Relevant and even prescient commentary on news, politics and the economy.

This idea was lifted from an e-mail exchange with Noni Mausa this morning. The following well seasoned joke reminds me of political communications among the people who write the copy for our leaders:

A carpet layer had just finished installing carpet for a lady. He stepped out for a smoke, only to realize he’d lost his cigarettes. He went back in and in the middle of the room, under the carpet, was a bump. “No sense pulling up the entire floor for one pack of smokes,” he said to himself. He got out his hammer and flattened the hump.

As he was cleaning up, the lady came in. “Here,” she said, handing him his pack of cigarettes. “I found them in the hallway.”

“Now,” she said, “If only I could find my parakeet.”

Part of Noni’s note:

What is worrisome is that we don’t always correct our steering as we should, jumping back and forth between data, predictions, steering, more data and comparisons to our predictions.

But the biggest problem isn’t poor execution of good-faith strategies. It is clever execution of bad-faith strategies.

Comments (4) | |

UC-Berkeley Law School Degrades Itself Even More

No wonder Brad DeLong has had no luck persuading Christopher Edley to get rid of the malfeasant John Yoo. As Bob Somersby observes:

Christopher Edley thinks he’s one of your “betters.” It’s hard to believe, but that’s the exceptionally low-IQ framework this self-proclaimed member of the elite enunciated in Sunday’s piece. According to Edley, rubes like us should want our “betters” in important posts, like the post in which Kagan will serve:

EDLEY: The tension between elitism and populism is embedded in our national DNA because America rejected the model of a monarch ruling by divine right in favor of an iffy experiment in democratic self-governance. So now you are responsible for choosing your leader. Do you want someone like you or someone better than you?

What an astonishing framework! But so it goes when people like Edley spends decades inside institutions like Harvard, convincing themselves that they and their peers are “better” than all the rest of us rubes. [formatting in original]

Kagan, like Yoo, “has excelled in a meritocratic system, one that is selective yet far more open than in generations past.”

Bonus quote from Edley:

The gatekeeper power of such institutions is why it was so important to desegregate them (using affirmative action, among other tools) and why virtually all leaders of great universities talk about diversity and access.

Yep. Elena Kagan is All About Diversity.

At least Edley is consistent:

Dean Edley rolls embarrassingly off the tracks.

Read the whole thing.

Full disclosure: My wife’s cousin is working at Berkeley now. Fortunately, she’s not at the Law School, or I would worry for her reputation.

Tags: , , , , Comments (13) | |

I’ll Believe in the Tea Baggers if Tamyra Gets the Signatures

Tamyra d’Ippolito has suddenly become a Very Important Person.

She needs signatures primarily in Indian’s Eighth District (currently represented by Brad Ellsworth, who would be the Party’s pick to replace Evan Bayh), Evansville, and Terre Haute. She has a background to make a Tea Partier proud:

I was born in Worthington, Indiana and raised in Linton. Currently, I live in Bloomington. I was raised an only child with a single, hard-working mother who “retired” from General Electric as a factory worker.

I attended college at Indiana State University in Terre Haute, receiving my degrees in Graphic Design and Photography. The United States government financed my education with federal grants.

In 1981, jobs were limited in Indiana so I moved to Houston, Texas and worked for over 3 years at Foley’s, an advertising agency, as a Production Artist. At 25, I moved to New York City where I lived for the next 20 years. I worked on Wall Street for Salomon Smith Barney and later for Lehman Brothers. While in NYC I picked up another degree at the New York Film Academy in Filmmaking….

When I returned to Indiana, I was chosen by the Linton Rotary to go with a team to the country of Brazil. We were Ambassadors of the USA and traveled to 6 different cities. In Indiana, I became involved with World Learning. I worked as a Regional Director with World Learning in Indiana, Boston, and New York City

However, since moving to Indiana I have had no health insurance. I was diagnosed with colon cancer five years ago giving me a pre-existing condition. Additionally, I own a small business. Those two obstacles make insurance very expensive and unattainable. As a cancer survivor and small business owner, health reform is an issue that directly affects me like many Indiana residents.

I own and operate the Ragazzi Arte Cafe in Bloomington. I also founded the Poor Club, www.thepoorclub.org, after meeting many people who are in need. Our mission is to bring awareness and education to the fact that poverty is prevalent in Indiana and I want to make a change for the better.

I am a past board member of Women Inspire, www.womeninspire.org. I am also a member of PSI XOTA, a philanthropic sorority. Some of my accomplishments are Leadership Bloomington Graduate of 1995 and City of Bloomington Citizens’ Academy Graduate in 2008. I also serve on the Volunteers in Medicine Advisory Board.

Right now, the Democratic Party (having been royally screwed by its current Senator) is hoping that Tammy doesn’t get enough signatures to qualify for the ballot, which would enable them to pick someone without bothering with a primary.

But here’s a small business owner, someone who earned things and is quite aware of “from where it is that I come from.”

In short, an ideal candidate from outside of the Establishment—but one who comes naturally without having to build a third party. And someone who—as a small-business owner—knows very well what works and what doesn’t.

If the Tea Party people endorse her, then I’ll take them seriously. If they avoid her because she would have to run with a (D) next to her name, then that will tell us everything we need to know about whether they are Astroturf.

Tags: , Comments (23) | |

I Take No Joy in Raping and Pillaging

Chris Christie moves New Jersey into the 17th century:

Christie is cutting $475 million in aid to school districts, $62 million in aid to colleges and $12 million to hospital charity care. He is pulling all funding from the department of Public Advocate….He is cutting state subsidies for NJ Transit, a move Christie said could lead to higher fares or reduced services but would force the agency to become “more efficient and effective.”…

“I take no joy in having to make these decisions. I know these judgments will affect fellow New Jerseyans and will hurt,” Christie said. “This is not a happy moment. However, what choices do we have left?”…

Senate budget chairman Paul Sarlo (D-Bergen) said cutting funding for schools was not the same as cutting state spending, and would simply raise property taxes.

Chris Christie reprising the plan Christie Whitman used to “balance” the budget: the one created by Cokehead that has led to property taxes rising by 50% in the first seven years of this decade alone.

Tags: , , Comments (18) | |

Can Nobody Play this Game Correctly?

CBO:

At 9.2 percent of gross domestic product (GDP), that deficit would be slightly smaller than the shortfall of 9.9 percent of GDP ($1.4 trillion) posted in 2009. [emphasis mine]

A 7.1% decline in real GDP terms isn’t just “slightly smaller”; it’s a real improvement that is greater than any (mythical or not) “spending freeze” would produce.

Tags: , , Comments (19) | |

The One Sentence Everyone Needs to Read and Understand

Bruce Bartlett:

The Fed has talked openly about new procedures to soak up the bank reserves it has created even as those reserves remain largely idle and unlent.

You don’t get inflation if there is no money multiplier in play. So long as the banks are just holding the cash, worries about monetary policy leading to inflation are at best a shibboleth.

(via Brad DeLong)

Tags: , , Comments (10) | |

Bernanke Part 2 of 2: Leaders Lead, or Just Say No

The world would be a much better place if people had listened to Tom last August:

Now some elite opinion favors Ben Bernanke’s reappointment, but politicians are irritated over Fed stonewalling of bailout oversight and others (e.g. Dean Baker) point out that Ben Bernanke who put the Fed throttles to the firewall to save the world is also the Ben Bernanke who carried over Greenspan policy until it was too late. [links in original]

Not a strong enough source for you? How about the Internet’s Chief Bernanke Apologist? Brad DeLong last August:

I am surprised that he is being reappointed. I would have thought that the combination of people angry because he has given too much public money to the banks and people angry because he didn’t stop the recession would together make him damaged and that Obama would want to bring in a fresh face–never mind that Bernanke had no way to try to lessen the recession save by policy steps that inevitably involve giving money to the banks.

Tom also dealt with that:

To which the obvious response is, duh, who says it has to be one or the other? A reality-based critique of the bailouts allows them to be both effective at saving the world and unconscionable screw-jobs that kept an array of bad actors from paying for their greed and incompetence. (The latter clearly feeds a lot of the underlying sentiment of the tea partiers, even if it’s ultimately the greedy and incompetent who are marshalling it.) However, considering Team Obama’s political tone-deafness, it’ll be a pleasant but major surprise if they let Bernanke go back to Princeton for some R&R.

And DeLong himself (today) moves the goalpostsnotes where the problem is centered:

[Bernanke] is no longer the academic intellectual who advocates inflation targetting. He is, instead, the voice for the consensus of the Federal Open Market Committee–and a member of that committee who can, by his own internal arguments, move that consensus at the margin. So he is going to reflect that consensus….[A] Fed chair who doesn’t reflect the consensus in public has less power to move the consensus in private. From my perspective, I don’t think that there’s anything wrong with Ben Bernanke’s (private, intellectual, academic) analysis of the current situation. What is wrong is that the FOMC consensus is wrong—and Bernanke’s public statements reflect that wrong consensus. So here I tend to blame Obama more than I blame Bernanke for the recent character of Bernanke’s public statements–for the fact that Fed policy and rhetoric right now is not more Gagnonesque, because Obama could have done things over the past year to move the FOMC consensus that he has not done. [emphases mine]

This is a true statement—but it is no less true now than it was in August, and Ben Bernanke has been the ostensible leader of the FRB since then—and, indeed, since 2.5 years before then, as the crisis was unfolding.

In the past four years, Bernanke has “led” the Federal Reserve. And even those who are not sympathetic to Steve Keen’s interpretation of Bernanke’s flaws (h/t Yves and Naked Capitalism, who printed it themselves as well) would have to agree that the sounds coming from the Fishers* and Hoenigs, not to mention Bernanke himself, are more reminiscent of Morgenthau than Volcker.

Which should have been the death knell for his renomination. To turn Brad DeLong’s statement on its side: Ben Bernanke has been unable to lead and change the consensus of the Federal Reserve Board, even marginally, to be more in line with what Ben Bernanke, the skilled economist, knows would be a better policy.

Leaders lead. Ben Bernanke hasn’t and doesn’t.* For that alone, he should be replaced, and Janet Yellen nominated to replace him.

*This one was reprinted, without several of the cronyism acknowledgements, in the WSJ comics section today. I prefer the original.

**The similarity to the Canadian Liberal Party’s selection of Celine Stephane Dion as their leader should not be overlooked. That they had the good sense to replace him after one term is a sign of sanity the Obama Administration would have been wise to consider. (That they compounded the mistake by replacing him with a pro-torture American conservative is a mistake from which one would expect the Obama Administration could and presumably will learn.)

Tags: , , , , Comments (18) | |

Bernanke Interlude

Via David Wessel’s Twitter feed, the WSJ publishes a letter:

Ben Bernanke is a good person, a fine academic and a well-respected professor. But those traits have no bearing on whether he should be reconfirmed as Federal Reserve chairman….

Applying accountability principles, there’s no way Chairman Bernanke should be reconfirmed by the Senate, let alone reappointed by the Obama administration….He’s been at the helm from the very beginning of this Great Recession. That alone warrants a “no” vote on reconfirmation.

At this point, I feel obligated to note that if you’re going to declare this The Great Recession—i.e., if you are assuming the chance of having the third Depression is over*—then Bernanke deserves credit, not blame. (Even those of us who do not assume we’re out of the woods admit we aren’t quite sunk yet, though 17.3% unemployment is problematic at best.)

In addition, the Fed’s behavior over the past 15 months has put America on a very dangerous path. The Fed has increased the monetary base (high-powered or wholesale money) by the largest amount ever, from colonial times to the present, times 10. Without an exit strategy, inflation is a virtual certainty over the coming decade, while an effective exit strategy virtually assures a further weakening of the U.S. economy. [emphasis mine]

This is Gospel for the WSJ editorial page, and a logical confusion of the first order. Any “exit strategy” assumes that the conflict is primarily over, so any exit strategy would, by definition, not weaken—let alone “further weaken,” which suggests that the writer’s faith that “the Great Recession” is accurate is wavering—the economy. (We can, and will, discuss where All That Money Has Gone; suffice to say, it’s not exactly producing a Multiplier Effect.)

But the writer saves the best for last.

And lastly, on a more personal note, [Bernanke] doesn’t have the gravitas of a Paul Volcker, Alan Greenspan or William McChesney Martin. In this day and age of crisis management, gravitas is essential. Almost anyone would be better than Mr. Bernanke.

Well, at least Arthur Burns is conspicuously excluded. It’s nice to know that Arthur Laffer believes in gravitas, while his best-known disciple believes “deficits don’t matter.”

*Yes, I could 1873-77 as a Depression in the United States. Looking at the evidence, it would be difficult not to.

Tags: , , , , Comments (6) | |

Bernanke Apologist Watch

by Tom Bozzo

Shorter [1] Jim Hamilton (via [2] Brad DeLong):

Ben Bernanke’s record leaves nine links’ worth of things to be desired, but considering the zombie ex-Fed Chair alternatives (plus Brett Fav-Paul Volcker), he deserves to be confirmed for a second term.

I am almost not kidding. Here’s what Hamilton actually asks Bernanke’s critics:

I wonder which of [sic] previous Fed Chairs critics think would be better for the job than Bernanke. Surely you don’t think we’d have been better off bringing Alan Greenspan back? [touché] G. William Miller [deceased] fumbled badly with much simpler problems. Arthur Burns [also deceased] is a case study in how not to conduct monetary policy.

Would DeLong accept this sort of argument from a Berkeley undergrad seeking a decent grade? The question of far greater interest is why critics should have preferred Bernanke to prospective candidates who might have the combination of background and metabolic function to carry out the job — say, Janet Yellen or Alan Blinder — and might also do better than Bernanke in a pop quiz on the Fed’s dual mission.

Nor does Hamilton impress in reviewing the (admittedly odd) politics of Bernanke’s reappointment:

I shake my head when I look at the list of senators who say they’ll vote “no.” How could there possibly be an alternative whom Barbara Boxer (D-CA) and Jim DeMint (R-SC) would both prefer to Bernanke?

Obviously an alternative candidate need not be preferred by both Boxer and DeMint. An SDJ commenter rightly notes that DeMint’s opposition is in the nature of a political stunt, that is rejecting the rightmost potential nominee for Fed Chair to try to help along the development of the Obama political suicide machine. (They may not need the help.) As little as they act like it, the Democrats hold a sizeable majority of Senate seats, and a reasonable choice of a Democratic monetary policy technocrat ought to have little trouble lining up at least 59 votes. As for the sixtieth, I’d have liked to see the Republican Senate caucus hold ranks in preventing a Yellen nomination from receiving an up-or-down vote.

[1] ‘Shorter’ concept created by Daniel Davies and perfected by Elton Beard. We may not be aware of all Internet traditions™ but try to keep abreast of the popular ones.

[2] Econbrowser’s feed has a high-attention place in my feed reader, and it should be in yours; this piece, though, gets emphasis largely via DeLong’s apologist-in-chief blogging.

Tags: , Comments (3) | |

Not the Cheeriest Way to Start the Day: Bernanke Part 1 of 2

It’s bad enough to violate Brad DeLong’s first rule (which, I hasten to rationalize, was posted when DeLong himself was disagreeing).

It’s worse when the opposition to Krugman is coming from…the WSJ editorial page. (Or, as Barry Ritholtz correctly describes it, “the comics section.” Just less funny, and more likely to make the two-drink minimum unnecessary.)

This seems to be a direct violation of reality.

But compare the Krugman “endorsement”:

But — and here comes my defense of a Bernanke reappointment — any good alternative for the position would face a bruising fight in the Senate. And choosing a bad alternative would have truly dire consequences for the economy.

Furthermore, policy decisions at the Fed are made by committee vote. And while Mr. Bernanke seems insufficiently concerned about unemployment and too concerned about inflation, many of his colleagues are worse. Replacing him with someone less established, with less ability to sway the internal discussion, could end up strengthening the hands of the inflation hawks and doing even more damage to job creation.

with the WSJ:

No matter how it plays out, Ben Bernanke’s bruising confirmation battle has damaged the U.S. Federal Reserve’s clout and perceived independence.

Mr. Bernanke is more than the Fed’s chief decision maker. Fed officials see him as their brand, a smart, honest and stoic voice best able to defend decisions of the past two years to a skeptical Congress and public. Even if the Senate backs Mr. Bernanke this week, he won’t speak with the same authority, and the Fed will have a harder time casting itself as above partisan politics.

Fortunately for the Fed, the hard call about when to raise interest rates doesn’t need to be made now. Fortunately for Mr. Bernanke, his support inside the Obama administration, and even more so inside the Fed, is solid. But the longer the battle drags on, the more it could interfere with the Fed’s ability to communicate convincingly. And no matter what, the Fed will have less sway as Congress debates whether to rein in its powers.

Oh, wait. That’s a news article. The editorial page throws a few random facts:

Mr. Bernanke continues to deny any Fed monetary culpability for creating the mania. Shortly after the New Year, even with his nomination pending, Mr. Bernanke issued an apologia that was striking for its willingness to play to the Congressional theory of the meltdown by blaming bankers and lax regulators. [note: lax regulators includes the Fed itself.]

with semi-credible analysis:

Others argue that any alternative to Mr. Bernanke could be worse, and that is certainly a risk. Mr. Geithner and White House economic adviser Larry Summers couldn’t be confirmed, even in a Democratic Senate. In the short term if Mr. Bernanke is defeated, Vice Chairman Donald Kohn might run the Open Market Committee, and he shares Mr. Bernanke’s contempt for Fed critics. President Obama could also select San Francisco Fed President Janet Yellen, but she thinks the Fed should be even easier. [Oh, the evil of Ms. Yellen, who immediately replaces Laura D’Andrea Tyson as my pick to run the Fed.]

with sheer insanity:

We agree that the Fed needed to ease money precipitously when the financial markets suffered their heart attack in late 2008, and we praised Mr. Bernanke for that at the time and since. But the issue for the next four years is whether the Fed can extricate itself from its historic interventions before it creates a new round of boom and bust. We already see signs that it has waited too long to move.

Yes, because—along with more obvious indicators—Durable Goods orders have been down two months in a row. Anyone betting January will be up? I fear they have used “real” tea leaves to make their tea.

So the WSJ came to the right conclusion for all the wrong reasons, while Krugman comes to the wrong conclusion for the right reasons.

How did we get here? in the next post.

Tags: , , , Comments (23) | |