Paul Krugman is WRONG about The Obama TARP Plan - Once Again

On March 24th, I wrote a short post on Economist and NY Times Columnist Paul Krugman and created this video below.




Today, in the wake of Newsweeks' rather unfortunate April Fools Day article on the Princeton Professor (which presented him as a kind of edgy intellectual but lacked real substance in the discussion of why Krugman is wrong about Obama), I decided to offer this expanded blog post. The problem is that Krugman is really angry that the Obama administration is and has ignored him and this emotion has driven a sloppy intellectual approach, paced by the fact that he's not presented a plan for our troubled banks, all the while taking an aim at the President's plan that has the effectiveness of a drunken sailor at an arcade shooting gallery.

Who is Paul Krugman?

Professor Krugman is a decorated International Economist, who recently - in 2008 - won the Nobel Prize in Economics for his solid theory on two-country trade. Here Krugman attacked the standard idea of two-country trade by explaining with some heft that a country like the United States that makes a Cadillac sports sedan will see that car purchased to some degree in Germany, which just happens to produce the competitor BMW 5-series. In other words, rich countries trade like goods more often than poor country to rich country or vie versa. This idea was path-breaking in that the economies of scale were not included in traditional models of trade, so pretty much any country could trade with another one in this immmaginary World. Krugman's theory explained the real World.

Now, why do I have an interest in this? Because my background is in urban economics and I focused on it at both Texas-Arlingron and Cal-Berkeley, but fell in love with a kind of way of modeling relationships called System Dynamics which causes one to see the World as a set of feedback and control connections. And that's where I break with Krugman. As a traditional economist, he does not see beyond a set "straw-person example" and into the more complex World around him -- the political aspect of economics (the political economy as its called) is lost on him, which is why the Obama Administration does not embrace him.

The Obama plan for bank troubled assets, using Troubled Asset Relief Program money to finance non-recourse loans to encourage investors to buy the "junk" is one example (called the "Public-Private Investment Program for Legacy Assets"). Krugman attacks this plan around the idea that we're giving taxpayer money away to create this market, then sets the idea that it will not work without emprically showing why it will not do so in detail or offering an alternative plan.

What Krugman missed is a read of the political landscape such that Obama's TARP plan is not only one the market asked for, and for months, but was needed to take the bad debts off the banks books. And that's what Krugman misses. He rants on about the plan's possible failure from within its own system, but says nothing -- zip -- about getting the assets off the banks books, which is the real success. Then Paul makes a real intellectual error by writing that the Obama administration sees the bank financial system as sound, which it does not, otherwise this plan would not exist.

He then writes as if the plan uses all of the TARP money, rather than the truth, which is that it uses a small portion of it, thus leaving enough left over for other plans.

As I have stated again and again, the plan lacks a payment to American taxpayers under $100,000 of $3,500 each -- or about $380 Billion -- to essentially help banks and to a degree stimulate spending. Why? The vast majority of Americans don't have massive debt problems asmany don't carry credit card debt and for those who do the average level of credit card debt is about $10,000, so this plan helps reduce that by one-third. But people aren't going to leave the money under a matress, they will put it in banks, thus helping both Wall Street and Main Street. Remember the unemployment program, designed for those who were laid off from large companies in the past, does not help the apprentice plumber who has a decade-long resume of customers that suddenly dried up.

See, my idea is a supplement that I introduced a while back in a talk with CNN's Ali Velshi, who agreed it could help. But it fits within the economic and political reality of what we need to do to fix America's economy in a way that Krugman's plan does not do.

Oh. I forgot. He doesn't have a plan.

In closing, I do not embrace crits of this post that are based on the "You're not an economist" view or juvenile name-calling, which is common online but not allowed here in my space, but I do like a good debate on rigor and detail. Bring it.

Follow me on Twitter!

Click here for SF Chronicle version.

Obama Plans to End Iraq Combat Missions by August 2010

More at NYTimes.com: “CAMP LEJEUNE, N.C. — President Obama declared Friday that the United States has now “begun the work of ending this war” in Iraq as he announced the withdrawal of most American forces by the summer of next year while leaving behind as many as 50,000 troops for more limited missions.”

Barack Obama taps Leon Panetta to run CIA

More at chicagotribune.com: “WASHINGTON - President-elect Barack Obama has selected Leon Panetta, a former congressman with little experience on intelligence matters, to serve as the next director of the CIA, according to Democratic officials familiar with the decision.

The selection puts the prominent Democrat in charge of an agency that has been at the center of a storm of criticism in recent years, ranging from intelligence failures leading up to the Sept. 11 attacks to the aggressive tactics that were embraced in its aftermath.

Panetta, who was chief of staff to President Clinton, is regarded as a bright political operative and highly capable manager. But if confirmed by the Senate, he would be among the few directors in agency history with no prior experience at one of the nation's spy services.
”

-- Or was this a trial balloon to see how Senator Diane Feinstein would react? Whatever the case, she was not happy to have learned the news via the New York Times.

Interview: New NYT.com GM Denise Warren: | paidContent.org

Interview: New NYT.com GM Denise Warren: Tip-toeing Into Aggregation With Guarded Optimism | paidContent.org: “As if heading advertising for the New York Times (NYSE: NYT) Media Group wasn’t tough enough in this climate, Denise Warren is taking on the role of GM of NYTimes.com as the site fends off increased challenges from competitors and the economy. Warren has been chief advertising officer of the NYT Media Group for three years and has been with The New York Times Company for 20 years.”

U.S. Training in Africa Aims to Deter Extremists - NYTimes.com

U.S. Training in Africa Aims to Deter Extremists - NYTimes.com: “KATI, Mali — Thousands of miles from the battlefields of Iraq and Afghanistan, another side of America’s fight against terrorism is unfolding in this remote corner of West Africa. American Green Berets are training African armies to guard their borders and patrol vast desolate expanses against infiltration by Al Qaeda’s militants, so the United States does not have to.

A recent exercise by the United States military here was part of a wide-ranging plan, developed after the Sept. 11 attacks, to take counterterrorism training and assistance to places outside the Middle East, like the Philippines and Indonesia. In Africa, a five-year, $500 million partnership between the State and Defense Departments includes Algeria, Chad, Mauritania, Mali, Morocco, Niger, Nigeria, Senegal and Tunisia, and Libya is on the verge of joining.”

Bad Times Draw Bigger Crowds to Churches - NYTimes.com

Bad Times Draw Bigger Crowds to Churches - NYTimes.com: “Like evangelical churches around the country, the three churches have enjoyed steady growth over the last decade. But since September, pastors nationwide say they have seen such a burst of new interest that they find themselves contending with powerful conflicting emotions — deep empathy and quiet excitement — as they re-encounter an old piece of religious lore:

Bad times are good for evangelical churches.”

Bernard L. Madoff - Questions Are Raised in Madoff’s Massive Fraud - NYTimes.com

Questions Are Raised in Trader’s Massive Fraud - NYTimes.com: “For years, investors, rivals and regulators all wondered how Bernard L. Madoff worked his magic.

But on Friday, less than 24 hours after this prominent Wall Street figure was arrested on charges connected with what authorities portrayed as the biggest Ponzi scheme in financial history, hard questions began to be raised about whether Mr. Madoff acted alone and why his suspected con game was not uncovered sooner.

As investors from Palm Beach to New York to London counted their losses on Friday in what Mr. Madoff himself described as a $50 billion fraud, federal authorities took control of what remained of his firm and began to pore over its books.”

Bush White House Blocks Blair House From Obamas - The Caucus Blog - NYTimes.com

Sorry, We’re Booked, White House Tells Obamas - The Caucus Blog - NYTimes.com: “CHICAGO—The White House has turned down a request from the family of President-elect Barack Obama to move into Blair House in early January so that his daughters can start school on January 5.

The Obamas were told that Blair House, where incoming presidents usually stay in the five days before Inauguration Day, is booked in early January, a spokesperson to the Obama transition said. “We explored the idea so that the girls could start school on schedule,’ the spokesperson said. “But, there were previously scheduled events and guests that couldn’t be displaced.”

It remained unclear who on Bushes guest list outranked the incoming President.

“It’s not a public schedule,” said Sally McDonough, spokeswoman for First Lady Laura Bush, in refusing to disclose who was staying at Blair House. “It’s not a question of outranking the Obamas. Blair House will be available to them on January 15.””

Barack Obama Fills Top Posts at a Sprint - NYTimes.com

Issues Pressing, Obama Fills Top Posts at a Sprint - NYTimes.com: “CHICAGO — The call summoning him was somewhat cryptic. Only after Gen. James L. Jones showed up in a hotel suite for a one-on-one meeting with Barack Obama did it become clear what was going on.”...

Protect Free Speech, Including Hate Speech

I just saw this article in the New York Times reporting on how Canadians crack down on the use of "hate speech" that's commonly heard in the United States.

Does that mean we're less advanced as a society? I think not. My personal view is that while I totally hate any kind of "hate speech", hearing it in a digital society gives us a true view of our country and causes others to put pressure on the "haters" to stop what they're doing.
http://www.blogger.com/img/gl.link.gif
For example, I remember when a certain NY Times writer confused me as being two different Black men in consecutive columns. Valleywag picked up on that, and the racism that was evident.

The result was an apology from the writer.

Besides, we would not know how stupid Michelle Malkin could be without free speech!

Emily Gould Attacks Gawker and "Henry" But Give Her A Break

Emily, originally uploaded by m_d_portela.

Emily Gould was invited to write a first-person essay which appeared in the NY Times Magazine with a cool photo of Emily on its cover. No big deal to me, but it's caused a firestorm of criticism mostly aimed at the NYTimes itself for being, well, capitalist in trying to gain commenters for its new blog system.

But I think what's missing here are two things. First, is what I will call the struggle of mainstream media to have some influence and say in the blogsphere. Second, there's Emily's very revealing attack on Gawker.





I just read her entire post -- it's long; perhaps 20,000 words or so -- and what I came away with was that, 1) she broke the heart of her now-ex boyfriend Henry who she made read like someone who's afraid of success and was good for nothing except growing out of, and 2) that she essentially jumped into a relationship with a guy -- Gawker blogger Josh Stein -- who she worked with who didn't really "get" her like Henry did, but was able to convince her to spread her legs on cue, 3), she totally hated the Gawker Culture (but not its people) but worked her way into it because she was slowly becoming like Julia Allison, who's attention seeking personality Gould claims to dislike, but only because it's really the completion of what Emily was becoming (and since they're friends, arguably has become - see photo), and 4) Emily needs a new Mac as the one she's using is really old. I think about five years old at least.





Of course, getting wrapped up in all that totally causes one to miss the bird's eye view of things. In this case, from the air there are a lot of people really pissed off about what Jezebel blogger "Moe" -- who's a friend of Emily's -- called a "masterbatory" blog.

It was. Writing the line "Josh and I sat together on the couch, and I put my head on his shoulder in a completely friendly, professional way" made Moe and me LOL, because there's no fucking way that one could even think of such an action as either just friendly or professional. But I'm sure it gave Emily much quasi-sexual pleasure to write that. But what's not a feel-good moment is the reaction to Gould's work.

Rachel Skalar at the Huffington Post just plain unloads on Emily , taking her to the woodshed for being so, well, self-revealing. Rachel ties together every negative blog and article on Emily's "Exposed" Times work, and leaves no whipping lash unused. Rachel's point -- again -- is that there are more interesting topics than the musings of a self-absorbed blogger with boyfriend problems.

What I find totally facinating about all of the crying and whining about Emily's NYTimes blog is that people are complaining that people are reading about this; Let's face it, no one's forcing us to do so. Rachel read it -- so did thousands of others. People don't seem to get that they like to read about other people. We're voyeurs. Period. Bravo that the NY Times and NYTimes Mag Editor Gerry Marzorati recognizes that -- I guess. Of course, it could have been the happy accident of some editor there -- perhaps Gerry Marzorati -- who thinks Emily's hot. I was about to write we'll never know, but in this "new revealling media" society, I take that back. We'll find out at some point in time.

Do we care? Yes. The simple proof of this shows up in the numbers. Not just for Emily, but on a smaller scale for what -- for example -- I wrote for the San Francisco Chronicle. A revealing article on a defense mechanism I used to deal with subtle racism I call my "Iron Man" suit. In writing it I discovered I gave a voice to many people who felt like me. And let's face it, we like feedback and appreciation; it's a drug that has all of us under its spell.

So what?

I think we're seeing the seeds of why some people don't succeed in new media on a personal level. One does have to be comfortable with a certain degree -- a high level -- of self-revelation. Either by the person or someone else.

What's funny is that no one is free from this, and choosing not to blog is no escape -- just ask Henry. I'm sure somewhere, he's hating every word of Emily's article as he plays a major part in it, and just because of his former association with her.

Welcome to the 21st Century. Eventually, therapists will have to properly sooth clients who's lives were exposed by some wayward blogger working for or starting their own media company. It's more the norm than you think.





And if that's scary to you, I'm glad to get your attention because this new, revealing world of masterbatory blogging also has a sibling called "masterbatory video-blogging" both draw eyeballs, but there's something baserly attractive about seeing a video of someone talking about themselves or doing something either completely stupid or sexy or interesting. Plus, we have videos of people being caught doing something completely stupid or sexy or interesting, and its those works that get the most attention -- and that leads to money.

The eyeball economy meets "Masterbating Emily" - film at 11, Emily in metallic bikini.

Obama / Wright NY Times Editorial Is a Home Run

Today's NY Times Editorial on Senator Barack Obama's angry response to Rev. Jeremiah Wright's appearance at the National Press Club was a home run. I too was not happy with Rev. Wright's presentation, complete with the "dog" pose after he answered one question. While the media questions were also stupid and race-batting, Rev. Wright lowered himself to their level.

But what hurt most was seeing Wright throw Senator Obama under the bus, when Obama took great pains to protect Pastor Wright even in Obama's landmark speech on race, a response to initial criticism about the former leader of Trinity United Methodist Church.

New York Times Kit Seelye Responds To Zennie's Post

Last night, New York Times online writer Kit Seelye responded to my post on her error in failing to recognize that I was the same person who's video she linked to twice in her article on the CNN / YouTube debates.

I referred to the action as an example of institutional racism, which, while it's generally unintentional has terrible results of stereotyping or exclusion -- both of which happened in this case. In Ms. Seeyle's partial defense, she responded as if she was tired, but still, she's a professional journalist.

The comment exchange is in the blog post here.

Hillary Clinton's Staffers Jealous Of Barack Obama's Rise - NY Times

Wow. Just when you'd think we'd have a peaceful presidential campaign, a war of words explodes in full. Senator Hillary Clinton and former President Bill Clinton were rocked by negative comments from Hollywood Mogul David Geffen, who on Monday hosted a dinner party for Senator Barack Obama and raised $1.3 million for the presidential candidate.

According to the New York Times, and The Washington Post , Mr. Geffen said the Clintons lie “with such ease, it’s troubling” and that the Clinton political operation “is going to be very unpleasant and unattractive and effective.” The Times reports that Mr. Geffen called Mr. Clinton a “reckless guy” who had not changed in the last six years, and suggested that Mrs. Clinton was too scripted.

What's bothersome is the Clinton campaign is blaming Senator Obama for remarks he didn't make. They're also calling for the Senator to return the money Geffen donated.

They must be totally nuts. Plus, they're letting it be known that they're a bit envious of Obama's rise to fame and popularity. That can only hurt, not help, the Clinton campaign. Even if it wasn't Obama who made the statements, Senator Clinton herself has seemed to react to them as coming from Obama, when they did not. Thus, becoming the adversary of a rising star can only harm her own efforts -- best to back off.