Friday, August 3, 2012

Debt, Depression...and Goldstein (Again)

One of the constant themes of Paul Krugman's hyper-partisan columns has been the role of Goldstein in the current economic failure, and he gives us more Orwellian material in his latest column. Yes, the same president who has unleashed the Environmental Protection Agency to try to reduce our electricity output, and the same president who had absolute majorities in the House and Senate (filibuster-proof majority there) for more than half of his current term in office has seen the economy stymied by the Forces of Evil. Yes, the economy has not climbed out of the depression because Goldstein has declared that we must remain in the mire:
There has been plenty to criticize about President Obama’s handling of the economy. Yet the overriding story of the past few years is not Mr. Obama’s mistakes but the scorched-earth opposition of Republicans, who have done everything they can to get in his way — and who now, having blocked the president’s policies, hope to win the White House by claiming that his policies have failed.
Now, the president controls the executive branch, the U.S. Supreme Court handed him a victory in the ObamaCare decision, and the president's party controls the Senate. Only the House of Representatives eludes Obama's control. That Republicans would disagree with Obama's economic policies hardly is shocking, given that opposition parties generally do disagree on a few things.

The so-called "scorched earth" opposition refers to the Republicans being unwilling to raise the top tax rate from 35 percent to 39.6 percent, and their "intransigence" in supporting Obama's desire to tax investment income more heavily. I believe that people can agree to disagree on some things, and I do believe that raising taxes on private investment income during a depression is not a good thing. I guess that makes me a "scorched earth" sort of fellow.

Ultimately, Krugman lays huge amounts of upon Edward DeMarco, who heads the agency that oversees Freddie and Fannie, and DeMarco does not support policies that Krugman likes:
But Edward DeMarco, the acting director of the agency that oversees Fannie and Freddie, refuses to move on refinancing. And, this week, he rejected the administration’s relief plan. 
Who is Ed DeMarco? He’s a civil servant who became acting director of the housing finance agency after the Bush-appointed director resigned in 2009. He is still there, in the fourth year of the Obama administration, because Senate Republicans have blocked attempts to install a permanent director. And he evidently just hates the idea of providing debt relief.
Yes, that's it. DeMarco apparently is a career bureaucrat who moved into that office by default and he stands in the way of ending the depression, which means that he must be Goldstein. Of course, we are talking about a bureaucratic functionary who easily could be canned. After all, this is the same Obama administration that overrode contracts and made up its own rules on the fly in the bailout of GM and Chrysler; this is an administration that is fining oil producers for not using cellulosic ethanol, conveniently ignoring the hard fact that there is no cellulosic ethanol being produced anywhere right now. Somehow, I am sure that the Obama people are not without options here.

Nonetheless, Krugman holds this whole thing as "proof" that Goldstein purposely is driving down the economy to keep Big Brother, er, Obama, from being re-elected. Writers Krugman:
...the DeMarco affair nonetheless demonstrates, once again, the extent to which U.S. economic policy has been crippled by unyielding, irresponsible political opposition. If our economy is still deeply depressed, much — and I would say most — of the blame rests not with Mr. Obama but with the very people seeking to use that depressed economy for political advantage.
 No, Krugman never has offered proof that DeMarco is making his decisions for political reasons, and I have no idea if Krugman's housing scheme even would make a dent in the depression. However, when one is performing the "Two-Minute Hate" and putting Goldstein's picture on the screen, good sense and even truth are going to be thrown out the window.


Bala said...


Read 1984 rather recently. Fantastic parallel. Makes you realise the extent of Orwell's brilliance.

CPBrown said...

Note also how he says :

"He’s a civil servant who became acting director of the housing finance agency after the Bush-appointed director resigned in 2009."

Somehow, even though he became director under the Obama administration, this evil functionary actually "trickled down" from Bush.

Stephen Banicki said...

The scorched earth policy Krugman is referring to is the Republicans refusing to accept any increases in taxes paid by the wealthy. They are afraid of Grover, more so than the voters.

By all means replace DeMarco and provide relief on those mortgages that are under water and owned by Fannie and Freddie. Simply put, he is not following orders and needs to be dismissed. DeMarco is interfering with the operation of our government. This is not a question of whether the current administrations decision is right or wrong. The voters have the right to make that decision. Fire him now!

There are additional steps to be taken that benefit we the people. The government, or Fannie and Freddie, should file suit against those entities causing the sub-prime meltdown and thus contributing to Fannie & Freddie's current problems. These culprits include firms on Wall Street, some banks, some loan originators, credit rating agencies who were bought off to give investment grade ratings on the securities and others.

Further, allow citizens whose mortgage is/was not owned by Fannie or Freddie, and were financially harmed by the culprits actions, to join in on suit and seek damages. This includes those homeowners who did nothing and yet watched their net worth disappear because the entire housing market collapsed. JUSTICE

It is these miscreants who profited from the sub-prime meltdown; therefore, it is reasonable that they pay for the harm they caused. This then results in a stimulus to the economy primarily paid for by the villains. That is how are justice system is suppose to work.

Mike M said...

Stephen said:
“These culprits include firms on Wall Street, some banks, some loan originators, credit rating agencies who were bought off to give investment grade ratings on the securities and others.”

Yes and the applicable Congressional Committee Chairs, Congress as a whole, the Federal Reserve, The Treasury Department, regulatory agencies, financial talking heads, and consumers choosing to suspend logic, reason and common sense etc..

Moses came down from the mountain and found the masses partying and worshiping a false idol. It was only after being called out they panicked and pointed fingers at each other to avoid the wrath of God. Virtually every one of the above referenced parties participated in this financial orgy. Some knew the truth and ignored for gain, others didn’t want to know the truth for gain. Now it’s someone else’s fault.

“That is how are justice system is suppose to work.”

I love your sentiment here, but good luck with that. Not going to happen. The justice system stopped dispensing justice a long time ago but that’s another subject.

C. Van Carter said...

It's nice of Krugman to share what the real liberal view of "independent agencies" is.

Kate Dunkin said...

I'm happy I found this while I was looking online at articles on tax debt relief. This was a very interesting and informative read. Thank you for sharing this with us.

Tel said...

Please Prof Anderson, write your opinion on Paul Ryan. Is he really from the Tea Party or just a fake? Does he believe in Liberty or Authority?

If Paul Ryan does nothing more than bringing the deficit under control, then that is a step away from disaster; but is it a step towards Liberty? Maybe it is right that the state should collapse... they have worked hard towards that goal, they deserve to reap what is sown.

On the other hand, if there is an economic collapse, maybe war would be the inevitable result of that and war is without a doubt a step away from Liberty. I mean, the USA is already at war, in several places at once, but I'm talking about a bigger and less manageable war that could be on the horizon.

I would value your opinion if you could explain what you expect the different paths into the future to look like, depending on how we look at the end of the year.

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