The Daily Parker

Politics, Weather, Photography, and the Dog

Will Bernanke actually answer questions?

With Federal Reserve Chairman Ben Bernanke becoming the first in his office ever to hold a press conference, I wonder whether he'll actually say anything. As I mentioned yesterday, and as Krugman has said for years, Very Serious People worry about inflation even though elementary economics shows there isn't anything to worry about.

Fortunately, other reporters are catching on:

One question more than any than other is crying out for an answer: Why has Mr. Bernanke decided to accept widespread unemployment for years on end, even though he believes he has the power to reduce it?

The Fed’s own forecasts suggest that the unemployment rate won’t fall below 5 percent for perhaps another five or six years. Mr. Bernanke believes the Fed “retains considerable power” to reduce unemployment faster, despite the fact that its benchmark interest rate is zero, as he’s said before. Yet he has been hesitant to use that power.

As he has explained many times, the Fed has alternatives. It could announce that it would keep its benchmark rate at zero for a few years, which would probably hold down long-term rates. It could say that it was comfortable with higher inflation for a limited period of time, given how low inflation has been since 2007 and how high unemployment is. Above all, Mr. Bernanke could make clear that he considers years of widespread unemployment to be unacceptable.

He has not done so, and he has yet to offer a satisfying rationale.

So, later today, will he explain?

My junior senator wants to keep you out of work

Senator Mark Kirk (R-IL) doesn't seem like a Tea Partier on the surface, but he's started to experiment with right-wing populism. Today his office sent out an email suggesting inflation will destroy us all climb in the near future and hurt Illinois businesses. He even shows a chart from the St. Louis Fed showing how the monetary base spiked during the 2009 recession. Only, the chart doesn't have anything to do with inflation except to show how (but not why) we didn't spiral into deflation during the crisis.

You have to remember three things about inflation: first, we haven't got any right now; second, inflation hurts lenders more than it hurts debtors in the long run; and third, deflation—the danger of which has not yet passed—is a lot worse.

Here's my note to the senator's office in response:

The Senator's office recently sent an email to constituents on the dangers of inflation. Only, the data show that core inflation remains below historical levels, and certainly below the Fed's target. If inflation were really a worry, we'd see the bond markets react, as they usually lead other indications of inflation. However, bond yields are at historically low levels.

What we need right now are jobs. Decreasing the money supply during a period of low inflation and high unemployment will not only hurt our already anemic job supply, but also possibly plunge us into *deflation,* which is far worse. Just ask Japan. Or look back at President Jackson's disastrous policy of paying off the national debt in full.

Senator, it's disingenuous of you to argue in favor of policies that hurt average people while claiming it's in their interest. The current policy of quantitative easing, far from hurting the economy, doesn't go far enough to help it. I'm in favor of weakinging the dollar even further, to help exports, boost jobs, and--here's the part your banker friends hate--reducing the real debt burden on families.

For more on how wrong Kirk is, see Krugman on austerity from a couple weeks ago.

Nonsense is here to stay

Apparently cluing into my accidental theme this week of things that scare people irrationally, Patrick Smith had a pair of child safety scissors confiscated, even though he's, you know, the one flying the plane. He worries things will never change:

When it came right down to it, the success of the Sept. 11 attacks had nothing—nothing—to do with box cutters. The hijackers could have used anything. They were not exploiting a weakness in luggage screening, but rather a weakness in our mind-set—our understanding and expectations of what a hijacking was and how it would unfold. The hijackers weren't relying on weapons, they were relying on the element of surprise.

All of that is different now. For several reasons, from passenger awareness to armored cockpit doors, the in-flight takeover scheme has long been off the table as a viable M.O. for an attack. It was off the table before the first of the twin towers had crumbled to the ground. Why don't we see this? Although a certain anxious fixation would have been excusable in the immediate aftermath of the 2001 attacks, here it is a decade later and we're still pawing through people's bags in a hunt for what are effectively harmless items.

How depressing is that, to be stuck with this nonsense permanently? Not only the obsession with sharps, but the liquids and gels confiscations, the shoe removals, etc.

These policies aren't just annoying, they're potentially self-destructive. Self-destructive because they draw our security resources away from more useful pursuits.

I remember when people weren't scared all the time. I'd like to go back to that era. I can only handle so much irrationality.

More scary things that aren't, really

The news shows were hyperventilating earlier this week about a "near miss" involving an Air Force plane carrying the First Lady and Jill Biden. Only, it wasn't a near miss. It wasn't even a loss of IFR separation (though the planes did come too close for strict wake-turbulence safety). The planes were never close enough to warrant even a stern talking-to by the FAA. No, instead, Obama's plane—a military version of a Boeing 737—came within 8 km of a landing C-17 transport, which is close enough that the air traffic controller at Andrews warned the 737's pilot of wake turbulence. I mean, it's one thing if a Cessna takes off behind a 747: that's dangerous. But a 737 landing behind a C-17 might suffer, at worst, a momentary bump.

Then, because the C-17 took its time getting off the runway, Obama's plane had to go around to prevent a loss of separation. (Ideally, you don't want to land when there's something on the runway ahead of you, particularly when that something is large enough to carry your house inside.) Ten-hour student pilots do go-arounds routinely; it's a standard procedure.

Phil Bertorelli, editor of AVWeb, does a facepalm:

I award first place to Lisa Stark, of ABC News, who consistently reports aviation stories, no matter how minor, in urgent, 72-point type. Her report on this incident, while not wildly inaccurate, lacks the balancing perspective a lay viewer could grasp if the story weren't so dumbed down. Her gatekeeping of facts proceeds from the notion that this was a dangerous situation when, in fact, is was just less than optimal. Too tight sequences get fixed every day.

As a journalist, I judge these stories on the reporter's apparent ability to listen, digest and understand technical issues related to aviation. There are exceptions, but most general assignment reporters don't do this very well for aviation stories, although not many mangle it to the extent that Lisa Stark does. She is in a league of her own.

This is just another instance of dispensing fear instead of information. Perhaps I'm cranky because Parker needed to go outside at 4:45 this morning, but this kind of story makes me crankier.

Everyone just chill

As the extreme right-wing lunatics in the U.S. continue to wring their hands over our debt—completely ignoring how we're the world's reserve currency—it's helpful to examine what happens when a country actually collapses:

The yield on Greece ten year bonds increased to 14.9% today and the two year yield is up to 23%. Sounds like a credit event might happen soon. If so, I wonder if it will be haircut or an extension of maturities?

Here are the ten year yields for Ireland up to a record 10.5%, Portugal up to a record 9.5%, and Spain at 5.5%.

The problem, of course, is that Spain, Portugal, and Greece have to accept Euro-zone financial policies, which are generally anti-inflationary. Of course, if the pesteta, escudo, and drachma still existed, none of these countries would have the problems they face today. They'd have instead rampant inflation, which sucks for creditors but isn't so bad for debtors. They would, as well, face specific and predictable other problems, but as none of those issues has attracted the attention of cable news, few people understand why these countries have any problems at all, or who's responsible for them.

Most relevantly to the U.S., however, is that despite the loony right beating the debt-ceiling drum, and despite all the idiocy about the U.S. budget deficit, our biggest asset right now is that we're the world's reserve currency.

Few people seem to have noticed that if we threaten to default on our debt, or if we fail to pay any of it back—even for a brief moment—we're done.

There was a time, years ago, when the left went all to pieces over ideology. And I expect the right believed that the left were going to ruin Western Civilization if people voted for McGovern. But the key difference between then and now that I see—though in fairness through my leftish proclivities, which probably count for something—is that the left tried to end wars and reduce suffering in their craziness. It seems pretty clear the current right-wingnuts trying to take over the House of Representatives are fine with wars and poverty.

I think we'll get through this extreme swing of the pendulum, and 50 years from now we'll bemoan the ridiculousness of the left.

The frightening counter-example is, of course, Rome, which drifted so far right over three centuries that the citizens invited the Visigoths in to help them get out of Roman oppression. So who should we Americans look to for a similar salvation? I mean, if we're not going to fix things ourselves, which is probably the best long-term solution.

Willfully stupid

Ezra Klein found Michele Bachmann's latest policy pronouncement frightening; I find it frighteningly ignorant:

In short, her plan is that we don’t raise the debt ceiling, but we use the revenue still coming in to pay off creditors first and whatever we think most important second. That way, we “don’t violate our credit rating” and “prioritize our spending.” Makes perfect sense.

At least, it makes perfect sense unless you, like me, had spent the previous few days talking to economists, investors and economic policymakers about what could happen if we start playing games with the debt ceiling. Their answers were across-the-board apocalyptic. If the U.S. government is so incapable of solving its political problems that it can’t come to an agreement on the debt ceiling, they said, that’s basically the end of the United States as the world’s reserve currency.

Klein concludes, "Her plan is the equivalent of setting off a bomb at the center of the U.S. economy."

Donald Trump's practical joke

Scott Adams likes to provoke people. On occasion, like today, he writes something that provokes other people. He makes a good case that Donald Trump's presidential campaign is a practical joke:

The magnificent part of this whole thing is that he's putting no effort whatsoever into concealing his prank. That's what I love about the guy. He knows that no level of clownery in a field of clowns will single him out as the one clown that doesn't really mean it.

He's a graduate of the Wharton School, which means his intelligence is in the genius range. He's a world-renowned businessman with attention to details. He's also famous for a trademark form of self-parody that has boosted his brand for decades. There isn't the slightest chance that this man hasn't looked at the birther evidence. He knows the President of the United States is American. That's the hiding in plain sight part of this prank. It isn't the least bit credible that Trump thinks the birther issue is real.

Some of you are thinking he's gone too far with the joke. Or maybe he went too far when he said we should take Iraq's oil by force as payment for a war they didn't ask for. This is not a man who thinks he might someday debate serious politicians in a public forum. This is a man who is winking at the camera and daring you to see the obvious.

Now, other than the silly assertion that he's smart because he went to the Wharton School (it's not Fuqua, after all), Adams hits a stand-up double with the post. I'm convinced.

Wink.

Unfortunate recommendations

Via Gulliver:

ONE of the obvious difficulties with lead times in the magazine industry is the way events can overtake stories. This is problem enough with a weekly publication such as The Economist, but the results can look even more bizarre in a monthly. Thus, in an article in its April issue titled "The 15 Best Places to See Right Now", Condé Nast Traveler tells readers to head to Libya.

"With Syria being called the new Morocco and Beirut the new (gasp!) Provincetown, travelers with an eye for antiquity are moving on to Libya."

Oops.

Forgotten anniversaries

On this day 150 years ago, the United States began its bloody civil war that left the South in ruins and 600,000 Americans dead. And on this day 50 years ago, Yuri Gagarin became the first human being to leave the planet and return safely.

But who, other than James Fallows, remembered that 10 years ago today, Microsoft strangled Clippy?

But what about Clippy? It's a big day for him too. Ten years ago, he was finally given the deep-six at Microsoft, or at least turned off by default as the first step to full elimination, so he would no longer automatically pop up with such helpful observations as, "It looks like you're writing a letter!" At Microsoft's Mix11 conference for web developers today in Las Vegas, Dean Hachamovitch, head of IE activities at Microsoft, announced the anniversary of Clippy's demise.