Science: Researchers Create Room-Temperature Ice

In a breakthrough so hot it's cool, Spanish researchers have figured out how to make water freeze at room temperature. By artificially manipulating the mechanisms by which water condenses in the atmosphere, the researchers found a means to trigger ice formation at far higher temperatures than water's usual freezing point, a development that could lead to better artificial snowmaking, more efficient ice skating rinks, and better freezer technology.

For more, see By Manipulating Condensation Conditions, Researchers Create Room-Temperature Ice by Clay Dillow, July 29, 2010, at Popular Science.

Economics: Germans and Inflation

The German experience is two-pronged. Most Germans do have a cultural aversion to inflation because of those folk memories of the 1920s. But it's not quite true that the hyperinflation ushered Hitler to power. Berlin brought it under control by the late '20s and found a disciplined way in the '30s to print money without causing inflation. Offensive as it sounds, that's one thing the Nazis did right.

Largely because of a central banker named Hjalmar Schacht, who served before Hitler as well as under him, the German economy recovered briskly after 1933. Hitler combined a policy of government-printed money (through Schacht) with a feverish public-works program that provided both jobs and new infrastructure, like a modern Autobahn.

“Within two years, Germany's unemployment problem had been solved and the country was back on its feet,” writes Ellen Hodgson Brown, a lawyer and author of Web of Debt. “It had a solid, stable currency, and no inflation, at a time when millions of people in the United States and other Western countries were still out of work and living on welfare.”

Schacht argued that the difference between the growth of the 1930s and the hyperinflation of the 1920s was the use to which the printed money was put. In the '30s, it was productive stimulus. In the '20s, it paid for speculation and debt. [Emphasis added].

From Germans and Inflation by Michael Scott Moore, July 28, 2010, at Miller-McCune.

Economics: How the Great Recession Was Brought to an End

By a formder Fed vice chairman and Moody's Analytics' chief economist ...

The U.S. government's response to the financial crisis and ensuing Great Recession included some of the most aggressive fiscal and monetary policies in history. The response was multifaceted and bipartisan, involving the Federal Reserve, Congress, and two administrations. Yet almost every one of these policy initiatives remain controversial to this day, with critics calling them misguided, ineffective or both. The debate over these policies is crucial because, with the economy still weak, more government support may be needed, as seen recently in both the extension of unemployment benefits and the Fed's consideration of further easing.

In this paper, we use the Moody's Analytics model of the U.S. economy—adjusted to accommodate some recent financial-market policies—to simulate the macroeconomic effects of the government's total policy response. We find that its effects on real GDP, jobs, and inflation are huge, and probably averted what could have been called Great Depression 2.0. For example, we estimate that, without the government's response, GDP in 2010 would be about 11.5% lower, payroll employment would be less by some 8½ million jobs, and the nation would now be experiencing deflation.

When we divide these effects into two components—one attributable to the fiscal stimulus and the other attributable to financial-market policies such as the TARP, the bank stress tests and the Fed's quantitative easing—we estimate that the latter was substantially more powerful than the former. Nonetheless, the effects of the fiscal stimulus alone appear very substantial, raising 2010 real GDP by about 3.4%, holding the unemployment rate about 1½ percentage points lower, and adding almost 2.7 million jobs to U.S. payrolls. These estimates of the fiscal impact are broadly consistent with those made by the CBO and the Obama administration.2

For much, much more, see How the Great Recession Was Brought to an End by Alan S. Blinder and Mark Zandi, July 27, 2010, at Moody's Economy.com.

Politics: Who Is Meg Whitman?

Exhibit A for the Death of Truth is Her Megness, eMeg Whitman herself.

Let's be clear: Krusty the General (Gandolf) Brown and his Merry Pranksters in Oakland are guilty of their own special brand of spin. But it's pretty much your normal, basic campaign (wink-wink) re-framing like you'd get from Gov. Schwarzmuscle, President Oybama or Golden Gate Feinstein.

Brown has failed to level with voters about how he'd deal with the state budget (we think he'd shift all the responsibility for services back to cities, counties school districts, with a local option to raise taxes, and get the locals off the state's books), among most other issues. But his guy Sterling Clifford has a point when he argues that “Meg Whitman is trying to paper over her lies and deceptions with dollar bills.”

Indeed, when it comes to killing truth, eMeg is miles ahead in felony flip-floppery. The pro-Brown California Working Families tried to drive that point home last week with the release of an online ad titled “Lies.” detailing just a few recent examples of Megspeak:

— She was for double furloughs for state employees before she was against furloughs altogether.

— She was for a path to citizenship before she knew what it meant, and then she was vehemently against it, before she declared herself aligned with Brown, who's for it.

— She was for sending state agents into work places to hunt down and arrest illegal immigrant workers until she decided she was against that (probably illegal) idea.

— She was against extending benefits to children of illegal immigrants (like admission to state universities and colleges) before she was . . . wait, maybe she's still against that, but OK with letting illegal immigrant offspring get treated at a hospital.

— In the primary she said, “We have to prosecute illegal aliens and criminal illegal aliens in all of our cities in every part of California.” Now she says, “What has bothered Latinos for too long is the harsh rhetoric around the immigration debate. Too often, the debate has been tinged with hurtful words signaling intolerance or worse to many Latinos.”

If a candidate changes his or her position from A to B, he or she can be accused of flip-flopping (or changing his or her mind). What makes the Whitman campaign's changes so special is that her paid mouthpieces are out there insisting that eMeg has NOT changed her position one iota. She's entirely consistent and not a rank opportunist, they argue.

Calbuzz has been harping on this lack of truthiness by the Whitman camp for some time, and we've catalogued a partial list of prevarications. But where are the other non-partisan voices willing to hold Meg's feet to the fire? Why isn't every editorial page and columnist in the state thundering with indignation, instead of equating Brown's admittedly infuriating avoidance of staking clear positions on policy with Whitman's corporate style, black-is-white daily deceits and deceptions?

The beyond standard quantum limit nature of Whitman's spending so far has enabled her, like no California candidate in history, to take advantage of Calbuzzer Mark Twain's timeless dictum: “A lie can run around the world six times while the truth is still trying to put on its pants.”

For more, see The Death of Truth: Emeg and the Politics of Lying, July 19, 2010, at Calbuzz.

Politics: Rachel Maddow vs Bill O'Reilly

From The Rachel Maddow Show July 22, 2010 at MSNBC.

Climate: China Trades Carbon

Just as the U.S. Senate was abandoning plans for a U.S. cap-and-trade system, this article ran in The China Daily: “BEIJING — The country is set to begin domestic carbon trading programs during its 12th Five-Year Plan period (2011-2015) to help it meet its 2020 carbon intensity target. The decision was made at a closed-door meeting chaired by Xie Zhenhua, deputy director of the National Development and Reform Commission ... Putting a price on carbon is a crucial step for the country to employ the market to reduce its carbon emissions and genuinely shift to a low-carbon economy, industry analysts said.”

For more, see We're Gonna Be Sorry by Thomas L. Friedman, July 24, 2010, at The New York Times.

Education: D.C. Schools Chief Fires 241 Teachers

Washington, D.C. schools Chancellor Michelle Rhee announced Friday the firing of 241 teachers who did not meet standards set forth by a new district-wide evaluation system.

The firings, which put D.C. at the center of a national debate over teacher performance and accountability, come on the heels of a long-awaited contract agreement reached between the Washington Teachers' Union and Chancellor Rhee last month. The contract increases new teacher salaries by 21 percent but gets rid of teachers' seniority designations. Instead, teachers will be evaluated based on students' classroom performance and are eligible for $20,000 to $30,000 in "performance pay" if their students exceed expectations on standardized tests and if they meet other benchmarks.

Chancellor Rhee said in a statement that "Every child in a District of Columbia public school has a right to a highly effective teacher -- in every classroom, of every school, of every neighborhood, of every ward, in this city.That is our commitment. Today, with the release of the first year of results from IMPACT, the educator assessment system, we take another step toward making that commitment a reality."

For more, see D.C. Schools Chief Rhee Fires 241 Teachers Using New Evaluation System by Veronica Devore and Imani M. Cheers, July 23, 2010, at PBS.

Economics: Economic Insecurity: The Long View

One in five Americans, a new report for the Rockefeller Foundation found, has experienced a decline of 25 percent or more in available household income. The typical American experiencing such a plunge will require six to eight years just to climb back to previous levels of income.

The report, which draws on a variety of Census and Federal Reserve data, notes that in 1985, 12.2 percent of Americans experienced an economic loss sufficient to render them economically insecure. During the recession of the early 2000s, the insecurity rose to 17 percent; today it is 25 percent.

The narrative arc is not reassuring.

“The ‘new normal' in each subsequent economic cycle has featured a higher level of economic insecurity,” the foundation's Web site notes.

There are many factors complicit in the increased agitation of the American middle class, from declining real wages to the three-decade erosion of pensions and health plans and the new insistence of corporate boards on reducing company matches for 401(k) plans.

Overall income and family wealth has grown during this time. But the gains are far from equal. After-tax income rose by 21 percent for the middle fifth of American households, but increased by 112 percent for the richest 10 percent of households and by 256 percent for the top 1 percent, according to Mr. Hacker's report.

With the national economy now sitting becalmed, and many indicators hinting at a downward trend, some commentators have tended to talk of psychological factors, as if to suggest that Americans need only to snap out of their funk.

This report suggests that this funk is grounded in prosaic reality far more than many want to acknowledge.

For more, see Economic Insecurity: The Long View by Michael Powell, July 23, 2010, at Exonomix Blog, New York Times, and Economic Security at Risk by Jacob S. Hacker, et al, July 2010.

Politics: Rush Limbaugh: Fox 'Caved' on Shirley Sherrod

Rush Limbaugh is blasting Fox News for its coverage of Shirley Sherrod, saying that one of the network's anchors “caved” by not showing the original misleading video fragment that led to the firing of Shirley Sherrod. [Emphasis added].

The video, posted and promoted by Andrew Breitbart as a display of racism, was a sensation in conservative corners of the internet, but Fox News host Shepard Smith explained Wednesday that his show had decided to not show the video.

“We on Studio B did not run the video and did not reference the story in any way for many reasons,” Smith said. “Among them: We didn't know who shot it, we didn't know when it was shot, we didn't know the context of the statement, and because the history of the videos on the site where it was posted. In short-we did not and do not trust the source.”

On his show Thursday, Limbaugh blasted Smith for not showing the video, suggesting that Smith only showed restraint because he didn't have the “guts” to show it.

“This regime is tribalizing this country,” he said. “They are dividing this country. It's not just enough to say that they are dividing us. They are tribalizing this country. We aren't Americans anymore. We're all members of different racial tribes, and we are to be pitted against each other: Black Americans, White Americans, Asian Americans, Hispanic Americans. We're all being divided up racially, by tribes.”

For more, see Rush Limbaugh: Fox 'Caved' on Shirley Sherrod by Andy Barr, July 23, 2010, at Politico.

Economics: Loan Plan Defies GOP Tarp Attacks

A Treasury-backed loan facility for small business showed surprising strength in the Senate Thursday night, winning a 60-37 vote despite withering Republican attacks likening the proposal to the oft-criticized TARP bailout of Wall Street banks amid the 2008 financial crisis.

As now proposed, the $30 billion loan facility would be an option for smaller community banks, enabling them to increase their capital and be rewarded with lower interest charges if they turn around and increase their small business lending. Critics contend that taxpayers could lose as much as $6 billion, but the Congressional Budget Office has said the facility will more than pay for itself with new revenues. And in its statement Thursday afternoon, NFIB said the “lending fund has the potential to help credit-worthy small businesses that have had difficulties obtaining credit, which is a good thing.” [Emphasis added].

For more, see Loan Plan Defies Gop Tarp Attacks by David Rogers, July 23, 2010, at Politico.

Economics: Eliminate Fannie Mae & Freddy Mac

The Treasury says it will put out proposals on the future of Fannie and Freddie early next year but there are few signs that politicians are prepared to get rid of them altogether.

They should. The GSEs' mission is to provide “liquidity, stability and affordability” to America's mortgage market. Set aside the fact that these aims tend to conflict: cheerleading for cheap mortgages is likely to produce instability, for example. The bigger question is why Fannie and Freddie are needed to achieve them. America's obsession with home ownership is itself questionable, especially now that the trap of negative equity has hampered workers' ability to move in search of jobs. Even if it were a valid goal, there are plenty of countries (Australia, Britain and Canada among them) that have similar or higher levels of home ownership with far less, and in some cases no, systemic government support (see article).

As for liquidity, the argument that America needs Fannie and Freddie because private securitisation markets do not exist to take their place is circular. The GSEs have guidelines for the types of home loans they can guarantee: these let Fannie and Freddie colonise the safest, “conforming” bits of the mortgage market (before expanding into dodgier bits), leaving private lenders to swerve around them into ever-riskier areas. If the GSEs were not there to securitise and guarantee prime American mortgages, private firms would take their place.

A gradual withdrawal is needed. The first step is to run off or sell their retained portfolios of mortgages. A second would be to squeeze the definitions of conforming mortgages over time, so that bit by bit Fannie and Freddie lose control of chunks of the prime market. American housing would, unfortunately, still have lots of props—agencies such as the Federal Housing Administration and subsidies like tax relief on mortgage interest. But the GSEs should go.

For more, see Unnecessary Evils by A, July 22, 2010, at The Economist.

Mind: Depressed People Really Do See a Gray World

The world really does look gray to depressed people, at least on a subconscious level, new research suggests.

The new study, published in the journal Biological Psychiatry, relies on an objective measure of the retina, suggesting depressed people may see the world in a different way from the non-depressed.

The research team had 40 patients with major depression and 40 healthy individuals view a sequence of five black-and-white checkerboards of different contrasts. Each checkerboard flickered (with a black square turning white and white turning black) 12 times per second on a computer screen.

Meanwhile, the researchers used an objective measure called the pattern electroretinogram, which is similar to an electrocardiogram (ECG) of the retina of the eye. The retina ECG shows the response of neurons inside the retinal cells. "That's not conscious vision, it's much earlier than you conscioulsy (sic) perceive something, within milliseconds," said lead researcher Dr. Ludger Tebartz van Elst.

The depressed patients had dramatically lower retinal responses to the varying black-and-white contrasts than healthy individuals. The results held regardless of whether patients were taking antidepressants.

While the researchers aren't sure exactly why depressed people might sort of "see the world as gray," they have a strong hypothesis. Here's how they figure it works: Contrast vision relies on so-called amacrine cells within the retina, which horizontally connect the retina's neurons called ganglion cells with each other. These cells rely on dopamine, a substance known to be important for drive and attention — when lacking, two main symptoms of depression.

"We think the retina is some sort of outpost marker of the integrity of the dopaminergic system in the whole brain," van Elst said. So the dopamine is linked with both the vision and the depression.

For more, see Depressed People Really Do See a Gray World by Jeanna Bryner, July 20, 2010, at Live Science.

Government: Federal Agencies Bolster Transparency Plans

Federal agencies have beefed up plans for how they will be more open to the public after a consortium of transparency groups gave failing grades to some.

OpentheGovernment.gov released the evaluations of the revised plans today.

For more, see Federal Agencies Bolster Transparency Plans by Jennifer Lafleur, July 20, 2010, at ProPublica.

Economics: The Stupidity and Hypocrisy of the Austerity Movement

According to the Bureau of Public Debt, the US has been running a structural deficit for the last ten years, not just the last year. Here is a chart of the total amount of federal debt outstanding at the end of each federal fiscal year for the last ten years:

09/30/2009 $ 11,909,829,003,511.75
09/30/2008 $ 10,024,724,896,912.49
09/30/2007 $ 9,007,653,372,262.48
09/30/2006 $ 8,506,973,899,215.23
09/30/2005 $ 7,932,709,661,723.50
09/30/2004 $ 7,379,052,696,330.32
09/30/2003 $ 6,783,231,062,743.62
09/30/2002 $ 6,228,235,965,597.16
09/30/2001 $ 5,807,463,412,200.06
09/30/2000 $ 5,674,178,209,886.86

The reason for this yearly increase of at least $400 billion in net new federal debt/year is simple: the US cut taxes but didn't make a proportionate cut in spending. As a result, total debt outstanding increased.

If the austerity movement was really about the increase in federal debt, it would have emerged sometime after 2004-2005 when the US' structural deficit issue started to emerge in the data.

Much like Spain, Ireland and the UK, the Baltic states were badly hit by the bursting of a credit bubble in 2008 that sent their economies into freefall and their budget deficits soaring.

While others cushioned the impact with stimulus spending, the Baltic trio plunged straight into austerity. As a result, they suffered the deepest recessions in the European Union last year, with Latvia's economy shrinking by 18 per cent.

Nearly two years ago, an economic collapse forced Ireland to cut public spending and raise taxes, the type of austerity measures that financial markets are now pressing on most advanced industrial nations.

“When our public finance situation blew wide open, the dominant consideration was ensuring that there was international investor confidence in Ireland so we could continue to borrow,” said Alan Barrett, chief economist at the Economic and Social Research Institute of Ireland. “A lot of the argument was, ‘Let's get this over with quickly.' ”

Rather than being rewarded for its actions, though, Ireland is being penalized. Its downturn has certainly been sharper than if the government had spent more to keep people working. Lacking stimulus money, the Irish economy shrank 7.1 percent last year and remains in recession.

Joblessness in this country of 4.5 million is above 13 percent, and the ranks of the long-term unemployed — those out of work for a year or more — have more than doubled, to 5.3 percent.

And what about the countries that use massive government stimulus? China spent $586 billion on their stimulus plan to thwart the Great Recession. Now they are having to put the brakes on their expansion to prevent overheating.

For more, see The Stupidity and Hypocrisy of the Austerity Movement by Hale "Bonddad" Stewart, July 18, 2010, at FiveThirtyEight.

Economics: The Financial Reform Bill

This article contains a short summary of a slightly preliminary version of the recently passed bill.

It is touted as the biggest overhaul of American finance since the Great Depression. The 2,319-page Dodd-Frank Wall Street Reform and Consumer Protection Act, now nearing the end of its odyssey through Congress, tackles almost every aspect of American finance from municipal bonds to executive pay. Its success, however, rests on a simple question: does it make another crisis significantly less likely?

The reform does make progress in three critical areas: regulatory oversight, derivatives and dealing with troubled banks that are too big to fail. Yet by itself, this bill, whose passage in the Senate is still not quite secure, is an incomplete remedy (see article). Much depends on how American regulators implement its provisions. Congress left several meaty matters for later, including the crippled mortgage giants, Fannie Mae and Freddie Mac. And even more is riding on how the Basel club of international banking supervisors compel banks to raise their buffers of capital and liquidity.

For more, see A Decent Start July 1, 2010, at The Economist.

Mind: How Facts Backfire

Sorry about the very long post, but this (with previous posts) explains so many of our political problems.

Recently, a few political scientists have begun to discover a human tendency deeply discouraging to anyone with faith in the power of information. It's this: Facts don't necessarily have the power to change our minds. In fact, quite the opposite. In a series of studies in 2005 and 2006, researchers at the University of Michigan found that when misinformed people, particularly political partisans, were exposed to corrected facts in news stories, they rarely changed their minds. In fact, they often became even more strongly set in their beliefs. Facts, they found, were not curing misinformation. Like an underpowered antibiotic, facts could actually make misinformation even stronger.

This bodes ill for a democracy, because most voters — the people making decisions about how the country runs — aren't blank slates. They already have beliefs, and a set of facts lodged in their minds. The problem is that sometimes the things they think they know are objectively, provably false. And in the presence of the correct information, such people react very, very differently than the merely uninformed. Instead of changing their minds to reflect the correct information, they can entrench themselves even deeper.

“The general idea is that it's absolutely threatening to admit you're wrong,” says political scientist Brendan Nyhan, the lead researcher on the Michigan study. The phenomenon — known as “backfire” — is “a natural defense mechanism to avoid that cognitive dissonance.”

People ignorant of the facts could simply choose not to vote. But instead, it appears that misinformed people often have some of the strongest political opinions. A striking recent example was a study done in the year 2000, led by James Kuklinski of the University of Illinois at Urbana-Champaign. He led an influential experiment in which more than 1,000 Illinois residents were asked questions about welfare — the percentage of the federal budget spent on welfare, the number of people enrolled in the program, the percentage of enrollees who are black, and the average payout. More than half indicated that they were confident that their answers were correct — but in fact only 3 percent of the people got more than half of the questions right. Perhaps more disturbingly, the ones who were the most confident they were right were by and large the ones who knew the least about the topic. (Most of these participants expressed views that suggested a strong antiwelfare bias.)

Studies by other researchers have observed similar phenomena when addressing education, health care reform, immigration, affirmative action, gun control, and other issues that tend to attract strong partisan opinion. Kuklinski calls this sort of response the “I know I'm right” syndrome, and considers it a “potentially formidable problem” in a democratic system. “It implies not only that most people will resist correcting their factual beliefs,” he wrote, “but also that the very people who most need to correct them will be least likely to do so.”

What's going on? How can we have things so wrong, and be so sure that we're right? Part of the answer lies in the way our brains are wired. Generally, people tend to seek consistency. There is a substantial body of psychological research showing that people tend to interpret information with an eye toward reinforcing their preexisting views. If we believe something about the world, we are more likely to passively accept as truth any information that confirms our beliefs, and actively dismiss information that doesn't. This is known as “motivated reasoning.” Whether or not the consistent information is accurate, we might accept it as fact, as confirmation of our beliefs. This makes us more confident in said beliefs, and even less likely to entertain facts that contradict them.

New research, published in the journal Political Behavior last month, suggests that once those facts — or “facts” — are internalized, they are very difficult to budge. In 2005, amid the strident calls for better media fact-checking in the wake of the Iraq war, Michigan's Nyhan and a colleague devised an experiment in which participants were given mock news stories, each of which contained a provably false, though nonetheless widespread, claim made by a political figure: that there were WMDs found in Iraq (there weren't), that the Bush tax cuts increased government revenues (revenues actually fell), and that the Bush administration imposed a total ban on stem cell research (only certain federal funding was restricted). Nyhan inserted a clear, direct correction after each piece of misinformation, and then measured the study participants to see if the correction took.

For the most part, it didn't. The participants who self-identified as conservative believed the misinformation on WMD and taxes even more strongly after being given the correction. With those two issues, the more strongly the participant cared about the topic — a factor known as salience — the stronger the backfire. The effect was slightly different on self-identified liberals: When they read corrected stories about stem cells, the corrections didn't backfire, but the readers did still ignore the inconvenient fact that the Bush administration's restrictions weren't total.

Nyhan worked on one study in which he showed that people who were given a self-affirmation exercise were more likely to consider new information than people who had not. In other words, if you feel good about yourself, you'll listen — and if you feel insecure or threatened, you won't. This would also explain why demagogues benefit from keeping people agitated. The more threatened people feel, the less likely they are to listen to dissenting opinions, and the more easily controlled they are.

For more, see How Facts Backfire by Joe Keohane, July 11, 2010, at The Boston Globe.

Society: Rent a Friend for $10 an Hour

Scott Rosenbaum, 30, has a database of 218,000 men and women who members of his site Rent a Friend can hire "to hang out with, go to a movie or restaurant with", or be "someone to show you around an unfamiliar town".

The US-based site already has around 2,000 members, each paying up to £16 a month ($25) to access the site.

When they see a friend they like the look of, they can rent them for as little as £6.50 ($10) an hour.

Rosenbaum said he wanted to "go a step back" from dating sites and offer a service that was, in the words of his website "strictly platonic".

From Rent a Friend for £6.50 an Hour July 19, 2010, at Telegraph.

Economics: The Debt Supercycle

More on total debt (vs government debt).

... the Debt Supercycle is the decades-long growth of debt from small and easily-dealt-with levels, to a point where bond markets rebel and the debt has to be restructured or reduced or a program of austerity must be undertaken to bring the debt back to manageable proportions.

How did we get here? We simply kept borrowing ever greater amounts of money at an increasingly rapid pace. Look at the chart below. It is about six months old, but not much has changed.

And it is not just the US. Take a look at the chart of G-7 debt (courtesy of GMO, more about which later). That is one ugly and unsustainable chart. In 1950 the G7 countries were recovering from very large war-time debts. Now we don't have that excuse. Nor do we have the option of doing what they did. They cut military spending, inflated a little in nominal terms, and grew their way out of the problem.

For much more, see The Debt Supercycle by John Mauldin, July 17, 2010, at Thoughts from the Frontline.

Economics: When Debt Flies Off the Charts

The CBO baseline uses spending and revenue provisions as they exist under current law. Under this scenario, the Bush tax cuts are allowed to expire, the alternative minimum tax remains un-indexed to inflation, and revenue and spending in the healthcare bill occur as planned (note that these promises have already begun to be broken—projected cuts in Medicare reimbursement have been put off three times already this year). Even CBO finds this scenario highly unlikely.

This is why the scenario in black projects what CBO deems more likely. In the world of the alternative scenario, widely expected policy changes occur. These include:

• A gradual increase in the reimbursement rates of Medicare physicians

• Elimination of pay-as-you-go rules that control spending

• Congress protects middle-class families from the alternative minimum tax.

As you can see, things look bad in this case. But when the dynamic effects of government debt on the economy are incorporated, things look even worse. When government borrows money, there is less money available for the private sector to invest in capital; this results in decreased economic output in the long run. Economists refer to this effect as crowding out. The red line shown above captures the most likely projection of debt as a percentage of GDP, incorporating crowding-out effects.

For more, see When Debt Flies Off the Charts by Veronique De Rugy, July 15, 2010, at The American Enterprise Institute.

Science: Plants 'Can Think and Remember'

Plants, scientists say, transmit information about light intensity and quality from leaf to leaf in a very similar way to our own nervous systems.

These "electro-chemical signals" are carried by cells that act as "nerves" of the plants. Fluorescence image of Arabidopsis plant The researchers used fluorescence imaging to watch the plants respond

In their experiment, the scientists showed that light shone on ... one leaf caused the whole plant to respond.

And the response, which took the form of light-induced chemical reactions in the leaves, continued in the dark.

This showed, they said, that the plant "remembered" the information encoded in light.

"And the changes proceeded when the light was off... This was a complete surprise."

In previous work, Professor Karpinski found that chemical signals could be passed throughout whole plants - allowing them to respond to and survive changes and stresses in their environment.

But in this new study, he and his colleagues discovered that when light stimulated a chemical reaction in one leaf cell, this caused a "cascade" of events and that this was immediately signalled to the rest of the plant by via specific type of cell called a "bundle sheath cell".

The scientists measured the electrical signals from these cells, which are present in every leaf. They likened the discovery to finding the plants' "nervous system".

He said that plants used information encrypted in the light to immunise themselves against seasonal pathogens.

For more, see Plants 'Can Think and Remember' by Victoria Gill, July 14, 2010, at BBC.