When Paul Krugman and Megan McArdle agree on Obama/Geithner's lackluster reaction to the economy, that's usually a good sign to go long on duct tape and shotguns.  And this Brad DeLong post doesn't make me feel much better -- because I think he has the political economy just about right. 

Still, I'm going to wait a month before allowing my freaking out flag to fly.  Why?  Because in the time that Barack Obama has been forced to react in real time, I've noticed two tendencies:

1. He tends to take his own sweet time in making decisions;
2. Those decisions have usually worked for him.

So maybe a month from now Treasury will actually have some appointments besides Geithner, and markets will be more certain about what Obama is planning to do.  If these things don't happen, however, I have every confidence in my commenters saying, "I told you so." 

UPDATE:  OK, now we're seeing some movement!  This Reuters story lists three incoming nominees at the assistant secretary level.  It also explains the dithering at the more senior levels: 

On Thursday, sources said former Securities and Exchange Commissioner Annette Nazareth withdrew from consideration to become a deputy Treasury secretary for personal reasons and that she would remain in her private securities law practice.

In addition, Geithner's choice for international affairs undersecretary, Caroline Atkinson, also pulled her name from consideration. Atkinson, a senior official at the International Monetary Fund, has decided to remain at the institution, a person familiar with the decision said.

Both Nazareth and Atkinson had been vetted for the jobs but had not been formally nominated.

Lee Sachs, also currently a counselor to Geithner, is widely considered a top contender for undersecretary for domestic finance, but also has not been formally nominated.

One wonders if the reasons for the withdrawal have to do with the people involved or the rigors of the vetting. 

A prominent institution issued the following warning about the "Buy American" provisions in the stimulus package:

History and economic theory show that in facing a financial crisis, trade protectionism is not a way out, but rather could become just the poison that worsens global economic hardships.

  Name that institution:

1. Cato Institute
2. Peterson Institute for International Economics
3. Group of Seven nations
4. World Trade Organization
5. Xinhua News Agency

Click here for the answer.

Admittedly, the title of this post gives the game away, but it nicely highlights one of the many oddities of the current crisis. 

Props to my colleague David Rothkopf for this concise description of the Department of Commerce: 

The Commerce Department is a bureaucratic hodge-podge held together by those old Washington stand-bys of inertia, habit, and the self-interests of Congressional appropriators. Oh, and neglect. And ignorance. Not only do most Americans not know what the Commerce Department does -- its various missions are so diffuse most people who work there don't know all that it does.

David is being modest, however.  As near as I can figure, the Commerce Department does perform one task exceptionally well -- it allow people to step up from foreign policy middleweights to heavyweights. 

Prior to being at Commerce, these people are working in the think tank trenches struggling to get their op-eds placed in the Washington Post.  After being at Commerce, these people are jetting to Davos, writing august tomes for Knopf, pulling down medium five figures for speeches, popping up on Sunday morning talk shows, and becoming Deans at the Yale School of Management.   

Not that I'm bitter about this or anything. 

It's been fashionable as of late to predict the end of the dollar's hegemony as a reserve currency.  And, to be sure, the U.S. performance in recent years does not recommend the dollar as a great store of value. 

World politics is a relarive game, however, so while the dollar might have its problems, what are the alternatives?  China might have its fiscal house in order, but the renminbi is not fully convertible.  The yen is appreciating, but Japan's economy is too small (and its growth opportunities are not exactly robust). 

The only viable alternative is the euro.  But as Landon Thomas Jr. story in the New York Times suggests, that currency's odd political status is creating economic fissures within the Eurozone.  The key paragraph:

For some of the countries on the periphery of the 16-member euro currency zone — Greece, Ireland, Italy, Portugal and Spain — this debt-fired dream of endless consumption has turned into the rudest of nightmares, raising the risk that a euro country may be forced to declare bankruptcy or abandon the currency.

As the story makes clear, the odds of this happening are still small.  Because they are not trivial, however, uncertainty surrounding the euro will remain high.  Which means that it is not going to displace the dollar anytime soon. 

After bailouts designed to pump up the flagging finance and auto sectors, you knew that this was going to come at some point: 

As the 2009 AVN Adult Expo opens in Las Vegas this week, Girls Gone Wild CEO Joe Francis and HUSTLER magazine publisher Larry Flynt are petitioning the newly convened 111th Congress to provide a financial bailout for the adult entertainment industry along the lines of what is being sought by the Big Three automakers, a spokesperson for Francis announced today.

Adult industry leaders Flynt and Francis sent a joint request to Congress asking for $5 billion in federal assistance, "Just to see us through hard times," Francis said. "Congress seems willing to help shore up our nation's most important businesses, we feel we deserve the same consideration. In difficult economic times, Americans turn to entertainment for relief. More and more, the kind of entertainment they turn to is adult entertainment."

But according to Flynt the recession has acted like a national cold shower. "People are too depressed to be sexually active," Flynt says, "This is very unhealthy as a nation. Americans can do without cars and such but they cannot do without sex."

While not to the degree felt by banks and automakers, the Adult Entertainment industry has been hit by the effects of the economic downturn. DVD sales and rentals have decreased by 22 percent in the past year as viewers turn to the internet for adult entertainment.

Crazy as this sounds, Flynt and Francis do make one penetrating insight in their complaint -- adult entertainment sales and rentals are shrinking much more quickly than overall DVD sales and rentals.  So it would be fair to say that compared to mainstream Hollywood, the adult entertainment sector is getting pounded.  Unless the economy can manage to mount a robust and vigorous upturn sometime soon, it makes sense for the adult entertainment industry to beg for a more direct and forceful stimulus package. 

Hat tip:  Free Exchange

If you can fake authenticity in the new year, you will have it made. Authenticity was already a buzzword in business and politics before the credit crunch. It will become an essential virtue following the curtain twitch that revealed so many Masters of the Universe to be Wizards of Oz. At one executive leadership seminar I attended recently, the trainer explained that authenticity was the main attribute delegates needed to radiate, including “different types of authenticity for different audiences”. This means being a technocrat in the boardroom, a pragmatist among middle managers and an Average Joe on the shop floor.

The New York Yankees represent the very worst of America. Overstatement? Consider the times. Cornerstone industries are faltering, taxpayers are being asked to bail out mismanaged financial institutions and their overpaid CEOs, and decent, hard-working men and women are being laid off or worrying that they could be next. Now consider the eight-year, $180 million contract the Yankees reportedly handed first baseman Mark Teixeira Tuesday. Stack it on top of the $161 million deal signed by pitcher CC Sabathia and the (relatively) modest $82.5 million promised to A.J. Burnett and you have the most egregious display of financial irresponsibility in the history of sports. The Yanks' insane overspending would be bad for baseball in the best of times. These are not the best of times.... What's wrong here is obvious. It's also not really new. Unlike the NFL, NBA and NHL, baseball has no salary cap. Those leagues do not have caps for the sheer, unbridled joy of finding loopholes and exceptions. They have them as part of an effort to maintain some kind of competitive balance among teams from different-size markets in disparate parts of the country.

it always gives me great comfort to see the following facts: -- Over the past 10 years, eight different teams have won the World Series. In all, 15 teams made the World Series -- half of the teams in baseball. -- Over the past 20 years, 14 different teams have won the World Series. In all 22 teams made the World Series. Now, we're at more than two-thirds who have reached the Series. -- Over the last 30 years, 20 different teams have won the World Series, and only four -- Cubs, Mariners, Rangers and the Expos/Nationals -- have failed to get there... I'm not saying that the Yankees will not win in 2009 -- that's an awfully good team now, absolutely the best that money can buy. But just remember that key fact: 20 teams have won a World Series in the last 30 years. And by comparison: -- Only 14 teams have won the Super Bowl over the last 30 years. -- Only 14 different men have won Wimbledon over the last 30 years. -- Only 13 teams have won the Stanley Cup over the last 30 years. -- Only nine teams have won an NBA title over the last 30 years.

The Yankees do spend more money than other teams in MLB, but the differences would be less drastic if the payrolls of many teams had been rising up to the waves of new cash that have entered baseball in recent years. Going by the NFL formula, very generous considering the MLBPA is far more powerful an entity than any other union in sports, the payroll floor for 2009 would almost certainly be in the $100 million range. 58% of league revenue, as the players in NFL get, would be, in baseball, an average team payroll of a hair under $120 million. It's pretty clear that while the Yankees are outspending everyone comfortably, the rest of baseball has just as much to do with the payroll disparity as the Yankees do. Now, what about the Yankee mindset? The Steinbrenners aren't anywhere near as rich or as liquid as some other owners in baseball such as Carl Pohlad of the Twins. The difference is that the Steinbrenners have always invested in their team, always striven to put the best product possible out on the field. The Yankees have certainly made some terrible trades, especially when King George was hands-on the most, but they were done with the motive of making the team better. Yes, the Yankees got a huge, undeserved payday from the locals for their stadium, like most teams in baseball did, but it's a mitigating factor that they're actually plowing those funds back into the on-field product. And the team never threatened to not compete until they got their sweet check. Perhaps a small difference, but I see it as a good bit more ethical than Kevin McClatchy demanding taxpayer moneys to help the Pirates compete and then turn around and use all the money to fund his failing media empire. 

Students are applying to the state's public colleges and universities in record numbers, as the nation's financial crisis forces more families to consider less expensive schools. The new application figures confirm a widely forecast "flight to price" among students. They also follow a sharp increase in fall enrollment in the public system, which consists of 15 community colleges, nine state colleges, and the five University of Massachusetts campuses. The increase will sharpen competition for spots in this fall's freshman classes, bumping some students who in previous years could have counted on being admitted, college counselors say. Applications for early admission to UMass-Amherst, the state's flagship campus, rose 29 percent over last year, and applications for regular admission have climbed 23 percent at UMass-Lowell. Framingham State and Westfield State colleges have seen more than 40 percent increases in applicants from this time a year ago, while the Massachusetts College of Liberal Arts in North Adams has seen a 60 percent jump. Early-action applications at the Massachusetts College of Art and Design in Boston have risen 75 percent.... With most four-year public colleges unable to handle a significant increase in enrollment, the heightened competition will probably have a ripple effect across the state, college officials and high school guidance counselors say. The shift toward public colleges takes place as small private colleges in Massachusetts, which educate a sizable portion of the state's low- and moderate-income students, grapple with heavy financial losses from stock market declines, jeopardizing their ability to award financial aid. "You might have a perfect storm where public colleges will be the only place to get your foot in the door, and they don't have enough seats," said Bob Giannino-Racine, executive director of ACCESS, a Boston nonprofit that helps students find ways to afford college. "They've always been a fail-safe, but now they have a real challenge to remain places of access."

President-elect Barack Obama this morning named Daniel K. Tarullo to the Federal Reserve Board of Governors, the first step in an unusual opportunity Obama has to remake the Federal Reserve at a time the institution is undergoing dramatic change.

Although it is common for presidents to appoint several Fed governors by the end of a term, Obama will be able to appoint three of seven members of the Fed's board of governors immediately upon taking office, subject to confirmation by the Senate. He can either reappoint or replace Chairman Ben S. Bernanke when his term expires in January 2010, and he will make the same decision for Vice Chairman Donald L. Kohn when his term ends that June. Governors serve a 14-year term, though in practice, slots turn over every few years. Thus, within 18 months of taking office, Obama will likely have appointed five of seven Fed governors, including its top two members. Tarullo, if confirmed, will be one of them. He was a top aide to President Bill Clinton for international economic policy in the 1990s and since then has taught at Georgetown University's law school. He published a book this year on the Basel II international standards for bank regulation, arguing that the approach needs to be changed in major ways to prevent financial crises like that now underway. He is thus well poised to represent the Fed in its coordination with bank regulators around the world in responding to the financial crisis, and to take part in what is likely to be a vigorous debate on how the U.S. financial regulatory system should be overhauled and what the Fed's role should be.... The Obama administration is likely to move quickly to fill the three open governors slots, said Democrats who have been in touch with the transition team. Two of those slots are currently vacant -- nominations were held up by congressional Democrats -- and a third is occupied by Bush appointee Randall Kroszner, whose term has expired but who is serving until his replacement takes office.  In filling the three governor slots, Obama should seek to bring a diversity of experience to the Fed in an effort to manage the various dimensions of the crisis, said economists who study the central bank. With Tarullo, he has filled one with an expert in international banking regulation. For the other two, he might appoint one person with a background in financial markets and another academic experience in macroeconomics and monetary policy.

From the plains of North Dakota to the deep waters of Brazil, dozens of major oil and gas projects have been suspended or canceled in recent weeks as companies scramble to adjust to the collapse in energy markets. In the short run, falling oil prices are leading to welcome relief at the pump for American families ahead of the holidays, with gasoline down from its summer record of just over $4 to an average of $1.66 a gallon, and still falling. But the project delays are likely to reduce future energy supplies — and analysts believe they may set the stage for another surge in oil prices once the global economy recovers.

1. If oil prices are sky-high, the energy sector explains that it will be slow to develop new fields, because exploration requires massive fixed investments and no one knows what the price of energy will be 5-10 years from now;
2. If oil prices are low, the energy sector explains that it is unprofitable to develop new fields because... energy prices are low.

The World Trade Organisation has dropped plans to convene ministers to push for an outline deal in the troubled global trade talks – a further blow to world leaders’ promises to combat protectionism. Pascal Lamy, WTO director-general, said a meeting, originally planned for next week, “would be running an unacceptably high risk of failure which could damage not only the round but also the WTO system”.... The outcome runs counter to promises made by leaders of the Group of 20 major economies in Washington last month, who were committed to reaching an outline deal this year and promised no new protectionist actions within 12 months. Since then at least five of the G20 – Russia, India, Indonesia, Brazil and Argentina – have announced their intention to raise import tariffs or otherwise restrict trade.... Trade experts said the episode underlined the weakness of rhetorical agreements such as the G20 statement to constrain governments faced with domestic political pressure. Douglas Irwin, trade economist at Dartmouth College in the US, said: “Such statements may sometimes act as a signal to local legislatures, but there is usually ample room for governments to renege or weasel out of their commitments.” Since the G20 meeting, Russia has announced it will increase import tariffs on cars, India has raised duties on iron, steel and soy and Indonesia has alarmed trading partners with measures to benefit local producers. Brazil and Argentina have argued for an increase in external tariffs for Mercosur, the Latin American trade bloc of which they are the two biggest members. The G20 was lauded by attendees as a landmark meeting that would put big developing countries at the heart of global policymaking. Following last month’s summit, Gordon Brown, the UK prime minister who will host the next G20 meeting, said there would definitely be a meeting of trade ministers this year. Downing Street did not return calls on Friday. The countries that have raised tariffs deny breaking the agreement. The US said on Friday that it could not be blamed for the stalemate in Doha.

Four new power brokers—Asian sovereign investors, petrodollars, hedge funds, and private equity firms—are having a growing impact on global capital markets. In this update to a 2007 report, MGI examines how the new power brokers have fared since then, during the turmoil of skyrocketing oil prices, evaporating liquidity, and disappearing leverage.

MGI finds that the financial and economic events since mid-2007 have, if anything, accelerated the trends identified earlier: The power brokers' wealth and clout have grown. They have adapted by expanding their investment strategies. And they have increased the use of private financing as an alternative to public markets. Their actions have brought clear benefits in containing the financial market crisis but also have highlighted the risks associated with their rise....

Despite the financial crisis, MGI projects that the power brokers will continue to grow in wealth and clout. Under a conservative, base–case scenario, their combined assets will grow to $21 trillion (excluding overlap between them) by 2013. If, instead, they grow more briskly, at their 2000 to 2007 pace, their wealth would rise to $31 trillion, equivalent to roughly 60 percent the expected size of global pension funds or mutual funds in 2013.

The rapid rise of the new power brokers also poses potential risks. The report examines four main concerns: that the additional liquidity might foster asset price inflation; that state investors might use their wealth for political purposes; that hedge fund failures might destabilize the financial system; and that private equity firms' heavy leverage might increase credit defaults. MGI concludes these concerns remain on the table and justify careful consideration and monitoring. But overall, the rise of these new power brokers has been largely beneficial to global capital markets.

The possibility of hedge funds destabilizing the system certainly remains in play, but most of the rest of this looks pretty silly.  Of MGI's four new power brokers, only Asian sovereign investors still look like their power will be growing. 

Mr. Obama compared his infrastructure plan to the Eisenhower-era construction of the Interstate System of highways. It brings back the Eisenhower era in a less appealing way as well: there are almost no women on this road to recovery. Back before the feminist revolution brought women into the workplace in unprecedented numbers, this would have been more understandable. But today, women constitute about 46 percent of the labor force. And as the current downturn has worsened, their traditionally lower unemployment rate has actually risen just as fast as men’s. A just economic stimulus plan must include jobs in fields like social work and teaching, where large numbers of women work (emphasis added).

Men are losing jobs at far greater rates than women as the industries they dominate, such as manufacturing, construction, and investment services, are hardest hit by the downturn. Some 1.1 million fewer men are working in the United States than there were a year ago, according to the Labor Department. By contrast, 12,000 more women are working. This gender gap is the product of both the nature of the current recession and the long-term shift in the US economy from making goods, traditionally the province of men, to providing services, in which women play much larger roles, economists said. For example, men account for 70 percent of workers in manufacturing, which shed more than 500,000 jobs over the past year. Healthcare, in which nearly 80 percent of the workers are women, added more than 400,000 jobs. “As the recession broadens, the gap between men and women is going to close somewhat,” said Andrew Sum, director of the Center for Labor Market Studies at Northeastern University. “But right now, the sectors that are really getting pounded are intensely male.”

Here is the data from the November report of the BLS, available to anyone with a click of the mouse, showing the female unemployment rate rising as the downturn worsened, and, coincidentally, the jobs stimulus rose to the top of the political pile as the salient issue. Since extracting information from printed sources does not seem to be your strong suit, allow me to summarize the data: From October to November 2008, men's and women's unemployment rate rose .2. From September, 2008 to November, 2008, which was when the downturn worsened, men's unemployment rate rose .4 and women's .6.

• I misspelled her name in the initial version of this post.  And my apologies for that.
• Again, her focus on this quarter's data misses the point that this recession has hit men far harder than women.  Looking only at recent data without examining the whole of recession is like looking only at the gender breakdown of the last lifeboat off of the Titanic.
• Hirshman asks, "why is it that making an argument for women elicits this level of vitriol?"  I don't find much vitriol in this post.  I would counter with the question of why Hirshman -- someone who is hardly new to the public sphere -- is so sensitive to valid criticisms.
• Stepping back, there's a larger question, which is whether the stimulus package should take gender into account.  To me, that's the wrong question.  The right question is, how can the stimulus be apportioned to maximize productivity and employment gains? 

Barack Obama's chief economic adviser was one of the youngest people to be tenured at Harvard and later became its president. His budget director went to Princeton and the London School of Economics, his choice for ambassador to the United Nations was a Rhodes scholar, and his White House counsel hit the trifecta: Harvard, Cambridge and Yale Law.... [S]keptics say Obama's predilection for big thinkers with dazzling résumés carries risks, noting, for one, that several of President John F. Kennedy's "best and brightest" led the country into the Vietnam War. Obama is to be credited, skeptics say, for bringing with him so few political acquaintances from Illinois. But, they say, his team reflects its own brand of insularity, drawing on the world that Obama entered as an undergraduate at Columbia and in which he later rose to eminence as president of the Harvard Law Review and as a law professor at the University of Chicago.... The Ivy-laced network taking hold in Washington is drawing scorn from many conservatives, who have in recent decades decried the leftward drift of academia and cast themselves as defenders of regular Americans against highbrow snobbery. Joseph Epstein wrote in the latest Weekly Standard -- before noting that former president Ronald Reagan went to Eureka College -- that "some of the worst people in the United States have gone to the Harvard or Yale Law Schools . . . since these institutions serve as the grandest receptacles in the land for our good students: those clever, sometimes brilliant, but rarely deep young men and women who, joining furious drive to burning if ultimately empty ambition, will do anything to get ahead." The libertarian University of Chicago law professor Richard Epstein, who is not related to Joseph Epstein, worries that the team's exceptionalism could lead to overly complex policies. "They are really smart people, but they will never take an obvious solution if they can think of an ingenious one. They're all too clever by half," he said. "These degrees confer knowledge but not judgment. Their heads are on grander themes . . . and they'll trip on obstacles on the ground." All agree that the picks reveal something about Obama, suggesting he will make decisions much as he did in the U.S. Senate -- by bringing as many smart people into the room as possible and hearing them out.... [Nicholas] Lemann said Obama's penchant for expertise seems tempered with a respect for people who had, like Obama, left the path to academic jobs or big law firms to run for public office.  

The stewards of the Vietnam fiasco had pedigrees uncannily reminiscent of some major Obama appointees. McGeorge Bundy, the national security adviser, was, as Halberstam put it, “a legend in his time at Groton, the brightest boy at Yale, dean of Harvard College at a precocious age.” His deputy, Walt Rostow, “had always been a prodigy, always the youngest to do something,” whether at Yale, M.I.T. or as a Rhodes scholar. Robert McNamara, the defense secretary, was the youngest and highest paid Harvard Business School assistant professor of his era before making a mark as a World War II Army analyst, and, at age 44, becoming the first non-Ford to lead the Ford Motor Company. The rest is history that would destroy the presidency of Lyndon Johnson and inflict grave national wounds that only now are healing. In the Obama transition, our Clinton-fixated political culture has been hyperventilating mainly over the national security team, but that’s not what gives me pause. Hillary Clinton and Robert Gates were both wrong about the Iraq invasion, but neither of them were architects of that folly and both are far better known in recent years for consensus-building caution (at times to a fault in Clinton’s case) than arrogance. Those who fear an outbreak of Clintonian drama in the administration keep warning that Obama has hired a secretary of state he can’t fire. But why not take him at his word when he says “the buck will stop with me”? If Truman could cashier Gen. Douglas MacArthur, then surely Obama could fire a brand-name cabinet member in the (unlikely) event she goes rogue. No, it’s the economic team that evokes trace memories of our dark best-and-brightest past. Lawrence Summers, the new top economic adviser, was the youngest tenured professor in Harvard’s history and is famous for never letting anyone forget his brilliance. It was his highhanded disregard for his own colleagues, not his impolitic remarks about gender and science, that forced him out of Harvard’s presidency in four years. Timothy Geithner, the nominee for Treasury secretary, is the boy wonder president of the Federal Reserve Bank of New York. He comes with none of Summers’s personal baggage, but his sparkling résumé is missing one crucial asset: experience outside academe and government, in the real world of business and finance. Postgraduate finishing school at Kissinger & Associates doesn’t count.