Die Tarper, or Tire Rims And Anthrax
Feb. 10th, 2009 08:41 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
koganbotThe banks argue that the few trades of such securities lately have been at unreasonably low prices — ones that would be justified only if foreclosures, and losses on foreclosed mortgages, are far higher than now seem likely.
But the banks have shown little interest in demonstrating their confidence in the securities by buying more of them from one another. Instead, banks have sometimes been unwilling to trust other banks that hold such securities.
That lack of trust, in turn, has spread to the broader international financial system.
If many of those troubled assets can be removed from bank balance sheets, and others seem to have a clear market value, economists hope that banks would feel freer to lend — rather than continuing to hoard capital to protect themselves from further losses. Only then, the experts say, can the banking system get the economy moving again.
Those are the final four paragraphs of Floyd Norris's "U.S. Bank Bailout to Rely in Part on Private Money," New York Times, February 8, 2009. They seem to sum up what the issue is in regard to the bailout (I suppose the Geithner plan could be called TARP done right, if it works. If not, we can call it Die TARP II: Die Tarper).
I've not been posting as many of my ignorant explorations about economics as I had previously, being afraid that some Googlers might ignorantly associate my views with those of my brother, who does know what he's talking about.
But as long as I'm under the cut, I'll sum up what I've been reading from DeLong, Krugman et al. as saying that Obama in his attempt at bipartisanship/postpartisanship may well be botching the stimulus, making it too small and ineffective. And the trouble with his bipartisanship is that the people he's making the postpartisan overtures to are fundamentally, deeply insane. Krugman called the 36 Republican Senators who voted to stop the stimulus bill* "irresponsible hypocrites," but he entitled his blog post "The Crazy 36," and to be consistent he actually should (and probably would be happy to) also apply the term beyond these 36 to the Repub and Dem (Claire McCaskill and Ben Nelson) "centrists" who put together the compromise Senate bill, which Krugman thinks hurts the stimulus package. There's an inconsistency in Krugman's terminology, since "hypocrite" implies that these people have some foggy idea of what they're doing, and as far as I can tell, they don't. So "insane" it is, even if it's not clinically correct.** "Stubbornly, destructively ignorant" might do. But then, I called myself ignorant earlier in this post, given that I've hardly mastered the relevant macroeconomic theory, nor do I know the evidence.
Of course, Obama could argue that just because someone is insane doesn't mean you don't need his vote. Krugman would argue back that you have to sway public opinion so that the insane guy has to vote sanely if he wants to get reelected.
FYI: Paul Krugman's "The Destructive Center"
*By the way, the Floyd Norris article I quoted above isn't about the stimulus bill but about the administration's plan for how to use the rest of the TARP money. Different things, the stimulus bill and the bailout, though each has the same ultimate goal, to increase lending and/or spending and ultimately ensure that consumables get created and bought.
**I don't know if DeLong himself has used the word "insane" - he did just yesterday say that Ben Nelson is acting like an idiot. He does quote John Cole, who says:
I really don’t understand how bipartisanship is ever going to work when one of the parties is insane. Imagine trying to negotiate an agreement on dinner plans with your date, and you suggest Italian and she states her preference would be a meal of tire rims and anthrax. If you can figure out a way to split the difference there and find a meal you will both enjoy, you can probably figure out how bipartisanship is going to work the next few years.
But the banks have shown little interest in demonstrating their confidence in the securities by buying more of them from one another. Instead, banks have sometimes been unwilling to trust other banks that hold such securities.
That lack of trust, in turn, has spread to the broader international financial system.
If many of those troubled assets can be removed from bank balance sheets, and others seem to have a clear market value, economists hope that banks would feel freer to lend — rather than continuing to hoard capital to protect themselves from further losses. Only then, the experts say, can the banking system get the economy moving again.
Those are the final four paragraphs of Floyd Norris's "U.S. Bank Bailout to Rely in Part on Private Money," New York Times, February 8, 2009. They seem to sum up what the issue is in regard to the bailout (I suppose the Geithner plan could be called TARP done right, if it works. If not, we can call it Die TARP II: Die Tarper).
I've not been posting as many of my ignorant explorations about economics as I had previously, being afraid that some Googlers might ignorantly associate my views with those of my brother, who does know what he's talking about.
But as long as I'm under the cut, I'll sum up what I've been reading from DeLong, Krugman et al. as saying that Obama in his attempt at bipartisanship/postpartisanship may well be botching the stimulus, making it too small and ineffective. And the trouble with his bipartisanship is that the people he's making the postpartisan overtures to are fundamentally, deeply insane. Krugman called the 36 Republican Senators who voted to stop the stimulus bill* "irresponsible hypocrites," but he entitled his blog post "The Crazy 36," and to be consistent he actually should (and probably would be happy to) also apply the term beyond these 36 to the Repub and Dem (Claire McCaskill and Ben Nelson) "centrists" who put together the compromise Senate bill, which Krugman thinks hurts the stimulus package. There's an inconsistency in Krugman's terminology, since "hypocrite" implies that these people have some foggy idea of what they're doing, and as far as I can tell, they don't. So "insane" it is, even if it's not clinically correct.** "Stubbornly, destructively ignorant" might do. But then, I called myself ignorant earlier in this post, given that I've hardly mastered the relevant macroeconomic theory, nor do I know the evidence.
Of course, Obama could argue that just because someone is insane doesn't mean you don't need his vote. Krugman would argue back that you have to sway public opinion so that the insane guy has to vote sanely if he wants to get reelected.
FYI: Paul Krugman's "The Destructive Center"
*By the way, the Floyd Norris article I quoted above isn't about the stimulus bill but about the administration's plan for how to use the rest of the TARP money. Different things, the stimulus bill and the bailout, though each has the same ultimate goal, to increase lending and/or spending and ultimately ensure that consumables get created and bought.
**I don't know if DeLong himself has used the word "insane" - he did just yesterday say that Ben Nelson is acting like an idiot. He does quote John Cole, who says:
I really don’t understand how bipartisanship is ever going to work when one of the parties is insane. Imagine trying to negotiate an agreement on dinner plans with your date, and you suggest Italian and she states her preference would be a meal of tire rims and anthrax. If you can figure out a way to split the difference there and find a meal you will both enjoy, you can probably figure out how bipartisanship is going to work the next few years.
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Date: 2009-02-11 02:34 pm (UTC)re: the "progressive" mantle -- it seems like he's already working hard to manage those expectations, but it's hard to imagine, especially after Clinton, ANY Democratic President adapting an economic strategy based on even mildly socialist principles like nationalizing the banks (given how tightly both parties are tied into corporate interests, etc.), except in the most dire and extraordinary circumstances... which it seems may now be the case.