Derek Thompson

So are we on our way out of this thing or not? The world's economies are plunging, commercial real estate is on a cliff and California would register a 10.0 on the Richter scale if it could detect fiscal fissures. But now April's leading indicators are up and economists are once again optimistic. What the heck is going on?

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Two reasons, actually. 1.) Because, as I note in my piece this week, there's evidence that the banks--at least the four biggest ones--are semi-delusional about the size of the losses they still face. Historically, the banks themselves have been about the worst source you can find for an honest assessment of their own financial situation.

2.) Because, as the Times notes in its TARP repayment piece today, the race to return TARP money seems much more about seizing a competitive advantage and identifying oneself as a "healthy bank" than actually, you know, being a healthy bank. (Well, that an wriggling out of government-mandated pay restrictions.) From the Times:

Steep declines in the economies of three of the U.S.'s biggest trading partners -- Mexico, Japan and Germany -- underscored the severity of the global recession and put pressure on major industrialized nations to revive moribund global trade talks.

On Wednesday, Mexico became the latest country to report a plunge in output. The country's gross domestic product fell at an annualized rate of 21.5% in the first quarter, the worst performance since the 1995 peso crisis led to an International Monetary Fund and U.S. Treasury financial rescue. This time, Mexico has insulated itself somewhat by arranging a $47 billion IMF credit line in advance.

Mexico's decline followed by a day Japan's report that its economy contracted in the first quarter at a 15.2% clip, its worst performance since 1955. Last week, Germany said its first quarter decline in GDP, an annualized 14.4%, was the worst since 1970.

Barry Ritholtz asks an interesting question: since Congress controls the budget and presidents set the agenda, can we say that one is more responsible for our deficits? He doesn't answer the question so much as tease readers with these two really interesting graphs that plot our deficits next to each party's control of the White House or Congress. So who can we blame?

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Federal and state governments are badly in need of revenue. And since their citizens have no money and hardly remember what a capital gain looks like, people are getting desperate for taxable goods. And by desperate, I mean creative. Is it time to tax prostitution yet? Yes it is, apparently.

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Not much! That's the conclusion from Robert G. Picard, an Oxford professor whom I'm not liking very much right now. Here's his argument for why journalists deserve low pay:

Wages are compensation for value creation. And journalists simply aren't creating much value these days. Until they come to grips with that issue, no amount of blogging, twittering, or micropayments is going to solve their failing business models.

Ouch, Picard. Since I've already Twittered about this article (literally) and asked for micropayments from my comment section (still waiting, guys...), I guess the only thing left to do with this piece is blog it. To value creation and beyond!

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In the Wall Street Journal's oped pages today, John Steele Gordon explains why headline-driven politicians simply can't run businesses. He writes:

The Obama administration is bent on becoming a major player in -- if not taking over entirely -- America's health-care, automobile and banking industries. Before that happens, it might be a good idea to look at the government's track record in running economic enterprises. It is terrible.

No, that's not really true:

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There really is no making Paul Krugman happy. The Republican establishment is down on its knees and conservative luminaries are despondent, with Richard Posner publicly bemoaning the state of Hayek and Buckley's conservatism. But Krugman would prefer to excommunicate reformed conservatives than listen to them as they flock to his side -- with a couple suggestions. "Why, exactly, should we listen to people who by their own admission completely missed the story?" he writes. Jeez, I thought smart, intellectually honest people were a good thing.

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It's not enough that Google troll every corner of the Internet, turn itself into a universal library, and read through your email to pepper your Inbox with relevant advertising. No, Google will not stop until it has developed an algorithm to read your mind. Or at least, the minds of all of its employees.

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Today in the New York Times, David Brooks writes that the qualities that make good CEOs aren't people skills or charm, but doggedness and boring anal-retentiveness. For this reason, he says, "business and politics do not blend well." Brooks warns that when charismatic politicians wrestle the CEO title from the charmless organization-bots, as we're doing now, the the inevitable result is disaster. Does that mean the Obama administration is doomed to fail with the bailouts?

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Wolfram Alpha, the new "search engine" that you should absolutely check out sometime today if you haven't, has been compared to Google and Wikipedia, or to some hybrid of the two. In short, the engine takes a term, like "vampire bat" or "May 19, 2009," and instantly produces a scientific report with details (like the size and weight of the bat, or today's moon cycle) culled from its extensive internal knowledge base. In other words, it's not a search engine, which produces articles as results. It's a knowledge engine that produces answers with explicit information. It's still a work in progress, but the unveiling is enough to make some question whether it will change the way we search the Internet.

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A study from the Center for American Progress polls the Millennial generation and finds that they aren't afraid of big government, not even a little. This is a bit surprising, because one thing I always heard about today's twentysomethings is that we're libertarian-lite: culturally liberal but too anti-authority to love a big government. Well, nevermind, I guess.

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Here's a story I like to tell. I used to eat Cosi salads for lunch about three days a week. Then I read that a serving of Cosi's salad dressing has about 360 calories. As somebody who likes his salads well-dressed and his pants well-fitting, I was taken aback, and snooped around a bit for other foods I eat regularly that have about 400 calories -- like two big scoops of chocolate ice cream. Today I warn fellow Cosi-addicts that it makes nutritional sense to order this way: "I'm actually on a diet. Could you hold the dressing and just put two big scoops of chocolate ice cream on top of the lettuce, instead? Thanks." Why am I telling this story? Because Sens. Tom Harkin and Rosa DeLauro are re-introducing a menu-labeling law with calorie-counts, and that is awesome.

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More charitable giving! Fewer designer handbags! Free hugs everywhere! Welcome to the post-recession America. Or so says the cover story from New York magazine, a buoyant ode to the bright side of NYC's financial doom. Green shoots of human compassion abound, it seems, from booming volunteerism, increased enrollments in divinity school, and plunging crime stats (murders are down 21% in New York). So should we all stop worrying and learn to love a world with much less money?

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Finally, there's a product that puts a wireless hotspot in your pocket: the MiFi, a battery-powered device the size of a thick business card that provides its own password-protected wireless network (NYT's David Pogue reviews here). This is cool for all the obvious reasons -- with MiFi in your pocket, your computer, phone and iPod Touch are connected to the Internet whether you're on a road trip or the beach. But it's especially cool for a reason Pogue doesn't mention: It could signal the end of cell phones.

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On Saturday morning, in a packed pizza joint in northern Virginia, I watched as three Republican superstars -- Rep. Eric Cantor, Mitt Romney and Jeb Bush - kicked off a "national conversation" with Americans to find out what happened to their party, where it's going, and what platform it will run on. The answers from Saturday were, in short: they're not entirely sure, they don't really know, and they're open to suggestions.

Since the defection by Sen. Arlen Specter pushed Republicans to the brink of irrelevance in DC, the GOP decided that if it's going to get back in the game, it should get out of the city. But what struck me was the tension between the party's eagerness to hear new ideas and the conviction that the ideas they have are really fine, already. After all, following a question from the restaurant's manager about how to help small businesses, a friend leaned over a whispered, "Do you think he'll say cut taxes?" A couple minutes later, Romney intoned: "The right thing to do is lower taxes.

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Does John Thain -- the former head of Merrill Lynch who is now one of the richest, most reviled unemployed people in the country -- deserve our pity?  And is Bank of America CEO Ken Lewis blatantly lying to shareholders? Let's review the case:

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There are many more pandemic threats than there are pandemics, and so I hope and expect that swine flu will run its course fairly quickly and without too much damage being done. Still, it's difficult to overstate how bad the timing is here. Not that there's ever a good time for a pandemic threat, but this particular point in the worst recession since the Great Depression is an especially bad time, for a couple of reasons. One is that people are certain to overreact, in ways that will be almost uniformly bad for the economy. Mexico City has become like a ghost town, it seems, with people staying indoors, and gathering places -- shops, restaurants, and bars -- closing their doors. It's unfortunate that the things which facilitate economic activity -- namely, the bringing of people together, are also the things that feed pandemics.

John Thain figured seven months ago that he was just one rung down the corporate ladder from becoming chief executive of the largest consumer bank in the U.S. Now, he is trying to climb back from the professional disaster that followed.

In an effort to restore his sullied reputation, the 53-year-old Mr. Thain is striking back at Bank of America Corp. He claims the bank lied about its role in the giant bonuses and losses at Merrill Lynch & Co. that cost Mr. Thain his job in January, after Bank of America bought the troubled brokerage.

"Getting fired is one thing. But nobody has the right to say things that they know aren't true," said Mr. Thain, who had been Merrill's chief executive, during one of a series of interviews with The Wall Street Journal.