Wednesday, September 24, 2008

Making Shit Up

Paul Krugman on just what the Hanky Panky is all about:
A sneaking suspicion

So now the whole rationale for the plan is “price discovery”: we’re going to throw lots of taxpayer funds into the pot because that will let us find the true values of troubled assets, which are higher than the fire sale prices out there, and so balance sheet will improve, confidence will return, etc, etc..

So I just did a Nexis search trying to find out when Paulson and Bernanke started talking about price discovery, which we’re now told are at the core of the plan’s logic. And the answer is …


I can’t find any use of the term, or even a hint of the argument, until yesterday’s Senate hearings.

One possible explanation. It wasn’t until yesterday that they realized that it would actually be necessary to explain themselves.

But there’s another possible explanation, which I find terrifyingly plausible: the plan came first, and all this stuff about price discovery is an after-the-fact rationalization, invented when people started asking questions.

It has seemed very strange to me that such a supposedly crucial economic program would be based on such an exotic argument. My sneaking suspicion is that they started with a determination to throw money at the financial industry, and everything else is just an excuse.
This is of a kind with Bush & Cheney using the trauma of 9/11 to push through their glorious little war with Iraq. There is a true crisis, though in this case a crisis that has been forseen by good economic analysts for the better part of three years, and the BushCo administration tries to turn it into a an exercise in personal enrichment. In the midst of turmoil, they flat out lie their way into what they want for themselves and screw the rest of us.

Ditch the plan, Democrats. Create one that is realistic and may actually solve the problem. Dare the Chimp to veto it and then run on that veto until November.



Dhyana said...

I can predict my future because I repeat the same routine.

I've also seen the routine from the Democrats. I suspect they will announce a "compromise" reached behind closed doors with the Republicans that give 99 percent of what the administration wants. The compromise will state that the details will be settled after the election and call it a win for the American people. When the details are written into law, the taxpayers will be left holding the bag.

Anna said...

Obama has a campaign patter of waiting for his opponent to announce a position and then issuing a position very close to the oponent with one or two very non-controversial opinions. Gail Collins in NYT 9/25 noted that Obama had waited till the administration position "jelled" and then issued a position that was "vaguely similar and similarly vague." She seemed surprised.

Gary McGowan said...

"My sneaking suspicion is that they started with a determination to throw money at the financial industry, and everything else is just an excuse."

That's the way monetarists think. Find me an economics class that teaches that the basis of any truly successful economy is the creativity of the sovereign human mind -- the ultimate resource. Sit right where you are and look around you. Think. Does all this neat stuff come from money or from human resourcefulness? How many congresscritters have ever built furniture or wired up a radio receiver? There are discoveries (or re-discoveries) to be made along that path. Their "educations" were all bullshit. They live, as do an increasing number of our fellow citizens, in a "post-industrial" fantasy world. The fantasy has just crashed into reality.