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The Lame-Duck Economy
Everyone’s talking about a new New Deal, for obvious reasons. In 2008, as in 1932, a long era of Republican political dominance came to an end in the face of an economic and financial crisis that, in voters’ minds, both discredited the G.O.P.’s free-market ideology and undermined its claims of competence. And for those on the progressive side of the political spectrum, these are hopeful times.
There is, however, another and more disturbing parallel between 2008 and 1932 — namely, the emergence of a power vacuum at the height of the crisis. The interregnum of 1932-1933, the long stretch between the election and the actual transfer of power, was disastrous for the U.S. economy, at least in part because the outgoing administration had no credibility, the incoming administration had no authority and the ideological chasm between the two sides was too great to allow concerted action. And the same thing is happening now.
It’s true that the interregnum will be shorter this time: F.D.R. wasn’t inaugurated until March; Barack Obama will move into the White House on Jan. 20. But crises move faster these days.
How much can go wrong in the two months before Mr. Obama takes the oath of office? The answer, unfortunately, is: a lot. Consider how much darker the economic picture has grown since the failure of Lehman Brothers, which took place just over two months ago. And the pace of deterioration seems to be accelerating.
Most obviously, we’re in the midst of the worst stock market crash since the Great Depression: the Standard & Poor’s 500-stock index has now fallen more than 50 percent from its peak. Other indicators are arguably even more disturbing: unemployment claims are surging, manufacturing production is plunging, interest rates on corporate bonds — which reflect investor fears of default — are soaring, which will almost surely lead to a sharp fall in business spending. The prospects for the economy look much grimmer now than they did as little as a week or two ago.
Yet economic policy, rather than responding to the threat, seems to have gone on vacation. In particular, panic has returned to the credit markets, yet no new rescue plan is in sight. On the contrary, Henry Paulson, the Treasury secretary, has announced that he won’t even go back to Congress for the second half of the $700 billion already approved for financial bailouts. And financial aid for the beleaguered auto industry is being stalled by a political standoff.
How much should we worry about what looks like two months of policy drift? At minimum, the next two months will inflict serious pain on hundreds of thousands of Americans, who will lose their jobs, their homes, or both. What’s really troubling, however, is the possibility that some of the damage being done right now will be irreversible. I’m concerned, in particular, about the two D’s: deflation and Detroit.
About deflation: Japan’s “lost decade” in the 1990s taught economists that it’s very hard to get the economy moving once expectations of inflation get too low (it doesn’t matter whether people literally expect prices to fall). Yet there’s clear deflationary pressure on the U.S. economy right now, and every month that passes without signs of recovery increases the odds that we’ll find ourselves stuck in a Japan-type trap for years.
About Detroit: There’s now a real risk that, in the absence of quick federal aid, the Big Three automakers and their network of suppliers will be forced into liquidation — that is, forced to shut down, lay off all their workers and sell off their assets. And if that happens, it will be very hard to bring them back.
Now, maybe letting the auto companies die is the right decision, even though an auto industry collapse would be a huge blow to an already slumping economy. But it’s a decision that should be taken carefully, with full consideration of the costs and benefits — not a decision taken by default, because of a political standoff between Democrats who want Mr. Paulson to use some of that $700 billion and a lame-duck administration that’s trying to force Congress to divert funds from a fuel-efficiency program instead.
Is economic policy completely paralyzed between now and Jan. 20? No, not completely. Some useful actions are being taken. For example, Fannie Mae and Freddie Mac, the lending agencies, have taken the helpful step of declaring a temporary halt to foreclosures, while Congress has passed a badly needed extension of unemployment benefits now that the White House has dropped its opposition.
But nothing is happening on the policy front that is remotely commensurate with the scale of the economic crisis. And it’s scary to think how much more can go wrong before Inauguration Day.
- Posted in
44 Comments so far
Show AllAnd much more can and will go wrong before Inauguration Day because it still involves Bush policy...
So right! There is no telling what The Great Texas Worm is up to. Out of sheer spite, or drunken rage or euphoria, he could haul out that last monkey wrench he's been saving these last years and fling it into the works.
THIS IS WHAT SCARES ME!
http://www.thetruthaboutcars.com/breaking-news-chinese-may-buy-gm-and-chrysler/
This is what scares me - why is it so damn impossible to comprehend how other nations and other peoples need not be our enemies?
It's really very simple - we either kill off everybody else or we learn to live together. Be like unto the Beast or the Lamb.
The survival of our species requires eventually at some point that we must learn to live together. As long as we perceive and act toward everyone else as if they are a threat then we will continue down the same path of violence and greed, wreaking havoc everywhere and creating situations where some people starve for basic water and food while others live unhappily in their contrived superficiality.
We make our enemies by treating them as such. We make our friends by treating them as such. We make our wealth and glory by how we define it. If we define it such that is only obtainable by the suppression, oppression or denial of others, then what kind of honor is it that we in fact aspire to obtain? On the other hand, if we embrace each other and share in our pursuit of prosperity together, then aren't we all lifted by an opportunity together.
What of the fact that saving GM might save the quality of life and the broader economy for thousands upon thousands? Why must this be perceived as a threat, except for fear of another country, another people? Why can't we grow beyond that and unit for a common cause - of humanity itself?
Sioux Rose
COSMOBILLY: I agree and would add that thoughts DO carry energy, particularly when hundreds of thousands are thinking them. The thought generally leads to action. In the mystical realm it's believed that when you mentally dwell on something, you essentially magnetize it your way. This can help explain why 100 people are say traveling by train, and an accident only affects a few of them. (Others pass this off to chance.) The PERCEPTION of an enemy creates a wall of fear, that's generally acted upon. Even the thought can cause energetic antipathy. When we drive our cars and just look at another driver who's in a parallel lane, they generally FEEL this and look our way.
I think much that's being faced today is to create a shift INSIDE people away from the ego-ruled self that's walled off with defenses towards others, towards a model of inclusion, where we recognize that when each fulfills a specific role within a HARMONIZED system, the intended distinctive notes together make for real music. It's been the big bang show for too long...
Rose, I know you speak to this energy aspect much better than I do. For me it is both intuitive and logical how our perceptions can manifest themselves. Years ago I had a friend who would say how the ego has a way of kicking us in the ass whenever we put it too far out in front. I can see plenty of evidence for that in my personal life and in what's happening in the world today.
I do believe true change in our world will only come about through more inner work, and in the meantime all the outer work won't matter much.
Sioux Rose
Hey COSMO, Ideally the pair functions as a cosmic cha cha cha! It's getting the moves into synch/balance between inner and outer initiatives that could be the great rub.
No offense but do you have a web site where I can like learn all that abstract stuff you post about because I can understand some of what you say but you sound a bit too abstract all too often?
Sioux Rose
CARLA: I have a website and 6 published books, but I can't transpose to you the basis of an education that's spanned 4 decades in any instant formula. I do have some articles you might (?) find interesting on my site: www.siouxrose.com
Ok, thanks. That's all I needed. Seriously, I feel sorry for the natives.
P.S.: You look beautiful. :)
Sioux Rose
CARLA: That's very kind of you (I think it's a rather stiff photo.)
Sioux Rose: I agree with Carla (maybe for first time);great photo.
The Lame Duck Automobile.
Quoting Paul Krugman;
"About Detroit: There’s now a real risk that, in the absence of quick federal aid, the Big Three automakers and their network of suppliers will be forced into liquidation — that is, forced to shut down, lay off all their workers and sell off their assets. And if that happens, it will be very hard to bring them back.
Now, maybe letting the auto companies die is the right decision, even though an auto industry collapse would be a huge blow to an already slumping economy. But it’s a decision that should be taken carefully, with full consideration of the costs and benefits — not a decision taken by default, because of a political standoff between Democrats who want Mr. Paulson to use some of that $700 billion and a lame-duck administration that’s trying to force Congress to divert funds from a fuel-efficiency program instead."
The automobile, as the primary unit for land transportation, will become obsolete in the very near future. Two weeks ago I watched “The Amazing Race” on CBS. The contestants were in Delhi India and had to travel to several different locations. The streets of Delhi were completely packed with bicycles, scooters, three wheeled two passenger scooters, cars and trucks. I have little doubt that nearly as much fuel was used waiting for traffic to move as was used for transportation.
I many of America’s major metropolitan centers the exact same problem occurs, except the vehicles sitting still in the gridlock are gas guzzling SUV’s, full sized cars, trucks minivans and 18 wheelers.
Secondly, as long as autos and trucks have gas pedals, brake pedals and steering wheels they are inherently unsafe. Every two years automobiles kill as many Americans as died in the Viet Nam War. In addition it is simply ludicrous to transport thousands of pounds of steel, glass and plastic to transport one or two people, finally pneumatic tires, when companied to steel wheels on rails are very energy inefficient. The rail company CSX boasts that it can transport one ton of cargo 423 miles on just one gallon of fuel in a an advertising campaign that is currently appearing on TV.
At our current levels of computing power, communication technology, motion detection capabilities, GPS capabilities, along with carbon fiber, titanium, Kevlar and other super strong component technologies a transportation system rebuilt from the ground up could reduce energy consumption for transportation by 80%.
By eliminating virtually all crashes the weight of cars could be reduced by more than half, to eliminate crashes the vehicle would need to be controlled by computers integrated with GPS, motion and range detectors, wireless communications and a locally centralized computing system that would balance traffic flow with the available routs. Placing the vehicles on light rails would make it much easier for the computerized control system, instead of using a steering system vehicles would be switched from rail to rail to rail etc. etc. etc to arrive at their chosen destination. By employing state of the art materials like carbon fiber, titanium and Kevlar weight could then be reduced even more. Secondly, by eliminating gridlock stop and go driving, energy consumption could be reduced by nearly half again. By elimination crashes soccer moms would no longer think they needed giant SUVs to keep the family safe so the size of transportation vehicles could be greatly reduced and by eliminating pneumatic tires another significant reduction of energy consumption could be achieved.
Without the steering wheel brake and gas pedals people would no longer “drive” instead they would punch in the address they wanted to go to and the computerized navigation and switching system would do the rest, charting the quickest route while balancing with the larger picture of traffic flow. People would then be free to get a head start on their work, browse online catalogs while on the way to the mall, text their friends or surf the net. Reducing the stress of driving would go a long way to reducing stress levels of the nation.
"By eliminating virtually all crashes the weight of cars could be reduced by more than half..."
My thought has been that everyone having a "bigger/safer" vehicle is a loosing game. Crashes won't be eliminated; they just have to be made comparable. It seems to me that a huge SUV hitting A huge SUV is the same as a mini cooper hitting a mini cooper. But everyone thinking that they are more important than others, thus needing bigger, how long is it until we're all driving tanks? Not that we're all that far from it.
I believe the electric car is the future. Windmills are going up around me here in Minnesota like crazy. The government could, should, and I hope will become heavily involved with constructing windmills from the Canadian border to Texas and offshore on both coasts. With a re-designed national power grid we could travel all we want for peanuts. I move, therefore I am. You betcha.
Sioux Rose
MADHOOSIER: I have no insight into the technological logistics of what you here represent but it SOUNDS good. Makes me wonder why a few of the Forbes millionaires or billionaires don't bail out the 3 big auto companies and see if they can begin a operation that can retro-fit these conveyors to the system you describe. That's gonna be where the (future) $ is, if there IS $ to be had.
I can remember back to the Bay City, Michigan of the 1950's. All the stoplights on Center Avenue were timed so that you could drive all the way through town and either have to stop for just one light or not have to stop at all. The speed limit signs told you at what speed you had to drive (35 miles/hour if I remember correctly) in order to be assured all green lights once you were in sync. Either you were in sync by chance to begin with or the first stop light would get you in sync.
One can understand the low evaluation of Congress when we contemplate the foolish issue and the legislative herd's focus upon the mode of transportation of the auto executives. Can we visualize them checking their bags and waiting in the security lines? Those CEO jobs are killers; should we pay them thousands of dollars an hour to stand in line? How does the President of the US travel? How many engines on the presidential airplane? Indeed, how many airplanes for the President?
Unmentioned so far has been the effect of the health care and retirement burden that has so severly affected the US companies when competing with the national healthcare and pension plans of the European and Asian competitors. What long-term drain was that upon funds available for research and development? This would not be, if it happens, a failure of three corporations, but a failure of a nation dedicated to free-market fundamentalism. If we add in what we pay for healthcare and retirement, we are effectively taxed at twice the rate of the French.
Absolutely. No one in their right mind would build cars in michigan, if they can move a few miles to Canada and have free health care for their employees.
Mr. Johnson,
You're right that the execs didn't need to come on commercial airliners. Wagoner and Mullaly should have "jet-pooled" though; they both came from Detroit.
However, the Home Despot should have skipped the meeting. Chrysler is no longer publicly traded, so there is really no conscionable way for Congress to give them support. He had no standing at the hearings.
When Cerberus sells its stock to an ESOP for $1, I'll support giving them a loan. Not until.
Mr. Johnson,
You're right that the execs didn't need to come on commercial airliners. Wagoner and Mullaly should have "jet-pooled" though; they both came from Detroit.
However, the Home Despot should have skipped the meeting. Chrysler is no longer publicly traded, so there is really no conscionable way for Congress to give them support. He had no standing at the hearings.
When Cerberus sells its stock to an ESOP for $1, I'll support giving them a loan. Not until.
This article is among Krugman's least coherent in a very long time.
For example, "...Henry Paulson, the Treasury secretary, has announced that he won’t even go back to Congress for the second half of the $700 billion already approved for financial bailouts." Will someone please explain why Paulson would need to "go back to Congress" for what they have already approved? Esp. since he seems to have the dictatorial power to change his mind about how to use the "money" he has already been granted, from purchasing "toxic assets" to buying "preferred" shares of financial institutions including insurance companies!
As for Japan's "lost decade," somehow Japan has all kinds of reserves for international lending and/or buying the assets of others, and their standard of living is better than ours and they are selling cars while Krugman is talking about liquidating Detroit.
Meanwhile, the incoherence is not limited to Krugman. Obviously the computer models that govern investment and divestment are not working in the current milieu. For example, my local federal credit union is currently paying an outrageous 0.85 per cent on a savings account (I just withdrew thousands) while sending out a flyer, "Annual Holiday Loan Special." "Borrow up to $3,000 [unsecured loan] • 8.99% interest Rate [sic]..." The "spread" here is surreal.
Can you spell "m-a-n-i-p-u-l-a-t-i-o-n"?
What bothers me most, perhaps, is that the Fed, through its special new "window," has lent out some two TRILLION at really cheap rates in near total secrecy and it is as though nothing has come of it. Whatever happened to the "multiplier effect"? Are the bankster-recipients of such largesse hoarding?
Nationalize the Fed, IMPEACH Bush & Cheney, and put Paulson and Bernanke on trial for TREASON.
-30-
Sorry, but the incoherence is yours oleman. The Treasury Sec does have to ask Congress for the second $350 billion. Japan's lost decade is now a decade in the past and has little to do with their current situation. Yes, of course the banks are hoarding. A federal reserve note in hand is worth more than big bankrupt nothing.
All this matters little unless we reverse the trend of giving away our manufacturing at breakneck speed. This hits us a double whammy, and anyone with common logic would have known it was bad from the get-go. Think about it. We were scammed with the promise that the 'crappy' jobs would be sent away, and replaced by better ones--until they figured out how to send away the 'better' jobs as well (or import cheaper foreign workers). This included computer programmers, tech support, and even engineers. The American worker was left with only crumbs (i.e., temp/contract work without benefits), if he could even get those. All along, mind you, the real goal of outsourcing was to maximize profits for the corps and Wall Street. This was a short-sighted, greedy goal at best because it ultimately disabled their most loyal consumers! Maybe they thought that once they fleeced us, they would find a market elsewhere. It did not work out that way, did it? I remember, too, that before the jobs started going out, they were raving about the productivity of the 'American worker.' What a wonderful way to reward their productivity!! The one thing MSM, government, Wall Street, and especially big business did was to destroy us and, in the process, end up wrecking their best market(s). Ingenious, huh? It also calls into question our own ability to reason correctly because we kept putting the same scumbags in office, meaning we were complicit in our own demise. Not much bliss for this ignorance, was there?
Seriously, this guy won a Nobel yet he offers not a hint of a solution to the problem he lays out.
So what's the point - to make us feel even more helpless?
In the real world there are problems that have no solutions. When you drop a glass and it shatters you can't predict where the many pieces will land, all you can do is clean up the mess after the crash.
frank, if you care about krugman's ideas, then you have to read his columns. There is no point in him writing the same ideas over and over in his twice weekly NYTimes gig. He writes on Monday and Friday. Check his archives. Check his blog. He has ideas and he explains them quite well. Do a bit of homework, please.
It's high time to get rid of the Bush Companies..all of them.. Daddy and the boys should get out of politics once and for all. Not only have they ruined our
trust and relationship with most countries in the World, they have completely
destroyed out industrial base and no one dares talk about "The New World Order",
that Daddy Bush forced on us, and the combination of the Bushees and Clintons that
gave us Nafta. We can ignore these two things as long as we want, but those two subjects are why we are in a major depression, and the big-wigs simply cannot
understand why the bail-out is not working and will not work until we re-establish
ourselves in the industrial world.. The very fact that no one, not even a
Congressman or Senator dare tip-toe around this issue, is the sign that we are
in for difficult times. The bell is ringing and no one hears it. Help?
Krugman is really being very restrained. He knows what's going on.
Here's an anecdote: I have a friend who's a vp for Deutche Bank. She and her husband pulled their investments out of the market three years ago. She told me that's what everyone at that level did. Coincidentally, the very same weekend we learned this, we met another bank vp at a wedding and she told us exactly the same thing.
They all pulled their money out of the market three years ago.
They've been scared a lot longer than we have. Krugman's no dummy. He's known too. He's even told everybody, here and there.
Allowing the Big Three to go under could be devastating. I think the answer is to support them, cap corporate salaries, freeze dividends, retool for smaller, fuel efficient and alternative energy vehicles
Give them no choice. Then recoup the investment over time.
It's a crap shoot. My bank vp friend also said that no one knows what to do. They're making it up as they go along. This is virgin, trackless forest.
Give Krugman the machete. He's the smartest guy in the room.
Yep. Watch what the execs do and what happens within partners' accounts in banks and brokerages, and you will observe that they know what's happening and keep the information to themselves. It's all insider trading. The public has been the patsy for a long time.
"My bank vp friend also said that no one knows what to do". A bank VP is fairly far down on the ladder, in this case probably an astute oberver with enough access to clues to make informed decisions about his own retirement. I was in a similar position as a Wall Street techie in the 80's and pulled my tiny retirement account out of stocks right before that crash.
The people with the real power have only one concern - ME MINE MYSELF ME. They grab and go. They could care less about the economy or the United States.
Joe
To Greg R---
You write, "Yes, of course the banks are hoarding. A federal reserve note in hand is worth more than big bankrupt nothing."
So, if as you also insist, Paulson has to go back to the Congress to beg for another bag of billions already approved by them, what purpose would that serve? The ostensible purpose of the multi-billion "bailout," er, "rescue" was to reinstill liquidity and thus ultimately productivity. Bankster hoarding does not create liquidity, and is hardly productive.
Krugman met a deadline but hardly touched on your "A federal reserve note in hand is worth more than big bankrupt nothing." I am not a big bankrupt nothing. I have no desire to pay my life savings and my responsible behavior to a bunch of goddam crooks and charlatans and I don't know a single MAN in my neighborhood who is NOT seething with anger at the obvious betrayal by Washington.
I think I am beginning to get the REAL drift on the global crisis here: There is growing uncertainty as to the Dollar's future as the Global Reserve Currency, because it is secured NOT by gold as it was after Bretton Woods until Nixon decoupled them in 1971. For example, recall that Saddam Hussein was actively working to decouple the oil market from the dollar, as Iran is doing today (as might China also be doing now...). The Bush Family did not twice invade Iraq for oil (Greenspan's diversionary "admission" that it was all about oil to the contrary notwithstanding); they did it for Dollar Hegemony, as the likes of Henry CK Liu of Asia Times On Line (atimes.com) might well agree. The Global Community, such as it is, is seriously considering losing the Dollar as the Reserve Currency, but what to replace it with, and how do you "peg" it? Again, hugely competing computer models.
The Dollar exists as a Confidence Game pegged to itself. No wonder there exists a really great opera on Nixon in China. And Kissinger. Et al.
May I suggest that the Dollar again be pegged, but this time to a "basket" of Precious Metals and perhaps other Commodities but Commodities nevertheless? We need a Universalizing Gloal Computer Model. Without valid currency we cannot trade. We need to find what is Valid.
Meanwhile, can anybody nail down that report that some in Congress were told by Paulson et al that if they did not pass the 7xx "bailout," there would be Martial Law? I'm on a landline modem...
Comeon back, Greg R. We are now Post-Marxists all.
-30-
ole man: i left shortly after bretton woods to go work in europe for a few yrs..when i left a free standing house in santa clara calif. next to national semiconductor was 20k..when i got to germany i found a free standing house was 500k..when i got back the 20k house was 200k..now probably 2000k..before the US left the gold standard we made most everything we used..we did not really need to trade with the rest of the world..it seems with no peg to the currency debt is allowed to run to infinity..i wonder if the folks that decided to remove the peg had a clue of what they were doing..
ken
I heard a comment from the smug Paulson that floored me the other day. When asked by a reporter if the money given to the banks was being accounted for, he said something to the effect that it would be counterproductive to make them do so! We're talking about hundreds of billions of dollars here. Now when it comes to the auto makers, they need to account for every penny of the 25B they will be borrowing. On the other hand, AIG gets 100B+ just for the asking. That's a double standard if I've ever seen one!
Sioux Rose
OLE MAN RIVER: Excellent posting. It brings to mind something I absorbed as a child who sat in front of a variety of game shows, where common folk did all sorts of things, some quite humilitating to gain "points." Added to this, whenever my parents left the house our maid blasted Southern Baptist ministers from the radio. The combined effect of these messages led me, a naturally bossy Leo child, to tell other children WHAT to do on the basis of POINTS they could earn. At one time my father overheard me bullying some peers with the lure of POINTS to have them do my bidding and asked with great objection, "What are these points about?" That blew my con game. Unfortunately this abstract point system is pretty much what the US dollar is about, as people trade in their finite hours to gain access to this illusory collateral, and sometimes kill for it. Scams R'U.S.
My wild guess as to the purpose of having Tres. Sec. go back for the second $350 billion is to hopefully have a bit more insight as to where to funnel more money if the first $350 billion were to disappear down the crapper. If banks have a relatively poor idea of the soundness of their investments, then they are far better off to sit on any gift money they receive than to lend it to anyone other than those deemed to have impeccably high credit scores. Nowadays, most currencies are valued by commodity traders. This could be you and I, if we so choose. This works fairly well for richer nations, although herd instincts will often overshoot or undershoot the relative value of individual currencies. This setup works less well for smaller nations, some of whom can be far too easily devastated by currency flight and manipulative trading.
Oh please. Bush has already done 8 years of damage on both economic and foreign policy. He's been lame-duck for 4 years and Obama ran on the promise to clean up the mess no matter how big it is. Anyone who thinks Bush will do something really drastic to cripple Obama's presidency needs to have his/her head thoroughly examined. I may not be optimisitic about Obama but I'll give him 4 years to prove that he can deliver more than chump change even if his cabinet looks a bit too stale. Let's see him show leadership no matter how severe the crisis gets once in office.
At this point, it really doesn't matter much what Bush does to worsen the economy - or what Obama does to fix it. This is a wheel that started rolling with voodoo economics in the 80s and now faces the realities of peak oil and peak everything. Tweaking a few dollars or corporations or jobs by the Government will be the equivalent of putting a kid's bandage on a ruptured artery.
Americans used to pride themselves on their self reliance. Its time to return to this attitude and not expect the government or the corporations to save us. Change won't happen trickle down from Washington, but from the ground up in our communities. It is time, everybody, to roll up one's sleeves and get to work.
"Change won't happen trickle down from Washington, but from the ground up in our communities. It is time, everybody, to roll up one's sleeves and get to work."
We really do need to improve voter turnout on local and state level elections instead of getting hypnotized into these silly presidential elections. It's what goes on locally that affects us all the most. The folks at the federal level are only going to govern on the whole.
Another thing to point out is that there is no need for our US House Reps or US Senators to do pork barrel spending for constituents. Their job is to represent all of America. Representing a state belongs to pols in state legislators and representing local levels belong to the local pols.
When we can improve our voter turnout for presidential and a few select Congressional elections from 45 to 62%, why can't we do the same on local and state level elections? There is nothing to be proud of when turnout on the local and state levels is abysmally low as far down as 5%.
And another thing. Presidents don't create or take away jobs. Their only goal is to direct the policies on economic justice.
"Yet economic policy, rather than responding to the threat, seems to have gone on vacation."
That's an understatement! Here we are bailing out AIG in 2008, 4 years after Bush and Congress knew that major proplems were brewing with the largest insurer on the planet.
"(AIG)AMERICAN INTERNATIONAL GROUP, INC. AGREES TO SETTLE CHARGES OF VIOLATIONS OF ANTIFRAUD AND OTHER PROVISIONS OF THE FEDERAL SECURITIES LAWS"
http://www.sec.gov/litigation/litreleases/lr18985.htm
It seems that "transparency" on all levels has taken a permanent vacation!
Have you checked out the bailout sleuth? http://bailoutsleuth.com/cgi-bin/m/mt-search.cgi?blog_id=1&tag=transparency&limit=20
I'm still trying to understand how such disastrous policies became so widespread. I'll have to read up on Krugman a bit, or someone can point me to some reading, but for now, I'll just cut and paste this from the Wikipedia. It is interesting to see the results of these policies among the countries listed at the end. I think Naomi Klein covers some of them in her Shock Doctrine book, as does Ralston Saul in "The End of Globalism" [?]
-------------------------
from Wikipedia:
Friedman's methodological innovations were widely accepted by economists, but his policy prescriptions were highly controversial. Most economists in the 1960s rejected them, but since then they had a growing international influence (especially in the U.S. and Britain), and in the 21st century have gained wide acceptance among many economists. He thus lived to see some of his laissez-faire ideas embraced by the mainstream,[6] especially during the 1980s.
His views of monetary policy, taxation, privatization and deregulation informed the policy of governments around the globe, especially the administrations of Ronald Reagan in the U.S., Brian Mulroney in Canada, Margaret Thatcher in Britain, Roger Douglas in New Zealand, and Augusto Pinochet in Chile, and (after 1989) in many Eastern European countries.
“Milton Friedman’s misfortune is that his policies have been tried.”
---John Kenneth Galbraith
jonabark
Do Economists live in a complete void when it comes to other economic writers? Reading Krugman, you would not think Naomi Klein had anything worth saying in her analysis of Friedman, her Shock Doctrine hypothesis, or about the questionable actions of Paulson and the lack of Democratic response since the bailout approval. Actually, you wouldn't even know she existed. Or what about the astute observations of Nomi Prins. Also, there isn't much substance coming from his recent writings. Is he really saying "Do anything", because that is all I can find here? Also he has shown no acknowledgment of Schecter, Kunstler, Prins, or Roubini, who are the only writers I came across in my surfing who clearly predicted the derivatives/mortgage implosion for months before it happened. Why is he not demanding more transparency or setting out something a little more prescriptive and detailed. He was a divine tonic under Bush, but his world is too small and too tied to the Democratic Party and FDR worship and Kenynes.
Check out krugman's blog. He certainly acknowledges Roubini. The others you mention are more on the fringes of capitalistic economic thinking and krugman is clearly a centrist, but with a heart in the right place and a good head on his shoulders.
Sioux Rose
All true; plus he wants to retain his job at the money-preserving/thus mostly conservative New York Times.
And don't forget his gig at Princeton.