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Posts Tagged ‘Krugman’

Debt Delusion

The recent budget fight is simply a precursor of what must be done.  Both sides are still playing small ball, messing with discretionary spending, when the huge entitlement bomb is going to cause our demise.  While Democratis cry about “cruel” budgets, our debt will go up more this week (about $50B) than the $38B or so that Congress was able to agree to cut.  We’re using bandaids and aspirin when wholesale amputation and emergency surgery is required.  Columnist Robert Samuelson put the matter well in his column today:

We in America have created suicidal government; the threatened federal shutdown and stubborn budget deficits are but symptoms. By suicidal, I mean that government has promised more than it can realistically deliver and, as a result, repeatedly disappoints by providing less than people expect or jeopardizing what they already have. But government can’t easily correct its excesses, because Americans depend on it for so much that any effort to change the status arouses a firestorm of opposition that virtually ensures defeat. Government’s very expansion has brought it into disrepute, paralyzed politics and impeded it from acting in the national interest.

Few Americans realize the extent of their dependency. The Census Bureau reports that in 2009 almost half (46.2 percent) of the 300 million Americans received at least one federal benefit: 46.5 million, Social Security; 42.6 million, Medicare; 42.4 million, Medicaid; 36.1 million, food stamps; 3.2 million, veterans’ benefits; 12.4 million, housing subsidies.

While Paul Krugman cries that Obama is a wimp and Republicans are cruel, it is our continued, insane-level of deficit spending that is cruel.  It has real practical consequences today ($5 gas) and tomorrow (a shrinking, sclerotic, no jobs economy).  There are signs of seriousness and hope among both voters (the Tea Party) and politicians (Paul Ryan, for example),  but one wonders if the stars can align for the kind of serious courage needed to get this sorted out before we have a real Greek-style meltdown.

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Sarah Palin got in some hot water this week for suggesting the left’s rseponse to the Loughner shooting was a “blood libel.”  Way back in the day, when Jews and Christians lived apart from one another in Europe, this was a popular myth of Jewish mendacity:  that they engaged in ritual murder of Christians for their religious ceremonies.  It was fueled by confusion, prejudice, and the theological view of Jews as the murderers of Jesus. More recently, it’s become a secular term to denote murdeous intent by one’s political and cultural enemies.  It’s undoubtedly what was leveled at the conservative half of the country by the left in the wake of Arizona’s shooting.  The self-righteous rage at Palin reflects the various ways she is hated as a symbol of this half of the country.  It also reflects another important phenomenon: the self-righteous view by the mostly leftist Jewish minority that no one can ever make an analogy to Jewish suffering without also agreeing with broader, mostly left-of-center Jewish views, and that to make such analogies is an act of hateful anti-semitism.

Paul Krugman, however, has upped the ante.  After his earlier, divorced-from-facts attacks on the right, he has now suggested that those critical of the federal government’s various unconstitutional welfare programs are engaged in “eliminationist” rhetoric.  That’s an interesting term.  It finds its origins in the propagandistic book Hitler’s Willing Executioners by Daniel Goldhagen. Goldhagen is an historian who penned a controversial and largely discredited thesis that the Germans of the Holocaust mass murdered Jews after embracing an “eliminiationist” paradigm, and that this view was widely embraced by Germans at every level of society.  While short on facts and analysis–after all, why did the Germans hide the Holocaust if it was a logical outgrowth of majority views–the book was popular and reached a mass audience.   Krugman’s defamatory slur is doubly troublesome, as it conflates the rhetoric that would eliminate welfare or national health care with the kind that would eliminate millions of people.  Details, details.

The left and right undoubtedly do not like one another in this country and have different values.  However, it is the left that appears more unhinged, at least in its mainstream.  While we have our share of fringe elements concerned about the Trilateral Commission and Obama’s birth certificate, it is the mainstream Democratic Party that invited Michael Moore to their annual convention in 2004.  It is they who responded to this attack with venomous rage before a single fact connected this mentally ill shooter to any political faction at all.  And now it is Krugman–not Sarah Palin–who has tried to connect his opponents with murderous, Nazi antisemitism.

I’m not sure if anyone else has picked up on this inflammatory usage of his.  In any case, he is a fool, and the left, in their hate, are projecting their own hostile and homicidal feelings on the right, whose Tea Party rhetoric and appeals to the Constitution are almost completely nonviolent.

Indeed, the left’s habitual violence, far from being condemned, is embraced at the highest levels.  While his campaign and Tuscon speech were largely conciliatory, Barack Obama began his political career in the living room of a former Weather Underground terrorist, Bill Ayers.  The Weathermen, as they were also called, were notorious bombers, cop-killers, and all around bad people.  Angela Davis, a California professor, was involved in a communist murder plot in the mid 1970s; today, she’s honored as an esteemed academic.  By contrast, no one in the mainstream right rallied around Tim McVeigh (undoubtedly a right-wing, if extreme terrorist), nor Eric Rudolph, nor other violent extremists of the right.  Such extremism, incidentally, is a feature of any political movement. The question is how such extremists are dealt with and treated by the mainstream leadership.  Here the left has failed, where the right has largely behaved responsibly.  But the left appears to be engaging on a wide scale in what psychologists call “projecting”:  that is, imagining their opponents to have their own worst traits.

Let’s not forget, it’s the left that romanticizes Che Guevara and makes excuses for the dictatorship he served; is it any wonder they assume all their political opponents want to kill and destroy as much as they do.

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If we’re going to be spending tons of money on helping banks and dying, mismanaged companies, would it be too much to ask that the redistribution does not go from the productive 25% or so of this country to the risk-preferring .0001% on Wall Street, but that these huge sums actually goes to homeowners in some plan that injected capital into their pockets or forgave their debt in the process? Perhaps such a plan would allow those with reasonable prospects of repayment to pay down 25% of principal or lock in 5% notes over 40 years or something else that actually will not quickly blow up in the government’s face. Wouldn’t this be preferable to the current scheme whereby the housing-induced insolvency for banks is resolved by moving huge sums of taxpayer dollars around from AIG to Goldman or Credit Suisse and then back into the pockets of a few sovereign wealth funds, hedge funds, bank bond holders, and the like?

I mean, I’m not for any of this, but between helping Bear Stearns, GMAC, and AIG with capital infusions and helping average guys who are upside down on their houses, I guess I’d rather just have good, old-fashioned wealth redistribution. After all, the latter arguably would help more people, cut out the middle man in the form of the banks getting direct cash infusions and FDIC leverage, and would at least spread out the benefit of the inevitable inflation that we will face as result of the Treasury’s abject terror at the prospect of a few big banks’ failing. Welfare at least is more transparent and likely to create some Republican (and renter) backlash in comparison to the dishonest claims of “investment,” “emergency,” and Rooseveltian prescience surrounding the bank bailouts.

Of course, the banks have in reality failed, and they are insolvent. The loss is simply being spread to the taxpayers and the few well run banks through FDIC premiums. None of these measures will replace the huge sums of lost wealth nor lead to more lending–for housing or anything else.  Why?  Because the whole economy is uncertain, malinvested, and buried under huge sums of debt undertaken in times where we collectively foresaw a rosier future, and Obama’s reactive responses to these phenomena increase uncertainty, which is a major impediment to wealth creation and risk-taking economic behavior.

What exactly is propelling this Democratic Tribune of the People to spend so much money and political capital to bail out mismanaged bank shareholders and bond holders, who in effect endorsed the banks’ acquisition of huge positions in MBS and ABS products? I don’t think, like Clinton, he is a kind of globalist pro-capital guy, who wants to help international capital so long as DC gets a slightly larger cut. Judging by his rhetorical clumsiness on this issue, it seems more likely that Obama is acting out of a combination of ignorance, fear, and insecurity. After all, it would take real philosophical vision of free markets or a philosophical commitment to Krugman-style redistribution to stare down Bernanke and Geithner in a game of chicken. Obama has effectively outsourced the most important policies of his administration to these Wall Street lackeys, preferring instead to strong arm Detroit into making flying cars and spending time to gin up exquisitely nuanced youtube videos for the Iranian censors to jam.

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