The story of the miners trapped underground in Chile is fascinating. Even with the 4-inch boreholes that have been drilled to supply them with food, water, and electricity, the men are in for quite a challenge for the next several months while a new shaft is drilled for their rescue. Abetted by a gift of a Kindle reader, I have been doing some reading this summer about World War II and other parts of American history. Here are some of the books that have been inspiring stories of survival, with some links in case you want to read more:
Tears in the Darkness: The Story of the Bataan Death March and Its Aftermath, by Michael and Elizabeth M. Norman
Ben Bernanke may have painted a big bullseye on the Federal Reserve when he spoke last week in Jackson, Wyoming, about the Fed providing additional stimulus if the economy needs it.
Here's some new research by Ang, Bhansali, and Xing on the impact of Build America Bonds:
Build America Bonds (BABs) are a new form of municipal financing introduced in 2009. Investors in BAB municipal bonds receive interest payments that are taxable, but issuers receive a subsidy from the U.S. Treasury. The BAB program has succeeded in lowering the cost of funding for state and local governments with BAB issuers obtaining finance 54 basis points lower, on average, compared to issuing regular municipal bonds. For institutional investors, BAB issue yields are 116 basis points higher than comparable Treasuries and 88 basis points higher than comparable highly rated corporate bonds. For individual investors, BABs have lower yields than regular municipal bonds. Thus, on average the Federal government subsidy disadvantages individual U.S. taxpayers, who are the main holders of municipal bonds, and benefits new entrants in the municipal bond market.
I see that my old boss Ron Paul wants an audit of the nation's gold holdings to make sure the gold is really there and isn't lead bars covered with gold paint or something. This reminds me of a conversation I had with then-congressman Phil Crane many years ago.
Crane told me that one day he happened to be in Louisville, Kentucky and he had some time to spare so he drove out to Fort Knox. He went to the guard, introduced himself, and said he wanted to see the gold. The guard said that wasn't possible because he didn't have an appointment and a bunch of other reasons.
So Crane asked if he could use the phone and he called the Treasury Department and asked to speak to Bill Simon, who was then Treasury secretary. Because Crane was an important Republican congressman on the House Banking Committee, Simon took the call. According to Crane, Simon asked to talk to the guard and he told him to let Crane see the gold.
The main point of Laura Tyson's op-ed in Saturday's New York Times is correct: we should be using the occasion of very low interest rates on government debt to add to our productive infrastructure.
But she makes a simple arithmetic error in the title, "Why We Need a Second Stimulus." In fact, what she's arguing for is not the second but the third stimulus. As is common with the current administration and its supporters, she forgets that the $150 billion infusion in early 2008 was a bipartisan attempt to prevent economic growth from stalling. The Obama administration is now populated by those who, in late 2007 and early 2008, were calling for a "timely, targeted, and temporary" bout of deficit spending to prop up the economy. They shouldn't be running away from it now.
Why does it matter what number stimulus this is?
There's no quicker way to get long-time federal budget watchers to curl up in a fetal position and rock back and forth while moaning in pain than to mention three words: general revenue sharing. Yet Robert Shiller not only used that phrase this morning in this excellent piece in The New York Times, he recommended that the program be brought back to life as a way to help state and local governments out of their fiscal problems and, therefore, to help fix the U.S. economy.
Some background for those too young to remember or for who the original experience is still too painful to recall voluntarily.
Fed Chair Ben Bernanke just addressed the annual Kansas City Fed economic symposium in Jackson Hole, WY. After a detailed review of recent subpar U.S. economic performance, he discussed the pros and cons of more quantitative easing. Rarely have other Fed chairs offered such insight into their thinking, but, based upon his extensive study of the Depression, Mr. Bernanke strongly believes that Fed transparency is essential to reviving markets. So the Federal Open Market Committee stands ready to provide more quantitative easing at its September 21 meeting, if not before, if the economy continues to falter. We are fortunate to have Mr. Bernanke's leadership in this crisis.
The Congressional Research Service published a good discussion of this topic back in March that does not appear to be available online. As a public service, I am attaching this document here. Below is the summary.
D. Andrew Austin, "Running Deficits: Positives and Pitfalls."
Long-time CG&G readers know that my Beautiful and Talented Wife (The BTW) is a professional actor. What you don’t know is that one of The BTW’s favorite and most celebrated roles was when she played Sarah Daniels, the lead in Rebecca Gilman’s wonderful, and wonderfully controversial, play, Spinning Into Butter.
The phrase “Spinning Into Butter” comes from the now largely discredited children’s story Little Black Sambo. In that book, Sambo gives his clothes, shoes, and umbrella to four tigers so they won’t eat him. But instead on agreeing among themselves on how to divide up what Sambo gives them, the tigers chase each other around a tree so fast as they argue that they spin themselves into butter.
