Salon: How the World Works

Family doctors go better with Coke

Andrew Leonard — Tue, 10 Nov 2009 14:49:00 PST

A Coke a day, keeps the family doctors in pay.

Outrage of the week alert: Via a tweet from Steve Silberman, we are directed to this story from the Cleveland Plain Dealer reporting that the American Academy of Family Physicians has "a six-figure grant from the Coca-Cola Co. to create content about beverages and sweeteners for the academy's consumer Web site, FamilyDoctor.org."

Kaye Spector reports the obvious:

Soda and other sweetened beverages are the No. 1 source of added sugars in the U.S. diet, the American Heart Association says, and many health experts blame the drinks, at least in part, for the soaring U.S. obesity rate. A 12-ounce can of soda can contain up to 10 teaspoons of sugar.

From the AAFP press release:

The Consumer Alliance program is a way of working with interested companies to develop educational materials to help consumers make informed decisions so they can include the products they love in a balanced diet and healthy lifestyle," said AAFP President-elect Lori Heim, M.D., of Vass, N.C.

The American Academy of Family Physicians -- working hard to help you incorporate "the products you love but that aren't at all good for you" into your unhealthy lifestyle.

But hey, there is a silver lining. From the press release again:

The Consumer Alliance program also will create a new source of funding for AAFP, which, in recent years, has broadened its search for funding outside the pharmaceutical industry.

Fantastic! Have a Coke with your Ativan.

Bear Stearns' subprime hedgies: Not guilty!

Andrew Leonard — Tue, 10 Nov 2009 13:34:00 PST

Two former Bear Stearns hedge fund managers who made very, very bad bets on subprime mortgages, Ralph Cioffi and Matthew Tannin, were found not guilty of securities fraud in Brooklyn federal court on Tuesday. The verdict invites a look back at how the history of the financial crisis is being written in real time.

William D. Cohan's riveting account of the fall of Bear Stearns, "House of Cards: A Tale of Hubris and Wretched Excess on Wall Street" was one of the first books published on the financial crisis to hit the market. It also held pride of place as one of the best, at least until the publication of Andrew Ross Sorkin's "Too Big To Fail." Full of detail from numerous interviews and copious access to company e-mails, Cohan's account is noteworthy not least for the compelling and lengthy circumstantial case that it makes against Cioffi and Tannin. If you were judging from "House of Cards" then Cioffi and Tannin seemed obviously guilty of telling investors in their funds one thing while doing another.

Just one example of how Cohan tells the story;

The problem was that none of it was true. Cioffi had not been avoiding residential mortgage-backed securities, as he had suggested to his investors on their monthly statements. Actually, he had done precisely the opposite and had started to load up on these toxic securities at exactly the wrong moment.

The indictment of both men on charges of conspiracy, securities fraud, and wire fraud is part of the last chapter of "House of Cards." The case against them, from Cohan's telling, seems airtight.

Two months after the publication of "House of Cards," Wall Street Journal reporter Kate Kelly's book on Bear Stearns, "Street Fighters: The Last 72 Hours of Bear Stearns, The Toughest Firm on Wall Street," finally made it to stores. Although Kelly broke some important stories for the Journal on Bear Stearns, "Street Fighters" -- about half as long as "House of Cards" and much less comprehensive -- suffered in comparison. The saga of Cioffi and Tannin only occupied two pages near the beginning of her story, and the fact that they had been indicted for securities fraud in federal court wasn't even mentioned, a point I noted with several exclamation points written in the margins of my reviewer's copy.

At the time, I thought this was a pretty serious flaw in "Street Fighters." But now, after seeing Cioffi and Tannin acquitted in a court of law, I wonder. Maybe it was Cohan who gave their misadventures too much attention, while Kelly got it just right.

A Chinese netbook in every pot

Andrew Leonard — Tue, 10 Nov 2009 11:08:00 PST

From the waiting-for-China's-sleeping-consumer-giant-to-wake-up department we bring you this quote from a CNET news story reporting that shipments of computer processors worldwide set new records in growth and volume in the third quarter of 2009. (Italics mine.)

"The story about 3Q09 leads with Atom processors being sold in mini-notebooks (a.k.a. netbooks) manufactured and sold in China," said Shane Rau, IDC's director of semiconductors for personal computing research

Low-cost netbooks have been selling at a rate of 200,000 to 300,000 a month all year in China, according to China Daily, although one analyst predicted that the "euphoria" would peter out toward the end of the year, as consumers start "to realize the limits of the products."

It's a tough market to get rich in -- netbooks use cheap, underpowered processors that don't allow for much profit per device, and the competition to bring new products to market is extraordinarily intense. Yesterday's netbook is today's paperweight. So while the sheer total of computer processors being shipped may be setting records, revenue is not. Still, while we wait and watch in the U.S. for indisputable signs that an economic recovery is under way, taking meager hope in such indicators as a slight uptick in temp hiring, the reports of the fast-growing Chinese consumer computer market are intriguing. If the netbook is an entry-level computing device, then there are millions of Chinese ready for an upgrade. That's good news for the semiconductor industry, the global economy and, naturally, Intel.

What does it mean for American jobs? Well, Intel is still building state-of-the-art semiconductor fabrication facilities in the U.S. So as long as Chinese computers continue to incorporate Intel CPUs, there should be a trickle-down benefit to to American workers from a booming domestic Chinese computer market. But we'll see how long that lasts.

SuperFreakonomic science fiction

Andrew Leonard — Tue, 10 Nov 2009 08:39:00 PST

In the annals of bogus Digital Millennium Copyright Act (DMCA) takedown notices, the directive from HarperCollins ordering Berkeley economist Brad DeLong to remove from the Web the PDF of Chapter 5 of "SuperFreakonomics" that he posted a few weeks ago is not actually an out-of-bounds request. There's little doubt that DeLong actively wanted to embarrass "SuperFreakonomics" authors Steven Levitt and Stephen Dubner by exposing their "global warming" chapter to public scrutiny. Even bad publicity is usually welcomed by publishing companies, but in this case, the storm of ridicule showered upon "SuperFreakonomics" may ultimately be too much of a bad thing.

So? The DMCA takedown is just as embarrassing for Levitt, Dubner and HarperCollins as the content of the chapter; demanding its removal is a tacit admission that this particular excerpt does not work as advertising for the entire book. It may even be achieving exactly the opposite.

"SuperFreakonomics" has attracted so many withering critical takedowns that keeping track of them deserves a blog of its own (although ClimateProgress' Joe Romm has that job pretty much covered), but the award for the best written annihilation must go to the New Yorker's Elizabeth Kolbert.

Best paragraph:

Given their emphasis on cold, hard numbers, it's noteworthy that Levitt and Dubner ignore what are, by now, whole libraries' worth of data on global warming. Indeed, just about everything they have to say on the topic is, factually speaking, wrong. Among the many matters they misrepresent are: the significance of carbon emissions as a climate-forcing agent, the mechanics of climate modelling, the temperature record of the past decade, and the climate history of the past several hundred thousand years.

Best single line (in reference to large-scale geoengineering technologies):

To be skeptical of climate models and credulous about things like carbon-eating trees and cloudmaking machinery and hoses that shoot sulfur into the sky is to replace a faith in science with a belief in science fiction.

Best word:

Horseshit.

No economic disaster here, folks. Just move along

Andrew Leonard — Tue, 10 Nov 2009 07:01:00 PST

Casey Mulligan, the Chicago school economist who writes a regular column for the New York Times and maintains a blog, is nothing if not consistent. But he's moved on from arguing that financial crises rarely cause woe to Main Street, or predicting that the commercial real estate sector wouldn't crash. Now he's staking an even more ambitious claim: The disastrous year we've just lived through wasn't really a disaster.

Lehman failed in September 2008, and that started the panic that got the world's attention. So a year later, in September 2009, after living through a year of "disaster," how did real consumption expenditure ... compare to what it was in September 2008? What about real disposable personal incomes: the amount of income households have on hand to spend? Both of these are HIGHER in September 2009 than they were a year earlier.

University of Wisconsin economist Menzie Chinn crunches the numbers and observes that if you break the data down down per capita "consumption [in the third quarter of 2009] is 0.3 percent (in log terms) below the level in 2008Q3." Maybe not quite a "disaster." But he asks the reasonable question, "But one wonders how much lower per capita consumption would have been in the absence of the actions undertaken by fiscal and monetary authorities around the world."

I have a different question to ask. How isolated must one be not to acknowledge, deep down in your bones, that for millions and millions of Americans the last year has been a disaster? My own state of California, which stands alone as one of the largest economies of the world, has an unemployment rate over 12 percent. I see this every day, even in the relatively insulated enclave of Berkeley. A neighbor is getting foreclosed out of a house he lived in for decades. The nearest pizza parlor just closed down. Restaurants almost always have open tables. The job market is tight or nonexistent for nearly everyone I know and that has resulted in a clampdown on spending, on a purely anecdotal basis, that is near universal. I've lived through a couple of decent-size recessions. This is undoubtedly the worst. Why argue with that?

To try to pick and choose statistics that deny this reality betrays a fundamental lack of connection with real lives in America. It's an impressive achievement.

Why can't Obama be more like Roosevelt?

Andrew Leonard — Mon, 09 Nov 2009 14:26:00 PST

In the wake of 10.2 percent unemployment, the usual suspects are calling for more stimulus and even dreaming of a new Works Progress Administration. The subtext: Why can't Obama be more like Roosevelt? People are out of work, so instead of subsidizing car purchases or home ownership, why not just hire them to build the kinds of parks and schools and bridges that made Roosevelt's WPA such a lasting influence on the American landscape?

The politics of then and now are quite different, of course. Roosevelt faced nothing remotely like the intransigence currently being demonstrated by the opposition party. But could there be other constraints? While defending Obama from critics who are directly blaming the president for the current unemployment numbers, Megan McArdle makes an interesting point:

Stimulus is at best an incredibly blunt instrument. And it is made blunter by all of the procedural checks we've accumulated over decades of government growth, not to mention very powerful public sector unions. FDR could tell his government to go out and hire people to paint hallways or build dams. The current president needs Environmental Impact Statements, public review periods, and the okay of AFSCME.

McArdle is onto something. Consider the city of Berkeley, which is dotted with amazing relics of the New Deal, for instance, the lovely Codornices Rose Garden, an amphitheater of roses carved into the Berkeley hills by WPA workers. If a similar project was conceived today, it is impossible to imagine its progress occurring at anything even approaching a snail's pace. In addition to a no doubt hotly-contested Environmental Impact Statement, there would be massive NIMBY-ism from the local hill-dwellers, protests against the displacement of indigenous plants and animals from a motley crew of activists, and endless City Council meetings debating the merits of every aspect of the new project until the wee hours. Just getting new bike lanes in San Francisco has required a titanic -- and highly litigated -- struggle over the last half-decade. To pull off something on the scale of the WPA, which hired millions of workers to build thousands of schools and bridges and parks all over the country, would require battling "procedural checks" of gargantuan proportions.

Which is not to say that we should do away with impact statements or public review or protest. Making it difficult to remake the landscape has its drawbacks, but also serves to protect our landscape from being remade willy-nilly by the best connected developer or empire-building corporation. In China, the government can get things done fast, but in China, the farmer on the outskirts of Shanghai doesn't have much power to do anything but accede to the authorities when Disney and the Party decide to build a new theme park. Over the centuries in the U.S. a baffling encrustration of contraints has limited the power of the government and the private sector to accomplish their will... but not necessarily for ill.

Obama is not Roosevelt in part because, well, he's not Roosevelt, but also because the times (in addition to the Senate) will not let him be Roosevelt.

How to fix Wall Street in just four paragraphs

Andrew Leonard — Mon, 09 Nov 2009 10:57:00 PST

Sen. Bernie Sanders' proposed bill ordering the secretary of the Treasury to submit to Congress a list of "Too Big to Fail" financial institutions and then to break up those institutions in short order is garnering a surprising amount of attention. Surprising, because first, sad to say, Sanders does not have the best track record in getting bills he has sponsored out of committee, much less signed into law, and second, the slender, two-page piece of legislation is remarkably slight on the details as to how the secretary would go about accomplishing this critical task.

At the Baseline Scenario, James Kwak is ebullient:

The bill says that Treasury can break up the institutions any way they want to, so long as the resulting entities do not individually threaten the financial system (and thereby our economic well-being). So opponents can throw out all those arguments about why separating commercial and investment banking is bad, or why banks have to be global (a bit of an embarrassment to Wells Fargo) -- now they need to argue that a well-functioning financial system must include institutions that could take down the financial system.

I don't think this is true. I don't think "opponents" are going to bother at all with a bill proposed by one of the Senate's most left-wing members. They're saving their fire for considerably more conservative proposals that are backed by the White House and might have an actual chance of passing. Sanders' bill works nicely as a populist thermometer for measuring rage against the Wall Street machine, but it is more an act of political theater than a step toward realizable policy.

But for what it's worth, here's where to go to sign Bernie Sanders' "Too big to fail is to big to exist" petition:

And here's the bill, in its entirety:

A BILL
To address the concept of "Too Big To Fail" with respect
to certain financial entities. 1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 SECTION 1. SHORT TITLE.
4 This Act may be cited as the "Too Big to Fail, Too
5 Big to Exist Act".
6 SEC. 2. REPORT TO CONGRESS ON INSTITUTIONS THAT
7 ARE TOO BIG TO FAIL.
8 Notwithstanding any other provision of law, not later
9 than 90 days after the date of enactment of this Act, the
10 Secretary of the Treasury shall submit to Congress a list 2 1 of all commercial banks, investment banks, hedge funds,
2 and insurance companies that the Secretary believes are
3 too big to fail (in this Act referred to as the "Too Big
4 to Fail List").
5 SEC. 3. BREAKING-UP TOO BIG TO FAIL INSTITUTIONS.
6 Notwithstanding any other provision of law, begin-
7 ning 1 year after the date of enactment of this Act, the
8 Secretary of the Treasury shall break up entities included
9 on the Too Big To Fail List, so that their failure would
10 no longer cause a catastrophic effect on the United States
11 or global economy without a taxpayer bailout.
12 SEC. 4. DEFINITION.
13 For purposes of this Act, the term "Too Big to Fail"
14 means any entity that has grown so large that its failure
15 would have a catastrophic effect on the stability of either
16 the financial system or the United States economy without
17 substantial Government assistance.

Goldman Sachs and "God's work"

Andrew Leonard — Mon, 09 Nov 2009 07:16:00 PST

The headline of a very long story about Goldman Sachs and its CEO, Lloyd Blankfein in the London Times is calculated to provoke: "I'm doing 'God's Work.' Meet Mr. Goldman Sachs."

The passage evokes memory of last week's outburst by banking executives defending the Christian righteousness of profits.

So, it's business as usual, then, regardless of whether it makes most people howl at the moon with rage? Goldman Sachs, this pillar of the free market, breeder of super-citizens, object of envy and awe will go on raking it in, getting richer than God? An impish grin spreads across Blankfein's face. Call him a fat cat who mocks the public. Call him wicked. Call him what you will. He is, he says, just a banker "doing God's work"

But that's hardly the most inflammatory section in John Arlidge's piece. Far more disturbing than the call to a higher authority is Blankfein's dark twist on the old "what's good for General Motors is good for the United States" theme.

Does Blankfein not acknowledge that it is maddening for most of us to watch Goldman gobble up so much cash while we struggle? Quite the opposite. He insists we should be celebrating his bank's success, not condemning it. "Everybody should be, frankly, happy," he says. Can he be serious? Deadly. Goldman's performance, he argues, is the firmest indication of a nascent economic recovery that will benefit not just him and his firm but all of us. "The financial system led us into the crisis and it will lead us out." ... "I've got news for you," he shoots back, eyes narrowing. "If the financial system goes down, our business is going down and, trust me, yours and everyone else's is going down, too."

Let us make as much money as God, in other words, or else.

Dogs vs. SUVs vs. the earth, debunked

Andrew Leonard — Fri, 06 Nov 2009 15:45:00 PST

Because I know Salon readers are still having sleepless nights wondering whether owning a Labrador Retriever does as much damage to the earth as owning an SUV, I thought I would pass on this entertaining debunking of the numbers involved, put together by Clark Williams-Derry at Sightline Daily.

Derry concludes that the authors of "Time to Eat the Dog: The Real Guide to Sustainable Living" underestimate the carbon footprint of SUVs and way overestimate the carbon footprint of dog food. His bottom line, "the anti-doggites are off by a factor of at least 18, and probably more."

Derry's make a convincing case all along the numbers-chain, especially when it comes to breaking down the dog food issue.

The anti-doggists estimate it takes .84 hectares -- or about 2.1 acres of cropland -- to meet a a pooch's food needs for a year. There are a little over 70 million dogs in the U.S. (the Humane Society says 74.8 million, the veterinarians say 72.1 million, and the pet food industry says 66.3 million, for an average of 71.1 dogs). So by the authors' estimates it must take about 150 million acres of U.S. farmland to feed our dogs. In all, there are 440 million acres of cropland in the US -- suggesting that the equivalent of one-third of all U.S. cropland is devoted to producing dog food.

Williams-Derry argues that the notion that 1/3 of all U.S. cropland goes to dog food is ridiculous, particularly when you look at how big a part dog food plays in the overall food economy.

Total retail food sales in the U.S. topped $1.1 trillion in the US in 2008 (see table 36 from the USDA's Agricultural Outlook statistics.) But according to the pet food industry, retail dog food sales totaled just $11 billion in 2008. By that measure, dog food represents about one percent of the total food economy.

There's more at the source, if you still need convincing.

Unemployment's black October

Andrew Leonard — Fri, 06 Nov 2009 13:11:00 PST

That the U.S. would experience a top-line unemployment rate of over 10 percent before the end of 2009 was something most observers of the economy could see coming six months ago, if not earlier. Which makes the somewhat overwrought response to today's admittedly bad numbers a little unexpected.

Megan McArdle titles her post "America and the Terrible, Horrible, No Good, Very Bad Jobs Numbers." Felix Salmon ponders "A Global Problem with No Solution." Paul Krugman has "got a sick feeling about the whole situation."

I don't want to sugarcoat anything. Calculated Risk and The Big Picture have oodles of "butt ugly" charts and graphs that make it abundantly clear that the current labor picture is as bad as anything Americans have seen since the Great Depression. I myself was moaning about the lack of jobs as recently as last Thursday. It's miserable out there.

But as readers were quick to remind me last week, unemployment is a lagging indicator. We have known all year that the unemployment rate would likely rise steadily throughout the year. Let's remind ourselves again that the rate at which the economy is shedding jobs is slowing. That's a good thing. The point at which it would be time to cry out in despair that the world is ending would be if the rate of job loss started growing again -- a sign of the dreaded double dip recession.

Paul Krugman is repeating his usual refrain: Obama should have pushed for a bigger stimulus at the beginning. Perhaps, in the most Rooseveltian of all possible worlds, he could have come into office and immediately orchestrated a massive WPA-like jobs program. But even if one accepts the rather unlikely possibility that Obama could have pushed through a budget deficit even larger than the $1.4 trillion we are currently looking at, I think there's good reason to believe that it would have been very difficult to materially alter the shape of the unemployment curve in the first nine months of the presidency. Remember, Obama came into office at the absolute height of the crisis -- the shock to the economy that hit a year ago had barely begun to work its way through its system.

There are definitely some bad future scenarios lying in wait. One possibility is that high unemployment next year leads to a Republican takeover of the House, and complete government paralysis ensues. Then we might find out for sure what happens when the government does not stimulate an economy as sick as ours. That is an experiment I am not looking forward to. But for the moment, we do have a White House committed to fiscal stimulus, even if it is operating under budgetary constraints -- not of its own making -- that severely reduce its freedom of action.

The numbers are bad, sure. But they could be worse, and they might get better. For the sake of all our animal spirits, let's not despair.

Stimulus at work: Berkeley's SolarMap

Andrew Leonard — Fri, 06 Nov 2009 10:15:00 PST

On Monday, the City of Berkeley announced it had received a $108,500 grant "for the purpose of spurring the adoption of solar installations" as part of the American Recovery and Reinvestment Act.

Berkeley plans to split the grant between two existing programs, "the SmartSolar and Berkeley Solar Map projects."

SmartSolar offers "free energy efficiency and solar advising to Berkeley property owners."

The Berkeley SolarMap is even neater -- a very cool application that takes advantage of the capabilities of Google Maps, and allows you to quickly calculate the cost of a solar system for your home. In just a few minutes, I inputted a years worth of PG&E data on my gas and electricity expenses into Berkeley SolarMap's online calculator, plugged in my address so that system could estimate my available roof square footage from satellite photos, and ended up with an estimate for how much a system would cost and how much I would save on electricity (and how many pounds of carbon dioxide I would no longer be responsible for emitting).

That was the fun part. The not so fun part was that Berkeley SolarMap estimated the total cost of a system that would pay for 100 percent of my electricity needs at $27,000. Ouch. Sure, after after 25 years I would net out at zero, but that's still a little bit too long a time frame for me at the moment. I'm going to have to wait until Berkeley's solar power system financing plan expands.

Even though I have not yet been spurred to take advantage of the program, I'm still happy that stimulus money is helping to pay the wages of people creating these programs and doing the solar power consulting. Those are tax dollars spent that I do not regret one whit.

Why can't more bankers be like Citigroup's ex-CEO?

Andrew Leonard — Fri, 06 Nov 2009 07:24:00 PST

It's only fair. Last week, HTWW was mean to Citigroup's former CEO, John Reed, after he acknowledged in a letter to the New York Times that maybe repealing Glass-Steagall's separation of commercial and investment banking activities hadn't been such a great idea. Since Reed was instrumental in forcing the law's repeal, his change of heart seemed to fit squarely in the "way too little, way too late" category.

But Bloomberg's Bob Ivry tracked Reed down and got the CEO on record with an explicit apology, in "Reed Apologizes for Glass Steagall Repeal, Building Citigroup":

"I'm sorry," Reed, 70, said in an interview yesterday. "These are people I love and care about. You could imagine emotionally it's not easy to see what's happened." ...Lawmakers were wrong to repeal the Depression-era Glass- Steagall Act in 1999, Reed said. At the time, he supported overturn of the law, which required the separation of institutions that engaged in traditional customer banking services from those involved in capital markets. "We learn from our mistakes... When you're running a company you do what you think is right for the stockholders. Right now I'm looking at this as a citizen."

While other bankers are running around trying to defend the Christianity of profit-seeking, and the banking industry as a whole is fighting tooth and nail against any regulatory reform, here's one former executive willing to apologize and admit error. It's refreshing, and worth applause.

How bad is a 10.2 percent unemployment rate?

Andrew Leonard — Fri, 06 Nov 2009 06:19:00 PST

By any normal standard, there is no doubt that the government's unemployment report for October is grim. The unemployment rate jumped up to 10.2 percent and there are 15.7 million unemployed Americans. The headline writers and politicians will grab those numbers and won't let go.

The broadest measure of unemployment, the so-called U-6 number that measures "total unemployed, plus all marginally attached workers, plus total employed part time" also rose, from 16.1 percent to 16.3 percent.

But the news isn't all bad. The Bureau of Labor Statistics reported that it revised down significantly the number of jobs lost in August from 201,000 to 154,000, and in September from 263,000 to 219,000. That means;

In the most recent 3 months, job losses have averaged 188,000 per month, compared with losses averaging 357,000 during the prior 3 months. In contrast, losses averaged 645,000 per month from November 2008 to April 2009.

Going from an average of 645,000 jobs lost a month to 188,000 is a sign of an improving labor market, even if the improvement is only from absolutely horrific to merely awful.

Don't persecute the climate change believers

Andrew Leonard — Thu, 05 Nov 2009 11:05:00 PST

Manna from heaven for the climate skeptic brigade: A British judge has ruled that a man can sue his employer for unlawfully termination based on his "green views" on the grounds that environmental beliefs deserve the same legal protection as religious or philosophical beliefs.

The case is complicated, but not for those who believe human-caused global warming is a hoax, and that environmentalists who urge action restricting greenhouse gas emissions are just trying to impose their anti-capitalist Marxist agenda on society. They are cheering: See, we told you global warming was a religion!

The backstory: Tim Nicholson, head of "sustainability" for the property firm Grainger PLC, says he was attempting to come up with a "carbon management" program for the company, but couldn't get Grainger to give him the necessary information to determine the firm's carbon footprint. He claims he was eventually fired because of his belief that action needed to be taken to stop global warming. Grainger contends that "that Mr Nicholson's redundancy was driven solely by the operational needs of the company during a period of extraordinary market turbulence."

In 2003, the UK enacted a law that prohibits discrimination against employees for "religious or philosophical beliefs." In his ruling, Justice Michael Burton declared that "a belief in man-made climate change ... is capable, if genuinely held, of being a philosophical belief for the purpose of the 2003 Religion and Belief Regulations".

Oddly, Grainger's lawyer had been arguing, reports the Daily Telegraph, "that adherence to climate change theory was 'a scientific view rather than a philosophical one,' because 'philosophy deals with matters that are not capable of scientific proof.'" Which would seem to be saying that it would be OK to discriminate against an employee for views based on science, but not on religion or philosophy. Which is just plain weird.

Nicholson's own reaction to the verdict seems nuanced and reasonably clear-headed.

I'm delighted by the judgment, not only for myself but also for other people who may feel they are discriminated against for their belief in man-made climate change. This is a huge issue and the moral and ethical values that I have in relation to the imperative to do something about it, but crucially underpinned by the overwhelming scientific consensus, mean that to have secured protection in this way is, I think, a landmark decision ... It's a philosophical belief based on my moral and ethical values underpinned by scientific evidence and that's the distinction [with it being a religious belief] I think. The moral and ethical values are similar to those that are promoted and adopted by many of the world's religions. But one of the key differences I think is that mine is not a faith-based or spiritual-based belief: it is grounded in the overwhelming scientific evidence and it's the combination of that scientific evidence with the moral and ethical imperative to do something about it that is distinct from a religion.

But who's got time for nuance? Belief in global warming is now officially a religion is the shorter takeaway for the climate skeptics. I expect to hear Senator James Inhofe declaiming on this topic before the week is done.

An interesting sideline to this case. Justice Michael Burton, reports the Daily Telegraph, is the same judge "who last year ruled that the environmental documentary An Inconvenient Truth by Al Gore was political and partisan."

The Telegraph grossly misrepresents Burton's 2007 ruling. A parent had been trying to stop "An Inconvenient Truth" from being distributed by the Department of Education to secondary schools. Burton declined to do so, calling the film "broadly accurate." He did, however, enumerate nine errors that he said he had found in the documentary and that teachers should be aware of.

Whether or not Burton's citations were truly "errors" has been contested. But I was intrigued to see that one of the supposed errors, in Burton's view, was that "the receding snows of Kilimanjaro are due to global warming." Burton declared that "the scientific consensus is that it cannot be established that the recession of snows on Mt Kilimanjaro is mainly attributable to human-induced climate change."

Well guess what? Just this week, a new study appearing in the Proceedings of the National Academy of Sciences documented that "the melting on Kilimanjaro is accelerating and that in a few years there may be no ice left."

The lead author of the study, Lonnie Thompson, said that the scientists looked at ice cores from the glacier covering the top of Kilimanjaro that "represent almost 12,000 years of history, since the glaciers first formed on Kilimanjaro," and that "the top, most recent layer shows evidence of melting and refreezing, in the form of elongated air bubbles -- a pattern that is not seen at any other time in the glaciers' history.

"So in the 11,700-year history, we don't find that type of melting having been preserved, and it would be preserved and you should be able to see it in the bubble structure," he said in an interview.

Sounds like bad juju to me. The spirits are angry. Maybe it's time to start praying. Or at least cut back on our greenhouse gas emissions.

Amazing Japanese bicycle parking technology

Andrew Leonard — Thu, 05 Nov 2009 08:50:00 PST

The Japanese have a problem: Illegal bicycle parking.

The Japanese embrace technological solutions to problems.

Q.E.D.: A robotic bike-parking machine conveniently located near subway stations that stores and retrieves bicycles quickly and efficiently (and reasonably cheaply -- about 20 bucks a month ).

The Guardian has the non-embeddable video. The whole process seems vaguely Rube-Goldbergian, but that's what makes it so crazy cool.

How to squeeze workers to the last drop

Andrew Leonard — Thu, 05 Nov 2009 07:14:00 PST

The productivity of U.S. workers, reported the Bureau of Labor Statistics, on Thursday, grew a huge 9.5 percent in the third quarter of 2009.

The figures are stark: Output increased 4.0 percent and hours worked decreased 5.0 percent. Overall, "unit labor costs in nonfarm businesses fell 5.2 percent." The BLS defines that last stat by saying "the increase in productivity outpaced the increase in hourly compensation." What that seems to mean in plain English is that those of us who have jobs are working harder for less pay.

Or maybe we're just taking better advantage of the technology that we have available to us. Maybe we're not really working harder, but better, more efficiently. The BLS doesn't go quite into that level of detail.

By and large, steady increases in worker productivity are a sign of a healthy economy, but this big a jump is yet another indicator of what a huge shock to the system the U.S. economy has just experienced. The question remains: If the productivity of each still-employed worker has grown so much, what are the prospects for laid-off workers ever finding new jobs?

And here, one economist, quoted by Bloomberg, offers a slight ray of hope.

"Business are being extraordinarily cautious on costs," said Dean Maki, chief U.S. economist at Barclay's Capital in New York. "Employment will have to go up before long." In other words, so much fat has been trimmed off the bone that there's nothing left to trim.

Do we a see sign of that in today's weekly jobless claim numbers, which fell 20,000 from last week, reaching their lowest point this year since Jan. 3? This week has been chock-full of mildly encouraging economic indicators, but there's also a better than even chance that the overall unemployment rate hits ten percent or higher tomorrow. How much encouragement should we take from the fact that employers have squeezed so much productivity out of workers that it defies expectations that there is any more juice left to wring?

The stock market and the "Obama agenda"

Andrew Leonard — Wed, 04 Nov 2009 15:45:00 PST

Here's what we know for sure. From the opening bell until about 3 p.m. EST stocks staged a strong rally. Then, in the last hour of trading, the rally collapsed, with most indexes ending up about even for the day.

Bloomberg blamed the collapse on a House vote to curb credit card rates. The Wall Street Journal cited worries about a "lackluster" recovery. Megan McArdle attributed it to the Fed's decision to specify under exactly what circumstances it would start raising interest rates again.

McArdle's thesis is especially provocative, because most market watchers expected that the Fed's announcement that it would keep rates close to zero indefinitely would juice the market. But there's no doubt -- the timing of the market collapse and the news from the Fed were highly correlated.

But there's one other thing that happened about the same time the market collapsed. Noam Scheiber published a post demolishing the absurd thesis that the (then-ongoing) rally was a reflection of Wall Street's enthusiasm that Tuesday's election results represented a repudiation of the Obama "agenda" and "stopping the agenda is good for the market."

As Scheiber writes, "the reasons why this theory is utterly ludicrous are almost too numerous to catalog." You don't have to go much further than contemplating what a six month long market boom implied for Wall Street's faith or lack thereof in the Obama agenda. But moments after Scheiber's post, the rally suddenly ran out of steam, suggesting that, if investors had believed such nuttiness, they no longer did, probably because they had just read Scheiber. Which I guess, perversely proves the original thesis!

The truth, as my readers love to inform me, is that intra-day movements of the stock market are rarely explainable by any one factor, and we shouldn't waste precious blog-space trying to figure them out. But longer term movements are worth some head-scratching, which leads to a consideration of a troubling column published in Slate yesterday, by Dan Gross, "The Mystery of the Rising Stock Market."

Gross argues that the strong performance of the U.S. stock market since March has little to do with the prospects of the U.S. economy, and everything to do with the return to relative health of the global economy.

The Dow, the S&P 500, and the NASDAQ are primarily indices of large U.S.-based companies, not main street businesses: more Davos than Chamber of Commerce. These increasingly cosmopolitan firms have been busy globalizing and expanding their operations overseas. In 2006, according to Standard & Poor's, 238 members of the S&P 500 broke out revenues between U.S. and non-U.S. sales. These companies notched about 43.6 percent of sales outside the United States. For large companies that had already saturated the U.S. market, the home market was something of an afterthought. In the second quarter of 2007, 66 percent of Coca-Cola's (KO) beverage business came from outside North America.

This is a point I've been making here since at least last April, when I noticed that the companies that were doing best at resisting the slowdown in the U.S. were the companies that had the most exposure overseas. But while global growth might be good for stockholders and company execs, it's not clear how it helps everybody else.

Gross:

GM's sales in China are rocking. In the first nine months, the company sold 1.3 million cars in China, including more than 181,000 in September. By contrast, GM in the United States in the first nine months sold 1.5 million cars in the United States, down 36.4 percent from the year before. And in September, GM sold just 156,673 cars in the United States. That growth in China is good for GM's shareholders and for some of its executives. But since most of the cars sold in China are produced there, with parts produced by suppliers in China, rising sales in the Middle Kingdom won't translate into jobs for unionized workers in the Middle West.

Before the global recession, there was much talk about whether Asia and the West had "decoupled" their economies. What some of us might not have realized was that the U.S. stock market had also decoupled from the U.S. economy -- and run off with Asia.

Bankers look to Jesus for cover

Andrew Leonard — Wed, 04 Nov 2009 11:27:00 PST

It has come to this: desperate bankers are appearing in churches in order to make the claim that Jesus would have had no problem with million-dollar bonuses and subprime mortgage-backed securities.

OK -- maybe, that's a slight exaggeration. But what else is one to make of that news, reported by Bloomberg, that Barclays CEO John Varley told the "packed pews" of St. Martin-in-the-Fields on London's Trafalgar Square last night that "profit is not satanic."

The 53-year-old head of Britain's second-biggest bank said banks are the "backbone" of the economy. Rewarding high-performing bankers with more pay doesn't conflict with Christian values, he said. Varley was paid 1.08 million pounds ($1.77 million) and no bonus in 2008.

Varley's comments came just two weeks after Goldman Sachs International advisor Brian Griffiths told an audience at St Paul's Cathedral that "the injunction of Jesus to love others as ourselves is an endorsement of self-interest."

It is tempting to make some comments here about having the money-changers getting expelled from the temple, but that would be too easy. There's also that little problem about rich people encountering difficulties getting into heaven, but the Conservabible has already fixed that.

What the bankers are somehow missing, however, is that part of the gospel in which Jesus preaches: If we the taxpayer bail you out, saving your bank and your job, we also have a right to condemn you to eternal damnation when you get a big fat bonus, while we stand in line for our unemployment checks. Is that really so hard to understand?

Peak oil? Don't worry -- Obama's on the job

Andrew Leonard — Wed, 04 Nov 2009 09:21:00 PST

What if, as a result of efforts to fight climate change and boost energy efficiency, global oil demand peaked in the foreseeable future? You could argue that such an achievement would be one of the most historic accomplishments of human civilization to date, proof, indeed, that we are civilized. It's a task that will require lots of hard work all over the globe, but based just on the actions taken by President Obama in his first year of office, in the United States, we have made real progress toward that goal.

The International Energy Agency, reports Spencer Swartz in the Wall Street Journal, is predicting that even if China and India continue to consume ever more oil, overall, the world's appetite for crude is slowing down.

The IEA, which advises rich nations, such as the U.S., on energy matters, is set to use its closely watched annual World Energy Outlook report to forecast that improved energy-efficiency measures in developed nations, as well as climate-change legislation, will help to slow the rate of global oil consumption.

Swartz reports that Deutsche Bank is bold enough to predict that "global demand will peak by 2016 ... due to efficiency gains and technology improvements in electric vehicles."

This kind of thing doesn't happen by accident. Yesterday Energy Secretary Steven Chu announced $38 million worth of grants to Alaska, Kansas, Utah and West Virginia to "support energy efficiency and conservation activities."

Hardly a week goes by when the DOE isn't making a similar announcement. On Sept. 14, Chu announced $354 million in grants to 22 other states. On Oct 1, $72 million. All the grants are part of the DOE's Energy Efficiency and Conservation Block Grant (EECBG) program, created in 2007 under the auspices of the Energy Independence and Security Act, but funded for the first time, to the tune of $2.7 billion, by the American Recovery and Reinvestment Act of 2009 (aka the stimulus bill). So far, $1.6 billion in grants have been disbursed.

So if you're feeling gloomy at the state of financial regulatory reform, or the compromises being made to get a healthcare bill passed, or the failure of same-sex marriage in Maine, consider this. Every single day, the Obama administration has been making steady progress in addressing two of the greatest challenges the human race faces -- human-caused climate change, and a fossil fuel-constrained future.

I'll let Joe Romm, the indefatigable climate change activist, have the last word. In a post published yesterday, "One year after his election, Obama on verge of audaciously fulfilling his promise as the green FDR," Romm writes:

Future historians will inevitably judge all 21st-century presidents on just two issues: global warming and the clean energy transition. If the world doesn't stop catastrophic climate change ... then all Presidents, indeed, all of us, will be seen as failures and rightfully so. In that sense, what team Obama has accomplished in the year since he was elected is nothing less than an unprecedented reversal of decades of unsustainable national policy forced down the throat of the American public by conservatives.

Specifically, Romm cites the stimulus funding for "energy efficiency, renewables, transmission and smart grid, and mass transit and train travel," Obama's decision to raise fuel economy standards, Obama's EPA ruling that greenhouse gas emissions are a pollutant covered by the Clean Air Act, and the progress made so far toward a climate bill.

Not bad ... for a start.

Jon Corzine and the Goldman kiss of death

Andrew Leonard — Wed, 04 Nov 2009 07:18:00 PST

In my blog-reader, a New York Times DealBook summary of the results of the New Jersey gubernatorial election, "Attacking Corzine's Wall St. Ties, Christie Wins Race," is tagged with the byline "By DealBook on Goldman Sachs."

Jon Corzine left (or was forced out by Hank Paulson) Goldman Sachs ten years ago. But in today's through-the-looking-glass political climate, where Republicans are making inroads attacking Democrats for being too close to Wall Street, the stain of any association with the investment bank that everyone loves to hate cannot be washed away. (Bloomberg's astoundingly poor showing in his victory might be another sign of populist revulsion against moneybags candidates.)

By all accounts, Corzine ran a lousy campaign. But his resumé did not do him any favors. The people have spoken: For at least a few years, other Goldman Sachs alums considering a future in electoral politics are advised to be cautious.

BONUS: Felix Salmon, back from vacation, comes on strong with a magnificent history of the recent adventures of ex-Goldman CEOs.

Is Buffett really betting on climate change? Or coal?

Andrew Leonard — Tue, 03 Nov 2009 18:04:00 PST

Yes, not one, but two posts on Warren Buffett's decision to plow $26 billion into purchasing the entirety of Burlington Northern Santa Fe railroads, lock, stock, and barrel.

Because this is too much fun.

First, we have UCLA economist Matthew Kahn theorizing, in "Carbon Pricing Will Help Warren Buffett Get Rich From Investing in Railroads" that Buffet's railroad play is really a climate change bet.

Did you know that freight trains have a fuel economy of 400 MPG? That's better than a freight truck. You don't have to be Jimmy Hoffa to anticipate that Mr. Buffett's bet on shipping logistics will be more likely to payoff in a carbon constrained world where carbon is priced.

OK, but, wait a minute. Blogging at Reuters, John Kemp says the name of the game is coal.

Warren Buffett's acquisition... looks like a strategic bet that America's future energy needs will be met, in large part, through a massive expansion in coal-fired power generation coupled with carbon capture and storage (CCS). Coal is the most important item moved on BNSF's railroads. It accounted for almost half the tonnage moved by BNSF in the first nine months of the 2009 (214 billion revenue ton miles out of a total of 444 billion) and a quarter of the company's revenues ($2.7 billion out of a total of $10.4 billion).

Hmmm. Carbon sequestration technology is not, by anyone's estimation, ready for a large-scale roll out. Seems to me that the bet that properly priced carbon will boost railroad freight doesn't work so well when what the railroad happens to be carrying is a whole lot of coal.

Maybe Buffett just likes playing with trains?

No cheers please, for the N.Y. Marathon winner

Andrew Leonard — Tue, 03 Nov 2009 14:11:00 PST

Just how red, white and blue does an American's blood need to run before being considered truly American?

In CNBC sports business reporter Darren Rovell's first contemplation of this important question, considered in the context of Meb Keflezighi's New York Marathon win this past weekend, the answer seemed to be, either you are born in America, or you flat out don't deserve any patriotic credit. Channeling the nativist, anti-immigrant sentiments of a nation of jerks, Rovell delivered himself of some pearls of journalistic opinion.

It's a stunning headline: American Wins Men's NYC Marathon For First Time Since '82. Unfortunately, it's not as good as it sounds. Meb Keflezighi, who won yesterday in New York, is technically American by virtue of him becoming a citizen in 1998, but the fact that he's not American-born takes away from the magnitude of the achievement the headline implies.... He is an American citizen thanks to taking a test and living in our country... Nothing against Keflezighi, but he's like a ringer who you hire to work a couple hours at your office so that you can win the executive softball league. The positive sign was that some American-born runners did extremely well in yesterday's men's race. If any of them stand on the top step of the podium in Central Park one day, that's when I'll break out my red, white and blue.

Rovell's column excited a storm of negative commentary, and was effectively demolished by Gina Kolata in yesterday's New York Times. Keflezighi may have been born in Eritrea, but "he immigrated to the United States at age 12, [and] he is...a product of American distance running programs at the youth, college and professional levels."

So today Rovell attempted to grovel.

Let me be clear: Meb Keflezighi is an American and any suggestion otherwise is wrong...

That's an almost an apology. But then there's this:

I never said he didn't deserve to be called American.

Sorry, mister, but such a slur sums up exactly the implication of your first column. You should just consider yourself lucky you don't have to take a test to gain American citizenship, because judging by your own words, if asked what it means to be American, you would fail.

Illegal immigration -- India-style

Andrew Leonard — Tue, 03 Nov 2009 11:40:00 PST

Opening paragraphs I wish I'd written:

It's after sundown in Chandankiyari, a village near Bokaro in Jharkhand, and the only sound audible is of howling hyenas in the distance. But strain the ears and you catch snatches of a foreign movie playing. The film, strangely, is in Mandarin and it's for the benefit of the hundreds of Chinese workers here at the site for a steel plant. Watching one of their movies on the big screen is a relaxing way to end the day.

So begins an investigation conducted by by India's Outlook magazine into a sticky labor issue. (Found via ChinaDigitalTimes.) Chinese construction companies contracted to build power plants and steel mills and other big infrastructural projects in India are importing as many as 25,000 Chinese laborers to do much of the work -- and skirting or outright disobeying Indian visa rules that are supposed to only allow entry to "skilled workers."

American technology professionals who look askance at Indian H1B visa immigrants as unfair, low-wage competition might want to hold off on indulging in their schadenfreude. The weird twist to this story is that, according to Indian workers, the Chinese workers get paid wages far higher than their Indian counterparts. So it's not exactly your standard case of cheap foreign labor exploitation.

However, Outlook did gain access into the Chinese walled residential compound. Built like a military base, it had air-conditioned barracks and amenities like a basketball court, a Chinese canteen and cable TV, among other facilities the Indian workers couldn't possibly dream of. As an Indian worker put it, "The Chinese get rum bottles, water bottles and we don't even have a tubewell." The compound is constantly guarded given the tensions with the locals. Clearly, the Chinese, despite being famous for cheap products, do not come cheap. But the Indian management isn't complaining. R.S. Singh refused to divulge financial details but says the Chinese are very "cost-effective". "They'll set up this plant in 15 months whereas a plant of a similar nature would take an Indian enterprise eight years," he says. D.S. Rajan, director, Centre for China Studies, Chennai, agrees on that point. "They behave very well collectively with an inclination to complete projects in time. Indians tend to be more individualistic."

I suppose an economist could make a case that the overall welfare of the Indian people will rise faster than it would have otherwise if Chinese laborers build new roads and power plants and airports at an accelerated pace. But as we know from the U.S. example, arguments about the impact of outsourcing or illegal immigration on our collective prosperity tend not to make much of an impact on the individual who has been downsized or otherwise lost out competing in the job market with foreign imports.

But is international labour mobility something to be shunned? Not at the cost of resentment at home, says Rajan. "At no point should the locals feel that outsiders are taking away their jobs," he says.

OK...now you can plug in your schadenfreude meters.

How do right-wingers explain the commercial real estate meltdown?

Andrew Leonard — Tue, 03 Nov 2009 08:32:00 PST

It is a rare thing indeed to criticize Paul Krugman for being overly optimistic, but his contention in a blog post today that the ongoing implosion in the commercial real estate sector once and for all refutes the argument that all our economic ills can be blamed on Fannie and Freddie and the Community Reinvestment Act, is too hopeful.

One of the enduring myths of the financial crisis has been the claim that it was the result of (a) Fannie and Freddie (b) the Community Reinvestment Act, which forced poor, helpless bankers to make loans to you-know-who. It's a myth that won't go away -- I get asked about it almost every time I give a public lecture -- even though it has been extensively debunked. (See, e.g., here.) But reading this scary piece about commercial real estate, I realized that CRE offers yet another debunking. After all, there was no federal act driving banks to lend money for office parks and shopping malls; Fannie and Freddie weren't in the CRE loan business; yet 55 percent -- 55 percent! -- of commercial mortgages that will come due before 2014 are underwater. The lenders didn't need government urging to dive deep into a property bubble, and drown.

In his haste to pile debunking upon debunking, I think Krugman is missing a crucial link in the right-wing logic chain. I can hear the conservative bloggers typing madly away at their keyboards even as I write these words. The downfall of the commercial real estate sector, they will argue, is a consequence of the financial crisis, which was caused by the subprime mortgage meltdown, which itself was, you guessed it, an inevitable result of the passage of the Community Reinvestment Act in 1977. There's no winning this argument. The best you can do, as with the birthers and 9/11 Truthers, is mock mercilessly, and then move on.

Warren Buffett's railroad bet

Andrew Leonard — Tue, 03 Nov 2009 07:17:00 PST

Explaining his decision to spend $26 billion to buy the 77 percent of railroad operator Burlington Northern that Berkshire-Hathaway doesn't already own, Warren Buffett said, "Most important of all, however, it's an all-in wager on the economic future of the United States. "I love those bets."

The Wall Street Journal opines:

Mr. Buffett's move appears to be a bet that the freight industry is poised for recovery, though it hasn't shown much of a rebound yet. The best that most rail executives have said about freight volume is that it seems to have bottomed. Mr. Buffett has said that he uses weekly railroad carload data as a proxy for the economy's health.

HTWW will henceforth add "weekly railroad carload data" to the list of economic indicators it follows. If it's good enough for Warren Buffett, it's good enough for me. But I'm a little leery of the "all-in" poker metaphor. When you decide to go "all-in" in a hand of poker, you push every last chip in your stash into the center of the table. If you win, great, you are a high roller.

But if you lose, you are done, out of the game, finished, over. Since Mr. Buffett is wagering on the "economic future of the United States," I, for one, sure hope he's not bluffing.

Root for the Yankees, or else

Andrew Leonard — Mon, 02 Nov 2009 15:03:00 PST

Trust the Wall Street Journal for the really important number crunching.

Since 1930, the Yankees -- who would clinch their 27th World Series trophy with a win tonight -- have been a harbinger of average 5 percent GDP growth in years following a series victory.

Meanwhile, as documented by Gary Weckselblatt of the Bucks County Courier Times, when a team from Philadelphia wins the Series, we all suffer horribly.

Last year needs no embellishment. In 1980, writes Weckselblatt, "interest rates were above 20 percent, and unemployment remained at high levels (about 7.5 percent) through the end of 1981."

But the last time Philadelphia won two straight World Series? The A's, in 1929-1930. And we all remember what happened then.

Say what you will about small sample sizes and correlation-is-not-causation, but based on this analysis, it's hard to argue with the data: the unlikely event of a Philadelphia victory would all but ensure a vicious double-dip recession. For the sake of the children, we should be rooting for the Yankees to close this thing out, preferably tonight.

And yet, much as I care about the welfare of my country, I find I hate the Yankees even more. Remember: GDP growth does not necessarily translate into happiness, and the pall of gloom that would descend over the national psyche should the Yankees win again might be more devastating in its long-term psychological impact than even a second Great Depression. Right?

Blowing jobs to China

Andrew Leonard — Mon, 02 Nov 2009 13:36:00 PST

Why should a wind farm in Texas mostly financed by Chinese commercial banks and featuring made-in-China wind turbines get stimulus money supposedly intended to create jobs in the United States? That's the question some angry New York Times readers are asking about the project, and not without reason.

The mystery deepens further when one learns from an expose published by the Investigative Reporting Workshop run out of the School of Communication at American University, that 84 percent of the $1.05 billion in green energy grants announced by the government since Sept. 1st have gone to the American subsidiaries of foreign wind companies. Although some jobs are created during the installation and maintenance of wind farms, the great majority of wind energy jobs are associated with the manufacturing of wind turbines -- an industry currently dominated by foreign manufacturers.

The first lesson to be discerned from the Chinese wind farm example is that the twin goals of Obama energy policy -- quick ramping up of renewable energy deployment and green job creation -- don't always go hand in hand. The U.S. has a limited capacity for manufacturing state-of-the-art wind turbines -- even the American leader, G.E., is looking for ways to cut costs by offshoring production. If your goal is to encourage the creation of as many new wind farms as possible, you will not get there by waiting around for American companies to get their turbine production lines going.

But there's a second, more important lesson. The countries that dominate turbine production: Spain, Denmark, Germany, and soon, China, all made substantial government commitments to support renewable energy development long before the U.S. got around to realizing that this could be an important strategic goal. Perhaps influenced by right-wing economists who argued that simply waiting for rising energy prices to create the proper incentives was the best way to conduct energy policy, generations of American politicians dithered and avoided doing anything substantial.

Now, the U.S. finds itself in a weak position. Catching up with, or surpassing, the likes of China will be increasingly difficult in the decades to come. The U.S. may already have lost its opportunity to be the pace-setter in clean-energy technology. To my mind, that's something a lot more worth getting angry about than whether stimulus money is inadvertently creating jobs in China.

Bad news: Obama wants to "get serious" on deficit

Andrew Leonard — Mon, 02 Nov 2009 10:28:00 PST

Counting down the seconds -- five, four, three, two... -- until Paul Krugman blows his top at President Obama's declaration Monday morning, as reported by Bloomberg, that the government must now "get serious" about reducing debt and helping spur job growth.

Spurring job growth, yes. As Krugman writes in his column today, even a 3.5 percent GDP growth rate isn't fast enough to reduce unemployment by more than a smidgen over the next few years, and there's no guarantee that such a growth rate will continue indefinitely, unless government redoubles its stimulus efforts.

But "reducing debt?" One of Obama's top economic advisers, Christina Romer, has repeatedly warned against repeating the example of 1937, in which Roosevelt heeded the pleas of the deficit hawks of the time and precipitated a recession that short-circuited recovery from the Great Depression. Is Obama listening? Now is not the time for the president to be saying "The government is going to have to get serious about reducing our debt levels."

Certainly, the bond market isn't demanding any such seriousness, yet. As Dean Baker points out this morning the current yield of 3.5 percent on ten-year-bonds indicates "that financial markets are very unconcerned about the deficit."

One can only imagine that Obama's pollsters are picking up on a successful effort by the GOP to make government spending the centerpiece of their attack on Obama's management of the economy. But I'm with Matt Yglesias on this point: When the midterm elections roll around, voters will care much more about high unemployment than they will big deficits. And the one way to absolutely ensure higher unemployment next year is to start "getting serious" about deficit reduction now.

UPDATE: Krugman responds.

Goldman Sachs lesson: The house always wins

Andrew Leonard — Mon, 02 Nov 2009 07:23:00 PST

Goldman Sachs dismissed Matt Taibbi's "vampire squid" assault in Rolling Stone last August as a "witches' brew of conspiracy theories" and continued merrily going about its business of making insane amounts of money while everyone else was lining up at the soup kitchen. But the investment bank will have a harder time shrugging off the punches landed by McClatchy Newspapers' Greg Gordon in a major broadside delivered this morning: "How Goldman Secretly Bet on the U.S. Housing Crash."

Gordon's piece wraps up a grab bag of Goldman criticism into one package, but the key assertion is one that is likely to have Goldman lawyers on DefCon 1 high alert.

In 2006 and 2007, Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.

At the very least, it looks very bad for an investment bank to be selling bonds to pensions funds that its executives knew were toxic waste -- to the point that the bank was actively placing bets that the subprime market in mortgage bonds was due for a crash. The key question is: Was Goldman's behavior illegal? Goldman spokesperson Michael DuVally -- a very, very busy guy these days -- says no.

DuVally told McClatchy that Goldman "had no obligation to disclose how it was managing its risk, nor would investors have expected us to do so ... other market participants had access to the same information we did."

But a host of securities experts say, well, maybe, citing the Securities Act of 1933, which "imposes a special disclosure burden on principal underwriters of securities, which was Goldman's role when it sold about $39 billion of its own risky mortgage-backed securities from March 2006 to February 2007."

Numerous lawsuits filed by pension funds and other institutional investors who were burned by Goldman are now making their way through the judicial system. It will be years before there is any closure on the issue of Goldman's guilt. It would be nice if there was a Elliot Spitzer-type still around who could add some political juice to the process (The People versus Goldman, coming soon to a federal court near you -- Andrew Cuomo, are you listening?) But maybe this is a mess that will be ultimately resolved "within the family," so to speak. Some of the biggest pension funds in the country bought into Goldman's junk. Unlike you or me, they can afford the type of legal counsel that Goldman has to pay attention to.

A vast Jesuit missionary ginseng conspiracy

Andrew Leonard — Fri, 30 Oct 2009 13:06:00 PDT

A news brief from WisBusiness.com, "Wisconsin's Business News Source":

Gov. Jim Doyle announced a trade agreement between the Wisconsin Ginseng Board and a Chinese company today he said will result in $12 million for state producers over the next five years... The Badger State produces some 95 percent of all ginseng produced in the U.S.

Somewhere, the spirits of a couple of 18th century Jesuit missionaries are nodding their heads sagely. This news would not surprise them. Nor would Daniel Boone or John Jacob Astor raise his eyebrows. Ginseng exports have a long history in North America -- in fact, one could argue that ginseng, as possibly the first trade item ever exported to Asia from the Americas, was a key factor in embedding the colonies in what passed for globalization in the 18th century.

The historical record is remarkably clear. In the early 1700s, Father Pierre Jartoux, a Jesuit missionary stationed in Beijing, was ordered by the Kang-Hsi emperor to compile an atlas of China. While surveying the Korean border, he was introduced to the miraculous powers of the ginseng root, which flourished in the dark forests of the northeast. Jartoux wrote a report on the plant intended to be distributed to Jesuit missions throughout the world and eventually translated into English and published in 1714 in the Philosophical Transactions of the Royal Society, under the title "The Description of a Tartarian Plant, Call'd Gin-Seng; with an Account of Its Virtues. In a Letter from Father Jartoux, to the Procurator General of the Missions of India and China."

Jartoux's account was an unqualified rave, making the tuber, long prized in China, sound like a a cross between a wonder-drug antidepressant and crystal meth. As he noted:

"But four days after, finding myself so fatigued and weary that I could scarce get on horse back, a Mandarin who was in company with us perceiving it, gave me one of these roots: I took half of it immediately, and an hour after I was not the least sensible of any weariness. I have often made use of it since, and always the same success."

Amazingly, Jartoux also surmised that wild ginseng's propensity for growing in shady, cool forests in northern latitudes suggested the likelihood that the plant might also be at home in the forests of Canada, a country he had never visited.

Enter Father Francois Lafitau, a Jesuit missionary working with the Iroquois in Canada. In 1715, Lafitau read Jartoux's letter in a Jesuit periodical, and decided to follow up. Within a year he had located the plant in the forests stretching between Montreal and Ottawa. Lafitau soon organized the Iroquois, who were apparently unfamiliar with the medicinal properties of the root, as gatherers of the wild plant. He sent his samples back to China for positive identification. Although North American ginseng was not identical to Asian ginseng, it was nevertheless immediately embraced by the Chinese. By 1720, a French trading firm, the Company of the Indies, was exporting ginseng to China.

(Let us pause for one second here to ponder the linkages now exposed between Qing Dynasty emperors, Jesuit missionaries, Iroquois Indians, colonial exploitation, global trade, and natural medicine. We think the world has been made smaller (or flatter) by the Internet and other communication technologies, but even 300 years ago, the forests of southern Canada were not as distant as we might imagine from the Forbidden City.)

In "Ginseng Dreams: The Secret World of America's Most Valuable Plant," author Kristin Johannsen tells us that Americans of all stripes became fervent ginseng hunters. Daniel Boone was just one of thousands of Appalachian ginseng seekers, and the plutocrat John Jacob Astor "got his start in business in 1786 by buying every scrap of ginseng root he could find and chartering a chip to take it to China. From this venture he he received $55,000 in silver coin -- equivalent to $1,140,000 in our day, and the stake that founded a trading empire that stretched from New York to Oregon." In 1841, writes Johannsen, clipper ships carried over 640,000 pounds of dry ginseng to Asia, and the United States exported a total of 60 million pounds between 1783 and 1900.

Ginseng fever was so great that the United States quickly accomplished what had previously taken many centuries to achieve in China; the near eradication of the wild plant over most of the continental land-mass. Wild ginseng is now considered an endangered species in much of its former North American habitat. As the wild variety became scarcer, the commercial pressure to successfully engage in domestic cultivation rose.

And here is where the story moves to Wisconsin, specifically the German and Polish farmers who settled in the hills of Marathon County.

Today, 90 percent of Wisconsin's ginseng is grown in Marathon County. It is renowned worldwide and prized in China for its high quality -- which in scientific terms means its relatively high percentage of gensenocides, the compound believed to give ginseng whatever special properties is may have. But as recounted by Johannsen, it was all something of an accident. The pioneers of ginseng domestication, the four Fromm brothers of Hamburg, Wisconsin, were "just trying to raise the cash to start a fox farm." Specifically a "silver fox" farm, aimed at producing rare silver fox pelts that could command a huge premium in the fur market. The whole point of farming ginseng, for the Fromm brothers, was to raise enough cash to buy a breeding pair of silver foxes.

Ginseng cultivation is extraordinarily finicky, and it took the Fromm brothers years to perfect it. They also had to endure the crash of the Great Depression, which, combined with the Japanese invasion of China and then World War II, annihilated ginseng export markets. But the brothers persevered, and in the decades after World War II, prospered. In the 1970s and '80s ginseng cultivation in Wisconsin exploded.

But today the news that a new deal for Wisconsin ginseng has been signed could hardly come at a better time. Canada's entry into the export market, along with Chinese efforts at domestic cultivation, caused a global price crash for ginseng in the 1990s, sending hundreds of Wisconsin farmers out of the business -- including the legendary Fromm brothers. Although Wisconsin still dominates U.S. production, the total acreage under cultivation has fallen dramatically. Between 1997 and 2002 alone, it dropped by more than half.

And yet the root causes for ginseng's popularity as an export item in the early 18th century have hardly changed -- if anything, the potential is greater than ever. As one investigation of the current status of the Wisconsin ginseng industry concluded:

Although WI ginseng industry is experiencing a gloom period now, there are chances to revive it. China, the biggest market for American ginseng, has seen a growing population with more and more affluent consumers. Besides, domestic ginseng market is expanded by value-added products such as capsules, teas, tonics, soup base, beer, boxes of candy, and even cranberry-flavored "ginseng chew." The most important is that, Wisconsin ginseng is unique from other ginseng and famous for a higher quality and a minimum amount of chemical residue though at a cost of low production.

What, one wonders, would the Kang-Hsi emperor have thought of cranberry-flavored ginseng chew? Perhaps he would have immediately dismissed it as yet another barbarian innovation of no interest to the ageless Middle Kingdom. I'm guessing, however, that a modern Father Jartoux would taste it with curiosity, and, who knows, perhaps write a blog post about the yummy restorative treat that changed the course of history and global trade patterns.