This must have been humiliating. P.J. Crowley had to climb down today from his recent remarks about Libyan leader Muammar al-Qaddafi, in which the State Department spokesman said that Qaddafi's speech before the U.N. General Assembly amounted to "lots of words and lots of papers flying all over the place, not necessarily a lot of sense." Crowley was reponding to Qaddafi's threat to declare a "jihad" against Switzerland for arresting his son, but chose to go off script.

Turns out the Libyans were not happy about Crowley's remarks, and threatened to retaliate against U.S. oil companies seeking to do business in Libya.

From today's press briefing, here's Crowley:

I want to clarify the U.S. position regarding Libya. We are strongly committed to the bilateral U.S.-Libyan relationship, and Secretary Clinton has asked Assistant Secretary Jeff Feltman to travel to Tripoli next week for a series of bilateral consultations.

Regarding the personal comments I made last week, I want to provide some context. I responded to a question regarding use of the term “jihad” in the context of relations between Libya and Switzerland. I should have focused solely on our concern about the term “jihad,” which has since been clarified by the Libyan Government. I understand that my personal comments were perceived as a personal attack on the president. As I made clear to Libyan Ambassador Ali Aujali when Assistant Secretary Feltman and I called upon him in his office on Friday, these comments do not reflect U.S. policy and were not intended to offend. I apologize if they were taken that way. I regret that my comments have become an obstacle to further progress in our bilateral relationship.

It should be noted that "progress" in ties between Libya and the United States has been pretty slow and spotty since the two countries began normalizing relations. As I reported last week, Libya experts are pretty skeptical that the country can really change -- and the reason boils down to Qaddafi, whose mercurial rule has left Libya with basically no functioning institutions. Nor is it necessarily the case that U.S. companies are desperate to do business in Libya, given the political risks. And I'd say those risks just went up.

On December 3 the President will convene a "jobs summit" to consider what if anything to do about the dismal employment picture. And dismal it is. The figure of 10.2 percent unemployment in October understates the problem because people who have given up on seeking a job, or who are involuntarily working part-time rather than full-time, are not counted as unemployed. They are, however, included with the unemployed in the statistics of underemployment, and the underemployment rate has reached 17.5 percent. These rates may continue to rise. And more than in previous downturns, employers have been cutting wages and benefits, which from a worker's standpoint is a form of quasi- or partial unemployment.

At the end of the summer there was some hope for a rapid economic recovery, but that has faded. Recovery from a recession or depression precipitated by a collapse of the banking industry secondary to a housing collapse tends to be slow. Weakened banks are hesitant to lend, and because housing is a big part of household wealth a collapse of housing prices tends to inhibit spending, or alter spending patterns, and especially to inhibit borrowing: debt is a fixed cost, so when household wealth declines people find themselves overindebted. With the supply of and demand for credit weak, economic activity slows. The banks' reluctance to lend, which expresses itself in stricter credit standards, is especially hard on small business, which depends on bank loans for credit; small businesses unlike big cannot finance themselves by issuing bonds or commercial paper or using retained earnings in lieu of credit. And small businesses in the aggregate are big employers. The Administration's ambitious health-care reform is inhibiting hiring by small business by creating uncertainty about the health-insurance costs that employers will bear. Mounting concern with our rapidly growing national debt is a further damper on investment and hence employment.

There is even concern that we may be in a trap in which rising unemployment feeds on itself. Credit defaults are highly correlated with the unemployment rate, so as unemployment rises, defaults rise, and defaults impair bank capital, causing a further tightening of credit, which by hurting small business pushes unemployment up.

All this is speculation and for all I know the unemployment rate will start falling soon and rapidly. But most forecasters think not, and so it is understandable that the Administration would like to do more than it is doing to curb unemployment. But what is there to do? In part because of mistakes in the design, implementation, and explanation of the $787 billion stimulus program enacted last February, and in part because of concern with the rapidly growing federal deficit, the stimulus has become extremely (I think undeservedly) unpopular, and Congress will not enact another stimulus program as urged by left-wing economists.

What then can be done? One possibility, which has been tried in Europe recently, apparently with some success, is to pay employers, through tax credits or otherwise, to hire workers. This is fiscal stimulus--Keynesian deficit financing--by another name. It is like the government's paying a construction company to build a highway, which will require the company to enlarge its workforce. All that might seem to distinguish the job subsidy is that the link between funding and jobs is more direct, which increases its political appeal.

A common objection is that it will encourage fraud--employers will fire workers and then rehire them, to obtain the subsidy. Or, less transparently, it will fire workers and hire replacements, again in order to obtain the subsidy. But a bigger objection, which is also an objection to the original stimulus program, is that it's not targeted on industries or areas of above-average unemployment. Even in an area of low unemployment. an employer will have an incentive to hire workers in order to obtain the subsidy, but he may do this by hiring workers who already have a job, and the net effect on unemployment will therefore depend on what the hired worker's former employer does--maybe just pay him to stay.

There are other ways of stimulating employment, at lower cost and probably with greater impact. One would be to reduce the federal minimum wage, which over a three-year period beginning in 2007 will have risen from $5.15 to $7.25 an hour--a 40 percent increase. As time passes, unemployment becomes less a matter of layoffs and more a matter of failing to provide jobs for new entrants to the workforce, and a reduction in minimum wage would make these new entrants--inexperienced workers with modest wage expectations--far more employable.

Another way to reduce unemployment would be to amend the stimulus law to redirect the remaining unspent funds to areas and industries of high unemployment. Another would be to reduce payroll taxes, including the unemployment-insurance tax and the employer's share of the social security tax; for payroll taxes are part of the cost of labor. The effect on the employer would be similar to that of a wage cut, and would increase the demand for labor. Since social security and unemployment benefits (as opposed to taxes) would be unaffected, the reduction in the taxes would not reduce the employees' full wages and so induce a demand for higher wages. So the employer's net labor cost would fall and his demand for labor rise. The problem is that the government's deficit would increase, but that would also be true of a subsidy for hiring, though it would not be true of a reduction in the minimum wage.

"The means that may be most effective for the Iranians is war by proxies--Syria, Hizbullah and Hamas," Vered writes.  "(There will be) ongoing and massive rocket fire (and in the Syrian case, also various types of Scud missiles), which will cover most of the area of the country, disrupt the course of everyday life and cause casualties and property damage.  The effect of such fire will greatly increase if the enemy fires chemical, biological or radiological ordnance... massive Iranian support, by money and weapons, will help the organizations continue the fire over a period of indeterminate length... due to the long range of the rockets held by Hizbullah, Israel will have to occupy most of the territory of Lebanon, and hold the territory for a long time.  But then the IDF will enter a guerrilla war, a war the end of which is hard to predict, unless we evacuate the territory, and then the rocket fire will return...

Today on the Dish we saw Obama turn up the heat on healthcare reform (and his approach seemed to be working). More on HCR here. We also featured the first legal gay wedding in DC. In foreign policy, Israel flipped Biden the bird, Livni talked sense, and Bernard Avishai pitched for economic peace with Palestine.

Andrew went after Rahm Democrats and reminded the right of his fiscal-conservative cred. Thiessen slithered into the DOJ controversy, an ultra-Republican condemned the McCarthyism, and Greenwald called for congressional condemnation. More here. US waterboarding appeared much worse and McCain sunk lower.

The pope's brother got wrapped up in a sex scandal, an anti-gay state senator came out of the closet, and a US congressman tickled his male interns. Chait, Yglesias, and Nyhan critiqued Beltway journalism. And WaPo could be going broke. Readers debated Mo'Nique's smug level and another dubbed Obama "the closer." Clay Risen received a Von Hoffman nod and South Park geared up for something good.

-- C.B.