Tyler Cowen says not so good:
The simple truth is that so far economic policy has fallen short of being good. Some (not all) left-wing bloggers may be reluctant to say this so early in the tenure of such a long-awaited administration, but perhaps a few of them are thinking it. There is the stimulus, the Geithner banking plan, and the housing plan. Of course there are differences of opinion but perhaps it is fair to say he is straining to be one out of three?
February 20th, 2009 at 2:00 pm
Until someone actually reads the bill it will be hard to say if the stimulus was really a victory, but at least he got that passed — so I think you have to give it to him for now.
As for banking/housing, every plan released by either Bush or Obama has been tentative and partial which is leading me to believe they know something far worse or far more negative than we are currently aware. Otherwise, why would they avoid taking the problem head on?
February 20th, 2009 at 5:03 pm
The stimulus plan is politics as usual. The biggest problem with Obama is his selection of his economic team. Geithner is an acolyte of Rubin and Summers, whose free market anti-regulatory thinking created wild-west mentality on Wall Street that rewarded greed and incentivized financial innovations like CDOs and CDSs that were sold all over the globe to unsuspecting buyers (our modern day equivalent of widows and orphans). Summers, well, let’s just say if he didn’t think of the idea he has no respect for it–and forget it if you’re “cursed” with 2 X chromosomes. Plus his staunch neo-classicism and dogmatism borders. Summers also opposed regulating the new structured credit instruments under the Futures Modernization Act.
Then you have Gary Gensler, who as undersecretary of the Treasury opposed the regulation of CDSs–those are the pesky little bundles of toxicity that have destroyed our financial system–when then CFTC head Brooksley Born warned of catastrophic consequences should they be left unregulated. This was in 2000!
And let’s not forget about Austan Goolsbee who’s on the president’s economic advisor board and who so brilliantly wrote in the NYT that subprime mortgages are a good thing because they open the door to economic opportunity http://www.nytimes.com/2007/03/29/business/29scene.html
And finally, there’s Mary Schapiro who is Obama’s appointee to head up the SEC. You know the SEC, they’re the regulatory arm of the USG when it comes to markets and securities. So Mary used to head up FINRA, that’s the securities industries self-policing body. Except FINRA is a joke. They’ve levied no fines of any import against two of the largest fraudulent members in recent past–Bernard L. Madoff Investments and Stanford International Bank.
So there you have it. Obama’s economic team consists of Geithner, Summers, Gensler, Goolsbee, and Schapiro. It’s like putting Dick Cheney, Don Rumsfeld, Paul Wolfowitz and Scooter Libby in charge of defense policy.
Oh, wait we did that.
Sorry guys, but until Obama gets new blood in the regulatory bodies that oversee and create our nation’s ecomomic policy we will continue to careen down a path of absolute certain financial catastrophe.
Nik
February 20th, 2009 at 5:38 pm
Every time he comes out with a “plan” the market tanks. The market is down especially strong since his inauguration; the stock exchanges are voting mechanisms for $$ from around the world. The world has spoken clearly that Obama’s decisions are a failure.
I hope he gets the hint sometime soon.
February 20th, 2009 at 9:45 pm
I’m wondering, are the right things to do necessarily the ones “the market” will like? Most stock traders are looking for quick profits and some of the right decisions might not provide them. What if the right thing for the country long term is let GM & Chrysler fail? Or to nationalize B of A & Citi? Or to let housing prices fall to where they were 5 years ago? Would these drive the Dow higher?Should we care?
I honestly don’t know. But I wonder what Warren Buffet is doing right now? He seems to be more levelheaded than the bubble and crash prone “markets”.
February 20th, 2009 at 10:09 pm
Since it seems that there is almost nothing in this “stimulus” package for the next year (or two or three, in most cases), it might in fact allow the economy to recover. Assuming, of course, Obama doesn’t do anything else — which seems unlikely. So far he seems to be continuing the Bush policy of taking money from those who are succeeding now and who will be succeeding in the future to give to people who are failing in the present day. Any way you look at it, it’s a bad idea to take from the successful to give to failures. That’s the very definition of punishing success and rewarding failure. Guess what happens when you reward a certain behavior? You get more of it.
Here is the problem in a nutshell: people believe that Obama is caught in a paradox of borrowing and spending to fix a crisis created by too much borrowing and spending. But this is not a paradox. If you find that someone is dying of arsenic poisoning, you don’t give them more arsenic. Only a socialist would think that more of what caused your economic problems is what you need to solve them.
I cannot believe these kinds of idiots are in charge and I’m still unemployed.
February 21st, 2009 at 4:32 pm
Aside from right-wing hardliners, I don’t understand all of the wailing about Obama so far. Oh darn, it’s a full 30 days and he hasn’t solved everything. I mean, Roosevelt beat the Depression and Lincoln won the Civil War in a month, right? And with no mistakes or false starts either.
I was looking at the Vanity Fair Annie Liebowitz pictures of the Cabinet and of 15 appointments, Tom Dashle is the only one who didn’t get confirmed. I don’t think 14 of 15 is a bad percentage. Oh, and Bill Richardson withdrew and Judd was badly confused.
I have no idea if Geithner was a good appointment and probably neither will anyone else for a year or more. The banks are probably in worse shape than we think, but no one knows. There was an radio interview with a former FDIC investigator saying that when they looked at balance sheets of the banks that failed in 2007, they were in billions worse shape than they had been reporting, and that we really have no idea about any of the banks out there, not just the big ones. The Bush administration cut the number of bank examiners dramatically and drove out the most experienced. No wonder the markets are nervous.
In the next year, no in the next 2 months, the “middle class tax cut” takes effect. Whether or not you think its a good idea, that’s not a year or two off. I expect we’ll see highway repairs this summer, NIH grants being approved by fall, etc.
In the first month, in addition to the stimulus, the Ledbetter Fair Pay Act passed, the “gag” order on international family planning was removed, the torture ban took effect. Not a bad start.
I do wonder when they’re going to get the dog, though.
February 22nd, 2009 at 2:15 am
I am looking forward to that $8 week tax cut. Infrastructure projects typically take years to get off the ground. And Roosevelt didn’t beat the Depression — our entry into WWII beat it. Unemployment had been on the rise for several years after the New Deal was put into place, and that rise only ended upon our entry into WWII. Forgive people for looking at history and seeing the same exact kinds of things as we’ve done over the past 6 months not working and expecting them to not work again. Also, don’t call something a stimulus bill that won’t actually do anything for several years. Oh, except for that $8 a week we’re getting.
February 22nd, 2009 at 9:43 am
Troy, yeah, you can’t spend your way out of debt
Michael:
30 days is all we’ve needed to see this is a big mistake
February 22nd, 2009 at 11:33 am
Michael,
Let me be clear, I am a fan of Obama despite his grievous mistakes on economic policy. I think he was the only candidate that could make a difference for the US. That said, his economic team is abysmal. You may not have an opinion on Geithner, but that’s part of the problem–not just you, but nearly everyone else in mainstream America not knowing how destructive this team will be. Geithner represents everything that is wrong with the fiscal and monetary policies of the past 20 years. Go back and look at his statements while at the NYFed and as Vice Chair of the FOMC. Do some digging, you’ll see what I’m talking about. This whole crisis could have been avoided with sound regulation. Geithner was part of the Greenspan/Rubin/Summers team that championed dismantling the only protection we had against rapacious greed. We’re seeing the wisdom of that strategy right now.
Nik
February 23rd, 2009 at 8:36 am
Nikolai,
Why would you think obama could make a difference? Turns out he’s the empty suit I knew he was. His role as puppet-in-chief is to sell the congress’ liberal platform. Actually, since our legislators didn’t even read the “Stimulus” (a breach of fiduciary duty I might add) I’d say he’s the lobbyists’ who wrote its chief cheeleader.
But he can read a teleprompter with the best of ‘em, and he has such dreamy eyes.