Ahhh, Politics.
Sheldon Richman almost feels bad for Paulson...almost. But in the end, not really. I certainly don't. It's a pretty simple display of the politics of intent going awry...quite easily and quite predictably.
1. Paulson grandstands by selling Congress an impossibly and foolishly ambitious bag of goods about how he can somehow intervene with billions of dollars and bailout the financial industry from its debacle.
2. Congress grandstands by lapping up the rosy intent of his plan which none of them seem to understand amounts to getting a dog to meow with a stick of gum and a bullhorn.
3. The plan is then not working as planned (what a surprise) and Congress grandstands by lambasting and scolding Paulson for not being able to realize the intent of his foolishly arrogant and infeasible plan.
4. All the while, the nobody takes seriously the idea that Paulson could never deliver what he said he could. You mean Paulson can't tame a hurricane with a conductor's wand? But he said he could!!. Shame on Paulson. Says Sheldon:
Did these and other members of Congress actually think one man, no matter how many “expert” advisers he had at his side, could know how to spend $700 billion of other people’s money in order to plan the restoration of a $15 trillion economy that is integrated into a global marketplace? Maybe if these congressmen knew something about economics they wouldn’t have had such idiotic expectations. I don’t really feel bad for Paulson. He led Congress to believe he could do the impossible. So he has no one to blame but himself.
. Amen, Sheldon, Amen. I'm reminded of my number one lesson from Hayek:
"The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design." (The Fatal Conceit, p. 76)
Unfortunately, far too many modern economists who sneer at Hayek's self-imposed humility and prudence take the task of economics as seeing how much they can possibly, perhaps, sorta kinda know in limited simplistic models and take that knowledge as gold and confidently employ it full-tilt in the real world with little concern from how much they leave out or cannot possibly know. Astronomy becomes Astrology and Astronomy gets the black eye.
--
--
- John's blog
- Login or register to post comments
Conservative
Liberal
Moderate/Mixed/Non-Partisan
Non-Political/Reference
Related Sites -
Polisci Applied (Aaron)
Intrepid Liberal Journal (Intrepid Liberal)
Obsidian Wings (Bird Dog)
Open Hand/Open Eye (locutas)
Red State (Bird Dog)
Swords Crossed (brendanm98)
Wagster Speaks (Wagster)
WatchingAmerica (BlaiseP)
The Social Pathologist (TSP)
Foreign Affairs -
Abu Aardvark
'Aqoul
American Footprints
Council on Foreign Relations
CSIS
Democracy Arsenal
Intel Dump
The Fourth Rail
War and Piece
Politics -
Ace of Spades HQ
Andrew Sullivan
Balloon Juice
Belgravia Dispatch
Captain's Quarters
Crooked Timber
Curmudgeonly & Skeptical
Daily Kos
Democracy Arsenal
Eschaton
Firedoglake
Glenn Greenwald
Global Guerrillas
Hugh Hewitt
Instapundit
Jawa Report
Lawyers, Guns and Money
Liberals Against Terror
Matt Yglesias
Michael J. Totten
Michelle Malkin
Moon of Alabama
New America
OxBlog
Patterico
Political Animal
Political Wire
Publius Pundit
QandO
Reality Based Community
Talking Points Memo
The Agitator
The Belmont Club
The Corner
Truman Project
Winds of Change.net
War -
Counterterrorism Blog
Iraq the Model
Jihad Watch
Small Wars Journal Blog
Economics and Business -
Angry Bear
Brad DeLong
Daniel Drezner
Mahalanobis
Marginal Revolution
Roubini Global Economics
The Big Picture
Science and Tech -
Bad Astronomy
New Scientist
Real Climate
Science Blogs
Scientific American
The Panda's Thumb
Legal -
Balkinization
Conglomerate
Ideoblog
Jurisdynamics
Law and Letters
Overlawyered
ProfessorBainbridge
ScotusBlog
Talk Left
The Becker-Posner Blog
Volokh Conspiracy
Sports -
Baseball Crank
Baseball Musings
Baseball Reference.com
ESPN.com
NFL.com
Only Baseball Matters
The Sports Economist
Books, Film and Music -
Amazon.com
Internet Movie Database
All Music Guide
News and Aggregators -
Asia Times
Boingboing
CNN
Digg
English Russia
Fark
Los Angeles Times
Memeorandum
MSNBC
Politico
Poynteronline
Slashdot
The New York Times
The Washington Post
References -
The bailout as others noted seems to be doing what it was supposed to do, i.e. prevent full-on banking system failure by restoring (some) confidence and unfreezing credit markets. Long way to go yet, but it's kind of working. DJIA's floor seems to be around 8000 – dropped below that today on a big selloff resulting from bad housing, labor & consumer numbers. It's a panic sell & I wish I had money to pick up some of those rock-bottom shares, because they'll start climbing pretty soon, barring another round of credit failures. So the bailout is kinda working.
On the politics, though, you're right on. Did anyone actually believe Congress was going to accept responsibility for the bailout plan (unless it works)? Of course not. And at the same time, Paulson has allowed himself to be put forward as *the* guy, knowing he'll either be the hero or the goat, depending on how it all shakes down. He isn't risking much personally, and I guarandamtee he doesn't want another job like this. Meanwhile he gets to write giant checks for his buddies. No downside for him.
In brief, the media has been hornswoggled into anointing Paulson as "the bailout guy," letting Congress essentially off the hook, even though it is their responsibility, and not his.
--Before you criticize someone, you should walk a mile in their shoes. That way when you criticize them, you're a mile away and you have their shoes. -JH
- Login or register to post comments
)This is a situation where one guy can make more efficient decisions than a parliamentary body, they had it for like 3 days and loaded it up with 100 pages of mostly garbage. Paulson's pretty smart and it doesn't change things politically since the Bush admin is culpable for the scandal in the first place.
What's amazing is how Bush's name is never even mentioned in this conversation.
- Login or register to post comments
| parent )The only think I can think that you might mean is the loosening of margin requirements back in 2000, which was done in front of the full Senate (assuming they read what they vote on), and which persisted for two years under Dem-controlled Congresses. Or you might mean the scandal involving Raines, Gorelick et al cooking the two FMs' books to inlfate their bonuses, but that one's Chris Dodd's and barney Frank's baby.
I've certainly mentioned Bush's name in this context before. I consider Bernanke to be borderline competent at best, but I can't conceive of a legitimate reason for picking Paulson to head the Treasury Department. He was Merrill Lynch's main man when it came to avoiding reasonable margin reserves and ratios, and he is the ultimate Wall Street insider. I wouldn't trust the guy with a penny of my money, but now I don't have a choice. I think giving him this ridiculously broad discretion over almost a trillion bucks is the height of irresponsibility. I can't think of anyone offhand who I would trust with that authority, but Paulson can be counted on to abuse it imo.
--Even a dead midget is far from light. - Confucius
- Login or register to post comments
| parent )So you might be right, I'm just saying that executing a bailout like this is much better done by an office than by 535 offices -- congress can't successfully micromanage this although ideally you'd think they could've put together a bill with some clear guidelines as to how the money should be spent. My (not particularly educated) read on personalities was that I like Bernanke and don't know a thing about Paulson -- I was just talking systemically that a congress can't really execute a bailout like this beyond approving the total sum, if they get into specifics it'll be all about who's district a given company is based in. They should've laid out some much better statements of principle for the money's purpose though, like a template agreement for what any company needs to give up to receive it.
The current meltdown is broadly perceived to be the fault of compulsive attempts to shred regulation wherever possible and with no regard to it's efficacy or consequences by the Bush Admin -- that's all I was saying, you can share the perception or not.
- Login or register to post comments
| parent )The meltdown is the confluence of two factors:
1) Stagnant and/or declining real wages for the majority of Americans, and
2) The Federal Reserve and Bush Administration's eager encouragement of the housing bubble.
The first created a slow decline in our savings rates. This is something which is going to create a crisis eventually, as people finally run out of credit card space and have to tighten belts. So then aggregate demand (belatedly) falls, and we have a recession. It was going to hit in the early 2000s, but then the housing bubble started up and people used their houses as ATMs. So we were fine for a while.
Then the housing bubble popped, because that's what they do. I'm pretty sure the Fed and Bush Admin were essentially trying to get the bubble to last until January 2009, but they weren't successful. But in the meantime, we'd gone to betting more or less the entire economy on houses only going up, because otherwise we had miniscule and totally unsustainable savings rates.
Everything else is details, to some degree.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
- Login or register to post comments
| parent )really?
--This place is my vacation.
- Login or register to post comments
)-
--Even a dead midget is far from light. - Confucius
- Login or register to post comments
| parent )was never to prop up the Dow. Or maybe you were being facetious and I didn't get it?
--This place is my vacation.
- Login or register to post comments
| parent )Do you know evidence on what kind of situation we'd be in if we hadn't passed TARP? Of course not.
Do you realize that credit indicators, while still troubling, are far better than they were at their nadir (with the TED spread just above 2 instead of in the 4 region?)
I think part of the problem is that you're not aware of the intent of TARP. It's not to salvage a $15 trillion economy. (That will be another day.) It's to recapitalize financial companies and get credit flowing again. While TARP may need to be increased, it is proportional to the problems it seeks to address, as we know them now. And to talk about "idiotic expectations" and not knowing anything about economics, when most economists of liberal and conservative stripes saw it as essential... well, let me just say that it casts some doubts on the credibility of who you are being guided by on this crisis.
--More Wagster!
- Login or register to post comments
)1. No. I don't. And neither do you.
2. Correlation does not equal causation. I could do a dance in honor of Apollo, the sun god, at 5:30am. Does that mean we have causation when the sun rises shortly after?
- Login or register to post comments
| parent )1. I didn't come to the conclusions in your post based on this assumption.
2. My story is that when the most trusted borrower in the world stands behind financial companies, trust in them grows. That when they have billions to relieve their liabilities, they have more to lend. What's your story as to why credit has started working again?
--More Wagster!
- Login or register to post comments
| parent )A TED spread of 2 is about, what, 4-8 times its trend?
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
- Login or register to post comments
| parent )... it was still troubling, but the situation isn't as bad as it was at the darkest moment.
--More Wagster!
- Login or register to post comments
| parent )But "not as bad as its darkest moment" wasn't actually what was promised for our $700 billion.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
- Login or register to post comments
| parent )That's only if you look at recent years, longer term the TED spread used to be higher.
--This place is my vacation.
- Login or register to post comments
| parent )They didn't buy just the toxic assets.
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
- Login or register to post comments
| parent )...
--More Wagster!
- Login or register to post comments
| parent )Keep in mind that bank activity is still grindy, and the big beneficiaries of all this are the smaller banks that got eated by the big ones in an attempt to become "too big to fail."
--It's impossible to debate if people simply hold beliefs that have no grounding in reality.
- Login or register to post comments
| parent )