The Obama Administration determination to avoid describing their new economic stimulus as a "stimulus" has been comical. And logical. Most economists believe the stimulus created and saved millions of jobs, enough to help keep the country out of a true depression. But the word stimulus has become politically toxic. Mainly that's because the stimulus wasn't big enough to restore employment to what it was before the downturn. When unemployment is near 10 percent, voters are going to be angry. But it's not just that the stimulus was too small.
--Isaac Chotiner explores "how a first-rate novelist became a reactionary" --James Surowiecki analyzes the financial reform bill. --Fox News has hyped the Black Panther pseudo-scandal in an astonishing 95 segments. --Kevin Drum skewers the small business estate tax dodge.
Tonight at 8 pm, President Obama will give one of his patented Big Speeches about the oil debacle in the Gulf—only this one will be his first-ever address from the Oval Office. The backdrop's no accident. Presidents typically only resort to Oval Office speeches when, as John Dickerson notes, they're "responding to an immediate crisis [or] trying to change the dynamic of an ongoing one." And this address falls into the latter category. The public thinks Obama's been way too cuddly with BP, while badly-needed energy legislation is sputtering in the Senate. Something has to change, and fast.
There are three kinds of "bubbles"--a term often used loosely when asset prices rise a great deal and then fall sharply, without an obvious corresponding shift in "fundamentals." A short-run bubble. Think about 17th century Dutch Tulip Mania: spectacular, probably disruptive, but not a major reason for the decline of the Netherlands as a global power. A distorting bubble. In this case, the increase in asset prices contributes to a reallocation of resources across sectors. Think of the Dot-com Bubble: fortunes were made and lost, the collapse was scary to many, and--at the end of the day--you'
James Surowiecki (via Andrew) makes a great point about the bonus backlash: Myriad experiments in behavioral economics have found that people are willing to pay to punish members of a group whom they believe to be shirkers or free-riders. In other words, people are willing to make themselves worse off (they have to pay their own money) in order to ensure that others don’t get undeserved rewards.
The Wisdom of Crowds: Why the Many Are Smarter Than the Few and How Collective Wisdom Shapes Business, Economies, Societies, and Nations By James Surowiecki (Doubleday, 296 pp., $24.95) In the summer of 2003, analysts at the Department of Defense had an unusual idea. To predict important events in the world, including terrorist attacks, they would create a kind of market in which ordinary people could actually place bets.