Things to Read on the Afternoon of February 22, 2014

Must-Reads:

1. Nathaniel Popper: As 2008 Crisis Loomed, Yellen Made Wry and Forceful Calls for Action: ‘Janet L. Yellen was not even a full voting member of the Federal Reserve’s policy-making committee, but she was not shy about admonishing her colleagues for not acting faster. “We need to do much more and the sooner the better,” Ms. Yellen said at a two-day meeting in late October…. After months in which some members of the Fed committee resisted taking steps to prop up the economy, Ms. Yellen lectured her colleagues: “Frankly, it is time for all hands on deck when it comes to our policy tools.”… What the transcripts show is a woman who was constantly pushing her peers — and also cleverly cajoling them — to do more to help ordinary households, not just financial institutions. At the same time, she urged her colleagues to look at the flaws in the banks that caused the crisis in the first place. “I don’t believe in gradualism in circumstances like these,” Ms. Yellen said in March 2008, months before the situation came to a boil…. At the end of October, the head of the regional Fed bank in Dallas, Richard W. Fisher, a member of the central bank known for his advocacy of higher interest rates, said that for one of the few times, he was following Ms. Yellen’s lead. “I will conclude with actually once again agreeing with President Yellen, as I think I have done twice in history,” Mr. Fisher said…. But even as the committee agreed to take ever more extraordinary actions, Ms. Yellen voiced her steady disappointment that her colleagues were not doing more to help the economy. “Historical precedents, such as the case of Japan, teach us that it is a mistake to act cautiously as the economy unravels,” she said in late October.’

2. Felix Salmon: Facebook’s Horrible, Stroke-of-Genius IPO: “The technology world moves fast, and companies need to be able to change or die…. Zuckerberg knew, circa Facebook’s IPO, that his company was not good at mobile… he knew that asking his existing corps of engineers to turn their attention to mobile would probably not work. But… he… [now had] a highly-valued acquisition currency in the form of Facebook stock. The world of mobile is in large part a lottery. The most successful products aren’t the best-made; they’re just the ones which managed to catch on…. Facebook bought Instagram for $1 billion in 2012 not because the product was particularly great, but because the product was insanely popular. The same when he offered $3 billion for Snapchat…. Facebook’s acquisition of WhatsApp sums up Zuckerberg’s strategy perfectly. WhatsApp is an ugly, clunky product with a juvenile name…. But… it’s also insanely popular… hundreds of millions of incredibly loyal users…. Issuing Facebook stock, especially if doing so buys you the future, in terms of a young global user base, costs Zuckerberg effectively nothing…. The WhatsApp acquisition is a statement by Zuckerberg that mobile matters more than money. He’s right about that. Without mobile, it doesn’t matter how much money Facebook has…. He’s playing large-stack poker, and he’s playing it in textbook manner. I, for one, wouldn’t want to be competing against him.”

3. Uki Goñi: Peso panic and rocketing prices shake the throne of Argentina’s Queen Cristina: “The economic panic… began in mid-January, when Argentina’s central bank reserves dipped below $30bn, forcing the government of President Cristina Fernández de Kirchner to drop its policy of injecting large quantities of dollars into the exchange market to shore up the overvalued peso. The sudden dollar scarcity on Argentina’s exchange market sent the peso’s official value crashing to eight pesos to the dollar, while the ‘blue’ illegal rate shot up to nearly 13…. The government has been quicker at naming culprits than finding solutions… Jorge Capitanich… televised verbal blast[s] at the perceived enemies of the ‘victorious decade’ presided over by the current president and her husband, the late Nestor Kirchner… ‘visible and invisible’ politicians, labour representatives, businessmen and journalists he blames for the sudden collapse of the peso and the explosive price increases… faceless foreign speculators, whom he accuses of a “strategy of domination” to gain control of Argentina’s oil and freshwater reserves, pandering to the widespread belief here, often underlined by the president in her speeches, that “vultures” of the leading industrial countries harbour secret plans to siphon off natural reserves…. Capitanich has also blamed ‘anti-patriotic’ farmers and large retailers… corruption-probing journalists… ‘generating psychological action of permanent destabilisation’…”

4. Richard Mayhew: Why the AFP Ads S—: “There are a couple of categories of people who are undeniably worse off under Obamacare…. (i) People earning over $250,000 per year in Modified Adjusted Gross Income who have employer sponsored health care or Medicare and are paying more in taxes (ii) Young single males with absolutely no health problems, no relatives with health problems and incomes over 250% Federal Poverty Line that previously had a $42 a month, $25,000 deductible plans that did not cover maternity or mental health needs. Those policies got cancelled…. Avik Roy has been trying to make this class sympathetic and failing miserably). Those are the two big classes of losers under the law. Neither are particularly sympathetic…”

Should-Reads:

• Chye-Ching Huang and Nathaniel Frentz: What Really Is the Evidence on Taxes and Growth?

• Henry Farrell (2008): Robust Action in the Topkapi Palace: “More generally, the problem of ambiguity, reflects, as Brad says, to a very considerable degree the desires of those at the top. Moreover, it may be a crucial source of power for them. It allows them to blur lines of accountability and responsibility, by making underlings guess what they want…. Hence decisions by underlings over torture, to destroy tapes, to skew intelligence in the one way rather than another, that are based on well grounded inferences about the preferences of those above, but which don’t allow others later to reconstruct clear chains of causation and responsibility…. That motivations may not be unambiguously discernible from context doesn’t mean that their motivations don’t exist, or that beliefs about those motivations aren’t important. Moreover, precisely that ambiguity over motivations allows for all sorts of strategic actions that wouldn’t be possible otherwise…. Tim… ver-emphasize[s] the epistemological consequences… (we can never be entirely sure that Porter Goss wanted those tapes destroyed, and almost certainly we can never prosecute him for it), and under-emphasize[s] the strategic consequences (that we can never prove what Porter Goss wanted, allows Porter Goss to get away with a lot of stuff that he couldn’t get away with otherwise)…”

• Matthew Yglesias (2008): The Electable Huckabee: “The trouble with having Bill Kristol as a New York Times columnist is not just that he’s prone to saying substantive things about the issues that I disagree with. He’s also the kind of guy who when he goes out on a weird limb and says Mike Huckabee would have a good chance of winning in a general election, you immediately start wondering why he’s saying that. ‘Because he believes it’ doesn’t tend to rank very high on the list. That’s his rep, and based on his record it seems like a deserved rep. But when you read your morning paper and find yourself wondering why, exactly, its authors are trying to mislead you, then your morning paper is suddenly not so useful.”

• Sahil Kapur: How Tea Party Absolutism Cost The GOP A Huge Win On Entitlements: “Back in the summer of 2011, Republicans had it within their grasp. A dejected President Barack Obama placed the crown jewels of liberalism on the chopping block, offering Republicans hundreds of billions of dollars in cuts to Social Security and Medicare benefits. House Speaker John Boehner wanted to seal the so-called grand bargain, and was willing to reciprocate with the $800 billion in new tax revenues that the president sought in return. Democratic leaders were grudgingly willing to support Obama on what they feared was a lopsided deal for conservatives. But the Ohio Republican, facing a tea party mutiny… walk[ed] away…. And so the deal was dead…. Republicans had a once-in-a-generation opportunity to capture their Great White Whale if they just acquiesced to $800 billion in taxes. It turns out they were forced to soak up $650 billion in taxes anyway in the end-of-2012 fiscal cliff deal. Only they got nothing in return on entitlements. As of this week, Obama has rescinded his proposals to chop Medicare and Social Security benefits. The political landscape has changed, and the dream is over.”

Evan Soltas: Is the U.S. Better Off Without Unions? | Brendan Greeley: America’s 10-Year Experiment in Broadband Investment Has Failed | Jeff Madrick: We Need More Nuance from the CBO | Steve Benen: The Recovery Act, five years later |

Should Be Aware of:

1. Ryan McCarthy: The economics of Venezuela’s unrest: “What started as a student outcry against crime, has turned into a larger protest against the Maduro regime…. Leopoldo Lopez, a Harvard-educated economist who helped spearhead the movement, was arrested this week and initially charged with murder, but his charges were reduced to instigating arson and terrorism. Venezuela’s… economic problems include, but aren’t limited to: (i) prolonged shortages of basic goods, including sugar and milk; (ii) after inflation hit 56%, the highest of any of 103 countries examined by Bloomberg, Venezuela forced retailers to cut prices. Businesses must also give the government information on their profit margins; (iii) it has devalued its currency several times in the last few years; (iv) it ranks as one of the most crime-addled economies in the world; (v) foreign currency reserves are at a 10-year low; (vi) while it pays overseas bondholders on time, Venezuela has been frequently late in making payments to domestic companies that own government bonds… these late payments are leading to shortages — auto assembly is down 83% over last year–and shortchanging Venezuelans…. Venezuela does have the largest oil reserves in the world. But, as, Megan McArdle writes, oil prices have fallen, production is now below pre-Chavez levels, and the country’s crude is relatively hard to extract. Less oil money, the FT writes, means less to spend on imports and social programs…. David Frum says the Maduro regime hasn’t been able to use oil money to adequately bribe potential opponents, a key tool of Chavez’s power. Raul Gallegos points out that even the Maduro government has suggested publicly that it has bungled the distribution of the country’s oil money…”

2. Matthew Yglesias: Where’s Apple’s response to Google Fiber?: “The best news of the week… Google Fiber is going to expand, saving at least a few American cities from the disaster of current broadband monopolies. And good for Google. But… where are America’s other technology giants, especially… Apple? Apple… believes in integration…. When I think my iPhone 5S, all the most frustrating aspects of using it… are the ones that are under Verizon’s control…. What frustrates me most about my Apple TV, it’s the limits on the content available on the NBA League Pass Broadband app…. My MacBook Air is a substantially better computer when used at my office downtown than when used in my apartment in Logan Circle because the Internet is much faster at the office. Not only is my residential broadband slower, but it’s less reliable than it was a year ago–a situation a Comcast rep I spoke to on the phone blamed on the fact that more people live in my neighborhood.”

3. Federal Reserve (2008): FOMC statement–August 5, 2008: “The Federal Open Market Committee decided today to keep its target for the federal funds rate at 2 percent…. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth. Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain. Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the Committee…. Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh. Voting against was Richard W. Fisher, who preferred an increase in the target for the federal funds rate at this meeting.”