I’m rushing to finish a literature review on the economic effects of divorce reform, but wanted to post a few random thoughts:

1. Kudos to Paul Krugman, recipient of this year’s Nobel Prize in Economics.  He received the prize for his work on trade and economic geography, but I knew him first as an expert on currency and financial crises. (He edited a book on the subject that was assigned in one of my college courses.)  I find it mildly amusing that this other branch of his academic work is not the part being recognized, given the current international financial meltdown that makes it especially relevant.

2. I do not know why anyone drives in San Francisco.  I spent 1.5 hours getting from the Marina to SoMa yesterday evening, stuck in stop-and-go traffic after the Blue Angels air show.  Where did all those people park??

3. It’s almost mid-October, and I have somehow resisted the urge to buy any Halloween candy yet.  This borders on miraculous.

Krugman digs up the source of that closing Palin quote about the ongoing need to defend our liberties.  It’s from a Ronald Reagan ad against Medicare–a program most Americans today would rather expand than end in the name of “freedom.”

Paul Krugman’s latest take on the bailout proposals:

My view, which I think is now shared by many economists, is that Paulson grabbed hold of the wrong end of the stick — he should have been seeking to expand bank capital, taking an ownership share in compensation, rather than trying to push up the value of toxic paper. In the end, that’s what we’ll probably do.

On the other hand, the way that Paulson et al have been blundering around puts the lie, I think, to the idea that this is a cynical ploy. Ideology certainly played a role — it’s probably a lingering distaste for Evil Socialism that made Treasury go for buying toxic waste rather than injecting capital. And if the Bush years have taught us anything, it is that sometimes conspiracy theories are right. But in this case the performance has been more Keystone Kops than Star Chamber.

So now what? Like Jamie Galbraith, I’d rather see Dodd-Frank-Paulson, which is much better than the original plan, pass than not. The true cost to taxpayers will probably be close to zero, and it would buy some time. But I’m not passionate about this. The real financial rescue still lies in the future, probably under the Obama administration.