Matt Yglesias

44 Responses to “Why Is There Something Rather Than Nothing?”

1. Calvin Jones and the 13th Apostle Says:
   September 23rd, 2008 at 8:43 pm

   Cramer is an entertainer. You also have to remember one thing. Both Paulson and Cramer are Goldman Sachs alum. That tells you all you need to know. If you take investment advice from Cramer, you have to be one of the dumbest MF’ers out there.

2. El Cid Says:
   September 23rd, 2008 at 8:44 pm

   C/P on Balloon Juice:

   David Cay Johnston, author of a number of books on the U.S. financial and tax system, and a guy that all sorts of people and politicians ought to listen to, said this in a letter to Poynter:

   Journalists: Start Your Skepticism
   From DAVID CAY JOHNSTON

   In covering the proposed $700 billion bailout of Wall Street don’t repeat the failed lapdog practices that so damaged our reputations in the rush to war in Iraq and the adoption of the Patriot Act. Don’t assume that Congress must act instantly, as so many news stories state as if it was an immutable fact. Don’t assume there is a case just because officials say there is.

   The coverage of the Paulson plan focuses on the edges, on the details. The focus should be on the premise. And be skeptical of what gullible Congressional leaders, most of them up before the voters in a few weeks, say after being given a closed-door meeting on supposed horrors.

   The Administration has scared the markets and some key legislative leaders, but it has not laid out a coherent, specific and compelling need for this enormous proposal, which is the equivalent of a one-time 55 percent income tax surcharge. (Instead the money will be borrowed, so ask from whom and how this much can be raised so quickly if the credit markets are nearly seized up with fear.)

   Ask this question — are the credit markets really about to seize up?

   If they are then lots of business owners should be eager to tell how their bank is calling their 90-day revolving loans, rejecting new loans and demanding more cash on deposit. I called businessmen I know yesterday and not one of them reported such problems. Indeed, Citibank offered yesterday to lend me tens of thousands of dollars on my signature at 2.99 percent, well below the nearly 5 percent inflation rate. That offer came after I said no last week to a 4.99 percent loan.

   If the problem is toxic mortgages then how come they are still being offered all over the Internet? On the main page AOL generates for me there is an ad for a 1.9% loan (which means you pay that interest rate and the rest of the interest is added to your balance due.) Why oh why or why would taxpayers be bailing out banks that are continuing to sell these toxic loans?

   How does the proposal help Joe and Mary Sixpack who can afford their current monthly payment, but not the increased interest rate that has been or soon will take effect? Every day bankers work out loans with customers — so why are taxpayers being asked to act when banks are largely on strike, refusing to negotiate revised deals with many loan customers?

   How about interviewing small landlords who were drawn into these toxic loans. Are banks negotiating with them? If not it means more foreclosures and renters who had nothing to do with this being evicted. Ask why banks are refusing (landlords I spoke to said they are) to negotiate with small landlords.

   What steps are being taken to take back bonuses, fees and other compensation from the folks who got rich selling toxic mortgages and illiquid investments that Secretary Paulsen claims are threatening the whole system.

   How will adding $700 billion to the national debt ease strains on the credit markets?

   As of now we are, as a group, behaving just as we did the last two times the administration sought to rush through a hastily thought out, ill-conceived plan. Why in the world are we being so gullible and naive? whatever happened to the core value of journalism — check it out?

   The questioning on the Sunday talk shows was all softball. ABC, CBS, NBC and Fox, shame on your anchors and roundtable regulars all for engaging in lightweight faux journalism. This passivity, superficiality and gullibility was at its worse Monday night on NBC in the banter between anchor Brian Williams and a CNBC correspondent with its utter lack of skepticism.

   Here are some question to ask:

   Do we need a bailout of American and foreign banks? Show us in detail the reasons for this, and the numbers: make the case.

   Is there a market solution to this? If so, why impose a government solution?

   If not what does that tell us about our entire economic theory?

   Is there a less expensive solution?

   How do we know this will not just be a downpayment on a much bigger bailout?

   Is there a solution that provides direct help to those who took out these loans, rather than those who sold them?

   If AIG and others are too big to fail, what does that tell us about government anti-trust policy and regulatory policy and inaction?

   Why have both Goldman Sachs and Morgan Stanley made clear that they want IN on this deal? Get skeptical and ask the basic questions — who benefits, how much and what makes this plan so attractive that Goldman and MS want to participate? Ditto for GE. That they are others want to be included should prompt a great deal of skeptical questioning.

   How does banning short selling of the stocks of 900 companies help the markets? (The markets are heavily biased toward the sell side, so why constrain the shorts, who often turn out to be right about stocks whose share prices has been artificially inflated.)

   How is banning short selling of this growing list of companies show a commitment to “free markets,” a stated goal of this and a long lost of previous administrations?

   During this short selling ban, why are there no parallel controls on insiders getting out of their positions?

   Reporters, hit the streets and telephones to ask business owners if their credit lines have been frozen. Look at swings in the stock market and put the recent swings in perspective.

   Look on the Internet and see all of the ads for the very toxic mortgages that are supposedly at the core of this mess. Ask why are 1.9% loans (in which you pay that in cash and the rest of the interest is added to your mortgage balance) still being sold? Find out who continues to buy these loans.

   Lets do our job — be skeptical and ask the core questions, not the detailed ones around the edges.

3. Kolohe Says:
   September 23rd, 2008 at 8:49 pm

   always-idiotic Jim Cramer

   Fwiw, I think he’s favors Obama. He’s said on one of Chris Matthew’s(!) saturday shows that the markets will rally the day after an Obama election because they will be sure the Republicans will be leaving.

4. Kolohe Says:
   September 23rd, 2008 at 8:52 pm

   “because they will then be sure that the Republicans are leaving.

   (also ignore the (!), I missed that the subject of the post was Hardball)

5. JJF Says:
   September 23rd, 2008 at 8:53 pm

   I had a similar reaction watching the show. My guess (which is exactly what most people have this, a guess) is that the financial system IS in crisis (contrary to what Chris Bowers and a growing chorus on the blogosphere think) and that SOMETHING needs to be done.

   The question remains: what to do?

   The Dodd provisions need to be included, at minimum. I do think equity positions for the gov’t need to be part of the package. And I think the final amount needs to be a fraction of the $700 million that Paulson is asking for, enough to get us through the elections–unless Paulson can make a convincing case why he needs the whole amount.

   I think the response to the crisis should do two things: (a) avoid the immediate implosion of the financial markets, which may lead to a depression, and (b) get us through the election season till more permanent measures can be implemented. An Obama/Dem Congress gov’t will give us a better chance at real, lasting reform.

6. rwm Says:
   September 23rd, 2008 at 8:58 pm

   Jim Cramer is not an idiot. His piece in New York magazine about the current crisis puts The Atlantic to shame. It was so well-written even I could understand it. He made sense, and I didn’t fall asleep reading it.

7. Wilbur Says:
   September 23rd, 2008 at 9:15 pm

   Always dig the Leibniz references, however gratuitous.

8. Jim Says:
   September 23rd, 2008 at 9:34 pm

   Wolf Blitzer made the same mistake when he asked Ron Paul about the bailout:

   http://www.youtube.com/watch?v=3qLefrvxbq8

   Ron Paul actually pointed out the false choice of doing exactly what Paulson wants or “nothing.”

9. dB Says:
   September 23rd, 2008 at 9:37 pm

   Jim Cramer has no friend in Yglesias. But that’s okay. Other people want to make friends, Cramer just wants to make YOU money.

10. howard Says:
    September 23rd, 2008 at 9:39 pm

    well, i think we can already say the paulson plan, as presented, is dead.

    what we don’t know is what will replace it, and whether it will be better than doing nothing.

    i favor no bill over a bad bill and a good bill over no bill.

11. Paul Says:
    September 23rd, 2008 at 9:49 pm

    I watched part of the same show and was instantly reminded of the same logic that has been used for the Iraq War. We can’t leave because if we do something really bad is going to happen. But of course we don’t know what it is that is so bad that we can’t leave and let it happen. We just know that it’s so bad that we can’t even comprehend leaving so let’s don’t do anything that might seem like we leaving. Now that’s been turned on it’s head because now if we don’t do anything immediately to bail out Wall St., then Sarah Palin’s rapture will be just around the corner….

12. kafka Says:
    September 23rd, 2008 at 10:05 pm

    “…the financial system IS in crisis (contrary to what Chris Bowers and a growing chorus on the blogosphere think) and that SOMETHING needs to be done.”

    That’s what the Japanese thought in 1990. So they bailed out banks, had serial “stimulus packages”, etc., etc.

    Result: 18 years of deflation, 5 recessions, an horrendous national debt. And they had/have an indigenous savings pool to draw on and a thriving export trade. We have neither.

13. lowellfield Says:
    September 23rd, 2008 at 10:08 pm

    Jim Cramer may be a lot of things, but he’s not “always-idiotic.”

14. Jay Dwight Says:
    September 23rd, 2008 at 10:14 pm

    I would sign on to any plan negotiated by Warren Buffet. The government should hire him to hammer out deals like the one he just concluded with Goldman. I feel quite certain no one pulled any wool over his eyes.

15. Alejandro Says:
    September 23rd, 2008 at 10:15 pm

    I can’t believe I’m the first one to quote Yes, Minister on “The Politician’s Syllogism”:

    -We must do something.
    -This is something.
    -Therefore, we must do this.

16. Steve LaBonne Says:
    September 23rd, 2008 at 10:17 pm

    Jim Cramer may be a lot of things, but he’s not “always-idiotic.”

    The people convinced by him to buy Countrywide stock might beg to differ…

17. Rich Says:
    September 23rd, 2008 at 10:19 pm

    Cramer isn’t an idiot–he’s just focused (like a laser beam, to coin a phrase) on share prices. That’s the economy for him, that’s all well-being. Certainly the bailout, as proposed, would be a share-price bonanza. So it’s perfectly reasonable for him to want the bailout as-is. Everyone has their perspective, and it’s the job of Congress to balance the perspectives and chart a course that takes all legitimate interests into account. God help us all, but that’s the idea at least.

18. blah Says:
    September 23rd, 2008 at 10:29 pm

    What I want to know is why Paulson is trying to spook the markets? Why did he think it would a good idea to whip up hysteria over the bailout, rather than proceed in a deliberate, conciliatory manner that would calm the markets?

19. Petey Says:
    September 23rd, 2008 at 11:08 pm

    “Jim Cramer is not an idiot. His piece in New York magazine about the current crisis puts The Atlantic to shame. It was so well-written even I could understand it. He made sense, and I didn’t fall asleep reading it.”

    Right. He’s a clown, not an idiot. And I mean that in the best sense. He’s a genuine audience pleaser, in both print and TV. That’s what his entire second career is based upon.

    That doesn’t make him a particularly good person to listen to on matters of substance, however. He’s a pretty shallow thinker on his very best days. The ability to keep an audience from falling asleep doesn’t imply any degree of fundamental correctness.

    —–

    And to the person speculating that Cramer’s Obama general election support puts him on the side of the angels here, it’s worth noting that he’s been a nominal Democrat for his entire life, with only some equivocation during the post-9/11 dark days. That alone doesn’t put on him on the side of the angels here.

20. Petey Says:
    September 23rd, 2008 at 11:10 pm

    “What I want to know is why Paulson is trying to spook the markets? Why did he think it would a good idea to whip up hysteria over the bailout, rather than proceed in a deliberate, conciliatory manner that would calm the markets?”

    I’ve got to assume this is high irony rather than a serious inquiry…

21. Kolohe Says:
    September 23rd, 2008 at 11:42 pm

    And to the person speculating that Cramer’s Obama general election support puts him on the side of the angels here

    Didn’t say that. Just presenting the contrapositive to ‘always idiotic Jim Cramer.’ He could very well be also a member of the International Association of Defective Timepieces.

22. Kolohe Says:
    September 23rd, 2008 at 11:45 pm

    Or, to put is another way, just pointing out that Matt used rounding, but not saying anything about the size of the error.

23. Jason_M Says:
    September 24th, 2008 at 1:03 am

    Cramer’s no idiot. He knows his stuff; he’s often wrong; and he tells you that he’s often wrong. I would always, always listen to what he says. Matt might want to say more about why he feels free to toss that “always idiotic” phrase out there.

24. Mike Says:
    September 24th, 2008 at 1:04 am

    Cramer is plainly not an idiot. Matt just doesn’t like him, which is pretty understandable. He’s an acquired taste at best.

    To the point at hand: nowhere in the segment did either guest claim every detail of the Paulson plan was essential. They were both arguing for the quick (in Cramers case especially quick) accomplishment the task that needs to be accomplished here. Paulson’s plan does that; I think Pearlstein has greater problems with the manifold defects of the Paulson plan, whereas Cramer just wants to see it get done now and doesn’t care much about the details. It’s not like if Paulson had included the things Matt wants to see he’d be screaming bloody murder at the help for mortgage payers and oversight of the Treasury’s authority.

    This segment was a broad-strokes presentation of the case (which Matt now is persuaded to–see later posts) for the need for a sufficient bailout.

25. Mike Says:
    September 24th, 2008 at 1:06 am

    …that is Cramer woudn’t be screaming bloody murder if the plan was better. (Unclear in previous comment.) He wasn’t address ing the Paulson plan specifically–he knows the details are still being worked out. He was addressing the urgent need for a bailout, which Matt now acknowledges.

    Nice try again on burying Cramer, Matt. See you next time.

26. Mike Says:
    September 24th, 2008 at 1:18 am

    Also: if Jim Cramer were capable of this: “Merely citing the urgent need for action is a transparent effort to foreclose debate.” It would be hard to call him an idiot. That would be a pretty savvy strategy if that were what he were up to. It’s probably true he hasn’t “canvassed” enough other ways to accomplish “#1″, but that’s not because he is hostile to any other way. He just wants the action done now, whatever it is, as long as it “accomplishes #1.” His desire for urgency is sincere, and arguably justified. Arguably justified, but certainly sincere. He’s not in principle against a better way to do this and ginning up a rush, a-la Cheney 2003. It’s quite unfair of Matt to accuse him of that given how much corroboration Cramer has on the urgency of this. Not that they couldn’t all be wrong, not that we shouldn’t ignore their urgency and make sure what we do makes sense. But htey definitely do feel sincere urgency, and are not ginning that up in a bad-faith negotiating strategy, which is exactly what Matt is accusing Cramer of here.

27. Mike Says:
    September 24th, 2008 at 1:21 am

    Also: if Jim Cramer were capable of this: “Merely citing the urgent need for action [in] a transparent effort to foreclose debate,” it would be hard to call him an idiot as that would actually be a pretty savvy negotiating strategy if that were what he were up to. It’s probably true he hasn’t “canvassed” enough other ways to accomplish “#1″, but that’s not because he is hostile to any other way. He just truly believes the action needs to be done now, whatever it is, as long as it “accomplishes #1.” His desire for urgency is sincere, and arguably justified. Arguably justified, but certainly sincere. He’s not in principle against a better way to do this and ginning up a rush, a-la Cheney 2003. It’s quite unfair of Matt to accuse him of that given how much corroboration Cramer has on the urgency of this. Not that they couldn’t all be wrong, not that we shouldn’t ignore their urgency and make sure what we do makes sense. But htey definitely do feel sincere urgency, and are not ginning that up in a bad-faith negotiating strategy, which is exactly what Matt is accusing Cramer of here.

28. xjerryx Says:
    September 24th, 2008 at 1:40 am

    This Mr. Show video is a capable analogy.

    http://www.youtube.com/watch?v=kHpX5aa5Lz4

29. The Pop View Says:
    September 24th, 2008 at 6:55 am

    In a segment afterwards, Matthews gave an endorsement to the view that something has to be done. He pressed two guests if it was permissable to vote against the bill if they weren’t satisfied. Matthews expressed the opinion, based on the Cramer-Pearlstein segment, that one had to vote “yes” on the bill, even if one wasn’t happy with its final form.

    In other words, Proposition #2.

30. Luther van Pumpernickel Says:
    September 24th, 2008 at 7:47 am

    Ah, but I believe in MGM endings, and everybody will be coming back for Christmas in Texas.

    Nice Silver Jews reference Matt.

31. Don Williams Says:
    September 24th, 2008 at 8:57 am

    Re Petey’s comment “That doesn’t make him a particularly good person to listen to on matters of substance, however. He’s a pretty shallow thinker on his very best days. The ability to keep an audience from falling asleep doesn’t imply any degree of fundamental correctness. ”
    ————

    Actually, back in Aug 2007 Cramer was screaming that Ben Bernanke was “asleep at the switch” and didn’t realize how bad the credit markets were getting. Was Cramer wrong?
    http://www.cnbc.com/id/20111570

    If so, why did Bernanke subsequently act to address Cramer’s warning?

    Re Matthew’s reference to Jim Cramer as “always idiotic” , how about Matthew provides us with his Self-Generated Net Worth so that we can compare that with Jim’s and determine who’s the idiot?

32. The Pop View Says:
    September 24th, 2008 at 11:18 am

    While I am too busy to do so today, I believe it would be fairly easy to pull up a plethora of other comments by Jim Cramer that provide evidence of his overall clownishness.

    Okay, here’s one: http://www.youtube.com/watch?v=GKZgfrsItmw

33. crumbling Says:
    September 24th, 2008 at 12:36 pm

    #31: Your net worth doesn’t determine your intelligence.

    Case in point: George W. Bush

34. Don Williams Says:
    September 24th, 2008 at 1:02 pm

    Re crumbling’s comment “Your net worth doesn’t determine your intelligence. Case in point: George W. Bush”
    ————
    I said “Self Generated” Net worth. Bush would be a bankrupt drunk if not for the rescue of Arbusto by his rich buddies.

    Although i suppose I should have excluded “Whoring for Dollars” from the definition of “Self-Generated”

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