Hoisted from Comments (thought not here)
UPDATE: D-Squared chimes in, saying in less than 100 words what took me a couple of thousand (though with no quotes):
After the “first hundred days” in the term of a new Democratic President comes the next stage; the almost impreceptible transition among his supporters from saying
“of course, he’s been hampered by all sorts of obstacles to date, but he’s about to start delivering on all those promises he made to his supporters on the left”
to saying
“well, he never really promised anything and it’s terribly naive to think he was ever going to deliver anything to his supporters on the left”
Apparently we’ve reached it.
That’s why he gets the big bucks, folks.
Brad DeLong attempts to attack Matt Taibbi’s facts. Tao Jonesing replies in comments (DeLong starts; Jonesing in bold) :
- The financial reform bill that just passed the House is not nearly as strong a bill as the Treasury wanted. The reason is not that Obama and Geithner did not push for a stronger bill, but rather that the members of congress balked at a stronger bill. What financial did Obama and Geithner “push for,” exactly? And don’t point us to speeches. What did they push for, i.e., actually apply the pressure of the bully pulpit? Unless there’s some way to establish that they brought pressure to bear, I think this fact is an opinion.
- Citigroup did not receive a $306 billion bailout as the first major act of Obama’s presidency. First, where does the $306 billion number come from? The number I associate with Citigroup is $45 billion of TARP money. Certainly Citigroup would be bust and gone if not for government aid extended to it during George W. Bush’s presidency–aid that Obama endorsed–but it now looks as though Citigroup will pay everything back: that the government will profit from the aid it extended to Citigroup.Clearly, Taibbi is including the backstop in his number, which you realize in 8.*
- James P. Rubin is not James S. Rubin.
- The James Rubin whom Mike Froman brought in to staff the economic policy search was not Bob Rubin’s son. 3-4. Taibbi admits this error.**
- The Obama economic policy inner circle–Tim Geithner, Gene Sperling, Larry Summers, Christie Romer, Peter Orszag–is not “a group of Wall Street bankers.” It is only 5% Wall Street banker–only 1/4 of Larry Summers can possibly count as a Wall Street banker.You misread what Taibbi said, which was that two people in Obama’s economic policy inner circle–Goolsbee and Kornbluh– were replaced with a group of Wall Stret bankers. Taibbi did not say that the all of the inner circle were Wall Street bankers. So, your fifth “fact” is actually a strawman. Perhaps you are focused on the subtitle? I can’t lay the subtitle at his feet because editorial staff make that decision. Note from Ken: Brad is incredibly generous in the case of Geithner, whose dinner plans while at the NY Fed were consistently at the homes of Wall Street bankers, and Summers, whose work since attempting to destroy Harvard’s endowment has been with Goldman, D. E. Shaw, and other paragons of Wall Street. Summers may have worked for years without being on Wall Street, but it has been his primary source of income since his divorce.
- Mike Froman staffed the economic policy search. Mike Froman–a very smart and capable man–did not lead the economic policy search. He was not some corrupt Svengali who foisted advisors who would whisper evil in the innocent Obama’s ear. Obama led the economic policy search. Come now, Obama led the search? Really? What did that leadership entail, delegating the day-to-day responsibilities to somebody else? Froman, maybe? Since you seem to know, what did Froman actually do? And Taibbi never said or implied Froman was a corrupt evil Svengali. His point was that Froman was a Citi insider. Overall, this fact seems more like opinion.
- Austan Goolsbee’s absence from the transition staff was not notable. Austan Goolsbee does have a senior subcabinet appointment. And Austan Goolsbee is not a voice on the economic left–this is the man who told the Canadians not to take Barack Obama’s claims that he wanted to renegotiate NAFTA seriously. I don’t know the story of Karen Kornbluh.Your opinion of Goolsbee’s departure is an opinion, not a fact. I don’t know whose opinion is correct, although I’d bet on yours.
- Ah. Taibbi says: “the government also agrees to charge taxpayers for up to $277 billion in losses on troubled Citi assets.” First of all, $277 + $45 = $322, not $306. But a guarantee is not money at risk and money at risk is not money lost. As I said, it looks like the government is going to make money off of its support of Citi. (Albeit not off its support of AIG.) Clearly, Taibbi is including the backstop in his number, which you realize in 8. Note from Ken: This is, by the way, bullshit, since it’s actually another example of the Rubinesque “contracts are only valid if they favor Wall Street firms.” What is being counted as “profits” are deeply-discounted equity options that have value because of the mass amount of subsidization and drug money that has gone into the banking system without in the least being passed on to the consumer who is footing the bill.
- Tim Geithner was not hired as Treasury Secretary by Mike Froman. Tim Geithner was hired as Treasury Secretary by Barack Obama. You are correct that Obama hired Geithner. Nobody else could have, at least in the end. But who proposed Geithner? And what weight did Obama give the opinion of the people who proposed him? Did Obama just rubber stamp the recommendation after meeting Geithner? Who else was on the list? While there’s no doubt that Taibbi was making a lot of assumptions about Froman’s role and level of influence to jump to the obviously false conclusion that Froman hired Geithner, the fact that the conclusion was obviously false does not detract from ugly optics that Taibbi was attempting to magnify.
- According to CBO, the ARRA so far is not worth 640,000 extra jobs as of September 2009 but rather 1.1 million plus or minus 500,000–and that number will grow.You got your number from the CBO, but Taibbi says he got his number from the White House. There is a website managed by an executive branch agency that proclaims the 640,329 job number used by Taibbi.
So that scores as 5 (or 6, since I’m inclined to count [2] in the Taibbi column) to 3 (3, 4, and arguably 7) against DeLong, with (8) called a draw (I would give it to Taibbi—the guarantee covers $306B in “assets” without cherry-picking, so potential buyers are seeing “support”-level offers for the entire $306B. But there is a specific issue in using the $306B number, and Dr. DeLong correctly notes that the actual backstopping was greater than Taibbi reports. Whether this makes his interpretation here preferable is left as an exercise.)
Hint for the future: if you’re going to claim you’ve got fifty corrections, lead with your ten best.
*From the comments later, Our Own Rusty lays out the details:
Wall Street Journal 11/24/2008…Under the plan, Citigroup and the government have identified a pool of about $306 billion in troubled assets. Citigroup will absorb the first $29 billion in losses in that portfolio. After that, three government agencies — the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp. — will take on any additional losses, though Citigroup could have to share a small portion of additional losses…In addition, the Treasury Department also will inject $20 billion of fresh capital into Citigroup. That comes on top of the $25 billion infusion.
So it didn’t happen during Obama’s presidency, but it did happen post-election, and during the time that the Obama Administration was—by its own declarations—actively holding discussions with the parties.
There are no comments from Tao Jonesing under DeLong’s post at this time. If that is where you found them, they have been deleted.
I only score Brad firmly correct on 3-4; the other points appear to be opinions or statements subject to some further debate. I would like to read the other 40 “corrections” on his mind.
I would be interested in knowing how much of Matt Taibbi’s article is accurate absent the emotional ranting. Yes, I read some statements that match previous news reports from various source. If Brad is going to whine about the article, perhaps he should rewrite it and afford readers the opportunity to compare. First, though, Brad should include a disclaimer regarding who hired him and whom he worked for during the Clinton Administration.
Matt’s article strikes me as being seven or eight months late. Seems that I’ve read a few biting accounts on the same points months ago.
@MG,
Yep. Brad disappeared all of my comments to that thread (and his entire blog) and asked me not to visit his blog again, which I agreed to do.
Here’s my scoring of Brad’s “ten facts,” which you would have read in his comments but for his decision to make it so that you couldn’t. I retain all my typos, even though I could correct them without you knowing it.
FYI–It’s Brad’s blog, so he can shape reality any way he sees fit and grasp it with any imaginary appendage that he wants. I continue to respect him in spite of the fact that he is to Obama what Mankiw was to Dubya. He’s a very smart and earnest guy.
Ugh. I guess that means I have to start respecting Mankiw, too, if only for the fact that he embraces his self-interest with none of the cognitive dissonance that marks what Brad does (versus what he says).
————
Tao Jonesing said in reply to save_the_rustbelt…
“ONE POINT MATT”
Actually, points 2 and 8 are the same, so that’s two points Matt, if we accept that there are ten points. Add that to point #10, and that’s three points Matt using the ten point must system.
Points 3 and 4 are really a single point, as well, but if we accept the ten point system, that’s two points Brad.
Of the remaining five points, all of which are presented as facts, four are opinion unless Brad can substantiate them, and the fifth is really a straw man. For the sake of argument we’ll treat the straw man as opinion and all opinions as ties.
Summing up on the ten point must system, we have 3-2-5 in favor of Taibbi. Summing up using reality, we have 2-1-5 in favor of Taibbi.
Regardless of how you tally the points, Taibbi’s central point remains untouched: a man who ran on “change we can believe in” has embraced the status quo. Like Taibbi and brad, I voted for Obama. Unlike Taibbi, I expected that Obama probably wouldn’t change much of anything because, like Brad, I knew Obama was “post-partisan African-American technocrat.” The cynicism of the Obama campaign in using leftist populist rhetoric while running a post-partisan technocrat campaign almost lost Obama my vote (and I voted for Clinton twice and Gore and Kerry). Sarah Palin is the only reason I ultimately cast my vote for Obama. The idea of Dubya-Lite being one heartbeat away from the presidency was too much for me. McSame should have nominated Colin Powell as his Veep.
Reply December 13, 2009 at 06:52 PM
I suspect my days at DeLong’s site are numbered too. The guy shows signs of perception at times, but he seems hopelessly loyal to his friends, his profession, and even to his tendency within the profession.
People like Brad are getting ready to blame Obama’s failure on progressives. The trial balloons are already out there. About 60% of the Democratic electorate is demoralized to the “might not vote” level, but the centrists don’t care about that. To them it’s just a few stubborn ideologues who ruined everything.
Since 1988 the Democrats have been trashing their bas as a matter of high principle. There’s apparently no way to convince them that that doesn’t work. I’ve pretty much switched from mixed explanations to the pure corruption + ideology explanation. That is to say, there have been no misunderstandings or missteps on their part; they’d rather lose as neoliberals than win as progressives, and freezing the progressives out is their primary goal.
Wow! From these comments its beginning to look like that poll showing 44% wishing GW was back is gaining even amongst the Dem elites.
OT, but why do Dems/Libs when cornered in discusssion try to shut down discussions? Banning, disappearing comments, etc is a common action on the left’s side of the blogosphere. Not so common on the other side or in the middle.
Even I have been banned for the first time this past month. I know, I know how hard it must be to believe, but it did happen.
While I have dissatisfaction and much concern about many of Obama’s policies, the counterfactual is not to favor Bush II…I know of no one who would go back to Cheney’s leadership, period, nor embrace the likes of Boehner.
However, as with any President, some in AB can be quite critical as well of Obama, and expressed concern on economic advisors early on. After all right now there have only been either/or choices by party.
I do not have enough experience with which right wing sites are tolerant. The counter factual could be that the left has fewer dedicated trolls?
“OT, but why do Dems/Libs when cornered in discusssion try to shut down discussions?”
Because they are more polite than Reps/Cons, who resort to shouting and ad hominem. 😉
“I do not have enough experience with which right wing sites are tolerant.”
I think it is an economist thing. Economists seem, in general, to have a lower pain threshold. It would not bother me so much if they stuck to what they knew and then policed the conversation according to some internal standard. But many economists are fond of straying into political economy and then trying to behave as though they can decide what the internal standards are for the conversation. In my opinion Political blogs tend to be more tolerant. Perhaps because they know that even facts can sometimes by political. BD likes to think of his opinions as facts and his forays into political economy as based, as the tag line indicates, in reality. It is quite an achievement to regard ones own speculations as having the same ontological status as reality. Go big or go home I guess.
“Wow! From these comments its beginning to look like that poll showing 44% wishing GW was back is gaining even amongst the Dem elites.” CoRev
Man you do know how to beat a dead horse even when it’s lying with feet pointed towards the sky. That 44% that you think would like to have Bush back is still fewer than the 45.7% that voted for McCain. So give us the explanation of how it has meaning in regards to Obama? Try a new approach to your efforts to obfuscate. The 44% tale is growing hair.
DeLong, purposely I think, completely overlooks the direction of Taibbi’s article, while tediously attempting to refute individual data points.
Delong never once acknowledges how Wall St. (through various intermediaries) has corrupted the US Government, including presidents Clinton and Obama.
Taibbi was assigned to Russia duing the rise of the oligarchy and their corrupting influence on the Russian govenment. I suppose by now he knows it when he sees it. DeLong, probably not so much. The prehensile tail is losing its grip on reality.
DeLong, purposely I think, completely overlooks the direction of Taibbi’s article, while tediously attempting to refute individual data points.
Delong never once acknowledges how Wall St. (through various intermediaries) has corrupted the US Government, including presidents Clinton and Obama.
Taibbi was assigned to Russia duing the rise of the oligarchy and their corrupting influence on the Russian govenment. I suppose by now he knows it when he sees it. DeLong, probably not so much. The prehensile tail is losing its grip on reality.
One point that Matt Taibbi[?] brought up on either Colbert or the Daily Show was that it would have been cheaper to pay off the “toxic” subprime mortgages rather than paying off the AIG insurance policies (which Matt described as the “bets” on the subprime mortgages) — is that true ?
-Would it have been less costly to guarantee/pay the payment stream on the subprime mortgages (i.e., the monthly mortgage payments), which would have cost less than repaying the toxic subprime mortgages ?
–Could the guarantees/payments by the government been structured as a higher-priority secured debt that would get repaid upon sale of the property or, alternatively, recapitalized into the principal of the loan ?
Another point that Matt alluded to on that show (but didn’t discuss) was that the bank “profits” and bonuses based thereon were primarily due to relaxing/removing the mark-to-market requirements, so that the bank profits and executive bonuses are based on “notional” or “estimated” asset values. Is this true ?
Ken: On point 8, you and Brad are missing a few key points. One minor quibble (as you later noted), is that the $306 billion was really $288. The other is more material.
The US Government doesn’t own any more “deeply-discounted options” in Citi — or for that matter most of the major financial firms. Treasury long ago converted its position in Citi to common stock. While there is some art in valuing the government’s large common stock position, it’s not that hard. In fact, making this point in the context of Citi (and not any other money-center bank) is perhaps the weirdest part of your attack. Treasury did exactly the right thing with Citi and passed on its upside to the US taxpayer. Those equity gains in the latter part of this year have been pretty darn good in absolute terms (while perhaps giving up a bit in relative terms).
As for the other banks, profits can be measured both in terms of the warrants (which haven’t been that juicy) and the coupons. Those 5% dividends were not insignificant for a government issuing sub-1% short-term and sub 4% long-term debt.