Hyde Park Blvd

How do we perceive art?  How do we value art? In case you missed the original, Pulitizer-prize winning article, it’s all here in the Washington Post’s piece by Gene Weingarten.

David Rosenberg, he of Gluskin Sheff, checks in, a bitter wind from the North:

Never in recorded history has growth coming out of a string of declines been as weak as what we just witnessed. Considering all the government efforts to usher in a V-shaped recovery, what we saw unfold in the real economy in Q3 – admittedly quite divorced from the action in financial markets – was, in a word, sad.

Via Clusterflock.

On the WSJ blog, Raghuram Rajan makes sense, which seems increasingly unusual in this difficult period:

The question is how you get the benefits without the excess volatility that’s now in the system. I think that’s what we will tackle over the years. We are going to question whether we need a better safety net, we are going to question whether finance should be as risky as it has been.

We may well want to choose more safety and less risk, but we should go into it with open eyes. We can’t have the dynamism and at the same time expect a lot more security.

David Brooks has vital insights today; the world of economics becomes less a hard one, returning to its place as a more a social science.  And its anthropological perch is built on foundations by the likes of Northwestern’s Joel Mokyr.  Worth a read.

David Rosenberg, he of Gluskin Sheff in Toronto, opines on US unemployment and the likelihood that 12% is not impossible, that structural problems may be around for a while:

Think about it. We haven’t yet hit bottom on employment but that will happen at some point. Employment is not going to zero, of that we can assure you. But when we do start to see the economic clouds part in a more decisive fashion, what are employers likely to do first? Well, naturally they will begin to boost the workweek and just getting back to pre-recession levels would be the same as hiring more than two million people. Then there are the record number of people who got furloughed into part-time work and again, they total over nine million, and these folks are not counted as unemployed even if they are working considerably fewer days than they were before the credit crunch began.

So the business sector has a vast pool of resources to draw from before they start tapping into the ranks of the unemployed or the typical 100,000-125,000 new entrants into the labour force when the economy turns the corner. Hence the unemployment rate is going to very likely be making new highs long after the recession is over — perhaps even years.

Harold Pollack, head of the Center for Health Administration Studies at the University of Chicago has had it up to here with the posturing and histrionics surrounding the healthcare debate. Writing in The New Republic, his comments are timely and important and worth repeating in full:

During the Bush years, a fellow at the Kennedy School of Government was writing a book called Savin’ it! on abstinence education in the public schools. As part of his research, he contacted then-Attorney General John Ashcroft with a request for personal testimony. His letter noted:

The book’s fourth chapter, ”Role Modelin’ It!” will feature the personal stories of abstinence heroes for our nation’s young people to emulate …I would very much appreciate if you could share your abstinence story.  I can tell by your passionate advocacy that you will have a lot to offer this book… I hope you will find the time to inspire the next generation of sex-free leaders.

I don’t know whether the author ever completed this monograph, though he did complete another book soon after.

My next health policy book will include a similar chapter on what you might call budget abstinence heroes: Men and women will proclaim the virtues of fiscal conservatism, and then actually resist the temptation to mess around in the fine print when the adults aren’t looking.

Sadly, I can’t find many self-avowed fiscal conservatives who honor the budget abstinence pledge. Consider these lines from the Washington Post:

House leaders abandoned an effort to include a public option backed by liberals that would establish reimbursement rates to providers based on Medicare. Rural Democrats strongly opposed that approach because of the potentially ruinous effect on doctors and hospitals in their districts, where Medicare rates are generally well below the national average.

Only a few lines later:

House negotiators were able to lower the price tag in part by expanding Medicaid coverage to a broader slice of the population… The adjustment reflects findings by congressional budget analysts that covering the poor through Medicaid–which pays providers far less than Medicare–is far more cost-effective than offering subsidies for private insurance policies.

To recap: Rural hospitals will be protected from efforts to reduce the deficit by imposing Medicare reimbursement rates. Urban hospitals (and patients and states) will be forced to accept a system of far lower reimbursements, in order to spare the federal government the cost of private insurance.

This is not a particular surprise, but the hypocrisy is galling. To avoid the evils of a government-run program moderates say will pay providers too little, we’ll put a markedly larger population into a government-run program that pays providers even less.

I can tolerate another giveaway to rural constituencies who profit from our peculiar political system. When the recipients of such giveaways–Mike Ross, Kent Conrad, and others–are such ostentatious advocates of fiscal discipline, it’s a bit rich.

Money and sex have a way of exposing the hypocrisy in all of us. At least when our kids are old enough to demand our personal abstinence stories, we have the decency to blush.

David Rosenberg of Gluskin Sheff provides an interesting picture of life across the border, and just how much different the economic mess looks from Toronto:

If there is one thing that Canadians are never happy with (in addition to their local hockey team) it is the Canadian dollar. When it was flirting near that record low of 62 cents nearly a decade ago, everyone lamented the future of the Loonie and closer ties to the U.S. were being recommended from various corners of Bay Street. It was too expensive to buy anything that was imported, it was too costly to make that annual trip to Florida, and tickets to a Broadway play were prohibitive. We felt poorer. We must have been doing something wrong.

Fast-forward to today. Canadians are now fretting about a strong currency. After all, it is going to crush our manufacturing sector, kill our export base and undermines our domestic competitiveness. Even the Bank of Canada commented on how the strength in the CAD is dampening our growth prospects, cutting its medium-term GDP growth forecast.

Remember, when currencies move there are going to be winners and losers. In its latest policy statement, the Bank of Canada said that “persistent strength in the Canadian dollar” is going to “slow growth and subdue inflation pressures.” So, in return for softer economic growth coming from a more challenging export outlook, what we get back is lower “inflation pressures.” The winner here is anyone who is seeking to borrow money to buy something because the stronger Loonie will prevent the BoC from taking the interest-rate punchbowl away any time soon.

For Canadian businesses, the silver lining is that it will be easier to attract talent today compared to a decade ago when the Loonie was sinking. Call it the reverse brain drain. Whatever it is, it is a good thing from a productivity standpoint, which is the cornerstone to our standard of living. That is why I think we should embrace this new era of Canadian dollar strength as opposed to resisting it.

For those who remember his dad, Mike, on Boston local news (circa 1970s), Matt Taibbi’s rollicking style is a delight, full of genetic echoes.  His Rolling Stone article on Bear Sterns and Lehman — and the naked short-selling behind their demise — is a good read:

Six months after Bear was eaten by predators, virtually the same scenario repeated itself in the case of Lehman Brothers — another top-five investment bank that in September 2008 was vaporized in an obvious case of market manipulation. From there, the financial crisis was on, and the global economy went into full-blown crater mode.

From Roger Myerson’s web page.  Something a little more thoughtful than the usual prattle:

A COMMENT ON THE 2009 NOBEL PEACE PRIZE

By giving the Nobel Peace Prize to Barack Obama at this stage, less than one year into his Presidency, the Prize Committee has emphasized the importance of his redefining how American power will be used in the world: with manifest restraint and respect for world opinion. In his first nine months in office, without giving any foreign power a veto over America’s use of military force, President Obama has reassured the world that the military superiority of the world’s greatest superpower will used only with broad consultation and support from other nations throughout the world. This reassurance has greatly reduced international tensions, so that people can feel safer in America and throughout the world. The Peace Prize Committee may be anticipating that President Obama’s acceptance speech could become a clear statement of a new doctrine: that America can retain its position as the world’s dominant military power without serious challenges only if we exercise our dominance according to principles of restraint that the whole world can judge. If Americans embrace such a doctrine and demand that our future presidents should adhere to it, then there may be some real hope of global peace under American leadership for generations to come. In the long run, this accomplishment may be a far greater contribution to peace than mediating a resolution to one international dispute.

Roger Myerson
2007 Nobel Memorial Prize in Economic Sciences