My friend “Pierre-Olivier Gourinchas”:http://ist-socrates.berkeley.edu/~pog/ has co-authored a “very interesting paper”:http://ist-socrates.berkeley.edu/~pog/academic/IFA/ with “Hélène Rey”:http://www.princeton.edu/~hrey/ called “International Financial Adjustment.” (Here’s the “PDF version”:http://ist-socrates.berkeley.edu/~pog/academic/IFA/ifa.pdf.) You might think that’s not a title to set the world on fire, but don’t be fooled. A more appealing — though perhaps less responsible — alternative would be something like “Dude! We can predict exchange rates!” Here’s the abstract:

bq. The paper proposes a unified framework to study the dynamics of net foreign assets and exchange rate movements. We show that deteriorations in a country’s net exports or net foreign asset position have to be matched either by future net export growth (trade adjustment channel) or by future increases in the returns of the net foreign asset portfolio (hitherto unexplored financial adjustment channel). Using a newly constructed data set on US gross foreign positions, we find that stabilizing valuation effects contribute as much as 31% of the external adjustment. Our theory also has asset pricing implications. Deviations from trend of the ratio of net exports to net foreign assets predict net foreign asset portfolio returns one quarter to two years ahead and net exports at longer horizons. The exchange rate affects the trade balance and the valuation of net foreign assets. It is forecastable in and out of sample at one quarter and beyond. A one standard deviation decrease of the ratio of net exports to net foreign assets predicts an annualized 4% depreciation of the exchange rate over the next quarter.

Now, I am not a macroeconomist so I should leave further discussion to Daniel and John. The guts of the paper are really beyond my competence to evaluate. But this is a blog, so naturally I will carry on regardless and make three points anyway.

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From the Washington Post, “Blinding Flash of the Obvious” Department:

The insurgency in Iraq continues to baffle the U.S. military and intelligence communities, and the U.S. occupation has become a potent recruiting tool for al Qaeda and other terrorist groups, top U.S. national security officials told Congress yesterday.

“Islamic extremists are exploiting the Iraqi conflict to recruit new anti-U.S. jihadists,” CIA Director Porter J. Goss told the Senate Select Committee on Intelligence.

“These jihadists who survive will leave Iraq experienced and focused on acts of urban terrorism,” he said. “They represent a potential pool of contacts to build transnational terrorist cells, groups and networks in Saudi Arabia, Jordan and other countries.”

On a day when the top half-dozen U.S. national security and intelligence officials went to Capitol Hill to talk about the continued determination of terrorists to strike the United States, their statements underscored the unintended consequences of the war in Iraq.

“The Iraq conflict, while not a cause of extremism, has become a cause for extremists,” Goss said in his first public testimony since taking over the CIA. Goss said Abu Musab Zarqawi, a Jordanian terrorist who has joined al Qaeda since the U.S. invasion, “hopes to establish a safe haven in Iraq” from which he could operate against Western nations and moderate Muslim governments.

“Our policies in the Middle East fuel Islamic resentment,” Vice Adm. Lowell E. Jacoby, director of the Defense Intelligence Agency, told the Senate panel. “Overwhelming majorities in Morocco, Jordan and Saudi Arabia believe the U.S. has a negative policy toward the Arab world.”

How long before our doughty friends at Power Line realize that Porter Goss and Vice Admiral Jacoby are…ON THE OTHER SIDE!!!!

Some interesting news just in from Ireland. Observers of Northern Ireland politics may remember the “massive bank raid”:http://www.ireland.com/newspaper/front/2004/1222/2122287523HM1ROBBERY.html last December, where the thieves netted UKP 26.5 million. The dogs in the street knew that the IRA were responsible, but when the UK and Irish governments, as well as the body charged with monitoring the ceasefire said as much, they were met with vociferous and indignant denials from both the “IRA itself”:http://www.ireland.com/newspaper/front/2005/0119/109897192HM1LEAD.html, and from “Sinn Fein”:http://www.ireland.com/newspaper/front/2005/0211/287693130HM1NORTH.html, the IRA’s political wing. Now, Irish police “have arrested”:http://www.rte.ie/news/2005/0217/cork.html seven men who appear to have been in possession of large quantities of Northern Ireland banknotes; it appears that those arrested include two Sinn Fein members, one of whom is a former elected representative. As the leader of the Irish Labour party, Pat Rabbitte has noted in a statement:

bq. even at an early stage, it appeared that today’s events were particularly significant in the context of the Northern Bank robbery and subsequent denials by IRA and Sinn Féin.

At this stage, one hesitates to make any definitive pronouncements – the possibility exists that these jokers had a perfectly legitimate reason to be carting around UKP 2.3 million in Northern Ireland and British banknotes. But if it does indeed turn out that this is some of the missing cash, it puts Sinn Fein in an extremely awkward position. Everybody knows quite well that they’ve been lying through their teeth about IRA involvement in the bank raid – but there hasn’t been any smoking gun evidence that would put the lie to them. It’s clear to even a casual observer that the IRA and Sinn Fein are organically linked, and there’s very strong reason to suspect that Sinn Fein’s electoral successes in the Republic have been bankrolled in part by the proceeds of crime in the North. This has been having an extremely damaging effect on democratic politics in the Republic. It’s long past time for Sinn Fein to decide whether it’s a normal political party in a democratic system or the political wing of a particularly nasty private army that even during its supposed ceasefire has consistently demonstrated its keenness to maim and cripple innocents.

If the US government is willing, it has a very easy means of signalling how drastically Sinn Fein/IRA’s political options have narrowed. The annual St. Patrick’s Day parties at the White House have been an integral part of the peace process. When Sinn Fein leaders started getting invites as well as democratic politicians, it signalled the US government’s willingness to underwrite Sinn Fein’s role in the negotiations, and any subsequent political arrangements. The gossip around Washington has been that the entire occasion is going to be cancelled this year because the US government doesn’t want to meet and greet terrorists – but also doesn’t want to single them out for disfavor for fear of offending Sinn Fein’s friends on Capitol Hill. If the government wants to send out the right signals it should go ahead and hold the function – but invite only representatives of those political parties that are committed exclusively to democratic politics. This may sound like diplomatic niceties – but it would send a quite powerful signal, and, I suspect, have a substantial chastening effect on a group of people who are in sore need of chastening.

I’m rather proud of a piece I’ve written about a new anthology of essays, Wittgenstein Reads Weininger, for Notre Dame Philosophical Reviews. (A nice online journal that just does short reviews. They just underwent a redesign. Now smoothly searchable.) I think I did a pretty solid job of covering this modest quadrant of scholarly specialization – this suburb of Wittgenstein’s Vienna, if you will; while also providing some clear views of the city; and some sense of the strange bird who roosts and rules there – this fierce Austrian double-eagle, gripping Frege and Russell in one sharp beak! Schopenhauer, Kraus … and Otto Weininger in the other! Who understands how such an ornithologico-philosophical thing could be? (As Wittgenstein once paraphrased Plato to one of his over-awed followers: ‘I study not these things – e.g. logic – but myself, to learn whether I am a Typhon-like monster, or a simpler sort of creature.’) And so I managed to turn a book review into a modestly original short essay. The editor very kindly let me ramble on twice as long as I was supposed to. But it’s still quite short [UPDATE: I think the word I was reaching for was ‘long’.] The Kraus quote I stuck on at the end is one of my favorites.

Last week, a dozen of the top American law journals announced their commitment to reducing the length of law review articles. The Joint Statement concerning this policy is available “here”:http://www.harvardlawreview.org/articles_length_policy.pdf. A number of journals have already adopted policies to implement the goals behind this statement. The so-called “Virginia Experiment”:http://www.virginialawreview.org/page.php?s=membership&p=announcements#length (see the link on Short-Article Policy), which began a year ago, sets a presumptive word limit at 20,000 words and effectively caps articles at 30,000 words. “Harvard Law Review”:http://www.harvardlawreview.org/manuscript.shtml#length has recently adopted similar language, with a 25,000 word preference and a 35,000 word limit. These policies will have serious implications for what is published at Virginia and Harvard. Far less constraining, but nevertheless significant, are policies adopted by “Columbia Law Review”:http://www.columbialawreview.org/information/submissions.cfm and the “University of Pennsylvania Law Review”:http://www.pennlawreview.com/submission.php, both of which have set presumptive word caps at approx. 35,000 words. Other journals will probably adopt similar policies in the near future.

From the perspective of academics in non-legal disciplines, these words caps may seem absurdly generous. Most peer-review journals won’t accept articles over 10,000 words. And, to be clear, these limits are ceilings. Most law reviews regularly publish “essays”—really just normal length articles—that are far below these numbers.

One would think that this is all relatively uncontroversial and rather long overdue. And there has been some positive feedback from legal bloggers. “Orin Kerr”:http://volokh.com/archives/archive_2005_02_07.shtml#1108060955 quotes the Joint Statement rather approvingly, and Larry Solum gives it a characteristic “very interesting!”:http://lsolum.blogspot.com/archives/2005_02_01_lsolum_archive.html#110788056452294809

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It’s all happening in Dublin these days. In January, Michael Ignatieff gave the first annual Amnesty lecture in Trinity College – since published by The Dubliner magazine. Ignatieff tried to explain and in some sense justify American exceptionalism in matters multilateral, particularly the ‘judicial narcissism’ that prevents US judges from incorporating foreign jurisprudence and international legal norms.

Meanwhile, no less a personage than Antonin Scalia put the idea of judicial isolationism to the test only last Friday night, which he passed in the company of a horde of boisterous Dublin barristers.

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The New Statesman has “an excellent leader on the Ken Livingstone row”:http://www.newstatesman.com/nsleader.htm . Read the whole thing, but here’s a taste:

bq. The demand for ritual recantation and punishment whenever someone expresses themselves “inappropriately” (itself a prissy, nannyish sort of word) has become an inhibition on free speech. A football manager loses his job when he “insults” disabled people; an editor’s career is endangered when his magazine “insults” Liverpudlians; a commentator is thrown off the airwaves when he “insults” tsunami victims with a feeble pun. The worst sin of all (and rightly so) is anti-Semitism; but to place Mr Livingstone’s remarks in that category is another example of trivialising the genuine article.

Indeed. The second part of the Statesman leader is about Michael Howard’s disgraceful pandering to the racists with his proposed “health checks” on migrants. Unfortunately this (and the recent competitive bidding by Tories and Labour alike for the xenophobic vote) doesn’t receive nearly as much attention from the “left” blogosphere — a point “well made on John Band’s blog”:http://www.stalinism.com/shot-by-both-sides/full_post.asp?pid=788 .

Fans of the Hotelling/Downs Median Voter Model will be truly gratified by the latest two policy initiatives to be chucked in the general direction of the National Health Service. From the Conservatives (NB to non-UK readers: they are our right-wing capitalist party, which means that they are in favour of socialised medicine and abolishing university tuition fees).

” We will bring back matrons to take charge and deliver clean and infection-free wards”

And from the Labour Party (NB to non-UK readers: they are our left-wing socialist party, which means that they are in favour of privatisation of local government services and identity cards)

” Matrons will take the lead in setting standards for hospital cleanliness”

Three reasons why I find this particular piece of policy-by-Daily-Mail-editorial-page rubbish particularly disspiriting.

1. Some nurses are men; if I was one, then I think I would be pretty cross at the idea that a senior position was being created whose name came from the Latin for “mother”.
2. A “matron” in the NHS today is a ward sister with extra managerial responsibilities; ie a quite senior medical professional. If I was one, I think I would be quite cross that in the view of my political masters, my real role in life was to be a comedy battleaxe running a finger over the dusting.
3. This whole business is a response to a stream of tabloid hysteria about MRSA. MRSA is a bug which colonises the noses and skin of lots of human beings, and becomes a problem when transferred to burns or wounds patients through poor quarantine or lack of handwashing. It’s a problem completely unrelated to “dirty wards”, as anyone who ends up spending an hour or two reading the free leaflets in hospital waiting rooms can confirm. If you put every hospital in the UK into a big pot and boiled them, there would still be an MRSA problem as colonies of it are endemic in the population and it is spread by people, not wards. Apparently, the manifesto-writers for our two leading political parties either don’t know this, or do know it and have decided that what the Mail thinks (plus the opportunity to pander to the turn-back-the-clock tendency in British public life) is more important than the facts.

Like I say, democracy isn’t working.

Glenn Reynolds has responded to this post, and explicitly stated that he doesn’t believe that American liberals or Democrats are treasonous. As I mentioned below, I’ll resist a few opportunities for point-scoring and just accept that. (The one point I’d really like to make is laid out here at Finnegan’s Wake.)

However, he still believes that it’s appropriate and accurate to argue that European leftists are supporting terrorists in the hopes of destroying the United States. More specifically, he believes that Europeans (especially the French) are fighting a “proxy war” with Americans in the Middle East

While I don’t take this charge quite as personally (“Oh, you mean the other Timberites? Well then, never mind”), I don’t think that the argument has improved tremendously. Let’s look at the evidence that Reynolds brings to the table. (This sounds like an attackblogging post, but it really isn’t. It’s about Israel and Palestine, so I’ll have the flame retardant up.)

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The _Boston Review_ has a fascinating debate on the future of American foreign policy, with a long “lead essay”:http://bostonreview.net/BR30.1/walt.html by Stephen Walt, and responses from Richard Falk, Joseph Nye, Ivo Daalder, Mary Kaldor and Ann-Marie Slaughter among others. The Walt piece is on-line; the others are only available in the print edition at the moment (but if you enjoy CT, you should “subscribe”:http://bostonreview.net/subscribe.html to the _Review_; you’ll almost certainly like it, and it’s a cheap read). I suspect that he’s going to get most flak for his bald statement that it is not in the national interest of the US to offer unconditional support to Israel, but the most interesting bit of the essay, to my mind, was his discussion of non-proliferation policy. Walt is a realist – perhaps one of the three or four most prominent IR realists out there – and he’s calling for the US to give up most of its nuclear weapons in order better to encourage other states to sign up to a revamped version of the Non-Proliferation Treaty.

bq. If the United States is serious about reducing the dangers of nuclear terrorism (and it should be), then it must offer the rest of the world a “grand bargain.” In exchange for a more reliable nonproliferation regime (accompanied by an aggressive effort to secure existing stockpiles of loose nuclear materials) and the verifiable abandonment of nuclear ambitions by countries like Iran and North Korea, the United States would simultaneously agree to 1) abandon current plans to build a new generation of nuclear weapons, 2) significantly reduce its own nuclear arsenal (while retaining a few hundred warheads as a deterrent against direct attacks on the United States), and 3) take concrete steps to reduce the threat that it presents to so-called rogue states, including a willingness to sign some sort of nonaggression agreement with them.

This seems to me to be a thoroughly sensible set of arguments – but I’m rather surprised to find a realist advocating them. I’m even more surprised to find that I agree more with Walt’s essay than with the replies of some of his more ‘liberal’ critics such as Slaughter and Daalder (but then Walt, unlike Slaughter and Daalder, got it right on Iraq). Anyway, it’s a fascinating essay – anyone who’s interested in these debates should definitely give it a read.

NB – as per my usual policy, comments relating to Israel or Palestine will be expunged, to prevent the comment section degenerating into a flame-fest.

I’d just about finished this lengthy post when I got the news that our readers and fellow bloggers are calling for lots of juicy attackblogging instead of dryasdust issues analysis. But it’s done now, so I’m going to post it anyway.

Matthew Yglesias had a well-argued piece a couple of days ago on Social Security and the Efficient Markets Hypothesis (EMH), in which he quoted me on the (generally left-wing) implications of rejecting the EMH. This spurred me to start on a post (or maybe a series) on the EMH, the equity premium and the implications for Social Security reform. Most of what I have to say is consistent with what Matt and others have said previously, but perhaps there will be a bit of a new perspective.

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Letters are what we get:

Regarding destroying the sun and all–you missed a good one. Power Line’s “Hindrocket” finished off a pessimistic quote on the Iraqi elections from Jimmy Carter by noting: “Jimmy Carter isn’t just misguided or ill-informed. He’s on the other side.”

I gotta say, I’m a conservative and all (of the old-fashioned, pre-Bush type), and I dislike Carter as much as the next conservative, but openly accusing an ex-president of treason is way, way, way, way, way out of @#$@#ing line.

Why, oh why, do left-wing blogs not keep this kind of odious insanity ever before the public eye, like right-wing blogs with their Democratic Underground posts and their Ward Churchill obsession? The past year’s worth of John Derbyshire’s commentary alone would be enough to tar all of wingerdom with the taint of racist, xenophobic idiocy from now until the midterm elections. And this is from the so-called “in-flight magazine of Air Force One.”

The sooner you guys take a breather from pointy-headed debates over “issues” and devote some time to good, old-fashioned propaganda, the quicker we can crush the caricature of conservatism that is the “right-wing movement’ and get back to real left-right debate in this country.

J

I should note that (1) I’ve got to disagree about taking a breather from pointy-headed debates. Personally, I’d like a little from Column A, and a little from Column B; I think that folks like Josh Marshall and Kevin Drum are having a real effect in the debate about Social Security privatization. (2) I don’t know J, and can’t personally vouch for his conservative credentials, and (3) I think we do a reasonable job with the odious insanity. But, “reasonable” doesn’t mean “effective”.

Related post from Digby.

UPDATE: Here’s a good collection from MyDD.

ANOTHER UPDATE: Discover the Network! I’ve been wondering about the connection between the well-known liberals Abu Musab al-Zarqawi, Ayatollah Khomeini and Barak Obama. Now I know!

ON A ROLL: David Horowitz, you’ve done it again! So I clicked on Katrina vanden Heuvel, an unambigious liberal and presumably a juicy target. Here’s the beginning of the profile:

· Editor and co-owner of the leftwing magazine The Nation
· Limousine leftwing daughter of William J. vanden Heuvel, who worked for the founder of the CIA and for Robert F. Kennedy, and Jean Stein, whose father founded MCA-Universal.
· Married to New York University Russian scholar and Gorbachev enthusiast Stephen F. Cohen
· Fluent in Russian. Worked as reporter for state-run Moscow Times in U.S.S.R.

AAAH! Teh foregin language knowledge! RUN!

(Incidentally, the Moscow Times is a private English-language newspaper that started in 1992.)

AAAND: Commentor abb1 made the reasonable point that the Moscow Times might have existed in a different incarnation prior to 1992. To confirm, I spoke to Katrina vanden Heuvel, who told me that she worked for a few months in 1989 for the Moscow News covering the first multiparty elections.

The 15-year-long “McLibel” case came to an end yesterday. Two anti-McDonald’s protesters won their fight in the European Court of Human Rights, which ruled that they did not recieve a fair trial in the UK. They were not provided with legal aid to assist them in their defense against libel charges brought by McDonald’s (thus the ruling was against the UK government rather than McDonald’s itself; Mickey D’s won the original libel suit in 1995). I think the Independent is right in calling the original suit, over a leaflet accusing McDonald’s of bad labor practices and worse food “one of the biggest own goals in the annals of corporate public relations.” Seriously, they should have just let that slide.

Slightly OT: damn, y’all have really got some supra-national organizations over there in Yurp, dontcha? It’s like faceless bureaucrats in Strasbourg are telling everybody what to do, or something. Voting for some incompetent Tories would probably straighten that right out; you might want to look into it.

Thanks to everyone who bought through Amazon. With tsunami reconstruction funds cash-flush, I ended up donating another $250 (on top of the original $500+) to the Doctors Without Borders general emergency relief fund. Thanks in particular to whoever bought the expensive stuff lately. Although I regret to inform that Amazon capped the commission on the tasty G4 Powerbook at $25. I think you got a pretty good deal anyway. I hope you are happy with your sleek new machine. I’ll give again in a month and a half. Whatever accrues over the quarter.