mykeystrokes.com

"Do or Do not. There is no try."

“The Timidity Trap”: The Best Lack All Conviction, While The Worst Are Full Of Passionate Intensity

There don’t seem to be any major economic crises underway right this moment, and policy makers in many places are patting themselves on the back. In Europe, for example, they’re crowing about Spain’s recovery: the country seems set to grow at least twice as fast this year as previously forecast.

Unfortunately, that means growth of 1 percent, versus 0.5 percent, in a deeply depressed economy with 55 percent youth unemployment. The fact that this can be considered good news just goes to show how accustomed we’ve grown to terrible economic conditions. We’re doing worse than anyone could have imagined a few years ago, yet people seem increasingly to be accepting this miserable situation as the new normal.

How did this happen? There were multiple reasons, of course. But I’ve been thinking about this question a lot lately, in part because I’ve been asked to discuss a new assessment of Japan’s efforts to break out of its deflation trap. And I’d argue that an important source of failure was what I’ve taken to calling the timidity trap — the consistent tendency of policy makers who have the right ideas in principle to go for half-measures in practice, and the way this timidity ends up backfiring, politically and even economically.

In other words, Yeats had it right: the best lack all conviction, while the worst are full of passionate intensity.

About the worst: If you’ve been following economic debates these past few years, you know that both America and Europe have powerful pain caucuses — influential groups fiercely opposed to any policy that might put the unemployed back to work. There are some important differences between the U.S. and European pain caucuses, but both now have truly impressive track records of being always wrong, never in doubt.

Thus, in America, we have a faction both on Wall Street and in Congress that has spent five years and more issuing lurid warnings about runaway inflation and soaring interest rates. You might think that the failure of any of these dire predictions to come true would inspire some second thoughts, but, after all these years, the same people are still being invited to testify, and are still saying the same things.

Meanwhile, in Europe, four years have passed since the Continent turned to harsh austerity programs. The architects of these programs told us not to worry about adverse impacts on jobs and growth — the economic effects would be positive, because austerity would inspire confidence. Needless to say, the confidence fairy never appeared, and the economic and social price has been immense. But no matter: all the serious people say that the beatings must continue until morale improves.

So what has been the response of the good guys?

For there are good guys out there, people who haven’t bought into the notion that nothing can or should be done about mass unemployment. The Obama administration’s heart — or, at any rate, its economic model — is in the right place. The Federal Reserve has pushed back against the springtime-for-Weimar, inflation-is-coming crowd. The International Monetary Fund has put out research debunking claims that austerity is painless. But these good guys never seem willing to go all-in on their beliefs.

The classic example is the Obama stimulus, which was obviously underpowered given the economy’s dire straits. That’s not 20/20 hindsight. Some of us warned right from the beginning that the plan would be inadequate — and that because it was being oversold, the persistence of high unemployment would end up discrediting the whole idea of stimulus in the public mind. And so it proved.

What’s not as well known is that the Fed has, in its own way, done the same thing. From the start, monetary officials ruled out the kinds of monetary policies most likely to work — in particular, anything that might signal a willingness to tolerate somewhat higher inflation, at least temporarily. As a result, the policies they have followed have fallen short of hopes, and ended up leaving the impression that nothing much can be done.

And the same may be true even in Japan — the case that motivated this article. Japan has made a radical break with past policies, finally adopting the kind of aggressive monetary stimulus Western economists have been urging for 15 years and more. Yet there’s still a diffidence about the whole business, a tendency to set things like inflation targets lower than the situation really demands. And this increases the risk that Japan will fail to achieve “liftoff” — that the boost it gets from the new policies won’t be enough to really break free from deflation.

You might ask why the good guys have been so timid, the bad guys so self-confident. I suspect that the answer has a lot to do with class interests. But that will have to be a subject for another column.

 

By: Paul Krugman, Op-Ed Columnist, The New York Times, March 20, 2014

March 22, 2014 Posted by | Economy, Economic Recovery, Global Economy | , , , , , , | 1 Comment

“Overheated, Half-Baked Advice”: No, Obama Doesn’t Have To Fire Everybody In The White House

In the wake of the disastrous rollout of HealthCare.gov, President Obama’s inner circle is taking a pounding.

Several anonymous Democrats recently dumped on Obama’s White House political aides in the pages of The Hill newspaper, suggesting they should be fired for dropping the ball on their boss’s top domestic priority.

Ron Fournier took a more direct approach. In a National Journal piece titled “Fire Your Team, Mr. President,” Fournier argued that Obama will never regain his standing with the public unless he overhauls his staff “so thoroughly that the new blood imposes change on how he manages the federal bureaucracy and leads.”

The “off with their heads” approach is just the latest manifestation of longstanding criticism that Obama’s group of advisers is far too insular, which in this case resulted in utter embarrassment for the administration.

But this overheated advice is half-baked for a few reasons.

Yes, the HealthCare.gov rollout is a headache for the White House, but early problems are typical of new government programs. In particular, ObamaCare’s hiccups are reminiscent of Social Security’s at the beginning. The eventual government audits may find instances of individual incompetence, but even if so, there likely won’t be evidence of a systemwide governmental breakdown warranting mass firings.

In fact, the Obama administration has a rather impressive managerial history, pulling off an $800 billion stimulus free of graft and boondoggles, executing the auto industry bailout, and providing scientific expertise to stop the BP underwater oil gusher. Any assessment of the Obama administration’s competence should factor in all it has done before demanding across-the-board career sacrifices.

Furthermore, panic firings breed more panic. Jimmy Carter learned this the hard way in 1979. Suffering from low approval ratings and a sputtering agenda, Carter sparked a fresh wave of support and renewed grassroots spirit with his daring “Crisis of Confidence” speech. But a few days later, he snuffed out his own momentum by demanding the resignation of his entire cabinet.

One Carter-era reporter recently told Politico, “Wholesale sacking of cabinet officers usually comes off as desperation,” and fed the perception of Carter as a “floundering leader.”

Contrast that to Franklin Roosevelt, who was suffering his lowest approval ratings in 1939 as fears circulated that the Social Security Board had failed to collect necessary wage data from employers and would be unable to cut millions of checks. Did FDR start firing people left and right? Nope. As his top Social Security man recounted decades later, “He wasn’t interested in it. He was bored stiff. I couldn’t have kept him interested in any of my woes. He laughed them off.”

Some people today say Roosevelt was a pretty good leader.

By: Bill Scher, The Week, December 5, 2013

December 6, 2013 Posted by | Affordable Care Act, Obamacare | , , , , , , , | Leave a comment

“First We’ll Undermine Wall Street”: Standard And Poor’s Had This Planned From The Start!

One of the funnier items in the news this past week was the assertion by lawyers for Standard & Poor’s that the Department of Justice, which is suing the agency for fraud, is just trying to punish it for its downgrade of U.S. credit in 2011.

S&P was one of the agencies that gave high ratings to complicated and very unsound investment instruments, especially collateralized debt obligations, in advance of the financial crisis. Since the agencies’ fees were paid by the same banks issuing the securities they were charged with evaluating, the agencies had no reason to be neutral in their assessments. They knew just how dangerous the securities were, but they were paid to look the other way.

Matt Taibbi looks over the evidence:

In incriminating e-mail after incriminating e-mail, executives and analysts from these companies are caught admitting their entire business model is crooked.

“Lord help our fucking scam…this has to be the stupidest place I have worked at,” writes one Standard & Poor’s executive. “As you know, I had difficulties explaining ‘HOW’ we got to those numbers since there is no science behind it,” confesses a high-ranking S&P analyst. “If we are just going to make it up in order to rate deals, then quants [quantitative analysts] are of precious little value,” complains another senior S&P man. “Let’s hope we are all wealthy and retired by the time this house of card[s] falters,” ruminates one more.

Had the agencies been doing their job correctly, poor ratings would have forced bankers to stay away from the toxic assets. “The firm provided cover,” Michael Hiltzick writes. “No securities trader would be fired for taking the plunge on a mortgage-backed security, no matter how dubious, if it bore the seal of approval of S&P.” Senior bank executives would have had a better idea of how much risk these supposedly safe investments really entailed, and they would have been able to prepare for, or even avert, the collapse.

After the national embarrassment that was the negotiation over the federal debt ceiling in 2011, S&P revoked its perfect “AAA” credit rating for United States. Now, the agency claims that the government’s lawsuit is “retaliation for defendants’ exercise of their free speech rights with respect to the creditworthiness of the United States of America.”

A few points. First, this defense contradicts another argument S&P made earlier this year: that everyone should have ignored S&P’s ratings because (and I kid you not) no reasonable investor would ever rely on them, and therefore S&P should not be blamed for the catastrophe. If that is true, and the ratings are completely and utterly meaningless, then S&P’s decision to downgrade Treasuries simply cannot be interpreted as a statement about the creditworthiness of the United States.

S&P’s earlier position, absurd though it is, actually has a basis in reality. The agency studiously ignored the dangers accumulating in the financial system, and then, when it revoked the government’s AAA rating, the entire world studiously ignored S&P. Investors, having learned that whatever S&P says about your creditworthiness is basically horsesh, made their own decision about the likelihood of a U.S. default and continued buying Treasury bonds. Interest rates actually fell, as Hiltzik notes. “Maybe S&P is still trying to prove its point that no one ought to take it seriously,” Paul Barrett writes.

Finally, S&P’s sanctimonious posturing after the debate over debt ceiling and its measured statement of profound concern regarding the stability of the national economy in the long term appear particularly hypocritical given its share of the responsibility for the financial crisis. Indeed, had S&P done its part to maintain the stability of the global financial system, the federal government’s finances would be much stronger now.

Maybe someone at S&P had the entire charade planned from the very beginning. “First we’ll blow up Wall Street,” I can imagine him saying. “Then, to protect ourselves from fraud litigation, we’ll make sure we’re the first to question the federal government’s creditworthiness after Congress responds to the crisis with a massive fiscal stimulus. It will look like retaliation if they try to sue us then.” Fortunately for the rest of us, this strategy probably won’t quite work all the way.

 

By: Max Ehrenfreund, Washington Monthly Political Animal, September 8, 2013

September 9, 2013 Posted by | Big Banks, Financial Crisis | , , , , , , , | 1 Comment

“A Warped Prism”: Sequestration And How The “Liberal Media” Keeps Blaming Obama For Republican Behavior

Reading what has now become a cavalcade of Beltway pundits, led by New York Times writers, denouncing President Obama for failing to avoid the drastic budget sequestration, and berating him for not “leading” by getting Republicans to abandon their chronic intransigence, I keep thinking back to the earliest days of Obama’s presidency when the press concocted new rules regarding bipartisanship.

Specifically, I recall a question NBC’s Chuck Todd asked at a February 2009 press briefing as the president’s emergency stimulus bill was being crafted in Congress. With the country still reeling from the 2008 financial collapse, and the economy in desperate need of an immediate stimulus shot in the arm, Todd asked if Obama would consider vetoing his own party’s stimulus bill if it passed Congress without Republican support.

Todd wanted to know if Obama would hold off implementing urgent stimulus spending in order to a pass different piece of legislation, one that more Republicans liked and would vote for, because that way it would be considered more bipartisan.

I mention that curious Todd query because only when you understand the warped prism through which so much of the Washington, D.C. press corps now views the issue of bipartisanship does the current blame-Obama punditry regarding sequestration begins to make sense, even remotely.

Here’s what the prism looks like, and here’s what it’s looked like for the last four years: Blame Obama for Republican obstinacy. (Or, as a backup: Both sides are to blame!)

And remember, most of the pundits currently taking misguided aim at Obama on sequestration are part of the supposedly “liberal media” cabal, the one that conservatives insist protect Obama at any cost.

As key observers have noted in recent days, the facts on sequestration are not in dispute: Obama has made repeated offers to meet Republicans in the middle with a proposed deficit reduction plan built around a mix of spending cuts, reform to entitlement programs, and revenue increases. Republicans have countered by saying they will not agree to any deal that includes revenue increases. In terms of “leading,” Obama has done everything in his power to try to fashion a deal with Republicans. In response, the absolutist GOP has refused to move off its starting point; it’s refused to move at all. (Hint: They wanted sequestration to occur.)

So, because Obama, who just won an electoral landslide re-election, wasn’t willing to concede to Republicans everything they wanted, the sequester impasse was reached and $85 billion worth of across-the-board spending cuts went into effect. From those facts, too many pundits have rushed in to blame Obama. Why him? Because he hasn’t been able to change Republican behavior. He wasn’t able to get them to agree to a bipartisan solution.

Question: If you’re an obstructionist Republican and the press blames Obama for your actions, why would you ever change your obstructionist ways? Answer: You wouldn’t. And they haven’t.

Remember, the recently concluded confirmation battle over Chuck Hagel becoming Secretary of Defense wasn’t just about the Republicans’ unprecedented opposition to the cabinet choice. It was also about the press’ ongoing refusal to acknowledge the GOP’s radical obstructionism. A refusal that simply encourages more of the same destructive behavior.

Not surprisingly that theme now runs through the sequestration coverage, as pundits and commentators do their best to downplay those obstructionist tactics in order to clear a way at their real rhetorical target: Obama. (Notable exceptions are appreciated.)

My sense of déjà vu on the sequester media mess is especially intense. I noticed this same trend 49 months ago:

If Republicans simply do not want to cooperate in any meaningful way with Democrats, is there anything Obama can do to change that? No, not really. But according to the press, Obama — and Obama alone — is supposed to change that mindset.

For four years this nonsensical narrative about how it’s up to Obama to change the GOP’s conduct has been promoted and celebrated inside Beltway newsrooms. And now all the savvy pundits agree: Republicans’ obstinate ways created the sequestration showdown, so that means it’s Obama’s fault. By failing to lead, by failing to change Republican behavior, Obama must shoulder the blame.

As noted though, the agreed-upon sequester facts are not in dispute. So in order to blame Obama for Republican obstructionism, pundits have been inserting boulder-sized caveats to their illogical writing that ultimately points the finger at the president [emphasis added]:

“And, of course, it is true that much of the responsibility for our perpetual crisis can be laid at the feet of a pigheaded Republican Party, cowed by its angry, antispending, antitaxing, anti-Obama base.” (Bill Keller, New York Times)

“We have a political system that is the equivalent of a drunk driver. The primary culprits are the House Republicans.” (David Ignatius, Washington Post)

“The great debt-ceiling crisis of 2011 was initiated entirely by the Republicans refusing to do anything.” (Howard Kurtz, The Daily Beast)

“Most Republicans in Congress have been utterly irresponsible in this debate.” (Washington Post editorial).

But never mind all that. It’s Obama’s fault that Republicans are the “pigheaded” “culprits” who “initiated entirely” the “utterly irresponsible” debate over sequestration.

 

By: Eric Boehlert, Media Matters for America, May 5, 2013

May 10, 2013 Posted by | Sequestration | , , , , , , , , | Leave a comment

“Changnesia”: The Man With The Worst Memory In American Politics

No wonder he looks surprised so often.

There’s something that’s been bugging me for a while about House Budget Committee Chairman Paul Ryan (R-Wis.), but I haven’t been able to put my finger on it. Until now, that is.

The congressman talked to Bloomberg TV this morning, and reporter Peter Cook raised the prospect of some kind of compromise with Democrats, in light of Sen. Patty Murray’s (D-Wash.) Senate Democratic budget. Take a look at Ryan’s response:

“Well, I would say to the Patty Murray school of thought to the President Obama school of thought, they’ve got their tax increases. They got $1.6 trillion in tax increases that are just now starting to hit the economy. But we have yet to get the spending cuts.”

Now, right off the bat, it’s important to note that Democrats didn’t get $1.6 trillion in tax increases. Earlier this year, they got about $600 billion in new revenue — Ryan is only off by $1,000,000,000,000 — which Republicans on the House Budget Committee found so offensive, they included the money in their own budget plan. Maybe Ryan forgot about this?

But even if we put that aside, there’s the matter of Ryan’s assertion that Republicans haven’t already successfully received spending cuts. The problem, of course, is that Ryan seems to have forgotten 2011, when Democrats accepted nearly $1.5 trillion in spending cuts, with no accompanying revenue, as part of the GOP’s debt-ceiling hostage strategy.

At the time, Ryan boasted about all the spending cuts he and his party had won by threatening to hurt Americans on purpose. Less than two years later, the far-right Wisconsinite appears to have forgotten about the policy altogether. How is that possible?

It’s not just today, either. Ryan keeps reinforcing suspicions that his memory is alarmingly bad.

Ryan doesn’t remember that he used to refer to his own plan to end Medicare as “vouchers.”

Ryan doesn’t remember taking credit for the sequestration policy he later condemned.

Ryan doesn’t remember learning about Democratic alternatives to the sequester.

Ryan doesn’t remember what happened with the 2011 “super committee.”

Ryan doesn’t remember Bill Clinton’s tax increases.

Ryan doesn’t remember the times he condemned social-insurance programs as “taker” programs.

Ryan doesn’t remember all of the times he appealed to the Obama administration for stimulus funds for his congressional district.

Ryan doesn’t remember his marathon times.

Ryan doesn’t remember how much he was inspired by Ayn Rand.

Ryan doesn’t remember his own speeches.

Everyone can be forgetful once in a while, but the Republican Budget Committee chairman seems to forget rather important details and developments so often, it’s rather unsettling.

The alternative, of course, is that Ryan’s memory is fine and he shamelessly lies when it suits his purposes, but why be uncharitable? Let’s instead just assume that the poor congressman suffers from a terrible memory.

Maybe it’s some weird political version of Changnesia?

 

By: Steve Benen, The Maddow Blog, March 19, 2013

March 20, 2013 Posted by | Budget | , , , , , , , , | Leave a comment

Follow

Get every new post delivered to your Inbox.

Join 2,497 other followers

%d bloggers like this: