Robert Samuelson is a top economist who gets a wide audience, mostly due to his Newsweek column. I find him to be the most consistently politically-neutral economist around, think of him as the Dwyane Wade of economists; talented, hard-working and responsible. You get the sense that he goes wherever the data leads him. Here is an example of that fairness in his most recent column:
What suppressed inflation was the brutal 1981-82 recession undertaken by Federal Reserve Chairman Paul Volcker and supported by the newly elected Ronald Reagan. … Volcker and Reagan embarked on a deliberate effort to quell inflationary psychology; the question was whether the recession could be maintained long enough to do the job.
That may seem like an uncontroversial formulation, but to economist’s with a leftist agenda–which is most of them in academia–giving Reagan any credit is harder than getting a New York Yankees fan to show class.
Speaking of unlovable losers, that brings us to the New York Times Paul Krugman. Think of Krugman as the Kobe Bryant of economists; mad skills and does not play well with others, i.e. unreliable. He is so talented, that he will just make the data fit into his views. An example from his latest column:
Old-fashioned voodoo economics — the belief in tax-cut magic — has been banished from civilized discourse. The supply-side cult has shrunk to the point that it contains only cranks, charlatans, and Republicans.
But recent news reports suggest that many influential people, including Federal Reserve officials, bank regulators, and, possibly, members of the incoming Obama administration, have become devotees of a new kind of voodoo: the belief that by performing elaborate financial rituals we can keep dead banks walking.
Can you see Kobe quitting in the 2nd half of game 7 in the 2006 playoff series against Phoenix in that analysis? Krugman relies on a 1980’s code phrase, voodoo economics, to get his readers in the proper frame of mind–an attack. But who is he attacking you ask? “Many influential people, including Federal Reserve officials, bank regulators, and, possibly, members of the incoming Obama administration,” Paulie oh so gently explicates. Geez! That sound you just heard must have been his testicles falling off.
Later on he demonstrates that his fecklessness, like his former body parts, travels in pairs. He writes, “what I suspect is that policy makers — possibly without realizing it — are gearing up to attempt a bait-and-switch.” That additional sound you just heard were the aforementioned body parts being placed in a freezer ziplock bag.
Here’s my point. Please follow through. Either explain without an agenda or attack with one, both are fine. But don’t come in like a lion [voodoo economics] and go out like a Kobe [possibly, without realizing it]. People who mix metaphors aside, those people are the worst [man]!
Both columns referenced and Bill Simmons’ Kobe mail bag are copied in full at end of post – click on ‘Read More!
—————————————————————————-
The Great Foreboding
January 19, 2009
By Robert Samuelson
WASHINGTON — For Barack Obama, the Great Foreboding is both an enormous burden and a splendid opportunity. We are now suffering from more than depressed retail sales, stock prices and production. Americans have drifted, or been dragged, into a state of collective despair and bewilderment. They don’t know what lies ahead and wonder whether anyone does. Americans have lost their sense of mastery over the future, and if Obama can restore that, he will have gone a long way toward reviving the economy and ensuring a successful presidency.
It is not the present economy that most disturbs people. That’s bad, but not unprecedented. Despite recent increases, the unemployment rate of 7.2 percent in December remains below the average peak unemployment of 7.6 percent in the previous 10 post-World War II recessions. What unsettles and scares people is the vague notion that we’re headed into something new, menacing and enduring. Unemployment, predicted to reach 9 percent or more, will remain high. Expansion will resume grudgingly, if at all. Income gains will be slight or nonexistent.
Precisely this specter explains why the word “depression” is now so routinely deployed, even though we’re a long way from the bread lines of the 1930s. But the Great Depression also signifies a period when we lost control. For all the New Deal programs, the Depression lasted a decade and ended only with World War II. Even in 1940, unemployment averaged almost 15 percent. It’s the worry that government won’t triumph over today’s economy that justifies, for many people, the bleak analogies.
The pessimism stretches across class and political lines. A December survey by the Pew Research Center asked whether economic conditions would be worse in a year. Among those with incomes under $30,000, 51 percent thought so; for those with incomes exceeding $100,000, the response was almost identical, 53 percent. Another question was whether unemployment would rise in the next year; 57 percent of Democrats, 64 percent of independents and 66 percent of Republicans said yes.
This democratic (with a small “d”) despondency has many causes. As more Americans invested in stocks, more became exposed to the market’s wild psychological and financial swings. The plunge in home values has made many workers with secure jobs poorer. And, of course, layoffs themselves have become more democratic. Once, the young and blue-collar workers bore the brunt of firings. Now, managers, investment bankers, journalists, scientists — almost anyone — can be canned. Age confers little security. In December, almost a third of the jobless were 45 and over.
What offends middle-class Americans, most of us, is economic capriciousness. People crave order, predictability and security. They want to believe that personal virtues of studying, working hard and planning will be rewarded in the marketplace. Even in good times, these ambitions are often frustrated. But in today’s economy, the disconnect has widened. Setbacks and losses seem increasingly divorced from personal effort. Our whole values system seems besieged.
Since World War II, Americans have only once before experienced a similar economic trauma: the double-digit inflation of the 1970s (13 percent in 1979). Work and thrift were undermined, because inflation threatened the worth of wages, salaries and savings accounts. Then as now, people were terrified, because inflation seemed uncontrollable. Starting with Lyndon Johnson, four presidents had failed. No one knew how high it might go. Then as now, we seemed unable to chart our destiny.
What suppressed inflation was the brutal 1981-82 recession undertaken by Federal Reserve Chairman Paul Volcker and supported by the newly elected Ronald Reagan. Unemployment reached a peak of 10.8 percent, but gluts of jobless workers and idle factories broke the wage-price spiral and ushered in two decades of strong economic growth. Reagan won a landslide victory in 1984; his campaign featured a signature TV spot boasting that “It’s morning again in America.”
Up to a point, there are parallels for Obama. Today’s misery is a political opportunity. Reagan’s popularity soared on the belief that he had re-established economic order. The country had reasserted control of its future. These gains offset the recession’s severity and its hangover. In 1984, unemployment still averaged 7.5 percent.
If Obama can overcome the sense of helplessness, he will surely reap much political credit. There need not be a boom — the economy must achieve just enough sustained growth to convince most people that it’s manageable and that we have not descended into a new dark age.
Here, the parallels break down. Volcker and Reagan embarked on a deliberate effort to quell inflationary psychology; the question was whether the recession could be maintained long enough to do the job. Obama faces a global recession brought on by murky forces barely understood. The effort to counteract them and to prevent further economic damage is a grand and confused experiment. If it fails, Obama’s burden will be back-breaking.
Copyright 2009, Washington Post Writers Group
Page Printed from: http://www.realclearpolitics.com/articles/2009/01/the_great_foreboding.html at January 19, 2009 – 05:57:56 AM PST
——————————————————————————–
Wall Street Voodoo
January 19, 2009
Op-Ed Columnist
By PAUL KRUGMAN
Old-fashioned voodoo economics — the belief in tax-cut magic — has been banished from civilized discourse. The supply-side cult has shrunk to the point that it contains only cranks, charlatans, and Republicans.
But recent news reports suggest that many influential people, including Federal Reserve officials, bank regulators, and, possibly, members of the incoming Obama administration, have become devotees of a new kind of voodoo: the belief that by performing elaborate financial rituals we can keep dead banks walking.
To explain the issue, let me describe the position of a hypothetical bank that I’ll call Gothamgroup, or Gotham for short.
On paper, Gotham has $2 trillion in assets and $1.9 trillion in liabilities, so that it has a net worth of $100 billion. But a substantial fraction of its assets — say, $400 billion worth — are mortgage-backed securities and other toxic waste. If the bank tried to sell these assets, it would get no more than $200 billion.
So Gotham is a zombie bank: it’s still operating, but the reality is that it has already gone bust. Its stock isn’t totally worthless — it still has a market capitalization of $20 billion — but that value is entirely based on the hope that shareholders will be rescued by a government bailout.
Why would the government bail Gotham out? Because it plays a central role in the financial system. When Lehman was allowed to fail, financial markets froze, and for a few weeks the world economy teetered on the edge of collapse. Since we don’t want a repeat performance, Gotham has to be kept functioning. But how can that be done?
Well, the government could simply give Gotham a couple of hundred billion dollars, enough to make it solvent again. But this would, of course, be a huge gift to Gotham’s current shareholders — and it would also encourage excessive risk-taking in the future. Still, the possibility of such a gift is what’s now supporting Gotham’s stock price.
A better approach would be to do what the government did with zombie savings and loans at the end of the 1980s: it seized the defunct banks, cleaning out the shareholders. Then it transferred their bad assets to a special institution, the Resolution Trust Corporation; paid off enough of the banks’ debts to make them solvent; and sold the fixed-up banks to new owners.
The current buzz suggests, however, that policy makers aren’t willing to take either of these approaches. Instead, they’re reportedly gravitating toward a compromise approach: moving toxic waste from private banks’ balance sheets to a publicly owned “bad bank” or “aggregator bank” that would resemble the Resolution Trust Corporation, but without seizing the banks first.
Sheila Bair, the chairwoman of the Federal Deposit Insurance Corporation, recently tried to describe how this would work: “The aggregator bank would buy the assets at fair value.” But what does “fair value” mean?
In my example, Gothamgroup is insolvent because the alleged $400 billion of toxic waste on its books is actually worth only $200 billion. The only way a government purchase of that toxic waste can make Gotham solvent again is if the government pays much more than private buyers are willing to offer.
Now, maybe private buyers aren’t willing to pay what toxic waste is really worth: “We don’t have really any rational pricing right now for some of these asset categories,” Ms. Bair says. But should the government be in the business of declaring that it knows better than the market what assets are worth? And is it really likely that paying “fair value,” whatever that means, would be enough to make Gotham solvent again?
What I suspect is that policy makers — possibly without realizing it — are gearing up to attempt a bait-and-switch: a policy that looks like the cleanup of the savings and loans, but in practice amounts to making huge gifts to bank shareholders at taxpayer expense, disguised as “fair value” purchases of toxic assets.
Why go through these contortions? The answer seems to be that Washington remains deathly afraid of the N-word — nationalization. The truth is that Gothamgroup and its sister institutions are already wards of the state, utterly dependent on taxpayer support; but nobody wants to recognize that fact and implement the obvious solution: an explicit, though temporary, government takeover. Hence the popularity of the new voodoo, which claims, as I said, that elaborate financial rituals can reanimate dead banks.
Unfortunately, the price of this retreat into superstition may be high. I hope I’m wrong, but I suspect that taxpayers are about to get another raw deal — and that we’re about to get another financial rescue plan that fails to do the job.
—————————————————————————————
Kobe letters: Second thoughts on second half
Monday, May 8, 2006
Bill Simmons – ESPN.com
Editor’s Note: Here’s a selection of letters to Page 2’s Bill Simmons about Kobe Bryant’s performance in Game 7 of the first-round series loss to the Suns.
Looks like the voters got it right … at least the part about not giving the award to Kobe. There is no way that the league MVP would score just one point in the second half of a Game 7 in a playoff series. There’s just no way that would happen. I hope this puts to rest all the Kobe/Jordan comparisons that are still floating around out there. Kobe is not on his level. He never will be. Quite frankly, it’s not even close.
— Geoff, Agawam, Mass.
Kobe Bryant
It’s the third quarter — and Kobe’s not looking too good.
Game 7 of the Laker-Suns series was like in grade school when you challenge a big kid to race only after it starts he just jogs halfway and lets you win. You’re right, the MJ comparisons stop now.
— Rick M., New York
Let me first make you understand that I am a LIFELONG Lakers fan — I was born, I grew up, and now live less than one mile from the Fabulous Forum — and I have listened to the whole “Kobe has no supporting cast”/”Kobe is transforming”/”Kobe is becoming MJ” thing. And now I will remind you of the exact evidence as to why Kobe is not the next MJ. Is he more talented than MJ at his age? YES. Is he the next basketball savior? NO.
Because at the end of the day let’s remember: 1) The reason Kobe has no supporting cast is because he wanted it that way AND 2) Kobe only cares about Kobe, from the day he left Eddie Jones wide open for 3 in the corner while he took a 40-foot airball against Utah in his first playoff series (and eventually got him traded away too), to the time in Sacto when the “hacks” were saying he was taking too many shots (so he purposely didn’t shoot the whole game), to tonight when he decided that he would get ultimate revenge against Phil’s whole “team concept” and the “hacks” saying he shot too much in Game 6 by “just running the offense” in a deciding Game 7.
At the end of the day Kobe has never felt the “hunger” for basketball like MJ (or Magic or Bird) did, because through it all he was already coddled and never paid his dues. At the end of the day Kobe believes his own hype, and Kobe goes out of his way to TRY to show that basketball “needs” him more than he “needs” it — and it is that basic difference that will separate the two — because we are at 10 years and counting and he hasn’t changed yet.
— Dorian, Inglewood, Calif.
Did the other Laker starters play above themselves for four games or was Kobe gracious in sharing the ball, thus allowing the team to reap the rewards? I think it’s the former. I don’t want to play the role of “I-told-you-so” revisionist historian (but I will anyway), but when everyone was praising Kobe for sharing the ball, I was telling everyone that if the other Lakers had played like this all year long, he’d have given them they keys to the car long before now. It’s like when Robert Downey Jr. checks out of rehab and seems to have his act together, but you’re never quite sure if he’s really clean and you aren’t the least bit suprised when he relapses. It’s almost like we got a glimpse into an alternate universe where Kobe had decent teammates.
And I can’t wait to hear the criticisms about Kobe taking too few shots (presumably these people would prefer Kobe to score 40, so that the Lakers would only have lost by 20, paving the way for Kobe getting blamed for not getting everyone involved). And I really can’t wait for people to wisely begin observing that “at least Shaq is still playing” as if Chicago and Phoenix are anywhere remotely on the same level.
— DeAngelo L., Santa Monica, Calif.
An MVP does NOT throw in the towel during the second half of a Game 7. I don’t know if Kobe was trying to make some kind of statement or what, but that’s not what an MVP does. Period.
— Alex, Provo, Utah
After Kobe’s Game 7 performance, not only should MJ comparisons be forbidden, he should have to give up his self-proclaimed status as Black Mamba. Maybe he could call himself the Mottled Garter Snake or something like that. No way MJ disappears like that in a Game 7. Ever.
— Chuck J., Centreville, Va.
Someone please explain what happened to Kobe in the second half. I consider myself a Laker fan of the highest order. Diehard. I cheered like crazy for Magic Johnson, James Worthy, Shaq, Kobe, Fish, and even Cedric Ceballos and Chucky Atkins. I’ve been with them all the way. And yet I don’t get the second half. Defending Kobe’s integrity for the last 10 years suddenly feels futile and pointless.
— Gov D., Metro Manila, Philippines
Kobe would be great on “The Apprentice.” When it became clear that the Lakers had lost Game 7, Kobe went into his “boardroom defense” strategy. At the time, he was shooting over 50 percent and had 23 first-half points. Why should he bother to shoot in the second half? How could he be fired by passing the ball and getting his teammates involved? How easy it is to blame it on the Project Manager’s (Phil’s) game plan? Congrats on your boardroom victory, Kobe.
— Rick S., San Diego
So apparently Kobe was trying to get teammates into a rhythm during the second half. Funny, I must have missed his drives and dishes, and his post-ups that drew double-teams and created open shots. I did, however, see Kobe harmlessly swing the ball around the 3-point line quite a bit. Has any other “superstar” been so passive with the season on the line? You can debate whether Kobe should be MVP but there’s no debate whether he makes his teammates better. Either he doesn’t know how or Saturday he didn’t want to try. And if he didn’t want to try and he didn’t want to shoot, then he quit.
— Jonathan, Venice, Calif.
How much is Kobe trying to stick it to Phil Jackson and the media right now? Criticized for “shooting” too much in all of the Lakers’ losses, he’s willing to let the Lakers lose this series to prove a point that this is his team (and his success that got him to this point, not Phil’s great coaching). The Mamba is tricky like that — just when you think you have him figured out . . .
— Jonathan, Morgantown, W. Va.
Watching Kobe in the second half — wow. What blew me away was that, time after time, he would catch the ball, get doubled, give it up, and then DO NOTHING, literally just stand there. Your team is down 20-plus late in the third quarter in Game 7, no one on the floor except you should be allowed in the same ZIP code as a basketball player, and you’re not going to try to take over the game? You’re not going to start, I don’t know, making some cuts or something after you’re forced to give the ball up, in an attempt to get it back?
I doubt they would have won either way, but Kobe’s performance in the second half was absolutely baffling. Which is why I’m convinced he’s blown tens of millions on ice for his wife, is secretly in debt to the Stucci brothers, and was therefore forced to throw the game. It makes more sense than anything else I can come up with.
There’s some solace in this, however: I’d been forced to acknowledge Kobe’s brilliance recently, simply because I’d been watching him so much. This was an uncomfortable situation for me to be in, because a) I’m a Boston fan and b) Kobe’s a jerk. Now I have reason to dislike him again. So even though I was robbed of an entertaining Game 7, it wasn’t a total wash.
— Jesse S., Boston
No more MJ comparisons. It’s over. Three shots in the second half? He mailed it in with half a game to play! Kobe as MVP? What a joke [because] (a) MVP’s shouldn’t lose Game 7s; (b) if they’re going to, I want them to lose by shooting 45 shots, making 10, and breaking their face because they dove for too many loose balls. What a disgrace. I don’t even like basketball, and guys like Kobe are why. There’s too little heart in the NBA and way too much posturing.
— Mike, NYC
How about Kobe tanking the entire second half of Game 7? The great thing about egomaniacal prima donnas is that you can always count on them to showcase their true colors sooner or later with some grand spectacle of unprofessional petulance (see Carter, Vince). Snaps to Mamba on setting back the resuscitation of his image another 4-6 months. Oh and sweet mid-career number change. Awful.
— Matt, Washington, D.C.
How come no one is talking about Kobe completely stabbing his teammates in the back in the second half of Game 7? There’s a difference between (a) not taking 40 shots and (b) completely taking yourself out of the offense by standing at half court the entire half. Kobe was clearly trying to distance himself from the loss and let the blame fall squarely on his teammates. And then in the postgame interview Kobe made it sound like the Lakers never had chance — like they were the Generals and the Suns were the Globetrotters. Are you really telling me that Kobe would have sounded like that if Thomas’s 3 had been a half-inch off at the end of Game 6? The man is incapable of admitting that he got beat. It’s like when you’re playing against a cocky [player] in a pickup game, who realizes he’s going to lose, and stops trying at all just to let everyone know that they didn’t beat him when he was trying. That crap works at the Y, but it doesn’t work in Game 7 of an NBA series.
— Scott, Washington, D.C.
Michael Jordan
It didn’t end well in Washington, but a history of clutch performances earned Michael Jordan a victory lap or two.
Second half of Game 7 points out all that needs to be said about your MVP pick (not that Nash had a great game). But Kobe giving up after an amazing first half to keep them even in the picture was unbelievable. I never liked him, but I respected his talent, his skills, and his competitiveness — now I have no respect at all. He gave up, didn’t want to be blamed for the loss and, to top it off, pulled an Isiah and walked off the court without shaking hands. He is simply a classless individual who will never win another title. The media must now observe a permanent moratorium on all comparisons to MJ (which were insane from the beginning).
— Chris, Richmond, Va.
I’m sure you’re getting tons of these emails, but no matter what Kobe does the rest of his career, the Kobe/Jordan comparison is officially over. Jordan would NEVER let any of his teams lose by 30 in a Game 7. You could put Jordan with me and three other of my slow, overweight friends and we still wouldn’t lose by 30.
— Avi, Brooklyn, N.Y.
Maybe you should come up with a “Failed Vengeance Scale” to cover events such as Kobe seeming like he’d get revenge, then going splat. His teammates didn’t help, but do you really think Michael Jordan would have launched only three shots in the seconnd half?
— Fritz, New Orleans, La.
Kobe’s second-half performance in Game 7 against the Suns had to rank among the weirdest I’ve ever seen. Was the Phoenix defense that good? Doubtful. Was he mailing it in? Was he trying to prove a point (the weakness of his supporting cast, his importance to the team)? Zero field goals in the second half!? One measly technical free throw!? He didn’t attack the basket once! Yes, Phoenix had a 15-point lead at the half. Daunting? Yes. Insurmountable? No way. Simply inexplicable. No more MJ comparisons, please. No way MJ mails in a Game 7. EVER. And no more MVP whining, either. I have no desire to get acquainted with Kobe’s demons, but there’s something strange going on in there. I watched in disbelief (and with glee).
— Adam Caress, Manchester, Mass.
And don’t know what is more satisfying: Being a Suns fan and having to endure a week where every sportswriter in the country wrote about the impending Lakers/Clips duel . . . but then, hold on, wait . . . I got your Hallway Series right . . . HERE! Or watching Mamba flat-out quit during the second half in a Game 7 of a playoff series. (Do MVP’s actually do this?!) What a beautiful week!
— Nick, Chippewa Falls, Wis.
Watching Bryant quit in the second half of Game 7 was like watching as if Ray Lewis were to raise up his hands and say “[forget] it” in the middle of a wild-card game. MVPs do not put on their pouty face when things don’t go their way. It doesn’t work for me in real life and it most certainly doesn’t work in Game 7 of the playoffs. I can’t help but feel sorry for Lakers fans, something I never thought I would EVER say, given that I cheer for the Celtics. Kobe now ranks alongside Barry Bonds and Marcus Vick on the list of “Holy Crap I Can’t Believe He’s Actually Doing That” performances of this century.
— Brian H., Brighton, Mass.
Poor David Blaine. He spends a week in a water-filled bubble only to have Kobe come along and pull the greatest disappearing act of all time. What a shame.
— Neil L., Burns Lake, British Columbia
—————————————————————————-
2 Think Good 