Moon of Alabama Brecht quote
December 21, 2007

Krugman has an Illusion

Paul Krugman laments about the ideology that drove the stock and mortgage bubble:

Of course, now that it has all gone bad, people with ties to the financial industry are rethinking their belief in the perfection of free markets. Mr. Greenspan has come out in favor of, yes, a government bailout. “Cash is available,” he says — meaning taxpayer money — “and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this.”

Given the role of conservative ideology in the mortgage disaster, it’s puzzling that Democrats haven’t been more aggressive about making the disaster an issue for the 2008 election. They should be: It’s hard to imagine a more graphic demonstration of what’s wrong with their opponents’ economic beliefs.

Dear Paul, I don't find this puzzling at all.

2008 Election Cycle:
Finance/Insurance/Real Estate:

Long-Term Contribution Trends
Donations to Democrats $79,749,633
Donations to Republicans $66,274,624

Top 20 Senators
1 Clinton, Hillary (D) $12,302,928
2 Obama, Barack (D) $9,834,870
3 Dodd, Christopher J (D) $5,212,168
4 McCain, John (R) $5,208,827
5 Biden, Joseph R Jr (D) $1,321,819

The 'opponents’ economic beliefs' are the same believes the top dog Democrats have. It is what pays their campaigns. Like the repubs, they will bail out the financial industry with tax money.

To assume something different is like dreaming those Democrats want to get out of Iraq.

It's an illusory world view.

Posted by b on December 21, 2007 at 9:01 UTC | Permalink

Comments

Damn b, you get better with each post, I wish I had your ability to slap the shit out of the right people as you do here.

Posted by: Uncle $cam | Dec 21 2007 9:42 utc | 1

b-, AWESOME/HORRIFYING - Gotta be sure they own 'em all...

Posted by: jj | Dec 21 2007 9:54 utc | 2

Damn! You gotta get up early in the morning to best B! Over here in Euro-land we read the NYT before y'all in the USA and having just read the PK op ed piece a while ago (still morning here, tho' just), B already has the critique posted. Whew!

PK's op ed, like so many, provides a good analysis and then, as I've previously noted, wimps out at the end. Lame. Defeated. "Why don't the dems ...?" whine. Why can't PK just take it a little bit further ... and discuss the numbers B does? Is that such a dangerous thing to do at the NYT?

You nailed it yet again B and thanks for the info and links. How I wish PK read MoA.


Posted by: Hamburger | Dec 21 2007 10:42 utc | 3

It was under president Clinton that the separation between financial banking and commercial banking was removed, making possible financial chimeras like sub-prime mortgage bonds.

The Democrats cannot criticize Republicans on this point wihtout leaving themselves wide open to counterattack.

Both parties tout the vitues of the free market while working quietly to keep it well under control.

Posted by: ralphieboy | Dec 21 2007 11:30 utc | 4

Hamburger, “Is that such a dangerous thing to do at the NYT?”
In a word “Yes”. In that vein, exactly what are “we’all” backward folks here in the U.S. missing by not reading the NYT as some adored scroll (whether from heaven or hades)? Not exactly my first or last read at 1:00 am. Of course I am pleased to see B criticize the stories as he does very admirably. Personally, I’m sick of hearing every top NYT story repeated 100 times from every copycat news source for the rest of the day. Hearing from the same experts day after day is not my desired daily bread. That is why I enjoy MOA so much. Most U.S. folks realize that politicians in both parties are bought and paid for. No doubt Rush Limbaugh has informed his ditto heads repeatedly how Hillary Clinton is one of the largest receivers of corporate funding. Maybe Paul Krugman didn’t feel the need… hmmm? Well b was certainly correct to emphasize the words “opponents economic beliefs”.

Posted by: Rick | Dec 21 2007 11:58 utc | 5

My point, Rick, was the time zone difference and that B takes on the MSM pretty damn early in the day, even while some, certainly not all in the US, may still be in bed - not by any means that the NYT is a valuable source of news, but rather is a bushco meme-machine to be scrutinized and countered. :-)

PK pulls his punches. Eugene Robinson, in the even-worse-than-the-NYT WaPo, seldom does. PK should have ER's balls. I read these op ed people with the ear of my US relatives, who don't read MoA, but could conceivably be roused to think given a bit more juice. Hopeless, I know.

Posted by: Hamburger | Dec 21 2007 13:34 utc | 6

perverse socialism.

Posted by: annie | Dec 21 2007 15:29 utc | 7

hard to find time for analysts like krugman who can't even see (or, perhaps, tell you) what they're looking at

Posted by: b real | Dec 21 2007 15:47 utc | 8

Towards the end, I voiced the suspicion that Bilmon was in fact a composite personality of aliens -- how else to explain his perspicacity?

Indeed, although Bernhard, being German, and therefore, suposedly, of a master race, this is just too much -- fess up Bernhard, how often do you get messages from the Mother Ship?

All snark aside, Bernhard, you are lightyears beyond people who get super wages for "making news"

Posted by: Chuck Cliff | Dec 21 2007 15:55 utc | 9

Towards the end, I voiced the suspicion that Bilmon was in fact a composite personality of aliens -- how else to explain his perspicacity?

Indeed, although Bernhard, being German, and therefore, suposedly, of a master race, this is just too much -- fess up Bernhard, how often do you get messages from the Mother Ship?

All snark aside, Bernhard, you are lightyears beyond people who get super wages for "making news"

Posted by: Chuck Cliff | Dec 21 2007 15:55 utc | 10

1999-

After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts. Supporters hail the change as the long-overdue demise of a Depression-era relic.

On Oct. 21, with the House-Senate conference committee deadlocked after marathon negotiations, the main sticking point is partisan bickering over the bill's effect on the Community Reinvestment Act, which sets rules for lending to poor communities. Sandy Weill calls President Clinton in the evening to try to break the deadlock after Senator Phil Gramm, chairman of the Banking Committee, warned Citigroup lobbyist Roger Levy that Weill has to get White House moving on the bill or he would shut down the House-Senate conference. Serious negotiations resume, and a deal is announced at 2:45 a.m. on Oct. 22. Whether Weill made any difference in precipitating a deal is unclear.

On Oct. 22, Weill and John Reed issue a statement congratulating Congress and President Clinton, including 19 administration officials and lawmakers by name. The House and Senate approve a final version of the bill on Nov. 4, and Clinton signs it into law later that month.

Just days after the administration (including the Treasury Department) agrees to support the repeal, Treasury Secretary Robert Rubin, the former co-chairman of a major Wall Street investment bank, Goldman Sachs, raises eyebrows by accepting a top job at Citigroup as Weill's chief lieutenant. The previous year, Weill had called Secretary Rubin to give him advance notice of the upcoming merger announcement. When Weill told Rubin he had some important news, the secretary reportedly quipped, "You're buying the government?"

Posted by: Michael Klett | Dec 21 2007 18:10 utc | 11

oops, please ignore my auto-filled name.

Posted by: biklett | Dec 21 2007 18:13 utc | 12

michael..After 12 attempts in 25 years, Congress finally repeals Glass-Steagall, rewarding financial companies for more than 20 years and $300 million worth of lobbying efforts.

my, how times have changed..

fyi


The financial sector spent nearly $368 million on lobbying the federal government in 2006, with the insurance and real estate industries spending the most."

...

The sector donated $252 million to federal campaigns and candidates in 2006, with the National Assn. of Realtors, Goldman Sachs and the American Bankers Assn. donating the most.

goldman sachs gets around.

Posted by: annie | Dec 21 2007 18:16 utc | 13

michael, that's a very informative link..

Posted by: annie | Dec 21 2007 18:29 utc | 14

One of the under reported little sub plots in the sub_prime saga is they way that asian nations are reclaiming their balance of payments overhang. The amerikan taxpayer is bailing out the big banks by providing them with liquidity, in return for which they get - zilch. The big Asian financial insitutions whose population doesn't live on credit but saves and whose banks seem to have forgone the offer to make easy money concealing risk are using their position to acquire the banks formerly regarded as the foundation of the capitalist economy. Investment Bank Merrill Lynch is currently in discussions with Temasek Holdings the Singaporean Government Superannuation fund managers in a cash for equity swap which is likely to make Temasek the largest shareholder in Merrill Lynch.
Singapore eh. Singapore's population 4.5 million (CIA Factbook July 07) is now the second richest nation in the world on a per capita basis.

Look at you now Singapore, I can remember sleazing down Bugis St in the old Chinatown when most people thought Singapore was just another sweatshop city.

Last month Temasek sat down with UBS (Union Bank of Switzerland) to help bail them out in return for equity. That time they were involved in an arrangement through one of the Gulf States which appears to be fronting for the Saudi Royal family. That isn't being well received in the land of cuckoo clocks, probably those closet People's Party voters who don't mind burning Arab oil but object to paying for it.

Posted by: Debs is dead | Dec 21 2007 21:30 utc | 15

And where will those taxpayer bailout dollars eventually end up:

The equity units carry a fixed annual interest rate of nine percent before conversion on Aug. 17, 2010.

China's state forex investment company to invest $5 bln in Morgan Stanley

Posted by: Sam | Dec 21 2007 23:23 utc | 16

In 1999 the Clinton Administration was greatly weakened by the trumped up BS of the impeachment over the Lewinsky affair. I don't know if he might have signed the bill anyway without that abuse of Congress' constitutional role, but his administration was in a lot weaker position to beat back bad legislation at that point.

Posted by: Maxcrat | Dec 22 2007 0:21 utc | 17

Max,
You're missing the whole point of this thread. Robert Rubin, et al., weren't in bed with Lewinsky. The Dems are in bed with the GOP, taking turns on who's on top.

Here's an hilarious interview with the philosopher king Rubin:

PAUL SOLMAN: Power fascinates you?

ROBERT RUBIN: No, not power. No, no. I think it's something different. And I didn't express this this way in the book because I just thought it sounded too, oh, I don't know, too heavy or something, but it's basically a sense that if you think about the totality of time and space, we are very small, individually.

PAUL SOLMAN: Yeah, it's a really ... bummer, isn't it?

ROBERT RUBIN: Well, it is and isn't. I mean, it sort of ... yes, it certainly has that aspect about it, but it also means that if you don't do something, if something goes wrong or you go ... you do the Mexican financial support program and it fails or you run into great trouble because you're trying to do a debt-ceiling issue and that fails ... yeah, on the one hand you take it very seriously, but on the other hand, you recognize that 100,000 years from now nobody is going to care.

Now, that train of thought has led a lot of people unfortunately into not being engaged with life. I feel that you can have that kind of perspective and also be enormously and intensely committed to what you're doing. And I, somehow or another, combine the both.

PAUL SOLMAN: And that's what the philosophers who have called themselves existentialists believed. There might not be any meaning out there but that just meant that you had to give life meaning.

ROBERT RUBIN: I think that is the fullness of existentialism. By the way, that same mind set was shared by, I think, quite a few other people at treasury.

PAUL SOLMAN: There was a cabal of existentialists?

Link

Posted by: biklett | Dec 22 2007 2:04 utc | 18

Biklett - I get the point, but I only partially buy it. Both parties are corrupted, yes. But presidents and the people in their administrations do differ, all people do, and Clinton would probably not otherwise have gone along with overturning Glass-Steagall. So its not so much that he was just as bad as the republicans in Congress at the time, but he had lost the capital to resist it.

Posted by: Maxcrat | Dec 22 2007 13:50 utc | 19

"Corporations have been enthroned and an era of corruption in high places will follow, and the money power of the country will endeavor to prolong its reign by working upon the prejudices of the people until all wealth is aggregated in a few hands and the Republic is destroyed."
— Abraham Lincoln

"Among us today a concentration of private power without equal in history is growing"
— Franklin Delano Roosevelt

"The Matrix is a system, Neo. That system is our enemy. And when you're inside, and look around, what do you see? Businessmen. Teachers. Lawyers. Carpenters. The very minds of the people we are trying to save. But, until we do, these people are still a part of that system... You have to understand: Most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it."
— Morpheus (from the film The Matrix)

“With their wealth larger than many countries (e.g., Wal-Mart is bigger than Sweden's economy), and no opposing social force challenging the strength of corporations, it would seem reasonable to follow a trend-line into the future.
…The big question may narrow down to be how far along the road the world is toward irretrievably being locked into a form of socioeconomic control that we have barely begun to face. Already, the mass media (corporate outlets) mislead most of their public with the notions that we as individuals still have an independent government and that much of society is run by community institutions such as schools and the friendly police force. The police can be said to be in every neighborhood in the world that has allowed U.S. corporate influence: Anytown USA and Iraq as well.”
— Jan Lunberg (from The Rise of Corporate Rule)


Posted by: Rick | Dec 22 2007 14:43 utc | 20

@Rick - nice quotes -it's back so 1920s the 'Trusts' and all that and its consequences.

Posted by: b | Dec 22 2007 16:32 utc | 21

Shit, b, you over krug Krugman -- I would never had caught this -- and I have children caught in this real estate scrunch.

Posted by: Chuck Cliff | Dec 22 2007 19:50 utc | 22

@Chuck - you over krug Krugman - sometimes. He is very good in analysing stuff and his textbooks are very well written.

But Krugman's solutions or recipies are often flawed. His record on those is not really impressive: Lots of illusions.

Posted by: b | Dec 22 2007 20:30 utc | 23

@Rick -another quote I just stumpled upon:

Thomas Jefferson:
The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.
not sure of the source though ...

Posted by: b | Dec 22 2007 20:53 utc | 24

Thanks for all these quotes - I have been feeling particularly discouraged by thinking about corporate power and money control in this country. I do not have housing debt but medical debt - another way the gargantuan insurance industry has us Americans in submission. And even many of our reformers can only imagine a Massachusetts-style solution, which further entrenches insurance as our masters. My husband is one of the very rare physicians in the US of whom I know who knows the biggest problem in medicine today is insurance - most think the problem is the uninsured - and as he is not rich, his views are ignored. Nice to revisit this blog - I'm a Billmon alumna and miss his analysis of things, though B. does very well also.

Posted by: francoise | Dec 23 2007 3:47 utc | 25

Absolutely great post, b.

US "liberals" are really discouraged from thinking complete thoughts. Eventually they just sort of quit doing it. Krugman is not the only one to steadily lose his edge by failing to take his thoughts on to the next level.

Posted by: Gaianne | Dec 23 2007 5:47 utc | 26

@Rick

How could you forget Eisenhower's 1961 farewell speech warning about the rise of the military-industrial complex...? I can't say that I like Ike or anything, but if you're going to quote a tyrant like Lincoln...

If you just wanted to be pithy, you could simply excerpt this part:

In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.

We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.


Posted by: Monolycus | Dec 23 2007 13:25 utc | 27

The comments to this entry are closed.