Megan McArdle

In an interview with IMF advisor Robert Shapiro, the bailout expert has pretty much said what, once again, is on everyone's mind: "If they can not address [the financial crisis] in a credible way I believe within perhaps 2 to 3 weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system. We are not just talking about a relatively small Belgian bank, we are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere because the global financial system is so interconnected. All those banks are counterparties to every significant bank in the United States, and in Britain, and in Japan, and around the world. This would be a crisis that would be in my view more serrious than the crisis in 2008.... What we don't know the state of credit default swaps held by banks against sovereign debt and against European banks, nor do we know the state of CDS held by British banks, nor are we certain of how certain the exposure of British banks is to the Ireland sovereign debt problems."

Now try to imagine a world where everyone actually tried to follow this advice. And notice that we have an awful lot of things that need doing which are unlikely to be anyone's dream job. So a few folks would be really happy, but most everyone else wouldn't stay long on any job, and most stuff would get done pretty badly. Not a pretty scenario.

OK, now imagine that only graduates from colleges like Stanford or better followed this advice. Since such folks have more fulfilling job options, a larger fraction of them would end up really happy. But we'd still have too much job turnover among our elites, with too much stuff done badly.

Now notice: doing what you love, and never settling until you find it, is a costly signal of your career prospects. Since following this advice tends to go better for really capable people, they pay a smaller price for following it. So endorsing this strategy in a way that makes you more likely to follow it is a way to signal your status.

To start, writing off debts would not necessarily increase economic growth. Every liability is also an asset, so while a dollar that is no longer required for debt repayment might add some cents to consumer spending, it is also a dollar cut out of a bank's capital or of an investor's net worth -- subtracting from resources and confidence.

And write-offs big enough to change consumer behavior would probably be big enough to destabilize banks. The Federal Reserve or the government would need to help, presumably by injecting newly printed money as capital. Such government control is usually inefficient, and abundant printing of money increases the risk of uncontrolled inflation, which has its own way of making people feel poorer.

The issue of moral hazard also cannot be ignored. Much of the excess debt was incurred through irresponsible mortgage refinancing, which peaked in 2006 at $322 billion, representing 2.4 percent of G.D.P. The reckless use of houses as A.T.M.'s was a major factor in decapitalizing and destabilizing the American economy. Forgiving such debts will teach the wrong lesson: borrow in haste, repent never.

Finally, investors would rightly see a jubilee as an attack on property rights. That runs the risk of throwing markets into disarray and discouraging foreign investors from buying assets in the United States. Risk premiums on both debt and equity capital would increase.

By 2020, cases of throat cancer caused by the human papillomavirus may outnumber those of HPV-caused cervical cancer

Bad news on HPV:  it now seems to be the leading cause of throat cancer in men. Worse news: it may be spread by kissing.

Researchers examined 271 throat-tumor samples collected over 20 years ending in 2004 and found that the percentage of oral cancer linked to the human papillomavirus, or HPV, surged to 72 percent from about 16 percent, according to a report released yesterday in the Journal of Clinical Oncology. By 2020, the virus-linked throat tumors -- which mostly affected men -- will become more common than HPV-caused cervical cancer, the report found.

. . . Until recently, head and neck cancer mainly occurred in older patients and was associated with tobacco and alcohol use. The HPV-linked head and neck cancers, usually of the tonsils, palate or tongue, hit men their 30s, 40s, and 50s, Gillison said. It is unclear why women are affected much less often than men, she said.

. . . In a 2007 epidemiology study published in the New England Journal of Medicine, Gillison and her colleagues found that having a high number of oral or vaginal sex partners are risk factors for HPV-associated throat cancer. The cancer may also be spread by open-mouth kissing, Gillison said in the interview. "Nobody paid attention to oral HPV infections until 2007," she said. "We are about 15 years behind in the research" compared with the data on cervical cancer and HPV, she said.

True, great thinkers like John Maynard Keynes and the late Nobel laureate James Tobin floated various ideas for taxing financial transactions as a way to reduce economic volatility. (Tobin's tax applied specifically to foreign-exchange trading.) But, since then, the idea has received close attention from many economic researchers, and, frankly, it is hard to find their research results supportive.

Such taxes surely reduce liquidity in financial markets. With fewer trades, the information content of prices is arguably reduced. But both theoretical and simulation results suggest no obvious decline in volatility. And, while raising so much revenue with so low a tax rate sounds grand, the declining volume of trades would shrink the tax base precipitously. As a result, the ultimate revenue gains are likely to prove disappointing, as Sweden discovered when it attempted to tax financial transactions two decades ago.

Worse still, over the long run, the tax burden would shift. Higher transactions taxes increase the cost of capital, ultimately lowering investment. With a lower capital stock, output would trend downward, reducing government revenues and substantially offsetting the direct gain from the tax. In the long run, wages would fall, and ordinary workers would end up bearing a significant share of the cost. More broadly, FTTs violate the general public-finance principle that it is inefficient to tax intermediate factors of production, particularly ones that are highly mobile and fluid in their response.

All of this is well known, even if prominent opinion leaders, politicians, and philanthropists prefer to ignore it. The European Commission has surely been strongly cautioned by the Fiscal Affairs Department at the International Monetary Fund, whose economists have thoroughly catalogued the pros and cons of FTTs.

So why did the Commission go forward with the idea?The most generous interpretation is that the Commission simply does not believe economists' estimates and analysis, and views an FTT as more workable than is commonly realized (a scenario that calls to mind the debate surrounding the creation of the euro). It is true that Latin American governments, particularly the Brazilian authorities, succeeded in raising more revenue from taxes on bank withdrawals (a crude version of an FTT) than most policy analysts thought possible. On the other hand, Latin America's long-term growth record is hardly an advertisement for the approach, and accounting for lost tax revenues due to lower GDP would surely yield a less impressive fiscal outcome.

I think many people will be furious at how much of their paychecks are, effectively, being piped into the pockets of health insurers, health care providers, drug manufacturers, health IT gizmo creators, massive radiology machine developers, other device makers, and government programs. Some will think the return is worth the price. Many will not, particularly those who think insurers are wringing them dry.

What then? I can't help but think that's when people turn to government. After the market has adjusted, provided new products with higher deductibles and more managed care (or whatever the latest private-side cost control mechanisms are), people will still not be happy. More of them may then look to political leaders and say, "Do something about this. NOW!!!"

Transparency is the right way to go. But there's no telling what market and extra-market fury it might unleash. I'm not making any firm predictions here. My feet are securely planted in the zone of speculation. (I'm entitled to three seconds, right?) I'm just saying we don't know what passion can do. Be careful what you wish for. (And, for all that, I'm wishing it too.)

Suppose that the DOE has $1bn that it's happy to risk in order to subsidize alternative energy. It could simply grant that $1bn in $50m pieces to twenty companies. Using loan guarantees, however, it can leverage that $1bn to much greater effect. Assuming that the DOE thinks that 10% of these businesses will fail, it can guarantee $10bn worth of loans to the same 20 companies, so that each gets $500m. Assuming that it's right about the 9-to-1 repayment to default ratio, it will still be out $1bn once the loans are satisfied (or defaulted upon). (I've used round numbers for simplicity, these aren't even close to real ratios.)

Now, say that one of the companies--we'll call it Hypolyndra--fails and defaults on its loan relatively early. There are two ways of looking at this: first, that only 5% of the DOE's total exposure to the market has defaulted. This is the way that it appears, from your comments above, that you're looking at it: there's only been one default, and everything else is doing "okay for now." The other way of looking at it is that 50% of the expected losses have now occurred, and two more defaults will make the program considerably bigger than anticipated. While six defaults would only represent a total of 15% of the DOE's total market exposure, that wouldn't be a phenomenal success, it would be a program that's 300% of its forecast budget.

All of this is a separate question from whether the government should be intervening in the economy in this manner. I think that's a conversation worth having. But it should be a conversation about programs, not transactions. To focus on one failed loan is a bit like pointing to a lottery winner and saying, "That's how they think we're going to pay for our schools -- by handing out checks? What a bunch of dopes!" But of course this ignores the bigger picture. Perhaps there is a problem with that lotto payout, but that's a different and frankly less important issue than whether it's wise for the government to run a lottery. This is why the intense focus on Solyndra strikes me and many others as a transparently partisan feeding frenzy rather than a considered discussion of energy policy.

Robinson edges toward what I suspect is the deeper belief at work, urging Christie to follow the example of others who have lost weight. The premise here is that weight is a marker of personal discipline, and anybody who's fat must simply be too lazy to take care of themselves. This conveniently fulfills the desire to categorize obesity as a character flaw, but ignores the extreme difficulty of sustained weight loss. Robinson cites, as an example of somebody who has "lost weight and kept it off for extended periods," Mike Huckabee. Has he seen Huckabee lately? . . . .

Kinsley more explicitly casts Christie's weight as a moral failing, arguing, "a presidential candidate should be judged on behavior and character, not just on policies." It's pretty jarring to see somebody openly make the case that being fat is a sign of poor character. It certainly helps make Campos's case that there's a moral panic afoot.

Shanghai's subway riders (I am one) are all-too-familiar with bungling conductors who often ignore signals and don't line up train cars with platform doors. Shanghai Subway Line 10, along which the Sept. 27 accident took place, has only existed for 18 months but had already become notorious. One day, a train car's glass doors  spontaneously shattered. Another day, a conductor led a train down the wrong track, only to then make the dangerous decision to back the train up.

Subway commuters across China have been plagued by similar operational problems and the subway lines' overall sub-standard construction. In 2008, for example, 10 people were killed in eastern China when a subway tunnel collapsed.

After the Sept. 27 accident, Yu Shunshun, a well-known blogger, went to Sina Weibo, China's leading Twitter-like microblog, to give some advice to Shanghai's subway-wary citizens:

... Take the middle carriage whenever you are on a metro line or a high-speed train ... if the vehicle is overloaded, please send a message describing your position so as to make it easy for your relatives and friends to locate you. Make sure your cell phone has power before you step on any vehicle and be sure to pray for yourself.

In many cases, that's the best Shanghai's commuters can do to protect themselves.

As Shanghai's housing prices rise, residents have little choice but to move further and further away from the city center. They rely on the subway lines to get to work, but the lines were built quickly and shoddily. A common feeling among Shanghai's commuters is that the subway was not designed to serve them, but to enhance the status of Shanghai's Communist Party leaders.

Indeed, the U.N. projects that by 2025, the population of children under 5, already in steep decline in most developed countries, will be falling globally -- and that's even after assuming a substantial rebound in birth rates in the developing world. A gray tsunami will be sweeping the planet.

. . . Because of the phenomenon of hyper-aging in the developing world, another great variable is already changing as well: migration. In Mexico, for example, the population of children age 4 and under was 434,000 less in 2010 than it was in 1996. The result? The demographic momentum that fueled huge flows of Mexican migration to the United States has waned, and will wane much more in the future. Already, the net flow of illegal Mexican immigration northward has slowed to a trickle. With fewer children to support and not yet burdened by a huge surge of elders, the Mexican economy is doing much better than in the past, giving people less reason to leave. By 2025, young people on both sides of the border may struggle to understand why their parents' generation built this huge fence.

Americans watching college football games and news broadcasts in the next week may notice new ads from the agency -- long known for its campy messages promoting Priority Mail shipping services. Now, the "If it fits, it ships" campaign will share airtime with two 30-second spots designed to remind customers that paper mail, unlike e-mail, can't be hacked, and that letter carriers are still providing reliable and safe deliveries to doorsteps.

"A refrigerator has never been hacked," an announcer says in the first message as an actress pins a paper bill to her fridge.

In the other ad, a smiling letter carrier is seen walking her route while an announcer reminds viewers that hand-delivered messages ensure that "important letters and information don't get lost in thin air, or disappear with a click."

When a remote authority sets incentives, people respond by manipulating the system. This fact is poorly understood by education reformers who are fond of pay-for-performance and national standards, by health care reformers who are fond of paying for quality, and by financial regulators. In fact, the quoted paragraph provides an excellent description of the financial regulatory process under risk-based capital. The banks spent much energy and time trying to manipulate the risk-based capital regulations in their favor. They got what they wanted, in terms of risky portfolios backed by little capital.