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.

President-elect Obama Announces Stephen Chu, Carol Browner, and Lisa Jackson

President-Elect Barack Obama continues to introduce members of his cabinet, today officially bring in Dr. Stephen Chu, Lisa Jackson, and Carol Browner. Dr. Chu is a legend in the halls of Lawrence Berkeley Laboratory and known for his leadership and knoweldge. Ms. Jackson is a policy-driven public official who reportedly improved the formerly politicized New Jersey EPA Department. And Carol Browner is a well-known environmental public official having served as the head of the EPA under both Clinton Administrations, the longest serving head of the EPA in history. Nancy Sutley, Los Angeles's deputy mayor for energy and environment, will chair Obama's White House's Council on Environmental Quality.

If you're keeping score, Obama has introduced three women and one man today. I also have to add that I think Obama's appointing more Asians and women to top posts that ever before, but they're also trail-blazers in their fields.

Donald Lacy's Views On The Election, Obama

Donald Lacy is a name that came into Oakland and the nation's view after the 1997 murder of Lacy's daughter who was an innocent bystander just leaving McClymond's High School in Oakland. As part of his on-going effort to combat the problems that caused that event, Lacy started The Lovelife Foundation, which is "promoting life and saving lives through community revitalization, leadership and development." (http://lovelifefoundation.org) . I saw Lacy at the San Francisco Democratic Party event on Election Night and got his views on the Election and President-Elect Obama's victory.

Obama Celebration: Harlem Style Parade For Obama

Obama Volunteer's Positive Experience in Nixa, MO - From Listserv

Obama Volunteer Sheree Williams reports from the Obama listserv..

I just got back from Missouri with the Obama Campaign. A group of about 100 people from Arkansas went down to rural Missouri to help Get out the Vote and Canvass for Barack and Joe.


It was the BEST experience I have EVER had in my life!!!! I was able to be a Deputy Field Organizer and Group leader this weekend.


The office in Nixa, MO said due to Arkansan's help we BROKE RECORDS and knocked on OVER 1,400 door in our area alone. There were OVER 3,000 Voluteers FROM 5 STATES went into the State of Missouri this weekend. LITERALLY TENS OF THOUSANDS OF DOORS WERE KNOCKED ON.


It was great to work the town on Nixa that voted for Bush in 2004 by a margin of 70%- 30% Kerry and see SO many pro-Obama people. The people in Missour are FIRED UP AND READY TO GO!!! The local Nixa, MO residents were SO kind and welcoming.


They said due to us from Arkansas coming down to work that is also FIRED UP to local Missouri residents. They want us to come back again this weekend to help GOTV(Get out the Vote)!!! THe residents of Missour said if WE could come from Out of State to help TURN Missouri Blue, then THEY WILL WORK HARDER TOO!!!


I meet Nixa, MO residents that were previous republicans, young, older, workin familes and retired GM plant workers.


I am back to report PEOPLE in Missouri are looking for change and MISSOURI WILL GO BLUE IF WE KEEP WORKING HARD!!!!


The Van that I drove was FULL of Amazing people. Black, White, Young, Old, previous veterns, retired workers and college professors. We had a GREAT bonding experience as WE are ALL ready for Change!!!!


YES WE CAN AND YES WE WILL TURN AMERICA BLUE!!!!!!




Sheree Williams, Little Rock, AR


OBAMA/BIDEN 08..............

"Joe The Plumber" Makes Less Than $250,000 - Didn't Tell Obama

According to this Yahoo article, "Joe The Plumber" or Joe Wurzelbacher, the man featured by Senator John McCain, doesn't even make $250,000 according to his own statements.  Joe comes off as a kind of suburban Ohio hick with a past, and this level of attention may not be what he wants.  But he's got it and really in fairness he didn't ask for it.

This all could blow up in McCain's face if he gets too close to Joe.  McCain, desperate for a better performance than he's shown thus far, may very well be inclined to hitch his star to Joe as  he did Sarah Palin: without proper vetting.

Plus, there are other "Joe The Plumbers" who are also benefiting from this publicity and are not as conservative as Joe Wurzelbacher, just consider this Texas man who has a website called "Joe The Plumber".  

Moreover, Wurzelbacher may -- and I stress may -- be a close relative of, drum-roll please, Charles Keating, according to the blog "The LitterBox", which has an extensive post devoted to Mr. Wurzelbacher.  Here's what was written:

And then there are some other questions.

Is Joe the Plumber’s real name Joseph Wurzelbacher or Samuel Joseph Wurzelbacher?

According to some sources, including the Politicoblog, which claim to have already checked voting records, Joe the Plumber is NOT registered to vote in Ohio.

Joe the Plumber appears to have multiple addresses, including the one at which he gave the media a short interview this morning.  He is not registered to vote from that particular address.  It is not clear if he is the owner of that address (curious given his claim to an income of over $250,000).  Of the other given addresses for Joe the Plumber, his parents are registered to vote on one, but none are listed for him.  Which means he is either more than just an undecided voter.  Or less, since non-registration means he’s not eligible to vote!

He has an open unpaid income tax tax lien case against him in Lucas County, Ohio.

Twice married, with the public records of those cases available at:
http://apps.co.lucas.oh.us/onlinedockets/Default.aspx
Just type his name into the search box to bring up both divorce cases.

There are some suggestions that he does not own his own business but may be related to another Joseph Wurzelbacher who does run a septic tank company.  Ironic that Joe the Plumber may be full of shit, eh?

Wow.  Well, perhaps this exposure's good for Joe in some strange way, but if I were McCain, I'd be real careful in how I associate myself with Joe The Plumber.  He has a tax lien but claims to make money -- not good.  I could understand it if he was poor -- different story.  Let's see what McCain does with this.

Obama Talks To "Joe The Plumber" But Joe Mistates His Position

This video shows the now famous converation between Senator Barack Obama and Joe Wurzelbacher, an Ohio plumber looking to purchase a business.  Joe's under the impression that Obama's plan will cause him to not be able to purchase a plumbing business, but at the end of the conversation, Obama does explain his intent to eliminate the Capital Gains Tax for a small business like his, something not reported by the mainstream media.

Also, Joe didn't make the distinction between his income and the income of his current business operations.  If his personal income is less than $250,000, then his personal taxes will be lower.

But the main thing is Barack didn't throw BS at Joe.  He stood there and talked to him.  You gotta like that.

Obama Aide Robert Gibbs Goes After Sean Hannity For Anti-Semite Guest

Yeah for Robert Gibbs.  The top Obama Aide confronted the ever-irritating Sean Hannity over his hosting of an Anti-Semite guest Andy Martin as Sean was trying to make the stupid McCain-supporting Ayers connection that really has no basis in reality.  


It's too bad Gibbs didn't know about the White Supremacist friend Hal Turner Sean has had on his show, too.

Washington Post Poll Shows Likely Voters Backing Obama By Wide Margin

As I've written in the recent past, when likely voters tend to be Republican. What does it say when the majority tilt toward the Democratic Candidate? Well that's what's happening in today's Washington Post poll. See below:

Turmoil in the financial industry and growing pessimism about the economy have altered the shape of the presidential race, giving Democratic nominee Barack Obama the first clear lead of the general-election campaign over Republican John McCain, according to the latest Washington Post-ABC News national poll.


Just 9 percent of those surveyed rated the economy as good or excellent, the first time that number has been in single digits since the days just before the 1992 election. Just 14 percent said the country is heading in the right direction, equaling the record low on that question in polls dating back to 1973.


More voters trust Obama to deal with the economy, and he currently has a big edge as the candidate who is more in tune with the economic problems Americans now face. He also has a double-digit advantage on handling the current problems on Wall Street, and as a result, there has been a rise in his overall support. The poll found that, among likely voters, Obama now leads McCain by 52 percent to 43 percent. Two weeks ago, in the days immediately following the Republican National Convention, the race was essentially even, with McCain at 49 percent and Obama at 47 percent.


As a point of comparison, neither of the last two Democratic nominees -- John F. Kerry in 2004 or Al Gore in 2000 -- recorded support above 50 percent in a pre-election poll by the Post and ABC News.

Invesco Field - Live Video At 3:48 PM - Barack Obama Speech

This is the second video of the live series created as I sit here at Invesco Field in the Blogger Lounge. 

McCain "The One" Ad Focus Of Controversy, Petition

A group called "Matthew25" after a bible verse, is not happy with the "White Christian Male" John McCain. Here's why:

As Christians, we are deeply troubled by the John McCain campaign's latest ad entitled "The One.” This ad, which was released on the web last Friday, portrays Senator Obama as some kind of would-be Messiah and implies that those who support him are cultish followers looking for a new Savior.

Even more troubling, many view the ad as a dark attempt to portray Senator Obama as an anti-Christ figure. View the ad here.

This is the video:



This is the text of the petition:

Senator McCain,

As fellow Christians, we are deeply troubled by your campaign's latest ad entitled "The One,” which portrays Senator Obama as some kind of would-be Messiah and implies that those who support him are cultish followers looking for a new Savior.

We find it beyond offensive for you to piece together out-of-context video snippets to suggest that Senator Obama is a false Messiah or the anti-Christ, especially in light of Senator Obama’s open and humble confession of Christian faith.

Instead of seeking to inspire false fears, we would prefer you speak more positively about how your own faith would guide you in leading this country.

We trust that this desperate and insulting campaign tactic is not an indication of your true character, and we call on you to repudiate this ad and take it down immediately.

Sincerely,

Ferraro: "They're Attacking Me Because I'm White!

One day after Clinton backer and former Vice Presidential Candidate Geraldine Ferraro said that Senator Barack Obama had the campaign advantage because he's Black, she's opened her obviously lively mouth again. Today, in the same publication where she gave the interview, Ferraro said "They're Attacking Me Because I'm White!"

The full text is here:

NEWSPAPER: But far from backing off from her initial remark, Ferraro defended it and elaborated on it.

FERRARO: "Any time anybody does anything that in any way pulls this campaign down and says let's address reality and the problems we're facing in this world, you're accused of being racist, so you have to shut up," Ferraro said. "Racism works in two different directions. I really think they're attacking me because I'm white. How's that?"

Geez.

Senator Clinton has said that Ferraro's comments were not welcome. But now, she's got a fresh set of stupid Ferraro comments to deal with. Of course, all of this just fires up the Obama supporters and Ferraro may have sealed the deal for Clinton's eventual loss by pissing of rank-and-file Dems.

Obama Lawyer Claims Clinton Nevada Violations - Brietbart.com

These series of reports have come hot and heavy in emails and blogs, but this is the first report where a legal representative has gotten involved. According to Brietbart.com, Barack Obama's lawyer has sent a letter to the Nevada State Democratic Party head regarding alledged violation of election laws during the Nevada Primary. Brietbart reports ...

The letter to Nevada Democratic Chairwoman Jill Derby from Obama lawyer Robert Bauer lists instances of early door closings, obstruction of voters, and improper handling of voter preference cards. Obama aides said the campaign has received more than 1,600 complaints, including 300 that came in to a hotline at the time of the caucuses.

Bauer said the campaign is not challenging the outcome of the caucuses at the precinct level, but he asked Derby to conduct an inquiry into the Clinton campaign tactics during the caucuses. The campaign offered to provide the names and contact information of the individuals making the complaints as well as unedited copies of their accounts.

The Clinton campaign has also complained about behavior at the caucuses. On Sunday, Clinton senior adviser Dave Barnhart said he witnessed an enormous "gantlet" of Obama supporters at the Mirage casino-hotel caucus site who tried to intimidate Clinton backers.

Attached to the Obama complaint was an instruction sheet that Bauer's letter attributed to the Clinton campaign. The sheet offers guidance on how to persuade caucus goers to caucus for Clinton.

One line states: "It's not illegal unless they tell you so."

"This certainly suggests that, for the Clinton campaign, the operative standard was, simply and only, what it could get away with," Bauer wrote.

The letter complained that the Clinton camp distributed a caucus guide to supporters that said caucus site doors would close at 11:30 a.m. The party's rules stated that caucuses would be called to order at 11:30 a.m. but said attendees had to be signed in by noon.

Wow. From NH to Nevada and on, one pattern emerges: the Clinton's do not play fair.

Barack Obama Before SF Chronicle Editorial Board - Does Well But Chron's Questions and Intent Are Suspect

Senator Barack Obama appeared before the San Francisco Chronicle's Editorial Board today and as this video shows he performed well. He answered questions in incredible detail and showed great thought on the issues of the day. Senator Obama has particularly clear command of the matter of the security industry problem and the politics behind the heath care issue as well as energy policy.

I think where he seemed to confuse SF Chronicle Chief Phil Bronstein is in the statement that he "generally uses the truth" where Obama was explaining that he's not going to say something that makes a Democratic collegue look bad.

It seeme to me that Phil was more looking for weakness in what Obama said than paying attention to context and words. For example, Obama -- on the issue of how to exact change in the health care system -- said that it was necessary to use (not his exact words) some shame, by having a more open process so that one can hear if a legislator was on the side of the insurance providers, or not.

But Bronstein seemed to focus on just the use of the term "shame" and took that out of context to apply it in a general sense but forgetting the orginal conversation. That's what ones does when they seek weakness -- they don't see that the weakness is not there because the desire to be "right" in their search overwhelms any sensible thought and consideration.

I'm also very surprised that in the Internet capital of the United States there was no question regarding technology! How the Chronicle coule miss that is beyond me.

Also, Senator Obama, after the questions were over, said "Maybe we should adress this off the record," in a conversation about "experience" but the camera kept going. That was when Phil Bronstein tried to zero in on the way that Washington is caused to change in policy response. You know, the "shame" conversation. At that point, I expected the camera to be turned off, but that didn't happen. That's not right in my view. Off the record is off the record. Period.

I'm also interested in why the SF Chronicle made the video public so that Senator Obama's opponents -- who did not go before the editorial board, yet -- can see the cast and base their responses on it. The only way to blunt this obvious development is to have a nearly totally different set of questions. Otherwise, the process is not fair at all.

Let's keep an eye on what the Chronicle does.

Fomer President Bush Dunks Bill Clinton's Foreign Policy Tour Assertion

Stating that he was never aware of such an idea and will not accept the idea, Former President George Bush issued a fast and stern reply to Bill Clinton's comment that the elder Bush would go with him and fly around the World basically undoing the work his son did.

Wow, what a blow.

And the National Review jumped all over him:

Bill Clinton Outdoes Himself
Ladies and gentlemen, one more piece of evidence that Bill Clinton is no longer the least bit careful about what he says, and is used to getting away with little white lies on a regular basis. We've seen him claim to have opposed the Iraq war from the start. We've seen him suggest that the media isn't interested in covering his wife fairly. We've seen him suggest that Barack Obama as president would be "a crapshoot."

And now, he's suggested that former President George H.W. Bush is eager to help his wife repair America's image in the world and undo the image of America created by his own son.

ORANGEBURG, South Carolina (CNN) – Former President Bill Clinton said Monday that the first thing his wife Hillary will do when she reaches the White House is dispatch him and his predecessor, President George H.W. Bush, on an around-the-world mission to repair the damage done to America's reputation by the current president — Bush's son, George W. Bush.

"Well, the first thing she intends to do, because you can do this without passing a bill, the first thing she intends to do is to send me and former President Bush and a number of other people around the world to tell them that America is open for business and cooperation again," Clinton said in response to a question from a supporter about what his wife's "number one priority" would be as president.

Bill Clinton: He's a 1992 media-loves-me-and-doesn't-check-my-facts kind of guy in a 2007-2008 world.