1. Economists for Firing Ben Bernanke
2. Economists for Giving Narayana Kocherlachota a noogie
3. Economists for Drawing and Quartering the FOMC (and then having them hanged)
other ideas?
Not a Surprise
1 day ago
Friday, October 1, 2010
Tuesday, September 21, 2010
Thursday, August 26, 2010
Wednesday, August 25, 2010
Rant against liberals who rant that Obama is a centrist...
Recently, there's been a lot of liberal rage against Obama
So, I've long been critical of the Obama administration's economic policy, but there is one thing to know -- first off, there aren't actually all that many liberal economists, and even fewer with the stature to be Presidential advisers. Yes, there's Stiglitz and Krugman, and Brad DeLong, but, to my knowledge, none of them came down on the right side of Bernanke's fateful reconfirmation. Obama's choice to go with a team including Romer, Summers, Geithner, Austan Goolsbee, and Peter Orszag was a choice for Democratic economists with some sharp (or very!) sharp CVs (plus Jared Bernstein...). (How many of us have got "tenured at Harvard in our mid-20s" on our resumes?) Obama himself is not an economist and couldn't possibly have known about the Dark Ages economics has sadly fallen into the past few decades... And Summers published some extremely populist Op-Eds in 2009, rants about Bush Administration tax cuts and inequality, the kind of thing no liberal would have any qualms about, with an explicit eye toward appealing to candidate Obama.
I think that says Summers thinks Obama is a liberal. And I think it also makes it a touch more difficult to blame Obama for what were the key mistakes -- the reappointing of Ben Bernanke (which was supported by both DeLong and Krugman), the feet-draggging on the FOMC appointments, and the small stimulus. Obama deferred to the "experts". The experts turned out to be medeival priests on the key issues, even though these are not low-IQ, unqualified people. Then there's health care -- Obama did not give Summers control over health care, and the constraint on getting a more liberal health care bill came in the Senate, not from the White House.
Point is there just aren't that many doors President Obama could have knocked on to get competent advice on all three of these issues. And there are very, very few economists over the age of 35 who are ever worth listening to. More liberals need to get Economics Ph.D.'s instead of Anthropology or History Ph.D.'s if they want to shape policy (that's why I switched from Poly Sci/Law to econ), and we need to have more liberals who've got "Goldman Sachs VP" on their resume as well...
So, I've long been critical of the Obama administration's economic policy, but there is one thing to know -- first off, there aren't actually all that many liberal economists, and even fewer with the stature to be Presidential advisers. Yes, there's Stiglitz and Krugman, and Brad DeLong, but, to my knowledge, none of them came down on the right side of Bernanke's fateful reconfirmation. Obama's choice to go with a team including Romer, Summers, Geithner, Austan Goolsbee, and Peter Orszag was a choice for Democratic economists with some sharp (or very!) sharp CVs (plus Jared Bernstein...). (How many of us have got "tenured at Harvard in our mid-20s" on our resumes?) Obama himself is not an economist and couldn't possibly have known about the Dark Ages economics has sadly fallen into the past few decades... And Summers published some extremely populist Op-Eds in 2009, rants about Bush Administration tax cuts and inequality, the kind of thing no liberal would have any qualms about, with an explicit eye toward appealing to candidate Obama.
I think that says Summers thinks Obama is a liberal. And I think it also makes it a touch more difficult to blame Obama for what were the key mistakes -- the reappointing of Ben Bernanke (which was supported by both DeLong and Krugman), the feet-draggging on the FOMC appointments, and the small stimulus. Obama deferred to the "experts". The experts turned out to be medeival priests on the key issues, even though these are not low-IQ, unqualified people. Then there's health care -- Obama did not give Summers control over health care, and the constraint on getting a more liberal health care bill came in the Senate, not from the White House.
Point is there just aren't that many doors President Obama could have knocked on to get competent advice on all three of these issues. And there are very, very few economists over the age of 35 who are ever worth listening to. More liberals need to get Economics Ph.D.'s instead of Anthropology or History Ph.D.'s if they want to shape policy (that's why I switched from Poly Sci/Law to econ), and we need to have more liberals who've got "Goldman Sachs VP" on their resume as well...
Boehner calls for Summers' resignation
House Minority Leader John Boehner (R-Ohio) will call Tuesday for the mass firing of the Obama administration’s economic team, including Treasury Secretary Timothy Geithner and White House adviser Larry Summers, arguing that November’s midterm elections are shaping up as a referendum on sustained unemployment across the nation and saying the “writing is on the wall.”Sucks he's basically right. That Boehner himself was also on the wrong side of all the recent economic policy debates hardly matters. Obama was elected to put the economy in order. He hasn't done that. He pushed through a stimulus which was too small, waited 16 months on an FOMC appointment, and made a stupid decision to reappoint Bernanke.
And, hate to say it, but had McCain been elected, the Republicans would have pushed through a massive stimulus containing the mother-of-all tax cuts. Republican opposition to the stimulus was largely because it was in their self-interest to oppose it (and, oppose everything obama did). Had the Democrats been in the opposition, there wouldn't have been nearly as much opposition to the stimulus. Add to that, the right-wingers on the Fed would likely have been less hawkish over the past 18 months of what I would term "very strange" Fed policy. Combine all of this, and it's not at all clear that the economy would be worse off with a President McCain at the helm.
The mid-terms are basically a referendum on Geithner, Summers, and Bernanke. These guys were simply not up to the task, and so Boehner is right to attack them.
Tuesday, August 17, 2010
Tim Geithner is Behind the Curve...
Alex Tabarrok and other econ bloggers (Economists for Firing Larry Summers were not invited) spent the afternoon at the Treasury, firing questions at Timothy Geithner.
Tabarrok describes Geithner's view of the Fed: "There was a recognition that the Fed could do “dramatic” things but a sense that the theory here was uncertain and untested."
I wouldn't really describe a cut in the discount rate, a 25 basis point cut in the Federal Funds rate, an elimination of interest paid on excess reserves, or another $400 billion in QE to be "dramatic", "untested", or "uncertain". On the other hand, doing nothing to hit your inflation target in the wake of a financial crisis has been tested by Japan for 17 years running and repeatedly been shown not to work.
Oh, Timmy Chimeny, Tim tim, tim teroo. We've got Tim Geithner and he says (to the unemployed) eff you! javascript:void(0)
(This was Man U.'s Tim Howard chant for those that didn't get the reference...)
Tabarrok describes Geithner's view of the Fed: "There was a recognition that the Fed could do “dramatic” things but a sense that the theory here was uncertain and untested."
I wouldn't really describe a cut in the discount rate, a 25 basis point cut in the Federal Funds rate, an elimination of interest paid on excess reserves, or another $400 billion in QE to be "dramatic", "untested", or "uncertain". On the other hand, doing nothing to hit your inflation target in the wake of a financial crisis has been tested by Japan for 17 years running and repeatedly been shown not to work.
Oh, Timmy Chimeny, Tim tim, tim teroo. We've got Tim Geithner and he says (to the unemployed) eff you! javascript:void(0)
(This was Man U.'s Tim Howard chant for those that didn't get the reference...)
Monday, August 16, 2010
How strange is too strange?
After reading Tim Duy's latest, I'm just reminded how weird Fed policy has been.
Consider that in 2004, when inflation was at 3.3%, the Fed was fine to leave the Federal Funds rate at 1%. 3.3% inflation wasn't seen as anything sinister during President Bush's reelection run. Now, however, with the CPI having increased so far this year by .2%, for an annual rate of less than .4%, we're suddenly in dire risk of hyperinflation? Isn't this just a bit too strange?
Either the Fed is as stupid as I suspect they are, or they are very competent but hopelessly in the tank for the Republican Party. How else does one explain the above?
Also, consider that in 2004, unemployment topped out at 5.8% (in March, declining thereafter). Compare that with 9.5% today. This Fed brings new meaning to the phrase 'regime switching'.
Consider that in 2004, when inflation was at 3.3%, the Fed was fine to leave the Federal Funds rate at 1%. 3.3% inflation wasn't seen as anything sinister during President Bush's reelection run. Now, however, with the CPI having increased so far this year by .2%, for an annual rate of less than .4%, we're suddenly in dire risk of hyperinflation? Isn't this just a bit too strange?
Either the Fed is as stupid as I suspect they are, or they are very competent but hopelessly in the tank for the Republican Party. How else does one explain the above?
Also, consider that in 2004, unemployment topped out at 5.8% (in March, declining thereafter). Compare that with 9.5% today. This Fed brings new meaning to the phrase 'regime switching'.
Statistics in the Hands of Idjiots...
Matt Yglesias asks "What is it about the economy?" that impacts election outcomes, and links "Enik Rising", an interesting blog by a political scientist, who finds that income growth matters but that unemployment does not matter for mid-term election outcomes.
Having done a powerpoint slide on this issue once, I can say that this issue is actually trickier than it looks. His mistakes are three: First, he looks at change in house seats as the variable he's trying to explain. So, it would make sense to include "how many house seats the president's party holds" as a control variable. Second problem is that the Democrats usually lose about 8-12 seats in midterm elections simply because the share of young people, women, and minorities all decline during mid-term elections. Of course, young people, women, and minorities all turned out at record rates in 2008, but will sit out the midterms. (Good news for Dems is that they will be back in 2012... There is a lot of habit persistence in voting behavior, but it's really specific to the type of election.) But I digress. Third issue is that there are just too few data points here, and US politics has changed too much since 1912 to gain much by expanding the series. One thing the author could do is include Presidential election years, and that would help. Also, that the Bush 02 year is a chief counterexample to the "unemployment doesn't matter" is quite telling. Obviously, 2002 was an election dominated by 9/11. The Republican gain/loss was also helped out by the fact that they only started off with a slight majority, and that Republicans traditionally do well in midterms. Control for those two things and the Republican performance in 2002 loses a bit of its luster... But there's no way, really to control for 9/11 since it was a one-time event. Which means someone needs to write a careful international paper. And when they do, my guess is that they'll find that a change in unemployment matters a lot.
After all this criticism, however, I agree with part of the bottom line, that GDP growth matters more than unemployment. Why? The big reason why the economy matters has to do, I'm convinced, not with the actions of laid-off workers but with how the media covers the economy, the president, and the federal deficit. The deficit gets covered like it's a huge scandal, and it always comes across as though the President and Congress have been reckless with the nation's finances, even though the truth is that running smaller deficits would have been much more reckless. Since GDP and the stock market rebound before unemployment, of course, this means that GDP growth is a better indicator, because media types care much more about their stock portfolios and bottom-line GDP growth than they do unemployment, which is simply a remote statistic to them.
Having done a powerpoint slide on this issue once, I can say that this issue is actually trickier than it looks. His mistakes are three: First, he looks at change in house seats as the variable he's trying to explain. So, it would make sense to include "how many house seats the president's party holds" as a control variable. Second problem is that the Democrats usually lose about 8-12 seats in midterm elections simply because the share of young people, women, and minorities all decline during mid-term elections. Of course, young people, women, and minorities all turned out at record rates in 2008, but will sit out the midterms. (Good news for Dems is that they will be back in 2012... There is a lot of habit persistence in voting behavior, but it's really specific to the type of election.) But I digress. Third issue is that there are just too few data points here, and US politics has changed too much since 1912 to gain much by expanding the series. One thing the author could do is include Presidential election years, and that would help. Also, that the Bush 02 year is a chief counterexample to the "unemployment doesn't matter" is quite telling. Obviously, 2002 was an election dominated by 9/11. The Republican gain/loss was also helped out by the fact that they only started off with a slight majority, and that Republicans traditionally do well in midterms. Control for those two things and the Republican performance in 2002 loses a bit of its luster... But there's no way, really to control for 9/11 since it was a one-time event. Which means someone needs to write a careful international paper. And when they do, my guess is that they'll find that a change in unemployment matters a lot.
After all this criticism, however, I agree with part of the bottom line, that GDP growth matters more than unemployment. Why? The big reason why the economy matters has to do, I'm convinced, not with the actions of laid-off workers but with how the media covers the economy, the president, and the federal deficit. The deficit gets covered like it's a huge scandal, and it always comes across as though the President and Congress have been reckless with the nation's finances, even though the truth is that running smaller deficits would have been much more reckless. Since GDP and the stock market rebound before unemployment, of course, this means that GDP growth is a better indicator, because media types care much more about their stock portfolios and bottom-line GDP growth than they do unemployment, which is simply a remote statistic to them.
Thursday, August 12, 2010
Liquidity Trap Blogging...
On the effects of an oil price shock.
Matt Yglesias worries about the consequences of an Israel-Iran war, and concludes that, if things are bad now, just wait until we've got inflation to worry about! Except, if we have an oil price shock now, we'd be freed from our liquidity trap. This is the counter-intuitive logic whereby everything that is normally "bad" -- i.e., inflationary -- now helps the economy by reducing real interest rates. The only way an oil shock would hurt is if the Fed overreacts, and raises interest rates prematurely to head off inflation before it comes. This is more than a remote possibility, of course, but an oil price shock would at least get us back to the situation where the Fed can simply cut the federal funds rate when it wants to stimulate the economy rather than play word games with the "extended period" language.
Matt Yglesias worries about the consequences of an Israel-Iran war, and concludes that, if things are bad now, just wait until we've got inflation to worry about! Except, if we have an oil price shock now, we'd be freed from our liquidity trap. This is the counter-intuitive logic whereby everything that is normally "bad" -- i.e., inflationary -- now helps the economy by reducing real interest rates. The only way an oil shock would hurt is if the Fed overreacts, and raises interest rates prematurely to head off inflation before it comes. This is more than a remote possibility, of course, but an oil price shock would at least get us back to the situation where the Fed can simply cut the federal funds rate when it wants to stimulate the economy rather than play word games with the "extended period" language.
Wednesday, August 11, 2010
A Rough Comment on Levitt...
Here
This comment makes three observations about Donohue and Levitt’s paper on abortion and crime (Quarterly Journal of Economics 119(1) (2001), 249–275). First, there is a coding mistake in the concluding regressions, which identify abortion’s effect on crime by comparing the experiences of different age cohorts within the same state and year. Second, correcting this error and using a more appropriate per capita specification for the crime variable generates much weaker results. Third, earlier tests in the paper, which exploit cross-state rather than withinstate variation, are not robust to allowing for differential state trends based on statewide crime rates that predate the period when abortion could have had a causal effect on crime.Although this may look like "shocking" revelations to some, if you take essentially any major result in economics over the past 30-40 years and dig around with their data, you're quite likely to discover that the central finding is fraudulent.
Awesome NYT Fed Coverage...
The New York Times is supposed to be liberal. And yet, here they are cherrypicking quotes from conservative economists:
NYT, you suck!
I e-mailed "professor" Christopher L. House to explain himself, because the NYT really makes him sound like a complete idiot... No response yet.
While that action could be helpful, it carries some risk, said Christopher L. House, an economics professor at the University of Michigan.Of course, this logic holds if the federal funds rate is at .25. If the Fed is expecting inflation of .9% over the next year, then why should a 25 basis point cut get us to uncontrollable inflation? More likely it would shift us toward inflation of 1 or 1.1%. That's clearly some magical thinking that a 25 basis point cut, alone, would take inflation from .9% to, say, 3.4%, much less that it would happen so suddenly that the Fed would be unable to keep a lid on inflation via repeated rate increases. Did the NYT quote anyone on the other side? Anyone who thought the Fed is not doing enough? NO.
“If they were to simultaneously lower the rate to zero while leaving $1 trillion in reserves in the banking system, they would have a lot of reason to worry about inflation,” he said.
NYT, you suck!
I e-mailed "professor" Christopher L. House to explain himself, because the NYT really makes him sound like a complete idiot... No response yet.
Laffer Curve, Piled On...
Dylan Mathews surveyed a bunch of economists to find out where the peak of the laffer curve is.
Trouble is, there is no "the peak". The peak will depend on what the past rates are and other cultural factors, and in general will be different at all times and places. If a marginal tax rate moves from 70% to 50%, people will behave quite differently than if it the rate had just moved from 30% to 50%. And Greg Mankiw also made a good point, that the short-term and long-term effects can be different. Of course, what he doesn't realize is that this can go in both directions... I.e., if we declare all income over $20 million to be taxed at 99%, I think we'd all agree that Exxon Mobil will stop paying it's CEO more than that, and Phil Mickelson would do fewer sponsorships. Hence, we'd be on the wrong side of the laffer curve. But Exxon Mobil will still have a full-time CEO, and if Phil Mickelson does fewer sponsorships, then Lee Westwood or Jim Furyk will do more. Exxon will probably share more of its profits with its shareholders or other employees. In short, nothing less necessarily gets produced, yet revenues in the short run are increased. In the long run, however, this reduction in inequality would likely increase the growth rate...
I'm not saying to tax all income over $20 million at 99%, but currently we tax it at just 35%. The point is that it's very possible to be on the wrong side of the laffer curve but on the right side of maximizing economic growth.
Trouble is, there is no "the peak". The peak will depend on what the past rates are and other cultural factors, and in general will be different at all times and places. If a marginal tax rate moves from 70% to 50%, people will behave quite differently than if it the rate had just moved from 30% to 50%. And Greg Mankiw also made a good point, that the short-term and long-term effects can be different. Of course, what he doesn't realize is that this can go in both directions... I.e., if we declare all income over $20 million to be taxed at 99%, I think we'd all agree that Exxon Mobil will stop paying it's CEO more than that, and Phil Mickelson would do fewer sponsorships. Hence, we'd be on the wrong side of the laffer curve. But Exxon Mobil will still have a full-time CEO, and if Phil Mickelson does fewer sponsorships, then Lee Westwood or Jim Furyk will do more. Exxon will probably share more of its profits with its shareholders or other employees. In short, nothing less necessarily gets produced, yet revenues in the short run are increased. In the long run, however, this reduction in inequality would likely increase the growth rate...
I'm not saying to tax all income over $20 million at 99%, but currently we tax it at just 35%. The point is that it's very possible to be on the wrong side of the laffer curve but on the right side of maximizing economic growth.
Traders Need to read their EFFLS
From the NYT:
Also, interestingly, the NYT has changed its story. Yesterday, the "surprise" announcement by the Fed led to a market rally, today yesterday's QE has caused the market to drop a lot by inciting economic fears. Hard to believe both are true. Nevertheless, I can see where both stories are coming from. It's a good thing the Fed isn't shrinking its balance sheet. But keeping its balance sheet the same size does nothing to stimulate the economy...
On top of those reports, Tuesday’s decision by the Fed to begin buying at least $10 billion a month in new Treasury securities caught some traders off-guard.They shoulda been reading their EFFLS, and they'd have known in advance that's what the Fed was going to do...
Also, interestingly, the NYT has changed its story. Yesterday, the "surprise" announcement by the Fed led to a market rally, today yesterday's QE has caused the market to drop a lot by inciting economic fears. Hard to believe both are true. Nevertheless, I can see where both stories are coming from. It's a good thing the Fed isn't shrinking its balance sheet. But keeping its balance sheet the same size does nothing to stimulate the economy...
Monday, August 9, 2010
Predictions for tomorrow's FOMC meeting
I predict that the Fed will actually announce that it will reinvest some of the proceeds from the prior MBS investments as they come due, so there will be no net-tightening. What's more, that the Fed will see this as a major policy shift, but in reality it is far too little and it will do nothing.
However, I also see the economy getting better. Only, very, very slowly. Slowly enough that the Democrats will still get whacked this fall...
UPDATE: I hate it when I'm right!
However, I also see the economy getting better. Only, very, very slowly. Slowly enough that the Democrats will still get whacked this fall...
UPDATE: I hate it when I'm right!
Miscellany...
Keith Hennessy has a very interesting post on the different roles of White House economic advisers... One reason health care turned out so well for the Dems was probably that the NEC, and Larry Summers, was not in charge of it.
Matt Yglesias continues to push the Benjamin Friedman thesis, without mention the caveat which I think is the most important. That recessions tend to badly damage the party in power and help the party out of power. If the party out of power is an anti-foreigner, conservative party, then they will be emboldened. If the party out of power is led by Franklin D. Roosevelt or Barack Obama, then the anti-foreigner/race based stuff will never come into play.
Matt doesn't really provide any good explanation for why the Great Depression or the crisis of 2008 didn't result in more zenophobia (in the 2008 case, this didn't come until after Obama was sworn in). He says "Many expected racial tension during the 2008 presidential campaign, but it barely materialized." That's because the nation shifted toward Barack Obama and Nancy Pelosi and away from bankers and old conservative white guys. During the Great Depression, he says it didn't happen because 1934-1937 was the fastest period of economic growth America has ever experienced. I think this is wrong though. 1934-1937 was also a fast period of growth in Germany, what was the difference? The difference was that, in the US, the Republican Party was thoroughly discredited by the Great Depression, and the alternative, the Democrats, were much less zenophobic and against the free market orthodoxy, which meant that the nation subsequently became less zenophobic and more anti-laissez faire as the Democrats took control of government.
Matt Yglesias continues to push the Benjamin Friedman thesis, without mention the caveat which I think is the most important. That recessions tend to badly damage the party in power and help the party out of power. If the party out of power is an anti-foreigner, conservative party, then they will be emboldened. If the party out of power is led by Franklin D. Roosevelt or Barack Obama, then the anti-foreigner/race based stuff will never come into play.
Matt doesn't really provide any good explanation for why the Great Depression or the crisis of 2008 didn't result in more zenophobia (in the 2008 case, this didn't come until after Obama was sworn in). He says "Many expected racial tension during the 2008 presidential campaign, but it barely materialized." That's because the nation shifted toward Barack Obama and Nancy Pelosi and away from bankers and old conservative white guys. During the Great Depression, he says it didn't happen because 1934-1937 was the fastest period of economic growth America has ever experienced. I think this is wrong though. 1934-1937 was also a fast period of growth in Germany, what was the difference? The difference was that, in the US, the Republican Party was thoroughly discredited by the Great Depression, and the alternative, the Democrats, were much less zenophobic and against the free market orthodoxy, which meant that the nation subsequently became less zenophobic and more anti-laissez faire as the Democrats took control of government.
Saturday, August 7, 2010
Romer Post-mortem
Lauren Lyster gets this right!
Romer deserves props for arguing for a larger stimulus, but she backed up her arguments with economic projections which suggested the downturn would be short and one of the lightest recessions in the post-war period, despite this being the worst financial crisis. The moment that projection was made, we here at the Economists for Firing Larry Summers pointed out that her forecasts were nonsense.
Secondly, I suspect she supported the reconfirmation of Ben Bernanke, which was a horrendous mistake. If she disagreed with it, she should have resigned then.
Thirdly, the administration waited over a year to make a Fed Board appointment. I suspect that had she really been pushing this as a priority, it would have gotten done sooner. This was a clear administration mistake, and its importance is not to be understated. The more I think about it, the more foolish I think it was.
Fourthly, she didn't "work the refs" at all. I don't get the sense that she's been out there persuading reporters and economists to attack Bernanke's patently wrong policies like we have here at "Economists for Firing Larry Summers". I suspect the reason is she doesn't grasp what the Fed's been doing (or hasn't been doing), and that she actually believes Ben Bernanke is doing just fine.
But, alas, I suspect the voters this fall will send a message to the Democrats how well they think Ben Bernanke is doing.
Romer deserves props for arguing for a larger stimulus, but she backed up her arguments with economic projections which suggested the downturn would be short and one of the lightest recessions in the post-war period, despite this being the worst financial crisis. The moment that projection was made, we here at the Economists for Firing Larry Summers pointed out that her forecasts were nonsense.
Secondly, I suspect she supported the reconfirmation of Ben Bernanke, which was a horrendous mistake. If she disagreed with it, she should have resigned then.
Thirdly, the administration waited over a year to make a Fed Board appointment. I suspect that had she really been pushing this as a priority, it would have gotten done sooner. This was a clear administration mistake, and its importance is not to be understated. The more I think about it, the more foolish I think it was.
Fourthly, she didn't "work the refs" at all. I don't get the sense that she's been out there persuading reporters and economists to attack Bernanke's patently wrong policies like we have here at "Economists for Firing Larry Summers". I suspect the reason is she doesn't grasp what the Fed's been doing (or hasn't been doing), and that she actually believes Ben Bernanke is doing just fine.
But, alas, I suspect the voters this fall will send a message to the Democrats how well they think Ben Bernanke is doing.
Romer vs. Summers
She also was reported to have butted heads with other members of Obama’s economic team, in particular Larry Summers, director of the National Economic Council. In December, the she sand Summers even seemed to contradict each other — in interviews conducted on the same day — on whether the recession had ended.I think that shows she's got more human, and better, instincts than Summers. When unemployment has been above 9.5% for over a year and the economy is shedding jobs, you cannot try to pretend like everything is OK when you are in office. It makes you look out of touch. In Summers case, of course, he is out of touch. So it's not just framing...
“Everybody agrees that the recession is over,” Summers said.
“Of course not,” Romer said in a separate interview.
The clash appeared at the time to speak not just to the differing views on the economy within Obama’s inner circle but also to the sharply conflicting signals out of the economy itself, which continues to struggle to rebound.
So, Diamond Rejected, what now?
Recess-Appoint Jaime Galbraith and Joseph Gagnon!
(hat-tip again to sfraffa!)
UPDATE: I meant thanks to Matthew Saroff for suggesting the Galbraith recess-appointment!
(hat-tip again to sfraffa!)
UPDATE: I meant thanks to Matthew Saroff for suggesting the Galbraith recess-appointment!
Thursday, August 5, 2010
Wow... Diamond Rejected...
Wow. There goes any hope for monetary policy... The article doesn't say how Republicans alone could block the appointment w/ just 41 senators in the entire senate. How'd they get a majority on the Senate Banking Committee???
I wonder if now some wheels are starting to turn at the White House. If, now, they might start to reconsider how smart it was to leave Monetary Policy to a bunch of partisan-Republicans when they could have made these appointments 15 months ago, and whether it was smart to re-nominate a Republican inflation hawk in the midst of a liquidity trap. Now, of course, apparently the Republicans can easily block any dovish appointment with just 41 senators... I wonder if they can even grasp the importance of this.
If I were in the White House, of course, I would go on the offensive and accuse Republicans of sabotaging the economy... But that's just me.
UPDATE: Now it's come out that just one senator can send a nomination back to the White House. If I were there, I'd resubmit Diamond's application. (thanks to commenter sraffa.)
I wonder if now some wheels are starting to turn at the White House. If, now, they might start to reconsider how smart it was to leave Monetary Policy to a bunch of partisan-Republicans when they could have made these appointments 15 months ago, and whether it was smart to re-nominate a Republican inflation hawk in the midst of a liquidity trap. Now, of course, apparently the Republicans can easily block any dovish appointment with just 41 senators... I wonder if they can even grasp the importance of this.
If I were in the White House, of course, I would go on the offensive and accuse Republicans of sabotaging the economy... But that's just me.
UPDATE: Now it's come out that just one senator can send a nomination back to the White House. If I were there, I'd resubmit Diamond's application. (thanks to commenter sraffa.)
Christy Romer to Resign?
This certainly wasn't the Fed official I wanted to resign. The word was that she wanted a larger stimulus, Larry didn't, and she felt she wasn't having enough influence...
Don't think it's official yet tho'...
UPDATE: Wow! It's official. Of course, I suspect part of this is that, given that Congress is unlikely to do more stimulus (except for tiny things...), there's just not that much the CEA can do for the economy at this point. And with Republicans perhaps taking control of the House, the situation is only fit to get worse.
Don't think it's official yet tho'...
UPDATE: Wow! It's official. Of course, I suspect part of this is that, given that Congress is unlikely to do more stimulus (except for tiny things...), there's just not that much the CEA can do for the economy at this point. And with Republicans perhaps taking control of the House, the situation is only fit to get worse.
The Key Problem with Ben Friedman's Thesis...
Yglesias holds up the rightwing push to repeal the 14th amendment as support for Benjamin Friedman's book "The Moral Consequences of Economic Growth". However, the key problem I had with the book has been very much revealed. You might recall that in the wake of the financial crisis, Americans elected Barack Hussein Obama, the first black man ever. They didn't go all right-wingy. Since Obama's election, however, the Tea Party has really gained momentum, so much so that my father-in-law sent me an email forward the other day alleging that Barack Hussein Obama and his sinister cronies in government are in the midst of a devious plot, involving the global-warming "hoax", in order to make them all multi-billionaires.
The key problem with Friedman's thesis is that when the economy is doing poorly, anger toward the government in power rises. If the government in power is George W. Bush, then liberals gain support and Nancy Pelosi and Barack Obama get to make policy. If you've got a liberal government in power, then they will be discredited. And if the opposition is full of conservatives, then of course they will tend to push zenephobic policies...
Same thing happened during the Great Depression. In the US, the Great Depression destroyed the conservative movement for a generation -- until war hero Ike Eisenhower led the ticket. In Germany, the Great Depression destroyed the left. Key factor was who was in power and that they did not respond effectively to the recession.
This administration has not responded effectively to the recession, and so now we're seeing their enemies emboldened.
The key problem with Friedman's thesis is that when the economy is doing poorly, anger toward the government in power rises. If the government in power is George W. Bush, then liberals gain support and Nancy Pelosi and Barack Obama get to make policy. If you've got a liberal government in power, then they will be discredited. And if the opposition is full of conservatives, then of course they will tend to push zenephobic policies...
Same thing happened during the Great Depression. In the US, the Great Depression destroyed the conservative movement for a generation -- until war hero Ike Eisenhower led the ticket. In Germany, the Great Depression destroyed the left. Key factor was who was in power and that they did not respond effectively to the recession.
This administration has not responded effectively to the recession, and so now we're seeing their enemies emboldened.
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