Joe Nocera on Glass-Steagall:

The first thing I realized is that all the horse-trading over the bill’s provision was done by Democrats. The Republicans, having been badly defeated in the 1932 election, had no ability to block it or even amend it. For instance, Republicans tended to view the creation of deposit insurance as "socialism." (Sound familiar?) But it didn’t matter: Steagall cared deeply about deposit insurance. Many community bankers -- as strong a force back then as today -- also supported the idea because they believed it would renew customers’ faith in the banks, and bring back deposits. (This turned out to be true.) Glass, though skeptical, went along so he could get things he cared about, mainly a stronger Federal Reserve with more power over the banks.

The second thing I realized was that, the Sisson speech notwithstanding, there was surprisingly little controversy over what we now think of as the law’s primary achievement: splitting commercial and investment banking. The fights were all over issues that seem inconsequential by today’s lights. It’s as if the notion of breaking the banking business into two was always a foregone conclusion.

David Brooks Discovers That It Was All Fannie Mae's Fault by Dean Baker

collection of macro readings by Krugman

Rule by Rentiers by Krugman

The Decline of PIMCO Macro by Krugman

I first talked to the Pimco people in, I think, 1991, when I was asked (and paid) to talk to them about economic issues; don’t remember the subject. It was a striking experience, sartorially: I showed up in Newport Beach in my gray business suit, and they were all in casual shirts and slacks, some (as I remember it) with fashionable stubble.

Since then, of course, Pimco has continued to be a huge success; Bill Gross is without doubt a great investor. I have often found the economic analyses coming out of Pimco deeply enlightening. And in 2009-2010 the firm won big by betting, correctly, on interest rates staying low.

For the past year or so, however, Pimco seems to me to have been making less and less sense. Gross bet big on the idea that rates would spike when quantitative easing ends; I guess he has three weeks to be vindicated, but it sure doesn’t look like it. And the economic logic was all wrong. Now Mohamed El-Erian is claiming that inflation in China and Brazil is Bernanke’s fault; again, the economic logic is all wrong.

What’s strange about this is that nobody was better at laying out the logic of deleveraging and its consequences than Pimco’s Paul McCulley. But maybe that’s the explanation: McCulley has moved on.

Anyway, El-Erian’s latest sort of shocked me; it sounds as if he’s making up his own version of macroeconomics. And that’s not something you should do unless the existing models have failed -- which they haven’t.

Krugman, Jared Bernstein, Kenneth Rogoff and David Walker on Charlie Rose

David Leonhardt on Germany's economic successes

Woody Allen's new movie Midnight in Paris is really good. It was easy for me to identify with Owen Wilson's character. Back in 1999 when I was 29 I went on a fund-raising cruise for The Nation magazine and had the chance to hang out with some of my favorite writers and editors at that time like Hitchens, Cockburn, Pollit, Navasky and Vanden Heuvel. It wasn't exactly like Midnight in Paris, but they were charming and friendly like Hemingway and Fitzgerald are to Wilson in the movie and I was blown away.

Krugman on Fatal Fatalism

Our current economic discourse is pervaded by fatalism. Leave aside the people who insist that somehow Obama has destroyed capitalist incentives by passing Mitt Romney’s health care plan and threatening to raise tax rates to Clinton-era levels. Even among people who should be sensible, you hear many assertions that run something like this: historically, recovery from financial crisis is usually slow, so we have to accept a slow recovery this time around too. Actually, that’s more or less what Obama has been saying.

Gavyn Davies* writes in the Financial Times about Robert Lucas and the classical view of the global recession.

--------------------
*Gavyn Davies is a macroeconomist who is now chairman of Fulcrum Asset Management and co-founder of Prisma Capital Partners. He was the head of the global economics department at Goldman Sachs from 1987-2001, and was chairman of the BBC from 2001-2004.
     He has also served as an economic policy adviser in No 10 Downing Street, an external adviser to the British Treasury, and as a visiting professor at the London School of Economics.

Ratko Mladic caught

Jared Bernstein has a blog.

Single-payer health care in Vermont

Needed: Plain Talk About the Dollar by Christina Romer

Why Greece Should Reject the Euro by Mark Weisbrot

Krugman links to the piece approvingly, but discuses how the Greek and Argentinian situations are different.

Krugman on Casey B. Mulligan an economics professor at the University of Chicago

If Mulligan wants to argue that point, fine -- but he presents as "the New Keynesian position" something that is just what he imagines, on casual reflection (or, again, maybe after talking to some guy in a bar) to be the New Keynesian position.

OK, so from now on I’ll assert that the Chicago position on unemployment is that we can cure it by sacrificing goats. Hey, I heard that somewhere -- no need to actually read anything they say, right?

The Post-Bin Laden World by Roger Cohen

Death of a Madman by Hitchens

Osama dead says Obama

Needed: A Clearer Crystal Ball by Robert J. Shiller

or "Risk Topograhy"

In fact, some people view the recent crisis as just another "black swan event," one of those outliers, as popularized by Nassim Taleb, that come out of the blue. And it’s clear that a lot of smart people simply didn’t see the housing bubble, the instability of our financial sector or the shock that came in 2007 and 2008.

But the theory of outlier events doesn’t actually say that they cannot eventually be predicted. Many of them can be, if the right questions are asked and we use new and better data. Hurricanes, for example, were once black-swan events. Now we can forecast their likely formation and path pretty well, enough to significantly reduce the loss of life.

Such predictions are a crucial challenge in economics, too, and they are why data collection need not be a dull or a routine field. If done correctly, it can be very revealing. ...

...

The Federal Reserve started work on its Flow of Funds Accounts in the Depression as well. These accounts, which go beyond G.N.P. and show the flow of funds from each kind of financial institution to another, offer a much better picture of the kinds of instabilities that led to the Depression. This innovation took a long time, too. The Fed didn’t begin publishing these accounts until 1955, backdating them to late in the Depression, in 1939. 

Eventually, these advances led to quantitative macroeconomic models with substantial predictive power -- and to a better understanding of the economy’s instabilities. It is likely that the "great moderation," the relative stability of the economy in the years before the recent crisis, owes something to better public policy informed by that data.

Since then, however, there hasn’t been a major revolution in data collection. Notably, the Flow of Funds Accounts have become less valuable. Over the last few decades, financial institutions have taken on systemic risks, using leverage and derivative instruments that don’t show up in these reports. 

Some financial economists have begun to suggest the kinds of measurements of leverage and liquidity that should be collected. We need another measurement revolution like that of G.D.P. or flow-of-funds accounting. For example, Markus Brunnermeier of Princeton, Gary Gorton of Yale and Arvind Krishnamurthy of Northwestern are developing what they call "risk topography." They explain how modern financial theory can guide the collection of new data to provide revealing views of potentially big economic problems.

Exclamation point within parantheses

Ah, Charlie Jane Anders has a website(!) and I had assumed Charlie's a he but she's not.(!)*

And she has a review of  the movie Dylan Dog over at io9,** which is currently sponsored by Dylan Dog:

We've talked a lot lately about the fact that urban fantasy and noir detective stories have been converging, and urban fantasy is where a lot of the most interesting noir writing is happening. But the danger with both those genres -- either together or separately -- is that they'll devolve into pastiche. The worst case scenario with the cliches of tormented loner detectives, and big-city vampires, is that they'll become endlessly self-referencing and fatally mindless.

If you want to see that threat made real, just watch Dylan Dog. It's either a very unfunny comedy, or a very inactive action movie, one or the other.

There's nothing in Dylan Dog that you haven't seen a million times before. Except that you've probably never seen it done this inertly.

Anders penned two of my favorite recent reviews:

5 Theories That Explain Why Avatar Was Such a Huge Hit

Michael Bay Finally Made an Art Movie

Imagine that you went back in time to the late 1960s and found Terry Gilliam, fresh from doing his weird low-fi collage/animations for Monty Python. You proceeded to inject Gilliam with so many steroids his penis shrank to the size of a hair follicle, and you smushed a dozen tabs of LSD under his tongue. And then you gave him the GDP of a few sub-Saharan countries. Gilliam might have made a movie not unlike this one.

And the true genius of Transformers: ROTF is that Bay has put all of this excess of imagery and random ideas at the service of the most pandering movie genre there is: the summer movie. ROTF is like twenty summer movies, with unrelated storylines, smushed together into one crazy whole. You try in vain to understand how the pieces fit, you stare into the cracks between the narrative strands, until the cracks become chasms and the chasms become an abyss into which you stare until it looks deep into your own soul, and then you go insane. You. Do. Not. Leave. The Cabinet

Twitter is slowly sucking me in. I discovered Anders website, because Matt Yglesias RT/"retweeted" a tweet from Jamelle Bouie who retweeted @arjache

Why won't the President disclose the results of his Voight-Kampff test? How do we know he's not a replicant?

On arjache's twitter page, I found a "RT" from Anders, who retweeted

RT@DalekThay: THE DALEKS WOULD LIKE TO SEE THE DOCTOR'S BIRTH CERTIFICATE, BUT WE WOULD SETTLE FOR HIS DEATH CERTIFICATE.

---------------------
*Then I looked her up on Wikipedia and learned she's transgendered (!) and co-edits io9 with her partner Annalee Newitz (!)
** "Michael Moran of The Times' Eureka Zone blog, wrote, "Ostensibly a blog for science fiction enthusiasts, io9 finds space for pieces on cutting-edge technology, the wilder fringes of astronomy and the more worrying implications of grey goo."***
***Grey goo: " is a hypothetical end-of-the-world scenario involving molecular nanotechnology in which out-of-control self-replicating robots consume all matter on Earth while building more of themselves,(!) a scenario known as ecophagy ("eating the environment"). Self-replicating machines of the macroscopic variety were originally described by mathematician John von Neumann, and are sometimes referred to as von Neumann machines. The term grey goo was coined by nanotechnology pioneer Eric Drexler in his 1986 book Engines of Creation, stating that "we cannot afford certain types of accidents." In 2004 he stated "I wish I had never used the term 'grey goo'."

June 2011 and the end of QE2

Krugman quotes Flyod Norris:

Mr. Bernanke makes clear there will be no QE3. And he hopes that it will not have much impact when the purchases end: "We are just going to let the purchases end. Our view is that the end of the program is unlikely to have substantial effects on the economy or financial markets."

He bases that on the fact that all this has been well telegraphed, which is true enough, and then goes into jargon. "We subscribe to the stock view," he says.

That is not the view held by the stock market. Rather it is the size of the Fed’s portfolio -- the stock of securities held by the Fed -- that matters. And that will not change because the Fed will reinvest proceeds from maturing securities.

That’s exactly what I was saying in this post. Like Bernanke, I don’t believe that the flow of Fed purchases has been an important factor holding bond rates down, and hence don’t believe that they will jump when the purchases end.

Bill Gross of PIMCO believes otherwise, but I believe Bernanke and Krugman are correct.

Liberalism's bumper sticker problem by Jonathan Chait

The Dead Milkmen are playing tomorrow night. The Chicago Reader says:

Listening to The King in Yellow, the first album of new Dead Milkmen material since 1995's Stoney's Extra Stout, is a lot like catching up with one of your cooler, smarter, and funnier friends from high school who managed to grow up without losing all the qualities that made him your friend in the first place. Their jangled guitars, their bitingly witty lyrics, their snotty Philly accents, their playful and iconoclastic version of hardcore--a reminder of a time when it actually had a sense of humor--make it clear what you've been missing in the years since. "Don't trust the happy / The happy are insane / If you see someone smiling / Run! Get away!" advise Rodney Anonymous and Joe Jack Talcum on the chorus of "Meaningless Upbeat Happy Song," between verses about what a still-fucked-up world we're living in. The Dead Milkmen remain best known for "Punk Rock Girl"--a song that became a left-field hit during the pop nadir of the late 80s--but albums like Big Lizard in My Backyard, Eat Your Paisley, Bucky Fellini, and Beelzebubba have held up better than much of the music of that time, both over- and underground. Furthermore, I'm hard-pressed to find a song more prescient than "Right Wing Pigeons."...

Q: Who's John Galt?

A: Some asshole.

The Onion's review for the film "Atlas Shrugged: Part I":

The turgid first part of a proposed three-part adaptation of Ayn Rand's novel feels like Tucker: The Man and His Dream, written and performed by robots. Grade: D+

Writing in the New York Times, Carina Chocano didn't like it either.

Bernanke Offers Little Help On Budget Deficit by Dean Baker

In 1996, the Congressional Budget Office (CBO) projected a deficit of almost $250 billion (@ 2.6 percent of GDP) for the 2000 fiscal year. The country actually had a budget surplus of almost the same size in fiscal 2000, representing a shift from deficit to surplus in the year 2000 of more than 5 percentage points of GDP.

Congress did not approve any major tax increases in this 4-year period, nor were there any major unscheduled cuts to spending. Rather this shift from deficit to surplus of more than 5 percentage points of GDP ($750 billion in today's economy) was attributable almost entirely to better than expected economic performance.

In 1996 CBO projected that the unemployment rate would be 6.0 percent in 2000. Unemployment actually averaged just 4.0 percent. This was due to the fact that Alan Greenspan ignored the overwhelming consensus in the economics profession and allowed the unemployment rate to fall below the conventionally accepted levels of the NAIRU.

This decision, which was made over the objections of the Clinton appointees to the Fed, allowed millions of more people to get jobs than would have otherwise been the case. It also allowed strong wage growth for people at the middle and bottom of the wage distribution as their labor was then in demand. And it reduced the budget deficit. Because Bernanke offered little hope of more aggressive Fed actions to reduce unemployment, he is not offering any similar growth dividend on the budget deficit.

Jon Stewart on Obama's non-bombshell and the Trump "Egometer"

Yglesias on the 1970s and inflation

Damn you, Carnival Barkers.

Bernanke* just gave the first ever Federal Reserve Bank press conference live on the Internet.

Yglesias blogs:

The key moment in Ben Bernanke’s press conference was when he explained that the Fed wasn’t doing more to ensure full employment because it’s worried that additional action might cause inflation expectations to come unmoored and "if inflation expectations were to become unmoored the cost of that in terms of employment loss in the future would be quite signifiant." In other words, he’ll make sure to err on the side of policy that’s too tight because if he tries to get policy right he might accidentally end up being too loose and then he’d need to tighten in response and that would be bad.

As a technical issue, the problem should be addressable with level targeting. But as an issue of priorities, there’s just no addressing it.

Imagine you’re teaching a kid archery. You tell him to aim for the bullseye. But you also warn him that if the arrow goes to the left of the bullseye, he’s going to be in big trouble while if it goes to the right of the bullseye you won’t really mind. Well, naturally the kid’s never going to hit the bullseye. He’s going to shoot too far the right. And that’s the Fed right now. They’ll act to prevent total collapse of output and employment but what really worries them is inflation. They’re so worried about inflation that they’re happy to have an output gap that persists for years and years and years.

----------------------
* Paul Giamatti is portraying Bernanke in the HBO movie "Too Big To Fail." William Hurt will play Hank Paulson. Geithner will be played by ... Billy Crudup.

Lollapalooza 2011 lineup

Foo Fighters, Eminem, My Morning Jacket, Coldplay, Deadmau5, The Cars, Ween, Bright Eyes, Big Audio Dynamite, Arctic Monkeys, Death From Above 1979, Grace Potter and the Nocturnals, OK Go, The Pains of Being Pure at Heart,* etc.

--------------------
*I'm seeing them play tonight at Lincoln Hall. I like the Foo Fighters' new album. Check out the similarity of the cover art with Love's "Forever Changes" and The Sounds' "Living in America."

"Holding Bernanke Accountable" by David Leonhardt

How the Arab Spring remade Obama’s foreign policy. by Ryan Lizza

During the peak of the protests in Iran, Jared Cohen, a young staffer at the State Department who worked for Slaughter, contacted officials at Twitter and asked the company not to perform a planned upgrade that would have shut down the service temporarily in Iran, where protesters were using it to get information to the international media. The move violated Obama’s rule of non-interference.

White House officials "were so mad that somebody had actually 'interfered' in Iranian politics, because they were doing their damnedest to not interfere," the former Administration official said. "Now, to be fair to them, it was also the understanding that if we interfered it could look like the Green movement was Western-backed, but that really wasn’t the core of it. The core of it was we were still trying to engage the Iranian government and we did not want to do anything that made us side with the protesters. To the Secretary’s credit, she realized, I think, before other people, that this is ridiculous, that we had to change our line." The official said that Cohen "almost lost his job over it. If it had been up to the White House, they would have fired him."

Clinton did not betray any disagreement with the President over Iran policy, but in an interview with me she cited Cohen’s action with pride. "When it came to the elections, we had a lot of messages from people inside Iran and their supporters outside of Iran saying, 'For heaven’s sakes, don’t claim this as part of the democracy agenda. This is indigenous to us. We are struggling against this tyrannical regime. If you are too outspoken in our support, we will lose legitimacy!' Now, that’s a tough balancing act. It’s easy to stand up if you don’t worry about the consequences. Now, we were very clear in saying, 'We are supporting those who are protesting peacefully,' and we put our social-media gurus at work in trying to keep connections going, so that we helped to provide that base for communicating that was necessary for the demonstrations."

Failing to ask Twitter to not make the upgrade would have been, in effect, interfering on behalf of the Iranian regime.

The French and the British were shocked by the quick turn of events. Instead of the President announcing the Administration’s position from the East Room of the White House, the U.N. envoy quietly proposed transforming a tepid resolution for a no-fly zone into a permission for full-scale military intervention in Libya. Some officials thought it was a trick. Was it possible that the Americans were trying to make the military options appear so bleak that China and Russia would be sure to block action?

Gradually, it became clear that the U.S. was serious. Clinton spoke with her Russian counterpart, Sergey Lavrov, who had previously told her that Russia would "never never" support even a no-fly zone. The Russians agreed to abstain. Without the cover of the Russians, the Chinese almost never veto Security Council resolutions. The vote, on March 17th, was 10-0, with five abstentions. It was the first time in its sixty-six years that the United Nations authorized military action to preëmpt an "imminent massacre." Tom Malinowski, the Washington director of Human Rights Watch, wrote, "It was, by any objective standard, the most rapid multinational military response to an impending human rights crisis in history."

As the bombs dropped on Libyan tanks, President Obama made a point of continuing his long-scheduled trip to South America. He wanted to show that America has interests in the rest of the world, even as it was drawn into yet another crisis in the Middle East.

The key appears to be the Arab League's decision to get involved.

The Tyrants Strike Back by Juan Cole

Cripple Fight in Libya*

Go After Qaddafi by Hitchens

Finish the Job by James M. Dubik
--------------------
*I just finished reading a Jonathan Lethem book about John Carpenter's film "They Live" which contains the endless fight scene between "Rowdy" Roddy Piper and Keith David upon which South Park's "Cripple Fight" between Timmy and Jimmy was based. It's a brilliant book which touches upon Slavoj Zizek, Harry Dean Stanton, "Repo Man," Mike Judge's "Idiocracy," Alfred Hitchcock, Milan Kundera, Philip K. Dick, South Park, Stanley Kubrik, Roland Barthes's "Mythologies," Pauline Kael, Frances McDormand, and the Coen brothers' "Fargo" among other things.

The Beatings Will Continue Until Morale Improves

Krugman blogs about Ireland and Greece

Also, an excellent profile of Krugman by Benjamin Wallace-Wells

HBO ordered a second season for "Game of Thrones." Christopher Nolan's third and final Batman movie will come out July of next year and he's working with many of the actors from "Inception," including Joseph Gordon-Levitt, Marion Cotillard, Tom Hardy and Michael Caine who will play the butler Alfred again. The movie will also star Christian Bale as the Batman and Anne Hathaway as Selina Kyle.

Jenny Turner reviews David Foster Wallace's "The Pale King":

And the entire subject could scarcely be more of a political hot potato: most of these drafts were being written in the years of the George W. Bush tax cuts. 'There’s something very interesting about civics and selfishness, and we get to ride the crest of it. Here in the US, we expect government and law to be our conscience. Our superego, you could say ... Americans are in a way crazy. We infantilise ourselves. We don’t think of ourselves as citizens.' Or, a more WikiLeaksy approach: 'Consider ... the advantages of the dull, the arcane, the mind-numbingly complex. The IRS was one of the very first government agencies to learn that ... abstruse dullness is actually a much more effective shield than is secrecy.'

...

Wallace ironised the tendency, somewhat, through narrative refraction and recursion; but the problem must have worried him, and perhaps explains why he tried to interest himself in low-level fiscal bureaucrats, surely one of the least romanticisable social groupings imaginable on this earth. He may also have liked the element of self-mortification involved in this choice, or perhaps it was the challenge he found exciting: 'To function effectively in an environment that precludes everything vital and human,' he has a nameless character say at one point, 'is the key to modern life. If you are immune to boredom, there is literally nothing you cannot accomplish.'

The Wall Street Leviathan by Jeff Madrick

Congratulations to David Leonhardt for winning the Pulitzer in the commentary catergory for "his graceful penetration of America’s complicated economic questions".

Bill Gross and David Stockman versus the Fed by Ezra Klein

"When the Federal Reserve gets out of the Treasury market on June 30th, the question becomes who will buy them at these yields, and I don’t know who would." Gross, incidentally, has put his money where his mouth is by making a big and very public play against Treasurys.

 I'd take the Fed even though Gross is a player. The Fed can print money without an ensuing wage-price inflation spiral and the US government can raise taxes very easily if it has to. There are a lot of profitable US businesses. It could even stick it to China which would hurt some politcally-connected US firms and yet benefit the national economy as a whole.

Added:

Stocks, Flows, and Pimco (Wonkish) by Krugman

... If you believe that it is obvious that rates will spike as soon as QE2 ends, you have to ask why investors aren’t moving out of US debt now in anticipation; you don’t have to believe in efficient markets to believe that totally obvious gains or losses will be anticipated.

I’d also add that if flows matter a lot -- if it’s hard to persuade investors to buy a suddenly increased quantity of newly issued Treasuries per month, as opposed to being willing to hold the total amount of Treasuries outstanding -- the big shift into budget deficits and the corresponding increase in Treasury issuance should have led to sharply rising interest rates.

And as you may recall, some people did predict just that -- and ended up not just with egg on their faces, but losing a lot of money for their investors.

So I don’t buy the notion that rates are low only because the Fed is doing QE2; if there were really a problem with the marketability of US debt, rates would be high regardless. And so I don’t expect rates to spike when QE2 ends unless there’s good economic news that gives us a reason to believe that the zero-rate policy on short-term rates will end sooner than expected.

My estimation of Bill Gross just took a hit.

 

(via Yglesias)

Dean Baker on Standard and Poor's rating agency, who downgraded* the United States' government's outlook to negative.

It is also worth noting that S&P has a horrible track record for judging credit worthiness. It rated hundreds of billions of dollars of subprime backed securities as investment grade. It also gave Lehman, Bear Stearns, and Enron top ratings right up until their collapse. Furthermore, no one was publicly fired for these extraordinary failures. Investors are aware that S&P's judgement does not mean very much.

-----------------
* the US still has a AAA rating, but S&P now says the outlook is negative, or not good. They did this to Japan, but nothing ever came of it and the market allowed the Japanese government to continue to borrow at low rates.

Revenge of the Global Savings Glut by Krugman

 David Foster Wallace: The Last Audit by Tom McCarthy

The first is as a coherent, if incomplete, portrayal of our age unfolding on an epic scale: a grand parable of postindustrial culture or "late capitalism," and an anguished examination of the lot of the poor (that is, white-collar) individual who finds himself caught in this system’s mesh. The setting that Wallace has chosen as his background (and foreground, and pretty much everything in between) could not be more systematic: the innards of the Internal Revenue Service -- the sheer, overwhelming heft of its protocols and procedures. If, as one of Wallace’s characters asserts, "the world of men as it exists today is a bureaucracy," then the I.R.S., "a system composed of many systems," not only represents that world but also furnishes the ultimate stage on which its moral dramas are enacted. In the words of Midwest Regional Examination Center Director DeWitt Glendenning Jr., one of the more shadowy (or pale) presences in this ­multicharactered and multivoiced book, "The tax code, once you get to know it, embodies all the essence of [human] life: greed, politics, power, goodness, charity."

To its own agents and enforcers, the I.R.S. even offers a role and status akin to that of the lone, righteous gunslinger in the Wild West or the caped crusader in Gotham. "Enduring tedium over real time in a confined space is what real courage is," accounting students are informed with evangelical zeal by their instructor. "To retain care and scrupulosity about each detail from within the teeming wormball of data and rule and exception and contingency which constitutes real-world accounting -- this is heroism." The proposition is comic (one of the novel’s would-be heroes practices saying "Freeze! Treasury!" in front of his mirror) but sincere as well: the instructor is a Jesuit priest, and the scene is redacted with a genuinely epiphanic air. In a universe of veiled and veiling numbers, the task of drawing the true ones out into the light and holding them up for inspection, clear and remainder-­less, really is a sacred one. "Gentlemen," the instructor rounds off his sermon by saying, "you are called to account."

The problem, as I.R.S. recruits soon discover, is that neither moral nor heroic codes hold true anymore. The bulk of "The Pale King" takes place in the mid-1980s, as the Spackman Initiative is being implemented. Pure invention (as far as I can tell) on Wallace’s part, the initiative nonetheless describes an all too recognizable shift in administrative culture, with the supplanting of a public service ethos (tax enforcement is an affirmation of all citizens’ duties toward others) by a free-­market one: the I.R.S. is a revenue-­generating business and, as such, should audit only those returns that promise the highest yield-to-man-hour-spent-­investigating ratio. Post-Spackman, the tax agency is a godless space whose commandments are simply those of the profit motive, and whose driving logic is being automated at an alarming pace thanks to emerging software. "It was frightening," writes David Wallace (a character who shares his name not only with the author but also with another David Wallace at the I.R.S., causing yet further blurring of identities and voices), "like watching an enormous machine come to consciousness and start trying to think and feel like a real human."

The Power of Mockery by Kristof

The juiciest story behind the Middle East uprisings doesn’t concern Col. Muammar el-Qaddafi’s "voluptuous" Ukrainian nurse or C.I.A. bags of cash. Rather, it’s the tale of how a nonviolent revolutionary strategy crafted by Serbian students and an octogenarian American scholar came to challenge dictators in Egypt, Tunisia, Bahrain and many other countries.

This "uprising in a bottle" blueprint was developed by the Serbian youth movement, Otpor, to overthrow Slobodan Milosevic in 2000. One of Otpor’s insights was that the most effective weapon against dictators isn’t bombs or fiery speeches. It’s mockery. Otpor activists once put Milosevic’s picture on a barrel that they rolled down the street, inviting people to hit it with a bat. 

The Pains of Being Pure at Heart

Ginia Bellafante:

"Game of Thrones" is boy fiction patronizingly turned out to reach the population’s other half.

I wish the Times had assigned someone who had read the books to review the show. The first book is in part about Eddard (Ned) Stark (played by Sean Bean in HBO's 10 episode series) who took part in a successful rebellion against a King Aerys (called the "Mad King"). His childhood friend Robert Baratheon led the revolt and became the new king. Baratheon is the loutish type of man all right-thinking women hate: a man's man with little introspection and large appetites. In the war which deposed the mad king Aerys, Baratheon cut a heroic and dashing figure but after years of power he has become fat and complacent. He's was better at leading a revolt than being the king.

Ned Stark suffers from being pure at heart. He is loyal and honorable to a fault. He has a code and sticks to it, come what may. The Stark clan rules from a castle far in the north and the saga begins with Baratheon asking Stark to take over as his "Hand" or right-hand man / chief-of-staff. The previous Hand of the King had been poisoned. Stark has no desire to be Hand, which means court politics (i.e. dishonesty and backstabbing) and ruling in effect for a King who has little interest in the more mundane matters of being a King. His wise wife advises against it.

Stark believes one can't be pure at heart and also be successful at ruling and playing the political game, but he agrees anyway to become Hand out of loyalty to his old friend Robert Baratheon.

Chicago Fed paper on commodity prices and inflation by Charles Evans.

(via Krugman)

New York article on Peter Orzsag:

And while the crash dented the confidence of the Wall Street-Washington policy elite, the blow was far from fatal. In November 2008, Rubin attended an economic-policy meeting with Obama and senior aides in Chicago. Reich was there, and he told me that after the meeting, he confronted Rubin about the meltdown. "I asked him why did the crash happen? He said, 'It was a perfect storm. It was a once-in-a-lifetime event.'" Reich, like many progressives, sees 2008 as a reassessment of the Rubin way. "Why was there a complete implosion, if Wall Street is so smart, if markets work so well?"

(via Yglesias)

Larry Summers event at Bretton-Woods:



(via DeLong)

Krugman wins the thread

So, we have a plan that proposes to cut spending to Calving Coolidge levels, without explaining how it will do that; that includes $2.9 trillion in tax cuts, but asserts that it will make that up by broadening the base -- yet says literally nothing about what that means; and has as its centerpiece a Medicare plan that will collapse as soon as seniors start getting their grossly inadequate vouchers.

Oh, and it directs us to a totally ludicrous Heritage Foundation analysis for support.

There’s nothing serious about this plan. And the way our pundit class swooned over this fantasy document suggests that all those people lecturing the American people about our unwillingness to face up to reality and make hard choices should spend some time looking in the mirror.

Hertiage report forecasts that Paul Ryan's budget* if enacted would lower the unemployment rate to a miraculous 2.8 percent in 2021.

-----------------------
* tax cuts for the rich  / the elderly would end up spending most of their income on health care.

(via Krugman)

The Achilles Heel Of The Path To Prosperity by Jonathan Chait

And certainly some level of cutting is necessary. But Ryan's level of cutting goes far beyond what's needed to preserve those programs, and it does so in order to clear room for a very large, regressive tax cut. He is making a choice -- not just cut Medicare to save Medicare, but also to cut Medicare in order to cut taxes for the rich.

Ryan does not want to debate that choice, but he ought to be forced to do so. That is exactly what Bill Clinton did to defeat the Republicans in 1995. Indeed, the debate was virtually identical. Republicans insisted the debt constituted an existential threat. They proposed to "save" Medicare by privatizing it. And Clinton pointed out that their plan cut Medicare in order to finance a regressive tax cut. He won the argument because Medicare is highly popular and tax cuts for the rich aren't. 

Indeed, the divide on this issue is so overwhelming that Republicans simply refuse to acknowledge their position.

(via DeLong)

Ryan to 32M Americans: No Insurance for You by Jonathan Cohn

David Brooks Is Excited: Paul Ryans Kicks the Elderly While Protecting the Wealthy by Dean Baker

Krugman on the transmission mechanism for Quantitative Easing

Alessandra Stanley reviews The Killing

Sergio Leone gave cinema the spaghetti western, but there isn’t yet an equivalent term for Scandinavian riffs on the classic hard-boiled detective yarn. "The Killing," a fantastic new AMC adaptation of a popular Danish television series, certainly qualifies as a smorgasbord thriller. It’s unnerving how well the Nordic sensibility fits a genre that for a long time seemed indisputably and inimitably violent and American, particularly given that Sweden, Norway and Denmark have homicide rates that suggest that they have more mystery writers per capita than murders.

There are so many Scandinavian crime solvers besides Henning Mankell’s gloomy detective, Kurt Wallander, or Steig Larsson’s hacker heroine, Lisbeth Salander. Yet even among all those popular imports, "The Killing" stands out -- it is as scary and suspenseful, but in a subdued, meditative way that is somehow all the more chilling. 

 AMC and FX have really progressed.

Why Obama Had to Act in Libya by Marc Lynch

Answer to Glenn Greenwald by Juan Cole

Whit Stillman's Barcelona. He has a new movie with Greta Gerwig titled "Violet Wister's Damsels and Distress" coming out later this year. I like that scene in the movie Greenberg where Gerwig sings along to "Uncle Albert/Admiral Halsey" while drunk on champagne.

Article on Samantha Power

Calculated Risk: ADP: Private Employment increased by 201,000 in March

Private-sector employment increased by 201,000 from February to March on a seasonally adjusted basis, according to the latest ADP National Employment Report® released today. The estimated change of employment from January 2011 to February 2011 was revised down to 208,000 from the previously reported increase of 217,000.
...
The average monthly increase in employment over the last four months --December through March -- has been 211,000, consistent with a gradual if uneven decline in the unemployment rate...

(via DeLong)

Still the Fed has failed, as writes David Leonhardt.

One group of Fed officials and watchers worries constantly about the prospect of rising inflation, no matter what the economy is doing. Some of them are haunted by the inflation of the 1970s and worry it may return at any time. Others spend much of their time with bank executives or big investors, who generally have more to lose from high inflation than from high unemployment.

There is no equivalent group -- at least not one as influential -- that obsesses over unemployment. Instead, the other side of the debate tends to be dominated by moderates, like Ben Bernanke, the Fed chairman, and Mr. Meyer, who sometimes worry about inflation and sometimes about unemployment.

The result is a bias that can distort the Fed’s decision-making. Just look at the last 18 months. Again and again, the inflation worriers, who are known as hawks, warned of an overheated economy. In one speech, a regional Fed president even raised the specter of Weimar Germany.

The Iraq Effect: If Saddam Hussein were still in power, this year's Arab uprisings could never have happened. by Hitchens

American Thought Police by Krugman

Eyes Open, WaMu Still Failed by Floyd Norris

I’ll let the courts sort out whether Mr. Killinger will become the rare banker to be penalized for making disastrously bad loans. But I am fascinated by how his bank came to make those loans despite his foresight.

Answers are available, or at least suggested, in the mass of documents collected and released by the Senate Permanent Subcommittee on Investigations, which held hearings on WaMu last year. Mr. Killinger wanted both the loan book and profits to rise rapidly, and saw risky loans as a means to those ends.

Moreover, this was a market in which a bank that did not reduce lending standards would lose a lot of business. A decision to publicly decry the spread of high-risk lending and walk away from it -- something Mr. Vanasek proposed before he retired at the end of 2005 -- might have saved the bank in the long run. In the short run, it would have devastated profits.

Washington’s New Brat Pack Masters Media by Sridhar Pappu

Inflated Worries by Laurence Meyer


The Austerity Delusion by Krugman

Steampunk online series Riese: Kingdom Falling

Wikipedia entry

Hitchens on Egypt

Owsley Stanley, Steely Dan's "Kid Charlemagne" is dead at 76

Mr. Stanley, the [Grateful] Dead’s former financial backer, pharmaceutical supplier and sound engineer, was in recent decades a reclusive, almost mythically enigmatic figure. He moved to Australia in the 1980s, as he explained in his rare interviews, so he might survive what he believed to be a coming Ice Age that would annihilate the Northern Hemisphere.

Once renowned as an artisan of acid, Mr. Stanley turned out LSD said to be purer and finer than any other. He was also among the first individuals (in many accounts, the very first) to mass-produce the drug; its resulting wide availability provided the chemical underpinnings of an era of love, music, grooviness and much else.

His was the acid behind the Acid Tests conducted by the novelist Ken Kesey and his Merry Pranksters, the group of psychedelic adherents whose exploits were chronicled by Tom Wolfe in his 1968 book "The Electric Kool-Aid Acid Test."
...
In 1965, he met Mr. Kesey, and through him the Dead. Enraptured, he became their sound man, early underwriter, principal acolyte, sometime housemate and frequent touring companion. With Bob Thomas, he designed the band’s highly recognizable skull-and-lightning-bolt logo. Mr. Stanley also made many recordings of the Dead in performance, now considered valuable documentary records of the band’s early years. Many have been released commercially.

Mr. Stanley remained with the band off and on through the early ’70s, when, according to Rolling Stone, his habits became too much even for the Grateful Dead and they parted company. (He had insisted, among other things, that the band eat meat -- nothing but meat -- a dietary regimen he followed until the end of his life.)

The First Liberal: How Montaigne made us modern. by Kwame Anthony Appiah


Montaigne's Moment by Anthony Gottlieb

Fiddling While Libya Burns by Anne-Marie Slaughter

Don't Let Qaddafi Win by Hitchens

Chicago Tribune strikes out in Wisconsin by Michael Miner

Watch live streaming video from nytimes at livestream.com

Vive La Resistance!

93-year old hero of the French Resistance to the Nazis has a best-seller in France.

PARIS -- As a hero of the French Resistance, Stéphane Hessel was in exile with Charles de Gaulle in London, imprisoned in concentration camps, waterboarded in Nazi torture sessions and saved from hanging by swapping identities with an inmate who had died of typhus.

Now, at 93, he is the author of a best seller that has become a publishing phenomenon in France. It is not the story of his life (he wrote his autobiography years ago), but a thin, impressionistic pamphlet called "Indignez-Vous!," held together by two staples and released by a two-person publishing house run out of the attic of their home. It urges young people to revive the ideal of resistance to the Nazis by peacefully resisting the "international dictatorship of the financial markets" and defending the "values of modern democracy."

In particular Mr. Hessel protests France’s treatment of illegal immigrants, the influence on the media by the rich, cuts to the social welfare system, French educational reforms and, most strongly, Israel’s treatment of the Palestinians.

"When something outrages you, as Nazism did me, that is when you become a militant, strong and engaged," he writes. "You join the movement of history, and the great current of history continues to flow only thanks to each and every one of us"

Since its publication in October "Indignez-Vous!" has sold almost 1.5 million copies in France and has been translated into Spanish, Italian, Portuguese and Greek. Editions are planned in Slovenian, Korean, Japanese, Swedish and other languages. In the United States, The Nation magazine published the entire English text last month.

Though this world's essentially an absurd place to be living in
It doesn't call for (bubble withdrawal)

It said human existence is pointless
As acts of rebellious solidarity
Can bring sense in this world

La Resistance!

The Case for a No-Fly Zone by Nicholas Kristof

Flirting With a Repeat of a Stunted Recovery by Leonhardt

On the positive side, exports and consumer spending are up, and the job market finally seems to be improving. If anything, last week’s jobs report probably undercounted recent gains. That often happens early in an economic recovery because the Labor Department has a hard time keeping track of newly started businesses.

On the negative side, oil prices have risen more than 40 percent since September, and every level of government is considering spending cuts and layoffs.

All in all, the situation is uncomfortably reminiscent of last spring. Back then, companies were just starting to hire again, before a combination of events -- including Europe’s debt crisis and the fading of the stimulus program here -- spooked them and cut short the recovery. It’s easy to imagine how energy costs and government cuts could do the same this year.

  
Article on Edward Gorey:

NEWS bulletin from the spirit world: The specter of Edward Gorey, who died in 2000 at the age of 75, is haunting our collective unconscious.

In a sense that’s as it should be; Gorey was born to be posthumous. His poisonously funny little picture books -- deadpan accounts of murder, disaster and discreet depravity, narrated in a voice that affects the world-weary tone of British novelists like Ronald Firbank and Ivy Compton-Burnett -- established him as the master of high-camp macabre. Told in verse and illustrated in a style that crosses Surrealism with the Victorian true-crime gazette, Gorey stories are set in some unmistakably British place, in a time that is vaguely Victorian, Edwardian and Jazz Age all at once.
...
Gorey illustrations are even becoming voguish as tattoos. Last year the ninth-season "American Idol" finalist Siobhan Magnus had a biceps tattoo of Death playing nanny to a flock of soon-to-be-doomed children, from "The Gashlycrumb Tinies," Gorey’s grimly funny alphabet book.
...
Attendance has been climbing steadily at the Edward Gorey House in Yarmouth Port, Mass., and curators of the first major traveling exhibition of Gorey’s original art, "Elegant Enigmas" -- originally shown at the Brandywine River Museum in Chadds Ford, Pa., and now on view at the Boston Athenaeum -- have been stunned by the enthusiasm surrounding the show.

"I knew Gorey had a wide following, but I had no idea of the mania," said David Dearinger, an Athenaeum curator, before the exhibition opened there in February. News media inquiries and calls from the public had been coming in for months, he said then, "and the show isn’t even here yet." Since the opening, he said last month, "the response has been phenomenal." 

...

Undoubtedly such romanticized visions of a more decorous, dapper past, which also inform the neo-Victorian and neo-Edwardian street styles of goths and steampunks, have as much to do with escapism as historical fact.

Inflation: "Empiricists" versus "Theorists" by Christina Romer

By 1933, short-term interest rates were near zero -- just as they are today. As I described in a 1992 academic article, Franklin D. Roosevelt took the United States off the gold standard in April 1933, and rapid devaluation led to huge gold inflows and a large increase in the money supply. Roosevelt also made it clear that the monetary expansion would not be reversed. Expectations of deflation, which had been enormous, abated quickly. As a result, with nominal rates at zero, real interest rates (the nominal rate less expected inflation) plummeted.

The first types of demand to recover were ones that were sensitive to interest rates. Automobile production, for example, jumped 42 percent from March to April in 1933. Inflation did pick up somewhat in the mid-1930s, in part because of other New Deal measures like the National Industrial Recovery Act. But the inflation was modest, and after the crushing deflation of the early 1930s, widely celebrated.

THE triumph of hawkish views on inflation means that there is no appetite today for a Roosevelt-style, inflationary monetary policy.

Bubblenomics

Dean Baker:

The collapse of the bubble in 2000-2002 gave the country what was at the time the longest period without job growth since the Great Depression. The economy only recovered from that slump as a result of the growth generated by the housing bubble. 

Foreign Investment Ebbs in India

Foreign direct investment in India fell more than 31 percent, to $24 billion, in 2010 even as investors flocked to developing nations as a group.

And in the last two months, foreign investors took $1.4 billion out of the Indian stock market, helping drive the country’s Nifty 50 stock index down 17 percent from the record high it set in early November.

Libya's Legacy by Michael J. Totten

When suits challenge the Defense of Marriage Act, the 1996 law barring recognition of same-sex marriages, federal lawyers will now tell judges it should be struck down.

Beating up on Brad DeLong by Dean Baker

(via ... DeLong)

Why Budget Cuts Don't Bring Prosperity by Leonhardt

"It’s really quite striking how well the U.S. is performing relative to the U.K., which is tightening aggressively," says Ian Shepherdson, a Britain-based economist for the research firm High Frequency Economics, "and relative to Germany, which is tightening more modestly." Mr. Shepherdson adds that he generally opposes stimulus programs for a normal recession but that they are crucial after a crisis.

The trick is finding the political will to end the stimulus when the time comes. That is not easy, especially for Democrats, given that stimulus programs tend to include policies they favor. But the wave of recently elected Republicans, in Congress and the states, will no doubt be happy to help summon that political will.

For the sake of the economy, the best compromise in coming weeks would be one that trades short-term spending for medium- and long-term cuts. Beef up the cost-control measures in the health care overhaul and add new ones, like malpractice reform. Cut more wasteful military programs, like the F-35 jet engine. Force more social programs to prove they work -- and cut their funding in future years if they don’t.

By all means, though, don’t follow the path of the Germans and the British just because it feels morally satisfying.

Fighting Near Tripoli

TOBRUK, Libya -- Col. Muammar el-Qaddafi of Libya kept his grip on the capital on Wednesday, but large areas of the east of the country remained out of his control amid indications that the fighting had reached the northwest of the country around Tripoli.

Libyans fleeing across the country’s western border into Tunisia reported fighting over the past two nights in the town of Sabratha, home of an important Roman archeological site 50 miles west of Tripoli. Thousands of Libyan forces loyal to Colonel Qaddafi have deployed there, according to Reuters.

"The revolutionary committees are trying to kill everyone who is against Qaddafi," said a doctor from Sabratha who had just left the country, but who declined to give his name because he wanted to return.

There were also reports of fighting in Misurata, a provincial center 130 miles east of the capital. A witness said that messages being broadcast from the loudspeakers of local mosques were urging people to attack government opponents, following Colonel Qaddafi’s defiant television address Tuesday night calling for ordinary citizens to assist in eliminating opponents, promising that the "cockroaches" would be tracked and killed "house by house."

Eat the Future by Krugman

Pew also asked people how they would like to see states close their budget deficits. Do they favor cuts in either education or health care, the main expenses states face? No. Do they favor tax increases? No. The only deficit-reduction measure with significant support was cuts in public-employee pensions -- and even there the public was evenly divided.

The moral is clear. Republicans don’t have a mandate to cut spending; they have a mandate to repeal the laws of arithmetic.

How can voters be so ill informed? In their defense, bear in mind that they have jobs, children to raise, parents to take care of. They don’t have the time or the incentive to study the federal budget, let alone state budgets (which are by and large incomprehensible). So they rely on what they hear from seemingly authoritative figures.

And what they’ve been hearing ever since Ronald Reagan is that their hard-earned dollars are going to waste, paying for vast armies of useless bureaucrats (payroll is only 5 percent of federal spending) and welfare queens driving Cadillacs. How can we expect voters to appreciate fiscal reality when politicians consistently misrepresent that reality?

A Tunisian-Egyptian Link That Shook Arab History

Just a few months later, after a strike in the Tunisian city of Hawd el-Mongamy, a group of young online organizers followed the same model, setting up what became the Progressive Youth of Tunisia. The organizers in both countries began exchanging their experiences over Facebook. The Tunisians faced a more pervasive police state than the Egyptians, with less latitude for blogging or press freedom, but their trade unions were stronger and more independent. "We shared our experience with strikes and blogging," Mr. Maher recalled.

For their part, Mr. Maher and his colleagues began reading about nonviolent struggles. They were especially drawn to a Serbian youth movement called Otpor, which had helped topple the dictator Slobodan Milosevic by drawing on the ideas of an American political thinker, Gene Sharp. The hallmark of Mr. Sharp’s work is well-tailored to Mr. Mubark’s Egypt: He argues that nonviolence is a singularly effective way to undermine police states that might cite violent resistance to justify repression in the name of stability.

The April 6 Youth Movement modeled its logo -- a vaguely Soviet looking red and white clenched fist -- after Otpor’s, and some of its members traveled to Serbia to meet with Otpor activists.

Everybody's waiting for the man to come down from the tower.

Anna Faris and Chris Pratt of Parks and Recreation fame are married in real life. The actress Teresa Palmer reminds one of Kristen Stewart.


Video for NWA's "Straight Outta Compton"

Wired and Shrewd, Young Egyptians Guide Revolt

"When people have been killed, from time to time you feel guilty," Mr. Lotfi said. "But after the war that night, we felt more and more that our country deserves our sacrifice."

A few days later, seven members of the group were abducted by the police after leaving a meeting at Mr. ElBaradei’s house and detained for three days.
... 

Most of the group are liberals or leftists, and all, including the Brotherhood members among them, say they aspire to a Western-style constitutional democracy where civic institutions are stronger than individuals.

The young Google exec was abducted by the police and held incommunicado for 12 days before being released.


Iran Presses Opposition to Refrain from Rally

Iran’s authorities have increased pressure on the country’s political opposition days before a rally proposed by opposition leaders in support of the popular uprisings in Tunisia and Egypt.

Fed Governor Kevin Wash resigns to "go work in the private sector"

Now Obama can nominate a governor who actually cares about the large output gap in the economy.

Meanwhile, Republican Senator(s) is(are) holding Noble Prize winner / Bernanke teacher Peter Diamond in limbo.

Dean Baker on Jacob Lew

Jacob Lew, the head of President Obama's Office of Management and Budget, had a column in the New York Times that should really scare the American people. While the purpose of the column was ostensibly to tell the American people that there are few easy budget cuts left, the scary part is that Mr. Lew seems to have little understanding of the economy.

Lew boasts about the huge budget surplus at the end of the Clinton administration. He shows no understanding of the fact that these surpluses were largely the result of a stock bubble, which was inevitably going to burst. The story of the economy's growth at that point was that the $10 trillion stock bubble fueled a consumption boom, which led to strong economic growth.

Of course the bubble was not sustainable, when it burst, the consumption it supported also disappeared. We only recovered from the recession when the housing bubble created enough demand to replace the demand lost from the collapse of the stock bubble.
The underlying problem was the over-valued dollar. This was a conscious policy of the Treasury Secretary Robert Rubin, who actively pushed a "strong dollar" policy. This policy effectively gave a large subsidy to imports and imposed a large tax on U.S. exports. The result was a huge U.S. trade deficit.

Given a large trade deficit, the economy needs either large government deficits or very low private savings to sustain high levels of employment. This is not a partisan issue; it is an accounting identity.

Mr. Lew shows no understanding of this basic point. Either this top Obama official is ignorant of basic economics or he is not being honest with the American people. Either way, it is an incredibly scary column.

The IMF's Epic Fail on Egypt by Yves Smith

Needless to say, there has also been a great deal of consternation as to how the West’s supposedly vaunted intelligence apparatus failed to see this one coming. This lapse is as bad as the inability to foresee the collapse of the Soviet Union (it’s arguably worse: a lot of people profited from the Cold War, and they’d have every reason to fan fears and thus look for evidence that would support the idea that the USSR was a formidable threat...

(And there was the CIA's George Tenet on the "slam dunk" of finding WMD's in Iraq)

If this isn’t bad enough, other sections of the report are downright embarrassing. The IMF does acknowledge that poverty is a bit of a problem, and look at the remedies it suggests:

Reforms for Sustained Growth
9. Continuing the reform momentum and reducing fiscal vulnerabilities remain the key medium-term challenges. Rapid growth is crucial to tackling poverty and the high level of unemployment. In this context, reinvigorating the structural reform agenda should help raise productivity and reinforce Egypt’s competitiveness.

Prioritizing reforms that promote macroeconomic stability and improve the investment climate will support the resumption of foreign direct investment. As noted, the planned fiscal adjustment and tax reforms are an important element of generating confidence, improving the business environment, and ensuring space for the private sector. Resumption of privatization and development of public-private partnerships (PPPs) will help mobilize private sector financing and know-how. Contingent liabilities associated with PPPs, however, should be monitored closely.

Reinforcing financial soundness and promoting financial sector deepening will help mobilize savings needed to finance private sector-led growth. The stability of the financial sector during and since the crisis is a testament to reforms since 2004. Staff supports the continuation of reform efforts with the CBE’s Phase II agenda. Introducing Basel II standards and supporting financial sector development will help facilitate intermediation of savings and increase private sector access to credit. Staff supports plans to adopt additional prudential measures to contain vulnerabilities that will arise with greater integration with the global economy and the introduction of new asset classes. Close coordination between the new nonbank supervisory authority and CBE will be a priority, and consideration should be given to introducing forward-looking risk management and developing global standards on liquidity and leverage.

Strengthening data quality and transparency will help improve the policy debate and business environment, and enhance Fund surveillance. The need for greater transparency and higher frequency data was underscored by the global financial crisis, and enhancements would help ensure that data availability is on par with other emerging markets. In particular, there is a need for more robust CPI and GDP deflators, and for publishing higher-frequency aggregate financial soundness indicators (as planned), and encouraging banks to make available detailed performance and soundness indicators.

This is all neoclassical trickle down twattle. People are hungry and can’t find work, and what does the IMF have in its toolkit? "Public private partnerships".

However Tunisia was a relatively wealthy Arab country and the Egyptian protesters were inspired by the successful Tunisian revolt.