Wednesday, February 25, 2009

Barack Obama: Savior or freakin' moron?

Blogging has been slow and may continue to be as law review submission season begins. But if I can't be prolific, maybe I can be provocative.

I have a friend who has a tendency to refer to some of those with whom he disagrees as "freakin' morons." Although he is one of the very smartest people I know, I think he uses the term too often and tell him that God must have loved freakin' morons because, in his view, She made so many of them.

This guy has one of the world's great man crushes on Obama so let me be heretical.

Barack Obama just may be a freakin' moron.

Of course, I don't really think that, but his economic performance so far does not quite make it to dull average.

Let's put aside for a moment the debate over whether the past few months have revived Keynesian economics. What does classical Keynesianism tell us about debt financed responses to a recession which was brought on by, at least in the administration's view, too much borrowing? Really, who knows? Does it make sense to say, if people have borrowed too much and are now hunkered down, that the answer is to let the government borrow for them? If that idea is problematic, isn't it rendered more problematic by the coming entitlement crisis? What about the fact that, unlike times past, we are borrowing overseas and thus become dependent on foreigners willingness to continue? To quote the Boss, do we have debts no honest man can pay?

If that's so, one option is to inflate them away and John Cochrane has argued that, for stimulus to work, people must believe that is what will happen. They must believe that government does not intend to raise taxes to pay the debt back. Otherwise, they will save the injected funds in anticipation of the coming taxes and economic slowdown.

But Obama has announced that he is going do precisely that. Having blown the deficit through the roof, he now wants to talk about fiscal responsibility. Well, at least he's given himself a big target.

One way out of that trap is to use the stimulus money to create value, i.e., to make the economy more productive or to direct resources from less to more productive uses. But Obama outsourced the package to people like Nancy Pelosi, Henry Waxman and Dave Obey and got a grab bag of Democrats' pet projects tailored to total the $800 billion he wanted.

A certain type of unreconstructed Keynesianism says that this does not matter. We could, as Lord Keynes himself said, pay people to fill up bottles with old currency or as Larry Summers says, pay them to dig and then fill ditches. The idea is to get money in hands that will spend it. Now.

But that didn't happen either. Much of the package is backloaded. A moratorium on the payroll tax - giving moderate and low income earners a 7.5& raise after taxes - would have done that more effectively. But that was the GOP's proposal.

Off the stimulus package, there is no plan to address the underlying credit problem other than suggestions to nationalize banks. The proposal to spend huge amounts (more than the announced amount) to rescue improvident borrowers has been met with much deserved derision.

And, although finally got religion last night, the President has talked the economy down. Perhaps he is speaking words that are hard but true. Or maybe he is trying to play down expectations for political purposes. In any event, economics is, to a large degree, applied psychology and when the President tells us that catastrophe is imminent, folks do not feel good about spending and investing.

Back to that theme of fiscal responsibility. How do you reconcile it with last night's ambitious talk about what government can do you for just about anybody.

The result: The markets do believe that Obama is a freakin' moron. They were roiled. But since it became clear that he would win, they have tanked.

25 comments:

Anonymous said...

Reaganesque in style, Carteresque in substance, I fear.

Dad29 said...

You are too kind, Anony.

Carter liked nuclear energy--and was not overly impressed by the Intellectualoid Class of DC.

Obama worships them, and they him.

jp said...

"What about the fact that, unlike times past, we are borrowing overseas and thus become dependent on foreigners willingness to continue?"

Do you have any recommendations as to where (in the World) I should invest my ½\401K?

George Mitchell said...

JP...buy inflation-indexed treasuries or gold....

capper said...

How about Obama is just a man who is President?

The right are just bitter for two reasons:

1) They lost control after feeling invulnerable. IOW, their perception of reality just got a huge wake up call.

2) They are also being told that they now have to help clean up, and pay for, the party that they've had for the last eight years.

Poor babies.

Clutch said...

Article would be 1/2 as long without the long, threadbare backstory attempting to justify the mean-spirited title/punchline, so gloriously uncontaminated by evidence.

"Of course, I don't really believe that..."

LOL. You're accidentally finding ways of repeatedly saying what you "don't really believe"? How provocative!

Substance of story: Catastrophic consequences of past eight years will be catastrophic. Boo Obama! Republicans have the answers -- um, suddenly, mysteriously, ever since they've lost the ability to implement them -- but Obama won't listen. Boo!

Ah, the Big Brain/Class Act of rightwing bloggers. Could the bar be set any lower?

Anonymous said...

I would have thought the title line beneath you, Herr Professor. Apparently, I would have been wrong. Ann Althouse you are not.

Dad29 said...

The right are just bitter

"Bitter"?

That's a projection again, Capper.

Bitter is not the word. "Exceedingly concerned for the future of the USA" is the correct description.

Jimi5150 said...

Well, answer me this, cap . . . you think Obama's plans are going to work?

Anonymous said...

I didn't vote for Obama, but I truly hope he succeeds. It's in my best interest for him to succeed. But he's taking us deep into uncharted territory, and it often seems that he doesn't know where we're going, so it's entirely reasonable to be concerned.

Anonymous said...

The reason Carter liked nuclear power is he used to command a nuclear reactor (it powered the sub he commanded in the Navy).

jp said...

"The result: The markets do believe that Obama is a freakin' moron. They were roiled. But since it became clear that he would win, they have tanked."

Freakish morons drive the markets.

The following is from Thomas Friedman's column in today's Journal.

"No wonder then that even though this economic crisis began in America, people have nevertheless fled to the U.S. dollar. Case in point: South Korea’s currency has lost roughly 40% against the dollar in just the past six months."

Anonymous said...

Anon 9:30 hit it on the head for me. Didn't vote for him, hope he succeeds. Capper had it half right and half hackneyed gripe.

Republicans have had a party that the Democrats joyfully joined in (with the exception of Iraq, though a majority of Dems voted to go in there too...)for the past 8 years, but I don't see any Democratic sponsored programs being offered to clean up their deficit spending sprees, only more deficit spending sprees.

Clutch's comment: "Republicans have the answers -- um, suddenly, mysteriously, ever since they've lost the ability to implement them -- but Obama won't listen." was good but the rest... Yes the bar could be set at the level of the typical (not all) left wing blogger. Nothing but name calling and whining.

Did you ever hear any criticism over Bush's term about how the whole government deficit spent us to new levels? No. Bush, Bush, and Republicans. To use a clutchism: um, no, the Democrats were not against any spending of pork or 'substance' except the Iraq war. The Iraq war did not cause our current straits, the Government is the primary progenitor of housing crash, not 'greedy banks'.

Why do I read this blog? There are very few places you can hear a criticism of the 'remedies' that Government has passed to fix everything. You can't get any kind of conversation about Obama's policies at any left blog. 'Anything and everything Obama endorses must be best.'
Several months ago there had rarely (never?) been lower approval ratings of a Congress. Now, since Obama gives them trust and approval, every Obama supporter gives them trust and approval? Either every Obama supporter was a fool for not approving of the Democratic Congress of which Obama was a part several months ago, or they are fools now.
Tuerqas

jp said...

"The Iraq war did not cause our current straits, the Government is the primary progenitor of housing crash, not 'greedy banks'."


Where were the cowardly regulators hiding the past eight years?

Anonymous said...

Dad29--where was your concern the last eight years?

James Rowen said...

I'm surprised that you attribute the appelation to a friend who overuses it, then you repeat it yourself.

Beneath your usual internet civility.

Dad29 said...

Freakish morons drive the markets.

The word "RISK" has suddenly become important.

Obama has been a loose cannon; contradictions, re-wordings, evasions...

And more important, HUGE deficits.

T-Bonds will drop in price; petroleum will increase in price.

Anonymous said...

Obama promises a reduction in the Government Spending, but starts with a trillion dollar stimulus package?

He promises to federalize health care.

Where does this money come from?

The Truth is the percent of GDP of publically held debt will increase from 40.8 % in 2008 to 67.2% in 2019.

This is not “Keynesian economics” this is Enron Bookkeeping methodology.

Clutch said...

What's important is that everyone understand that markets roil and decline solely because of things Obama says.

So if a potential investor lacks confidence after reading this:

http://news.bbc.co.uk/2/hi/business/7914040.stm

...it's probably because of something Obama said.

capper said...

Dad, I'm not bitter about much, so I doubt it's projection. I'm also not the one ignoring the past, so I doubt any of it is on me.

But why weren't you concerned about risk and high deficits and deceit for the last 8 years?

Anonymous said...

Clutch, I think it is more something Obama does. Every part of his increased spending promises has already come true or is 100% surely on its way. Except for the businesses who will somehow get a piece of the hand out, businesses and investors know the money to pay for it all will eventually be taken from them so they do not invest. Anybody who has a 401K or other market vehicle knows it is a waste of money to put it in the stock market right now.
Bush got blamed for everything during his Presidency whether he had anything to do with it or not, shouldn't Obama get the credit for all the Government spending being set up over the next several years?
Capper, isn't the reason that Democrats have so much control throughout the US right now because Republicans were concerned about their Representatives lacking concern primarily over fiscal issues such as risk and high deficits?
Few Republicans I know supported the fiscal policies of the last 8 years and I would be surprised if Dad29 did.
Shouldn't conservative views be predominant in a conservative blog? No intelligent person I know thought Bush was a conservative, do you? If not, then why bring up a comparison of the last 8 years on a conservative blog? (I can call this a conservative blog, I think)

I don't know, maybe I am way off base, but the people I am sick of are the Republicans who have been (at the trough) in office the last 8 years, still are, and are just now remembering their conservatism.
Tuerqas

Dad29 said...

Capper, your assertion that I was 'not concerned' about Bush's deficits is demonstrably false.

And, by the way, I was (and remain) VERY chary of the "unitary Presidency" theories which allow the ExecBranch to get too nosy.

Want to try another approach--like dealing with facts, for a change?

Curt said...

Capper,

You confuse voting for Bush with supporting his policies. Most of us were disgusted by his liberal spending ways. Yet we voted for him (and that idiot McCain) because we were afraid of this day. GWB was no conservative and his deficit spending was very troublesome, but in his first MONTH in office, BO has already done more damage than GWB was able to do in eight years.

capper said...

Dad,

There have been several conversations that you and I have had that I have brought up the large amount of money that Bush/Cheney wasted with Halliburton, Blackwater, etc. which you have waived off with the highest disregard.

Curt-

While you may not like Obama's plan, to compare the debt to the hundreds of thousands lives lost needlessly is not a valid point to make on your part.

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