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(The Washington Post)
Wonkbook’s Number of the Day: $483.4 billion. That’s the federal budget deficit for the 2014 fiscal year, according to the Treasury Department, and the lowest since President Obama took office.
Wonkbook’s Chart of the Day: Are people going to stop flying because of Ebola? The market certainly thinks so.
Wonkbook’s Top 4 Stories: (1) Ebola’s air-travel risks; (2) what markets tell us about the economy; (3) next in the AIG trial; and (4) natural gas’s unintended climate policy effect.
1. Top story: What happens when someone with Ebola travels?
CDC: Health worker who got Ebola shouldn’t have been on plane. “The second Dallas health care worker to test positive for Ebola took a flight on Monday from Cleveland to the Dallas area the day before she reported symptoms of the disease, federal health officials said Wednesday. The head of the federal Centers for Disease Control and Prevention, Dr. Thomas R. Frieden, said that the worker should not have been on a commercial flight, but that the risk to the 132 passengers on the plane was “extrememly low.” Timothy Williams in The New York Times.
Timeline: What has happened, and when. Alison Bruzek in NPR.
Nurses in safety gear got Ebola. But plane travel is probably safer than you think. “How come nurses wearing protective gear can catch Ebola from a patient, but health officials keep saying you almost certainly won’t get it from someone sitting next to you on a plane? First, the odds of an Ebola-infected seatmate in the U.S. remain tiny, even after the news that a nurse coming down with the disease flew commercial across the Midwest this week. Then there’s the extra screening that’s begun on airline passengers arriving from West Africa. But even if you were to draw that unlucky spot next to a traveler with a yet-unknown infection, the disease experts would consider you at little or no risk.” Connie Cass in the Associated Press.
Background reading: Airplanes don’t spread disease nearly as much as you think. Alex Davies in Wired.
Why wasn’t new patient quarantined? Answer lies in layered health-care system. “Only Texas authorities had the power to place the health-care worker, Amber Joy Vinson, under quarantine after she helped treat Ebola patient Thomas Eric Duncan, a Liberian man who died last week, before she left the state. States generally have broad power to order quarantines and other extreme measures to protect the health and safety of the general public….The quarantining powers of the federal government are more circumscribed. The CDC, part of the federal Department of Health and Human Services, has no power to tell states or the more than 3,500 local public-health agencies what to do, legal experts said. Within the states, the CDC’s primary role is as an adviser, health law experts said.” Joe Palazzolo in The Wall Street Journal.
What it’s like to clean airplane cabins during an Ebola scare. “The Centers for Disease Control has issued guidelines for how cabin cleaners should be protected, but no federal agency explicitly regulates the procedure, and standards vary widely across airlines….The New York Committee for Occupational Safety and Health, a coalition of labor and community groups, says the conditions for cabin cleaners can be dangerous, in particular given the exposure of workers to harsh cleaning chemicals. According a recent report by the group, the Occupational Safety and Health Administration issued 14 citations in March to a cleaning contractor at JFK’s Terminal 8, including the absence of a plan for dealing with bloodborne pathogens, and the failure to provide puncture-proof containers for the disposal of needles. The report didn’t name the contractor.” Lydia DePillis in The Washington Post.
All this as more airports prepare to start screening inbound travelers. “Travelers arriving…from three West African nations hit hard by the Ebola virus will be met by Customs and Border Protection agents who will whisk them away to special screening rooms. There, they will be evaluated for signs of illness, questioned about their travel and asked whether they’ve had contact with anyone with Ebola or anyone exposed to the virus. They’ll have their temperature taken. And, if they show no symptoms, they will be sent on their way — but not before leaving their contact information for possible follow-up. If they have a fever, they will be referred for additional screening, the most suspicious cases sent by ambulance to a nearby hospital for further evaluation. A positive Ebola test will trigger a system of alerts that will go to state, federal and local officials.” Lori Aratani in The Washington Post.
The thermometers being used will only work so well. “Of course, many illnesses — many mild and some severe — can cause fever, and checking for fever at airports didn’t start with Ebola. In 2003, some Asian airports used thermometers as part of their screening of passengers for symptoms of severe acute respiratory syndrome, or SARS. And in 2009, with prompting from the World Health Organization, airports checked the temperature of some travelers, looking for symptoms of H1N1 flu….There are pros and cons to different types of temperature-taking devices, from the fairly common ear gun thermometer to the full-body scanner….If the goal is to pick up symptoms in some people before they even realize they’re sick, no-touch thermometers are the best bet.” Alison Bruzek in NPR.
Can we stop Ebola without squelching travel? “Obama has said he will not institute such travel bans until the World Health Organization recommends it, but that isn’t helping the mounting panic of elected officials and the citizens as epidemiologists make repeated warnings that the Ebola epidemic is picking up speed. The ‘stay calm’ message may not be enough stop the fear among Americans….Fear is a powerful motivator, but it isn’t a logical one. Quarantines and flight bans are extreme measures that make sense only when the risk is moderate or high. Screenings are fairly disruptive as it is, but they are more appropriate for moderate-risk situations, which currently describes the United States in its relationship to Ebola.” Fawn Johnson in National Journal.
Explainer: 5 things nurses say the Texas hospital got wrong. Catherine E. Shoichet in CNN.
Ebola’s other contagious threat: hysteria. “So far, emergency rooms have not been overwhelmed with people afraid that they have caught the Ebola virus, and no one is hiding in the basement and hoarding food. But there is little doubt that the events of the past week have left the public increasingly worried….Experts who study public psychology say the next few weeks will be crucial to containing mounting anxiety….The risk of Ebola infection remains vanishingly small in this country. The virus is not airborne, not able to travel in the way that, say, measles or the SARS virus can. Close contact with a patient is required for transmission.” Benedict Carey in The New York Times.
Other health care reads:
Mid-sized businesses still very concerned about (and unprepared for) Obamacare. J.D. Harrison in The Washington Post.
VILLASENOR: Nurses shouldn’t be guinea pigs. “Despite the CDC’s apparent belief to the contrary, basic statistics make clear that the very real possibility of transmission to health workers was entirely foreseeable. Why? Because the CDCs infection control protocol appears to have been designed without fully recognizing how the laws of probability operate in the combined presence of 1) an extremely contagious virus, and 2) large numbers of contacts between health workers and Ebola patients. The gloves, mask, and other gear used for infection control are undoubtedly very protective. But when used in the real world, as opposed to in the laboratory, they cannot possibly be completely protective — a fact that should have been suspected earlier.” John Villasenor in Slate.
SALAM: Amazon is not the problem with American capitalism. “We’ve all heard of Adam Smith’s ‘invisible hand’ that guides the free market. The invisible foot is the invisible hand’s brutish older brother. It is the force that sees to it that capital gets reallocated from firms that aren’t doing their jobs to firms that are by putting the former out of business. The invisible foot has seen better days. In sector after sector — banking, broadband, and utilities come to mind — large incumbent firms have found new ways to protect themselves from competition, whether through coziness with regulators of sweetheart subsidy deals with politicians on the make to a pathetic lack of imagination among entrepreneurs who refuse to take on the toughest challenges. The sectors that Amazon takes on are the big exception. Instead of damning Amazon, we need to be asking why we don’t have more companies like it.” Reihan Salam in Slate.
MALPASS: Growth management isn’t the Fed’s forte. “Under post-monetarism, the Fed has created a massive excess of bank reserves, nearly $3 trillion, to fund its bondholdings. It counteracts the transmission into the economy using huge interest payments to banks and sweeping regulatory controls that have turned the Fed into a superpowerful fourth branch of government. That’s diametrically opposed to Friedman’s deeply American insight that a central bank, if it has to exist, should be modest, and that monetary policy should be predictable and simple enough that businesses concentrate on profits and employees rather than central bankers’ economic forecasts and speeches.” David Malpass in The Wall Street Journal.
LAYTON: What Nobel to Tirole means for FCC net neutrality rulemaking. “Tirole’s work is important mostly for the ways it helps us understand platform firms and markets, not because it can give precise answers to firms or regulators. This Nobel Prize to Jean Tirole is a timely reminder to the FCC to avoid the danger of regulatory capture. The FCC should look at the evidence and keep in mind the robust academic literature which can help it understand that an open Internet is something that happens on its own, not through regulation.” Roslyn Layton in Tech Policy Daily.
GREENHOUSE: SCOTUS does a lot while saying so little. “Has there ever been such a crazy opening to a Supreme Court term? One so confoundingly opaque yet mattering so much? In the space of eight days, the justices managed to touch on American society’s hottest of hot-button issues: same-sex marriage, access to the polls, and finally — inevitably — abortion, and all without actually issuing an opinion. Review denied, stays granted, stays lifted, news-making orders appearing randomly at odd hours from an institution usually so predictable in its schedule that you can set a clock by its yearly calendar. What on earth is the court doing and what — with saying hardly a word — is it telling us?” Linda Greenhouse in The New York Times.
LANE: The IMF’s not-so-simple fix for the economy. “Obviously, the U.S. and world economies need first-class roads, harbors, airports and electrical grids. Equally obviously, they must be upgraded to accommodate and facilitate growth, and it can be worth risking public funds, including, at times, borrowed funds, to make that happen. But this is an inherently imprecise business. Governments that invest in infrastructure on the assumption it will pay for itself may find out that they’ve gone a bridge too far.” Charles Lane in The Washington Post.
Nature interlude: Shark video gives rare look at feeding frenzy.
2. What financial markets are telling us about the global economy
There’s no need to panic about the S&P, at least for now. “Economists surveyed by Bloomberg are still looking for the U.S. economy to grow at a healthy 3 percent pace in the last three months of 2014….Foreign sales last year accounted for 46 percent of the revenue of companies in the S&P 500, leaving them highly exposed to troubles abroad. Investors are selling shares because they fear that foreign sales will slump because of recurrent weakness in Europe, a falling growth rate in China, and a protracted slump in sentiment in Japan. The overall U.S. economy is far less dependent than the S&P 500 companies on what happens abroad. Most of what Americans produce is sold to other Americans; exports account for just under 14 percent of U.S. gross domestic product.” Peter Coy in Bloomberg Businessweek.
The depressing signal global financial markets send us about the economy. “Even if many Americans don’t fully realize it yet — though an unnerving drop in a wide range of global markets Wednesday may have gotten our collective attention—the autumn has brought a rather darker set of worries with a series of dives in financial markets across the globe….But those moves underlie a bigger story: Many crucial indicators in markets for international bonds, currency and commodities are pointing toward a heightened risk of a worldwide economic slowdown that may be beyond the ability of policy makers to halt. It would inevitably have ripple effects even on the relatively strong American economy.” Neil Irwin in The New York Times.
Central bankers may have no quick fixes. “Central bankers have been at the forefront of a campaign to save the global economy….At meetings of the International Monetary Fund last week, central bankers appeared content that their mission was largely over and called on governments to do their part to boost demand and job growth by investing in infrastructure. Central bank officials from Washington to Tokyo face questions that have dogged them in recent years: Is recent volatility just a sign of markets adjusting to a host of issues, from the potential for rising interest rates to tensions in the Middle East? Or is the world economy backsliding?” Howard Schneider in Reuters.
Global investors bank their hopes on the U.S. recovery. “Japan and the euro area are throwing up fresh signs of weakness by the day and emerging markets such as China are dragging instead of driving growth. The sense of tumult is being exacerbated by war in the Middle East, the standoff in Ukraine, street protests in Hong Kong and the spread of Ebola to Dallas. The worry is that five years since the world limped out of recession, central banks have virtually exhausted their stimulus arsenals if inflation and activity keep fading. That leaves the hopes of financial markets riding on the U.S. to resume its historical role as a locomotive robust enough to pull up demand elsewhere.” Simon Kennedy and Andrew Mayeda in Bloomberg.
As Fed ends bond-buying, global deflation poses growing risks. “The U.S. confronts much different circumstances than Europe and Japan. U.S. inflation had been rising toward the Fed’s 2% objective earlier this year but now faces a downward tug amid the weakening global growth and a strengthening U.S. dollar. The Labor Department reported Wednesday that producer prices in the U.S. fell in September. Sharp drops in commodities prices this month could add to downward pressure. Yet falling commodities prices have silver linings. For one, the decline is being driven in part by a U.S. energy production boom — not just sagging global demand for goods. Moreover, falling gasoline prices are a boon to U.S. consumers.” Jon Hilsenrath and Brian Blackstone in The Wall Street Journal.
ICYMI: Ailing global economy may move Fed to delay rate hike. Christopher S. Rugaber in the Associated Press.
U.S. retail sales offer cautionary signs on economy. “The report on Wednesday, along with data showing a drop in producer prices, led investors to bet the Federal Reserve would delay hiking interest rates until late 2015 at the earliest to keep support for the economy in place….The breadth of the weakness was surprising. Sales were down 0.2 percent even when stripping out automobiles, gasoline, building materials and food services….Sounding a less dour note, the Fed said in its so-called Beige Book that the economy continued to expand at a ‘modest to moderate’ pace across much of the nation in recent weeks. Wage growth, however, remained modest in most areas, even as employers bid up wages in some particular industries, it said.” Jason Lange in Reuters.
eBay, Wal-Mart warnings stir holiday retail-sales concerns. “EBay and Wal-Mart blamed divergent factors such as food stamp reductions and unfavorable search-engine optimization for the lower outlooks. Both complained about the stronger dollar putting the skids on their forecasts, lowering the value of overseas sales once converted into the U.S. currency. But analysts say stagnant incomes are also prompting U.S. consumers to curtail spending.” Deepa Seetharaman in Reuters.
Chart: What American retailers are most worried about. Roberto A. Ferdman in The Washington Post.
Turnip for what interlude: First lady Michelle Obama dances with a turnip.
3. What’s next in the AIG trial?
Who was really in charge of AIG? “Former American International Group Inc. (AIG) Chief Executive Officer Edward Liddy will face a key question….Was he or the government running the show? The U.S. had a hand in everything from press releases to selection of board members after the Federal Reserve Bank of New York loaned the company $85 billion and took most of its stock, according to testimony and documents in the case brought by Maurice ‘Hank’ Greenberg’s Starr International Co. With Liddy’s testimony set for today, Starr’s lawyer, David Boies, has confronted witnesses this week with documents to bolster his case that the government illegally took control of the company rather than acting as a detached steward.” Andrew Zajac and Christie Smythe in Bloomberg.
Fed is silent on its ‘doomsday book,’ a blueprint for fighting crises. “It’s a collection of legal opinions that describe and delineate the Federal Reserve’s ability to fight financial crises, along with a variety of related documents. And the Fed would really prefer to tell the public nothing more than that. The Doomsday Book has popped into public view because a group of investors suing the government over the terms of its bailout of the American International Group say some of the memos inside show the Fed broke its own rules. Last week…government lawyers took a break from defending the government against the $40 billion lawsuit, and instead pressed a judge to keep the contents under seal.” Binyamin Appelbaum in The New York Times.
Fed to adopt bank risk retention rule next week. “The Fed said it will meet on Oct. 22 to adopt the final version of the credit risk retention rule, a requirement of the 2010 Dodd-Frank law….The rule…was reintroduced last year following two years of lobbying from the banking industry and affordable housing advocates. Regulators initially wanted only safe loans, with a hefty down payment, to be exempted from the risk retention requirement, but dropped the demand after banks and consumer groups argued it would stifle the housing market’s recovery….The rule must also be adopted by the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Department of Housing and Urban Development, and the Federal Housing Finance Agency.” Douwe Miedema in Reuters.
New rules to stop clearing houses from becoming ‘too big to fail.’ “Clearing houses that help make trading derivatives safer will have to spell out how they would recover from a crisis without needing taxpayer bailouts, new rules from global regulators said on Wednesday. The new rules are in the final recommendations from a group of central bankers and market supervisors from the world’s leading economies on how to deal with collapsing market infrastructure such as a clearing house, payment systems, trade repositories or central securities depositories.” Huw Jones in Reuters.
Other financial reads:
Cyberattack at JPMorgan also hit site of corporate race. Matthew Goldstein, Nicole Perlroth and Jessica Silver-Greenberg in The New York Times.
Distraction interlude: Proof that cats are furry work saboteurs.
4. Natural gas’s unintended climate policy effect
Natural gas may not be as good for fighting climate change as thought. “Abundant natural gas in the United States has been displacing coal, which produces more of the chief global warming gas carbon dioxide. But the new international study says an expansion of natural gas use by 2050 would also keep other energy-producing technologies like wind, solar and nuclear, from being used more. And those technologies are even better than natural gas for avoiding global warming. Computer simulations show that emissions of heat-trapping gases to make electricity would not decline worldwide and could possibly go up, says the study, released Wednesday by the journal Nature.” Seth Borenstein in the Associated Press.
One caveat, though. “It does not look at greenhouse-gas reduction policies beyond what’s already in effect. Yet it arrives at a time when a number of governments, including the U.S., are expanding efforts to curb emissions through more aggressive deployment of renewables and efficiency measures, and other steps.” Ben Geman in National Journal.
It’s not the only study to make such a finding recently. “‘If you increase the use of gas, that will actually delay the deployment of renewable energy,’ said Christine Shearer of the University of California, Irvine, one of the authors of the study. Shearer and her colleagues modeled how the consequences for the climate in the next forty years would differ depending on how big the gas boom gets, how quickly solar technology develops, and what policies the federal government adopts to slow global warming. Their forecasts showed that the more natural gas is available, the less the energy sector will rely on renewable resources, and that the supply of natural gas will not have much effect on greenhouse gas emissions.” Max Ehrenfreund in The Washington Post.
Background reading: The shale gas boom won’t do much for climate change. But it will make us a bit richer. Brad Plumer in The Washington Post.
Another recent study highlights other concerns of oil and gas operations. “Methane, a potent greenhouse gas, has been found leaking from oil and gas operations all over the country. Trains that carry crude oil from fields in North Dakota are prone to dangerous derailments. Fracking uses a lot of water in arid regions, and water contamination from fracking has long been a concern of people living near energy development. The Stanford study, published in August in the Annual Review of Environment and Resources, also addresses another shaky issue about fossil fuels development that comes amid a flurry of new research connecting the same dots: Oil and gas operations, including fracking, can cause earthquakes.” Bobby Magill in Climate Central.
Other environmental/energy reads:
EPA approves new weedkiller for GMO crops. Mary Clare Jalonick in the Associated Press.
Sports interlude: High-school football team executes tricky onside kick.
Study: Don’t expect big health-care savings from medical malpractice reform. Jason Millman.
Are people going to stop flying because of Ebola? The market certainly thinks so. Roberto A. Ferdman.
How small changes to federal housing policy could make a big difference for poor kids. Emily Badger.
Obama’s nominee for a top DOJ slot has said states should legalize marijuana. That’s a huge deal. Christopher Ingraham.
Understanding the Ebola epidemic — in 2 charts and 2 maps. Max Ehrenfreund.
Chart: What American retailers are most afraid of. Roberto A. Ferdman.
After California decriminalized marijuana, teen arrest, overdose and dropout rates fell. Christopher Ingraham.
Markets are panicking again. What’s going on? Matt O’Brien.
Nation’s budget deficit falls to lowest level since Obama took office. Lori Montgomery.
Who’s more likely to own a home, a firefighter or a lawyer? Dina ElBoghdady.
The Obamacare re-enrollment crunch has officially started for millions. Jason Millman.
The wasabi sushi restaurants serve is pretty much never actual wasabi. Roberto A. Ferdman.
Top economists say Piketty is wrong about wealth inequality. They misunderstood him. Matt O’Brien.
Why Republicans stopped talking about gay marriage, in one chart. Christopher Ingraham.
Why government policy — not personal prejudice — is to blame for Ferguson. Emily Badger.
Private student borrowers can’t get help, report says. Associated Press.
U.S. tax inversion crackdown is said to sink AbbVie deal. David Gelles in The New York Times.
Group of state officials to rethink school testing. Caroline Porter in The Wall Street Journal.
The gender pay gap isn’t closing. Just ask AMD’s first female CEO. Peter Burrows in Bloomberg.
Texas abortion clinics set to reopen despite future in legal limbo. Erik Eckholm in The New York Times.
Ferguson protests frustrate, worry some about town’s future. Yamiche Alcindor in USA Today.
Obama to nominate ACLU lawyer to head DOJ civil-rights division. Sari Horwitz in The Washington Post.
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