April 11, 2012

Posted by orrinj at 7:00 AM


Resilient Romney Bests His Last GOP Challenger (Carl M. Cannon, April 11, 2012, RCP)

Another way to look at Romney is that he proved to have one key prerequisite to running a competitive general election campaign: He can take a punch. When he got decked, which happened repeatedly, sometimes by his own corner, Mitt Romney picked himself off the canvas and began launching haymakers on whatever rival was standing in his way -- and there were several of them.

These two images of Romney are not mutually exclusive, and one thing is objectively true: No Republican candidate ever captured the nomination after having trailed so many rivals at one time or another in straw votes, fundraising, public opinion polls, and buzz. They came at him in waves, as though they were running a relay race and Romney was running a marathon by himself. In the ended, he bested the entire tag team of Trump, Bachmann, Perry, Cain, Gingrich & Santorum.

Rick Santorum was the last, and the toughest, rival, but he spit the bit on Tuesday -- apparently to avoid a drubbing in his home state of Pennsylvania two weeks hence. Polls showed the race to be close, but moving Romney's way, even before an expected blitz of negative ads by the Romney machine that were set to begin saturating the Keystone airwaves this week.

"He would have been crushed," veteran Republican political consultant Edward J. Rollins told RCP Tuesday. "The Romney folks were going to bomb him back to the Stone Age! He didn't have any resources to fight back, and losing your home state would be humiliating."

Posted by orrinj at 6:44 AM


Gas Glut Rejiggers Industry (RUSSELL GOLD, REBECCA SMITH and DANIEL GILBERT, 4/11/12, WSJ)

Plummeting natural-gas prices are pushing U.S. industries into virgin terrain, even beginning to dislodge cheap Western coal from its once-untouchable perch as the nation's favorite fuel for power production.

On Tuesday, natural-gas futures settled at $2.03 per million British thermal units--just a hint above $2, the lowest price since January 2002.

The shock wave for industry could intensify this summer because the U.S. is running out of room to store the glut of natural gas, which could drive gas prices down to sustained lows not seen in decades.

Posted by orrinj at 6:38 AM


Kinkade's garish pictures of bubbling brooks, flowering arbors, and quaint village life get at an important chunk of the American psyche that most museum art doesn't. He captures, with chilling accuracy, a strangely American combination of blinkered nostalgia, blind complacency, and a ferocious resistance to change. And then he packages and sells that vision within a no-holds-barred consumerist culture that you wouldn't think compatible with pictures of commerce-free townships twinkling by snowlight. There's not a single Pop artist-not even Warhol-who got at this truly popular side of our culture, and its contradictions, the way Kinkade did.

My praise isn't facetious or knowing. Kinkade channeled a certain American vision and found the perfect way to convey it. His saccharine style, which escapes any hint of irony or self-reflection, is perfectly matched to some unreflective and irony-free zones in our culture. Art doesn't always have to comment on the thing it shows. Sometimes just holding up a mirror can be more than enough. Sometimes a mirror is a better tool for seeing than a fancy lens.

I believe Kinkade is not the fantasist he seems. His art gives a realist's view of how many Americans think and emote. His peaceable farmsteads may never have existed, but the ideals they appeal to are very much with us.

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Posted by orrinj at 6:07 AM


We all crave it, but can you stand the silence? The longest anyone can bear Earth's quietest place is 45 minutes (TED THORNHILL 3 April 2012, Daily Mail)

They say silence is golden - but there's a room in the U.S that's so quiet it becomes unbearable after a short time.

The longest that anyone has survived in the 'anechoic chamber' at Orfield Laboratories in South Minneapolis is just 45 minutes.

It's 99.99 per cent sound absorbent and holds the Guinness World Record for the world's quietest place, but stay there too long and you may start hallucinating. [...]

The company's founder and president, Steven Orfield, told MailOnline: 'We challenge people to sit in the chamber in the dark - one reporter stayed in there for 45 minutes.
'When it's quiet, ears will adapt. The quieter the room, the more things you hear. You'll hear your heart beating, sometimes you can hear your lungs, hear your stomach gurgling loudly.

'In the anechoic chamber, you become the sound.'

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Posted by orrinj at 6:02 AM


What Export-Oriented America Means (TYLER COWEN, May-June 2012, American Interest)

At least three forces are likely to combine to make the United States an export powerhouse.

First, artificial intelligence and computing power are the future, or even the present, for much of manufacturing. It's not just the robots; look at the hundreds of computers and software-driven devices embedded in a new car. Factory floors these days are nearly empty of people because software-driven machines are doing most of the work. The factory has been reinvented as a quiet place. There is now a joke that "a modern textile mill employs only a man and a dog--the man to feed the dog, and the dog to keep the man away from the machines."2

The next steps in the artificial intelligence revolution, as manifested most publicly through systems like Deep Blue, Watson and Siri, will revolutionize production in one sector after another. Computing power solves more problems each year, including manufacturing problems.

It's not just that Silicon Valley and the Pentagon and our universities give the United States a big edge with smart machines. The subtler point is this: The more the world relies on smart machines, the more domestic wage rates become irrelevant for export prowess. That will help the wealthier countries, most of all America. [...]

The second force behind export growth will be the recent discoveries of very large shale oil and natural gas deposits in the United States. Come 2030, the United States may well be the new Saudi Arabia of energy markets. We have new fossil fuel discoveries to draw upon, enough to fuel this country for decades, and there is plenty of foreign demand for those resources. 

The shale gas revolution started at the beginning of the last decade, as the technology of "fracking" (hydraulic fracturing) became easier. Fracking uses compressed water, sand and some chemicals to liberate natural gas from underground repositories. Fracking suddenly accounts for 20 percent of domestic natural gas production--a very rapid increase--and the number is slated to rise further over the next few decades, possibly to account for half of all U.S. natural gas output. This is a technology pioneered and mastered by the United States, and it is the United States that has the greatest capacity to transport the product, market it and deliver to the final customers, including those overseas. The United States also has the greatest capacity eventually to monitor and control for the environmental concerns fracking raises. Even if not all the recently discovered fields pan out or meet expectations (as already seems to be the case with the Marcellus field in the Northeastern United States), the door is open for further discoveries and improvements in extraction technologies. Related new technologies will also boost domestic production of oil. [...]

That brings us to the third reason why America is likely to return as a dominant export power: demand from the rapidly developing countries, and not just or even mainly demand for fossil fuel. As the developing world becomes wealthier, demand for American exports will grow. (Mexico, which is already geared to a U.S.-dominated global economy, is likely to be another big winner, but that is a story for another day.)

In the early stages of growth in developing nations, importers buy timber, copper, nickel and resources linked to construction and infrastructure development. Those have not been U.S. export specialties, and so a lot of the gains from these countries' growth so far have gone to Canada, Australia and Chile. Usually American outputs are geared toward wealthier consumers and higher-quality outputs, which is what you would expect from the world's wealthiest and most technologically advanced home market. To put it simply, the closer other nations come to our economic level, the more they will want to buy our stuff. Indeed most of those nations are growing rapidly, so we can expect their attentions to shift toward American exporters. The leading categories of American exports today--civilian aircraft, semiconductors, cars, pharmaceuticals, machinery and equipment, automobile accessories, and entertainment--are going to be in the sweet spot of growing demand in what we now call the developing world. 

Indeed, of the wealthy nations, the United States probably will do the best at capturing those growing markets. 

Posted by orrinj at 5:48 AM


The austerity question: 'How' is as important as 'how much' (Alberto Alesina   Francesco Giavazzi, 3 April 2012, Vox)

Two recent IMF publications (IMF, 2010, Chapter 3, and Devries et al 2011) agree that spending-based adjustments are indeed those that work - but not because of their composition, rather because almost 'by chance' spending-based adjustments are accompanied by reductions in long-term interest rates, or a stabilisation of the exchange rate, the stock market, or all of the above.

This line of argument is flawed on purely logical grounds. Financial prices - interest rates, the exchange rate, the stock market - are not exogenous. They respond to fiscal policy announcements. For instance, if investors perceive, correctly, that only spending-based adjustments will lead to a permanent consolidation of the budget, this will increase 'confidence' and result in lower interest rates and higher stock prices.

A more convincing piece of evidence comes from a comparison of the effects of different 'types' of fiscal adjustment on confidence and on output. Tax-based stabilisations not only eventually fail, in the sense that they are unable to stop the growth of the debt-to-GDP ratio. When these fiscal packages are announced entrepreneurs' confidence falls sharply, and this is reflected in a fall in output. On the other hand, spending-based stabilisations (especially if accompanied by appropriate contemporaneous polices) do not negatively affect economic confidence contemporaneously. Moreover they are often accompanied by an increase in output within a year.

It stands to reasons that European countries where tax revenues are close to 50% of GDP do not have the room to increase revenues even more.

A paper by Harald Uhlig and Mathias Trabandt (2012) nicely shows how close many European countries are to the top of realistically measured Laffer curves. Thus any additional tax hikes would lead to relative low increases in tax revenues and could be very recessionary, through the usual supply- and demand-side channels.

Given all of the above we should stop focusing fiscal policy discussions on the size of austerity programmes. A relatively small tax-based adjustment could be more recessionary than a larger one based upon spending cuts. Likewise, a small spending-based adjustment could be more effective at stabilising debt-to-GDP ratios than a larger tax-based adjustment.