Release of "Mission to Moscow": >"Mission to Moscow" was made at the behest of F.D.R. in order to garner more support for the Soviet Union during WWII. It was from the book by Joseph E. Davies, former U.S. Ambassador To Russia. The movie covers the political machinations in Moscow just before the start of the war and presents Stalin's Russia in a very favorable light. So much so, that the movie was cited years later by the House Un-American Activities Commission and was largely responsible for the screenwriter, Howard Koch being Blacklisted. Continue reading

**Mark Thoma:** Economist's View: Inequality and Economic Growth: Paul Krugman and Tony Atkinson | **Dylan Matthews:** Senior poverty is much worse than you think | THE humble shipping container is a powerful antidote to economic pessimism and fears of slowing innovation. Although only a simple metal box, it has transformed global trade. In fact, new research suggests that the container has been more of a driver of globalisation than all trade agreements in the past 50 years taken together | * **Paul Krugman:** Jaime Caruana, general manager of the Bank for International Settlements, warning of the dangers of easy money and the need to raise rates now to avert … something or other. And his views matter, says the Wall Street Journal: "Mr. Caruana is no disgruntled outvoted hawk on a policy-setting council, trying desperately to set the record straight after being outvoted. Rather, he’s the mouthpiece for a global college of central bankers, almost all of whom find themselves under intense pressure from their national governments to keep things ticking over while they try to repair the economy...." What I do recall, however — which the Journal apparently doesn’t — is that the BIS has spent years warning about... Continue reading

Why oh why can't we have a better press corps? Charles Lane emulates Clive Crook and Michael Kinsley in not citing and not quoting from the people he is criticizing. But he goes further: he doesn't even try to read what they have just written. Daniel Kuehn delivers the smackdown: >Facts & other stubborn things: An email to Charles Lane of the Washington Post: Perhaps I'm missing something, but isn't your "compromise" option precisely Krugman's position? I think it's the right idea, but I think that's exactly where Keynesians are. The tough part is figuring out how to get the pro-austerity crowd to that point. >Keynes actually advocated separating the current budget from the capital budget, and it was the current budget that was supposed to be balanced, not necessarily the two together. Most economists agree that you can run perpetual budgets and still maintain a stable debt ratio as long as the deficits aren't too large. >Daniel Kuehn Doctoral student, Department of Economics American University Charles Lane: >Austerity and Keynes can coexist: For those of us trying to sort out the debate over economic “austerity,” there’s a limit to what can be learned by inspecting the credentials of the... Continue reading

Bank of England CCBS Wifi Code: The scary thing is that Noah Smith has it memorized… Continue reading

Why oh why can't we have a better press corps? Daniel W. Drezner: >The worst piece of conventional wisdom you will read this year: Stagflation in the 1970s was caused primarily by an inward shift of the aggregate supply curve due to a surge in commodity prices, particularly energy. Some central banks responded with accommodating monetary policies that accelerated inflation even further. Fiscal policy was an innocent bystander to this whole shebang. So I honestly don't know what the hell Kinsley is talking about. More importantly, the current macroeconomic climate is really, really different from the 1970s. Inflation was a Big Bad Problem during that decade. It is not a problem right now. If inflation were spiking, then a genuine debate could be had on macroeconomic policy options. But that's not the case. >In his final paragraphs, Kinsley has managed to epitomize the exact critique that Krugman has served up. The irony of this whole thing is that the Congressional Budget Office's recent figures put the lie to Kinsey's hidden assumption that the federal budget deficit is getting bigger and bigger. Right now it's shrinking at the fastest rate in postwar economic history. The CBO also warns that the deficit... Continue reading

Why oh why can't we have better foundations? Tim Noah: >Gore, Sullivan, and "Fifth Column": Andrew Sullivan wants to know why it was OK for Al Gore (in an interview with the New York Observer) to describe Fox News, Rush Limbaugh, and the Washington Times as a "fifth column," but not OK for Sullivan to use that same epithet to describe the tiny band of leftists who, after Sept. 11, opposed the war against al-Qaida. As one who criticized Sullivan for slinging the term "fifth column," Chatterbox will gladly explain: It's the context, stupid. >"Fifth columnist" means "traitor." (For a fuller definition, click here.) When Sullivan (in an essay that appeared in the Sept. 16, 2001 SundayTimes of London) used the term "fifth column," he used it in the context of imminent war: >>The middle part of the country—the great red zone that voted for Bush—is clearly ready for war. The decadent Left in its enclaves on the coasts is not dead—and may well mount what amounts to a fifth column. >Reading this as the United States prepared to invade Afghanistan, it was impossible to avoid the literal reading that Sullivan believed anti-war dissenters were morally indistinguishable from traitors. (Sullivan... Continue reading

If I have the right numbers in my head (which I may not), Apple currently makes $40 billion a year in profits, has $150 billion in free cash, and has a market value of $500 billion. That's a (price-cash)/earnings ratio of 7.75. In what way is that divorced from fundamentals? Sounds like the market thinks that Apple has a very good franchise with a half-life of seven years, which seems about right to me. But if you told me the franchise was twelve years, I would not be surprised. And if you told me Apple was going to pull a Microsoft or a GM and burn all of its cash and its future earnings in a vain attempt to preserve a franchise beyond its natural life, I would not be surprised either. Apple's fundamentals are uncertain, but it does not seem to me that its market price is or was disconnected from them… Muhammed El-Erian writes: >We should listen to what gold is really telling us: Like Apple, valuation has become divorced from fundamentals…. >The consensus gold narrative is a familiar one… investors rushed into gold as a means to hedge against identifiable risks (inflation), as well as to counter... Continue reading

Axis Smashed in North Africa: Continue reading

Martha L. Olney and Aaron Pacitti: >More services means longer recoveries: The four longest recoveries in recent history, as measured by the number of months it took until the economy recovered all of the jobs lost during the recession, also have been the four most recent recoveries—those that followed the recessions of 1981, 1990, 2001, and 2007…. The shift from being a goods-producing, manufacturing-based economy to a service economy… is causing the pace of economic recoveries to slow…. Because services can’t be inventoried nor, for the most part, exported, services are only produced when domestic demand exists. >Goods-producing businesses… can produce in anticipation of increasing demand or in response to increased external demand. Either way, domestic demand need not increase before goods production increases. Service producers are not so lucky. A restaurant won’t produce a meal before you are in the booth. And your dentist can’t produce and inventory a teeth cleaning. You have to be in the dentist’s chair. So service producers must wait…. The greater the share of services in the economy, the greater the share of businesses that must wait for domestic demand to actually pick up… Continue reading

Ezra Klein: >Is the future of American health care in Oregon?: Two weeks ago, the group reported… that Medicaid coverage increased the amount of health care people used, offered almost total protection against catastrophic health expenses and reduced depression by 30 percent, but it didn’t show a statistically significant effect on blood pressure, cholesterol or blood sugar…. The sample of sick people was too small to show statistically significant improvements in those measures…. It’s a critique that Katherine Baicker, a Harvard health economist who was one of the principle authors of the study, partially accepts: >>Our power to detect changes in health was limited by the relatively small numbers of patients with these conditions. Indeed, the only condition in which we detected improvements was depression, which was by far the most prevalent of the four conditions examined. >She also noted that the diabetes results were consistent with the improvements one would expect from the clinical literature but the number of people with diabetes was too small to establish significance. However, she said the sample size was large enough to rule out large improvements in blood pressure and cholesterol, at least over the first two years. >All this might make for... Continue reading

**Brink Lindsey:** Jason Richwine's IQ-based argument that American Hispanics are less intelligent than native-born whites has been called racist. It's also wrong | **Jon Bakija et al.:** Jobs and Income Growth of Top Earners and the Causes of Changing Income Inequality: Evidence from U.S. Tax Return Data | The World Top Incomes Database | Unconventional Monetary Policies | [Summary of Informal Discussion](http://www.imf.org/external/np/pp/eng/2013/042913.pdf) | **Robert Litan:** Good Capitalism, Bad Capitalism, and the Economics of Growth and Prosperity | **Jagdish Bhagwati and Arvind Panagariya:** Why Growth Matters: How Economic Growth In India Reduced Poverty and The Lessons For Other Developing Countries | **Timothy Jost:** Implementing Health Reform: Defining ‘Minimum Value’ For Employer Coverage | * **Henry S. Farber** and **Robert G. Valletta:** Do Extended Unemployment Benefits Lengthen Unemployment Spells? Evidence from Recent Cycles in the U.S. Labor Market: "In response to the Great Recession, the availability of unemployment insurance (UI) benefits was extended to an unprecedented 99 weeks in many U.S. states in the 2009-2012 period. We use matched monthly data from the CPS to exploit variation in the timing and size of the UI benefit extensions across states to estimate the overall impact of these extensions on individual exit from unemployment,... Continue reading

Jeff Frankel: >On Whose Research is the Case for Austerity Mistakenly Based?: Several of my colleagues on the Harvard faculty have recently been casualties in the cross-fire between fiscal austerians and stimulators…. Carmen Reinhart and Ken Rogoff… the statistical relationship between debt and growth…. Niall Ferguson… “suggested that Keynes was perhaps indifferent to the long run because he had no children, and that he had no children because he was gay.” >But what does it all have to do with the debate between austerians and stimulators? Not much. But the battle lines of the austerians have been wavering lately under the continuing onslaught of facts (most notably the recessions in Europe and Japan’s recent conversion to stimulus), and the stimulators find the missteps of Reinhart-Rogoff and Ferguson to be convenient stones to…. Sorry: they are throwing the wrong stones. >The Reinhart-Rogoff controversy is not in fact relevant to the question whether governments should expand or contract at a given point in time. The basic finding in their papers continues to hold up… Ahem! There is nothing special about 90%. That is also true for 80%, and 70%, and 60%, and 100%. As I am going to say, again, today, for... Continue reading

CBI Roundup: >BAD NEWS FOR JAPS: Fighter pilots of the 14th Air Force have been erasing Jap planes out of the skies with regularity during the past three weeks. These pilots recently drove into a formation of bombers and Zeros and, though greatly outnumbered, knocked down 10 confirmed and eight probable enemy. Left to right seated on the fuselage: Maj. Edmund Goss, Lt. Col. John Alison, and Lt. Roger Pryos; standing on ground: Lt. Joe Griffen, Lt. Mack Mitchell, Capt. John Hampshire, and Capt. Hollis Blackstone. This was the last picture taken of Hampshire, who was later shot down after he had bagged 14 confirmed Jap planes to become the Theater's leading ace. Continue reading

**Paul Krugman:** Financial Repression | **Fernando Duarte** and **Carlo Rosa**: Are Stocks Cheap? A Review of the Evidence | **Gavin Kennedy:** Adam Smith's Lost Legacy: Keynes on Laissez-Faire | **Brad DeLong:** Notes on Carmen Reinhart and M. Belen Sbrancia: "The Liquidation of Government Debt" | **Alan M. Taylor:** Comment on “The Liquidation of Government Debt” | **Olivier Blanchard:** Rethinking Macroeconomic Policy | **Brad DeLong:** IS-LM Watch: Smart Words from Karl Smith | Karl Smith Has a Stiglitzian Credit-Rationing View of the Flow-of-Funds Through Financial Markets Department | Three Ways of Looking at a (Closed-Economy) IS Curve: Karl Smith Raises My intelligence Department | **Raghu Rajan:** Has Financial Development Made the World Riskier? | General Discussion | * **Jeff Weintraub:** Peggy Noonan goes Krugman (Hendrik Hertzberg): "Rather than waste time wondering what is going through [Peggy Noonan's] mind when she does this or how she gets away with it—is she really that clueless, or is she being cleverly hypocritical?—we should begin with the fact that she generally does get away with it and consider what Noonan's inversions of reality might tell us, symptomatically, about current political discourse…. That seems to be a hypothesis that Hendrik Hertzberg is toying with, at least,... Continue reading

The extremely smart Jonathan Adler delivers the smackdown: >For some reason [I just saw this now.](http://delong.typepad.com/sdj/2012/10/not-getting-the-memo-jonathan-adler-and-nathaniel-stewart-misunderstand-the-rehnquist-roberts-court.html) The Eldred point is interesting, but it’s missing important context. Lessig abandoned the Lopez-style argument against the CTEA. A conservative group had filed an amicus brief in the D.C. Circuit making a Lopez-influenced textual argument, Lessig failed to adopt it as an alternative argument, and the D.C. Circuit held that the argument was waived (a point on which the judge for whom I was clerking at the time – David Sentelle – dissented). As a consequence, the textualist argument against Eldred was never really in play in the Supreme Court. >As for your hippie-punching theory, that does more to explain the voting pattern of Justice Kennedy – who joined the majority In Raich, and tends to vote against criminal defendants in close drug cases – than Scalia or Thomas. See, e,g., Kyllo v. U.S. Continue reading

Ryan Avent watches Karl Smith remind Tyler Cowen that people respond to market prices, and piles on himself: >The euro crisis: Der Elefant im Raum: TYLER COWEN writes on the euro-zone economy: >>Would the new helicopter drop money be kept in periphery banks and lent out to stimulate business investment? Or does the new money flee say Portugal because Portuguese banks are not safe enough, Portuguese loans are not lucrative and safe enough, and Portuguese mattresses are too cumbersome? The former scenario implies that monetary policy should be potent. The latter scenario implies that the helicopter drop will be for naught and the fiscal policy multiplier also will be low, on the upside at the very least (fiscal cuts still might cause a lot of damage on the downside). I call this the liquidity leak, rather than the liquidity trap. >Karl Smith gives the correct response: >>What Tyler calls a liquidity leak, I call markets at work. The ECB provides enough stimulus to get all of the Eurozone going but it all leaks to Germany. Fine. The German market heats up. German wages and rents rise. Retired German doctors start considering the virtues of a flat in Lisbon overlooking the... Continue reading

Why oh why can't we have a better press corps? For at least half a generation, liberals--at least liberals that I know--have been hammering on the fact that the stepping-away from the commitment to universal free or nearly-free education has been a long-run disaster for America. With Claudia Goldin and Larry Katz's *The Race Between Education and Technology* serving as its analytical spearhead, the liberals I know spend lots of time talking about how the pace of technological progress requires a more-educated and thus more-skilled workforce, and about how the rise in college costs starting around 1970 stopped the normal American pattern by which each generation gets much more education in its tracks--with rising income inequality between the 80th and the 20th percentile being a big consequences: Solutions proposed vary from having your college costs be an income-contingent grant recaptured from those who earn much in life by a surcharge on your form 1040 to a mammoth federal commitment to universal access to broadband and to free provision of the highest-quality education online. Some liberals (e.g., Larry Mishel of EPI) go further, and say that rising 80/20 inequality is the result not just of our losing the race between education... Continue reading

Paul Krugman: >The Mythical 70s: It’s actually even worse than Matt [O'Brien] says. For the 1970s such people remember as a cautionary tale bears little resemblance to the 1970s that actually happened. In elite mythology, the origins of the crisis of the 70s, like the supposed origins of our current crisis, lay in excess: too much debt, too much coddling of those slovenly proles via a strong welfare state. The suffering of 1979-82 was necessary payback. None of that is remotely true. There was no deficit problem: government debt was low and stable or falling as a share of GDP during the 70s… a runaway welfare state more broadly just wasn’t an issue — hey, these days right-wingers complaining about a nation of takers tend to use the low-dependency 70s as a baseline. >What we did have was a wage-price spiral… exacerbated by big oil shocks… a case of self-fulfilling expectations, and the problem was to break the cycle. >So why did we need a terrible recession? Not to pay for our past sins, but simply as a way to cool the action…. Was there a better way? Ideally, we should have been able to get all the relevant parties... Continue reading

Kansas State University: April 30, Brad DeLong, University of California-Berkeley and Alan Reynolds, Cato Institute - Debate:"Proposed Solutions to the Fiscal Crisis in the United States": >Audio download: | Continue reading

Convoy SC 130: Wikipedia: >SC 130, comprising thirty-seven ships, departed Halifax Harbour on 11 May 1943; in the care of a Western Local Escort Force, led by RCN destroyer Niagara. Convoy Commodore was HC Forsyth in the freighter Sheaf Holme. They were met on 15 May by Mid-Ocean Escort Force Group B-7, led by Cdr. P Gretton in the D class leader Duncan and consisting of the V and W class destroyer Vidette, the River class frigate Tay, and Flower class corvettes Snowflake, Sunflower, Pink, Loosestrife and two armed trawlers. As B-7 was one vessel short for the voyage, the corvette Kitchener was seconded from the local group for the crossing. SC 130 also included two oilers for mid-ocean re-fueling and re-arming, and the convoy rescue ship Zamalek. >Ranged against them were 25 U-boats in three patrol lines, which had been organized by U-boat Command BdU on 15 May. This was in response to intelligence from B-Dienst which reported a westbound convoy (ONS 7) and two eastbound (HX 238 and SC 130) approaching the Air Gap. One group, Iller, of six newly arrived boats was just arriving, while two other groups, Donau I and Donau II, were formed from boats... Continue reading

**Doug Hall:** Ongoing employment disaster evident in too many states | **Dan Drezner** | **Raghu Rajan:** [Has Financial Development Made the World Riskier?](http://www.kansascityfed.org/publicat/sympos/2005/pdf/rajan2005.pdf) | **Carmen M. Reinhart** and **M. Belen Sbrancia*: [The Liquidation of Government Debt](http://www.imf.org/external/np/seminars/eng/2011/res2/pdf/crbs.pdf) * **Matthew Yglesias:** Michael Kinsley on austerity: Everyone is jumping on this Michael Kinsley…. Kinsley is mistaken about… the nature of our sins and the nature of the price that has to be paid. Think about Iceland… [which] pretend[ed] that they'd developed a super-innovative new model of hyper-profitable banking…. So the sector went bust and a huge blow was dealt to the economy. But rather than coping with the blow by implementing hard money and huge budget cuts, spurring mass unemployment and a years-long episode of penance, Iceland paid its penance through currency depreciation and repudiation of many foreign debts… [which] have made it much harder for Iceland's citizens to go on vacation in Spain or study abroad…. Icelanders need to smelt more aluminum and catch more fish… while consuming less…. Foreigners don't want to lend Iceland money…. Belts have to tighten. It's an all-around bad situation. But. Iceland's unemployment rate is below five percent. The country is paying for the sin of excess... Continue reading

Continue reading

Sturmbannfuehrer Gricksch for SS-Col. von Herff and Reichsfuehrer-SS Himmler: >The Auschwitz camp plays a special role in the resolution of the Jewish question. The most advance methods permit the execution of the Fuehrer-order in the shortest possible time and without arousing much attention. The so-called “resettlement action” runs the following course: >The Jews arrive in special trains (freight cars) toward evening and are driven on special tracks to areas of the camp specifically set aside for this purpose. >There the Jews are unloaded and examined for their fitness to work by a team of doctors, in the presence of the camp commandant and several SS officers. At this point anyone who can somehow be incorporated into the work program is put in a special camp. >The curably ill are sent straight to a medical camp and are restored to health through a special diet. The basic principle behind everything is: conserve all manpower for work. The previous type of “resettlement action” has been thoroughly rejected, since it is too costly to destroy precious work energy on a continual basis. >The unfit go to cellars in a large house which are entered from outside. They go down five or six steps... Continue reading

**Leon Trotsky:** Trotsky's Last Article (1940): Bonepartism, Fascism, and War | Bonapartism and Fascism (1934) | Leon Trotsky: The German Catastrophe (1933) | The Tragedy of the German Proletariat (1933) | * **James Galbraith** on Michael Kinsley: "Kinsley writes that all the ways of looking at the national debt 'lead to varying degrees of panic'. But obviously there is no panic where it matters, among those who lend money to Uncle Sam…. Nor is the present public debt close to being a record. In relation to our annual output it was much higher in 1946…. Did calamity follow? No. For a third of a century after the war, the debt-to-output ratio just gradually declined…. It's true that we have got big economic problems right now. But the budget deficit and the public debt aren't among them…. As for [Kinsley's] notion that a "typical" American surviving spouse leaves a cool half-million behind, only someone too lazy to distinguish a mean from a median could believe that. In 2004 according to the Federal Reserve mean family net worth for households with a head aged 65-74 was $690,900--I couldn't find where Kinsley got his $1 million--and the median value was only $190,100. This... Continue reading