Still Sleazy After All These Years
David Stockman (yes Reagan’s OMB director David Stockman) denounces the Republican Party for its irresponsible love of tax cuts for the rich. This is wonderful. With such a large target, he manages many hits. He also manages to demonstrate that he is still intellectually dishonest, as is shown after the jump.
Stockman argues that, under Bush Jr the Republicans spent like drunken sailors. This is true. However, it does not justify presenting nominal figures without correcting for inflation and population growth (if not GNP growth). Stockman writes “my statistics are still damn lies” oops I mean “George W. Bush surrendered on domestic spending cuts, too — signing into law $420 billion in non-defense appropriations, a 65 percent gain from the $260 billion he had inherited eight years earlier.” The New York Times disgraces itself. It should have a policy that all comparisons are, at least, in constant dollars. Also the numbers are weirdly low. Stockman clearly refers to non-defence discretionary spending not to all non-defence appropriations. I suppose the “signing into law” might make the difference.
Worse Stockman asserts that the non depository banking system couldn’t have grown (and growh relative to depositary institutions) if it’s deposits weren’t insured (huh ?!?!) and it couldn’t borrow from the Fed’s discount window (as it couldn’t until 2008)
As a result, the combined assets of conventional banks and the so-called shadow banking system (including investment banks and finance companies) grew from a mere $500 billion in 1970 to $30 trillion by September 2008.
But the trillion-dollar conglomerates that inhabit this new financial world are not free enterprises. They are rather wards of the state, extracting billions from the economy with a lot of pointless speculation in stocks, bonds, commodities and derivatives. They could never have survived, much less thrived, if their deposits had not been government-guaranteed and if they hadn’t been able to obtain virtually free money from the Fed’s discount window to cover their bad bets.
This is dishonesty and also idiocy. Stockman must understand that shadow banks don’t take deposits and don’t benefit from deposit insurance. He should also know that they are not allowed to borrow from the discount window, although the Fed can (at least could before the FinReg bill) loan as much as it wanted to anyone.
Stockman notes the growth of the shadow banking system. He must know that it grew relative to depository institutions, then he asserts that the shadow banking system couldn’t grow, because finance can’t grow without deposit insurance and access to the discount window.
Notably, Mr Stockman worked in finance after leaving public service. He does help us understand the problem. The Financial system destoyed itself because it was managed by idiots not because of deposit insurance and the discount window.
Or maybe he knows his claim is false (he presents the proof) and is just lying. I don’t know or care.
Finally he manages, rather impressively, to present propose policy even worse than that advocated by Republicans in Congress
“the modern Republican Party offers the American people an irrelevant platform of recycled Keynesianism when the old approach — balanced budgets, sound money and financial discipline — is needed more than ever.”
He presents no rationale whatsoever for his policy recommendations. Then again, he never has.
Barry Ritholtz does a good synopsis at the big picture: http://www.ritholtz.com/blog/
well, i suppose “recycled Keynesianism” doesn’t have to have much to do with J.M.Keynes whose policies were never actually followed. Seems the politicians got ahold of a soundbite and followed that. And when things went bad, well they blamed Keynes, who was dead and couldn’t defend himself.
Keynes did think the budget oughtta be blanced once in a while. The politicians decided that if deficit spending was good in a depression it must be great in a boom.
I blogged about the Stockman piece as well today, and actually hit on a totally different selection of bull shit items. I suppose you throw a dart at the article and hit a lie.
Anyone interested can see it here.
And then there was his business career…..
April 19 (Reuters) – Former White House Budget Director David Stockman would pay $7.2 million under a settlement with U.S. market regulators, who sued him and others on allegations of accounting fraud at bankrupt auto parts maker Collins & Aikman Corp [CKCRQ.UL], court documents filed Monday said.
Stockman agreed to pay $4.42 million plus prejudgment interest of $2.37 million and a civil penalty of $400,000, according to the final judgment filed in U.S. District Court in New York in a lawsuit brought by the U.S. Securities and Exchange Commission (SEC) in 2007.
Yes, a large difference between greek debt and US debt is that US debt resulted from US G spending in the military and pork command economy which can be cut, but which the parasites won’t let be cut.
I stop every time the US total deficit is related when the main issue is the general fund deficit and the 40% of USG spending for corporate welfare and war which is too small to matter against entitlements.
The rest of the OEDC spend a fraction of what the US does on the federal command and war economy and a bunch more on the masses.
“And when things went bad, well they blamed Keynes, who was dead and couldn’t defend himself. “
Yeah, that kind of rankled me, but Stockman is not the first to posthumously imply that Milton Friedman was a Keynesian when, in fact, Friedman’s tragically flawed monetarism was his retort to Keynes the economist and the frankenstein monster that others applied his name to.
One should be fair to Stockman. He started complaining publically about Republican willingness to cut taxes, but not spending in 1981 with a lengthy article in Atlantic. In 1995, he published a pretty good book on the subject called “The Triumph of Politics”. He may not be much of an economist or much of a businessman (which would be pretty typical for a Republican politician). But he surely has been consistent in his views even when they weren’t terribly popular. Given a choice between Stockman and lying assholes like Reagan, Gingrich, Gramm and almost all the current Republican senators, I’ll take Stockman any day.