Brad DeLong's Semi-Daily Journal: A Weblog

Brad: The "Permanent link/comments" link links to this: "http://www.j-bradford-delong.net/movable_type/2005_archives/template.Individual%20Entry%20Archive".

I'm not sure this is what you want.

When pressing "Preview" in the comments window, I get a ridiculously large blue header banner, and the comment text appears wrapped around w/o line breaks. The page source shows a TEXTAREA element in the form with line breaks, but no BR elements. So maybe it's just my browser not interpreting this properly (Mozilla 1.6 on Linux after having used Mozilla on Windows for a while).

Just to let you know. This comment should have 4 paragraphs. Let's see how it comes out.

Brad: On we go: On the "Thank You for Commenting" page the return link points to the template as well, and in addition immediately afterwards in shows twice:

Use of uninitialized value in string ne at /Library/WebServer/CGI-Executables/mt_2005/lib/MT/FileMgr/Local.pm line 148.

Brad, can you really name every Deputy Secretary from every cabinet-level department? Probably anyone reading your blog can name Wolfowitz at Defense, but maybe not Interior. Some have bigger media profiles than others. Noting which ones have big profiles, and which ones have small profiles contains helpful information. Committing to memory each Deputy Secretary's identity, as they come and go, would just be a waste. I'm glad a journalist as respected as Friedman is is doing other things.

Moreover, it's a really cheap shot you took at Friedman, considering that you previously noted in a blog entry that Treasury is having trouble attracting talent since nobody pays them any heed. This is Friedman's point, too. Maybe you're just revelling in knowing Bodman's name, when Friedman does not, because Friedman likes Israel more than you do? If Friedman could show he knew the names of more foreign leaders than you do, what would you have us conclude about how we should treat your respective analyses of foreign affairs?

I... I can't make it to January man. I'm getting the shakes. I need a new Krugman column NOW. I'm getting withdrawal baaad. I hope I don't start acting like a barnyard goat and chewing on my shoes or whatever.

And reading Friedman is like a bad trip. That stuff will #$%^ you up.

Dear Brad,

Please, please restore the normal size of the type in the comments box. Those of us who have weaker eyes even when corrected will have difficulty with a smaller type. The old comment box was always simple to read. This box has no left side margin, which also makes for more reading difficulty, and the type is crisp but alas smaller.

Stocks and bonds are performing much as after the Plaza Accord to allow the dollar to weaken in value in fall 1985. Stocks are rising in country after country, while long term American bonds are slowly declining in price. The orderly process is encouraging. Possibly the biggest problem is Japan which could fall to recession if exports decline. The Japanese may soon be forced to buy dollars to protect the domestic economy. There is no room to reduce Japanese interest rates and a fiscal stimulus takes time to institute.

I'm reposting the link to the funniest thing *EVER* written on Thomas Friedman: "The Datsun and the Shoe Tree," _The American Prospect_, 2000-05-22, by "Thomas L. Freetrademan."

(Link in my name is a clickable link to article.)

I remember thinking, after reading a thrashing of Anne Applebaum here a little while back - "Yes, but she's better than Friedman." Doesn't anybody read his stuff before it goes to print? Read all by itself ("every sentences should express a single idea..." said my grade school writing book), "It's a pretty important job, but I have no clue who it is..." is something one says in the confessional, not an editorial.

Brad,
You are a little harsh on the silly man today. At least since his "vacation" he has been a consistent critic of administration policy. The main stream press has so few that I am happy he is at least attempting to educate the Times readership. Gotta work with what you got. I also believe the real fault lies with the Times. So few really thoughtful people. Safire, Brooks and Tommy Boy are all not worthy.

I hate to defend pundits, but I understood his having "no clue" as being tongue-in-cheek, meant to emphasize how insignificant the top Treasury people have become, especially in comparison with their predecessors. I was just boring my family to tears the other night with a tirade along the same line.

So the problem is not Treasury? The problem is an administration that does not listen to its own experts at Treasury?

Having your name in the headlines at Treasury probably means saying something so stupid it has set off a market panic somewhere. Treasury did a good job backstopping being over the debt ceiling for several months. OTOH, no one at Treasury is getting the Bob Rubin genius label.

What I know is that I have an American friend whose back and digestive nerves were messed up on his former job as a construction worker. He has a Califirnian prescription for cannabis. Cannabis consumption does seem to make a major difference with respect to his ability to cope with the constant pain in his back and to allow him to eat more or less normally. Of course, all reasonable people must demand that he be sent back to a world of pain! Isn't this a country of values, or what?

Isn't that just another form of one-upsmanship? "It's beneath my radar, the merest trivia... not something I need to know to be Me."

As lame as Friedman is in his "I had a new thought today!" columns, he's right: very few Americans know the name Samuel Bodman or his job, and he is seldomly mentioned in news reports. Various news searches -- google, Yahoo news, NYT, Lexis -- bear that out. Hell, very few Americans know the deputy secretary of any department. Friedman's point is unclear if not useless, but declaring he's wrong because you know Bodman's name doesn't make Friedman wrong.

Sadly, back to the norm. The economy is growing nicely, but so is productivity and there is simply not enough growth in consumer demand to generate steady job creation above 200,000 a month. Again, we did not create enough jobs to keep up with what should be natural labor force expansion. Say what you will about the dollar falling and about foreign central banks wishing to sell American debt and currency and so drive up interest rates, but interest rates are being kept low because there is sadly no labor cost pressure. The heck with the dollar, we have a growth problem.

http://www.morganstanley.com/GEFdata/digests/latest-digest.html

Bubble Day
Stephen Roach (New York)

December 1, 2004 could well go down in history as yet another important milestone for America’s bubble-prone economy. No, I am not referring to the 162-point surge in the Dow Jones Industrial average that occurred on that day. Instead, my focus is on two widely overlooked statistical reports put out by US government statisticians -- the latest tallies on home prices and personal income. Collectively, these reports paint a worrisome picture of an asset economy that has now truly gone to excess. As was the case in early 2000 when Nasdaq was lurching toward 5000, denial is deep over the potential downside of yet another post-bubble shakeout. That’s what worries me the most.

The just-released report on US house prices for the third quarter of 2004 was a shocker -- an 18.5% annualized surge from the second quarter and a 13.0% increase from year-earlier levels, according to the tabulation of the Office of Federal Housing Enterprise Oversight (OFHEO). That represents a stunning acceleration from the 9.8% Y-o-Y increase of the second quarter and pushes nationwide house price appreciation to a 25-year high. It’s an even larger rise in real, or inflation-adjusted, terms. The surge over the past year is now running nearly five times the 2.7% annualized increase of the non-housing components of the CPI.

Housing analysts and central bankers often chide those of us who draw macro conclusions from a highly fragmented US real estate market. In the housing business, where “location” matters, concerns over nationwide trends are often dismissed out of hand. In a recent speech, Federal Reserve Chairman Alan Greenspan noted while discussing housing prices, “Overall while local economies may experience significant speculative price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity” (see his October 19, 2004 speech, The Mortgage Market and Consumer Debt, at America’s Community Bankers Annual Convention, Washington DC). It’s a nice theory, but the risk is that it may now be wrong. According to the latest OFHEO tally, house-price inflation over the past year has run at double-digit rates in 25 out of 50 states plus the District of Columbia. In six states -- Nevada, Hawaii, California, Rhode Island, Maryland, and Florida --- home prices increased by 20%, or more, over the past year. Housing is an asset class that is just as prone to excess as are stocks, bonds, currencies, or commodities. If it feels like a bubble, acts like a bubble, and looks like a bubble, it probably is one.

Meanwhile, also on December 1, the Bureau of Economic Analysis of the US Department of Commerce released its regular monthly update on personal income. The stock market loved the October numbers -- stronger-than expected gains in both income (+0.6%) and consumption (+0.7%) that were perceived as signs of ongoing resilience of the indefatigable American consumer. I found the report appalling. What caught my eye was a further reduction in the already sharply depressed personal saving rate -- down to 0.2% in October from 0.3% in September. The September numbers were widely thought to have been distorted by temporary hurricane-related losses to personal income. Most expected personal saving would rebound from this artificially-depressed reading. There was no such bounce in October. The consumer saving rate has now basically gone to zero.

Did you lose all your archives in the switch over to 3.121? Ouch.

In fairness to Tom Friedman, I think he was only trying to make the point that in comparison to the last two Deputy Treasury Secretaries under Clinton, we certainly don't read a lot about Samuel Bodman in the papers. I think his comment is simply that someone who reads a number of papers every day should have heard of him and most of us haven't been active followers of his career. Robert Rubin and Larry Summers were both pretty well known before becoming Treasury Secretary.

Your comment, and DD's, misses the essential point of Friedman's op ed, with which I'm sure you agree. Treasury has been cut out of the policy loop, reduced to an appendage of the Rove/Bush political machine. Snow, a cheerleader, is being shown the door because he wasn't cheerleader enough. In the big scheme of things, whether Samuel Bodman represents an instance of or an exception to that general pattern doesn't matter much.

That said, I'm forced to agree on Friedman's tendency toward the silly.

Your comment misses the essential point of Friedman's op/ed, with which I'm sure you agree. Treasury has been emasculated, cut out of the policy loop, reduced to a mere appendage of the Bush/Rove political machine. Snow, a cheerleader, is being shown the door because he wasn't cheerleader enough. In the big scheme of things, whether Samuel Bodman is an instance of or exception to that general pattern doesn't matter much.

Why am I not surprised?

http://www.nytimes.com/2004/12/03/politics/03social.html

From Bush Aide, Warning on Social Security
By EDMUND L. ANDREWS

WASHINGTON - Calling the current system of Social Security benefits unsustainable, a top economic adviser to President Bush on Thursday strongly implied that any overhaul of the system would have to include major cuts in guaranteed benefits for future retirees.

"Let me state clearly that there are no free lunches here," said N. Gregory Mankiw, chairman of the Council of Economic Advisers, at a conference on tax policy here.

"The benefits now scheduled for future generations under current law are not sustainable given the projected path of payroll tax revenue," he added. "They are empty promises."

Mr. Mankiw's remarks suggested that President Bush's plan to let people put some of their Social Security taxes into "personal savings accounts" would have to be accompanied by changes in the current system of benefits.

Well, ok - given that the opening line in the column mentions the very WaPo article in question, the deputy secretary comment is pretty idiotic. Other than that, though, you can't argue with the premise. The Bush economic team, starting with the Treasury Secretary, is either a gaggle of emasculated nobodies, or a herd of whores. Your pick.

http://www.morganstanley.com/GEFdata/digests/latest-digest.html

While it has only been four and a half years since the bursting of the equity bubble, memories have already dimmed of that extraordinary speculative excess. Yet in retrospect, that may have only been the warm-up for the main event. Bubbles have a way of feeding on each other -- ultimately compounding the problem and leading to an even more treacherous shakeout. That’s certainly the lesson from Japan and could well be the case in the United States. America’s housing bubble is now in the danger zone. So is its saving rate, current account deficit, and overhang of consumer indebtedness. It’s been a US-centric world for so long, that everyone takes it for granted. Yet global rebalancing poses challenges for all major countries in the world. Saving-short America will not be spared -- especially if it must now come to grips with the biggest asset bubble of them all.

I chiefly remember Sam Bodman from his Kinsley Gaffe when he was at Commerce, when he told a group of manufacturers that Commerce had very modest capabilities and wouldn't be going to the mat for them.

I know he's worked on some significant IT-related projects at Treasury, and between Commerce and Treasury has probably spent more time in the air than your average high-ranking Bush official, but, really, has he been terribly prominent, especially when compared to previous DepSecs Treasury?

Brad, you're particularly qualified in this area, so -- other than to hit Friedman -- why are you bringing this up? What should we know about Bodman?

Cut Friedman some slack. If there's anyone who should know who the Deputy Secretary is, it's me. Former Treasury employee; follow it for my job. When I read your piece, I did not recognize Bodman's name _at all_. It sounds like he's on the "running the Treasury" side, rather than the policy side anyway. Which is a big job in and of itself, and the guy who does it should probably stay out of the papers anyway.

Dave

Friedman's comment was right on the mark. As a financial economist, I'm paid to track anything of note out of Treasury, and Bodman is, for markets, not the household name that many Clinton era equivalents were. As a test, I entered Bodman's full name into google, generating only 3,680 hits. (My own name gets 2060, not bad for a Canadian economist). "Stuart Eizenstat", a Deputy Treasury Secretary under Clinton, reaps 18,900 hits. While "Brad Delong", of course, a spectacular 336,000 sites. The difference in google links to Bodman and Eizenstat reflect not only their role at Treasury, but their prominance before (and in Eizenstat's case, after) that job.