The Washington Post misleadingly told readers that the government turned a profit when it acquired the assets of the bankrupt savings and loans in the 80s and sold them off. It's true that the government made money on the sale of these assets, but that was after it had already shelled out close to $100 billion to deposit holders in the S&Ls.

The decision to auction off the assets of the bankrupt S&Ls was likely better than alternative options, but it still left the government with a very big bill. If the government were to take a comparable approach to the current mortgage crisis, it should first require that financial institutions like Citigroup, Merrill Lynch, and other holders of large amounts of bad assets go bankrupt, wiping out their shareholders' equity. Then the remaining assets of these institutions would be sold off at whatever price the market offers.

This may be the best available option for taxpayers and the economy, but the bankruptcy and liquidation of many major financial companies would be a prerequisite for going this route. The proposal being considered, as described in the article, seems more like a simple government bailout of financial institutions, which is not at all comparable to the S&L auctions of the 80s.

--Dean Baker

It seems that the business media is unfamiliar with the concept. I didn't find any news article on the Fed's rate cut that noted the jump in long-term interest rates that immediately followed the announcement of the cut. As noted in my prior post, if further cuts in the federal funds rate lead to higher 10-year treasury rates then they might actually slow the economy, since long-term rates have far more impact than short-term rates. The question is whether the Fed's goal is to stimulate the economy or help out the banks. The media should be following this issue.

[addendum: I stand corrected -- MarketWatch got the story right: http://www.marketwatch.com/news/story/mortgage-rates-could-rise-not/story.aspx?guid=%7b3EAD37E9-CBCB-4EE1-934A-5776C2834EBB%7d&print=true&dist=printTop

--Dean Baker

That would seem to be the implication of a quote from former Treasury Secretary Larry Summers that, "the housing sector is in serious trouble, even worse than we supposed." USA Today readers would be better informed if the paper sought out economists who are not part of Larry Summers' "we" and recognized the problems in the nation's housing market.

--Dean Baker

That is the question that reporters covering the latest rate reduction should be asking. When the Fed announced its 0.5 percentage point rate cut this afternoon, something very interesting happened: long-term interest rates rose. The 10-year treasury rate jumped by about 5 basis point when the Fed announced its rate cut. The current rate of 3.72 percent is about 34 basis points higher than the low hit earlier this year.

There is a simple story that could be told to explain the movement in long-term rates. The markets may increasing fear inflation and a falling dollar when they see the Fed cut short-term rates. This raises a serious problem from the standpoint of stimulating the economy. The long-term rate matters much more for the economy than the short-term rate since it affects the rate that people will pay on mortgages, car loans and most other important sources of credit. If the Fed's rate cuts lead to higher long-term rates, then it is possible that it is actually slowing growth by cutting rates.

There is another story in which the answer is less ambiguous. Banks borrow short-term and lend long-term. If they can borrow at a lower cost and lend at the same or higher interest rates, then they are unambiguous winners. For them, a rate cut that increases the spread between long-term rates and short-term rates is clearly good news.

So, if this pattern continues, and the Fed moves forward with further rate cuts, then it is reasonable to ask whether it is trying to help the economy or the banks.

--Dean Baker

The NYT has another excellent piece exposing corruption in the health care industry. This one is about medical devices, specifically an artificial spinal disk. The basic story is the same as with pharmaceuticals, the doctors that do the studies have a direct financial interest in the outcome of the tests. This raises concerns about whether the tests are being conducted and reported objectively.

The one complaint with this and most other stories is that the reporters never step back and examine how the nature of the current system of financing research will inevitably lead to such distortions. In a situation where government granted patent monopolies allow for large rents, it is virtually inevitable that corruption of this sort will arise.

--Dean Baker

David Leonhardt has a thoughtful analysis of Bernanke's first two years as Fed chairman today. However, at one point he comments that presidential candidates usually refuse to talk about the Fed to show that they realize it is an independent body.

While this may accurately describe the efforts of presidents and presidential candidates to evade responsibility for one of the government's main tools for affecting the economy, it does not accurately describe the legal status of the Fed. The Fed is quite explicitly responsible to Congress and the president to carry out specific charges, most importantly maintaining high levels of employment (defined as 4 percent unemployment) and low inflation.

It is entirely appropriate for presidential candidates to comment on the Fed's performance and to discuss the sort of approach that he/she would look for in prospective nominees for Fed governors. In many ways, these governors can be the president's most important appointees. It is negligent for reporters to allow candidates to evade discussing such an important topic.

--Dean Baker

The Washington Post had a front page article telling readers that the "Weak Dollar Fuels China's Buying Spree Of U.S. Firms." The article then gave accounts of the various investments by Chinese individuals and corporations or its sovereign wealth fund.

There is one problem with the Post's story: the dollar isn't weak against China's currency. While the dollar is down by more than 40 percent from its peaks against the euro and some other major currencies, China maintains a managed float of its currency against the dollar and has only allowed a modest increase over the last two years.

While the fall in the dollar against other currencies may explain a decision by the Chinese to shift investment from third countries to the United States, it would not explain a sudden increase in foreign investment by the Chinese.

The more obvious explanation is that the Chinese have accumulated massive amounts of foreign exchange as the result of their policy of keeping down the value of the yuan against the dollar. This policy requires that they hold onto the dollars that they earn as a result of their trade surplus. Until recently, the Chinese had put almost all of this money into U.S. government bonds. These were extremely bad investments since they paid low interest rates and the dollar plummeted in value against other major currencies.

It is likely that the experience of consistently losing money on their dollar holdings has prompted the Chinese to buy assets that pay a higher return than government bonds. This is a more plausible explanation than the weak dollar.

--Dean Baker

The NYT had a piece today on President Bush's economic legacy. In the second sentence it tells readers that:

"Mr. Bush has spent years presiding over an economic climate of growth that would be the envy of most presidents." adding that "Yet much to the consternation of his political advisers, he has had trouble getting credit for it, in large part because Americans were consumed by the war in Iraq."

Is that right? Let's check the numbers. Here the ranking of the presidential terms since 1960 by average annual GDP growth:

Kennedy-Johnson -- 5.2%
Clinton -- 3.6%
Reagan -- 3.4%
Carter -- 3.4%
Nixon-Ford -- 2.7%
Bush II --2.6%
Bush I --1.9%

President Bush's growth record is better than his father's, but it is worse than the record of every other president in the last half century. It's not clear why they would be envious. It is also not clear what his political advisers have to complain about.

Later, the article tells readers that: "from a strictly economic perspective, it is difficult to blame Mr. Bush for the current crisis. Even some economists who have been critical of the president, like Bruce Bartlett, who worked in the Reagan and first Bush administrations, say he cannot be held liable for the burst of the housing bubble or problems in credit markets."

Actually, from a strict economic perspective President Bush is absolutely responsible for the fallout from the collapse of the housing bubble. Competent economists recognized the bubble and warned of the harm that would come from its inevitable collapse. President Bush absolutely can be blamed for the fact that he chose to ignore the bubble or that his economic team failed to recognize it.

The fact that the NYT found a Republican economist who would not hold President Bush responsible for the bubble does not make a compelling case for his innocence. It is also important to note that President Bush was eager to claim credit for the growth created by the expansion of the bubble (and the NYT was anxious to give it), therefore it is difficult to see any reason that he should not be blamed for the recession created by its collapse.

--Dean Baker

That should have been the headline of the WSJ article featuring former British Prime Minister Tony Blair's warning about rising protectionism in the United States. The United States already has substantial protectionist barriers that are designed to maintain the incomes of highly educated professionals like doctors and lawyers. Blair is apparently unconcerned about these forms of protectionism. He only seems to be concerned about the erection of barriers that may protect less highly paid workers, like those in manufacturing.

There is no economic theory that shows that protectionist barriers in professional services impose lower economic costs than protectionist barriers in manufactured goods. Therefore, Mr. Blair was presumably demonstrating his ignorance of economics and/or his class biased approach to public policy. The article should have pointed this fact out to readers.

--Dean Baker

The official story is that a rogue trader cost the French bank Société Générale $7 billion dollars. This official story may well prove to be true, but at this point we know the story primarily through the statements of higher up officials at the bank. These officials have a strong incentive to lay the blame for trading losses on a rogue trader acting without the approval of higher-ups, even if this may not in fact be the case.

I have no inside knowledge, and the story being presented may in fact prove accurate. However, reporters would be well-advised to remember to attribute their statement to sources and acknowledge that these are allegations by interested parties. At this point, we are still looking at an "alleged rogue trader."

Thanks to an anonymous reader for this one.

--Dean Baker

Great piece in the NYT showing how the bosses who led Citigroup and Merrill Lynch to losses in the tens of billions of dollars are being courted for top jobs at other firms. However employment prospects are not nearly so promising for those lower down the rung, who lost their jobs due to cost-cutting.

--Dean Baker

The NYT featured an article on the front page of the business section with a graph showing the Mortgage Bankers' Association (MBA) index for applications for refinancing mortgages. The index shows a sharp spike in recent weeks, which is presumably a response to lower mortgage interest rates.

While applications have undoubtedly risen, the MBA index likely overstates the increase for two reasons. First. MBA members only account for about half of the mortgages issued. Issuers who concentrated on the subprime segment of the market are underrepresented in the MBA. This could mean, that the index is not fully reflecting the collapse of the subprime market. Also, if borrowers shift from non-MBA members (many of whom have shut down) to MBA members, the shift would appear as an increase in applications in the MBA index.

The other reason why the MBA index may overstate the actual increase in refinancing is that it is far more common for mortgage applicants to be denied now than one or two years ago. In the past, the overwhelming majority of applications would have resulted in a mortgage bing issued. Now that banks are far more frequently denying mortgages, the same number of applications would correspond to fewer mortgages being issued. Without data on denial rates, it is impossible to know the extent to which the uptick in applications corresponds to an increase in the number of mortgages being issued.

--Dean Baker

The NYT had a front page article discussing Senator John McCain's views on economic policy. At one point it notes his strong support for Reagan's economic policies. The article then points out two major downsides to the economic legacy of the Reagan years, the stagnation of middle class living standards and the large increase in the government's debt.

The article should have included in this list the large trade deficits of the Reagan years. The country went from a net international creditor in the Reagan years to a net international debtor, with the shift towards an international debtor position exceeding 17 percent of GDP in the Reagan years, the equivalent of almost $2.5 trillion dollars in today's economy, or $8,000 of additional foreign debt for every person in the country. This rise in foreign indebtedness will have more impact on future living standards than the government debt incurred in the Reagan era.

The article also refers to a list of ineffective programs cited by the Bush administration, which is described as comprising 10 percent of the budget. The 10 percent figure presumably refers to domestic discretionary spending, which is currently just over $570 billion, about 20 percent of the total budget.

--Dean Baker

Economic reporters could perhaps be excused for not noticing the housing bubble as it was expanding. After all, Alan Greenspan, who used to be the greatest central banker of all time, repeatedly assured audiences that there was no housing bubble. However, it is truly incredible that reporters could ignore its collapse, even as the bursting bubble throws the economy into a recession and has caused people like Federal Reserve Board Chair Ben Bernanke and Treasury Secretary Henry Paulson to become overwhelmed with fear.

Reporters who did their job would have been highlighting the extraordinary drop in median house prices shown in the National Association of Realtors' (NAR) existing home sales index. Many reports did note that the index showed a modest year over year drop in nominal prices, something which has not happened since the index was first created in the late sixties.

However, what is more striking is the rate of decline over the last half of 2007. The annual rate of decline in median house prices for the last quarter of 2007 compared with the third quarter was 21.8 percent. The price of the average home fell at a 17.0 percent annual rate. The NAR data shows an even sharper decline in house prices than the Case-Shiller index, which also showed double digit price declines for three months ending in November. (The December index will be released on Tuesday.)

The price data are always somewhat erratic, but with two independent indexes now showing double-digit price declines, there can be little doubt that house prices are falling at a rapid pace. If this rate of decline persists, it will have an enormous impact on the economy. The 21.8 percent rate of decline shown for the median house price would imply a loss of more than $4 trillion in housing wealth over the course of a year. This is more than 50 times the size of the tax break for families being considered as part of a stimulus package by Congress.

The sharp decline in house prices should have been front page news. Missing the bubble was an enormous failure by economic reporters. The failure to cover the dynamics of its collapse is an even more remarkable failure.

--Dean Baker

A free market in software, recoded music and video material, and most importantly prescription drugs, would likely make capitalism considerably kinder and reduce inequality. Perhaps no one is allowed at the World Economic Forum, at Davos, who would have made this point when Bill Gates made his plea, but presumably nothing prevents the Wall Street Journal, or other news outlets from pointing out this obvious fact.

--Dean Baker

According to the New York Times, the new set of budget projections from the Congressional Budget Office (CBO) prompted North Dakota Senator Kent Conrad "to declare that a short-term stimulus package was insufficient." The article then explains that Conrad wants to address the costs of the baby boomers' retirement, presumably by cutting Medicare and Social Security.

Is it really true that CBO's worsening outlook "prompted" Senator Conrad's new concern about the cost of paying for the baby boomer's retirement? That claim seems unlikely. The new projections from CBO did show a somewhat worse story for 2008 and 2009, but they actually show a slightly better picture for CBO's ten-year projection period, which is presumably what would matter for programs like Medicare and Social Security. For the years from 2007-2017 (the overlapping period between the last forecast and the newest set of projections), CBO actually lowered its cumulative projected deficit slightly from $501 billion to $331 billion. While this improvement is only equal to about 0.1 percent of projected GDP over this period, the direction of change is positive, not negative.

This means that it is implausible that worse projections prompted Senator Conrad's interest in cutting Medicare and Social Security. He either is unfamiliar with the actual projections or was not being honest. The NYT should have pointed this fact out to its readers.

--Dean Baker

Remember way back last summer when Fed Chairman Ben Bernanke and other prominent economists assured us that the problems in the subprime mortgage market could not possibly lead us into a recession because the market was too small to have that much impact?

They were right. The subprime market, by itself, is too small to lead the U.S. economy into a recession. On the other hand, the collapse of the $20 trillion U.S. housing market is plenty large enough to lead the U.S. economy into a recession. It is the latter that is the source of the economy's current problem, not the subprime sideshow.

NPR apparently still has not gotten word of this fact. This morning it did a piece where it referred to the subprime crisis as the cause of U.S. economic problems. Hopefully, its reporters will soon catch on to the nature of the problems in the U.S. economy or at least find some economists who can explain the situation to their listeners.

--Dean Baker

On its late night news show, the local Fox affiliate had "experts" telling people not to panic and to hold onto their stock. They gave the same advice back in November, when the market first began to plummet. Investors would be almost 20 percent richer if they had done the opposite of what the experts had recommended back then. It's too bad that people can't sue Fox for their losses, then maybe Fox would try to find experts who had some idea what they were talking about.

--Dean Baker

The NYT ran a piece showing the decline in earmarks in spending bills over the last three years. The article shows the dollar value of earmarks fell by more than 10 percent from 2005 to 2008. It would have been useful to compare the value of earmarks to GDP. Since nominal GDP rose by more than 15 percent over this period, the value of earmarks relative to GDP fell by more than 25 percent over this period.

It also would have been worth mentioning that the total value of earmarks for 2008 is projected to be less than $17 billion, approximately 0.5 percent of total spending. Even if earmarks were eliminated entirely, it would not have a very large impact on the budget.

--Dean Baker

That should have been a main theme in coverage of the Democratic presidential debate in South Carolina last night. At one point, Senator Clinton complained about Senator Obama's big-spending plans and singled out his plans for foreign aid. Currently, the United States spends approximately $3 billion a year on foreign aid This is approximately equal to $10 per person per year or 0.1 percent of total government spending.

The fact Senator Clinton is singling out Senator Obama's spending proposals for foreign aid as being unaffordable suggests that she is either unfamiliar with the budget, or had some other motive in exaggerating the potential cost of Obama's foreign aid proposals. In either case, this should have been a central theme in reporting on the debate.

--Dean Baker

The NYT pushed the old "government versus market" line in an article about Senator Clinton's economic positions. At one point the article tells readers that "Mrs. Clinton put her emphasis on issues like inequality and the role of institutions like government, rather than market forces, in addressing them."

Of course it was not market forces that led to the rise in inequality in the last quarter century, it was deliberate government policy. High on the list of government policies that promoted inequality are trade deals like NAFTA, which were designed to put non-college educated workers in direct competition with low-paid workers in the developing world, while keeping in place, or increasing, the barriers that protect the most highly educated workers. The predicted and actual effect of such agreements is to redistribute income upwards.

In presenting this contrast of government versus market, the article also notes the explosion in CEO pay, throwing in the assertion that "it is difficult to reduce such pay with new laws." Actually, it is easy to imagine laws that could have a large impact on curbing excessive CEO pay.

Current laws on corporate governance allow insiders (like CEOs) to plunder corporations in ways that do not seem occur in other countries. It is possible to rewrite the laws on corporate governance to prevent such insider abuse. For example, the law could require that the compensation packages for the top executives are sent out for shareholder approval at regular intervals, and only the votes actually returned are counted in the election. (Currently, management is allowed to count unreturned proxies as supporting their position.) The laws on corporate governance exist to prevent the sort of insider abuse that we are now seeing in the United States. The explosion in CEO pay presents strong evidence that these laws need to be modernized.

--Dean Baker

In case you were not getting enough inaccurate economic information and analysis from the Washington Post's news, editorial and oped pages, they invited Kevin Hassett, the co-author or the 1999 best-seller "Dow 36,000," to fill the gap in the Sunday Outlook section. Hassett uses his piece to refute 5 "myths" about recessions. None of the myths rises to mythological status in my understanding of the economy.

Myth # 1 is "we are already in a recession." This is a myth? Mr. Hassett does not actually say that we are not in a recession, only that we will not know for sure until some time down the road.

Myth # 2 is that the stock market usually tanks in a recession. I had not heard this one. I knew that the stock market usually declines around a recession, but I hadn't realized that the tanking was supposed to be during the recession. The sharpest decline associated with the last recession occurred after the recession was over, with the stock market plummeting more than 20 percent between November of 2001 and its trough the following summer.

Myth #3 is that recessions used to be much worse. I hadn't heard that many people wandering the streets saying this one, although if we include the Great Depression in the mix and use our cutoff point as World War II, then the statement is true. The column also includes the strange assertion that, "the past three recessions may have seen slightly smaller drops in economic growth on average." This one is strange, because the 90-91 and 2001 recessions were both relatively mild, but the 1981-82 recession was the most severe of the post-World War II era by most measures, with the unemployment rate rising to 11 percent.

Myth #4 is that recessions are bad for your health. Hassett cites recent research showing that deaths from a number of causes such as traffic accidents and various stress-related illnesses decline during recessions. While this may be true, it is important to include some caveats here. There are very strong links between health and income. The research finds that after controlling for income, recessions are associated with better heath outcomes. Of course, if a recession is associated with a large enough drop in income, the negative health effects of the income decline will swamp the positive effects associated with a recession and we will be seeing worse health outcomes because of the recession.

Myth #5 is that there is a regular business cycle. Again, I didn't know that many people wandered the streets saying this (not where I live) but it would seem pretty hard to make this case given that we had decade long expansions in the 60s and 90s, compared with recoveries that only lasted 3-4 years in the 50s and 70s.

I am always happy to see myth-busting, but I'm not sure this piece rises to the occasion. Fortunately, Hassett did not take issue with one of the points he made in his intro:

"Economists have the same occupational hazard as baseball managers and football coaches: Every person on the street knows their job better than they do."

Hassett wisely chose not to include this one on his list of myths. Since nearly all economists managed to miss both a $10 trillion stock bubble and and an $8 trillion housing bubble, there is pretty good evidence that this myth is true.

--Dean Baker

The Post has finally gotten wind of the housing bubble after years of relying on David Lereah, the chief economist of the National Association of Realtors, as its main expert on the housing market. Unfortunately, it is still having some serious trouble getting the numbers right.

A front page story on the decline in housing prices in the DC area tells readers that, "prices for single-family houses fell 7.7 percent in the region during the third quarter of 2007 from the comparable quarter in 2006. That is among the steepest declines in home prices since 1991, when prices fell 5 percent during the first quarter from the first quarter of 1990."

Let's parse this one carefully. A 7.7 percent drop in house prices is "among the steepest declines" since 1991, when we are told that house prices fell by 5.0 percent. Okay, where I do arithmetic, 7.7 percent is larger than 5.0 percent, so the recent price decline is considerably larger than the 1991 drop. Also, were there periods between 1991 and 2007 when house prices fell by more than 7.7 percent or even more than 5.0 percent? In fact, there was no period of comparable price declines in the data referred to in the article, so why does the piece imply that there were other large price drops over this 16-year period.

This is a front page article in the Sunday paper. Doesn't anyone proofread these things?

--Dean Baker

The NYT editorial board warns us today about the $200 billion in "pirated or counterfeited goods" that enter the United States each year. I have no idea what they are talking about.

There is an extremely important conceptual difference between counterfeit products and unauthorized copies, however much the protectionists at the New York Times might like to obscure it. A true counterfeit good is intended to deceive the consumer. This would be an article of clothing supposedly by a famous designer, an original painting by a famous artist, or fake currency, all of which are intended to capture a far higher price in the market because the consumer is misled about their identity. True counterfeit items sell for approximately the same price as the real thing because people think that they are the real thing.

On the other hand, there are unauthorized copies which sell for prices that are far below the price for which the "real thing" would sell. This includes handbags and articles of clothing that may carry a designer label, but often sell for a small fraction of the designer label price. It is almost inconceivable that consumers don't know that they are not getting the designer product. Similarly, people often buy unauthorized versions of patented drugs because they are far less expensive than the patented version. They do this to save money; they know that they are not getting the drug produced by the patent holder. The same applies to copies of recorded movies and music, that may sell for a fraction of the copyrighted version or be passed along for free over the Internet.

This distinction is essential because with true counterfeits, the consumer is the victim. In the case of unauthorized copies, the victim is the company to whom the government has granted a monopoly over the sale of the item in question. The consumer is a beneficiary when they purchase an unauthorized copy at a price that is far lower than the price of the authorized version. For this reason, consumers are not likely to cooperate in efforts to stamp out the trade in authorized copies. The government's efforts to crack down on this trade is likely to meet the same fate as the Soviet Union's effort to stamp out the black market trade in blue jeans, it didn't work.

There is an economic argument for the sort of protectionism advocated by the NYT editorial board, but the underlying question is what is the most efficient way to provide incentives for creativity and innovation. Appeals to consumers to act against their own interest are just silly.

--Dean Baker

As the economy is being pushed into a recession by the collapse of housing bubble, everyone now agrees that it is a serious problem. So how can the NYT publish a 10 page magazine piece on Ben Bernanke and not ask him about why he failed to recognize the bubble, either in his stint as a Fed governor or in his first year and a half as Fed chair?

The evaporation of much or all of the $8 trillion in excess housing wealth created by the bubble is creating the largest financial crisis since the Great Depression and might well lead to the most serious recession since World War II. While Greenspan, as Fed chair, must carry the primary responsibility for failing to take steps to stem the growth of the bubble before it reached such dangerous dimensions (arguably, he promoted its growth), given his position as a Fed governor, Bernanke must share part of the blame.

It is remarkable that the NYT did not even think to ask about this failure. It may have seemed rude, but a serious piece cannot ignore such an enormous issue. After all, even in Washington, $8 trillion is real money.

--Dean Baker

Those who read the Washington Post's measured editorial on stimulus one week ago, whose sub-head was "Fiscal stimulus may eventually be needed, but there are pitfalls," may be surprised to read today's editorial with the subhead "Everyone agrees the economy needs a government boost ..."

Wow, what a difference a week makes! All the hesitance and caution from last week's editorial have disappeared (although Martin Feldstein's now antiquated trigger mechanism does make a cameo appearance in the last paragraph), the only issue is the details. We also all agree that $150 billion is the right number. That's great news in my book, but all the level-headed folks in Washington were saying that $70 billion was the right number last week.

What changed in a week? Well, the housing market is crashing louder than the Washington hacks thought possible. Fed Chairman Ben Bernanke is now calling for Congress to act quickly and Treasury Secretary Henry Paulson is saying that the economy "desperately" needs stimulus. In other words, the expletive deleted [we're a family friendly blog] is hitting the fan.

It would be nice if the Post editorial board would have the honesty to acknowledge that it and its designated "experts" don't have a clue.

--Dean Baker

Cuba's economy under Castro has not been a thriving success by any measure, but is it really necessary to make up numbers to exaggerate its failure? Marketplace radio apparently believes that it is.

It told listeners this morning that, adjusted for inflation, Cuba's per capita income was $2000 a year in 1953, today it is just $200 a year. According to the CIA Factbook, Cuba's per capita GDP in 2006 was $4,100.

--Dean Baker

Last week, all the serious Washington types were making measured comments about the risk of recession and the possible need for a fiscal stimulus. The numbers being tossed around (other than by CEPR types) generally centered around $70 billion and even this amount was not a slam dunk. Way back then, everyone wanted a "trigger" mechanism under which the stimulus would only kick in after we have been presented with more convincing evidence of a recession. The Washington Post editorial board admirably lived up to its responsibility of providing the conventional wisdom.

But, that was last week. This week, Fed Chairman Ben Bernanke raised the topic of stimulus with the House Budget Committee and said, "In order for this to be useful, you would need to act quickly." The conventional wisdom's trigger mechanism was altogether missing in Bernanke's testimony.

Bernanke used the figure of $100 billion, which puts him almost 50 percent above last week's conventional wisdom. According to press accounts, President Bush and the Republican leadership in Congress are now talking about $100 to $150 billion, at the high end more than twice last week's conventional wisdom.

The reality is that the economy is in serious trouble and the honchos like Bernanke don't really know what's going on. These folks completely missed the housing bubble as it grew to ever more dangerous levels. As the bubble has started to deflate, they now recognize that we have a problem, but they have no idea how bad it is or how to deal with it.

It is time for economic reporters to level with the public on this fact and stop doing PR work for Bernanke and the rest assuring people that everything is okay.

--Dean Baker

The NYT and other publications reporting on the Fed's release of the latest Beige Book noted that the district banks reported that growth was slowing. It would have been helpful to remind readers that the district banks were also reporting slow growth through the middle of the last recession. Below is the lead paragraph from Beige Book released in August of 2001, 5 months after the recession had begun:

Reports from most Federal Reserve Districts point to slow growth or lateral movement in economic activity in June and July. Retail sales generally were sluggish and frequently below expectations, despite substantial discounting on a wide range of consumer goods. Manufacturing activity in nearly all sectors and regions declined further in recent months as producers adjusted to weak domestic and foreign demand and worked through accumulated inventories. Sustained weakness in the manufacturing sector spilled over to other businesses, with many Districts indicating declines in demand for office space and trucking and shipping services. In contrast, residential real estate markets remained stable and even expanded in some areas, with the relative strength of the sector attributed in part to lower mortgage interest rates. Agricultural producers continued to struggle against low prices, weak exports, higher energy costs, and the weather, although some regions reported improvement in growing conditions since the last survey period. Financial institutions across the country reported reduced demand for a wide variety of loans, tighter credit standards, and stable-to-deteriorating quality of existing loans and leases; residential mortgages were the notable exception to these trends.

The point is that economists and people in policy positions have a tendency not to recognize or acknowledge recessions.

--Dean Baker

I never thought that I could be an optimist on the housing market, but USA Today did the trick. It ran an article telling readers that there will be a massive sell-off of homes over the next three decades as the baby boomers retire and sell their homes.

While we are in the midst of a major market meltdown, I would not bet on the decline persisting for three decades. The basic problem with the USA Today analysis is that it doesn't seem to take account of price. It has boomers selling homes in the Northeast and Midwest and moving to the South and West. This is possible when homes in Northeast and Midwest sell for the same or more than homes in the South and West. It becomes much less possible when this pattern reverses. It is already the case that home prices have been severely depressed in many areas of the Midwest, making the prospect of cashing out and moving to the Sunbelt very difficult. If the trend were to follow the pattern suggested in this article, many areas in the Northeast might be in the same situation.

Even more importantly, changes in the ownership rates within age groups could swamp the impact of demographics. Withing age group ownership rates had been increasing until the period of income stagnation that began in the mid-seventies. They rose again in the late 90s boom. If we can again have an era of moderate prosperity, in which most of the population shares in the gains from growth, it is likely that within age-group ownership rates will again increase and offset the decline in housing demand attributable to demographics.

--Dean Baker

Robert Samuelson wrongly says that most people will not be affected by a recession, claiming that only the relatively small portion of workers who lose their jobs are hurt. This is not true. Most workers will see less pay because of high unemployment.

He is right about the limited impact of proposed stimulus packages. With house prices now falling at a $2.2 trillion annual rate, the $70 billion stimulus package being put on the table will not have very much impact.

--Dean Baker

David Leonhardt's column compares the state of the economy in 1992 and 2008. He gets much of the story right, but misses a few items.

First, he notes the slow productivity growth in 1992 and attributes it to weak business investment. He then tells readers that business investment picked up under Clinton and productivity began to grow more rapidly. Actually, the increase in business investment was very modest, especially by the time of the productivity upturn in 1995. Furthermore, much of the increase was simply accounting. There was an explosion of car leasing in the 90s. A leased car counts as investment, a purchased car counts as consumption. The productivity upturn of the 90s was far too large to be explained by the modest increase in investment that we experienced. In fact, at the point where the productivity upturn began in 1995, investment was still below its late 80s share of GDP.

The second issue is that it is not clear that productivity is still growing at a healthy pace. In the three years from the second quarter of 2004 to the second quarter of 2007, productivity growth averaged just 1.6 percent a year, almost the same rate as during the 1973-1995 slowdown. There was a huge jump in the third quarter, although this will be largely offset by weak or negative growth in the fourth quarter. The course of productivity growth through the recession remains to be seen, but we cannot take for granted that 90s upturn is continuing.

The third big oversight is that trade does not appear as a factor that can improve the situation for the middle class. The upward redistribution of the last decade has gone primarily into the pockets of highly educated professionals such as doctors, lawyers, and accountants, in addition to investment manager types. These people are largely protected from the sort of international competition to which less educated and less highly paid workers like custodians and steelworkers are subjected. If we removed the trade barriers that protect highly educated workers, it would reverse this upward redistribution of income. (Journalists are on the protected list.)

One final point, the column does not include rapidly plunging house prices on its list of items causing middle class anxiety. With nominal house prices falling at an 11 percent annual rate in the latest data, it is difficult to believe that this is not a major cause for concern.

--Dean Baker

The media somehow still cannot see the housing bubble even as it collapses in front of their face. The NYT has an article today reporting on race and gender discrimination in the issuance of mortgages in the context of a rash of foreclosures in inner city Baltimore neighborhoods. It only notes in passing that the price of homes in the neighborhood in question "nearly doubled since 2004."

If the homebuyer who is the central figure in the article were able to pay the 2004 price for the home that she purchased in 2006, then she would not have faced any difficulty paying her mortgage even at reset rate on her subprime adjustable rate mortgage. Of course, if she only had to borrow half as much money to buy her home then she would have been far more likely to qualify for a prime mortgage.

The mortgage industry deserves to be held accountable for the abuses in the subprime market, but it was incredibly irresponsible for the government to have policies that pushed moderate income people to buy houses at bubble inflated prices. The media were also incredibly negligent in failing to recognize this situation while it was taking place. It is ungodly incompetence for them still not to be able to recognize this situation after the fact.

--Dean Baker

That's the report from Marketplace radio. They didn't tell us what happened to the top executives and their paychecks. This topic awaits some good investigative reporting.

--Dean Baker

A Washington Post article discusses the state of the economy and prospects for an economic stimulus package passing Congress and being signed by President Bush. When assessing the state of the economy, the article notes the subprime mortgage crisis, slow job growth, rising unemployment, higher oil prices, the latest rise in the trade deficit, and a fall in consumer confidence. Falling house prices did not make the list.

The latest data show house prices falling at an 11 percent annual rate. This rate of decline implies a loss of more than $2 trillion in housing wealth over the course of the year. If this rate of decline continues it will have a much larger effect on the economy than any of the items on the Post's list.

--Dean Baker

The Post ran another of its classic non-informative budget pieces this morning. It told readers that California faces a $4.6 billion shortfall that "could grow to $14 billion deficit by the 2009 fiscal year," that New York faces a $4 billion shortfall and New Jersey faces a $3.5 billion shortfall.

That sounds bad, but is it? Well, without knowing how large these state budgets are, how can any reader know. For the record, a 4.6 billion shortfall in California would be approximately 3.3 percent of its budget, while the ominous $14 billion shortfall would be almost 10 percent. The $4 billion shortfall for New York is just over 5 percent of its budget and the $3.5 billion shortfall for New Jersey is more than 10 percent of its budget. Why couldn't the article give readers this information? It took me about 5 minutes on the web to find it.

The non-information gets worse. The article tells us that New Jersey's governor Jon Corzine is threatening his legislature that if they don't buy his plan for dealing with toll roads, the alternative is to "increase the sales tax by 30 percent, the income tax by 20 percent or the gas tax by 12 cents per gallon." Okay, we all know what a 12 cent per gallon increase in the gas tax means, but how many people out their know New Jersey's current sales tax or income tax rate? I have no idea, and without knowing the current tax rate, there is no way of assessing the impact of a 30 percent increase in the income tax or a 20 percent increase in the sales tax. (Undoubtedly many readers will also be misled into reading these numbers as percentage point increases, hugely over-estimating their impact.)

But, the worst item in this piece is a discussion of the ambitious agenda of Massachusetts governor, Deval L. Patrick. The article notes that he wants to increase spending on health care, education and housing and then adds that he is "exploring whether to offer in-state college tuition to the children of illegal immigrants who attend public schools."

Okay, that last line has no place in a budget article. The amount of state money potentially at stake in subsidizing the tuition of the children over illegal immigrants is so trivial that whether the state does it or not will have no noticeable impact on the budget. There are reasons to argue as to whether this is good policy, but Massachusetts will not be facing budget problems because it allows the children of illegal immigrants to pay in-state tuition, and it is outrageous for the Post to publish an article implying that this is the case.

--Dean Baker

The bulk of the nation's economists and economic reporters somehow managed to miss the $8 trillion housing bubble. Somehow, they still seem to be missing it even as it explodes around them. The latest Case-Shiller index shows that house prices are now falling at an 11.3 percent annual rate, which would destroy over $2.2 trillion in housing wealth in the course of a year. Somehow the Post's front page article on recession risks didn't think this was worth mentioning, nor apparently did any of the experts who were cited.

--Dean Baker

That is the question that the Financial Times reporter should have asked when Moody's apparently threatened to downgrade U.S. debt within a decade if the country does not reduce the projected growth of Medicare and Social Security.

This threat is very odd for several reasons. First, it is not clear why Moody's would be concerned about the composition of U.S. government spending. Lenders have reason to be concerned about the overall budget balance, but they have no obvious interest in the composition of spending. The United States recently increased its defense spending by more than a percentage point of GDP to cover the cost of the wars in Iraq and Afghanistan. If the government reduced defense spending to pre-war levels, as an alternative to cutting the cost of Social Security and Medicare, it is difficult to see why lenders should care.

It is also odd that Moody's would single out Social Security. Its cost is not rising at an especially rapid rate, in a decade its cost will have just risen back to its 1983 level measured as a share of GDP. Presumably, bond holders don't have any particular reason to object to spending on Social Security, so it is difficult to see why a bond rating agency should.

In the same vein, it is also possible to make up projected budget shortfalls with tax increases. Bondholders presumably care about borrowers ability to pay off their debts, they have no reason to care about the tax rate in the debtor country -- especially since tax rates in the U.S. would still be far below the OECD average even if they were raised by several percentage points.

The Financial Times reporter (and other reporters) should have asked why one of the world's leading bond rating agencies would make such an unusual intervention into U.S. domestic politics. Such detailed policy prescriptions for the United States are certainly rare, if not unprecedented.

In this context, it is worth noting that Moody's could face legal difficulties due to its recent rating practices. It gave top credit ratings to tens of billions of dollars of securities that were partially backed by very risky subprime mortgages. Now that these bonds are being written off at a very rapid pace, there may be some legal consequences for Moody's. Moody's potential legal problems should have been mentioned in the context of this intervention into U.S. politics. This is also a topic that deserves more careful examination from the media generally.

--Dean Baker

That's what the Washington Post headline told readers. If this one left you scratching your head, you weren't alone. After all, we expect that a rise in oil prices will take money out of consumers pockets and therefore slow growth. This is the sort of event that prompts Congress to design stimulus packages. So, why wouldn't a stimulus be effective?

Actually, the article does not tell readers that a stimulus will not work. It just says that rising oil prices are creating an even bigger problem than what we were already facing due to the collapse of the housing bubble. The real implication of the information presented in the article is that an even bigger stimulus may prove necessary to boost the economy.

--Dean Baker

The effects of the falling dollar continue to show up in import prices. Non-fuel import prices rose by 0.3 percent in December and have been rising at a 4.8 percent annual rate over the last three months. The higher prices are showing up on most categories of imports from most countries. The price of Imports from the EU have risen at almost a 6.0 percent annual rate over the last three months. The price of imports from China rose at a 2.0 percent rate. Until recently, the price of goods imported from China had been falling.

Higher import prices will force the Fed to decide between its 2.0 percent core inflation target (which we are already above) and attacking unemployment.

--Dean Baker

Ben Bernanke indicated yesterday that the Fed was prepared to lower interest rates aggressively in response to continuing economic weakness. The European Central Bank decided to hold its overnight rate at 4.0 percent and suggested that the next move might be up. If the Fed keeps lowering and the ECB holds steady or raises it will soon create the opportunity for a profitable carrying trade involving borrowing in dollars and lending in euros. This will lead to further downward pressure on the dollar (good news in my book) and will send part of the Fed's stimulus to Europe, as happened with Japan and the U.S. earlier in the decade.

Reporters should be asking about this scenario.

--Dean Baker

The news articles today all report on how the country's leading economists now believe that we currently are in, or soon will be in, a recession. This is big news, in fact it's bigger news than the reports suggest. As I've written in the past, economists have an enormous bias against seeing recessions. Virtually no economist saw the recession coming in 2001, even after the stock bubble was already well on its way to deflating (okay, none of them saw the bubble either). This includes all the official forecasters, CBO and OMB both projected solid growth in 2001.

Economists don't predict recession. Economists don't predict recessions. (I'm not in the fraternity.) Say it one thousand times until it sinks in. Economists, when we are lucky, recognize recessions after we are already in them. The fact that so many economists are now willing to say that we are facing recessions should be viewed as a lagging indicator of a recession. It is very reliable -- I am fairly certain that there has never been a period in which a sizable share of economists forecast a recession (the WSJ puts the aggregate probability at 43 percent) and we have not actually been in a recession.

Reporters should regularly remind their audience that their economic experts have an enormous bias against seeing recessions. It would allow them to place their assessments of the economy's prospects in better perspective.

--Dean Baker

Clinton may have eked out a victory Obama in New Hampshire, but on the Post opinion pages, Social Security is losing in a landslide. Robert Samuelson has yet another diatribe talking about the budget breaking cost of "Social Security, Medicare and Medicaid." As CBO director Peter Orszag has tried to teach those willing to learn, the problem is health care, not aging.

Of course cutting health care costs means going after the insurance industry, the pharmaceutical industry, and the doctors' lobbies, all of whom enjoy great popularity on the Washington Post opinion pages. So, they would rather beat up the elderly and mislead their readers.

btw, if the Washington Post was not controlled by protectionists they would be looking for ways that people in the United States could take advantage of the much more efficient health care systems elsewhere in the world -- but this could lower the income of some powerful groups.

--Dean Baker

Okay, I was following the New Hampshire primary too, but this is big news. Credit card debt soared at a 11.3 percent annual rate in November following an 8.5 percent rate of increase in October. Last year credit card debt rose at a 6.1 percent rate and in 2005 at just a 3.1 percent rate.

People borrow against their credit cards when they can't borrow against their homes. It looks like a lot of people can't borrow against their homes.

--Dean Baker

The Washington Post reported on the increase in nationwide drug spending in 2006 which was associated with the Medicare drug benefit. At one point the article notes complaints from Democrats about the excess insurance fees and drug costs due to the design of the program. It compares the 6 percent discount from retail prices negotiated by insurers in the program with the 18 percent discount obtained by Medicaid.

It would have been useful to include a comparison with the Veteran's Administration, which average close to 40 percent. The implied savings for Medicare and its beneficiaries from such discounts would be almost $40 billion a year.

The article also includes a comment from Richard Foster, Medicare's Chief Actuary, that the Medicare discounts are "mandated" rather than negotiated. It would have been useful to point out that the high retail prices are also the result of government intervention, in the form of government imposed patent monopolies. There is no one pushing a free market solution in this story.

--Dean Baker

USAToday quotes Treasury Secretary Henry Paulson as saying that the recent run-up in house prices was unsustainable and that a correction is "inevitable and necessary."

"Mr. Paulson called the current housing correction inevitable after what occurred during the five-year boom in which sales and prices climbed to record levels. 'After years of unsustainable price appreciation and lax lending practices, a housing correction is inevitable and necessary,' Mr. Paulson said."

This raises the obvious question -- why didn't Paulson and others in positions of power recognize that this sharp run-up in house prices was unsustainable? Isn't this part of their job? Or, if they did recognize it, why didn't they warn the public? In fact, they were still encouraging people to buy homes in the middle of this bubble, including moderate income people who just threw away their life's savings.

The media should be asking Paulson, Greenspan and the others these very pointed questions. Why aren't they?

--Dean Baker

The NYT has yet another column repeating its strongly held editorial view that the United States must subject less educated workers to international competition while leaving in place the restrictions that largely protect the country's most highly educated workers from international competition. The article includes the usual pleas for more adjustment assistance for those who lose their jobs, something we can all heartily endorse for doctors, lawyers, and economists, if we ever subject them to the same sort of international competition now faced by autoworkers and custodians.

If the NYT ever let a real free trader write a column, they would probably also report on the enormous costs imposed on both the economies of the United States and developing countries through copyright protection and patent protection on prescription drugs. The latter raises drug prices in the United States by close to $200 billion a year (@ $670 per person) over their competitive market price. Free traders would be concerned about such costs. This sum is one or two orders of magnitude greater than the amount of money at stake in trade agreements like CAFTA.

--Dean Baker

I'm a bit slow here (I'm traveling), but the bad jobs story for December might be even worse than is being reported. The reason is that the imputation for jobs created by new firms not included in the survey is likely overstating job growth.

In December, this imputation added 66,000 jobs. In November it added 51,000. By comparison, in the same two months of 2006 the imputation added 64,000 and 36,000 jobs for these months. We now know that those imputations for last year were about 25,000 too high. With the economy almost certainly growing more slowly this year than the last, it is likely that the overstatement is even larger this year.

As always, you can get the full jobs story here.

--Dean Baker

The Post reported on the release of the minutes of the last meeting of the Federal Reserve Board's Open Market Committee at which they decided to lower interest rates by one quarter of a percentage point. It notes their concern with the prospect of higher inflation but indicates that this would only come from higher oil prices about which they can do little.

Actually, a second important potential source of inflation is higher import prices, which is at least in part attributable to a falling dollar. Non-fuel import prices rose at a 3.6 percent annual rate over the last quarter and may rise even more rapidly in the future as more importers pass on currency related price increased. With non-fuel imports comprising almost 15 percent of GDP, a 2.0 percentage point increase in the inflation rate in this sector would translate into a 0.3 percentage point rise in the overall rate of inflation.

With inflation already at or above the Fed's targets, this sort of increase in the inflation rate could concern them. Also, higher interest rates can be an effective tool for maintaining the value of the dollar and thereby stemming the inflationary pressure from higher import prices. Of course the cost of keeping interest rates high to support the dollar would be lower growth and higher unemployment.

--Dean Baker

addendum -- (courtesy of a careful reader) The Fed is concerned about inflation from import prices:
"Moreover, earlier increases in energy and food prices likely would imply higher headline inflation in the next
few months, and past declines in the dollar would put upward pressure on import prices."

The NYT points the finger in the wrong direction in its editorial on the economy today. It correctly notes that wages have stagnated in this decade. However, it wrongly asserts that "corporate profits have soared."

That's not what the numbers show. There was a cyclical upturn in profits from the lows hit during the recession, but when the final data is in, the profit share in 2006, the cyclical peak of the current business cycle, is almost certainly going to be lower than in 1997, the peak of the last cycle.

According to the Bureau of Economic Analysis (NIPA, Table 1.14) the profit share of corporate income in 2006 was 20.8 percent. This is somewhat higher than the 20.1 percent peak share reached in 1997. However, the 2006 numbers have not yet been through comprehensive revisions. These revisions generally lower profits, primarily because the revisions assign a value to corporate stock options, most of which are not given any value in preliminary reporting. These revisions can be quite large, especially following large stock market gains. (The profit numbers originally reported for 2000 were subsequently revised down by 15 percent.) If the comprehensive revisions lower 2006 profits by just 4 percent, then the profit share in 2006 will be lower than in 1997.

There is a second, perhaps more important, reason why 2006 profits are overstated. The profit data include the fees, commissions, and interest, associated with trillions of dollars of mortgage related debt, much of which is now being written off as uncollectible. In other words, these fees were not real profits. If we assume that the write-downs will eventually total $160 billion (a very conservative estimate) and that they were associated with profits booked over the three years from 2004-06, then this would lower true profits for 2006 by more than 4 percent, again pushing the profit share for the year below the 1997 level.

In short, a careful examination of the data shows that profit shares have not risen from 1997 to 2006. So, if the money didn't go to ordinary workers and didn't go to profits, then where did it go? The answer is high-end workers, which include CEOs, the hedge fund boys, doctors, lawyers, and other highly educated professionals. One of the main reasons for this upward redistribution is trade policy -- but the NYT likes current trade policy.

Oh well, so much for designing an economic policy that will help typical workers.

--Dean Baker

Last year we got to hear many of the country's most prominent economists, including the current and former Fed chairmen, tell us how surprised they were by the meltdown in the housing market and the subsequent turmoil in credit markets. Given these folks' track record, it might be helpful if reporters tried to also get the views of economists who were not surprised by this turn of events.

The NYT chose to rely on surprised economists in an article assessing the likelihood of a recession in 2008. In particular, it notes that many economists expect house prices to continue falling until they are at least 15 percent below their 2006 peak.

Some economists who were not surprised by the downturn in the housing market have pointed out that house prices will have to fall by more than 30 percent after adjusting for inflation to get back to their longterm trend path. This argument should have been included in this discussion.

--Dean Baker

David Leonhardt misled readers in his column today discussing Senator Clinton and Obama's approaches to economic policy. He noted that Senator Clinton favored a mandate that requires people buy health insurance, while Obama opposes it. Leonhardt framed the discussion in the context of reaching universal coverage.

Actually, even a mandate will not get to universal coverage, as Leonhardt notes. The purpose of the mandate is to prevent gaming of the system. If everyone has the option to buy into the system whenever they want, and to pay the same price regardless of any pre-existing conditions (a part of both candidates' programs), then healthy people have no incentive to buy insurance. They can pay minor expenses out of pocket and hold off buying insurance until a point where they actually do have major medical expenses.

If everyone follows this pattern the system cannot work. It would be like allowing people to first buy auto insurance after they have an accident and then send the company the repair bill. The mandate gets around this by requiring that people buy insurance before they get sick. It is an anti-freeloader mechanism, not a route to universal coverage.

It is worth noting that Senator Obama has more recently suggested that people who do not buy insurance when the plan is first offered will be penalized with higher rates if they subsequently enroll. If this penalty is well-designed it can prevent the sort of wholesale free-loading that can undermine the system.

Many press accounts presented the November data on existing homes sales as good news. This is surely at least in part true, they were up slightly from a very low October level. However, they were still down 20 percent from the year ago level and more than 30 percent from the peak levels hit in 2005.

The more important point that was missed in most of the reporting is that the existing home sales data is giving us a dated picture on the housing market. It refers to completed sales. These sales were typically contracted six to eight weeks prior to the sale, which means that November sales data is primarily telling us about the state of the housing market in October or even September. The more recent data, most importantly existing home sales (which refers to contracts signed), paint a more negative picture. So this new report should be seen as providing very little evidence that the housing market is stabilizing.

--Dean Baker

I have railed before against reporters using the stock market as a measure of economic performance. The stock market is a measure of how well people who own lots of stock are doing, just as corn prices are a good measure of how well corn growers are doing. Stock prices may rise because the economy is growing rapidly and corporate profits are growing along with it. Alternatively, stock prices may rise because profits are rising at the expense of wages or simply because stockholders are being irrationally exuberant. The latter two causes of price increases are surely not good news for the bulk of the population.

However, insofar as reporters do care to examine how the 25 percent of families who have substantial (more than $30,000) stock holdings are doing, there is the further admonition that they should focus on the broad S&P 500 index that represents the bulk of the capital of publicly traded corporations in the United States, not the Dow Jones Industrial Average which includes just 30 blue chip companies.

The two give somewhat different stories over the last calendar year. The Dow Jones Index was up a respectable 6.5 percent over the course of 2007. By contrast, the S&P 500 increased by just 3.5 percent, putting it roughly even with inflation.

In fact, investors in stock have not done very well over the last decade. The S&P 500 rose by a cumulative total of 52.6 percent from December 1997 to December 2007. After adjusting for inflation, the increase was 17.3 percent, which translates into real growth of just 1.6 percent a year. Add in a dividend yield of approximately the same size and we get that the average real return on stocks over the last decade has been 3.2 percent, a bit lower than the yield available on inflation indexed government bonds at the time.

Well, at least the CEOs are doing well.

--Dean Baker