John Cassidy's Blog, page 76

Day Two: About All We Know Is That the Attack Succeeded

It’s a fine spring day in Boston, and the area around Copley Square has been turned into a police-military encampment. Barricades have been erected, National Guardsmen are on the streets, and anybody trying to get access to their office or home has to show identification.

To someone who was living in downtown Manhattan eleven and a half years ago, that sounds sadly familiar. Thankfully, the scale of the damage and the casualty list isn’t anything like as big now as it was then. The tally of dead and injured could easily have been much larger. But a terrorist attack isn’t just about numbers: it’s about creating fear and terror and anger, and it’s about grabbing attention. With much of central Boston in a state of lockdown, normal business in Washington largely suspended, and the media in full-on saturation coverage mode, the attacks have already achieved their aims.

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Why the Price of Gold Is Plummeting: Six Theories

If you’ve been thinking about pulling out your gold fillings, or melting down the gold wedding ring your ex-wife threw in your face, you’d better get on with it. The way gold is trading on the financial markets, it won’t be worth your while unless you act soon. In the past two days, the spot price of the precious metal has fallen by almost a hundred dollars, to one thousand three hundred and seventy-five dollars an ounce. It’s the biggest two-day fall in thirty years. Since November, the price is down about four hundred dollars—or about twenty per cent.

Why’s this happening? The proximate answer is because traders are selling. Beyond that, nobody knows for sure. Trying to explain what’s happening in a speculative market like gold is a bit like trying to say why lightning strikes one place but not another. We know the general principles involved, but beyond that it’s mostly guesswork. Still, here are six theories, which I’ve ordered by increasing plausibility.

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Why the Masters Was Right to Punish Guan Tianlang

Here goes my latest bid to make myself unpopular.

Watching the Masters on Friday afternoon, I was just as astonished as everybody else to learn that the P.G.A. had given Guan Tianlang, the fourteen-year-old boy wonder, a one-shot penalty for slow play, which could well knock him out of the tourney, bringing a premature end to an astonishing story. (As I’m writing this, Guan is right on the cut line, which means he might or might not get to play the weekend. Update: Guan made the cut and will play the final rounds.) But the more I think about it, the more I believe the golf authorities made the right decision.

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Budget Games: Is Obama Playing Chess or Checkers?

According to Dan Pfeiffer, a senior adviser at the White House, President Obama has three rules for his staff: no drama; be disciplined; play chess not checkers. But if that’s the case, how can we explain the President’s new budget proposal, which has riled up his liberal base and gained him precious little credit from the Republicans? Is Obama breaking his own rules? Or does he have a fiendishly clever plan that his critics, on the left and the right, are too dim to discern?

When a Democratic President proposes to cut Social Security benefits, it surely counts as drama—especially when he does it up front, rather than at the end of a tortuous negotiation in which he has extracted some big concessions from the other side. No wonder the A.F.L.-C.I.O., Robert Reich, and the editors of the Nation are up in arms about what they see as a premature and self-defeating cave-in to the Republicans. “That’s exactly the problem,” Reich wrote other day. “The President throws things on the table before the Republicans have even sat down for dinner.”

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The Masters: Why My Money is on Tiger Woods

It’s Masters time again, and, like last year, the big question is whether Tiger Woods can win, thereby putting him back on track to catch Jack Nicklaus’s record of eighteen major championships. (Since his 2008 victory at the U.S. Open, Tiger’s been stuck on fourteen.) I think Tiger can do it, and I’m putting my money where my mouth is.

Earlier today, I texted a pal in England and asked him to wager ten pounds on Tiger at a British bookmaker. To be sure, the result is hardly going to break the bank either way, but having a little cash at stake adds to the rooting interest. If I weren’t such a wimp, I’d up the ante. In my view, the probability of Tiger notching his fifth Masters win come Sunday evening is substantially higher than the betting odds of 4/1 or 9/2 indicate, which is about twenty per cent. Tiger’s still more likely to lose than win, of course: that’s the way golf works. But this week, I wouldn’t bet against him.

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The Economic Case For and Against Thatcherism

As I hope I made clear in my post on Monday, I’m willing to give the old devil her due. But let’s not get carried away. “Margaret Thatcher had more impact on the world than any woman ruler since Catherine the Great of Russia,” Paul Johnson wrote in the Wall Street Journal. In the Times, David Brooks, perhaps confusing her for the Count of Cavour, said that she led a “fervent bourgeois Risorgimento.” Meanwhile, Speaker John Boehner described her as “the greatest peacetime prime minister in British history.”

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Maggie and Me: How Thatcher Changed Britain

When Margaret Hilda Thatcher took over as Prime Minister, in May, 1979, I was sixteen. To Britons of my generation, she wasn’t merely a famous Conservative politician, a champion of the free market, and a vocal supporter of Ronald Reagan: she was part of our mental furniture, and always will be. The day after her electoral triumph, Mr. Hill, my fifth form English teacher, an avuncular fellow with longish hair and a mustache, who had never previously expressed any political opinions, came into the classroom and shouted, “Right, you lot. Shut up and get down to work. It’s a new regime.” My father, a lifelong Labour Party voter, was equally aghast, especially when he discovered that my mother had voted for Mrs. T., on the grounds that “it’s about time we had a woman in charge.”

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Jobs Report: The Bad News and the Not So Bad

Like most observers, I assumed the March employment report, released today, was going to be so-so. Wrong. The report came in much weaker than expected, and by nine o’clock this morning, John Boehner, the Speaker of the House, had already issued a statement, noting that “hundreds of thousands fled the workforce last month,” and that “the president’s policies continue to make it harder for Americans to find work.”

You can’t blame Boehner and the Republicans for trying to make the most of it. They haven’t had much going for them recently, and the report was undoubtedly disappointing. The Labor Department’s monthly survey of firms showed total employment rising by just eighty-eight thousand in March, the lowest jump since last June. Coming after several months of encouragingly robust job growth, this was surprising. And the monthly survey of households showed an even darker picture. As Boehner indicated, the total workforce (i.e., the number of people who are working or actively looking for work) fell by almost half a million last month—496,000, to be exact. And according to the household survey, total employment fell by 206,000.

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Why Do Banks Go Rogue: Bad Culture or Lax Regulation?

If you are looking for a bit of light reading over the weekend, I can recommend a new two-hundred-and-fifty-page about Barclays Bank, a venerable British lending institution that, during the past decade or so, has transformed itself into a hard-charging global colossus that competes with the likes of JP Morgan, Goldman Sachs, and Deutsche Bank. (As a matter of local interest, Barclays has its name on the new sports stadium a few blocks from where I live in Brooklyn.)

After narrowly surviving the financial crisis, during which it bought some remnants of Lehman Brothers, Barclays got embroiled in a series of scandals, including efforts to rig a key interest rate, the LIBOR. These scandals, combined with the firm’s generous pay structure, enraged the British public, prompted questions in Parliament, and generally saw Barclays excoriated as a festering example of all that has gone wrong with banking. Last summer, the Barclays board forced out the firm’s chief executive, Bob Diamond, a flashy American who was once a bond trader, and asked a prominent British lawyer, Anthony Salz, to conduct a review of its internal culture and practices.

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Janet Yellen: A Keynesian Woman at the Fed

With Ben Bernanke’s term as chairman of the Federal Reserve up at the end of January, 2014, the speculation about the identity of his successor is starting in earnest. Two recent articles in The Economist and at the Washington Post’s Wonkblog have both made Janet Yellen, who is currently Bernanke’s number two on the Fed’s board of governors, the firm favorite for the job. Slate’s Matt Yglesias reckons her accession isn’t even in doubt, saying bluntly, “it’ll be Janet Yellen.”

Other possible candidates include Larry Summers, Tim Geithner, and Bernanke himself, although it’s been widely reported that Geithner isn’t interested and Bernanke doesn’t want to be reappointed. Given Yellen’s résumé, she’s a justifiable favorite. Before taking her current job, in 2010, she served for six years as President of the San Francisco Fed, one of the twelve regional reserve banks. She’s also got political experience and close ties to the Democratic Party. From February of 1997 until August of 1999, during Bill Clinton’s second term, she headed up the White House Council of Economic Advisers.

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