Like my current idol, Barry Ritholtz, who says that every time he goes away, the world breaks loose and things happen, I’ve been away from my computer and look what has been going on! Rather than try to catch up, I’ll just let a few of my favorites sum it up – Paul Krugman, Barry Ritholz, and Andy Borowitz, for a little levity in these turbulent times. Enjoy –
The Hijacked Crisis – by Paul Krugman
For more than a year and a half — ever since President Obama chose to make deficits, not jobs, the central focus of the 2010 State of the Union address — we’ve had a public conversation that has been dominated by budget concerns, while almost ignoring unemployment. The supposedly urgent need to reduce deficits has so dominated the discourse that on Monday, in the midst of a market panic, Mr. Obama devoted most of his remarks to the deficit rather than to the clear and present danger of renewed recession.
What made this so bizarre was the fact that markets were signaling, as clearly as anyone could ask, that unemployment rather than deficits is our biggest problem. Bear in mind that deficit hawks have been warning for years that interest rates on U.S. government debt would soar any day now; the threat from the bond market was supposed to be the reason that we must slash the deficit now now now. But that threat keeps not materializing. And, this week, on the heels of a downgrade that was supposed to scare bond investors, those interest rates actually plunged to record lows.
What the market was saying — almost shouting — was, “We’re not worried about the deficit! We’re worried about the weak economy!” For a weak economy means both low interest rates and a lack of business opportunities, which, in turn, means that government bonds become an attractive investment even at very low yields. If the downgrade of U.S. debt had any effect at all, it was to reinforce fears of austerity policies that will make the economy even weaker.
So how did Washington discourse come to be dominated by the wrong issue?
Hard-line Republicans have, of course, played a role. Although they don’t seem to truly care about deficits — try suggesting any rise in taxes on the rich — they have found harping on deficits a useful way to attack government programs.
But our discourse wouldn’t have gone so far off-track if other influential people hadn’t been eager to change the subject away from jobs, even in the face of 9 percent unemployment, and to hijack the crisis on behalf of their pre-existing agendas.
Check out the opinion page of any major newspaper, or listen to any news-discussion program, and you’re likely to encounter some self-proclaimed centrist declaring that there are no short-run fixes for our economic difficulties, that the responsible thing is to focus on long-run solutions and, in particular, on “entitlement reform” — that is, cuts in Social Security and Medicare. And when you do encounter such a person, you should be aware that people like that are a major reason we’re in so much trouble.
For the fact is that right now the economy desperately needs a short-run fix. When you’re bleeding profusely from an open wound, you want a doctor who binds that wound up, not a doctor who lectures you on the importance of maintaining a healthy lifestyle as you get older. When millions of willing and able workers are unemployed, and economic potential is going to waste to the tune of almost $1 trillion a year, you want policy makers who work on a fast recovery, not people who lecture you on the need for long-run fiscal sustainability.
Unfortunately, giving lectures on long-run fiscal sustainability is a fashionable Washington pastime; it’s what people who want to sound serious do to demonstrate their seriousness. So when the crisis struck and led to big budget deficits — because that’s what happens when the economy shrinks and revenue plunges — many members of our policy elite were all too eager to seize on those deficits as an excuse to change the subject from jobs to their favorite hobbyhorse. And the economy continued to bleed.
What would a real response to our problems involve? First of all, it would involve more, not less, government spending for the time being — with mass unemployment and incredibly low borrowing costs, we should be rebuilding our schools, our roads, our water systems and more. It would involve aggressive moves to reduce household debt via mortgage forgiveness and refinancing. And it would involve an all-out effort by the Federal Reserve to get the economy moving, with the deliberate goal of generating higher inflation to help alleviate debt problems.
The usual suspects will, of course, denounce such ideas as irresponsible. But you know what’s really irresponsible? Hijacking the debate over a crisis to push for the same things you were advocating before the crisis, and letting the economy continue to bleed.
Barry Ritholtz: Speaking Soothing Words vs. the Truth Bomb (Aug. 11, 2011) – an excerpt from his comments – calling out those who were trying to calm markets for their own purposes:
Which brings me to pundit motivation: People who try to soothe the savage market psychology do so because its their jobs, and it is in their self-interest. They may work for Fed or the Treasury or a firm so large they cannot be tactical investors. Hence, their calming words amount to little more than propaganda, self-interest, and crowd control.
If you think people are sheep, then you try to manipulate their fears and psychology via the media. You engage in color coded terror warnings, you threaten total financial Armeggedon, you warn of an economic seizure. You say what cows the masses into a corner to be harvested and sold off for parts.
I prefer the Truth bomb. Precision guided, accurate to within millimeters, high yielding explosive truths.
If you have the slightest respect for Humanity, you tell them what is. You give them the facts. You honor the Truth, and let the chips fall where they may. Despite my curmudgeonly world views, I still have enough respect for my fellows that I believe Truth telling is the only way to go. And I am more than happy to call out anyone who wants to tell lies to reach their objectives…….
AUGUST 22, 2011
Gaddafi Found Running for Republican Nomination
Libyan Madman Turns Up in New Hampshire
CONCORD, NH (The Borowitz Report) – The mystery surrounding Col. Muammar Gaddafi’s whereabouts was resolved today as the dictator announced his candidacy for the Republican presidential nomination in a town hall meeting in Concord, New Hampshire.
In announcing his candidacy, the Libyan madman joins a Republican field which is believed to number in excess of seven hundred candidates.
While some New Hampshire Republicans seemed surprised to see Col. Gaddafi shaking hands and kissing babies at the Concord town hall, an aide to the Libyan strongman said his transformation to GOP candidate made perfect sense.
“In those final days in Tripoli he was becoming increasingly disconnected from reality,” said the aide. “So I think he’ll fit right in.”
Mr. Gaddafi, dressed in his trademark yellow turban and matching robe, got mixed reviews in his first appearance on the campaign trail, with some New Hampshire citizens saying that his six-hour stump speech was badly in need of pruning.
Additionally, some felt that his rhetoric needed to be toned down, especially his closing line about fighting for the Republican nomination “until the last drop of blood.”
But others gave him high marks for his grasp of history and geography, which most agreed was stronger than Michele Bachmann’s.
Perhaps underscoring the challenges that lie ahead for Mr. Gaddafi in his quest for the GOP nod, current polls show him in the back of the pack, leading former Senator Rick Santorum but trailing the pizza guy.
“Unfortunately for Muammar Gaddafi, he might be out of step with the current crop of Republican candidates,” one pollster said. “There’s a perception that he’s too moderate.”