How bad would it be for Greece to leave the euro?
There’s been lots of discussion lately on whether Greece should exit the euro. Sure, advocates say, in the short term the country might face even more austerity and a crushing recession. But in the long run, Greece would be free to grow. Here’s Arvind Subramanian making that case:
Just look at what happened to the countries that defaulted and devalued during the financial crises of the 1990s. They all initially suffered severe contractions. But the recessions lasted only one or two years. Then came the rebound. South Korea posted nine years of growth averaging nearly 6 percent. Indonesia, which experienced a wave of defaults that toppled nearly every bank in the entire system, registered growth above 5 percent for a similar period; Argentina close to 8 percent; and Russia above 7 percent. The historical record shows clearly that there is life after financial crises.
Lunch break: Ken Burns on how to tell a great story
Documentary filmmaker Ken Burns talks to Sarah Klein and Tom Mason about how to tell a great story.
The TED talk TED doesn’t want you to hear
TED describes itself as “a nonprofit devoted to Ideas Worth Spreading.” In case that was unclear, their statement of purpose is just four lean words: “Our mission: Spreading ideas.” But as Seattle venture capitalist Nick Hanauer has learned, that mission comes with an unwritten caveat: “Unless the ideas might offend one party or the other.”
How ‘Taxmageddon’ would affect the U.S. economy
What will the economy look like in 2013? A great deal depends on what Congress decides to do at the end of this year. Remember, the Bush tax cuts are expiring, the payroll tax holiday will sunset, and a bunch of new spending cuts under the debt-deal “sequester” are scheduled to kick in. Coming all at once, that’s a potentially big drag on growth.
Jared Bernstein passes along a chart from Goldman Sachs that tries to map out a couple of different scenarios here. The dotted line shows what could happen if Congress can’t reach an agreement and lets all tax cuts expire and spending cuts kick in. If that happened, the U.S. economy would grow at least 3 percentage points less than its potential for each of the first three quarters of 2013:
No, drinking coffee probably won’t make you live longer
It’s a study that’s been happily noted by the ranks of the highly-caffeinated: People who drank coffee lowered their risk of premature death as much as 10 percent (men) to 15 percent (women). Even drinking one cup a day lowered men’s mortality risk by 6 percent.
That research was published in the New England Journal of Medicine and released Wednesday afternoon. Already, Google News can pick up 11,000 headlines declaring that coffee drinkers do indeed “live longer.” But dig into the research, and you might want to hold off on trading in your gym membership for a Starbucks card.
Jeff Fortenberry: One House Republican who’s dared to defy Grover Norquist
There are only about 10 House Republicans who have refused to stand by Grover Norquist’s pledge against tax increases. Rep. Jeff Fortenberry (R-Neb.) is one of them, having declined to renew his pledge last year. He doubled down on his refusal in an interview this week with the American Conservative:
Hayek on austerity
Lee Harris applies Friedrich Hayek’s theories to the euro zone’s austerity riots:
There is a tremendous difference between austerity imposed by anonymous market forces, which cannot be politically challenged, and austerity imposed by political institutions, which can be. This fact was pointed out by Friedrich Hayek in his classic book, The Road to Serfdom. In a free market system, everyone can complain when the price of bread (or gas) mysteriously goes up, but so long as the market is determining the price that is all anyone can really do...This is not the case, however, when the commissar of bread announces a new price increase in the cost of a loaf. Then, disgruntled consumers can march to the commissar’s house to express their outrage and indignation.
Wonkbook: Will the 2013 debt ceiling be moot?
According to Tim Geithner, we won't hit the debt ceiling until a few months into 2013. By that time, either the Bush tax cuts will have already expired and the automatic spending cuts will have already begun or the parties will have come to some big fiscal deal and the debt ceiling will have been raised along the way.
Reconciliation
- The largest-ever study of coffee drinkers find those who imbibe to have a lower risk of death.
- Canada discovers one downside to being an oil exporter--Dutch disease.
- Good details on the new cap-and-trade system in South Korea, one of the world’s top-10 carbon emitters.
- “Evan Soltas, likely winner of the 2030 John Bates Clark award.”
- How common is your birthday? This chart will tell you.
- Is death bad for you?
Obamacare has 99 problems - but a Republican governor isn’t one
From reading the press coverage lately, you could be forgiven for thinking that Republican governors have stopped Obamacare in its tracks.
Chris Christie looks to have vetoed implementation of the the law in
New Jersey Gov. Chris Christie has vetoed legislation to lay the foundation for Obamacare.
(AP)
New Jersey, as have some Alabama legislators. You may have read about these developments on this very blog (from this very reporter). And you might be wondering: Is the Affordable Care Act dead-on-arrival?
The short answer is no. What Christie and other Republicans are doing is largely political, pushing back against Obamacare by vetoing or voting down laws that help lay the groundwork. But, at the end of the day, the White House holds the trump card: The federal government has promised to step in and set up exchanges in states that do not take on the task themselves.
What the oil industry wants — in charts
In many ways, life has never been better for the U.S. oil and gas industries. Production is up, thanks to new fracking technology. Profits are high. There’s little chance Congress will cap carbon emissions anytime soon. What more could they ask for?
Quite a bit, it turns out. On Tuesday, the American Petroleum Institute released a report full of recommendations to the Republican and Democratic committees that are crafting their party platforms this summer. Basically, this is Big Oil’s wish list. It includes everything from opening up more federal lands for drilling to avoiding strict new federal rules on natural-gas fracking. And API has also included a slew of charts that help give a better sense for what’s driving the oil and gas industry.
Obama wants a clean debt-ceiling bill
President Obama and Speaker John Boehner had lunch today. Here, according to Boehner’s office, is how their discussion of the debt ceiling went:
In a discussion of the debt limit, the Speaker – who has warned that the growing debt is hurting U.S. job creation – asked the President if he is proposing that Congress pass an increase that does not include any spending cuts to help reduce the deficit. The President said, “yes.” The Speaker told the President, “as long as I’m around here, I’m not going to allow a debt ceiling increase without doing something serious about the debt.”
In other words, the White House’s position, for now, is that they want a clean debt-ceiling bill. We’ll see if they stick to it.
Also from Boehner’s office: “the Speaker was very pleased with the sandwiches served.” I bet he was. They came from Taylor Gourmet, and Taylor Gourmet is delicious.
Democrats talk about cutting entitlements. Republicans don’t talk about raising taxes.
The line you often hear in Washington is that Republicans won’t talk taxes and Democrats won’t talk entitlements. The two parties, the thinking goes, are similarly irresponsible, albeit on opposite sides of the budget.
But at the Peter G. Peterson Foundation’s 2012 Fiscal Summit, there was a clear difference between Democrats and Republicans: Democrats talked constantly about how they should be talking about entitlements. Republicans reiterated their position that they won’t talk taxes.
‘Too big to fail’ watch
The five largest banks controlled $6.1 trillion in assets before the collapse. By 2012, they controlled assets worth $8.5 trillion. That is to say, they went from being “too big to fail” to being much, much bigger.
But perhaps that somehow makes them better banks? Economies of scale and all that? Not according to this study (pdf) from the Cleveland Fed:
Our calculations indicate that the cost to the economy as a whole due to increased systemic risk is of an order of magnitude larger than the potential benefits due to any economies of scale when banks are allowed to be large..
Boehner’s debt ceiling crisis would be so much worse than you think
There’s some chance that House Speaker John Boehner’s threat to provoke another debt-ceiling crisis doesn’t much matter. If it does matter, it’s only because fiscal policy has already gone very, very wrong.
As Treasury Secretary Timothy Geithner said Tuesday, “we’re likely to hit the debt limit sometime before the end of the year, but Congress has given the executive branch a set of tools that buy them some time. And those tools will probably take us into the early part of 2013, thus separating somewhat the timing of the expiry of the tax cuts and the sequester with the ultimate need for Congress to act on the debt limit.”
Lunch break: Europe’s shifting borders
A time lapse video looking at Europe’s shifting country borders from 1000 A.D. to 2003:
50 years of government spending, in one graph
Planet Money’s Lam Thuy Vo charts how our government’s spending habits have changed in the past five decades:
The clearest development has been the growth of health-care costs — 50 years ago, Medicare and Medicaid didn’t even exist. Today, the two programs account for about a quarter of all federal spending. Defense spending, meanwhile, has gone from half of the federal budget to a quarter.
It’s also worth noting that federal spending has, over the past 50 years, grown at a pretty similar rate to the rest of the economy. In 1962, the federal government spent $707 billion, accounting for 18 percent of GDP. By 2011, federal spending had inched up to account for 24 percent of the economy or, in dollar figures, $3.1 trillion.
How a bank run could force Greece out of the euro
Let’s say you were an ordinary person living in Greece and had a stash of euros deposited in your local bank. You’ve been watching all the political chaos unfold on TV and listening to chatter about how Greece might have to exit the euro altogether. What would you do?
Get it while you can.
(Yannis Behrakis - Reuters)
Why, you’d take your euros out of your local Greek bank and put them someplace safe — say, in a German bank. No sense risking the prospect that the Greek government could leave the euro zone and replace all your hard-earned money with some less-valuable drachmas.
And that’s exactly what a lot of Greeks have been doing these past two years, withdrawing about €2 to €3 billion worth of euros from the country each month. Lately, though, these withdrawals have been accelerating. A lot. On Monday, Greek depositors took out some €700 million in a single day, sending their euros elsewhere for safekeeping. It’s a smart move by those individuals. The problem, though, is that if everyone in Greece does this, it could inadvertently get Greece kicked out of the euro.
Most of us think we make good doctors
Getting a medical degree is not easy: It requires 10 years of medical education and 16,000 hours of clinical experience to get certified to provide treatment. Even so, most of us think we can make equally as good diagnoses as our doctors—as long as we have a little help from Google.
A Wolters Kluwer poll out this morning finds that not only are most consumers turning to the Internet to answer medical questions, but that they also put strong faith in their own diagnosis. Among college educated Americans, 63 percent say they have “never” misdiagnosed themselves. Add in those who have say they’ve “rarely” made a wrong call and the number jumps up to 84 percent.
Boehner’s full speech on the debt ceiling, read it here
On Tuesday, Speaker John Boehner took the stage at the Peter G. Peterson’s 2012 Fiscal Summit and outlined his intentions to again threaten the Obama administration with default in order to extract concessions on spending. I wrote a bit about why Boehner is adopting this strategy in Wednesday’s Wonkbook. But here’s his full speech:
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Ezra Klein
Ezra Klein is the editor of Wonkblog and a columnist at the Washington Post, as well as a contributor to MSNBC and Bloomberg. His work focuses on domestic and economic policymaking, as well as the political system that’s constantly screwing it up. He really likes graphs, and is on Twitter, Google+ and Facebook. E-mail him here.
Suzy Khimm
Suzy Khimm covers the budget, economic policy, and financial regulatory reform. Before coming to Washington, she was based in Brazil and Southeast Asia, where she wrote for the Economist, Slate, and the Wall Street Journal Asia. Follow her on Twitter here, and email her here.
Sarah Kliff
Sarah Kliff covers health policy, focusing on Medicare, Medicaid and the health reform law. She tries to fit in some reproductive health and education policy coverage, too, alongside an occasional hockey reference. Her work has appeared in Newsweek, Politico, and the BBC. She is on Twitter and Facebook.
Brad Plumer
Brad Plumer is a reporter focusing on energy and environmental issues. He was previously an associate editor at The New Republic. Follow him on Twitter. Email him here.
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