The New Republic

The Most Telling Part of Palin's Announcement

Noam Scheiber — Sat, 04 Jul 2009 22:29:00 GMT

I meant to post on this last night but got sidetracked. Anyway, I thought the opening riff in Palin's resignation announcement almost perfectly encapsulated Palin-ism:

I want Alaskans to grasp what can be in store for our state. We were purchased as a territory because a member of President Abe Lincoln's cabinet, William Seward, providentially saw in this great land, vast riches, beauty, strategic placement on the globe, and opportunity. He boldly looked "North to the Future". But he endured such ridicule and mocking for his vision for Alaska, remember the adversaries scoffed, calling this "Seward's Folly". Seward withstood such disdain as he chose the uncomfortable, unconventional, but RIGHT path to secure Alaska, so Alaska could help secure the United States. [emphasis added.]

The bitterness toward sneering elites--and the burning need to prove them wrong (and make them sorry they sneered)--have basically motivated Palin her entire life, not least during last fall's presidential campaign. I'm not surprised she decided to frame her announcement that way, even if it's not exactly the highest-percentage play for someone who still imagines herself running for president.

--Noam Scheiber

Return of the Homeowner Walk-Away Myth

Zubin Jelveh — Sat, 04 Jul 2009 21:46:00 GMT

A little more than a year ago, people started to worry that mortgage holders who were underwater but could still afford mortgage payments would just walk away from their homes and, in the process, send real estate prices even lower.

But historical data, plus the fact that nobody seems to have actually documented widespread cases of walk-aways (granted that's not necessarily an easy task), reduced concerns over a potential jingle-mail problem.

Now Stan Liebowitz of the University of Texas at Dallas purports in a WSJ op-ed to have data showing that the walk away decision is the biggest driver of foreclosures during the current cycle. He considers the following to be clear evidence that home owners with no skin in the game are making the rational decision to walk away:

A simple statistic can help make the point: although only 12% of homes had negative equity, they comprised 47% of all foreclosures...

What about upward resets in mortgage interest rates? I found that interest rate resets did not measurably increase foreclosures until the reset was greater than four percentage points. Only 8% of foreclosures had an interest rate increase of that much. Thus the overall impact of upward interest rate resets is much smaller than the impact from equity.

To be sure, many other variables -- such as FICO scores (a measure of creditworthiness), income levels, unemployment rates and whether the house was purchased for speculation -- are related to foreclosures. But liar loans and loans with initial teaser rates had virtually no impact on foreclosures, in spite of the dubious nature of these financial instruments.

There are at least a couple of things to touch on here. First, the "simple statistic" Liebowitz presents is highly misleading. Here's why:

A group of Boston Fed researchers studied the poorly-performing Massachussets housing market in the early in 1990's and found that just 6.5 percent of underwater borrowers wound up having their homes foreclosed on.

How does that compare with the current downturn? Liebowitz doesn't include a similar figure, so let's do a rough estimate. According to RealtyTrac, about 1.6 million homes had a foreclosure filing in the second half of 2008, the time period Liebowitz examines. Of this group, 755,000 can be assumed to have been underwater using Liebowitz's 47% figure. According to Zillow (and this table), about 20 million homes are currently underwater. Putting that together shows that only 3.8 percent of underwater homes have defaulted.

It's important to point out that the Boston Fed study looked at a 3-year period, so there will no doubt be a rise in the percentage of underwater borrowers who default. But is there any reason to expect it to go much higher than 6.5 percent?

And reading some of Liebowitz's research, it's clear that he's less an unbiased observer than an opponent of government regulation, which he identifies as the primary cause of the foreclosure crisis:

the money for the speculation was made available by lenders who believed the housing and regulatory establishment when this housing and regulatory establishment said that such loans were safe. Since the housing and regulatory establishment consisted of mighty government agencies and highly educated academics, it was not unreasonable for the lenders to assume that the claims made for flexible underwriting standards were correct. Unfortunately, the claims were not correct although most of the housing and regulatory establishment continue to argue otherwise.

That might explain his appearance on the WSJ op-ed page.

In any case, it's not all that clear that walking away is the most "rational" decision for an underwater homeowner. With the economic picture is as gloomy as it currently is, and the government having just bailed out big institutions to the tune of $700 billion, is it crazy for an underwater homeowner to keep paying his/her mortgage and hope for assistance from the government? Moreover, as a recent paper from Charles Calomiris of Columbia University, Stanley D. Longhofer of the Barton School of Business and William Miles of Wichita State University points out, housing is as much of a consumption good as it is an investment. Which is to say, people have an incentive to stay in their home to keep "consuming" housing even if it's value as an asset declines.

--Zubin Jelveh

Worth Reading

Zubin Jelveh — Sat, 04 Jul 2009 19:38:00 GMT

Chinese stocks are up 68% in 2009.

How current health care proposals would reduce one type of rationing.

Excellent financial crisis interactive feature from the Council on Foreign Relations.

When should banks draw down their capital buffer?

Satisfied workers are good for stock prices.

--Zubin Jelveh

The Biggest Loser in Palin's Exit

tnr1.com — Sat, 04 Jul 2009 15:58:00 GMT

According to Continetti, a prominent Alaska state senator and longtime Palin rival had been gearing up a gubernatorial challenge explicitly based on anti-Palinism.

Also: Karl Rove, strangely silent as of this writing....

--Michael Crowley

The Killer Logic of Sarah Palin

tnr1.com — Sat, 04 Jul 2009 15:32:00 GMT

From her speech:

And so as I thought about this announcement that I wouldn't run for re-election and what it means for Alaska, I thought about how much fun some governors have as lame ducks... travel around the state, to the Lower 48 (maybe), overseas on international trade - as so many politicians do. And then I thought - that's what's wrong - many just accept that lame duck status, hit the road, draw the paycheck, and "milk it". I'm not putting Alaska through that - I promised efficiencies and effectiveness! ? That's not how I am wired. I am not wired to operate under the same old "politics as usual." I promised that four years ago - and I meant it.
It's not what is best for Alaska.

Note the subtle reasoning here. According to Palin, a lame-duck governor has just two options. You can have "fun," mail it in, and take an extended travel holiday. Or yo can bail out entirely and let someone else take over. No mention of a third option: using your freedom from crude electoral politics to make hard choices and earn the best possible results for your state. Apparently that's "not what is best for ~~Palin~~ Alaska," either.

--Michael Crowley

Don't listen to Obama

tnr1.com — Sat, 04 Jul 2009 12:16:00 GMT

Hmmm. North Carolina Democratic Senator Kay Hagan had expressed skepticism about a public option being included in the Democrats’ health insurance proposals. Then the advocacy group Moveon.org said they would run ads criticizing her over the July fourth weekend. Then Hagan announced that she is supporting the public option. That’s a pretty clear victory for Moveon.org and for a healthcare initiative that President Barack Obama has repeatedly backed.

Yet, Obama is now urging Moveon.org and other liberal advocacy groups to stop attacking Democrats who oppose measures like the public option, or the employee free-choice act that he favors. He wants them to devote themselves to attacking Republicans. I have some advice for these groups: don’t listen to Obama. And I have some advice for the White House: quietly pass the word to these groups that you appreciate what they are doing.

-- John B. Judis

Weekend Reading

Brad Plumer — Sat, 04 Jul 2009 02:13:00 GMT

Fine, you probably want to read about Sarah Palin. But on the off-chance you also want to read a nerdy piece on, uh, climate science, Edge has a terrific in-depth interview with NASA climate modeler Gavin Schmidt, who lays out the history of his field and really delves into the challenges in trying to understand something as complex as the world's atmosphere. If you've ever wondered what climate models do, how they work, what their strengths and weaknesses are, this is definitely worth a click.

--Bradford Plumer

Palin Round-Up

tnr1.com — Fri, 03 Jul 2009 23:55:00 GMT

Bill Kristol has what he calls a "contrarian" take:

If Palin wants to run in 2012, why not do exactly what she announced today? It's an enormous gamble - but it could be a shrewd one.
After all, she's freeing herself from the duties of the governorship. Now she can do her book, give speeches, travel the country and the world, campaign for others, meet people, get more educated on the issues - and without being criticized for neglecting her duties in Alaska. I suppose she'll take a hit for leaving the governorship early - but how much of one? She's probably accomplished most of what she was going to get done as governor, and is leaving a sympatico lieutenant governor in charge.
And haven't conservatives been lamenting the lack of a national leader? Well, now she'll try to be that. She may not succeed. Everything rests on her talents, and on her performance. She'll be under intense and hostile scrutiny, and she'll have to perform well.
All in all, it's going to be a high-wire act. The odds are against her pulling it off. But I wouldn't bet against it.

The odds are against it, but Kristol would still bet on it? Anyway, one thing that rings false here is Palin's supposed calculation that she would take a political hit for "ignoring" her job as governor. Politicians do this all the time, and it never seems to matter one bit politically.

On a ligher note, here was Palin today:

Let me go back to a comfortable analogy for me - sports... basketball. I use it because you're naïve if you don't see the national full-court press picking away right now: A good point guard drives through a full court press, protecting the ball, keeping her eye on the basket... and she knows exactly when to pass the ball so that the team can WIN. And I'm doing that - keeping our eye on the ball that represents sound priorities - smaller government, energy independence, national security, freedom! And I know when it's time to pass the ball - for victory.

This was somehow reminiscent of that great line of Leslie Nielsen's from the original 'Naked Gun' film:

It's fourth and fifteen and you're looking at a full court press.

--Isaac Chotiner

TNR Exclusive: Palin's Ex-Campaign Manager Reacts

Noam Scheiber — Fri, 03 Jul 2009 23:37:00 GMT

A few minutes ago I spoke to Laura Chase, who served on the Wasilla, Alaska, city council with Sarah Palin during the mid-1990s and managed her first campaign for mayor in 1996. (The two women subsequently had a falling out.) I asked Chase to react to the big resignation news:

I kind of expected it. How is she going to run for president if people keep nagging at her in Alaska? ... Republicans probably had a hand in it. [Democratic State Senator] Hollis French--her nemesis on most of these issues, Troopergate--he announced an interest in running for governor yesterday or the day before. They probably want to get [Lieutenant Governor and fellow Republican] Sean Parnell set up to run for governor with a little recognition under his belt, and she runs for president anyway.

So you don't think she's done with politics--that she's just throwing in the towel?

Absolutely no way in hell. Hell will freeze over before that happens. She’s like a bloodhound. Once she gets the scent, she's never going to let it go. She gets what she wants or dies trying. She wants to be president now that she has a following. ... The thing is with Sarah, she craves adoration. And the people that were sitting there at those rallies adored her. They would walk across coals for that woman. ... Once you have a taste of that--it's like a wild dog getting a taste of rabbit. You never ever go back. Nothing is ever the same, tastes as good …

So do you think it's a case of--whenever she travels outside of Alaska, she's beloved; but whenever she's back in Alaska, she's mired in various ethics scandals and political stalemates? Maybe she just decided, I don't need this abuse...

I think it's more than that. When she comes to Alaska, everyone calls her "Sarah." Out there she’s governor--almost president-elect. She’s not Sarah. They introduce her with pomp and circumstance. Build her ego up, do that whole thing. Here, she comes back, she runs into a buch of Alaskans. It's humbling. It's nothing big to us. They don’t mind calling you on the carpet. It's nothing special. She's just one of us. But she decided she wasn’t going to be one of us…

Do you think she would have resigned if some major scandal were about to break? Would that be her likely response to something like that?

She's too stubborn to allow that. She would have just said, 'Bring it on.'

[Cross-posted from The Stash.]

--Noam Scheiber

TNR Exclusive: Palin's Ex-Campaign Manager Weighs In

Noam Scheiber — Fri, 03 Jul 2009 23:27:00 GMT

I kind of expected it. How is she going to run for president if people keep nagging at her in Alaska? ... Republicans probably had a hand in it. [Democratic State Senator] Hollis French--her nemesis on most of these issues, Troopergate--he announced an interest in running for governor yesterday or the day before. They probably want to get [Lieutenant Governor and fellow Republican] Sean Parnell set up to run for governor with a little recognition under his belt, and she runs for president anyway.

So you don't think she's done with politics--that she's just throwing in the towel?

Absolutely no way in hell. Hell will freeze over before that happens. She’s like a bloodhound. Once she gets the scent, she's never going to let it go. She gets what she wants or dies trying. She wants to be president now that she has a following. ... The thing is with Sarah, she craves adoration. And the people that were sitting there at those rallies adored her. They would walk across coals for that woman. ... Once you have a taste of that--it's like a wild dog getting a taste of rabbit. You never ever go back. Nothing is ever the same, tastes as good …

So do you think it's a case of--whenever she travels outside of Alaska, she's beloved; but whenever she's back in Alaska, she's mired in various ethics scandals and political stalemates? Maybe she just decided, I don't need this abuse...

I think it's more than that. When she comes to Alaska, everyone calls her "Sarah." Out there she’s governor--almost president-elect. She’s not Sarah. They introduce her with pomp and circumstance. Build her ego up, do that whole thing. Here, she comes back, she runs into a buch of Alaskans. It's humbling. It's nothing big to us. They don’t mind calling you on the carpet. It's nothing special. She's just one of us. But she decided she wasn’t going to be one of us…

Do you think she would have resigned if some major scandal were about to break? Would that be her likely response to something like that?

She's too stubborn to allow that. She would have just said, 'Bring it on.'

--Noam Scheiber

Palin’s Independence Day

tnr1.com — Fri, 03 Jul 2009 23:12:00 GMT

Ed Kilgore is managing editor of The Democratic Strategist, a senior fellow at the Progressive Policy Institute, and a frequent contributor to a variety of political journals.

Generously helping the chattering classes extend a week of speculation about her past and future, Alaska governor Sarah Palin announced today that she was resigning her position on July 26, because--well, it’s not quite clear why, but if you watch her press conference, it seems to have something to do with her concept of point-guard play in basketball. She’s handing off the governorship to her Loot, moving towards the basket, and then executing some play only she knows.

To the extent that there are any coherent rationales expressed in her announcement, they involve the distractions of her battles with her lower-48 enemies (and perhaps their Alaskan stooges), and her realization that she wouldn’t be doing much work as a lame duck, so why wait to resign?

More conspiratorial souls, or perhaps those who think the whole announcement was more than passing strange, are expecting some other shoe to drop--perhaps a scandal, or an indictment, though probably no trips to Argentina. Still others think she’s actually getting out of politics altogether. At least one conservative pundit who’s been known to swoon for her, Bill Kristol, guesses she’s already decided to run for president, and calls it a “an enormous gamble--but perhaps a shrewd one.”

Along those lines, my own guess is that Sarah Palin has gotten too big for Alaska, in her own mind, and in the minds of the hard-core cultural conservative base activists across the country, who have loved her and suffered with her as a sort of St. Joan of the Tundra.

So what better time to declare her independence of her old frozen turf, with all the budget fights, and personnel problems, and the perpetual scrutiny of those who know her best? If she wants, I’m sure she can land a nice spot on Fox, and if quitting her one substantial job after just two-and-a-half-years increases the mockery of The Elites, why should she care? As I said the other day, mockery is nectar to Sarah’s legions.

But whether she’s getting tired of a small-potatoes job after hitting the big time, and wants to move up, or is getting out of the game entirely, she’s definitely a free woman now--unless there is a process-server staking out her front door.

--Ed Kilgore

Best Palin Resignation Spin

Noam Scheiber — Fri, 03 Jul 2009 21:37:00 GMT

From Jonathan Martin's piece on the sudden resignation:

“This was a positive, forward-looking decision for her state, her family and she cares so much for Alaska that she is going to get outside of the bubble and work to its benefit outside,” said Jason Recher, who worked for Palin on last year’s campaign.

Yes, exactly--Palin cares too much about Alaska to be its governor. Resigning is the ultimate show of respect. (Actually, now that I think about it, a lot of Alaskans would probably agree with that. I just don't think Palin is one of them...)

Just out of curiosity: How many half-term governors have won their party's nomination for president? (Though something tells me we're not going to get as far as primary season...)

Update: Okay, I spoke too soon. Bill Kristol's is even better:

If Palin wants to run in 2012, why not do exactly what she announced today? It's an enormous gamble - but it could be a shrewd one.

After all, she's freeing herself from the duties of the governorship. Now she can do her book, give speeches, travel the country and the world, campaign for others, meet people, get more educated on the issues - and without being criticized for neglecting her duties in Alaska. I suppose she'll take a hit for leaving the governorship early - but how much of one? She's probably accomplished most of what she was going to get done as governor, and is leaving a sympatico lieutenant governor in charge.

Riiiiiiight.

I'd like to ask a question some of you may have heard before: How many half-term governors have won their party's presidential nomination?

Update II: Okay, wow. I need to be more careful about making grand pronouncements. This, for the moment, is the best Palin resignation spin I've seen. Courtesy of K-Lo at National Review Online:

MSNBC is speculating it's a scandal.

Or it's a brilliant way to keep people guessing about you, perhaps?

If she means brilliant in the way that my showing up to the office naked Monday morning would be a brilliant way to keep my colleagues guessing about my sanity, then I completely agree.

--Noam Scheiber

Palin on Trig

tnr1.com — Fri, 03 Jul 2009 21:02:00 GMT

The full text of the speech is here. What to make of this?

In fact, this decision comes after much consideration, and finally polling the most important people in my life - my children (where the count was unanimous... well, in response to asking: "Want me to make a positive difference and fight for all our children's future from outside the Governor's office?" It was four "yes's" and one "hell yeah!" The "hell yeah" sealed it - and someday I'll talk about the details of that... I think much of it had to do with the kids seeing their baby brother Trig mocked by some pretty mean-spirited adults recently.) Um, by the way, sure wish folks could ever, ever understand that we all could learn so much from someone like Trig - I know he needs me, but I need him even more... what a child can offer to set priorities right - that time is precious... the world needs more "Trigs", not fewer.

Who exactly has been "mocking" Trig Palin? This is, in other words, a disgraceful straw man argument. (I could not help but notice Palin's implication that Trig voted for her to resign). On a less serious note, the most amusing paragraph was this:

We need those who will respect our Constitution where government's supposed to serve from the bottom up, not move toward this top down big government take-over... but rather, will be protectors of individual rights - who also have enough common sense to acknowledge when conditions have drastically changed and are willing to call an audible and pass the ball when it's time so the team can win! And that is what I'm doing!

Sic.

P.S. Here is Rich Lowry:

I think I have pretty well-established credentials when it comes to being charmed by Sarah Palin, but that statement, as a statement, was simply terrible. Rambling and not at all persuasive as an argument for her decision. More Gibson/Couric than GOP convention speech. She shouldn't have said a thing without getting Matt Scully—or some similarly talented speechwriter—on the case first. As to how this decision plays out ultimately, we'll see. There's plenty of time if (as I assume) she wants to run in 2012, and she obviously has plenty of capital with Republicans. But not an auspicious start.

--Isaac Chotiner

Right-Wing Blog Round-Up

tnr1.com — Fri, 03 Jul 2009 20:51:00 GMT

Matt Continetti, The Weekly Standard:

One thing you learn about Sarah Palin when you study her career is that she never, ever does things by the book. I think it's safe to say today's events are a further example of this tendency.

Kathryn Jean Lopez, The Corner:

Listening to her, it seems like this is a combination of stepping back and moving forward. Stepping back, because it's way too overwhelming to be Sarah Palin, political phenom, Sarah Palin, governor of Alaska, and Sarah Palin, wife and mother. I don't know that anyone can fulfill all those roles well, simultaneously. And we're unrealistic, I think, when we assume people can or should.

One reservation I've always had about Sarah Palin has to do with her family. If she is stepping down because of what politics has done to her family, because of something in her family life she doesn't want to see as David Letterman fodder, because it's impossible to be governor, a star, and a mom to an infant ... this is good. It demonstrates good judgment and priorities.

Ace of Spades:

And that is that.
It's over. You can't resign from a governorship and then run for higher office. Barring some strong reason, like needing treatment for cancer.

--Isaac Chotiner

Palin 2012: Maybe Not

tnr1.com — Fri, 03 Jul 2009 20:35:00 GMT

Andrea Mitchell is reporting on MSNBC that Palin has told friends and associates that this marks her permanent departure from the political scene.

Here is the complete Palin official statement.

--Isaac Chotiner

Palin Does it for The Taxpayers

tnr1.com — Fri, 03 Jul 2009 20:27:00 GMT

The weirdest part of a weird speech may have been Palin's claim that by resigning, she would save the state a bunch of money.

"All I can ask is that you trust me with this decision and know that it is no more politics as usual and as some Alaskans have seen today, maybe they don't mind wasting public dollars and state time but I do. And I cannot stand here as your governor and allow the millions of dollars and all that time to go to waste just so that I can hold the title of governor. I don't know if my children can allow it anyway."

--Isaac Chotiner

More on Palin

tnr1.com — Fri, 03 Jul 2009 20:11:00 GMT

Here is part of the statement her office released. The sense that her political team is incompetent will be strengthened by this memo. An excerpt:

It is my duty to always protect our great state. With that in mind, my family and I determined that it is best to make a difference this summer, and I am willing to change things, so that this administration, with its positive agenda, its accomplishments, and its successful road to an incredible future, can continue without interruption and with great administrative and legislative success.

She added:

"It hurts to make this choice, but I've given my reasons. I'm reminded of a sign on my parents' refrigerator, 'Don't explain; your friends don't need it, and your enemies won't believe you anyway.'"

The first paragraph above is gibberish. In the second graf, I have italicized two things that would appear to contradict each other. Strange, strange, strange.

--Isaac Chotiner

News of the Weird (i.e. Palin)

tnr1.com — Fri, 03 Jul 2009 20:10:00 GMT

Palin announces that she's stepping down as Alaska's governor on July 26. To do what? According to the NYT, to run for president in 2012:

By leaving office early, Ms. Palin will be able to travel around the country more freely and not have to deal with the constraints of being a governor.

It's true that as governor of a state that's not part of the lower 48, Palin was hampered in a way that pretty much every other governor with presidential aspirations is not: a weekend trip to Iowa or New Hampshire was not just a weekend trip for Palin. If she wanted to run for the White House in 2012, she probably couldn't have afforded to run for reelection as governor in 2010. But to resign before her first term is even over--making her skimpy resume even skimpier? Strange.

--Jason Zengerle

Palin To Resign as Alaska Governor!

tnr1.com — Fri, 03 Jul 2009 19:52:00 GMT

I will post some of the transcript of Palin's remarks when it becomes available. Suffice it to say that the speech announcing her resignation was given so quickly that you could hardly understand what she was saying. However, at whatever pace her remarks were made, the content of what she said made absolutely no sense. She talked about people in Alaska "looking north toward the future" and went on and on about the troops (no shame in that, of course, but what do American soldiers fighting overseas have to do with her decision?). She also added that she knew "when to pass the ball for victory." In short, it was a typical Palin performance: utterly bizarre and completely compelling.

More to come.

--Isaac Chotiner

Prospects For a Second Stimulus

Noam Scheiber — Fri, 03 Jul 2009 15:21:00 GMT

The Journal writes up what we can say at this point:

With unemployment still rising, White House economists have discussed whether more economic stimulus will be needed, but they won't make the decision until at least the fall.

Administration officials say they have to wait to see how the economy responds as more stimulus dollars are spent. And as big battles peak this summer and fall on the president's health-care plan, climate bill and financial re-regulation, Mr. Obama wouldn't want to put another fight on Congress's agenda. ...

Administration officials point out that only $53 billion of stimulus funding has been paid out this year as of June 19. That is about 10% of the spending portion of the stimulus measure.

President Obama has promised spending will ramp up quickly over the summer. Some 5,000 transportation projects have been approved, but only 2,000 of them have actually started. Much of the rest will be getting off the ground shortly, White House aides say. ...

On CNBC Thursday, Ms. Romer [Chairman of Obama's Council of Economic Advisers] was pressed on the possibility of a second stimulus. "We'll do whatever it takes," she said.

--Noam Scheiber

Elements of Style

tnr1.com — Fri, 03 Jul 2009 13:37:00 GMT

What's wrong with this sentence from today's Financial Times:

US marshals seized the $7m New York City penthouse of Bernard Madoff, the imprisoned fraudster, and his wife, officials said yesterday.

-- John B. Judis

Today at TNR (July 3, 2009)

tnr1.com — Fri, 03 Jul 2009 11:00:00 GMT

The Lost Lincoln: Who He Really Was, And Why We Need To Rediscover Him. by Sean Wilentz
TNR's Founding Fathers Spectacular: Wood On Washington! Schlesinger On Adams And Hamilton! Wilentz On Jefferson! And Much More...
‘Public Enemies': Johnny Depp Is Magnetic As John Dillinger, But Will You Care When The Lights Come Back On? by Christopher Orr
How The Iraq War Clouded Obama's Judgment On Iran, by Nader Mousavizadeh
TNRtv: Afghanistan's Ambassador On His Country's Big Challenges, From A Thriving Poppy Trade To Legalized Marital Rape, by Said Jawad
Congress 2.0: It's 2009--Isn't It Time We Allow Senators Incapable Of Making It To Washington To Vote From Home? by Jason Zengerle
Why A Half-Assed Climate Bill Is Probably Worth Supporting, by Bradford Plumer

As always, be sure to check out economic news on The Stash, environment and energy coverage on The Vine, the latest on health care at The Treatment, and Marty Peretz's The Spine. Also be sure to take a look at TNR's new blogs by William Galston, Damon Linker, John McWhorter, and Alan Wolfe.

The Most Alarming Employment Statistic

Noam Scheiber — Fri, 03 Jul 2009 03:48:00 GMT

From the unemployment story in The New York Times:

The losses for June lifted net jobs shed since the beginning of the recession to 6.5 million — equal to the net job gain over the previous nine years.

“This is the only recession since the Great Depression to wipe out all jobs growth from the previous business cycle,” Heidi Shierholz, an economist at the labor-oriented Economic Policy Institute in Washington, said in a research note. She called this fact “a devastating benchmark for the workers of this country and a testament to both the enormity of the current crisis and to the extreme weakness of jobs growth from 2000 to 2007.”

You kind of think of the business cycle as a wave that oscillates around a line that trends upward, so that one trough is higher than the next one, even if it's the lowpoint for that particular cycle. And, indeed, that's how it's been since World War II. Well, apparently not any more. At least not for the labor market. (It would be downright apocalyptic if that were the case for GDP.)

--Noam Scheiber

Parsing Goldman's Defense of Its Pay Increases

Noam Scheiber — Thu, 02 Jul 2009 23:46:00 GMT

As Zubin noted, the Journal has a piece today cataloguing the quick rebound in compensation at big Wall Street firms like Goldman and Morgan Stanley:

Based on analysts' earnings forecasts for 2009, Goldman Sachs Group Inc. is on track to pay out as much as $20 billion this year, or about $700,000 per employee. That would be nearly double the firm's $363,000 average last year, and slightly higher than the $661,000 for the average Goldman employee in fiscal 2007, according to analyst estimates reviewed by The Wall Street Journal.

Goldman's response, according to the paper:

"We've only accrued one quarter for compensation and benefits" for 2009, a Goldman spokesman said, noting that the 18% increase from a year earlier was "primarily due to higher revenues." He added that "compensation practices at Goldman Sachs remain fundamentally tied to the firm's performance."

I guess I don't see how that's a compelling defense. I'm not someone who begrudges Wall Street firms their ability to compensate employees well. But I do get exorcised when the structure of that compensation creates incentives to place reckless bets that taxpayers have to backstop. Which is to say, the problem with Goldman's likely payouts isn't that they're eye-poppingly high; it's that they appear to be based directly on short-term revenue, which is the opposite of what they should be based on if we want to eliminate those perverse incentives. And yet somehow the Goldman spokesman thought it was exculpatory to point out that the compensation is based on short-term revenue. Mystifying.

--Noam Scheiber

Dillinger Puts On A Show

tnr1.com — Thu, 02 Jul 2009 22:45:00 GMT

With the new John Dillinger biopic out, we decided to pull up a TNR article from 1934 about the legendary bank robber:

Two of the bandits on the outside were gentlemen; one was a tough. He didn't smile at the audience. He scowled. He pushed the people aside with the point of his gun. He ordered cars away from the parking place in front of the bank. He knew a lot of words that went with swearing.

The other two smiled politely as they officiated. The tear gas finally drove the bandits out. They had taken only $52,000 when they might have got $200,000. When they got into their cars they forced customers and others to stand on the running board or hang on the back over the extra tire. They politely told their hostages what they were to do. The hostages knew what would happen if they didn't. But the bank robbers were polite.

Click here for the rest of Kresensky's article on Dillinger. And click here for Christopher Orr's review of Public Enemies.