Lies, damned lies, and statistics: Spanish and Greek youth unemployment much lower than reported

One of the most commonly cited Eurozone crisis statistics over the past several years has been youth unemployment, which in hard hit countries such as Spain and Greece has been reported to be as high as 50%.

In a recent post over at Project Syndicate Steven Hill dissects Eurostat's unemployment rate methodology and comes up with markedly different figures:

Unemployment estimates also are surprisingly misleading – a serious problem, considering that, together with GDP indicators, unemployment drives so much economic-policy debate. Outrageously high youth unemployment – supposedly near 50% in Spain and Greece, and more than 20% in the eurozone as a whole – makes headlines daily. But these numbers result from flawed methodology, making the situation appear far worse than it is. 

The problem stems from how unemployment is measured: The adult unemployment rate is calculated by dividing the number of unemployed individuals by all individuals in the labor force. So if the labor force comprises 200 workers, and 20 are unemployed, the unemployment rate is 10%. 

But the millions of young people who attend university or vocational training programs are not considered part of the labor force, because they are neither working nor looking for a job. In calculating youth unemployment, therefore, the same number of unemployed individuals is divided by a much smaller number, to reflect the smaller labor force, which makes the unemployment rate look a lot higher.

So what we have here is a simple division problem: the unemployment numerator is accurate, but the labor force denominator has been fudged.

What are the real youth unemployment figures in countries like Spain and Greece?

The youth unemployment ratio – the number of unemployed youth relative to the total population aged 16-24 – is a far more meaningful indicator than the youth unemployment rate. Eurostat, the European Union’s statistical agency, calculates youth unemployment using both methodologies, but only the flawed indicator is widely reported, despite major discrepancies. For example, Spain’s 48.9% youth unemployment rate implies significantly worse conditions for young people than its 19% youth unemployment ratio. Likewise, Greece’s rate is 49.3%, but its ratio is only 13%. And the eurozone-wide rate of 20.8% far exceeds the 8.7% ratio.

Certainly these much lower youth unemployment figures are still a matter for serious concern. And as Hill notes later in his post it is likely that at least a significant portion of young people who are in school are there because they cannot find work.

There is, however, a substantive difference between the 50% shock headline figures and the real picture of youth unemployment, and this difference may explain why we have not seen a full-on revolution in countries like Greece or Spain (at least not yet).

The final question is why has the media only reported the much larger youth unemployment figures and not the arguably more meaningful, lower youth unemployment ratio? Certainly the larger figure is much more sensational and attention grabbing.

At the risk of sounding conspiratorial, another way of asking this question is who benefits by reporting the larger figure? Undoubtedly larger figures aid the narrative of the pro-bailout and pro-stimulus, anti-austerity contingent. 50% youth unemployment sounds pretty drastic, and drastic times call for drastic measures.

As they say, "never waste a good crisis".

Happy Free Positive PR for UK Banks Day!

One somewhat peculiar difference between the U.S. and UK is how in the UK (and Ireland) official public holidays are referred to as 'bank holidays'. From Wikipedia:

A bank holiday is a public holiday in the United Kingdom or a colloquialism for public holiday in Ireland. The first official bank holidays were the four days named in the Bank Holidays Act 1871, but today the term is colloquially...used for public holidays which are not officially bank holidays, for example Good Friday and Christmas Day.

I have no idea whether Brits on whole form any positive associations towards banks because of this, but if nothing else it strikes me as some nice free, positive advertising for our friendly, neighborhood Too Big to Fail banks.

Here's an idea: perhaps renaming 'bank holiday' to 'public holiday', or something similar, would allow a pol to campaign on a symbolic, anti-banker message that also poses low-to-no risk to the establishment.

'Government Bank Bailout Was Profitable' Myth Receives Another Nail in the Coffin

Bravo to Jonathan Weil of Bloomberg, who uses the U.S. Treasury's own footnotes and figures to dispel the myth that the bank bailouts were profitable to taxpayers here.

Naked Capitalism Uses a Single Data Point to Disprove Financial Repression

A post over at Naked Capitalism titled 'Why Is The Term “Financial Repression” Being Sold?' by the Roosevelt Institute's Matt Stoler purports to "fact check" a statement about the negative effects of financial repression.

That sounds useful, for as Stoler points out financial repression is much in the news these days. However, there's just one big problem: Stoler's fact checking consists of looking at just one country, the U.S.

Never mind that the Reinhart and Sbrancia paper about financial repression which Stoler references includes a 10-country data sample (and information about dozens of other countries), or that other studies on the effects of financial repression have looked at data from 20 or more countries. And Stoler clearly couldn't be bothered with checking to see that most of the research on financial repression has in fact focussed on its impact on economic growth in developing countries, and not advanced economies like the U.S.

Following Stoler's breathtakingly brief analysis of the single U.S. data point he concludes:

"So we see that the financial repression meme is at heart an aristocratic concept."

Sorry, Matt, but it's not quite that simple.

Who exactly are financial repression's winners and losers? As some of the commenters on Stoler's post note the not insignificant dose of inflation which accompanies financial repression hits everyone who saves money. Also, the large rentier may have additional means at his/her disposal to mitigate the effects of financial repression. However, the small rentier (aka 401K holders, pensioners, retirees on fixed incomes) may not easily be able to, for example, shift assets to Lichtenstein.

But there may be a more simple answer to this question of winners and losers. To work as intended financial repression depends on government rules and regulation. In short, this means that under a system of financial repression those who follow the law are the ones who are punished by the law. Sound like a place you'd like to live?

My $0.02 on Krugman's and Delong's Inflationista Potshots

Here's Delong's OH BOY: NIALL FERGUSON PRACTICING ECONOMICS WITHOUT A LICENSE DEPARTMENT

And my comment (which for some reason won't load onto Brad's blog so I'm posting it here):

I'll readily admit that I'm not an expert on CPI methodologies, and I am inclined to believe that the BLS has many well intentioned and highly educated professionals using defendable methodological practices. However, I share Ezra's feeling that something doesn't smell right on inflation numbers.  

Over the past decade how can official cost of living figures have gone up so little when they supposedly take into account the following items: 

-Housing
-Medical
-Fuel
-Food
-Education 

These are some of the largest cost items for most consumers, and in the last decade up to the financial crisis many saw double digit price increases (in some cases in a single year). 

The BLS's CPI calculator says that $1 in 2001 has the same buying power as a $1.17 in 2007, so yes, the BLS is picking up at least some of the perceived inflation in these categories. However, do the BLS number capture the full picture? 

One thing is for certain: the CPI was utterly useless with respect to the housing bubble as it does not include housing prices, only rent. This despite the fact that nearly 70% of all American homes are owner occupied.

It's convenient to dismiss anyone questioning official government statistics as a conspiracy crank. However, under reporting of inflation by a government bureaucracy would be useful in terms of reducing that same government's expenses in the form of lower cost of living adjustments for government workers and TIPs expense. Under reporting inflation also provides ammunition for the Greenspan-Bernanke Fed to not have to raise interest rates and thereby dampen exuberance. 

In other words, many stand to benefit from the under reporting of inflation. It is therefore reasonable to cast a skeptical eye on these numbers, especially when they fly in the face of everyday experience.

A final point I'd add is that economics is too important to be left to economists, particularly with most of the 'license' holders (econ PhDs) having completely failed to identify in advance the biggest economic event since the Great Depression.

Image of the Day

(click to enlarge)

In case you missed the video.

More on the story and fallout here.

Educational Site: If you are concerned about political reform, you might be interested in taking courses as a political science major.

No, No, No: Erin Burnett, the Government Bank Bailouts Were Not 'Profitable'

Oh boy.

On location at Occupy Wall Street, CNN's Erin Burnett is perpetuating the myth that government bailouts for banks were profitable for taxpayers.

Here, here, here and here are my previous posts about why this is not true.

In short, it's misleading to claim that the bank, or Wall Street, portion of the government bailouts (called TARP) is profitable without referencing the trillions in other bailouts provided by the Fed, the ongoing support for Fannie Mae and Freddie Mac (which could cost taxpayers trillions), and other taxpayer support which directly and indirectly bailed out Wall Street beyond just TARP. The reason is that the recipients of the government bailouts are intricately connected. Wall Street had (still has?) vast real estate holdings, so the support provided to Fannie/Freddie and the Fed's purchase or mortgage backed securities were second and third bailouts, respectively, for Wall Street on top of TARP.

Erin, it is fallacious to promote a myopic view that the government got its money back and then some on the TARP tranche of the government bailouts.  You need to also look at where taxpayers have not yet received their money back (Fannie/Freddie) or are still exposed (Fed's nearly $3 trillion balance sheet). To do otherwise is to engage in an incomplete, inaccurate and deceptive accounting of the bailouts.

For those interested in more detail line-by-line accounting of the various government bailouts can be viewed here.

Default Myth Busting: Sorry Simon and James, the U.S. is not a Default Virgin

Professor Simon Johnson and James Kwak of The Baseline Scenario have an article at Vanity Fair about the geopolitical importance of credit in late-18th century France, Great Britain, and (especially) the United States. Their article, however, fails to mention an important detail which also happens to contradict their claim that "the (U.S.) federal government would always honor its debt".

The consolidation/conversion of U.S. revolutionary state debt into federal debt, which took place in the early 1790s, and which the authors refer to in the paragraph prior to the above quote, represented a U.S. sovereign default. (For more on this event see Reinhart and Rogoff (click on the U.S. tab) or Sylla, et al, which describes the 'haircut' bondholders received (6% to 4%).)

The notion that the U.S. has never defaulted has unfortunately been repeated often enough that, like the incorrect claim that TARP was "profitable", otherwise well-informed people have come to believe it.

In terms of other U.S. defaults, Reinhart and Rogoff also count Franklin Roosevelt's 1933 prohibition on owning gold and the subsequent devaluation of the U.S. dollar vs. gold as a default.

It's not very surprising to see Vice President Biden promoting the myth that the U.S. has never defaulted (in his case following a visit to the U.S.'s largest creditor, China). Professor Johnson, however, should know better.

The SEC: Just When You Think You've Run Out of Outrage...

SEC Commissioner Mary Schapiro

Things were starting to look up for the beleaguered-since-Madoff  U.S. Securities and Exchange Commission (SEC) with its spate of successful prosecutions of high-profile insider trading criminals. But for the U.S. stock market cop it continues to be a case of one step forward, four steps back.

Rolling Stone's Matt Taibbi delivers the latest bombshell:

For the past two decades, according to a whistle-blower at the SEC who recently came forward to Congress, the agency has been systematically destroying records of its preliminary investigations once they are closed. By whitewashing the files of some of the nation’s worst financial criminals, the SEC has kept an entire generation of federal investigators in the dark about past inquiries into insider trading, fraud and market manipulation against companies like Goldman Sachs, Deutsche Bank and AIG. With a few strokes of the keyboard, the evidence gathered during thousands of investigations – “18,000 … including Madoff,” as one high-ranking SEC official put it during a panicked meeting about the destruction – has apparently disappeared forever into the wormhole of history. 

It goes without saying that no ordinary law-enforcement agency would willingly destroy its own evidence. In fact, when it comes to garden-variety crooks, more and more police agencies are catching criminals with the aid of large and well-maintained databases.

Much has been made in recent months of the government's glaring failure to police Wall Street; to date, federal and state prosecutors have yet to put a single senior Wall Street executive behind bars for any of the many well-documented crimes related to the financial crisis. Indeed, Flynn's accusations dovetail with a recent series of damaging critiques of the SEC made by reporters, watchdog groups and members of Congress, all of which seem to indicate that top federal regulators spend more time lunching, schmoozing and job-interviewing with Wall Street crooks than they do catching them. As one former SEC staffer describes it, the agency is now filled with so many Wall Street hotshots from oft-investigated banks that it has been "infected with the Goldman mindset from within."

Anyone seen the latest Intrade odds on SEC head Mary Schapiro keeping her job?

Full Taibbi article here. 

Playing it Safe, Losing it All

Two facts worth highlighting from Drew Westen's controversial NY Times piece titled 'What Happened to Obama':

1. Obama published nothing (except his autobiography) during his twelve years as a faculty member at the University of Chicago
2. Before joining the Senate he voted 'present' (instead of 'yea' or 'nay') 130 times

What is one to make of this?

I won't speculate on Obama's not publishing anything in an academic journal, but one thing presidential candidates are often attacked on is their voting record. During a heated political campaign a candidate's previous legislative votes are scrutinized and picked over for any possible controversy (see John Kerry). As an astute observer of political history and campaigns, Barrack Obama would be well aware of this.

Was his voting 'present' strategy all about playing it safe and as Westen puts it "dodging difficult issues"? Or is there another explanation all together?

From Westen:

Perhaps those of us who were so enthralled with the magnificent story he told in “Dreams From My Father” appended a chapter at the end that wasn’t there — the chapter in which he resolves his identity and comes to know who he is and what he believes in.

One of the hallmark qualities of Barrack Hussein Obama's rise to the presidency has been his exceptional risk aversion. That strategy worked well in the campaign but is not serving President Obama or the country well at a time when bold, visionary political leadership is needed.

Like many, I've been scratching my head trying to put my finger on what it is about Obama that just doesn't seem right. And then I remembered a comment made by fashion designer Karl Lagerfeld when he was asked to describe himself: "I don't want to be real in other people's minds. I want to be an apparition."

I completely agree with Westen that right now the U.S. desperately needs the gregarious optimism and energy of a Franklin Delano Roosevelt or Teddy Roosevelt type personality in the White House, and not the Lagerfeld-esque 'complete improvisation' we seem to have at present.

I will never wholly forgive and forget the missed opportunity in 2009 to conduct a perhaps once-in-a-century overhaul of the global financial system, along with Obama's decision to reappoint many of the same people who led us into the crisis - Larry Summers, Tim Geithner, and Greenspan protege Ben Bernanke.

With the way things are going at Bank of America and the Eurozone we may soon get a second bite at the financial system overhaul apple. Fighting to keep Timothy Geithner on as Secretary of the Treasury doesn't exactly instil in one a sense of optimism, but there is still time for President Obama to do what is necessary to restore American optimism.

The Xinjiang 13 and Chinese Appeasement

A disturbing report from Bloomberg about several elite U.S. universities not standing up to Chinese suppression of academic research freedom and free speech:

They call themselves the “Xinjiang 13.” They have been denied permission to enter China, prohibited from flying on a Chinese airline and pressured to adopt China- friendly views. To return to China, two wrote statements disavowing support for the independence movement in Xinjiang province. 

They aren’t exiled Chinese dissidents. They are American scholars from universities, such as Georgetown and Massachusetts Institute of Technology, who have suffered a backlash from China unprecedented in academia since diplomatic relations resumed in 1979. Their offense was co-writing “Xinjiang: China’s Muslim Borderland,” a 484-page paperback published in 2004. 

“I wound up doing the stupidest thing, bringing all of the experts in the field into one room and having the Chinese take us all out,” said Justin Rudelson, a college friend of U.S. Treasury Secretary Timothy Geithner and former senior lecturer at Dartmouth College, who helped enlist contributors to the book and co-wrote one chapter.
The sanctions, which the scholars say were imposed by China’s security services, have hampered careers, personal relationships and American understanding of a large, mineral- rich province where China has suppressed separatist stirrings. Riots and attacks in Xinjiang in July left about 40 people dead.

In the race to embrace China's riches the leaders of elite U.S. academic institutions (who should know better) seem to have forgotten that China is run by a brutal, freedom-suppressing dictatorship. Yet Stanford, the University of Chicago, Duke and NYU have or are in the process of building branch campuses in mainland China. Have many of the U.S.'s best universities forgotten that history has not looked kindly on those who have cozied-up to regimes like China's current one?

The Xinjiang 13 incident also smacks of the same problem in academia which Oscar Winning Director Charles Ferguson documented in his must-watch film Inside Job. Has the academy not learned anything about the importance of professional ethics these past few years?

Full article on the Xinjiang 13 here.

Econ Myth Busting: Sorry John Carney, the U.S. is Not a Default Virgin

I'm a big fan of American Public Media's Marketplace radio show, but Friday's show featured CNBC's John Carney and Fortune's Leigh Gallagher discussing the U.S. debt situation.

Both John and Leigh stated the oft-repeated myth that the U.S. has *never* defaulted.

If only that were true.

The above summary is from Carmen Reinhart's and Ken Rogoff's research in their superb book This Time is Different, which is available in the Good Books and Films section on the far right column of this blog.

As you can see from their research not only has the U.S. defaulted, but the U.S. has defaulted or 'restructured' (a partial-default) at least once every century since the founding of the republic. Details on each episode can be found in the book and at Carmen's website.

As Reinhart and Rogoff put it, the U.S. is definitely not a "default virgin".

Outrage of the Week: FCC Commissioner Meredith Attwell Baker Cashes-In

Shameful

Federal Communications commissioner Meredith Attwell Baker, who just four months ago voted in favor of the hugely controversial merger between Comcast and NBC, announced this week that she planned to join the lobbying office of Comcast.

From the Washington Post:

Baker stood out among the FCC’s five commissioners for criticizing the merger review process for taking too long. She said the agency attached too many conditions to the deal. Among them, she opposed holding Comcast accountable to Internet access rules and the sharing of content with new online distributors such as Netflix and YouTube. She said those Internet television platforms were too new and that the market for online video was competitive and still forming. 

The deal was approved in January by the FCC and Justice Department, forming a media behemoth that controls a bevy of television and movie assets along with the largest number of U.S. home Internet and cable subscriptions.

Also of note, Meredith Attwell Baker is a Republican who was appointed to the F.C.C. by President Obama two years ago. On the endemic problem of regulatory capture, here's The Future of Capitalism:

In a better world, this would be a hot political issue for a politician to seize on. But because it's such a bipartisan problem — both Republicans and Democrats cash out through the revolving door — it doesn't get much attention. It's a part of why government gets bigger, though, because for the politicians and regulators the incentives are there to make more complex rules and laws that they can then earn money helping companies to either comply with or get around.

Meredith Attwell Baker is just the latest example of the pervasive 'go into government to cash-in' culture which has poisoned public service in the U.S. Baker's shameful move is nothing new, but she does earn extra outrage kudos for brazenly waiting a scant four months before making such a blatant ethical affront.

Some may wonder whether it's right to cast shame on Attwell Baker? I'm not a legal expert, but I suspect she's not violating any laws or rules. Instead one could argue that she is simply behaving in accordance with the system's incentive structure.

The big problem with taking this view is that regulatory capture is a very difficult problem to address, but one that creates huge costs. Most of the people who are best served to work in the regulatory arena naturally come, and can most easily find later employment in, the industries they regulate. Until a systemic solution is devised accountability has to be maintained at the individual level, and that means shaming the shameful.

As the regulatory revolving door leading in-and-out of industry keeps going around, and around, and around, and as fiscal deficits keep piling higher, can there be any doubt that we're simply biding our time until the next big crisis?

'Adult Supervision' at Facebook?

But who is supervising Facebook's 'adults'?

Remarkable timing award of the week.

News of Facebook's secret smear campaign leaks the day after BusinessWeek publishes a rosy cover story on Sheryl Sandberg, which prominently quotes the Facebook COO as providing "adult supervision" at the social network.

However, Sandberg no doubt authorised and perhaps even concocted Facebook's idiotic PR caper.

In the competition over who people should trust with their very personal data, score a checkmark in Google's column and yet another minus against Zuckerberg and Co.

Graphic: Why Healthcare in America is so Expensive

For a quick chart-view on just how much more Americans pay for healthcare click here.


Via: Medical Billing And Coding

Video: U.S. Government Using Your Tax Dollars to Poison Food

At 1.3 million views and counting, below is the video highlighted in the recent NY Times article on how sugar is toxic.

This is a familiar story for anyone who has read the excellent Omnivore's Dilemma or seen the movie Food, Inc. (both can be found in the 'Good Books and Films' box on the right side of this blog). What may be less familiar is the fact that the U.S. federal government is directly supporting the poisoning of the American public through fructose (corn syrup) subsidies to Iowa farmers.

Please allow me to repeat that: our government is helping to poison us with our own tax money.

While some members of Congress are working to put an end to this deplorable policy, Big Food, the farm lobby and the U.S. Department of Agriculture (USDA) have thus far successfully fought off cuts to corn subsidies.

A perhaps more fundamental way to get a handle on this problem is by replacing the income tax with a consumption tax (which I've written about here).

As an aside, has anyone out there heard Warren Buffet, Coca-Cola's largest investor, address what Dr. Lustig calls the 'Coca-Cola Conspiracy'? It would seem that Warren is turning a blind eye to the fact that he is financing one of the nation's (and now the world's) fastest growing and most serious health epidemics.

Updated: New Bin Laden Death Photo Also Fake; No Photo Will Be Released

Today President Obama announced that a photo will not be released.

The below photo is the second prominent fake post-mortem shot that's been flying around the internet.

WARNING: graphic

Analysis: Bin Laden's Hideout Strategy and Pakistan's Lack of Credibility

Osama bin Laden was living and killed about 100 kilometers outside Pakistan's capital of Islamabad in a relatively posh part of Abbottabad, Pakistan called Bilal Town.

The compound itself was located a short distance from the Pakistani military academy (the "West Point or Sandhurst of Pakistan" as it's being characterized). Detailed maps, satellite imagery and the CIA's diagram of the compound can be viewed here.

The Lair

His five-to-six year old property, believed to have been purpose built to hide the ultimate 'High Value Target' (HVT), was three stories tall and approximately eight times larger than any other nearby dwelling. Other key details:

• 12-to-18-foot walls, topped with barbed wire
• Internal walls sectioned off different areas of the compound
• Access was restricted by two security gates
• Closed-circuit cameras positioned around the property

Yet bin Laden's "mansion", as it has been characterized, did not have a phone line or internet. The couriers, Afghans brothers named Arshad and Tariq who were also gunned down by ST6, did not report any income and had no visible source of wealth. They also burned all their own trash. Neighbors also reported that the women who were living inside the house spoke in Arabic and not the local dialect.

Bin Laden's Hideout Strategy

Bin Laden's choice to hide near Pakistani military installations and in a residential community of retired Pakistani officers strikes me as both intriguing and suspicious. Less wise, perhaps, were some of the activities noted above, like burning the trash and not having a phone or internet line.

In short, Bin Laden stopped just short of hiding in veritable plain view. Did his failure to go all the way here do him in? One thing we do know is that the U.S. was only able to locate bin Laden by trailing his courier back to the compound in August 2010, and the whole reason bin Laden had to employ the services of a courier was due to his aversion to phones and the internet.

This location at least gave bin Laden some chance as the first assassination option considered by President Obama, employing B-2 Stealth Bombers, was abandoned due in part to the likelihood of collateral damage.

Was bin Laden's thinking on where to locate influenced by his correct calculation that the U.S. was unlikely to drop a bomb or conduct a Predator drone strike on this particular location? In turn, was bin Laden expecting a tip from Pakistani intelligence should any planned U.S. Special Forces assault to be attempted?

Who Does Pakistan Think They're Fooling?

Bin Laden apparently lived in this compound for the last 5-6 years. This raises very important questions about how much Pakistan, or elements of Pakistan's military and intelligence service, knew about the whereabouts of bin Laden. The U.S. has sent billions of dollars to Pakistan over the past several years to help find and kill people like bin Laden, and the American public should insist on an answer.

Pakistan has publicly denied knowing that bin Laden was within its borders. But if that's true it makes Pakistan look incompetent, particularly in light of the fact that Pakistan's most powerful man, General Ashfaq Kayani, the chief of staff, was within shouting distance of bin Laden last week giving a talk at the military academy on how Pakistan had broken the back of terrorism. More from The Economist on on the logic behind why Pakistan may have been providing bin Laden safe harbor:

Something's wrong with this picture

More likely, but no more attractive for the likes of the ISI, is that at least some in power in Pakistan knew that Mr bin Laden had been forced by American drone attacks to shift from a mountain hideout to this urban shelter. On this score Mr bin Laden (and probably others, such as the Aghan Taliban leader, Mullah Omar, who was reported earlier this year to have been taken by the ISI to Karachi for medical treatment following a heart attack) was being afforded some measure of protection by Pakistani officialdom. Why? Perhaps so that he could be used, one day, somehow to promote Pakistani interests among fighting groups in Afghanistan, or perhaps so that he (bin Laden) could be used as leverage over the Americans on a “rainy day”, as one Afghan intelligence officer speculates.

Let's be clear about Pakistan's motive: the longer bad guys like Osama bin Laden, Mullah Omar, and the presume new Al Qaeda boss, Ayman al-Zawahiri, are kept alive, then the longer the billions in U.S. dollars in development and military aid will keep flowing to Pakistan.

From 2002 to 2010, the U.S. gave $13.3 billion in military aid to Pakistan, and $6 billion for economic development. Over $3 billion has been requested for 2011. Calls for U.S. forces to pull-out of Afghanistan will only grow, which will have a destabilizing effect on Pakistan and the wider region. It's no surprise to see that Congress is already moving to cut Pakistan's billions of dollars in annual U.S. economic and military aid.

As Pakistan plays their double-sided game, the U.S. Congress and President Obama need to think seriously about how much good all this aid is really doing in the fight against terror.

The history between Pakistan, the U.S., and the region is long and complex and for those familiar with it it really shouldn't come as a surprise that Pakistan was harboring bin Laden. For further reading I highly recommend Legacy of Ashes, by Tim Weiner, and in particular Ghost Wars, by Steve Coll. You can find both books in the 'Good Books and Film' section on the right side of this blog, and here is a recent interview with Steve Coll, David Ignatius of the Washington Post, and Dexter Filkins of the New Yorker.

Updated: Photo of Dead Osama bin Laden is Fake; Identity Confirmed with DNA from Sister

Update 2: A new purported death photo of bin Laden has been released, viewable here.

Update 1: Hat-tip to a commenter for providing evidence that the above photo is, as expected, a fake. If you're still interested in seeing the fake you can do so by clicking 'Read more' below.

Osama bin Laden's identity was confirmed with DNA from the brain of his late sister, who died of cancer in Boston. Her brain was preserved by the U.S. for the very purpose of one day identifying bin Laden's DNA.

Here is the alleged death photo that is flying around the internet, supposedly taken with a Marine's camera; the photo is also being shown on Pakistan TV.

(WARNING: graphic)

Video: U.S. Brain Drain Problem Undermining Competitiveness & Job Creation

Addressing this issue should be a 'no-brainer'. Congress' inability to do so is shameful.

Visit msnbc.com for breaking news, world news, and news about the economy

Visit msnbc.com for breaking news, world news, and news about the economy