Monday, March 23, 2009

What On Earth Is Happening In The Economy?

Several folks have taken a stab at explaining Geithner's plan.

Brad DeLong finds much to admire. My favorite question from his FAQ? "Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money? A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition. "

Mark Thoma compares and contrasts the Paulson version, Geithner version and Nationalization with a simplified exercise involving cars that blow up (well the engines at least...but only some of them!).

Paul Krugman has now actually made his way out onto the ledge and really looks like he's going to jump.

These are three "liberal economists" and just look at the range of opinion, this doesn't include any conservative/Chicago School economists. And who cares what the conservatives think? They and their desperate need to adhere to their orthodoxy caused the mess.

For reactions, considered and otherwise, I give you Hilzoy at Obsidian Wings: "As someone who thinks that levels of compensation in the US are absurdly unequal, and that this is bad for the country, it's tempting to say: oh, go ahead, you idiots. Keep your sense of entitlement to other people's money. Make people come after you with pikes and tumbrils. See if I care."

Also this rather elegant summing up on the difference between what your head and you heart tell you, by Ezra Klein: "Intellectually, I'm of the crowd that thinks the A.I.G. bonuses don't deserve the continued focus of the political system. One tenth of one percent of the money we've given to one company should not obsess us. But whenever it comes up in conversation, I'm shocked at the depth of my own fury. And here's why: Not to sound naive about this, but the absence of patriotism that galls. The lack of responsibility is sickening. These bankers delivered an almost mortal wound to the American economy. Their actions threw millions out of work and wrecked the retirement savings of tens of millions more. [...] They should be begging for a shot at redemption. They should work without pay, without sleep, without credit. They should wear sackcloth and ashes. But more than that, they should be trying to help. The damage they wrought might have been unintentional, but that doesn't absolve them of responsibility for the aftermath. What we've got, however, is an economic hit-and-run, with one wrinkle: The collar-popper peeking out of the bloodied Porsche is willing to stick around if we pay him for his time. Give him a bonus and he'll dirty his hands with CPR."

Me? How the fuck should I know? You just saw three major economists disagreeing and two very rational people who basically said that despite what their rationality tells them they'd be happy to attend a Festival of Blood for Wall Street types. Weird huh? I get all pissed off, right up until it becomes an actual crisis, then I get all calm.

Except for when Repubs talk about the debt, and how we're stealing from future generations. From THEM I want to know where their oh so tender concern for my daughter was when THEY were in charge of shoveling money to their cronies in no bid contracts and tax breaks for their buds. THEY can go fuck themselves.

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