B&W: You were very assertive against Paul Krugman. Do you ever talk to the guy?

DO: No. Though I have to say if I saw Paul Krugman tomorrow we would probably be more cordial than I would be with many of Krugman's supporters who see me as the devil incarnate...

&W: What do you regret?

DO: Oh, I paid too much attention to my critics. I was a little obsessed about what people were saying about me. I'm not certain about this but there was a certain amount of triangulation and sail-trimming, you know, "the left's mad at me and the right's happy, so maybe I should do something for the left." Or "Israelis like me too much, so now I have to do something to show that I'm fair to the Palestinians as well." I was so determined to try to make everybody happy.

B&W: Don't you think you got that?

DO: Not to the Krugman-ites...

B&W: Do you ever miss your job at the Times?

DO: There are moments when I miss it. There are a few things I miss, primarily when there is something that's so juicy, like the Duke Lacrosse team or Linda Greenhouse this week. The other thing I miss about it is to be as frank as possible, I miss the audience. There's nothing like having a regular column. As Paul Krugman knows, to have a regular column in the Times is to have a following. I'm not suggesting my following is nearly as loving, as devoted as Krugman's. I mean, he's a rock star. I've written cover stories in major American magazines. Nothing compares to a regular, repeating slot in The New York Times.

The Nikkei 225 fell 2.3 percent today, is down 3.5 percent since last Tuesday and 6.8 percent since October 23rd. The cause for drop is being attributed to an anticipated government report which will recommend allowing lower tax rates on capital gains and dividends expire. These provisions will not expire until 2008 yet markets are dropping in response to this change.

The U.S. is faced with a similar situation. Both Japan and the U.S. initiated lower tax rates on dividends and capital gains in 2003 to inject adrenaline into slumping equity markets. The lower tax rates increased the after tax rate of return on equities, making stocks more attractive to other financial instruments, all else being equal. Take away the lower rates and you lower the after tax rate of return and stocks will fall as evidenced by what is happening in Japan this past week.

The U.S. extended the lower rates on capital gains and dividends earlier this year from 2008 to 2010. We were told at the time it was unnecessary to renew these provisions since they were not expiring for another two years, but the experience of Japan shows just how important this initiative was.

Nearly every Democrat voted against the provision in 2003 and again in 2006. There is a real threat that a Democratic Congress will vote to repeal this measure, most likely as part of "tax reform," but we doubt President Bush will let this pass since the 2003 tax cut is the crown jewel of his administration. However, in 2008 all bets are off the table and the U.S. may face a situation to exactly what is happening in Japan right now.

One recent consultation came too late to keep the top of the Nov. 3 online story on government job growth statistics from contradicting the next day’s article in the print paper. Tom Redburn, the deputy business editor, typically confers with Mr. Peters on such stories sometime during the morning, but he was tied up in meetings until nearly noon.

By then, Mr. Peters had already emphasized slowing job growth at the top of all three versions of his Web story that morning. He based that on the weakness in job growth in the most recent month, October, as is the paper’s normal practice. There were also substantial upward revisions in the employment gains for September and August, however, and Mr. Redburn felt that meant the print paper story had to “look at the underlying trend.” And the first paragraph of Mr. Peters’s article the next morning had “job growth advancing in recent months.”

The recent rally of the United States dollar notwithstanding, the greenback has nowhere to go but down. ...The dollar is heading down, no matter what.

All the funnier considering that fact that the New York Times was obliged to report in a column by David Leonhardt that "legendary" Clinton Treasury Secretary Robert Rubin has personally lost a million bucks betting against the dollar over the same period. Just listen to the cushion given to Rubin's (and the Times's) bad bet by the lede to this story:

A couple of years ago, Robert E. Rubin — éminence grise at Citigroup and the Democratic Party’s economic wise man — decided that the United States dollar was headed for a fall.

This view put Mr. Rubin in good company. Nearly everyone who spends time thinking about the American economy believes that the value of the dollar has to fall at some point.

This is a column about why Mr. Rubin’s logic made perfect sense — why it still does, in fact — yet why most people who have made similar bets in recent years have taken a bath. Warren E. Buffett cost Berkshire Hathaway almost $1 billion last year shorting the dollar. On the opposite end of the investing spectrum, I put a small amount of my retirement savings last year into a T. Rowe Price mutual fund that is linked more directly to foreign currencies than most foreign-stock funds are. It has delivered a return of negative 7 percent.

"I'm a capitalist, and that means I'm for inequality," Frank told Boston business leaders on the morning after Election Day, in a speech about his grand bargain.

"But you reach a point where you get more inequality than is healthy, and I believe we're at that point..."

"What we want to do is to look at public policies that'll get some bigger share of the increased wealth into wages, and in return you'll see Democrats as internationalists. . .. I really urge the business community to join us."

So, business is supposed to agree to support a significant increase in its cost of doing business (increased benefits and wages) in exchange for a promise by Democrats that they will support free-trade and a reduction in regulation? I'm sure Barney's colleagues will jump on this grand idea....until it's dead.

Not withstanding his stated intent, this will turn into an excuse for Barney and the Democrats to pursue their economic agenda without constraint -- to burden or block free-trade issues, to increase regulation and to use politics to jack up labor costs -- justified somehow "because" business wouldn't deal. The political version of "the devil made me do it."

Gridlock might turn out to be inflation's best friend.