Amongst other unsurprising revelations in this FT opinion piece (sub req).

Some of the argument is rather wonkish, but the gist of Blankfein's chutzpah should be pretty evident once some of the sophistry is stripped away.

If I had to summarize the piece in once sentence, it would be "Goldman concern trolls the regulation of investment banking". Although Blankfein headlines his trolling as a quest for greater transparency, his article crosses a variety of themes being discussed in the context of regulatory reform and ends up offering a variety of contradictory remedies that haze the essential message - that Blankfein wants regulators to back off, not tell him how to run his business or how much capital to hold, but give other institutions a much harder time.

Here's how he pulls it off.

His point of departure is to highlight contingent risks posed by off-balance sheet vehicles, such as SIVs. This is generally uncontroversial point, and happens to be a pointed criticism of Citigroup especially, which was the industry leader in SIV sponsorship. That Citi subsequently reconsolidated its SIVs when short-term funding evaporated, however, was not a question of Citi realizing an off-balance sheet liability - it was instead a deliberate and discretionary choice of Citi's management, to reconsolidate rather than take a reputational hit by cutting investor clients loose. (Other firm, for example, Standard Chartered Bank with its SIV called Whistlejacket, Cheyne Capital with Sigma, took the opposite approach - i.e. it left the SIV for dead, and allowed bankruptcy vultures to sort through the carcass)

Blankfein's argument, whilst fine on the face of it, however, says very little about the hidden risk. (The famous "liquidity puts" - famous because Bob Rubin had apparently never heard of these cunning derivatives which certainly did embed hidden risk - were not sold to SIVs.) Instead it illustrates that bank management can make catastrophic decisions (news, anyone?).

But having claimed the moral high ground of not trying to hide risk (Goldman was not a SIV sponsor), Blankfein goes full throttle chutzpah, claiming:

"An institution's assets must also be valued at their fair market value - the price at which willing buyers and sellers transact - not at the (frequently irrelevant) historic value. [...] At Goldman Sachs, we calculate the fair value of our positions every day, because we would not know how to assess or manage risk if market prices were not reflected on our books."

Now part one, what institutions must do, is cheap talk. What's Blankfein does know, however, is that the second assertion, about what Goldman does, is testable. And Goldman does not fare well.

Here's a Bloomberg article from April 2008, just after the Bear Sterns demise, which proves how utterly full of it Blankfein is. Were Goldman so supremely diligent about valuing its assets daily, why would it have nearly 100bn of "impossible to value" assets (9% of total assets), up a staggering 50% from the previous quarter? What of Lehman Brothers, now the poster-child of banking incompetence, which was so much more transparent in contrast?

Lloyd Blankfein knows how easily Goldman's probity in this area can be measured. He has to know. But still, he has the cojones to come out and say - "we are totally awesomely transparent, always have been, because I say so."

Now, to be fair, Blankfein does walk it back somewhat by saying that in times of market distress, there needs to be some forebearance. That this does not comport with his call for greater transparency however does not apparently bother him much, nor does the totally obvious point that in a bull-market, where prices are stable and rising, firms flaunt transparency in the same way a well-endowed Chippendale flaunts full-frontal nudity. 

Sandwiched between the first flash of chutzpah and the next, Blankfein slips in a call to re-arrange the desk-chairs, with the creation of a forum where systemic risks can be discussed between bankers and regulators. Nice try, Lloyd, but you know how your firm behaves in this regard. Not that I blame Goldman, or other firms who carry the same attitude. There is an inherent incentive to withhold, in a multi-firm setting, the most critical information. If, for example, Goldman's brainiacs (and I will concede that Goldman employs some of the best) find a fantastic trading opportunity on account of a severe mispricing of risk (say, erm, the housing market), what incentive do Goldman have to share this nugget with all their peers and competitors? Why give up that sort of intellectual property? Dumb question, of course.

Now Lloyd tackles the question of capitalization. (By way of brief background, Goldman, like all firms, wants to be as thinly capitalized as possible to enhance return on equity.) What he calls for is, shall I say, a sensitive approach by regulators to ensure that "public capital" (i.e. taxpayer bailouts) is rarely needed.

If you have just anticipated the next classic episode of regulatory concern-trolling, well done. Blankfein says the quality of capital (i.e. Tier 1 equity versus Tier 2 hybrids) is very important. Yes it is. But lest we not forget, beggars, Goldman included, can't be choosers.

Blankfein deals next with liquidity. In short, he says park the question of capitalization, focus now on how banks fund themselves. How convenient. Liquidity for Goldman and co these days is provided in vast quantities directly from the Federal reserve - TALF, TSLF and its many variants. There is no exit strategy, there is effectively a perpetual supply of near-costless funding for firms like Goldman, and Blankfein would like little better than to have this arrangement persist and enable his brainiacs to go balls and all into spread-banking. And for as long as regulators are persuaded that another liquidity freeze will break the system again, Blankfein's people will be rolling in it.

On one level, I have to take my hat off to Blankfein - or more likely, Lucas van Praag - for managing to co-opt the Financial Times for a shameless advocation of a series of measures certain to reinforce Goldman's pre-eminence. The guy's doing his job, I guess. Still, concern-trolling the regulatory system this way is pretty brazen - it is not transparency that Goldman wants but better rigging of the system. In this case, by having regulators look very closely at firms who don't operate the way Goldman does, and turning a blind eye when Goldman violates its own standards.

Ross Douthat stakes his claim.

I know he is not from the first person to make this argument about declining the award, but what kind of imaginationless prig goes on for 800 words to explain that the main risk from accepting the award is that it could be used as a derogatory epitaph to his presidency?

Heckuva job, Ross.

You know how Obama shown to be completely useless and all and got disrespected by the world at large because Chicago didn't get awarded the 2016 Olympics?

There's now only one answer to that charge:

Suck. On. This.

Published today, available here.

Blame is apportioned on both sides, but this seems pretty final:

There is the question of whether the use of force by Georgia in South Ossetia, beginning with the shelling of Tskhinvali during the night of 7/8 August 2008, was justifiable under international law. It was not. Georgia had acknowledged that the prohibition of the use of force was applicable to its conflict in South Ossetia in specific legally binding international documents, such as the Sochi Agreement of 1992 or the 1996 Memorandum on Measures to Provide Security and Strengthen Mutual Trust between the Sides in the Georgian-South Ossetian Conflict. Even if it were assumed that Georgia was repelling an attack, e.g. in response to South Ossetian attacks against Georgian populated villages in the region, according to international law, its armed response would have to be both necessary and proportional. It is not possible to accept that the shelling of Tskhinvali during much of the night with GRAD multiple rocket launchers (MRLS) and heavy artillery would satisfy the requirements of having been necessary and proportionate in order to defend those villages.

Remember how John "we are all Georgians" McCain was supposed to be the war and foreign policy smart-guy? And still is? Heckuva job, Villagers.

Wolfie's back. (sub req)

And it's 2002 all over again, except this time it's all how Iran is the most dangerous threat to humankind.

After rambling for a few hundred words to explain that Iran is definitely going nuclear, will renege on any and every commitment, and that we must put in place more sanctions right away before Israel takes matters into its own hands, we hit pay-dirt. Apparently:

"Iran's Arab neighbours are also deeply worried that nuclear weapons would embolden Iran's support for terrorism, subversion and even conventional military aggression. Americans need to consider that nuclear weapons might embolden Tehran to provide sanctuary to al-Qaeda or other terrorists. Or, more catastrophically, even provide then covertly with nuclear weapons."

It's like after the Iraq WMD debacle, the Neocons are no longer even trying to be convincing. And certainly not original.

The usual suspects roundly mocked Brady yesterday, Atrios, TPM, Sargent, Cole.

Well played.

Except I think they all missed one critical point - the literal essence of the gripe, that Brady and his anti-socialist/communist/fascist compadres were complaining that the trains weren't running on time.

And good for him.

The racial animus underpinning the anti-Obama hate-mob is real, and it needs to be talked about.

I have neither the time nor the inclination to link to the multitude of concern trolls - Ben Smith of Politico, you know who you are - explaining that this is bad news for Obama, that the last thing he needs is racism dominating the news headlines. Sorry Ben, racism is already front and center of the anti-Obama movement, and tackling it head on is morally right, irrespective of what Villager conventional wisdom you agreed upon over last night's cocktails and canapes.

There are several indisputable facts around the state of the nation that explain why we have quite widespread discontent. In no particular order of relevance:

1. The economic crisis.

2. The as yet unreformed banking industry.

3. Long-term foreign military engagements that have delivered nothing.

4. Long-term middle class real wage stagnation.

It shoundn't need to be explained, but every goddamned one of these issues were things that Obama inherited. The basis for outrage about the status quo has long existed.

So why the sudden outbreak of popular revolt this year?

Leave that thought for a moment. Let's look at some of the particular complaints.

There's a good chunk of discontent over the fiscal stimulus. That this is an eminently defendable economic policy - indeed one that George Bush arguably followed with his 2001 tax cuts - does not matter. Because a Democratic president is doing it, this apparently makes it bad.

There's a good chunk of discontent over the nationalization of banks and auto-makers. That every bank nationalization occurred under George Bush, does not matter. That the atuo company nationalizations - which have preserved jobs prevented a total regional economic collapse in Michigan - have cost a miniscule fraction of the bank bail-outs, does not matter. Because this is now within the domain of a Democratic president, it is now suddenly apeshit bad.

There's a good chunk of discontent over healthcare reform. Nevermind that we are probably looking at fairly modest reform, definitely compared to the 1994 effort, does not matter. We have a Democratic president driving this - and anyone want to argue that Kerry would not have prioritized this had he had the chance? - and nevermind that the cost of it is broadly comparable to Bush's drug reform bill of 2003, none of this matters. No matter how tepid the reform, because it is Obama's, it is bad.

Let's also look at some of the particular complainants - Medicare beneficiaries decrying government healthcare schemes, birthers, and most famously a Southern law-maker who did everything but fellate Strom Thurmond daily (though it seems unwise these days to rule even that out).

Maybe it is on the Jimmy Carters of this world to demonstrate irrefutably the racial animus behind the protests. Maybe we should be trolling through Stormfront and various LaRouche affiliates to find this level of proof.

Or maybe the concern-trolls and other various stripes of skeptics and/or deniers might start presenting their own case for why the popular revolt against this Democratic president is so much more open and venomous. Clinton put up with a bottomless sewer of shit, largely orchestrated by the astroturfing pros and their friends in high-places. This present revolt is not the same, all kinds of lunatics have appeared on the scene to spew their frustrations against a Presidency operating in an economic environment as precarious and frightening as it was a year ago.

If race isn't stoking the frenzy, I'd interested to hear what is.

I don't want to waste too much more internets talking about the tea-party, just wanted pass on a couple of thoughts. First, from the incomparably civil Steve Benen, this:

We learned today that right-wing activists don't like government spending (except when Bush and Republican lawmakers spent freely), don't like the size of government (except when Bush and Republican lawmakers increased the size of government), don't like deficits and debt (except when Bush and Republican lawmakers added trillions to the nation's tab), and don't like czars (except when Bush used dozens of them to implement his agenda).

They don't like health-care reform, though it's not clear why. They don't like gun control, though it's not clear why they think anyone's coming for their firearms. They also don't like taxes, immigration, abortion, Muslims, the U.N., and the idea of "socialism," though their understanding of the word is tenuous at best.

In other words, the point of today's rally was to let the country know there are a lot of right-wing activists with right-wing beliefs. We knew that before today, but I guess they wanted to remind us.

No-one seems to be able to agree on how many people turned up, but Fox News, while excitedly talking up the occasion, went with "tens of thousands". So let's be generous and say 80,000 people were there.

Now cast your mind back 14 years, to when Louis Farrakhan held his party in the capital. I recall the endless nonsense about how many people had in fact turned up, but let's go with the independent estimates that put the figure around 400,000.

So, taking the high, non-independent estimate of the tea-party, and the low, indepedent estimate of the Farrakhan thingie, the tea-partiers were outnumbered 5:1. That's as generous an estimate as we can give to the tea partiers.

Would it be unfair therefore to argue that the tea partiers are less popular and thus by definition more extremist than the Nation of Islam?

Not the early release of al-Megrahi, which I will come back to later, but the entire process from the moment America and Britain sought to obtain convictions for the bombing.

This much of the background is certain. The FBI are adament that al-Megrahi was involved - investigators into Lockerbie will tell any reporter that what was shown in trial (and what wasn't) was solid proof. Scottish officials are not, however; and the person instrumental in assembling the Scottish court in Holland that tried and convicted al-Megrahi, Professor Robert Black, is adament that Megrahi's conviction is deeply unsound.

(By way of disclosure and shameless name-dropping, Professor Black taught me when I studied at Edinburgh University, and we both share longstanding connections to South Africa, so I am a natural fan)

Whilst I know Professor Black was quite pleased with the legal arrangements under which al-Megrahi was tried, the case fundamentally came about because a deal (allegedly brokered by Nelson Mandela) was agreed whereby Ghadaffi would turn over al-Megrahi to be tried for Lockerbie and in exchange Libya would begin to be brought in from international isolation.

Given the Lockerbie bombing took place in 1988, and the trial took place more than a decade later after years of painstaking investigation and protracted diplomacy, the pressure on the court to obtain a conviction was extreme.

Whilst the Libyan public's belief that al-Megrahi was innocent may be easy to explain away, not so when it comes to Scottish opinion. And it must be this in part that has fueled the division of opinion between Scotland and America over the early release - after all, if you think someone has been wrongly convicted, however ghastly the crime, you are surely more likely to tolerate a decision that effectively involves commuting a sentence.

Compassionate release in Scotland occurs infrequently - there are roughly 3 a year - and terminal illness is the prime reason for allowing it. But it is a politician, the Scottish Justice secretary, who carries the final responsibility for any decision, and as a result the final decision unfortunately acquires a political undertone.

So what's the political context here, with a Scottish National Party government in Scotland appearing to acquiesce to pressures from Gordon Brown's Labour goverment in the UK to release al-Megrahi. The SNP and Labour are arch-enemies, so it doesn't make much sense to have them just dutifully oblige a request from Gordon Brown by releasing el-Megrahi and then drawing the political flak that inevitably ensued. But whilst I accept there is precedent for releasing al-Megrahi, there is still fundamental reason to question if al-Megrahi was released purely on the grounds that he has only weeks to live.

Lockerbie has been tainted with obscure political dealings for as long as most of us can remember, and it is not the first time ill health has been used to move on from a thorny legal problem with international relations implications (think General Pinochet, who was declared unfit to stand trial and so enabled him to return to Chile). This most recent episode marks a conclusion of sorts into what has long seemed a thoroughly sordid affair and one about which victims have never received satisfactory answers. That's the travesty here, and one for which no politician appears prepared to answer for. Fair play to Newsweek, however, for at least intimating as much.

I haven't posted anything at the Cafe for a fortnight because during this time I have had to make use of the NHS. That this coincided with the blow-up this side of the Atlantic after a Conservative politician mouthed off on Hannity that he "wouldn't wish the NHS" on anyone was personally serendipitous.

By way of some background, I am in a good job at a large firm, and I am enrolled in the private healthcare plan available to all employees. And I am very pleased that I have this option, because it provides me, my wife and our young daughter with the best access to specialists when we need them. For example, I contracted Lyme Disease last year, and without private insurance I would have struggled to find a true Lyme specialist (the illness is still rare in the UK). Our daughter suffers from hypolactasia, and without private insurance we might not be able to see the gastroentologist recommended to us by our (NHS)family doctor.

For those that aren't familiar, many doctors, and in particular the specialist physicians, work both for the NHS and in private practice. When you have a particular medical problem that requires a specialist consultation, and you are going through the NHS, what you don't have is the luxury to choose your specialist - at least in the first instance, you go with who is available at the time.

So in this respect, private insurance is invaluable.

But two weeks ago, when I started to experience stomach pains, my first step was to try to arrange to be seen by our family doctor. She had no spare appointments for the afternoon, but agreed to call me when I got home and then see me the following day.

The pains got more severe however, so instead of going home, I called my wife and asked her to come pick me up from the train station and take me to the ER. I, like all us mere non-medically trained mortals, had no real idea what was going on though I am aware how dangerous something like appendicitis is.

The timeline from arriving at the ER went something like this:

2.00pm - Report to the reception. ER is full, am told I may have a 3 hour wait to see a doctor.

2.10 - Seen by a nurse who takes my blood pressure and pulse, and gives me painkillers.

2.20 - Second nurse takes blood for testing.

2.30 - Go back to reception to say the pains are worse, the painkillers have done nothing.

2.35 - Doctor calls me through into the ER. Given a private room, a gown, stronger painkillers, and container for a urine sample.

2.45 - Doctor tells me to go through for chest and stomach x-rays.

3.15 - Short wait to be x-rayed, but that's done, and I go back to the private room where I am put on a drip.

3.40 - ER doctor comes back for a further examination. What relief I had had from painkillers has worn off and when she starts to examine my stomach, I hit the roof. She gets more painkillers and says a surgeon is coming down to see me, but everything suggests a type of hernia.

4.00 - Surgeon visits, tells me it's an incarcerated hernia, they need to operate. Will do it as soon as possible, but in the meantime I'll get taken to the ward where I will be spending the night.

4.30 - Taken up to a urology ward, shared with five other patients. Checked in by ward nurses, drip replaced etc.

5.00 - Nurse tells me they probably aren't going to be operate that evening, but more likely early the next day.

6.00 - In major pain at this point, immediately attended to by the senior nurse on the ward, end up getting doped up on morphine. That's how I spent the night.

8.00am, next day - Taken down to operating theatre. Much of this day henceforth was spent in a daze, but the outcome was I was on my way home at around 8.00pm that evening with a bunch of stitches in my stomach, a bag full of drugs and sick note for work.

There are other details I could go into - the good (how flat-out the NHS staff work), and the bad (hospital food) - but the point here is (a) how quickly I was seen to; (b) how well I was cared for; and (c) that I came home 36 hours later with a clean bill of health without having had to shell out a penny.

I'm not about to look past the NHS's problems, God knows they exist, and I am very mindful that through having private insurance I pay for certain advantages. But my story from two weeks ago is that when I turned up at one of the country's larger NHS hospitals on a busy Monday afternoon urgently needing treatment, I got all the care I needed in extremely good time. And if a similar problem reoccurs, I'd have no hesitation going back to the same hospital.

The idea that this a system you wouldn't wish on anyone is, in a word, unthinkable.

This, from Bloomberg, is a fascinating account of how the NK hostage situation unfolded, how Bill Clinton ended up playing Superman this week.

I guess I could always understand why if the Obama-ites wanted a major non-administration figure to show up in Pyongyang, they'd have called on Clinton. What I hadn't appreciated is that NK were adament that Clinton himself should be the major figure to show up.

One piece of the narrative in Bloomberg that I don't necessarily buy is that nothing but the release of the hostages was discussed - and to be fair, that is only the narrative in as far as the mission was explained to Russia and China. The reason for my skepticism is the reporting that Clinton met Kim Jong Il for over 3 hours. Given the hostage release seems already to have been agreed in principle, 3+ hours seems an awfully long time to talk about that and nothing else.

I expect it will be years until we learn the agenda of this meeting, if indeed we ever learn of it - an advantage I suppose of an ostensibly private humanitarian mission, rather than an official state meeting.

What has surprised me in the aftermath of the mission, however, is not the right-wing convulsions about Clinton showing up in NK. It is not seeing Dick Morris tell us that Americans are expendable. It is seeing normally cautious people jumping to extreme conclusions about why this mission was wrong-headed.

We only know, right now, that two American hostages - very likely wrongly arrested in the first place - were released. We literally know nothing else about what was agreed, bar the agreement to have Bill Clinton front the American effort. We can only speculate.

And this is where I think the chatterers need to take a deep breath. Of all the areas of government, it is in foreign policy where Obama is the continuity Clinton administration. (That is one key reason why I reckon they were quite okay having Clinton out front in NK.) And given the Clinton record in diplomacy, it takes someone with dangerous confidence in their own certitude to argue that the Obama-Clinton nexus is screwing up.

Carne Ross's piece, which argues that the NK episode will encourage hostage-taking, carries the most striking resonance with the decision by Bill Clinton in 1994 to grant visas to Gerry Adams and Martin McGuiness of Sinn Fein. I'm old enough to remember the furore this created, and the argument that by doing what he did, Clinton was turning a blind eye to terrorism etc and it would encourage other IRA-inspired groups to turn to violence.

It seemed like a fair argument at the time, but don't think anyone can fairly say in hindsight this the argument has held out.

And I think the point that the Adams-McGuiness visa example proved, was that a sudden change of policy, and an unexpected show of largesse on the part of the world's only superpower, is a game-changer.

That's surely what Obama and his team saw here. Their judgement may turn out to be misplaced, the problems regarding NK aren't remotely comparable to those in Northern Ireland, but jumping only on the strategic risk posed when Clinton/Obama play a diplomatic wild-card seems oddly myopic. These people have an enviable record of successful diplomacy in the world's most difficult neighborhoods, and we'd perhaps do a little better trying to learn lessons from what they are doing - instead of lecturing them on what we think they don't know.

One of Atrios's lodgers nailed the wingnut hypocrisy apropos shutting down healthcare townhalls. Not much gray area there.

Perhaps the more relevant question however is Josh's entreaty as to why the Democrat reformers don't appear to be better prepared for this wingnut frenzy. And what can be done in response.

Well here's one idea.

Townhalls are public events, and anyone has a right to be there. This is fundamental. But don't let this get in the way of a cunning plan. Just as the townhall is about to commence, and the birther/teabag nutjobs are visibly in attendance, dial 911 and report a potential crime taking place at the townhall. Describe a suspect - generic middle-aged white male bible-thumper, probably armed, badly dressed, looking like he's up to no good. Then wait.

When the police turn-up, quite likely the tea-baggers will be out of control. Just to be clear, the tea-baggers have a right to be there. They have a constitutional right to mouth off as well. We must accept this.

But this all changes when the police turn up in response to the 911 call. Because then, and this applies whether you are in your own home on not, you do what the police say and mind your manners. What every wingnut will certify is that police are not acting stupidly if, when no crime is actually taking place, they are confronted by a situation where someone is "observed exhibiting loud and tumultuous behavior, in a public space, directed at a uniformed police officer who was present investigating a report of a crime in progress", they arrest the said loudmouth. Remember, this is especially defendable if such behavior "served no legitimate purpose and caused citizens passing by this location to stop and take notice while appearing surprised and alarmed".

The downside ofthe Crowley approach is not that it is quasi-fascistic and bound to get Jonah Goldberg all viagrafied, it is that wingnuts have a five second memory span and do not appreciate irony. This is regrettable, yet this is America.

But the upside is far greater. You see if we go with the Crowley approach, after the furore has subsided, the Democratic representative hosting the townhall, the arresting officer, and, say, a healthcare reform expert, can arrange a beer summit with the tea-baggers. This could all end very well, indeed it could be a seminal and totally authentic grass-roots teachable moment.

How do you like progress?

1993 - Harry and Louise killed healthcare reform

2009 - Harry and Louise, okay, yep, don't even need 'em

Isn't this one of the more instructive lessons of this latest healthcare head-fake? That sixteen years ago the healthcare industry had to go full throttle working public opinion, and this year they only had to just work the pols.

It's hard to disagree with Matt Taibbi:

Here we had a political majority in congress and a popular president armed with oodles of political capital and backed by the overwhelming sentiment of perhaps 150 million Americans, and this government could not bring itself to offend ten thousand insurance men in order to pass a bill that addresses an urgent emergency.

This is bit experimental, prompted I suppose by Josh's musings on birtherism, let's see how it goes.

If we were to identify the extreme conspiracy theorists of the Bush era, the 9/11 Truthers would surely come out on top. They were a large enough group to be noticed, arguably sufficient in number to be influential, and they presented some pretty outlandish things based on allegedly sound evidence.

Or more to the point, absent a complete public record of what happened on 9/11, these were people who were utterly committed to fill in the gaps and construct a narrative that would end up destroying a government.

The Birthers seem to be cut from the same cloth - and this is notwithstanding the fact some of the same people, like Philip Berg, are on both crazy trains. The point is the Birthers, like the Truthers, see a gap in the official record and are filling it in in such a way that it could end up destroying a presidency.

I am not wanting to draw parallels in terms of the gravity of the conspiracies or the merits of the accusations, my point is to juxtapose the methods of the two groups. Which is, as I said, to fill in perceived gaps in the official record in a way to maximize political advantage. I do fully accept that there are also true believers out there, who aren't looking at this quite as intensely through a political lens, but the movements have been and are being driven by political objectives as well, and explains why they develop momentum even absent decent evidence of anything.

And here's the rub - how often were Democratic politicians, even those far from the mainstream (Kucinich, McKinney), ever drawn into embracing the Truthers? The nearest I recall anyone getting was Howard Dean - and this is a mighty, mighty stretch - when in talking about the 9/11 Commission he made a typically accurate point that government secrecy fed conspiracy theorists. Can't remember anyone else getting remotely close to even alluding to the Truthers the way Dean did once or twice when he was trying to illustrate another more important issue.

Was there ever a major Democratic politician compelled to defend Truther allegations? Ever a major Democratic politician needing to distance himself/herself from Truthers or comments he/she made in support of Trutherism?

It is still early days with Birtherism, but is it fair to say the movement is already closer to mainstream Republicanism than Trutherism was ever to even fringe Democrats?

Just speculating a little further, imagine the Democratic Party had gotten remotely close to the Truthers... can't imagine that could ever have turned out well, and yet it remains to be seen if the GOP can put daylight between itself and Birtherism.

I wrote recently about Niall Ferguson's struggles with the banking regulatory framework. How facts got in the way of pretty much every conclusion he was drawing.

Well, now he seems to be having problems on the macro front. That his problems have been primarily with folks like Krugman and De Long, you'd think he'd be a little careful before picking up his shovel once more.

However, it seems not.

The genesis of Ferguson's problems - if you discount what seems to have been an unwise detour into economics - was this seminar hosted by the NY Review of Books.

His opening gambit in his most recent article in the UK Financial Times is to assert that the recent decline in 10-year Treasuries is proof that financial markets buy his argument, that interest rates will rise under the weight of expected debt issuance.

He is right about what has happened with 10-years Treasuries; is he correct about the reasons for the decline? Well, he says the decline coincided with warnings about the US fiscal condition, and indeed it did. It also coincided with a significant stock market and oil price rally, and the continued descent of the housing markets. Also, it seemed to have tracked the decline of Joe the Plumber, and the rise in good news regarding Tom Brady. Or it could have reflected little more than a correction after an overshoot at the apex of the liquidity crisis at the end of last year.

Bottom line - he can't know now definitely why the market moved as it has. Nor can anyone else.

Yet he decides, "it settled a rather public argument between me and the Princeton economist Paul Krugman." (cf. NY Review of Books link)

The public argument, essentially, is that in Ferguson's view expansionary monetary policy and expansionary fiscal policy are contradictory, because the latter drives up interest rates.

In Ferguson's latest estimation, Krugman is disagreeing with him because Krugman has a book to sell which requires us to see comparisons now with the 1930s. According to Ferguson, now is more like the early 1970s. Curiously, though, Fergusion heaps praise on Ben Bernanke, "whose knowledge of the early 1930s banking crisis is second to none, and [who] has averted a pandemic of bank failures."

Got it? Krugman is wrong to say now is like the 1930s, but the hero of the hour is the Chairman of the Fed who has acted the way the Fed should have in the 1930s.

With this level of intellectual coherence, it's kind of hard to see what Ferguson has to contribute to any debate about the current economic crisis.