Nov 13th, 2008 at 12:38 pm
Sperling Calls for Overwhelming Force
Gene Sperling, speaking at a CAPAF event, says we need big-time stimulus, calls for a “Powell Doctrine-type approach”:
As readers will know, I’m inclined to agree. That said, watching bailout mania unfold it’s worth noting that it would also be a good idea to keep some kind of eye on the actual merits of the projects we’re contemplating. The case for stimulus doesn’t need to rely on an unrealistic assumption of perfectly, but we do need to be mostly spending the money on stuff that’s actually worthwhile.
43 Responses to “Sperling Calls for Overwhelming Force”
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November 13th, 2008 at 12:43 pm
watching bailout mania unfold it’s worth noting that it would also be a good idea to keep some kind of eye on the actual merits of the projects we’re contemplating.
Do you have any opinions on the merits any specific projects? Say, the impending bailout of General Motors?
November 13th, 2008 at 12:49 pm
C’mon! Where are you going to find a trillion dollars worth of things that are really worthwhile?
Face it. There’s money to be wasted, and I’m the man to do it.
November 13th, 2008 at 12:49 pm
John McCain, the titular head of the party in opposition, says government should structure its finances exactly as a family would. Balanced budget. Spend no more than you earn. Not many Republicans following the lead on what their most recent presidential candidate espoused.
November 13th, 2008 at 12:59 pm
In the context of a desire to spend money to stimulate the economy, the automaker bailout makes sense. You get more stimulus banf for the buck by preventing bankrupcies. Out of that context, I’d let them die.
November 13th, 2008 at 12:59 pm
Three words…renewable energy infrastructure.
November 13th, 2008 at 1:02 pm
OK, we’re talking a tril or two now. My question: Where is this money coming from? We’re just coming down from a credit crisis – nobody wanted to lend to anyone else – but now somebody is willing to lend this much to the U.S. government? Who, exactly, and why? And what happens if the recession becomes a Depression and the U.S. government can’t raise the funds to repay?
November 13th, 2008 at 1:14 pm
The whole BushCo 8 years was a gigantic debt financed “stimulus package”. What, now we’re supposed to do more? Just think of how ridiculous that sounds! Too much debt caused this problem, and we’re supposed to solve it with more debt? It’s time to allow debt destruction to take place. Instead, the elites want to use the taxpayer to preserve debt for the simplest of all reasons – they’re the creditors.
November 13th, 2008 at 1:15 pm
dogfacegeorge: treasury sales keep going well. that means someone, somewhere, is willing to finance the us government, and as long as that’s true, we can run a big deficit for stimulus purposes.
someday, of course, that won’t be true, and we’d better be in better shape by that day….
November 13th, 2008 at 1:20 pm
kafka, of course we should have run a surplus during the bush years, but the fact that we didn’t can’t stand in the way of running a deficit now. waht the bush years showed is that the least stimulative way to run a deficit is through tax cuts at the high end (not that we didn’t already know).
a much more effective way is useful spending: for example, at the top of my list would be what hart and rudman called as $100B worth of hardening vulnerable targets (water supplies, power plants, etc.) 8 years ago. given inflation in the construction field, that’s probably north of $150B now, and it’s a threefer: a.) useful from a national security perspective; b.) spread across all 50 states; c.) construction-oriented spending, where there is about to be enormous slack in the economy to be picked up.
not, btw, that that’s close to enough stimulus, but it’s the right idea.
what isn’t the right idea is what you are effectively calling for: letting the markets clear. the wealth and job destruction that would accompany that is much, much too big a price to pay….
November 13th, 2008 at 1:27 pm
“Warm up the childrens’ choir..
Let’s SOCIALIZE!!”
http://www.pajamasmedia.com/instapundit/archives2/026710.php
November 13th, 2008 at 1:35 pm
And just in from the Red States:
http://news.yahoo.com/s/ap_campaignplus/20081111/ap_ca/congressman_obama_marxist_3
“WASHINGTON – A Republican congressman from Georgia said Monday he fears that President-elect Obama will establish a Gestapo-like security force to impose a Marxist dictatorship.
“It may sound a bit crazy and off base, but the thing is, he’s the one who proposed this national security force,” Rep. Paul Broun said of Obama in an interview Monday with The Associated Press. “I’m just trying to bring attention to the fact that we may — may not, I hope not — but we may have a problem with that type of philosophy of radical socialism or Marxism.”
Broun cited a July speech by Obama that has circulated on the Internet in which the then-Democratic presidential candidate called for a civilian force to take some of the national security burden off the military.
“That’s exactly what Hitler did in Nazi Germany and it’s exactly what the Soviet Union did,” Broun said. “When he’s proposing to have a national security force that’s answering to him, that is as strong as the U.S. military, he’s showing me signs of being Marxist.”
——————
I myself wondered if Obama had become a Life Member of the National Rifle Association.
Then it occurred to me that Obama was even more clever than that: He’s planning to destroy the NRA by making it into a real militia that has to run obstacle courses once a month and do PT till they meet minimum fitness standards.
Which means half the lardasses will Desert –and the other half will die from heart attacks. Wayne LaPierre will be saved for ..er. Special Treatment.
November 13th, 2008 at 1:41 pm
The problem has not been a shortage of money to lend, but rather a lack of trust in private borrowers. While the US treasury may be a riskier borrower today than a year ago, everyone else is even worse. People with cash are only willing to stuff so much into a mattress, aka an FDIC insured account. After that, the safest thing to do is to lend it to the US Treasury.
November 13th, 2008 at 1:45 pm
I found it hilarious that Paulson pissed away $300 Billion before coming to the same solution that I proposed months ago.
That is, that the Federal Government should not save bankrupt financial institutions by making the US taxpayer ASSUME their losses — i.e. by giving good money for worthless securities.
Rather, the Federal Government should supplement and if need be, REPLACE those financial institutions — by lending to real businesses so that the financial sectors bankruptcy doesn’t contaminate the real economy.
As I have noted several times, this bailout is not costing Matthew’s stated cost of $700 Billion. A few weeks ago the Bailout was more like $2 Trillion of our money and it’s now looking to be $5 TRILLION !!!!!
See http://www.businessandmedia.org/articles/2008/20080926110602.aspx
November 13th, 2008 at 1:45 pm
“…what isn’t the right idea is what you are effectively calling for: letting the markets clear. the wealth and job destruction that would accompany that is much, much too big a price to pay……”
No it’s not, because in fact that’s the less painful path. From Bill Fleckenstein:
Of course, there are those who believe that government is the answer to our problems. Among them is Martin Wolf, who presented his case in a Financial Times article titled “Preventing a global slump must be the priority.” The sentence that I think is the most telling: “Those who view liquidation of past excesses as the solution fail to understand the risks.
First of all, Wolf has it backward: The folks opposed to liquidation, not those who favor it, are the ones who “fail to understand the risks.”
The former cannot comprehend that in avoiding the risks of liquidation, they’re asking for a version of what has transpired in Tokyo for the past two decades — whereby the Japanese, in refusing to take the pain created by their real-estate and credit bubble, ensured the aftermath would be much worse and take much longer to recover from. (Not least of their mistakes: the unintended consequence of absurdly low interest rates in Japan, where chaos ensued as the domestic scramble for yield and the global spree of low-interest borrowing in yen went awry.)
“Stimulus packages”, bailouts, easy credit, etc. have been the policy options of choice for at least 2 decades, and are directly responsible for the situation we’re in now. More of the same is nothing short of insane.
As a final note, Bill Fleckenstein, along with Prechter, Roubini, Denninger, etc. were the ones that predicted this fiasco for years, while the conventional thinkers like Bernanke, Krugman, etc. were sitting around with their thumbs up their asses.
November 13th, 2008 at 1:51 pm
Re Njorl’s comment ” After that, the safest thing to do is to lend it to the US Treasury.”
——————
Wrong.
Safest thing is to buy a small lot (5 acres or so) with a house near a small town (5000 pop) out in a rural area at least 300 miles from a large city and 15 miles from the nearest Interstate. With a well, a wood stove, wood lot and ground prepared for small scale farming. Preferably with a growing season of 180 days plus. A years supply of food and guns. lots of guns.
November 13th, 2008 at 1:54 pm
Re kafka’s comment “while the conventional thinkers like Bernanke, Krugman, etc. were sitting around with their thumbs up their asses.”
———
Actually, Bernanke was sitting on the Board of the Fed, loudly singing the praises of Chairman Alan and waving a rubber stamp.
November 13th, 2008 at 2:00 pm
PS Anyone going the survivalist retreat route needs to remember to keep several years worth of land taxes in cash. What fucked a lot of people in the Great Depression was the sheriff selling off their property for a song in order to collect back taxes.
Also, if the Government has ANY record of your assets, you can assume they will be seized in the coming years to pay for this goatfuck.
For years, I have warned that Bush’s IOUS will be paid off by heavy taxes on the baby boomers when they try to withdraw their holdings from their 401Ks and IRAs.
Now, there’s rumors that the Congress is thinking about seizing 401Ks/IRAS and putting them under the “management” of Social Security. And we know what kind of rate of return the Social Security Trustees have gotten , don’t we?
November 13th, 2008 at 2:07 pm
Actually, Bernanke was sitting on the Board of the Fed, loudly singing the praises of Chairman Alan and waving a rubber stamp.
You seem to be agreeing with me but somehow manage to sound like you don’t.
November 13th, 2008 at 2:17 pm
Re Kakfa’s comment “You seem to be agreeing with me but somehow manage to sound like you don’t.”
————-
Where is disagree is that your depiction of Bernanke suggests he was merely dumbshit passive.
He was not — unlike Krugman, Bernanke ACTIVELY CONTRIBUTED to causing this huge mess.
He was voting on the Fed along with Greenspan. So I don’t understand why no one is questioning his judgment and calling from his removal as Fed Chairman. Especially when he is refusing to tell Congress to WHOM he loaned $2 TRILLION of our money :
http://www.bloomberg.com/apps/news?pid=20601087&sid=aatlky_cH.tY&refer=worldwide
November 13th, 2008 at 2:32 pm
kafka, first off, it’s not true that only fleckenstein foresaw this crisis: many people did, including me, and we don’t all agree with fleckenstein.
and second of all, you haven’t actually provided a response. the notion that a significant stimulus package is just like what they’ve been doing in japan for years is simply not so, nor are the objective circumstances the same.
sure, we could liquidate ourselves to a solution: there wouldn’t be much of a united states of america or much of a global economy left, but somehow, you think that’s a good idea? why? what’s the actual argument for a liquidation approach? i’m waiting to see it.
PS. just as a passing note, it is simply not true that we’ve had easy credit for 20 years: maybe you need to look up objective reality in 1988.
it is simply not true that we’ve had bailouts for 20 years: show us the long list of them if you would please.
it is simply not true that “stimulus packages” have been the norm for 20 years: they haven’t.
November 13th, 2008 at 2:41 pm
Re howard’s comment “it is simply not true that “stimulus packages” have been the norm for 20 years: they haven’t.”
—————-
Oh, bullshit. What do you call a rise in the Federal debt of $5 TRILLION just from 2001 to Sept of this year. Since followed by ANOTHER rise of $1.5 TRILLION.
That’s NOT counting $TRILLIONS in federal guarantees that are unfunded.
The Federal government has been pissing OUR FUCKING MONEY away to wealthy interests — and there’s no goddamm reason why we should let it continue. Let the fucking economy crash — ordinary people will survive and I really don’t give a shit if Forbes 400 Billionaires go bankrupt.
There is ONE thing worse than losing a job –that;s have corrupt , lying sonabitches keep dumping debt on you month after month –ensuring that you can never get out from under.
It’s about time the American people and COngress put an end to this deceitful lying bullshit that Economists and Wall Street buttkissers have been paid to put out for decades. They are the assholes who have put us into this disaster.
November 13th, 2008 at 2:43 pm
By the way, has anyone seen a single CRIMINAL INDICTMENT handed down over this little soiree?
November 13th, 2008 at 2:58 pm
we do need to be mostly spending the money on stuff that’s actually worthwhile.
This isn’t true. It’s probably better to do so, but if we’re looking to stimulate demand in recessionary times, the ends to which the money is put isn’t the important part.
“If the Treasury were to fill old bottles with bank notes, bury them at suitable depths in disused coal mines which are then filled up with town rubbish, and leave them to private enterprise on the well-tried principles of laissez faire to dig them up again… there need be no more unemployment and, with the help of the repercussions, the real income of the community and its capital wealth also would probably become a great deal greater than it actually is…”
Keynes
November 13th, 2008 at 3:12 pm
We’ve arrived at the “long run” part now –and that Fucker Keynes is dead.
November 13th, 2008 at 5:32 pm
there’s no goddamm reason why we should let it continue. Let the fucking economy crash — ordinary people will survive
You, sir, are talking dangerous nonsense. You ought to talk to someone who remembers what the 1930’s were like for “ordinary people.” The rich are the ones who will be okay if the economy crashes–ordinary people will suffer and die. Go read “The Grapes of Wrath,” for heaven’s sake.
November 13th, 2008 at 5:37 pm
has anyone seen a single CRIMINAL INDICTMENT handed down over this little soiree
You’ve got the timing of such legal proceedings wrong–it’s going to take a few months of forensic accountancy before indictments start getting handed down. Be sure there will be some.
November 13th, 2008 at 6:55 pm
Re rea’s comment “You, sir, are talking dangerous nonsense. You ought to talk to someone who remembers what the 1930’s were like for “ordinary people.” ”
———–
That’s because “ordinary people” were fucking cowards who lacked proper leadership –other than Huey Long.
That was nothing done in the 1940s and 1950s that could not have been done in the 1930s — the problem was obstruction by the Superrich and their Supreme Court. Obstruction which only retreated and allowed to government to act in the fact of the threat from Hitler. Plus Roosevelt was more focused on protecting the wealth of his Superrich class behind a facade of fake benevolence than in taking care of his countrymen.
It’s a debatable judgment but I think if the people had hanged a couple of Wall Street plutocrats and Bankers in 1930, the country would have been a lot better off in the longer run.
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