as is humanly possible.”

Since 2008, the science has grown more dire. The impact of existing global warming on oceans, extreme weather, agriculture, polar ice, and ecosystems is at or exceeding the highest range of past projections. Dr. Romm’s suggestions were based on the assumption that stabilizing greenhouse gas concentrations at 450 parts per million would likely limit warming to 2°C above pre-industrial temperatures. However, as climate scientists Kevin Anderson and Alice Bows write in Philosophical Transactions of the Royal Society, “the impacts associated with 2°C have been revised upwards, sufficiently so that 2°C now more appropriately represents the threshold between ‘dangerous’ and ‘extremely dangerous’ climate change”:

There is now little to no chance of maintaining the rise in global mean surface temperature at below 2°C, despite repeated high-level statements to the contrary. Moreover, the impacts associated with 2°C have been revised upwards, sufficiently so that 2°C now more appropriately represents the threshold between dangerous and extremely dangerous climate change.

Over a year and a half ago, Dr. Michael Mann concurred in Proceedings of the National Academy of Sciences that the 450ppm target is “terribly risky“:

So regardless of one’s precise definition of dangerous anthropogenic interference, stabilizing greenhouse gas concentrations much above 450 ppm CO2eq would be a terribly risky prospect.

Friends of the Earth UK’s latest report, “Reckless Gamblers,” reflects the science in its recommendations for immediate and significant cuts in climate pollution, while admitting that there are significant global-scale risks that come even with that effort. If future pollution is distributed on a per-capita basis, then net United States emissions would need to go to zero by 2030 (a similar effort by top climate institutes finds the US pathway goes to zero by 2020). Comparing the EIA pathway for energy-related CO2 emissions — which represent about 83 percent of total US greenhouse pollution — to the range of merely dangerous emissions pathways:

Unfortunately, the economics that policymakers rely upon is grossly outdated. Even as climate scientists have stopped considering 450 ppm stabilization safe, economists still question whether there would be any significant climate damage in a 550 ppm world (or even a 1000 ppm world). Economist Simon Dietz recently found that the risk of continent-scale economic disaster in a 550 ppm scenario is only six percent — and that’s dramatically higher than previous economic work. Based on his unreasonably sunny scenarios, he estimates that the “social cost of carbon” — essentially how current pollution should be taxed — is around $300/tCO2. And that’s dramatically higher than the official U.S. government estimates.

Suffice it to say our prospects for avoiding catastrophic loss caused by our damaged atmosphere are not improved by a political system in thrall to fossil fuel polluters. Hope for a sustainable future lies in our nation’s ability to overcome the fear of changing our disastrous status quo and conquer the great challenges ahead.

Culture

With $8 Million on the Line, People Should Be Paid For The Services They Perform

By Matthew Yglesias on Dec 21, 2010 at 4:29 pm

Nice report on the brass tacks implications of a missed field goal for Boise State:

“Eight million dollars would have come to the WAC if he makes the kick,” Benson said. “That’s the reality of it.”

The Rose Bowl, like other Bowl Championship Series games, touts a per-team payout of $17 million. For teams like Boise State and others in one of the five conferences without an automatic bid, the payout is $12 million, Benson said. Boise State figured to gain $3 million, the other WAC teams would have split $5 million, and the four other second-tier conferences would have split $4 million.

Instead, Texas Christian of the Mountain West Conference is going to the Rose Bowl. Boise State will get part of the $1 million payout in Las Vegas, and the WAC will get a fraction of T.C.U.’s reward.

And of course with all these millions of dollars on the line, the workforce expects to get paid. So the coaches do get paid. And the athletic directors get paid. And so do lots and lots of other people associated with the high stakes game of college football. So why aren’t the players paid? Well, because the schools have gotten together and formed a cartel that’s agreed that nobody should be paid. And if you want a shot at playing professional football, you need to play for the cartel first.

Alyssa

Warp and Weft

By Alyssa Rosenberg on Dec 21, 2010 at 4:27 pm

Perhaps I need film school training, or a finer sensitivity, but Terrence Malick’s The Tree of Life just looks horridly pretentious to me:

Life is a miraculous, transcendent thing, for sure. And I assume that all of us, at some point, feel the world open up around us. But there’s something a little precious and sensitive about a movie that’s entirely about a perpetual sense of wonder. It doesn’t make anyone exceptionally special to feel that they’re tugged between their father and their mother’s tendencies. I’m sure there’s more to the world than this. But there also needs to more to the plot of the movie than the suggestion that we’re all bound up in the glorious mysteries of the universe for it to be narratively interesting, and more visually than screen-saver like images of majesty.

Politics

Obstruction-Obsessed McConnell To Democrats: If You ‘Think It’s Bad Now, Wait Till Next Year’

By Tanya Somanader on Dec 21, 2010 at 4:20 pm

The 111th Congress witnessed a record amount of Republican obstruction. Wielding an unprecedented number of filibusters, the GOP waged war against the Democratic agenda to defeat Obama, apparently viewing unemployed workers, judicial nominees, service members, and even 9/11 rescue workers as collateral damage. As Congress entered the lame-duck session, Senate Republicans threw ‘operation obstruction’ into overdrive. In a rare moment of honesty, Sen. Jim DeMint (R-SC) openly admitted that the GOP stalling tactics on publicly-supported legislation were nothing more than an attempt “to run out the clock.” And even as the lame duck lurches to a close, “angst-ridden” Democrats better gird their sanity for another round because, according to a chuckling Senate Minority Leader Mitch McConnell (R-KY), “if they think it’s bad now, wait till next year“:

“There’s much for them to be angst-ridden about,” McConnell said with a chuckle. “If they think it’s bad now, wait till next year.”

Emboldened by Democrats’ decision to scrap an omnibus funding bill and extend the Bush-era tax cuts for two years, McConnell is ready to deploy his larger Republican minority next year, insisting that Democratic leaders will need to bend to his party’s will — particularly on spending issues.

Indeed, McConnell is signaling that the White House should be prepared in the new Congress to support Republican policies — not the other way around.

“If the president is willing to do things that we believe in, I don’t think we’re going to say, ‘No, Mr. President, we’re not going to do this any longer because you’re now with us,’” McConnell told POLITICO in his ornate office across from the old Senate chamber. “Any time the president is willing to do what we think is in the best interest of the American people, we have something to talk about.”

McConnell readily admits that his number one goal in the Senate is to bring about the defeat of President Obama in 2012, no matter what the price. It’s “not a shocking revelation,” he said. “We’re going to do business if we can for the next two years, and then we’re going to go out there and butt heads and see if we can’t win in ’12.” And with 46 GOP troops on the ground in 2011, McConnell certainly has the numbers to execute his game plan.

Security

Senate Votes For Cloture On New START, Votes Are There For Ratification Tomorrow

By Max Bergmann on Dec 21, 2010 at 4:19 pm

The Senate just voted 67-28 for cloture on New START. This ends debate on the treaty and means a final vote is likely tomorrow. 11 Republicans voted for cloture and in a press conference after the vote, Senator John Kerry (D-MA) said three other senators Judd Gregg (R-NH), Evan Bayh (D-IN), and Ron Wyden (D-OR) are all for the treaty. Senator Kerry remarked, “In today’s Senate, 70 votes is yesterday’s 95.”

With the support of Senator Gregg that would mean 12 Republicans look set to vote for the treaty. This means more than a quarter of the Republican caucus broke with the Senate Republican leadership, Minority Leader Mitch McConnell (R-KY) and Minority Whip Jon Kyl (R-AZ), both of whom came out strongly against the treaty this past Sunday. The vote is a big blow to the leadership, especially to Senator Kyl, who was long seen as the Republican point man on the treaty. Kyl even held a desperate press conference today in one last attempt to whip his own party, prompting Josh Rogin to report:

Everyone here on Capitol Hill is beginning to see the ratification of New START as increasingly inevitable — everyone, that is, except for Sen. Jon Kyl.

Senator Lindsey Graham was so outraged that Republican Senators would side with Richard Lugar (R-IN), instead of Kyl, that in a press conference today, Graham actually apologized to Kyl on behalf of his Republican colleagues:

To Senator Kyl, I want to apologize to you for the way you’ve been treated by your colleagues.

Greg Sargent at the Washington Post rebuked Graham:

Senators who are voting to ratify New START because they believe it’s the right thing to do should feel apologetic to Kyl for defying his wishes, even though the evidence is overwhelming that Kyl’s objections have been thoroughly addressed? Yeah, right: It’s an absolute outrage that these Senators are prioritizing their own sense of what’s right for the country and the world, over the influence, standing and fragile ego of a single fellow Senator.

Economy

Bank Of America Lawsuits Highlight Broken, Ineffective Mortgage Modification Programs

By Pat Garofalo on Dec 21, 2010 at 3:30 pm

The Attorneys General of Nevada and Arizona last week slapped Bank of America with lawsuits alleging widespread fraud occurrs in the bank’s mortgage modification programs. BofA, the nation’s biggest bank, has consistently lagged behind the other big mortgage servicers in successfully modifying mortgages for troubled borrowers. Andrew Jakabovics and I also caught the bank violating the contract it signed with Treasury to participate in the Home Affordable Modification Program (HAMP) by siphoning borrowers into its own private modification program without determining their HAMP eligibility.

But these lawsuits allege an even bigger mess, with BofA accused of giving deceptive and inaccurate reasons for rejecting modifications, and stringing borrowers along in the modification process for months, allowing them to continue making futile mortgage payments before ultimately foreclosing on them:

As a result of Bank of America’s misrepresentations, many Arizona consumers stopped making mortgage payments in a perilous attempt to qualify for help. Others waited for months for — or never received — answers on their modification requests, all while fearing that they would lose their homes; many actually lost their homes. Some consumers were misled to continue making payments in the belief that they would be able to obtain modifications and keep their homes.

Had they known they would lose their homes despite making payments, some consumers might have sough short sales or other foreclosure alternatives or simply allowed their homes to be foreclosed, saving the money from the additional payments for other necessary expenses. Other consumers lose willing buyers who could have mitigated their own (and Bank of America’s) financial losses by stepping in to purchase their homes.

Nevada’s attorney general told a very similar tale, accusing BofA of “misleading consumers with false assurances that their homes would not be foreclosed while their requests for modifications were pending, but sending foreclosure notices, scheduling auction dates, and even selling consumers’ homes while they waited for decisions.” The Upshot describes the “Boschian hell” that one Arizona family went through before having its home sold out from under it while waiting to see if it qualified for a modification.

Unfortunately, this story is all too common for homeowners seeking modifications. As Shahien Nasiripour noted today, 29,000 borrowers participating in HAMP have been stuck in the “trial modification” phase of the program for a year or more, unsure of whether they will ultimately keep their home, when that phase is only supposed to last three months. If those families are foreclosed upon in the end, they will have wasted months and months of payments that could have been used for something else.

HAMP, at this point, badly needs to fixed, and other foreclosure prevention efforts need to be undertaken. If they aren’t, the sorts of horror stories outlined above won’t stop, and the economy will continue to be weighed down by preventable foreclosures.

Update

New Jersey Supreme Court Chief Justice Stuart Rabner has ordered six mortgage lenders, including Bank of America, “to file to the court by Jan. 19 documents proving their internal foreclosure application processes are up to standards, or the applications will be suspended.”

Politics

After Taking Big Sugar Money, Florida Ag. Commissioner Adam Putnam Seeks To Halt Soda Ban In Schools

By Scott Keyes on Dec 21, 2010 at 3:13 pm

Rep. Adam Putnam (R-FL) has yet to take office in his new role as Florida Agriculture Commissioner, but he’s already making his Big Sugar contributors smile.

Throughout 2010, the State Board of Education has considered banning sugary drinks from Florida schools, including soft drinks, high-sugar juices, and chocolate milk. According to the Orlando Sentinel, Board member John Padget “has been pressing his colleagues for a year to cut out most beverages besides water, pure juice and white, low-fat milk.” Justifying such a move, Padget writes in a Key West Citizen op-ed, is the fact that “over one-third of America’s children are either overweight or obese,” leaving them “often less ready to learn in the classroom.”

A few weeks before the issue was to be considered, the state’s newly-elected Agriculture Commissioner, Adam Putnam, wrote a letter demanding that the Board of Education halt such a move. Putnam criticized the Board for choosing “to focus only on the nutrition content in beverages served in Florida schools,” rather than taking a more holistic approach:

One such area that I look forward to tackling is ensuring that Florida’s students have better nutrition options to reduce obesity and related long-term health risks. This is a topic your Board has discussed recently for possible policy recommendations. However, instead of looking at the entire nutrition intake of students, you have chosen to focus only on the nutrition content in beverages served in Florida schools. It is my belief that any nutrition improvement plan needs to be certain that students are receiving the best possible nutrition package, in concert with total wellness initiatives, to allow them to reach their optimum achievement potential. [...]

First steps would be to take a comprehensive look at current school foodservice offerings, rather than making individual product recommendations that do not address the broader health picture. This comprehensive approach will need time to develop and I would appreciate your Board considering delaying any plans to address just a single component of the nutrition factors and instead allow time for a complete approach to building a healthier generation of Florida students.

As a result, “the Board of Education decided to put off any further discussion of the issue,” Deborah Higgins of the Board of Education’s communications department told ThinkProgress, “until the agriculture commissioner-elect Adam Putnam was sworn in.”

However, campaign finance records show that Putnam is less than an impartial figure in the matter. A ThinkProgress investigation has found that the incoming Agriculture Commissioner has been the benefactor of a significant amount of money from both the sugar and dairy lobby during the campaign – both of whom have a strong financial interest in keeping sugary drinks in schools. Despite Florida’s $500 contribution limit for both individuals and PACs, Putnam received at least $61,000 in campaign funds from sugar and dairy interests, including maxed-out contributions from Coca Cola’s lobbyist in Tallahassee Brian Ballard and a slew of maxed out contributions from the Sugar Barons of South Florida, the Fanjul family.

Following his victory on November 2, Putnam also made a wealthy sugar magnate one of his first appointments. Tracy Duda Chapman, Vice President and General Counsel for the corporate megafarm A. Duda & Sons, Inc., was appointed by Putnam as co-chair of his four-member transition team. Chapman is not just heavily invested in the sugar industry herself. She also serves on the leadership of the Florida Land Council trade association alongside the senior vice president of the US Sugar Corporation, Robert Coker, who also maxed out to Putnam.

There is little doubt that sugarmakers take comfort with Chapman sitting at Putnam’s right hand. Now that Putnam has moved to block a ban of sugary beverages in schools, that faith has been vindicated. In an instance of life imitating art, Florida sugarmakers are proving true the classic Simpsons quote, “In America, first you get the sugar, then you get the power.”

Padget, who has spearheaded this issue for over a year, remains cautiously optimistic. “I think we could have 4 votes for this issue,” Padget told ThinkProgress by phone, which would constitute a majority of the seven-member Board. “Still,” he said, “there is a lot of work to be done. I look forward to Commissioner-elect Putnam’s contributions to this effort.”

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