Showing posts with label Phil Gramm. Show all posts
Showing posts with label Phil Gramm. Show all posts
Monday, January 5, 2009
Wednesday, November 19, 2008
Phil Gramm
The Reckoning
Deregulator Looks Back, Unswayed
Lisa Krantz for The New York Times
During his time in the Senate, Phil Gramm led the fight against more government intervention in the financial markets.
new_york_times:http://www.nytimes.com/2008/11/17/business/economy/17gramm.html
By ERIC LIPTON and STEPHEN LABATON
Published: November 16, 2008
WASHINGTON — Back in 1950 in Columbus, Ga., a young nurse working double shifts to support her three children and disabled husband managed to buy a modest bungalow on a street called Dogwood Avenue.
Related
Gramm and the ‘Enron Loophole’
A look at how Enron closely monitored Senator Phil Gramm’s handling of 2000 legislation that offered it a loophole fending off regulation.
Times Topics: Phil Gramm
The senator often spoke of his mother’s buying their home.
Phil Gramm, the former United States senator, often told that story of how his mother acquired his childhood home. Considered something of a risk, she took out a mortgage with relatively high interest rates that he likened to today’s subprime loans.
A fierce opponent of government intervention in the marketplace, Mr. Gramm, a Republican from Texas, recalled the episode during a 2001 Senate debate over a measure to curb predatory lending. What some view as exploitive, he argued, others see as a gift.
“Some people look at subprime lending and see evil. I look at subprime lending and I see the American dream in action,” he said. “My mother lived it as a result of a finance company making a mortgage loan that a bank would not make.”
On Capitol Hill, Mr. Gramm became the most effective proponent of deregulation in a generation, by dint of his expertise (a Ph.D in economics), free-market ideology, perch on the Senate banking committee and force of personality (a writer in Texas once called him “a snapping turtle”). And in one remarkable stretch from 1999 to 2001, he pushed laws and promoted policies that he says unshackled businesses from needless restraints but his critics charge significantly contributed to the financial crisis that has rattled the nation.
He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.
And he pushed through a provision that ensured virtually no regulation of the complex financial instruments known as derivatives, including credit swaps, contracts that would encourage risky investment practices at Wall Street’s most venerable institutions and spread the risks, like a virus, around the world.
Many of his deregulation efforts were backed by the Clinton administration. Other members of Congress — who collectively received hundreds of millions of dollars in campaign contributions from financial industry donors over the last decade — also played roles.
Many lawmakers, for example, insisted that Fannie Mae and Freddie Mac, the nation’s largest mortgage finance companies, take on riskier mortgages in an effort to aid poor families. Several Republicans resisted efforts to address lending abuses. And Congressional committees failed to address early symptoms of the coming illness.
But, until he left Capitol Hill in 2002 to work as an investment banker and lobbyist for UBS, a Swiss bank that has been hard hit by the market downturn, it was Mr. Gramm who most effectively took up the fight against more government intervention in the markets.
“Phil Gramm was the great spokesman and leader of the view that market forces should drive the economy without regulation,” said James D. Cox, a corporate law scholar at Duke University. “The movement he helped to lead contributed mightily to our problems.”
In two recent interviews, Mr. Gramm described the current turmoil as “an incredible trauma,” but said he was proud of his record.
He blamed others for the crisis: Democrats who dropped barriers to borrowing in order to promote homeownership; what he once termed “predatory borrowers” who took out mortgages they could not afford; banks that took on too much risk; and large financial institutions that did not set aside enough capital to cover their bad bets.
But looser regulation played virtually no role, he argued, saying that is simply an emerging myth.
“There is this idea afloat that if you had more regulation you would have fewer mistakes,” he said. “I don’t see any evidence in our history or anybody else’s to substantiate it.” He added, “The markets have worked better than you might have thought.”
Rejecting Common Wisdom
Mr. Gramm sees himself as a myth buster, and has long argued that economic events are misunderstood.
Before entering politics in the 1970s, he taught at Texas A & M University. He studied the Great Depression, producing research rejecting the conventional wisdom that suicides surged after the market crashed. He examined financial panics of the 19th century, concluding that policy makers and economists had repeatedly misread events to justify burdensome regulation.
“There is always a revisionist history that tries to claim that the system has failed and what we need to do is have government run things,” he said.
From the start of his career in Washington, Mr. Gramm aggressively promoted his conservative ideology and free-market beliefs. (He was so insistent about having his way that one House speaker joked that if Mr. Gramm had been around when Moses brought the Ten Commandments down from Mount Sinai, the Texan would have substituted his own.)
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Deregulator Looks Back, Unswayed
Lisa Krantz for The New York Times
During his time in the Senate, Phil Gramm led the fight against more government intervention in the financial markets.
new_york_times:http://www.nytimes.com/2008/11/17/business/economy/17gramm.html
By ERIC LIPTON and STEPHEN LABATON
Published: November 16, 2008
WASHINGTON — Back in 1950 in Columbus, Ga., a young nurse working double shifts to support her three children and disabled husband managed to buy a modest bungalow on a street called Dogwood Avenue.
Related
Gramm and the ‘Enron Loophole’
A look at how Enron closely monitored Senator Phil Gramm’s handling of 2000 legislation that offered it a loophole fending off regulation.
Times Topics: Phil Gramm
The senator often spoke of his mother’s buying their home.
Phil Gramm, the former United States senator, often told that story of how his mother acquired his childhood home. Considered something of a risk, she took out a mortgage with relatively high interest rates that he likened to today’s subprime loans.
A fierce opponent of government intervention in the marketplace, Mr. Gramm, a Republican from Texas, recalled the episode during a 2001 Senate debate over a measure to curb predatory lending. What some view as exploitive, he argued, others see as a gift.
“Some people look at subprime lending and see evil. I look at subprime lending and I see the American dream in action,” he said. “My mother lived it as a result of a finance company making a mortgage loan that a bank would not make.”
On Capitol Hill, Mr. Gramm became the most effective proponent of deregulation in a generation, by dint of his expertise (a Ph.D in economics), free-market ideology, perch on the Senate banking committee and force of personality (a writer in Texas once called him “a snapping turtle”). And in one remarkable stretch from 1999 to 2001, he pushed laws and promoted policies that he says unshackled businesses from needless restraints but his critics charge significantly contributed to the financial crisis that has rattled the nation.
He led the effort to block measures curtailing deceptive or predatory lending, which was just beginning to result in a jump in home foreclosures that would undermine the financial markets. He advanced legislation that fractured oversight of Wall Street while knocking down Depression-era barriers that restricted the rise and reach of financial conglomerates.
And he pushed through a provision that ensured virtually no regulation of the complex financial instruments known as derivatives, including credit swaps, contracts that would encourage risky investment practices at Wall Street’s most venerable institutions and spread the risks, like a virus, around the world.
Many of his deregulation efforts were backed by the Clinton administration. Other members of Congress — who collectively received hundreds of millions of dollars in campaign contributions from financial industry donors over the last decade — also played roles.
Many lawmakers, for example, insisted that Fannie Mae and Freddie Mac, the nation’s largest mortgage finance companies, take on riskier mortgages in an effort to aid poor families. Several Republicans resisted efforts to address lending abuses. And Congressional committees failed to address early symptoms of the coming illness.
But, until he left Capitol Hill in 2002 to work as an investment banker and lobbyist for UBS, a Swiss bank that has been hard hit by the market downturn, it was Mr. Gramm who most effectively took up the fight against more government intervention in the markets.
“Phil Gramm was the great spokesman and leader of the view that market forces should drive the economy without regulation,” said James D. Cox, a corporate law scholar at Duke University. “The movement he helped to lead contributed mightily to our problems.”
In two recent interviews, Mr. Gramm described the current turmoil as “an incredible trauma,” but said he was proud of his record.
He blamed others for the crisis: Democrats who dropped barriers to borrowing in order to promote homeownership; what he once termed “predatory borrowers” who took out mortgages they could not afford; banks that took on too much risk; and large financial institutions that did not set aside enough capital to cover their bad bets.
But looser regulation played virtually no role, he argued, saying that is simply an emerging myth.
“There is this idea afloat that if you had more regulation you would have fewer mistakes,” he said. “I don’t see any evidence in our history or anybody else’s to substantiate it.” He added, “The markets have worked better than you might have thought.”
Rejecting Common Wisdom
Mr. Gramm sees himself as a myth buster, and has long argued that economic events are misunderstood.
Before entering politics in the 1970s, he taught at Texas A & M University. He studied the Great Depression, producing research rejecting the conventional wisdom that suicides surged after the market crashed. He examined financial panics of the 19th century, concluding that policy makers and economists had repeatedly misread events to justify burdensome regulation.
“There is always a revisionist history that tries to claim that the system has failed and what we need to do is have government run things,” he said.
From the start of his career in Washington, Mr. Gramm aggressively promoted his conservative ideology and free-market beliefs. (He was so insistent about having his way that one House speaker joked that if Mr. Gramm had been around when Moses brought the Ten Commandments down from Mount Sinai, the Texan would have substituted his own.)
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Friday, October 3, 2008
Krugman
As usual Paul Krugman is spot-on.
Op-Ed Columnist
Edge of the Abyss
comments
new_york_times:http://www.nytimes.com/2008/10/03/opinion/03krugman.html
By PAUL KRUGMAN
Published: October 2, 2008
As recently as three weeks ago it was still possible to argue that the state of the U.S. economy, while clearly not good, wasn’t disastrous — that the financial system, while under stress, wasn’t in full meltdown and that Wall Street’s troubles weren’t having that much impact on Main Street.
Post a Comment »
But that was then.
The financial and economic news since the middle of last month has been really, really bad. And what’s truly scary is that we’re entering a period of severe crisis with weak, confused leadership.
The wave of bad news began on Sept. 14. Henry Paulson, the Treasury secretary, thought he could get away with letting Lehman Brothers, the investment bank, fail; he was wrong. The plight of investors trapped by Lehman’s collapse — as an article in The Times put it, Lehman became “the Roach Motel of Wall Street: They checked in, but they can’t check out” — created panic in the financial markets, which has only grown worse as the days go by. Indicators of financial stress have soared to the equivalent of a 107-degree fever, and large parts of the financial system have simply shut down.
There’s growing evidence that the financial crunch is spreading to Main Street, with small businesses having trouble raising money and seeing their credit lines cut. And leading indicators for both employment and industrial production have turned sharply worse, suggesting that even before Lehman’s fall, the economy, which has been sagging since last year, was falling off a cliff.
How bad is it? Normally sober people are sounding apocalyptic. On Thursday, the bond trader and blogger John Jansen declared that current conditions are “the financial equivalent of the Reign of Terror during the French Revolution,” while Joel Prakken of Macroeconomic Advisers says that the economy seems to be on “the edge of the abyss.”
And the people who should be steering us away from that abyss are out to lunch.
The House will probably vote on Friday on the latest version of the $700 billion bailout plan — originally the Paulson plan, then the Paulson-Dodd-Frank plan, and now, I guess, the Paulson-Dodd-Frank-Pork plan (it’s been larded up since the House rejected it on Monday). I hope that it passes, simply because we’re in the middle of a financial panic, and another no vote would make the panic even worse. But that’s just another way of saying that the economy is now hostage to the Treasury Department’s blunders.
For the fact is that the plan on offer is a stinker — and inexcusably so. The financial system has been under severe stress for more than a year, and there should have been carefully thought-out contingency plans ready to roll out in case the markets melted down. Obviously, there weren’t: the Paulson plan was clearly drawn up in haste and confusion. And Treasury officials have yet to offer any clear explanation of how the plan is supposed to work, probably because they themselves have no idea what they’re doing.
Despite this, as I said, I hope the plan passes, because otherwise we’ll probably see even worse panic in the markets. But at best, the plan will buy some time to seek a real solution to the crisis.
And that raises the question: Do we have that time?
A solution to our economic woes will have to start with a much better-conceived rescue of the financial system — one that will almost surely involve the U.S. government taking partial, temporary ownership of that system, the way Sweden’s government did in the early 1990s. Yet it’s hard to imagine the Bush administration taking that step.
We also desperately need an economic stimulus plan to push back against the slump in spending and employment. And this time it had better be a serious plan that doesn’t rely on the magic of tax cuts, but instead spends money where it’s needed. (Aid to cash-strapped state and local governments, which are slashing spending at precisely the worst moment, is also a priority.) Yet it’s hard to imagine the Bush administration, in its final months, overseeing the creation of a new Works Progress Administration.
So we probably have to wait for the next administration, which should be much more inclined to do the right thing — although even that’s by no means a sure thing, given the uncertainty of the election outcome. (I’m not a fan of Mr. Paulson’s, but I’d rather have him at the Treasury than, say, Phil “nation of whiners” Gramm.)
And while the election is only 32 days away, it will be almost four months until the next administration takes office. A lot can — and probably will — go wrong in those four months.
One thing’s for sure: The next administration’s economic team had better be ready to hit the ground running, because from day one it will find itself dealing with the worst financial and economic crisis since the Great Depression.
Op-Ed Columnist
Edge of the Abyss
comments
new_york_times:http://www.nytimes.com/2008/10/03/opinion/03krugman.html
By PAUL KRUGMAN
Published: October 2, 2008
As recently as three weeks ago it was still possible to argue that the state of the U.S. economy, while clearly not good, wasn’t disastrous — that the financial system, while under stress, wasn’t in full meltdown and that Wall Street’s troubles weren’t having that much impact on Main Street.
Post a Comment »
But that was then.
The financial and economic news since the middle of last month has been really, really bad. And what’s truly scary is that we’re entering a period of severe crisis with weak, confused leadership.
The wave of bad news began on Sept. 14. Henry Paulson, the Treasury secretary, thought he could get away with letting Lehman Brothers, the investment bank, fail; he was wrong. The plight of investors trapped by Lehman’s collapse — as an article in The Times put it, Lehman became “the Roach Motel of Wall Street: They checked in, but they can’t check out” — created panic in the financial markets, which has only grown worse as the days go by. Indicators of financial stress have soared to the equivalent of a 107-degree fever, and large parts of the financial system have simply shut down.
There’s growing evidence that the financial crunch is spreading to Main Street, with small businesses having trouble raising money and seeing their credit lines cut. And leading indicators for both employment and industrial production have turned sharply worse, suggesting that even before Lehman’s fall, the economy, which has been sagging since last year, was falling off a cliff.
How bad is it? Normally sober people are sounding apocalyptic. On Thursday, the bond trader and blogger John Jansen declared that current conditions are “the financial equivalent of the Reign of Terror during the French Revolution,” while Joel Prakken of Macroeconomic Advisers says that the economy seems to be on “the edge of the abyss.”
And the people who should be steering us away from that abyss are out to lunch.
The House will probably vote on Friday on the latest version of the $700 billion bailout plan — originally the Paulson plan, then the Paulson-Dodd-Frank plan, and now, I guess, the Paulson-Dodd-Frank-Pork plan (it’s been larded up since the House rejected it on Monday). I hope that it passes, simply because we’re in the middle of a financial panic, and another no vote would make the panic even worse. But that’s just another way of saying that the economy is now hostage to the Treasury Department’s blunders.
For the fact is that the plan on offer is a stinker — and inexcusably so. The financial system has been under severe stress for more than a year, and there should have been carefully thought-out contingency plans ready to roll out in case the markets melted down. Obviously, there weren’t: the Paulson plan was clearly drawn up in haste and confusion. And Treasury officials have yet to offer any clear explanation of how the plan is supposed to work, probably because they themselves have no idea what they’re doing.
Despite this, as I said, I hope the plan passes, because otherwise we’ll probably see even worse panic in the markets. But at best, the plan will buy some time to seek a real solution to the crisis.
And that raises the question: Do we have that time?
A solution to our economic woes will have to start with a much better-conceived rescue of the financial system — one that will almost surely involve the U.S. government taking partial, temporary ownership of that system, the way Sweden’s government did in the early 1990s. Yet it’s hard to imagine the Bush administration taking that step.
We also desperately need an economic stimulus plan to push back against the slump in spending and employment. And this time it had better be a serious plan that doesn’t rely on the magic of tax cuts, but instead spends money where it’s needed. (Aid to cash-strapped state and local governments, which are slashing spending at precisely the worst moment, is also a priority.) Yet it’s hard to imagine the Bush administration, in its final months, overseeing the creation of a new Works Progress Administration.
So we probably have to wait for the next administration, which should be much more inclined to do the right thing — although even that’s by no means a sure thing, given the uncertainty of the election outcome. (I’m not a fan of Mr. Paulson’s, but I’d rather have him at the Treasury than, say, Phil “nation of whiners” Gramm.)
And while the election is only 32 days away, it will be almost four months until the next administration takes office. A lot can — and probably will — go wrong in those four months.
One thing’s for sure: The next administration’s economic team had better be ready to hit the ground running, because from day one it will find itself dealing with the worst financial and economic crisis since the Great Depression.
Tuesday, September 30, 2008
Herbert
Op-Ed Columnist
When Madmen Reign
comments
new_york_times:http://www.nytimes.com/2008/09/30/opinion/30herbert.html
By BOB HERBERT
Published: September 29, 2008
Madness.
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I’m not holding my breath, but I would like to see the self-proclaimed conservative, small government, anti-regulation, free-market zealots step up and take responsibility for wrecking the American economy and bringing about the worst financial crisis since the Depression.
Even now, with the house on fire, the most extreme among them won’t pick up the fire hoses and try to put it out.
With the fate of the Bush administration’s desperate $700 billion bailout of the financial industry hanging in the balance, Representative Darrell Issa, a Republican from California, stuck to his political playbook like a man covered in Krazy Glue. He pronounced himself “resolute” in his opposition to the bailout because to be otherwise would amount to a betrayal of party principles.
To deviate from those principles, in Mr. Issa’s view, would be like placing “a coffin on top of Ronald Reagan’s coffin.”
We are in very strange territory here.
George H.W. Bush warned us about “voodoo economics” in 1980, but the ideologues clamped a gag on him and put him on the Gipper’s ticket. For much of the time since then, the madmen of the right have carried the day. They were freed of their remaining few restraints with the ascendance of George W. Bush in 2000.
These were the reckless clowns who led us into the foolish multitrillion-dollar debacle in Iraq and who crafted tax policies that enormously benefited millionaires and billionaires while at the same time ran up staggering amounts of government debt. This is the crowd that contributed mightily to the greatest disparities in wealth in the U.S. since the gilded age.
This was the crowd that cut the cords of corporate and financial regulations and in myriad other ways gleefully hacked away at the best interests of the United States.
Now we’re looking into the abyss.
When President Bush went on television last week to drum up support for the bailout package, he looked almost dazed, like someone who’d just climbed out of an auto wreck.
“Our entire economy is in danger,” he said.
He should have said that he, along with his irresponsible Republican colleagues and their running buddies in the corporate and financial sectors, put the entire economy in danger. John McCain and his economic main man, Phil (“this is a mental recession”) Gramm, were right there running with them.
Credit markets have frozen almost solid, banks are toppling like dominoes and brokerage houses are vanishing like props in a magic act. And who was one of the paramount leaders of the manic anti-regulatory charge that led to this sorry state of affairs? None other than Mr. Gramm himself, a former chairman of the Senate Banking Committee.
Where is Mr. Gramm now? Would you believe that he’s the vice chairman of UBS Securities, the investment banking arm of the Swiss bank UBS? Of course you would. A New York Times article last spring noted that the “elite private bankers” of UBS “built a lucrative business in recent years by discreetly tending the fortunes of American millionaires and billionaires.”
Toadying to the rich while sabotaging the interests of working people was always Mr. Gramm’s specialty. He was considered a likely choice to be treasury secretary in a McCain administration until he made his impolitic “mental recession” comment. He also said the U.S. was a “nation of whiners.”
The tone-deaf remarks in the midst of severe economic hard times undermined Senator McCain’s convoluted efforts to reinvent himself as some kind of populist. But they were wholly in keeping with the economic worldview of conservative Republicans.
The inescapable disconnect between rhetoric and reality is often stark. Senator McCain has been ranting recently about the excessive pay and “bloated golden parachutes” of failed corporate executives. And yet one of his closest advisers on economic matters is Carly Fiorina, who was forced out as chief executive of Hewlett-Packard. Her golden parachute was an estimated $42 million.
Voters have to shoulder a great deal of the blame for the economic mess the country is in. Too many were willing, for whatever reasons, to support politicians who spat in the eye of economic common sense. Now the voodoo that permeated conservative economic policies for so many years has come back to haunt us big-time.
The question voters should be asking John McCain is whether he has stopped serving his party’s economic Kool-Aid, which has taken such a toll on working families, and is ready to change his ways. Is his sudden populist transformation the real thing or just a mirage?
In the gale force winds of a full-fledged economic hurricane, it’s fair to ask Senator McCain whether he still considers himself a conservative, small government, anti-regulation, free-market zealot. Or whether he’s seen the light.
When Madmen Reign
comments
new_york_times:http://www.nytimes.com/2008/09/30/opinion/30herbert.html
By BOB HERBERT
Published: September 29, 2008
Madness.
Post a Comment »
I’m not holding my breath, but I would like to see the self-proclaimed conservative, small government, anti-regulation, free-market zealots step up and take responsibility for wrecking the American economy and bringing about the worst financial crisis since the Depression.
Even now, with the house on fire, the most extreme among them won’t pick up the fire hoses and try to put it out.
With the fate of the Bush administration’s desperate $700 billion bailout of the financial industry hanging in the balance, Representative Darrell Issa, a Republican from California, stuck to his political playbook like a man covered in Krazy Glue. He pronounced himself “resolute” in his opposition to the bailout because to be otherwise would amount to a betrayal of party principles.
To deviate from those principles, in Mr. Issa’s view, would be like placing “a coffin on top of Ronald Reagan’s coffin.”
We are in very strange territory here.
George H.W. Bush warned us about “voodoo economics” in 1980, but the ideologues clamped a gag on him and put him on the Gipper’s ticket. For much of the time since then, the madmen of the right have carried the day. They were freed of their remaining few restraints with the ascendance of George W. Bush in 2000.
These were the reckless clowns who led us into the foolish multitrillion-dollar debacle in Iraq and who crafted tax policies that enormously benefited millionaires and billionaires while at the same time ran up staggering amounts of government debt. This is the crowd that contributed mightily to the greatest disparities in wealth in the U.S. since the gilded age.
This was the crowd that cut the cords of corporate and financial regulations and in myriad other ways gleefully hacked away at the best interests of the United States.
Now we’re looking into the abyss.
When President Bush went on television last week to drum up support for the bailout package, he looked almost dazed, like someone who’d just climbed out of an auto wreck.
“Our entire economy is in danger,” he said.
He should have said that he, along with his irresponsible Republican colleagues and their running buddies in the corporate and financial sectors, put the entire economy in danger. John McCain and his economic main man, Phil (“this is a mental recession”) Gramm, were right there running with them.
Credit markets have frozen almost solid, banks are toppling like dominoes and brokerage houses are vanishing like props in a magic act. And who was one of the paramount leaders of the manic anti-regulatory charge that led to this sorry state of affairs? None other than Mr. Gramm himself, a former chairman of the Senate Banking Committee.
Where is Mr. Gramm now? Would you believe that he’s the vice chairman of UBS Securities, the investment banking arm of the Swiss bank UBS? Of course you would. A New York Times article last spring noted that the “elite private bankers” of UBS “built a lucrative business in recent years by discreetly tending the fortunes of American millionaires and billionaires.”
Toadying to the rich while sabotaging the interests of working people was always Mr. Gramm’s specialty. He was considered a likely choice to be treasury secretary in a McCain administration until he made his impolitic “mental recession” comment. He also said the U.S. was a “nation of whiners.”
The tone-deaf remarks in the midst of severe economic hard times undermined Senator McCain’s convoluted efforts to reinvent himself as some kind of populist. But they were wholly in keeping with the economic worldview of conservative Republicans.
The inescapable disconnect between rhetoric and reality is often stark. Senator McCain has been ranting recently about the excessive pay and “bloated golden parachutes” of failed corporate executives. And yet one of his closest advisers on economic matters is Carly Fiorina, who was forced out as chief executive of Hewlett-Packard. Her golden parachute was an estimated $42 million.
Voters have to shoulder a great deal of the blame for the economic mess the country is in. Too many were willing, for whatever reasons, to support politicians who spat in the eye of economic common sense. Now the voodoo that permeated conservative economic policies for so many years has come back to haunt us big-time.
The question voters should be asking John McCain is whether he has stopped serving his party’s economic Kool-Aid, which has taken such a toll on working families, and is ready to change his ways. Is his sudden populist transformation the real thing or just a mirage?
In the gale force winds of a full-fledged economic hurricane, it’s fair to ask Senator McCain whether he still considers himself a conservative, small government, anti-regulation, free-market zealot. Or whether he’s seen the light.
Monday, September 29, 2008
Krugman
Krugman is always spot-on -- until now. He's making a valid argument, but nobody who's in the running quite meets the bill. Perhaps that's just my way of throwing up my hands in despair over the economic disaster that is befalling the country, caused, clearly, by the Phil Gramm era.
Op-Ed Columnist
The 3 A.M. Call
comments (27)
new_york_times:http://www.nytimes.com/2008/09/29/opinion/29krugman.html
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By PAUL KRUGMAN
Published: September 28, 2008
It’s 3 a.m., a few months into 2009, and the phone in the White House rings. Several big hedge funds are about to fail, says the voice on the line, and there’s likely to be chaos when the market opens. Whom do you trust to take that call?
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I’m not being melodramatic. The bailout plan released yesterday is a lot better than the proposal Henry Paulson first put out — sufficiently so to be worth passing. But it’s not what you’d actually call a good plan, and it won’t end the crisis. The odds are that the next president will have to deal with some major financial emergencies.
So what do we know about the readiness of the two men most likely to end up taking that call? Well, Barack Obama seems well informed and sensible about matters economic and financial. John McCain, on the other hand, scares me.
About Mr. Obama: it’s a shame that he didn’t show more leadership in the debate over the bailout bill, choosing instead to leave the issue in the hands of Congressional Democrats, especially Chris Dodd and Barney Frank. But both Mr. Obama and the Congressional Democrats are surrounded by very knowledgeable, clear-headed advisers, with experienced crisis managers like Paul Volcker and Robert Rubin always close at hand.
Then there’s the frightening Mr. McCain — more frightening now than he was a few weeks ago.
We’ve known for a long time, of course, that Mr. McCain doesn’t know much about economics — he’s said so himself, although he’s also denied having said it. That wouldn’t matter too much if he had good taste in advisers — but he doesn’t.
Remember, his chief mentor on economics is Phil Gramm, the arch-deregulator, who took special care in his Senate days to prevent oversight of financial derivatives — the very instruments that sank Lehman and A.I.G., and brought the credit markets to the edge of collapse. Mr. Gramm hasn’t had an official role in the McCain campaign since he pronounced America a “nation of whiners,” but he’s still considered a likely choice as Treasury secretary.
And last year, when the McCain campaign announced that the candidate had assembled “an impressive collection of economists, professors, and prominent conservative policy leaders” to advise him on economic policy, who was prominently featured? Kevin Hassett, the co-author of “Dow 36,000.” Enough said.
Now, to a large extent the poor quality of Mr. McCain’s advisers reflects the tattered intellectual state of his party. Has there ever been a more pathetic economic proposal than the suggestion of House Republicans that we try to solve the financial crisis by eliminating capital gains taxes? (Troubled financial institutions, by definition, don’t have capital gains to tax.)
But even President Bush has, in the twilight of his administration, turned to relatively sensible people to make economic decisions: I’m not a fan of Mr. Paulson, but he’s a vast improvement over his predecessor. At this point, one has the suspicion that a McCain administration would have us longing for Bush-era competence.
The real revelation of the last few weeks, however, has been just how erratic Mr. McCain’s views on economics are. At any given moment, he seems to have very strong opinions — but a few days later, he goes off in a completely different direction.
Thus on Sept. 15 he declared — for at least the 18th time this year — that “the fundamentals of our economy are strong.” This was the day after Lehman failed and Merrill Lynch was taken over, and the financial crisis entered a new, even more dangerous stage.
But three days later he declared that America’s financial markets have become a “casino,” and said that he’d fire the head of the Securities and Exchange Commission — which, by the way, isn’t in the president’s power.
And then he found a new set of villains — Fannie Mae and Freddie Mac, the government-sponsored lenders. (Despite some real scandals at Fannie and Freddie, they played little role in causing the crisis: most of the really bad lending came from private loan originators.) And he moralistically accused other politicians, including Mr. Obama, of being under Fannie’s and Freddie’s financial influence; it turns out that a firm owned by his own campaign manager was being paid by Freddie until just last month.
Then Mr. Paulson released his plan, and Mr. McCain weighed vehemently into the debate. But he admitted, several days after the Paulson plan was released, that he hadn’t actually read the plan, which was only three pages long.
O.K., I think you get the picture.
The modern economy, it turns out, is a dangerous place — and it’s not the kind of danger you can deal with by talking tough and denouncing evildoers. Does Mr. McCain have the judgment and temperament to deal with that part of the job he seeks?
Op-Ed Columnist
The 3 A.M. Call
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new_york_times:http://www.nytimes.com/2008/09/29/opinion/29krugman.html
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By PAUL KRUGMAN
Published: September 28, 2008
It’s 3 a.m., a few months into 2009, and the phone in the White House rings. Several big hedge funds are about to fail, says the voice on the line, and there’s likely to be chaos when the market opens. Whom do you trust to take that call?
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I’m not being melodramatic. The bailout plan released yesterday is a lot better than the proposal Henry Paulson first put out — sufficiently so to be worth passing. But it’s not what you’d actually call a good plan, and it won’t end the crisis. The odds are that the next president will have to deal with some major financial emergencies.
So what do we know about the readiness of the two men most likely to end up taking that call? Well, Barack Obama seems well informed and sensible about matters economic and financial. John McCain, on the other hand, scares me.
About Mr. Obama: it’s a shame that he didn’t show more leadership in the debate over the bailout bill, choosing instead to leave the issue in the hands of Congressional Democrats, especially Chris Dodd and Barney Frank. But both Mr. Obama and the Congressional Democrats are surrounded by very knowledgeable, clear-headed advisers, with experienced crisis managers like Paul Volcker and Robert Rubin always close at hand.
Then there’s the frightening Mr. McCain — more frightening now than he was a few weeks ago.
We’ve known for a long time, of course, that Mr. McCain doesn’t know much about economics — he’s said so himself, although he’s also denied having said it. That wouldn’t matter too much if he had good taste in advisers — but he doesn’t.
Remember, his chief mentor on economics is Phil Gramm, the arch-deregulator, who took special care in his Senate days to prevent oversight of financial derivatives — the very instruments that sank Lehman and A.I.G., and brought the credit markets to the edge of collapse. Mr. Gramm hasn’t had an official role in the McCain campaign since he pronounced America a “nation of whiners,” but he’s still considered a likely choice as Treasury secretary.
And last year, when the McCain campaign announced that the candidate had assembled “an impressive collection of economists, professors, and prominent conservative policy leaders” to advise him on economic policy, who was prominently featured? Kevin Hassett, the co-author of “Dow 36,000.” Enough said.
Now, to a large extent the poor quality of Mr. McCain’s advisers reflects the tattered intellectual state of his party. Has there ever been a more pathetic economic proposal than the suggestion of House Republicans that we try to solve the financial crisis by eliminating capital gains taxes? (Troubled financial institutions, by definition, don’t have capital gains to tax.)
But even President Bush has, in the twilight of his administration, turned to relatively sensible people to make economic decisions: I’m not a fan of Mr. Paulson, but he’s a vast improvement over his predecessor. At this point, one has the suspicion that a McCain administration would have us longing for Bush-era competence.
The real revelation of the last few weeks, however, has been just how erratic Mr. McCain’s views on economics are. At any given moment, he seems to have very strong opinions — but a few days later, he goes off in a completely different direction.
Thus on Sept. 15 he declared — for at least the 18th time this year — that “the fundamentals of our economy are strong.” This was the day after Lehman failed and Merrill Lynch was taken over, and the financial crisis entered a new, even more dangerous stage.
But three days later he declared that America’s financial markets have become a “casino,” and said that he’d fire the head of the Securities and Exchange Commission — which, by the way, isn’t in the president’s power.
And then he found a new set of villains — Fannie Mae and Freddie Mac, the government-sponsored lenders. (Despite some real scandals at Fannie and Freddie, they played little role in causing the crisis: most of the really bad lending came from private loan originators.) And he moralistically accused other politicians, including Mr. Obama, of being under Fannie’s and Freddie’s financial influence; it turns out that a firm owned by his own campaign manager was being paid by Freddie until just last month.
Then Mr. Paulson released his plan, and Mr. McCain weighed vehemently into the debate. But he admitted, several days after the Paulson plan was released, that he hadn’t actually read the plan, which was only three pages long.
O.K., I think you get the picture.
The modern economy, it turns out, is a dangerous place — and it’s not the kind of danger you can deal with by talking tough and denouncing evildoers. Does Mr. McCain have the judgment and temperament to deal with that part of the job he seeks?
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