Semantics Play and Other BS Via Krugman

The Joy of Sachs
http://www.nytimes.com/2009/07/17/opinion/17krugman.html?ref=opinion

...it shows that by rescuing the financial system without reforming it, Washington has done nothing to protect us from a new crisis, and, in fact, has made another crisis more likely.

Let’s start by talking about how Goldman makes money.

Over the past generation — ever since the banking deregulation of the Reagan years — the U.S. economy has been “financialized.” The business of moving money around, of slicing, dicing and repackaging financial claims, has soared in importance compared with the actual production of useful stuff...

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I won’t try to parse the competing claims about how much direct benefit Goldman received from recent financial bailouts, especially the government’s assumption of A.I.G.’s liabilities. What’s clear is that Wall Street in general, Goldman very much included, benefited hugely from the government’s provision of a financial backstop — an assurance that it will rescue major financial players whenever things go wrong.

You can argue that such rescues are necessary if we’re to avoid a replay of the Great Depression. In fact, I agree. But the result is that the financial system’s liabilities are now backed by an implicit government guarantee.

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That first quoted part is good stuff - it tells it like it is. Wall Street's bean counters found a way to convince other people to risk money on complex financial instruments in a way that concealed the enormous risks they were actually taking. Investors weren't blowing it Vegas-style, they were investing in something akin to blue chip investments! That's Wall Street snake-oil in a nutshell. If you aren't an insider, you are a mark ripe for the big and long con.

And then Krugman goes kinda sideways on the rest. He seems to want to avoid getting down to details about how offensive are the activities of our own government in collaboration with Goldman Sachs - and all financed on the back of the taxpayer too!

And then the word game. Is there some way in which the current crisis is so radically dissimilar to the depression that we aren't de facto in something like a depression? We have some safety nets in place and I would argue that because of that fact we can play this semantic game and call it a "recession" instead. But call it what you will, the truth of it is very much the same thing. We shall be digging our way out of it for years to come.

Another thing that disappoints is the like of criticism concerning the manner in which the Wall Street bailout was pursued. I think there was a legitimate way to handle things in which all players would have received some consideration and the overall effects of the financial downturn would have been ameliorated. What we got instead was an offensive handout to those that needed it least. Wall Street got what it wanted and Main street got the shaft.

With joblessness rising, with foreclosures at an all time high, with a near shutdown of american industry I feel I can safely assert that we are still completely fucked and that we aren't going to be made whole again for a very long time.

Why doesn't Krugman say that?

Economic Ping Pong

The Geithner Plan FAQ
http://delong.typepad.com/sdj/2009/03/the-geithner-plan-faq.html

Brad Delong explains the highlights of the Geithner plan.

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Financial Policy Despair
http://www.nytimes.com/2009/03/23/opinion/23krugman.html?_r=2&ref=opinion

And now Mr. Obama has apparently settled on a financial plan that, in essence, assumes that banks are fundamentally sound and that bankers know what they’re doing.
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As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books.
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The likely cost to taxpayers aside, there’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive.
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You might say, why not try the plan and see what happens? One answer is that time is wasting: every month that we fail to come to grips with the economic crisis another 600,000 jobs are lost.

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So that's Paul Krugman explaining why this is the same old story from Obama and Co. - give the wealthy folks that have driven our economy to the brink billions and billions of dollars without oversight because *THEY* know how to fix it. If they win, they profit hugely. If they fuck it up all over again, the taxpayers will cover it. Brilliant!

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I Think Paul Krugman Is Wrong
http://delong.typepad.com/sdj/2009/03/i-think-paul-krugman-is-wrong.html

I find that a scary sentence to write. If the past decade has taught me anything, it has taught me that mistakes are avoided if you follow two rules:
1. Remember that Paul Krugman is right.
2. If your analysis leads you to conclude that Paul Krugman is wrong, refer to rule #1.

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And then DeLong goes on to tell you why he's right and Krugman is wrong. The sentence I find a little scary to write reads:

I think Brad Delong is wrong.

Obama had the mandate to nationalize the banks they day he walked into office. Wasting a bunch of time getting there while the economy tanks even further is just idiotic.

What Obama obviously wanted was the same blank check Paulson demanded. And he's getting it even if he is cloaking it better. At the end of the day it's just the same socialized solution for those at the top while everyone else in the U.S. goes begging for the kind of economic justice more readily available elsewhere among the western nations.

Universal healthecare, the green agenda and better educational opportunities are starting to look like distant dreams indeed. After all of this money is squandered on solutions that will not and could not have worked, they will still need even more money to finally nationalize the banks and cover for the toxic assets that are very significantly lower in true market value than anyone imagines right now.

One things that is remarkable about this huge fiasco is how even well informed economists disgree on what to do and why to do it. That goes such a long way to covering the asses of our clueless politicians that I find it actually worrying.

So yeah, this is another follow-up on the countdown to nationalization.