Thursday, October 6, 2011

I'm edging closer to being a solid Romney supporter...

...and perhaps owe Ron Paul a partial apology.

Jared Bernstein has the story, and of course also notes some of the remaining issues with Romney.


  1. Daniel, think about this.

    In a republic, the leader is not supposed to be somebody who pushes his own agenda, but goes to a legislature or a council or any larger body of people, proposes his idea to them, sees how far they will accept it, and only executes it to that extent.

    The problem with Romney is supposedly that he has no agenda, being a flipflopper of sorts. So what? Presidents, Chancellors, and Prime Ministers are not supposed to have agendas, but are supposed to fall in line with their larger organization.

    Isn't it beneficial to have this flipflopper Romney? When the general electoral and public mood changes to expansionary or contracting policy, this President will change to expansionary or contracting policy. He will have no core principles. He will be smart enough to be an austerian for elections and moderately pro-spending in practice. (Voters love austerity, just not for the policies they like, right?)

  2. Prateek - I think you're exactly right. Keynes once wrote "one blames politicians not for inconsistency, but for obstinancy. They are the interpreters, not the masters, of our fate. It is their job, in short, to register the fait accompli."

  3. Right, so Romney can't be a long run problem.

    Just get that man elected, and convert him to the right side on the right issues. If it's a deviation from his past positions, then we know it has never been a problem for him.

    Anyway, what do you think about Krugman giving his support for Occupy Wall Street? I am amazed at those guys - if they were angry at foreclosures done by Bank of America, why aren't they protesting at New Jersey instead of NYSE? As if stock brokers have anything to do with home loans? It pains me when professional economists throw their support behind illiterate members of the public with ill-conceived agendas based on little education about things...

    Such as the difference between stock market and banks lending housing loans.

    His comments that this may be the Left's Tea Party are unfortunate, because he is admitting that like the conservatives who were fooled into thinking that the populist fusion movement represented their views, he and other likeminded folk of his spectrum should delude themselves that another populist fusion movement represents their views.

  4. re: "Anyway, what do you think about Krugman giving his support for Occupy Wall Street?"

    To be honest I have no idea what the heck is going on with Occupy Wall Street - I just haven't had the time to look into it. I've been meaning to respond to a lot in the blogosphere - an earlier discussion of economics as a science, the IS-LM discussion, and several others and I haven't even been able to keep up with those much less a left-wing rally in NYC. If this has legs I'll make the effort to look into it, but I genuinely have no thoughts on it.

    If Krugman endorses them that improves my opinion of them. But I still don't know if they have legitimate concerns or are just making vaguish critiques of "banksters". If it's just the latter I'm not all that impressed.

  5. Prateek:

  6. Gary, Reason's writer is basically saying that this is a movement with Tea Party collaboration.

    That does not improve its stature in my eyes. Just the exact opposite. The Tea Party was just a set of coalition agendas with many of them having a vague anti-establishment stand. The fact that they side with Occupy Wall Street is not surprising, but predictable, since it is also an empty movement with a vague anti-establishment stand.

    Just look at Michael Tracy's enthusiastic support for the Occupy Wall Street slogan, "Shit is Fucked Up and Bullshit". Wow, what a clear, precise, well-research, and educated campaign agenda.

    Reason's and Ron Paul's eagerness to side with every ill-informed, illiterate "grassroots" movement is typical of libertarians. They know enough to buy a placard and shout slogans, but little else. If you were angry about bailouts, wouldn't you protest at Citibank and Bank of America offices? Nonbanking financial institutions were not bailed out, for heaven's sake.

    Meanwhile, the leftist Post-Keynesians are defending Wall Street and speculation on their blogs - Bill Mitchell and "Lord Keynes" have done so. What a massive gulf of thoughtfulness between anti-business libertarians and pro-business leftists.

  7. No, that isn't what Michael Tracy is saying (the writer of the piece).

    This is what Tracy is saying:

    "My takeaway from Liberty Plaza thus far is one of genuine pain and anger in the present, not a hipster-induced flashback to the sixties. Certainly it's worth acknowledging that for the past decade or more, under Republicans and Democrats alike, government and hugely influential corporations have dined out—and then gotten bailed out–by many of the people now calling for change."

    Yeah, there are some Ron Paul supporters there; and a Marine; and an interesting mix. Tracy's point was that the gathering as he saw it doesn't live up to the caricature.

    "Just look at Michael Tracy's enthusiastic support for the Occupy Wall Street slogan, 'Shit is Fucked Up and Bullshit'. Wow, what a clear, precise, well-research, and educated campaign agenda."

    Well, that simply is not how mass movements work to be frank (if this thing ever becomes a mass movement that is).

    "Reason's and Ron Paul's eagerness to side with every ill-informed, illiterate 'grassroots' movement is typical of libertarians."

    Oh no, they don't have sixteen white papers detailing blah, blah, blah.

    "Nonbanking financial institutions were not bailed out, for heaven's sake."

    Actually, they were. Unless you think that Chrysler is a banking institution. Who is ill-informed now? Yes, a lot of banks received bailout money, but so did two auto manufacturers, a lot of mortgage servicers, etc.

    So who is ill-informed again? BTW, someone who can write on a placard clearly is not illiterate.

  8. Prateek Sanjay,

  9. I read your ProPublica link.

    Goldman Sachs and JPMorgan were NOT bailed out.

    The Treasury simply made capital investments in those businesses and then withdrew those investments AT A PROFIT. Goldman Sachs and JPMorgan made a net transfer TO the taxpayer, and did not make a net transfer FROM the taxpayer.

    A bailout is when an undercapitalized bank is given funds by a government to help meet its liabilities and cover losses on non-performing assets. THAT is a bad thing, but nonbanking financial institutions have nothing to do with those bailouts.

    Goldman Sachs and JPMorgan were healthy businesses making profits even in the recession. The Treasury made temporary investments in the stock market to keep markets going.

    Read your own links, bro. Just clicking on the Goldman Sachs and JPMorgan section will show you that they have qualified their selection of these entries with a clear indication that they were not exactly bailouts.

  10. "Goldman Sachs and JPMorgan were NOT bailed out."

    For the sake of argument, I'll grant this assertion. That is beside the point.

    This was your assertion.

    "Nonbanking financial institutions were not bailed out, for heaven's sake."

    Well, for heaven's sake, non-banking institutions were bailed out. Chrysler and GM are the most glaring examples of course.

    What is the context in which that assertion is made? Well, you do call these people an "ill-informed, illiterate 'grassroots' movement." Of course it turns out - no matter how ill-informed they are - that you're also ill-informed. Non-banking institutions were bailed out. So, what's the take away "bro?" Before you start calling other people ill-informed, perhaps you should become informed first. I would have thought this would have been obvious after my first comment.

  11. Prateek,

    BTW, this is how a bailout is defined on Wikipedia:

    "In economics, a bailout is an act of loaning or giving capital to an entity (a company, a country, or an individual) that is in danger of failing, in an attempt to save it from bankruptcy, insolvency, or total liquidation and ruin; or to allow a failing entity to fail gracefully without spreading contagion.[1]"

    So a bailout can be applied to firms that were saved which later returned the money to the taxpayer. Chrysler's experience in the late 1970s and early 1980s is an example of that I would guess. So the profit issue does seem to be of any consequence.

    And this is what the link in question says:

    "Goldman Sachs was among the eight large U.S. banks to receive the Treasury Department's initial round of capital investments -- money described by Treasury officials not as a bailout, but rather as funds to help bolster 'healthy' banks in tough times."

    So they were "healthy," but they needed to be bolstered? Also, one has to ask, if they were healthy, why did Goldman-Sachs drop its role as an investment bank and seek the sort of protection associated with being a traditional bank holding firm? There is a lot going on there to think about, and the story about them not receiving a bailout can easily be questioned.

  12. In a period LESS than that of one whole year, Goldman Sachs paid back the government what was given to them, plus a nearly 14% preference dividend of $1.418 billion.

    Annualized, Goldman Sachs took a 20% p.a. loan from the government. That is almost a shakedown, except the company was solid enough to give the government that kind of money.

    That is huge. That is a lot of money. This was not a case of government bailing out Goldman Sachs, but Goldman Sachs bailing out the government with extra revenues during recession times.

    A 9-month 20% p.a. loan being described as a bailout is fairly radical, because the bigger beneficiary here was clearly the lender - the government.

  13. When the loan was made did the government know whether Goldman-Sachs was healthy or not*? It seems to me that they may not have and this is the reason why the government loaned money to a number of businesses that were not necessarily in trouble once the dust cleared.

    *Really, that seems to be the primary determinant of whether something is a bailout or not - is the money being given to save a firm in some sort of financial trouble or which is in a class of businesses that are in trouble, and thus there is some question as to whether the individual firm is in trouble.

  14. Well, if it were meant to save a company from financial trouble, they would have demanded lower rates, not higher, right?

    After all, this is a government, and it does not operate with its own money. It can throw away huge loans at extremely low rates that have to be repaid at the far future. Except this was a loan at a high rate with a short repayment period. Who would willingly inflict that on a firm in trouble?

  15. Prateek Sanjay,

    This should make you happy:


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