The Cassandras
Okay, a couple weeks ago I posted about “The Quiet Coup,” by Simon Johnson, a disturbing Atlantic article by a former chief economist at the IMF. His thesis (one which has gotten a lot of attention) is that the government has been gradually co-opted by Wall Street over several decades, and until we devise a greater separation between the two our economic troubles can only be deferred, and the cost can only rise with time. As it happens, Simon Johnson provided an extensive interview on NPR’s Fresh Air yesterday, for those who prefer to listen to his arguments rather than read them.
When I posted, I asked—begged, really—for anyone who might provide a cogent counter-argument to Simon’s article. Well, here you go: Andrew Leonard writes How The World Works, a blog at Salon.com. Originally it was a blog about globalization, but more recently it has almost exclusively covered the world economic crisis and has been an almost daily read for me (I also recommend NPR’s Planet Money). Anyway, Andrew Leonard has posted “Prophets of Doom,” thumbnail profiles and links to 14 economists and others—from Paul Krugman to Ron Paul—whose opinions about the roots of the crisis, its solutions, and their critiques of Obama’s stimulus plan could hardly be more varied. Right now (Thursday afternoon) it is the featured article on the front page of Salon.com.
In my daily travels, I hear basically two opinions about the financial mess: 1) “I trust Obama to get us out of this,” and 2) “The government is spending too much of our money!” Oddly, those who espouse Opinion #2 never seemed to have a word to say during the Bush administration about the massive deficits being piled up, and they seem to have forgotten the first $700 billion of government money was handed to the banks by that administration with no questions asked and no accountability. But that’s neither here nor there. Neither opinion is very satisfying in my mind.
After reading “Prophets of Doom” I don’t have any answers, but at least one thing is clear: Michele Bachman is an idiot addicted to publicity at any cost. Ditto Jim Cramer.
Final word: I almost made it through this post without mentioning teabagging. Snark, snark.
Comments
Teabagging: from the party that brought you sexual solicitation in a public bathroom.
I think I may have finally entered into a state of overload, where I can no longer think rationally about any of this. As a member of the working class, I feel like a mule in a field. I don't know how I got tricked into putting on this yoke, but I keep pulling the plow.
Posted by: Bryn Greenwood | April 17, 2009 10:21 PM
Wow, I randomly stumbled onto your site, and I thought it funny that your title included Cassandra. Coincidence? Plus... Forty three is my lucky number, and you are just one number away...
(http://www.randomwebsite.com/)
I go with #2... but I believe Bush was an idiot, and so is Obama for using the same method. I'm also a skeptic of anyone that tells me they have the answers to a problem so large.
Tea parties aren't a political movement by one party. (I'm somewhere around libertarian and constitutionalist myself) Republicans joined in for their political reasons, taking advantage of the grassroots movement, which has been around for some time. Many are astonished by the amount of money borrowed, which we don't have, it's from China and various other countries. It is such a large amount, and not to mention the debt Bush piled up. It makes me want to vomit. People just don't want to see that number skyrocket further!
For me, I don't believe you get out of debt by spending more money...
I have a very bad feeling about where this is headed. There can only be more bailouts and unseen problems with any long term plan. Why not let things collapse and rebuild, instead of trying to glue together something that is unstable and unpredictable? Either outcome is blood chilling. Be enslaved by our debt to other countries (God I hope Obama can get the debt in half like he promised) or allow everything to collapse and see how chaotic that is...
Ther is also a point where China might say enough is enough, we aren't buying anymore of your debt. :(
But I believe they have little to gain from that.
Posted by: Cassandra (Yes, Cassandra) :P | May 10, 2009 04:47 AM
Thanks for your comments, Cassandra (and Bryn, too).
I'm no economist, but the economists I have read have convinced me that simply letting everything fail is not an option--all sorts of other institutions and industries which are quite viable on their own would be pulled down and we really would be looking at a collapse of civilization as we know it. The Depression of the '30s would be a pale shadow of the economic woes to come.
While spending money to get out of debt indeed does not make sense for an individual, economies are different. A big part of the current problem is that individual people are doing what's best for them--as they absolutely must. Being cautious about spending money in this climate is prudent, to say the least. But that is exactly not what the economy needs at this moment. That's why it is essential for government to step in and spend money to prime the pump and get the economy moving again. That's one of the things the government is there for. So say the majority of economists I'm aware of.
Nearly half the money that's been spent on this problem was done by Bush and his cronies, with no accountability and no transparency. They just handed it over to the banks with no strings attached, not even to tell us what they're doing with it. Those banks certainly aren't lending it to consumers, which is what the economy needs. Obama is, as near as I can tell, going out of his way to introduce transparency and accountability to the money he's spending, and demanding that it be used in ways that will help the average citizen. At this point, we can only hope it works.
Assuming it does work, as soon as the economy starts to regain its footing we have to worry about inflation, because of all this borrowing. You're exactly right to be concerned about all the spending. Obama's going to have to walk a very tight line, assuming the economy recovers while he's in office. But again, we don't have a lot of other options.
China (and to a lesser extent, India) mostly needs us as much as we need them. China needs something like a 9% annual growth in GDP just to avoid political instability. Somebody has to buy Chinese products to provide that growth, and we're still their biggest market. It's not a done deal--and this talk of a new international currency rather than pegging various indices to the dollar is only one of many things we need to worry about--but by and large, it's in their own self-interest to prop us up.
Finally, my comment about conservatives as Johnny-come-latelys to the Bush-bashing party stands. For six years of the Bush administration, we had a rubber-stamp Congress, with few peeps of dissent from anybody on the right (I'm not saying anything about you personally, Cassandra). Now that the political tide has turned there's this parade of people disavowing most of what went on, but I think the time to stand up and be counted on that score is long past.
Posted by: pat | May 10, 2009 01:59 PM