Author: Kevin Drum

Great moments in financial analysis from Tom Bevan:

Academics & economists: We can't understand why people don't think the economy is great.

WSJ: Rise in prices from Dec 2019 to Aug 2023:

Gallon of milk: +12.5%
New car: +29.9%
Dozen eggs: +32.5%
Gasoline: +49.4%

Let's expand our view a bit:

If you cherry pick and don't account for wage growth, you can make anything look terrible. In reality, overall prices have increased 18.4% since the end of 2019¹ while overall wages have increased 19-23%. That's no great shakes for American workers, but for most people the relative cost of things has barely changed at all over the past four years.

¹At most. Prices have increased only 16.0% according to the PCE price index.

Yesterday was my last day on Obamacare. As of October 1, I'm officially a Medicare beneficiary.

In other words, I am old.

Go get 'em, Matt:

.@SpeakerMcCarthy is going to get his wish. I’m going to file a motion to vacate against him this week.

If at this time next week Kevin McCarthy is still Speaker of the House, it will be because the Democrats bailed him out. He can be their Speaker, not mine. pic.twitter.com/ITlcwynY39

— Rep. Matt Gaetz (@RepMattGaetz) October 1, 2023

My prediction is that Gaetz will be successful at ousting McCarthy. Republicans will then spend two or three weeks flailing around, obviously unable to agree on a replacement. Then they'll vote McCarthy back into office.

Then we'll get back to the critical business of obstructing budget bills for FY24.

Language nerds have long railed against the use of podium to refer to the thing you stand behind when you're talking to people. That's a lectern, dammit. But no, language nerds! According to the folks at Merriam-Webster it's perfectly OK to call that thing a podium, and has been for half a century.

Why do I care? Because I just learned this in the course of getting myself acquainted with Podiumgate, which is all about an alleged $19,000 podium/lectern that Sarah Huckabee Sanders bought a few months ago. You will recall Sanders as Donald Trump's former press secretary and now the governor of Arkansas.

Your first thought about this should be obvious: $19,000 for a podium? Is it made out of gold leaf or something?

And that's a good question. The backstory behind Podiumgate is that muckrakers in Arkansas think Sanders really spent the money on some kind of fishy purchase from an event and travel company, but covered it up by having the company—run by a pal of hers—invoice it as a podium. Then, for good measure, she asked the legislature to pass a bill exempting the relevant records from FOIA. Finally, having gotten nervous that someone was onto her, she had the Arkansas Republican Party reimburse the state on the grounds that the podium was meant all along to be used for party-sponsored events. Putting it on a state credit card months earlier was an "accounting error."

The problem with all this is that, first, podiums don't cost $19,000; second, it was purchased from an event/travel company that has no history of selling things like podiums; and third, an "accounting error"? Seriously? There are weeks of emails about this purchase.

So what was the money actually spent on? That's the million-dollar question. The best current gossip suggests it funded a trip to Paris for a friend or two. But no one knows. All we know is that the podium story really doesn't hold water.

For some reason, this question has suddenly become the new hotness among economists. But why? Paul Krugman notes that bond yields were pretty steady for a while in late 2022 and early 2023:

Over the past few months, however, the bond market has, in effect, capitulated, sending the signal that investors expect rates to stay high for a long time. Long-term interest rates are now higher than they have been since the 2008 financial crisis.

Well sure, but this is hardly surprising since Fed rates are now at 5.33% compared to zero during most of the Great Recession. Plus there's this:

Long-term yields spiked right after the first Fed hike in March 2022. Since then they've increased at a pretty steady rate as the Fed has continued to hike short-term rates. 10-year yields are now above their trendline, but only barely and only for the past couple of weeks. This doesn't strike me as something to panic about. And there's this:

The yield curve remains inverted, a sign that bond markets still expect a recession that will lower interest rates. It's true that the yield curve isn't quite as inverted as it used to be, but that doesn't mean much.

Krugman says: "My instinct is to say that the bond market is overreacting to recent data and that high interest rates, like high inflation, will be transitory." I'd go further: I'm not sure the bond market is really telling us very much in the first place. But yes, to the extent that it is, it's overreacting.

Unlike Krugman, I don't have an economic argument to make for believing this—aside from the fact that I suspect a recession is on the horizon. Mainly, my argument is that everyone, everywhere, at all times overreacts to everything that's new, and this goes double for financial markets. Fed rates have been above 4% for—hold onto your hats!—ten whole months. That exhausts our patience and must mean it's time to give up and assume that rates will be high forever.

Spare me.

It looks like there will be no government shutdown. Kevin McCarthy caved in at the last minute and submitted a "clean" 45-day continuing resolution in the House. Clean enough, anyway. Every Democrat but one voted for it and it passed by a huge margin, 335-91.

Now it goes to the Senate, where it should pass easily. All that's left is to figure out whether McCarthy can produce a few actual FY24 appropriations bills over the next 45 days.

Oh, and also whether McCarthy will still be Speaker of the House in 45 days. Stay tuned.

A regular reader asks if I can post a chart of gasoline prices over my lifetime. Of course. In fact, I can do better:

I was born right in the middle of that warm postwar summer of ever-declining gasoline prices—which ended abruptly in 1973 with the first oil embargo. And then again in 1979 with the second oil embargo. And again in 2002-08 during the Iraq War. And again in 2011 because of turmoil in the Middle East. And then finally yet again in 2022 thanks to the Ukraine War.

Will gasoline ever get down to $2 again? Probably not. OPEC countries need a higher price than that to avoid bankruptcy. But it will probably recede to $3 one of these days.

New York City is suffering through yet another thousand-year flood.¹ They sure seem to happen more often than once every millennium, don't they? Based on some probably unreliable googling here and there, here's how many we've had recently in the US:

Take a look at the trendline: In a very short time the number of huge floods has quadrupled from 0.7 to 3.1 per year. But global warming is just a hoax, right?

¹A "thousand-year" flood is one that has a 0.1% chance of happening. This probability is extrapolated from records over the previous century or so.

Things haven't been going well for Team Trump in the Georgia election fraud case. Several attempts to move the trial into federal court have failed, and today one of the co-defendants broke ranks and agreed to a plea deal:

Scott Hall, a 59-year-old bail bondsman from the Augusta area who prosecutors alleged played a wide-ranging role in efforts to overturn Trump’s loss in Georgia, pleaded guilty to five counts of conspiracy to commit intentional interference with the performance of election duties.

....Prosecutors had alleged in a 98-page indictment unsealed last month that Hall served as a linchpin of a secretive effort to access and copy elections software in remote Coffee County, working alongside pro-Trump lawyer Sidney Powell, who allegedly retained the forensic data firm that accompanied Hall and others to Coffee County....Prosecutors say that on Jan. 2, 2021, he had a 63-minute phone call with Jeffrey Clark, a senior Justice Department official accused of plotting to delegitimize the vote in Georgia and other states and galvanize slates of contingent pro-Trump electors.

....Hall was sentenced to five years probation with a $5,000 fine.

Hall also agreed to testify in upcoming cases, which is certainly bad news for Sidney Powell, and possibly for others as well. This doesn't have much to do with Trump, however, so it probably doesn't affect his case very much.

Over at National Review, Jeffrey Blehar says he's stunned at how decrepit Joe Biden has become. It was bad enough two years ago, but:

That was in 2021 — the man practically looks whipcrack-smart and youthful by comparison with today. The decay from that day to now (even just the public collapse from early 2023 to the present moment) is shocking. The visible aging, the increasing unsteadiness in gait, the sagging posture, the depressingly accelerating mental dissipation in all public appearances: Joe Biden is simply withering away before our eyes, as though he drank from the wrong grail at the end of Indiana Jones and the Last Crusade.

I have to admit that I don't actually see Biden much on TV, but I know he gave a speech in Arizona yesterday to honor the McCain Institute and Library, so I decided I should watch it. You can too:

Biden seems fine to me. He doesn't enunciate as well as he used to, and in particular he seems to have some trouble with voiced fricatives. This is most likely because his vocal cords aren't as lively as they used to be and don't vibrate fully. Aside from that his speaking was normal; he obviously knew what he was talking about; and he handled the heckler a few minutes into the speech just fine.

I'm not thrilled at having an election between two geriatric politicians, but conservative hysteria over Biden's age is way out of hand. Regardless of whether you like his policies or not, he seems to be running the country perfectly well.