Felix Salmon


Felix Salmon
May 19, 2011 05:23 UTC

Greg Mankiw is right about Treasury bonds — Mankiw

Bill Keller, previewing his column: “It won’t be a media column (at least mostly not), and it won’t be an op-ed column (no unfettered opinion)” — WWD

IMF Managing Director Dominique Strauss-Kahn Resigns — IMF

Bloomberg’s Mark Deen REALLY loves Christine Lagarde — Bloomberg

Bernie Madoff’s bottle of brown mystery liquid sells for $950 — CNN

Moe Tkacik’s brilliant analysis of the DSK situation as emblematic of New Economy power and gender inequalities — Reuters

In Media Coverage, Deficit Eclipses Unemployment — National Journal

My NBC hit about DSK. Note the shout-out to Lee Buchheit at the end — NBCNY

What’s the world’s largest offshore tax haven, where foreigners’ accounts don’t need to be reported? USA! — iWatch

Sharing Information Corrupts Wisdom of Crowds — Wired


Re “Greg Mankiw is right about Treasury bonds,”

Here is what the great man said:

“No, I am not predicting the United States is about to become just like Japan. But it is not inconceivable.”

Tough to be wrong.

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Bill Keller’s blind spots

Felix Salmon
May 19, 2011 04:28 UTC

Bill Keller, who proposes that Twitter makes you stupid and says that allowing a 13-year-old onto Facebook is like passing her a pipe of crystal meth, has responded to my last post about him in an email to Steve Myers:

Felix Salmon simply doesn’t know what he’s talking about. The Times takes care of its family — including our drivers, fixers and translators. We do not discuss the details of compensation (for anyone, including staff correspondents) but we fulfill our obligation to employees, including local hires, who are hurt or killed in the line of duty, and to their families in the case of death. (Yes, this includes Mohamed Shaglouf.)”

Keller’s latest column, with its nostalgia for a time before slide rules and even the printing press, is an indication that he’s utterly incapable of leading a 21st-Century news organization into the future. But his email to Myers is an indication that he can’t even read.

Let me try again, since I obviously failed to make my point the first time around: there is a huge debate raging in various social-media channels about the way that the NYT and other news organizations treat the local fixers who work for international reporters and photographers; Myers does a great job reporting on that debate. Keller wrote a column on the subject of wartime photographers right as the debate was raging. And in that column, he didn’t mention the debate at all; didn’t address any of the issues surrounding it; and didn’t even name a single one of those drivers, fixers and translators.

The NYT is being accused of acting as though the local fixers are less important than its flown-in superstars; Keller, in this column, acted as though they simply didn’t exist.

Shaglouf is the perfect case in point. He was with two NYT photographers — Tyler Hicks and Lynsey Addario — who were abducted in Libya; they were released, while he is assumed killed. Their names appear in Keller’s column; Shaglouf’s does not.

When “the Times takes care of its family”, in Keller’s words, part of that care is seen in public columns like Keller’s, or Mike Kamber’s eulogy to Chris Hondros and Tim Hetherington — another article which mentioned zero local fixers, living or dead. A simple blog post, like Tim McGirk’s heartfelt remembrance of Raza Khan on Time.com, can mean a huge amount to a grieving family. Khan was killed while driving Addario. Here’s what Keller had to say about Khan to Myers:

Keller said that case was “sad but considerably different” from Shaglouf and the three local hires killed working for the Times. “He was a short-term hire retained to take journalists to a refugee camp and back. It was not a dangerous assignment.”

Keller put it this way: “If something like that happened to a driver you hired in New York, you would feel terrible, but would you believe you had an obligation to compensate his family? I doubt it. Even so, the Times raised a few thousand dollars for his family in Pakistan.”

Somehow I doubt that these words will provide the succor, back in Pakistan, that McGirk’s did. And note too, that just after saying that he never discusses the details of compensation for anyone, Keller goes right ahead and says the the NYT raised a few thousand dollars for Khan’s family. Rules are made to be broken, I guess.

In any case, my point was never that the NYT didn’t compensate the families of local fixers injured or killed in the line of duty. I’m sure that the NYT lives up to whatever it considers its obligation to be in such cases. But I’m equally sure that local fixers are not treated the same way as foreign reporters and photographers.

But what’s undeniable is that Keller, when writing about the human cost of war reporting in the NYT Magazine, completely ignored those fixers. That’s what I was talking about. And all I needed to do to know it was read his column.


I’m just an occasional reader of the Times and follow stories about the paper because bad as it is, it’s still one of America’s two best papers and is, at the end of the day, still one of the premier news gathering operations in the world. (I qualify all this because the level of competence has been sinking across the board for the last couple of decades, so the best now can actually be fairly bad.)

But as to Keller: I genuinely think he and young Schulzberger are just too stupid and/or detached and/or disinterested in anything like publishing journalistic excellence with any regularity. The Times, also helped pioneer the newish trend of having the reporters stick their opinions into stories, all while failing to, you know, report.

And yes, I do believe it is exactly that simply. Keller’s just s***, which wouldn’t be so awful but for the fact the publisher is as well.

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Chart of the day, sovereign credit spreads edition

Felix Salmon
May 18, 2011 20:43 UTC

Remember the Pimco chart which showed emerging countries trading through the G7? Turns out it was a mistake: Pimco was using the SovX Western Europe index, and not the SovX G7 index that it referenced in the relevant footnote.

The Western Europe index includes all of the PIIGS, including Greece, so it’s hardly surprising that it’s trading pretty wide right now. But in fact, if you look at Markit’s official numbers, it’s not trading quite as wide as the emerging-markets index:


How come Markit has the WE index trading tight to EM, while Pimco has the indices the other way around? The answer is pretty technical: the official Markit indices only go back to 2009, while Pimco wanted data going back to 2003. So Pimco put together their own proxy for the indices, which is simply the arithmetic average of the various components in the index. The actual Markit methodology, by contrast, is a bit more complicated: the components are weighted by present value.

Where does this leave Pimco’s thesis? The original chart showed the spread between emerging and advanced economies, and it’s fair to consider all of western Europe to be advanced economies. So the big picture there is absolutely right. But if you just look at the spread between emerging economies and the safest G7 bonds, the movement there is far less dramatic:


There’s much less risk between emerging-market nations and the safest and richest sovereigns in the world than there used to be. But there’s still a significant spread there, of well over 100bp. (It was actually 137bp yesterday.) There’s probably no such thing as a risk-free asset any more. But if you’re looking for something close, you’re still better off in the G7 than you are in the emerging markets.


-Save Soviet Jewelry!
-Excuse me, Miss Litella, but that’s Soviet Jewry, not Jewelry.
- Never Mind.

In memory of Gilda Radner.

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The IMF oddsmakers

Felix Salmon
May 18, 2011 19:48 UTC

The Economist has one list of William Hill odds for who’s going to succeed Dominique Strauss-Kahn as managing director of the IMF; William Hill itself has a slightly different list. I would be much obliged if a reader in the UK would please pop down to William Hill for me and place a lot of money on Christine Lagarde at 20-1, as she’s listed on the William Hill site, or even at 14-1, where the Economist has her.

Kemal Dervis is the clear favorite here. But I don’t buy it: for one thing, the single most important issue facing the managing director of the IMF right now is Greece. And the bad blood between Greece and Turkey is so deep and so ingrained that I simply can’t see how any Turk could be credibly impartial on the subject of Greece.

Second-favorite is Montek Singh Ahluwalia, who at 67 is too old for the job. He’s followed by the top EU official on the list, Axel Weber. Again, given that the head of the IMF is going to be essentially brokering a deal between Greece, on the one hand, and Germany, on the other, it doesn’t make sense to me to put a German in that job.

Also near the top of the list are Gordon Brown, who’s already been ruled out by David Cameron; John Lipsky, who’s American and therefore a non-starter for anything but a temporary position; and Peer Steinbrück, who’s also German. Interestingly, Arminio Fraga is not on the list at all, and neither is Turkish finance minister Mehmet Simsek, one of the few people to openly lobby for the position.

If it were possible to short these odds, I’d happily short all Turks, Germans, and North Americans, including Mark Carney and Agustin Carstens. But since it’s not, I’ll make do with a long bet on Lagarde. Anybody willing to help me out?

Update: William Hill have now tightened Lagarde in to 10/1. Still worth a £25 bet, though. Thank you Matt!


@RS108 I disagree completely with your assessment of Manuel, he successfully managed to balance many different forces (labour unions, leftist pressure, big business etc etc) while Finance minister of SA and the country implemented some very tough economic reforms that ensured lower inflation and smaller budgets in SA. Maybe he’d habe the attitude and balls to actually stop bailing out every single Euro nation that can’t keep their spending in check. Ask yourself this question, would Mexico or Brazil have received such “wonderful” loans as Greece has? No – clearly the wonderfully qualified heads of the IMF have not used their “fantastic” degrees properly.

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Worrying about aggregators

Felix Salmon
May 18, 2011 15:36 UTC

This is what happens when high-minded journalists like Lauren Kirchner and David Plotz talk to each other:

LK: Do you ever fear that there will be, if not more websites, more people on staff at websites who are devoting their days to linking and summarizing, more than people producing original content? What if we run out of people doing original content and there’s nothing left to link to?

DP: That’s one of the things that I think about when I’m talking to young journalists, is that so many of them are going to go into jobs that are not reporting jobs, or even editing jobs—they are aggregation jobs. That’s a worry.

Plotz does go on to say, quite rightly, that “there’s been just a massive proliferation of new journalistic content.” Kirchner’s dystopia of a world with “nothing left to link to” has never been more distant. But at the same time, Plotz seems to agree with Kirchner that if you’re linking and summarizing, you’re not producing original content, and the rise of such activity is worrying.

I don’t like repeating myself, but I’m too lazy to rewrite this, and it was buried in a much longer piece when I wrote it last September:

The biggest thing that’s missing in the journalistic establishment is people who are good at finding all that great material, and collating it, curating it, adding value to it, linking to it, presenting it to their readers. It’s a function which has historically been pushed into a blog ghetto, and which newspapers and old media generally have been pretty bad at. And of course old media doesn’t understand blogs in the first place, let alone have the confidence or the ability to incorporate such thinking into everything they do.

Think about it this way: reading is to writing as listening is to talking — and someone who talks without listening is both a boor and a bore. If you can’t read, I don’t want you in my newsroom. Because you aren’t taking part in the conversation which is all around you.

When journalists apply for jobs today, they’re usually given some kind of writing test. Certainly the people hiring them will look at their clips. Everybody cares about how good a writer you are. So long as you write well, it seems, that’s all that matters.

But if I were hiring, the first thing I’d look at would be the prospective employee’s Twitter feed. What are they linking to? What are they reading? If they’re linking to great stuff from a disparate range of sources, if they’re following smart people on Twitter, if they’re engaged in the conversation — that’s hugely valuable. More valuable, in fact, than being able to put together an artfully-constructed lede.

So I’m not worried in the slightest by the rise of aggregation jobs, and of people devoting their days to linking and summarizing. That’s a crucial journalistic skill and service, it’s what readers want, and there aren’t nearly enough people who are good at it. It’s certainly much more useful than being the 35th reporter in a press conference, writing down whatever the Important Person up front is saying, or being part of some media scrum trying to get a quote out of Dominique Strauss-Kahn’s lawyer.

What people like David Plotz ought to do, I think, is start treating great aggregators with the same respect with which they treat great journalist-writers. The value added is greater, and the skillset is rarer. But it’s going to take a while to get there.

Update: Kirchner responds, via email:

You, accidentally or not, took one small part of my Q&A with David Plotz out of context and, in doing so, misrepresented the entire gist of the conversation. The Q&A was conducted to supplement a chapter of the recently-released Grueskin/Seave report, a chapter that explores the topic of aggregation in news websites. I chose to talk to Slate editor David Plotz for a supplementary piece precisely because Slate was one of the very first pioneers of news aggregation, back when it launched in 1996-97.  Plotz stresses the value of aggregation throughout the conversation–that was, in fact, the whole point of the conversation.

Plotz actually also spoke at length about what makes a good “Slatest” editor, and the talent that Josh Vorhees brings to the task of choosing and framing stories for the list — an exchange that I ended up editing out for length, but not because I disagreed with him. Then, at the end of that conversation, I asked one of those devil’s advocate hypotheticals, “Do you ever worry that we’re spending too much time on this” kind of thing. I was not representing my own opinion (or any kind of “dystopian” worldview) when I asked that question; I was just offering it up as a question.  He said that “no,” it is not a worry, and that’s where it ended.  So I found it strange that you picked out that exchange and represented our conversation as two journalists “worrying” about aggregation.


I absolutely totally agree with this post. There is a huge amount of information in the public domain — much more than any human being can know. Looking up this information serves exactly the same social function as shoe leather reporting.

I especially wish I wrote the last line about the press conference.

Unfortunately much print journalism lives in the past century (mid to late 20th not 19th really kids it used to be that bad). It is as if all newspapers need a correspondent at a press conference to find out what was said. And they have these poor kids travel around the country with candidates when one pool reporter could report if the candidate flashed the audience during his stump speech or whatever the news they expect to obtain is supposed to be.

I have the impression that journalists who have no respect for aggregating are often embarrassed in debates with, say, bloggers, as the bloggers can point to facts in the public record which show that the anti-aggregation journalists are wrong. I mean they would be embarrassed if they didn’t ignore the debate. One example, managing editor of Time who said that Americans want to look forward when most respondents in a poll said the opposite
or the famous case of Joe Klein who didn’t have the time or the expertise to read a bill and relied on an anonymous source to say what was in it (but it’s OK because he ran it past a Democrat). General rule is don’t mess with Glenn, but, the point is Greenwald isn’t a reporter but, when he debates with reporters, he’s the one who knows the facts.

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Why the online-poker crackdown makes sense

Felix Salmon
May 18, 2011 14:55 UTC

Steven Levitt isn’t very good at introspection. “I was outraged a few weeks back when the U.S. government cracked down on internet poker,” he writes, adding that “it took me a while to figure out why.” Well, I can tell him why he was outraged: he’s a gambler (he’s especially fond of the horses), and gamblers don’t like it when the government cracks down on gambling.

But no — after all that while thinking on the question, it turns out that Levitt’s own proclivities aren’t the reason he was so outraged. Instead, it’s the Daughter Test:

It wasn’t until the U.S. government’s crackdown on internet poker last week that I came to realize that the primary determinant of where I stand with respect to government interference in activities comes down to the answer to a simple question: How would I feel if my daughter were engaged in that activity?

If the answer is that I wouldn’t want my daughter to do it, then I don’t mind the government passing a law against it. I wouldn’t want my daughter to be a cocaine addict or a prostitute, so in spite of the fact that it would probably be more economically efficient to legalize drugs and prostitution subject to heavy regulation/taxation, I don’t mind those activities being illegal…

The “daughter test” makes it clear why I find the U.S. government’s stance against internet poker so ridiculous. When I imagine my daughter growing up to be a professional poker player, my reaction is to think that would be a great outcome!

Off to the side, in a photo caption, Levitt says that he’d love it if his daughter “became a poker champion.” But it’s insane to legalize an activity on the grounds that some tiny fraction of the people doing it are very successful at it. After all, the vast majority of poker players never go pro, and the vast majority of poker pros never become champions. Overall, the number of people who lose money playing poker is much larger than the number of people who make money at it.

Meanwhile, Levitt says that he wouldn’t want his daughter “to be a cocaine addict” if such activity were legalized. He says nothing about her becoming a gambling addict — just as he says nothing about her becoming a successful legal cocaine merchant who makes lots of money selling the stuff and who doesn’t use it herself.

The point here is that it’s the job of the government to look after the weakest members of society. Ultimately, if someone becomes a drug addict or loses their life savings gambling, it’s society as a whole which has to pick up the pieces and support that person. And so the government has an incentive to circumscribe such activities and even make them illegal — even if a handful of people could engage in them successfully.

I’ve tried playing online poker myself, and didn’t enjoy it all that much: for me, the pleasures of a poker game are first and foremost social ones, rather than being mainly gambling-related. Gambling serves very little in the way of public utility, and it makes sense to regulate it. Should online poker be banned entirely? Unless and until there’s a robust regulatory infrastructure in place, yes. Casinos are very carefully regulated, and I’m not sure it’s even possible to regulate online poker sites that assiduously. But certainly up until now those sites have been operating more or less outside any regulation at all. Which is why it makes sense to me that they were shut down.

Update: Some very smart pushback in the comments, none more so than a great entry from QuantPoker. Here’s some of it:

Realistically, depending on whose numbers you like, we can look at the players that make up the poker world in these pieces:

1%-5%: People at risk for being problem or addicted gamblers — Indeed these people should not be playing poker, and we should want regulations that help them control their harmful relationship with the game (I’ll get to this later).
10-15%: Players who derive significant income from poker — Not much to say here, but note that these profits are not necessarily unduly at the expense of the 1%-5% of addicted gamblers, but mostly against like-minded strategic competitors who happen to be slightly weaker at the game than them.
80%-89%: People who responsibly enjoy poker — Whether they are slight winners or slight losers, poker is a unique strategic competition that offers many social and personal benefits to its players (for one, certainly that the average person is bad at pricing and managing risk, and poker teaches that quite well). When a rational, well-minded, non-addicted person chooses to play poker, as economists, we should infer that they’re doing so *because they are deriving benefits in excess of the costs*!

Even if you take the worst-case-scenario assessment of poker as potentially harmful to too high a percentage of society, the risks are still much, much lower than other things that our society and government has already approved of. Alcohol is the obvious example. The majority of people enjoy alcohol responsibly and gain social and personal benefits from it, but a minority of people do significant harm to themselves and others through it.


Thank God for the people voicing there opinions here there is a true american voice represented by the respondents not the author “silver spoon brain washing”

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The Port Authority’s good deal with Condé Nast

Felix Salmon
May 18, 2011 13:17 UTC

Many congratulations to the Port Authority of New York and New Jersey, which is about to snare the most glamorous and high-profile anchor tenant possible for its flagship 1 World Trade Center property. But the Port Authority is getting more than just the whiff of high fashion here. Charles Bagli reports that Condé Nast is going to pay “an estimated $2 billion over 25 years” for 1 million square feet in the building: that’s a lot of money.

$2 billion for 1 million square feet is $2,000 per square foot. That’s an impressive average price of $80 per square foot per year. And even from day one, Condé’s getting no bargain here:

The publisher is expected to move about 5,000 employees to Floors 20 through 41 at 1 World Trade Center sometime in 2014, when its annual rent will start at a little more than $60 per square foot, or roughly the same amount it is paying today at 4 Times Square…

Its rent is somewhat higher than those in recent deals at 7 World Trade Center or the World Financial Center, according to real estate brokers.

It seems that Condé is agreeing to 2% annual rent increases here: you need an initial rent of $62.44 per foot in order to get to $2,000 over 25 years. That’s a good 20% over what Moody’s agreed to pay to anchor 7 World Trade Center next door, back in August 2007 before the financial crisis really hit.

It looks as though Condé is getting the bottom 22 floors of the building; one assumes that the 1.6 million square feet of office space in the 48 floors above Condé will go for even more, especially now that they come with added essence of Condé. And that means, in turn, that rents from 1 World Trade should pretty easily cover its $3.3 billion in construction costs.

What about the high maintenance and security costs for the building? Back in September, Joe Nocera wrote that the Port Authority would need to “charge $130 a square foot to break even on the building” — a number that the Port Authority itself said was far too high, and which didn’t make much sense to me, either. It’s unclear how much of the security costs are going to be borne by the Port Authority rather than the NYPD. But either way, there’s no reason to make Condé pay them.

I’m looking forward, then, to the World Trade Center site becoming a vibrant and exciting neighborhood, anchored by a buzzing skyscraper at its northwest corner — just across the street from Goldman Sachs — and by a beautiful transit hub a little further east. It’s taken far too long to get there from here. But better late than never, especially if the redevelopment is now starting to pay for itself.


something else that wasn’t mentioned in comments or the quotes pulled by Felix, Port Authority had to (per the article), “agreeing to assume the last four or five years of the company’s current lease in Times Square. “

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Felix Salmon
May 18, 2011 05:52 UTC

Greece: it’s “soft restructuring” time! And no, no one has a clue what that might mean — Reuters

Artisanal Food Fight: London’s Farmers’ Market Showdown — Atlantic

Slate distances itself from Slate.fr, doesn’t link to the article in question. (Slate editor Jacob Weisberg, by contrast, did link to it, on his Twitter.) — Slate

Why running for president as a Republican has become nearly impossible — Reuters

What’s the value of a $2,475 hotel-room upgrade? (Given that DSK can’t accept presents worth more than $100) — Slate

If Arnie’s affair had been public in 2003, California’s deficit would be half as bad today — MoJo

Adventures with blind tasting, Champagne edition — Buzzfeed

Adventures with debt-ceiling politics

Felix Salmon
May 17, 2011 22:46 UTC

As the debate over the debt ceiling has heated up over the past month, the yield on the ten-year bond has plunged, from 3.57% on April 11 to 3.12% today. This is not a market which fears catastrophe come August 2. So it’s easy to see why Republicans simply don’t believe Tim Geithner when he tells them that if the debt ceiling isn’t raised by then, we will have some kind of macroeconomic Armageddon.

Remember, the House Republicans were told in no uncertain terms — by George W Bush, no less — that if they voted against TARP, that would have equally catastrophic consequences. Bush’s threat was more credible than Geithner’s, and the Republicans in the House were less truculent then than they are now. And even so they voted against TARP.

On the other hand, this kind of thing simply is about as far from responsible lawmaking as you can get:

Dennis Ross, a House Republican and a member of the Tea Party caucus, told Reuters: “I’m not an economist, but I have maintained a household. The federal government owns 70 per cent of Utah, for example. There are federal buildings. If you need cash, let’s start liquidating.”

He wants to sell Utah?

The sensible thing to do, of course, is to abolish the debt ceiling altogether — it serves no useful purpose. It’s “a historical relic,” writes Annie Lowrey, “the budgetary equivalent of the appendix”.

At the same time, however, Ross is absolutely right that the sun is going to rise on August 3.

But here’s what I don’t understand: we’ve already reached the debt ceiling. At this point, Geithner can point at just about anything and say that it’s an expenditure we can’t afford right now, and we’ll have to put it off until the debt ceiling is raised. Why doesn’t he just do that with all Congressional salaries? If the House Republicans had to live without pay between now and when the debt ceiling is raised, that would surely concentrate their minds a bit. And it’s got to be a better idea than the current strategy, which seems to involve Geithner all but begging the Republicans to call his bluff and wait until after August 2 to do anything.


I can’t help but be annoyed by populist short sighted thinking when it comes to congressional compensation. Sure, it’s tempting to look at the grotesque state of the legislative branch of our government and want to starve the jerks who are screwing it up. I have to wonder how this logic would apply to any other professional field. If your company is staffed by incompetent engineers, would you correct the problem by lowering compensation and benefits in order to get them to work harder?

Of course not. This would only cause a mediocrity spiral and doom your company to failure. The best course of action is to fire the incompetent employees and increase the compensation of the position until you attract the best engineers available. While we often “fire” our representatives by voting them out, the options for replacement are all too often just as bad, and the people we get rid of actually are able to START to make serious money by cashing in on their fame and connections.

This isn’t to say that congressional positions aren’t coveted already, but I have a major issue about WHY they are so desirable. Anyone who is truly qualified to legislate would have significantly better financial prospects in the private sector and without the many difficult issues faced by elected government officials and the even the candidates for these positions. This leaves one to wonder what the motivation is for anyone to run for public office. While civic duty would be the ideal answer, I’m more inclined to believe it’s a more some combination of ego, opportunism, and power lust.

What if we paid our congress something more in line with the status, power, and exposure that the position holds? Let’s say something akin to what top tier professional athletes or corporate executives make. The desire for just compensation is motivator I can at least understand and respect. Also, while it won’t completely allay all the issues that might keep those of significant talent away from the position, it would at least jar some people of quality loose enough to give us better alternatives to the dregs we have representing us now.

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