The weak and the clueless

Here’s the latest outrage from “The World’s Greatest Deliberative Body”:

Republican Senator David Vitter has demanded that the Senate hold a debate before any vote on the nominees, which would require Democratic leaders to muster a super majority to move forward – a hurdle that may be too high to clear.

As a result, the Senate may end up abandoning the nominees, Harvard economist Jeremy Stein and investment banker Jerome Powell, and leave a decision on filling out the normally seven-member Fed board until after this year’s presidential election.

“I refuse to provide Chairman Bernanke with two more rubber stamps who approve of the Fed’s activist policies,” Vitter said when asked if he planned to lift his hold on the nominations.

.   .   .

Democrats control 53 votes in the 100-member chamber, but under Senate rules, they would need to muster 60 votes just to bring the nominees up for a vote, given Vitter’s opposition.

The various votes and debate could take as long as two weeks. But with highway funding, government spending and cyber security legislation looming, Senate Democratic leaders are not likely to make the Fed nominees a priority.

In addition, Democrats would be loath to spend precious political capital defending an unpopular central bank in an election year. Senate Majority Leader Harry Reid will be thinking long and hard before calling on any Democrat in a tight race to support a controversial cause.

“We are still trying to find a way to get Senator Vitter to drop his obstruction,” said Reid spokesman Adam Jentleson.

Matt O’Brien points out what President Obama should do (and what President Roosevelt would have done.):

I’ve left out a fairly important detail. There are two unfilled seats on the FOMC. President Obama’s picks for those positions have been among the victims of the endless Republican obstruction in the world’s greatest deliberative body. There’s a simple solution. Obama could just bypass the Senate with recess appointments. That’s what he did for the Consumer Financial Protection Bureau (CFPB) and National Labor Relations Board (NLRB). Why not do the same for the Federal Reserve (or the Federal Housing Finance Agency)?

There’s no good reason not to. The administration’s rationale is that Republican obstruction over the CFPB and NLRB was particularly pernicious — that it amounted to de facto nullification. Hence, the extraordinary recess appointments for just those vacancies. But even if that’s true, who cares? It’s hard to run the government if it’s not staffed. So staff it! More importantly, there’s little Obama can do that might help the economy more than sending Bernanke a few more friendly faces on the FOMC.

Regrettably, the Obama administration has consistently underestimated the importance of the Fed. That there are still two empty FOMC seats proves as much. So do the administration’s (blocked) nominees. Consider Peter Diamond. He’s a phenomenal economist — a Nobel-prize winner — who’s clearly qualified to serve on the FOMC. But he’s said that he doesn’t think there’s much more the Fed can do now. Even if he’s right — and I clearly don’t think he is — wouldn’t you rather appoint someone who thinks otherwise and find out if the Fed really is powerless? Someone like … former Council of Economic Advisers Chair Christina Romer.

Let’s try pushing some more before we declare that we’re pushing on a string.

Isn’t it ironic that Vitter is a product of America’s most corrupt state?  Imagine if Greece had a veto over everything the EU wanted to do.  That’s the US Senate circa 2012.


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71 Responses to “The weak and the clueless”

  1. Gravatar of Liberal Roman Liberal Roman
    7. May 2012 at 08:44

    Obama is so stupid. Here is what I think he thinks about this:

    “I don’t want to make it seem like I am abusing my power with these recess appointments. So, I’ll only use them on IMPORTANT things like NLRB and CFPB nominations. Fed appointees? Ehh..who cares”

  2. Gravatar of Cthorm Cthorm
    7. May 2012 at 08:56

    Obama, mainstream liberals, and many moderates have the same erroneous psuedo-intellectual view of markets and stability. They are steadfast in their view that regulations and regulation enforcement are the keys to financial stability. NGDP is not in their vocabulary, and to them inflation is a “risky strategy” of the Fed. There is no context to these disjointed ideas. I recently listened to Sheila Blair prognosticate on these topics. I think she has the right ideas about regulation (simple policy rules), and some bad ideas (she was the main pusher for the Fed to take on more regulatory responsibility); but I was dismayed to find that she has a strong opinion about Fed policy, specifically calling out Krugman’s higher inflation target talk as ‘senseless’. Unfortunately this is the left-of-center mainstream view, which includes Obama. I don’t think anything will be accomplished with this administration, not when they are pre-deciding that monetary policy is ineffective (or worse, ‘senseless’!).

  3. Gravatar of D.Gibson D.Gibson
    7. May 2012 at 08:57

    Seems consistent with this Bloomberg article on Romney’s economic advisors. At least Romney picked advisors that favor a helpful FED.

    http://www.bloomberg.com/news/2012-05-07/romney-economic-outsider-image-backed-by-bush-era-policy.html

    ‘On housing, Mankiw and Hubbard have called for the Federal Reserve to ease monetary policies and reduce interest rates to strengthen the market. Romney has said the government should stay out of the issue and let the market “hit bottom.” ‘

    Since Obama and the Democrats are not publicly criticizing the FED, it doesn’t seem like they will fight for a change in mindset. Thus, no recess appointments.

  4. Gravatar of Peter N Peter N
    7. May 2012 at 09:14

    This only blocks a vote if the Republicans are with Vitter on this. If so, it’s not just Vitter, but the Senate Republican leadership. Are you ready to spread your adjective around a bit?

  5. Gravatar of Benjamin Cole Benjamin Cole
    7. May 2012 at 09:19

    The problem is, these call girls started to demand more and more cash to service Vitter. Vitter reasoned it must not be his own odiousness, but too much cash in circulation, causing call-girl services to increase their prices.

    From Time Magazine:

    Scandal: Using the services of the “D.C. Madam.”
    How Vitter was outed: Phone number found in list of clients
    A staunch advocate of conservative platforms from abstinence-only education to a constitutional ban on same-sex marriage, the Republican Louisiana Senator Vitter apparently had no problem with high-class call girls, as his phone number was revealed to be on a list belonging to a company owned by the infamous “D.C. Madam.” Larry Flynt’s Hustler magazine found the phone number and contacted Vitter’s office to inquire about it. The next day, Vitter issued a public apology for his “very serious sin,” and later managed to retain his seat in the Senate.

  6. Gravatar of dwb dwb
    7. May 2012 at 09:31

    i have not seen anything on where Stein and Powell are on monetary policy, zero. Which i think is the idea – to appoint a candidate without much fodder for The Machine. So to me its a coin flip whether they would help or hurt.

    @cthorm,
    Shelia Bair is as qualified to talk about monetary policy as I am to practice law. wait, i take that back – i’ve reviewed reams of contracts so maybe she actually knows less about monetary policy than i know about the law. really, do people take her more seriously than, say, Einhorns jelly donut analogies or Fishers monetary cookies?

  7. Gravatar of Becky Hargrove Becky Hargrove
    7. May 2012 at 09:49

    This is one of those times when I wish Obama could be a bit more like LBJ: capable of storing leverage opportunities in every nook and cranny of his brain. No more Mr. Nice Guy!

  8. Gravatar of marcus nunes marcus nunes
    7. May 2012 at 09:54

    @ Benjamin
    …Only to “sin” again!

  9. Gravatar of ssumner ssumner
    7. May 2012 at 09:55

    Liberal Roman, I agree.

    Cthorm, I agree.

    D. Gibson, I agree.

    Peter N. Yes I am. Indeed both parties do this. It’s time for the President to start ignoring them and do all recess appointments, if they refuse to vote within a reasonable time.

    Ben, Touche. I was tempted to try for some humorous innuendo–but it’s not my forte. But that’s another example of how the GOP is more willing to play hardball. Weiner resigned (was pushed out) over what seems like a much smaller offense (not that I care about either case—prostitution should be legalized.)

    dwb, I agree. At this point I think they merely want to provide Bernanke with more votes, and hope that he does the right thing. It’s amazing how hard they fought for healthcare, and how little they fight for jobs. Or maybe they are equally clueless. Indeed it’s actually possible that Vitter knows the Fed can create jobs, and Obama doesn’t.

  10. Gravatar of ssumner ssumner
    7. May 2012 at 09:56

    Becky, The danger is that that power could also be used for harm, as LBJ showed.

  11. Gravatar of marcus nunes marcus nunes
    7. May 2012 at 09:59

    Becky
    Obama may be clueless. Pity he wasn´t at Chicago around the time Friedman was. But Bernanke is a very weak leader. The FOMC tramples over him!
    http://thefaintofheart.wordpress.com/2012/05/05/missing-federal-reserve-board-members-hawks-and-weak-leadership/

  12. Gravatar of Saturos Saturos
    7. May 2012 at 10:21

    Scott, I get why libertarians don’t like democracy, but why so much preference for the executive over the legislature? You and Caplan seem to be of one mind on this – he once called for an “Economic Supreme Court” to strike down laws as “uneconomical” – he would cure the the ills of democracy by setting up more oligarchs.

    Also, Jim Hamilton just replied to your previous post:
    http://www.econbrowser.com/archives/2012/05/yes_the_fed_cou.html

    At first he seems to agree with you:
    “although Federal Reserve deposits at the moment are essentially equivalent to short-term Treasury obligations, once we get away from the liquidity trap they will not be. Insofar as some of today’s created reserves turn into M1 instead of T-bills at that future date, Brad argues, the time path would be more stimulative and, through an expectations effect, that could make a difference today. This is in fact my view as well, and one of the reasons why I insist that the main mechanism by which large-scale asset purchases could make a difference is not through their direct mechanical consequences for interest rates, but instead comes from their value in sending a credible signal for future Fed policy. And that’s why I think the main task for the Fed is not to decide how much LSAP we need, but instead to articulate a clear framework within which those measures are implemented…”

    But then:

    “My fear is that the practical instruments available to the Fed are too blunt, and the stability of the expectations equilibrium too tenuous, for us to be confident that the Fed could manage a multi-trillion dollar balance sheet if financial participants develop sudden doubts about how it will play out.”

    which seems weak to me. He also keeps going on about the “fiscal management issues” of the Treasury moving its borrowing into short term securities. Care to respond?

  13. Gravatar of Steve Steve
    7. May 2012 at 12:36

    Mitt Romney came out in favor of a 4% unemployment target last week:

    http://politicalticker.blogs.cnn.com/2012/05/04/romney-says-no-celebration-until-4-unemployment-rate/

    What he didn’t say is if he will urge a sea change in monetary policy to achieve this, or if he will expand government to hire the unemployed.

  14. Gravatar of StPaulite StPaulite
    7. May 2012 at 12:53

    First time commenter here.

    Politics- and economics-junkies have bad habits of not understanding each other.

    Two conclusions have to be drawn from this episode, which would be familiar to anyone who has read any of the “far left” (or just procedurally-oriented) critics of Obama and his governance for the past four years

    1. Contrary to the very exciting depictions of Obama by his conservative critics, he is in no way a “radical”. Forget about his jejune activism (or his stupid love letters) and look at what’s in front of you: existing institutions in their existing forms have been preserved. The Senate has become a black hole of holds and cloture motions, and… oh well, that’s the ball game, them’s the breaks. For the Fed, for the courts, etc. No filibuster reform could be imagined. Curious, no, for a man keen to remake the country in his own image?

    2. The Senate, its rules, and the behavior & incentives of the Republicans in it are the single determinative force in American politics. The route to all policy change runs through Mitch McConnell. As Minority Leader in a supermajority rules regime body, he has a veto over all. He runs the country! This has to be plainly obvious to everyone in Washington (except the cable media numbskulls, for whom rules quirks like this are too boring).

    Despite this basic clarity, “Congress” remains a mysterious, unmoving entity to the public at large. Its collective approvals have never been lower, but that hardly matters to individual actors within it.

    And so, 3.: If Obama did start to do anything substantive to crack through McConnell’s brick wall, well, see point 1 cranked up to 11, if you can imagine it. How long would it take opposition media to run the script that a largely recess-appointed executive bureacracy was illegitimate, unconstitutional, dare we say, radical? How many seconds, exactly, before the “national conversation” was about crisis, overreach, creeping tyrrany, toward impeachment, and so on. Ask your own Morgan Warstler, who’s tight with the Breitbart crowd. There’s a reason the President doesn’t try to roll this rock uphill. He has no leverage and enormous risk.

    Legacy media will not adjudicate this: “both sides” must share blame for the mystery of paralysis. One sentence shows all: “Senate Majority Leader Harry Reid will be thinking long and hard before calling on any Democrat in a tight race to support a controversial cause.”

    What about this cause is “controversial”? Nothing. Nothing about Diamond or any other appointee, that is, but for the fact that Obama appointed him. See how this works?

    (For what it’s worth, comparisons to FDR or LBJ are weaker than they look. The party system was quite a bit different then, as was media.)

  15. Gravatar of CA CA
    7. May 2012 at 12:56

    Romney’s main economic advisor is Mankiw, and he’s been pretty quiet about ngdp targeting.

  16. Gravatar of Morgan Warstler Morgan Warstler
    7. May 2012 at 13:17

    Obama tells France to keep going with Austerity?

    Hysterical.

    http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/wh-france-dont-end-austerity-measures/525066

  17. Gravatar of Becky Hargrove Becky Hargrove
    7. May 2012 at 13:43

    Good point CA. Romney still has to make amends for saying he doesn’t care about poor people!

  18. Gravatar of Bonnie Bonnie
    7. May 2012 at 14:10

    Dr. Sumner:

    “It’s amazing how hard they fought for healthcare, and how little they fight for jobs. Or maybe they are equally clueless. Indeed it’s actually possible that Vitter knows the Fed can create jobs, and Obama doesn’t.”

    Yes, it really is too bad Democrats fell on their swords doing unconstitutional things with healthcare few people really want and didn’t do it doing something more noble as battling the Fed. It is, however, difficult to justify yet more programs and more money for the needy when there aren’t as many of them. The more customers for their kind of politics, the better, which is likely just as bad of a reason for not challenging the Fed as why the Republicans want to block the nominees.

    This is just my very cynical mind at work, and should be taken with some salt. Not everything is always that cut an dried, but the political system has understood the Fed in the past, especially in the early ’80s, and I don’t believe there to be a sudden bout of amnesia floating around when there is just way too much advantage to be taken of the situation. It would be nice to think that the people in politics care about us more than they care about themselves and would do the right thing if they knew what it was, but it doesn’t seem to be working out that way.

  19. Gravatar of Mark A. Sadowski Mark A. Sadowski
    7. May 2012 at 14:33

    Morgan wrote:
    “Obama tells France to keep going with Austerity?

    Hysterical.”

    I just have one thing to say:

    http://i581.photobucket.com/albums/ss260/emikoc/blog/charlie-brown-argh.jpg

    Given this and Obama’s choice in FOMC nominees I’m afraid that Liberal Roman is absolutely right.

    P.S. Who would have thought that a hypocritical pant zipper challenged bluenosed Cajun hick like Vitter understood monetary policy better than the White House.

  20. Gravatar of Major_Freedom Major_Freedom
    7. May 2012 at 15:11

    ssumner:

    Isn’t it ironic that Vitter is a product of America’s most corrupt state? Imagine if Greece had a veto over everything the EU wanted to do. That’s the US Senate circa 2012.

    Isn’t it even more ironic that Sumner is a product of America’s most corrupt university? Imagine if the Rockefellers and their cronies in the Senate had a veto over everything a fully present, non-vacationing Congress wanted to do. That was the US Senate circa 1913.

    The corruption that brought us the Federal Reserve, is holy after all.

    But yeah, the Congress is not corrupt when it does the corrupt things Sumner wants it to do. It’s only corrupt when it doesn’t do the corrupt things that Sumner wants it to do.

  21. Gravatar of beowulf beowulf
    7. May 2012 at 15:48

    Obama didn’t recess appoint these two because McConnell would win that lawsuit– seeing as they’re both legally ineligible to serve as Fed governors. Even worse, a legal fight would also drag in an incumbent Governor (Raskin).
    The Federal Reserve Act, Subsection 10(1), “In selecting the members of the Board, not more than one of whom shall be selected from any one Federal Reserve district…”

    Jeremy Stein is a Harvard professor and lives in Massachusetts which is (naturally) in the Boston Fed bank district. Jay Powell lives and works in the District of Columbia, which is in the Richmond Fed bank district (along with Virginia and Maryland).
    The trouble is there’s already a Fed governor from the Boston district and there’s already two (!!!) governors from the Richmond district.

    “Tarullo, Daniel K., of Massachusetts, to be a Member of the Board of Governors”
    “Elizabeth A. Duke, of Virginia, to be a Member of the Board of Governors”
    “Sarah Bloom Raskin, of Maryland, to be a Member of the Board of Governors”

    I’m on team Vitter on this one.

  22. Gravatar of Morgan Warstler Morgan Warstler
    7. May 2012 at 16:01

    “Who would have thought that a hypocritical pant zipper challenged bluenosed Cajun hick like Vitter understood monetary policy better than the White House.”

    Um, deep down… everybody.

  23. Gravatar of ChacoKevy ChacoKevy
    7. May 2012 at 16:17

    @Cthorm: At most, I’ll agree that Obama/liberals is/are disinterested in monetary policy. But for your projection of Blair’s position being the standard left of center view, I’d like to remind you that she is a Republican and a Bush appointee.

  24. Gravatar of ssumner ssumner
    7. May 2012 at 17:31

    Saturos, You said;

    “Scott, I get why libertarians don’t like democracy, but why so much preference for the executive over the legislature?”

    There is no one in the world more in favor of democracy than me. I think the US is nowhere near democratic enough. I like the Swiss hyper-democracy. I like votes. I’d love to see a vote on the Fed nominees. There’s a reason for recess appointments, it’s so that the government doesn’t grind to a halt when Congress refuses to vote on an issue. There is nothing more anti-democratic that the filibuster.

    Majority rules!

    Yes, Hamilton’s reply was not very persuasive (although I certainly agree about the mechanism in the quote you provide–but doesn’t that conflict with his earlier post?) I’ll do a post in a few days when I get my grading done.

    Steve, I suppose that’s a reasonable goal, as long as it’s achieved through supply-side fiscal policy, not monetary policy.

    StPaulite, Interesting comments, but you are off base on a couple points.

    1. The public could care less about this. To the extent they care, about 99.9% of the public hates filibusters. If the GOP tried to make an issue of it, it would be a huge win for Obama. Imagine the GOP bragging that one redneck from Louisiana who hangs out with prostitutes is crippling our economic policy by preventing the Fed from taking actions to address the recession. I bet that would go over great with those key independent voters in swing states!! When times are bad, voters want decisive actions. They currently view Obama as weak.

    2. No one cared when they tried to make an issue of the other recess appointments.

    3. The big problem here is that the Obama people are clueless about monetary policy. They did nothing to promote their agenda at the Fed in 2009 and early 2010, when they had 60 votes in the Senate. He isn’t even nominating the right people.

    CA, Next time I see him I’ll ask him.

    Morgan, That’s funny. Any other papers confirm that? As I recall the Examiner is a GOP paper, isn’t it?

    Bonnie, Yes, putting health care before recovery was a huge mistake.

    beowolf, But the GOP never cared about that issue when they were in power. That’s not what this is about.

  25. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 17:36

    “Obama tells France to keep going with Austerity?”

    Absurd as it sounds, this actually makes sense.

    Merkel will stubbornly resist any significant change in direction.
    An open battle between the French and German governments about the direction of Eurozone economic policy at this point could cause serious instability in the Eurozone that would adversely affect the U.S. economy just before the election.

    What the Obama administration is telling the French is “Don’t rock the boat (before our election).”

    At least I HOPE that is what they are doing. If not Obama is in a lot worse trouble than I had feared.

  26. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 17:39

    “seeing as they’re both legally ineligible to serve as Fed governors”

    Didn’t ANYBODY in the Obama adminstration notice this? Are they really that hopelessly messed up?

  27. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 17:46

    LBJ would have made sure that he was sitting on something Vitter really wanted and would tell him he cannot have it if he does not drop his hold. Or he would have something on him that he would threaten to use or use. (One of the things LBJ used to get the Voting Rights bill passed is that he found out that one of the firmest opponents had a black mistress.)

    Obama is just not enough of a ruthless hardball player. Seeing that he comes out of Chicago politics that is surprising. This is the kind of thing Daley would have been useful for.

  28. Gravatar of Becky Hargrove Becky Hargrove
    7. May 2012 at 17:55

    If the public knew how many economists also hold the “first, do no harm” motto, economists might get a bit more respect…jeez, or would they?

  29. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 17:55

    If Obama loses, the most important reasons are:

    !. That he failed to fill the vacancies on the BOG with people who were prepared to give the economy enough stimulus so that the unemployment rate was coming down at a strong, solid rate.

    2. That he reappointed a Republican who had served in the Bush administration, as head of the Fed. When the economy was in crisis and faced a possible depression Bernanke acted boldly and decisivel; but once things had settled down enough so that the wealth of the country club Republicans was no longer in danger, he went back to conducting monetary policy like a country club Republican. I cannot help suspecting that if McCain were up for reelection he would have given the economy more stimulus.

  30. Gravatar of Mark A. Sadowski Mark A. Sadowski
    7. May 2012 at 17:56

    FEH wrote:
    “Merkel will stubbornly resist any significant change in direction.”

    Sunday was not a good day for Merkel. Not only did the French and Greek elections go very badly for her but it looks like the CDU may have lost control of Schleswig-Holstein to the SDP in those elections. With the FDP continuing to implode Merkel may have trouble maintaining a ruling coalition, so she may soon be totally irrelevant (North-Rhine Westphalia has an election next Sunday).

    Consequently the Obama administration is looking more and more perplexed every day. (Do they have any clue about anything these days?)

    P.S. Did anybody realize that Vitter’s nickname in the tabloids is “Diaper Dave?” I only just found out. I’m obviously reading the wrong blogs.

  31. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 18:03

    “Imagine if the Rockefellers and their cronies in the Senate had a veto over everything a fully present, non-vacationing Congress wanted to do. That was the US Senate circa 1913.”

    And what we will have in 2013 if Romney wins and the Republicans get control of both houses. We have new plutocrats to replace the Rockefellers, like the Koch brothers.

  32. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 18:09

    “With the FDP continuing to implode Merkel may have trouble maintaining a ruling coalition, so she may soon be totally irrelevant (North-Rhine Westphalia has an election next Sunday).”

    She should be able to maintain a ruling coalition past the time after the U.S. election. And this defeat will make her even more inflexible. For the Obama campaign what is needed is that things do not fall apart in the Eurozone before the election.

    But they may. Italy had local elections in a significant number of areas and the ruling coalition lost badly. And the Irish people may vote down the stability pact.

  33. Gravatar of Mike Sax Mike Sax
    7. May 2012 at 18:27

    “I like votes. I’d love to see a vote on the Fed nominees. There’s a reason for recess appointments, it’s so that the government doesn’t grind to a halt when Congress refuses to vote on an issue. There is nothing more anti-democratic that the filibuster.”

    Now that Scott, I can get behind you wholeheartedly on. Of course the GOP was against the filibiuster till 2006-now the Dems are against it. Actually in 2005 the GOP actually tried to end it. Yeah I’m so sick of no votes in Congress. I’m not so familiar with the “hyper Swiss system” but it sonds pretty great in this description.

    As far as Obama goes I have no problem admitting I’m a partisan Obama Democrat and will defend almost all his policies but his handling of the Fed is a mystery to me.

    It’s not clear what the Administartion’s monetary philsoophy is. Do any of his economic advisors have any views at all on the Fed? I’m not aware of any one writing anything about that.

    Of course the GOP philosophy for now at least is no monetary stimulus and even bills to get back on the gold standard. So they have ideas but the wrong ones.

  34. Gravatar of Saturos Saturos
    7. May 2012 at 18:34

    Meanwhile:

    http://www.telegraph.co.uk/finance/g20-summit/5072484/Russia-backs-return-to-Gold-Standard-to-solve-financial-crisis.html

  35. Gravatar of Steve Steve
    7. May 2012 at 18:49

    Scott, Bonnie, Mark,

    The reason Obama focused on health programs and bank regulations rather than monetary policy is that he took advice from the wrong people. I wasn’t just Larry Summers’ fault, it was Paul Volcker’s!!!

    Remember this:

    http://money.cnn.com/2008/11/26/news/economy/Volcker/
    Obama seeks Volcker’s help
    November 26, 2008

    NEW YORK (CNNMoney.com) — President-elect Barack Obama on Wednesday named former Federal Reserve Chairman Paul Volcker as the head of a special economic recovery advisory board.

    Volcker, 81, is credited with taming inflation in the 1980s, and in the process making the difficult and unpopular choice of causing a recession in the short-term in order to pave the way for a long-term recovery.

    Then this:

    http://blogs.wsj.com/economics/2009/04/18/kohn-volcker-go-toe-to-toe-on-inflation-target/

    April 18, 2009, 12:39 PM
    Kohn, Volcker Go Toe-to-Toe on Inflation Target

    Federal Reserve Vice Chairman Donald Kohn’s question-and-answer session at a Vanderbilt University conference Saturday was going as countless others surely have in his years as a top policy maker. (Read Kohn’s speech here.)

    Until Paul Volcker raised his hand.

    Then, Kohn was grilled over the Fed’s apparent effort to convey that it considers a roughly 2% inflation rate to be appropriate for the economy in the long term.

    Former Fed Chairman Volcker, who along with Kohn was at a conference honoring former Fed governor Dewey Daane, questioned how the Fed can talk about both 2% inflation and price stability.

    “I don’t get it,” Volcker said, leading to a lively back and forth between the two central-bank heavyweights.

    By setting 2% as an inflation objective, the Fed is “telling people in a generation they’re going to be losing half their purchasing power,” Volcker said

  36. Gravatar of Major_Freedom Major_Freedom
    7. May 2012 at 19:11

    Full Employment Hawk:

    ““Imagine if the Rockefellers and their cronies in the Senate had a veto over everything a fully present, non-vacationing Congress wanted to do. That was the US Senate circa 1913.””

    And what we will have in 2013 if Romney wins and the Republicans get control of both houses. We have new plutocrats to replace the Rockefellers, like the Koch brothers.

    And what we will have in 2013 if Obama wins and the Democrats get control of both houses. We have new Plutocrats to replace the Rockefellers, like George Soros.

    In other words, Obama and Romney are Plutocrat friends.

  37. Gravatar of dwb dwb
    7. May 2012 at 19:31

    @steve
    bad advice, good advice, still hes POTUS and responsible for who he hires and for setting priorities.
    warning: rant on.

    so i should blame Mankiw or Hubbard for Romneys idiotic 4% unemployment 500k jobs a month crack?

    i dont see one Congressperson, not one D or R, holding the Feds feet to the fire on the dual mandate or pushing for confirmation of Fed nominees of any stripe. which will do more for the economy, Transportation funding or Fed members who can influence policy for the next umpteen years? weve got a total moron in charge of an agency that regulates two govt agencies that guarantee 8 Tn in home mortages (FHFA), and the administrations biggest concern seems to be making it clear that their views on same sex marraige are evolving. whatever. if we could find some unemployed same sex couples, maybe THEN theyd focus on economic policy.

    and just to be equal-opportunity, Romney seems to have absorbed economics from grad school or Bain like a brick absorbs water. maybe he hired people to take his tests. kidding.
    ok rant off

  38. Gravatar of Steve Steve
    7. May 2012 at 19:59

    Romney built a lot of his wealth, specifically his $100 million IRA account, on tax fraud. I’m surprised that the liberals haven’t picked up on this; it’s probably too technical for them to understand. Instead, it was the WSJ that broke this story:

    http://online.wsj.com/article/SB10001424052970204062704577223682180407266.html


    Employees didn’t sell their Wesley Jessen shares at the IPO; by the time they did sell, the IRA money they invested in common shares had multiplied 1000-fold, to more than $23 million.

    Gains of such magnitude raise a fundamental tax question, lawyers said: Was Bain properly valuing Wesley Jessen common shares, or other low-price Class A shares, when it created the dual-share structures in the companies? In the Wesley Jessen case, Bain valued the common shares in the aggregate at less than 6% of the company’s equity, despite the large portion of gains they stood to be entitled to if the deal proved successful.

    Under tax laws, valuations are supposed to reflect fair-market value. The IRS often challenges valuations of various kinds. For instance, if shares put in an IRA are undervalued, the IRS can determine there have been excess contributions to the account.

    Valuing shares that aren’t public is an art, not a science, tax lawyers said, and involves complex assumptions. The lawyers said they knew of no instance in which the IRS had challenged the valuation of private-equity investments held in IRA accounts, at Bain or elsewhere.

    Bain often ascribed 90% of the equity value of a company it had taken over to the safer shares and just 10% of the value to the risky shares—in other words, a 9:1 ratio of all of the L shares to all of the A shares.

    Some tax lawyers and private-equity experts said that was a low valuation for the A shares, particularly by today’s standards. Andrew Smith, president of Houlihan Capital, a Chicago firm that performs valuations of private-company shares, said a typical dual-class structure these days might use a 3:1 or 4:1 ratio, ascribing 75% to 80% of a company’s equity value to the safer share class and the rest to the risky ones. Mr. Smith said that firms were less conservative a decade ago—sometimes using 6:1 or 8:1 ratios—but even then, a 9:1 ratio would have been “pushing the envelope.”

  39. Gravatar of Steve Steve
    7. May 2012 at 20:04

    dwb wrote:
    “bad advice, good advice, still hes POTUS and responsible for who he hires and for setting priorities.”

    Yes, Obama has the responsibility, but he is simply too dumb to use it effectively. He appointed a ZERO percent inflation targeter to oversee his economic recovery advisory board.

  40. Gravatar of Mark A. Sadowski Mark A. Sadowski
    7. May 2012 at 20:20

    dwb,
    you wrote:
    “and just to be equal-opportunity, Romney seems to have absorbed economics from grad school or Bain like a brick absorbs water. maybe he hired people to take his tests. kidding.”

    Actually many MBA programs have no economics requirement. At my university (U. of Delaware) they have a semester long intro to micro and macro, and having tutored it, I have to say I think it is actually quite good. Some MBA programs have a half semester course called “Business Economics” (e.g. Vanderbilt) which is a watered down intro to micro from a firm’s perspective.

    Oddly, perhaps, Mitt’s alma mater, Harvard Business School, has no economics requirement at all, and no electives which could be reasonably characterized as economics courses. And if you think Bain has any interest in teaching its employees economics you’re hallucinating. If Romney learned anything formally at all about economics it would be a minor miracle.

  41. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 21:12

    “We have new Plutocrats to replace the Rockefellers, like George Soros.”

    Soros is an exception. The ovewhelming majority of the plutocrats support Romney. What Romney wants to do will make them richer. What Obama wants to do will make them poorer. Only a small minority of plutocrats, like Soros, put the common good above their narrow economic self interests.

  42. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 21:24

    “By setting 2% as an inflation objective, the Fed is “telling people in a generation they’re going to be losing half their purchasing power,” Volcker said”

    Volker took his foot off the monetary brake and on the monetary stimulus pedal while the inflation rate was still at about 4% and made no further attempt to get the inflation rate down. If he had tried to get it at even 2% the recession would have been longer and more serious. Reagan might well have lost. He certainly never tried to get to 0%. Perhaps by the time he said that he had gotten senile.

  43. Gravatar of Major_Freedom Major_Freedom
    7. May 2012 at 21:28

    Full Employment Hawk.

    Soros is an exception. The ovewhelming majority of the plutocrats support Romney. What Romney wants to do will make them richer. What Obama wants to do will make them poorer. Only a small minority of plutocrats, like Soros, put the common good above their narrow economic self interests.

    The Koch brothers are an exception. The overwhelming majority of the Plutocrats support Obama. What Obama wants to do will make them richer. What Romney wants to do will make them richer. Only a small minority of Plutocrats, like the Koch brothers, put the common good above their narrow self interests.

  44. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 21:28

    “he took advice from the wrong people. I wasn’t just Larry Summers’ fault, it was Paul Volcker’s!!!”

    I think that Geithner was the worst bad advice villain. Summer’s main mistake is that he apparently did not understand the need to get full employment hawks on the BOG and did not emphasize enough the need to make getting the unemployment rate down his first priority.

  45. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 21:31

    “The overwhelming majority of the Plutocrats support Obama.”

    Follow the money. Look at where the money for things like Americans for Prosperity, Karl Roves superpacs, and similar sources of right-wing funding is coming from.

  46. Gravatar of Full Employment Hawk Full Employment Hawk
    7. May 2012 at 21:40

    “Obama tells France to keep going with Austerity?”

    Actually I am at a loss to understand this. The hypothesis I stated above is only one possibility, and one which I now seriously doubt.

    Another one is that he once again got bad advice from Geithner, who is a Wall Street product totally unable to comprehend how important having a good job and not being afraid of losing it is to ordinary working people.

    Geithner appears to be the most important source of very bad economic advice for Obama.

    The above statement eliminates the possiblility of Obama arguing that Romney wants to impose the same kind of austerity on the United States as the austerity that has driven Britain and the Eurozone into second recessions.

  47. Gravatar of Major_Freedom Major_Freedom
    7. May 2012 at 21:53

    Full Employment Hawk:

    Follow the money. Look at where the money for things like Americans for Prosperity, Karl Roves superpacs, and similar sources of right-wing funding is coming from.

    I do follow the money. I see Obama getting over $1 billion, much of which is from Plutocrats in Wall Street, and the military industrial complex.

    You’re incorrectly claiming that only right wing donors can be Plutocrats.

  48. Gravatar of Daniel Daniel
    8. May 2012 at 01:05

    Scott I think the part that turns conservatives off is their version of the NAIRU. I think they have a higher estimate even though it might not be backed by hard logic. They see regulatory burdens causing high unemployment much like what one would see in Europe during the 1990s. The hard part is convincing them of something you’ve been studying before the crisis kicked off, that of neoliberal reforms instituted during the 1980s. IF you can only convince them that this fundamentally shifted AS to the right, then they will concede that more demand is needed. Until then, you’re language (mostly) falls upon deafened ears.

  49. Gravatar of Full Employment Hawk Full Employment Hawk
    8. May 2012 at 04:12

    “You’re incorrectly claiming that only right wing donors can be Plutocrats.”

    People that support candidates that support policies that will raise their taxes and regulate what they can do are not plutocrats, no matter how rich they are.

    Franklin D. Roosevelt and Jack Kennedy were both rich, but were not plutocrats.

    Rich people that use their wealth to support economic policies that make them richer and give them freedom to pollute the environment and engage in other anti-social economic behavior are plutocrates.

    Mitt Romney is a plutocrat.

  50. Gravatar of J Mann J Mann
    8. May 2012 at 05:38

    Scott, if you take the article at its word, then Vitter literally wants a debate, not a filibuster. The article states that Vitter wants a debate and the the dems won’t schedule one.

    Of course, it’s possible that Vitter would ultimately filibuster, or that the demand for debate is made in bad faith for the sole purpose of slowing down Obama.

    But on its face, the demand to debate is not inconsistent with being a “deliberative body.”

  51. Gravatar of W. Peden W. Peden
    8. May 2012 at 06:06

    FEH,

    “People that support candidates that support policies that will raise their taxes and regulate what they can do are not plutocrats, no matter how rich they are.”

    So plutocrats aren’t plutocrats if they vote for policies that economically harm the rich?

    Does that mean that a democrat is not a democrat if she adopts policies that harm the majority? An aristocrat is not an aristocrat if he adopts policies that harm the aristocracy? A theocratic is not a theocrat if she adopts policies that harms the state religion?

    Here’s the problem of using a technical term as purely a term of abuse: it leads to these kinds of muddles.

  52. Gravatar of Morgan Warstler Morgan Warstler
    8. May 2012 at 06:20

    Mark,

    I suspect your read on Romney says far more about the mental defenses of gents in your profession.

    Economics is NOT hard.

    The issue is that economics as practiced by “economists,” like some of you practice govt., money, and monetary theory…

    Is about you mattering more than you do.

    We KNOW for sure that businessmen matter. Inventors matter. Capital matters. Consumers matter. Since there are consumers, you also get labor.

    We’re not sure that a bunch of academics who we KNOW for sure resent not mattering, matter as much as they insist they do.

    —–

    Think of it this way. Austrians can be 100% correct. And it is still smart to do Sumner’s NGDPLT. It is afterall an improvement towards Austrianism.

    We KNOW for sure that MACRO basically evaporates once there is a global currency run without a govt. interference.

    That is to say, we take business and capitalism as a truth, we understand it only fails when there aren’t enough capitalists.

    And a man (Romney) who starts out this way, has a pretty damn good leg up on running the economy, over a NYT economist who resents his lot in life.

    —–

    Last note, the ENTIRE MINDSET of the Fed would deeply change with Romney in office. And you know it.

    You’d see it as despicable.

    But to normal Fed folk, to entrepreneurs, to businessmen, to Wall Street, it just represents a feeling of calm… deep in the lizard brain.

    Think of alert deer in the forest not comfortable eating and sleeping because the sense of evil dread is in their nostrils.

    It doesn’t have to be “fair.”

    Deer have their own reality.

    My point all along is that your side can ONLY accomplish what is possible within the DEER’S REALITY.

    Real strategy on your part requires understanding your weak hand, and playing from the position.

  53. Gravatar of Mark A. Sadowski Mark A. Sadowski
    8. May 2012 at 08:02

    Morgan wrote:
    “I suspect your read on Romney says far more about the mental defenses of gents in your profession.”

    I think you’re reading too much into it. It’s just a statement of fact. Both the economics business department are part of the same college at my university but virtually the only thing connecting the two programs is a second story walkway between our respective buildings. Business people at my university are exposed to a minimaum level of economics through required courses at the BA and MBA level and that is not reciprocated.

    However at some universities, like Harvard, there isn’t even that degree of connection. Romney has studied economics to the same exact extent I have studied accounting, finance and marketing (i.e. not at all). (And just to be fair I’m quite sure Obama has never taken Econ 101 either.)

    “Economics is NOT hard.”

    At the undergraduate level, I would agree. But it gets cranked up magnitudes the higher you go. This is different from math or physics (which I have also studied) where the difficulty level increases much more evenly as you pass up the course level.

    “The issue is that economics as practiced by “economists,” like some of you practice govt., money, and monetary theory…

    Is about you mattering more than you do.

    We KNOW for sure that businessmen matter. Inventors matter. Capital matters. Consumers matter. Since there are consumers, you also get labor.

    We’re not sure that a bunch of academics who we KNOW for sure resent not mattering, matter as much as they insist they do.”

    I never wanted to be a captain of industry or a head of state so it was never important to me personally. I’m concerned about the state of the economy and therefore I’m concerned when people think someone knows something about economics when they don’t. The U.S. churns out some 170,000 MBAs a year (for comparison there are 1000 PhDs in economics produced a year) so it would be nice if some of them were exposed to economics, especially since most people suffer the delusion that they were compelled to study it in school, but I also understand that it’s not important for them to know anything at all about it.

    —–

    “Think of it this way. Austrians can be 100% correct. And it is still smart to do Sumner’s NGDPLT. It is afterall an improvement towards Austrianism.

    We KNOW for sure that MACRO basically evaporates once there is a global currency run without a govt. interference.”

    Nobody gave two nickels for macro until this recession. As long as the economy was humming along Great Moderation style macroeconomists were as invisible as the roadies back stage at a rock concert. Now everybody wants to know something about macro and macro blogs are growing like weeds. People can actually name a macroeconomist (more than one in some cases). This was not true in 2007.

    NGDPLT might enable demand side macroeconomists to return to their places backstage along side the supply side macroeconomists (who are still invisible). And in many cases I think they will be happy and grateful.(For example I never got the impression that Scott craved the spotlight, only that he feels he has a job to do.)

    “That is to say, we take business and capitalism as a truth, we understand it only fails when there aren’t enough capitalists.

    And a man (Romney) who starts out this way, has a pretty damn good leg up on running the economy, over a NYT economist who resents his lot in life.”

    Business and capitalism also fails when there isn’t enough money. Money is to capitalism like water to a plant. You take it away and dry dust of fascism and socialism takes over. All the best businessmen and capitalists in the world can’t stop a depression without money.

    Romney knows how to run a firm. He was born to it, studied to do it, and has done it. But that doesn’t mean he he knows how to run an economy any more than Obama does. His ability to run the economy will depend on who he surrounds himself with. (And let’s face it, Obama’s choice of people, particularly Giethner, has been abysmal.)

    —–

    “Last note, the ENTIRE MINDSET of the Fed would deeply change with Romney in office. And you know it.

    You’d see it as despicable.”

    I don’t know it, but I would welcome it if it were true. Unfortunately my sense is what many Republicans once knew they have now unlearned in the interests of being contrary. They may have started out speaking in favor of austerity just for political reasons but if you repeat the profession of faith often enough it tends to become your religion.

    “But to normal Fed folk, to entrepreneurs, to businessmen, to Wall Street, it just represents a feeling of calm… deep in the lizard brain.

    Think of alert deer in the forest not comfortable eating and sleeping because the sense of evil dread is in their nostrils.

    It doesn’t have to be “fair.”

    Deer have their own reality.

    My point all along is that your side can ONLY accomplish what is possible within the DEER’S REALITY.

    Real strategy on your part requires understanding your weak hand, and playing from the position.”

    My hope is that we *are* talking about lizard brains and deer. Because if that’s the case they can be more easily deprogrammed and calmed. But I’m not sure that’s the case.

  54. Gravatar of Floccina Floccina
    8. May 2012 at 08:32

    Things get ugly when the rationally ignorant median voter is in charge of monetary policy and that is the case today.

  55. Gravatar of Floccina Floccina
    8. May 2012 at 08:36

    “At the undergraduate level, I would agree. But it gets cranked up magnitudes the higher you go. This is different from math or physics (which I have also studied) where the difficulty level increases much more evenly as you pass up the course level.” Mark A. Sadowski

    Because schools exist more to test than to educate, it purposefully made to be harder than is optimal for educating the most people most effectively.

  56. Gravatar of Steve Steve
    8. May 2012 at 10:13

    Major_Freedom wrote:

    “Only a small minority of Plutocrats, like the Koch brothers, put the common good above their narrow self interests.”

    I always suspected that Major_Freedom is actually a lobbyist for the Koch brothers.

  57. Gravatar of Morgan Warstler Morgan Warstler
    8. May 2012 at 10:43

    Mark, there will be no-deprogramming.

    Imagine the business class as skittish by nature anytime anyone who has no money, but only has government starts to want to increase their power.

    Now, since you want to live amongst the deer, your first task is to not spook them… if you spook them, you ruin their habitat.

    That’s what economists must do. Yours is a study of the deer mindset.

    So I LOVE economics where you say: deer like this. deer do this. here is a side effect of deer. don’t do that! you’ll spook the deer!

    See when I hear there are 160K MBAs and 1K Econ Phd’s I’m able to imagine EXACTLY your relative weight and import.

    You can’t win votes, you can’t be in charge. You can’t act as if the MBAs will be deprogrammed.

    The facts of life are that the system is set up to be run by and for the MBAs.

    Don’t resent it. you are but 1/170 their size and import.

    —–

    This is what I mean, by DeKrugman is not an “economist”

    He is a deer hunter. He HATES deer. And when the economy moves on without him, he’s going to be left trying explain that “eventually” these problems will work themselves out.

    The benefit of which is that the Deer hunter gained no power.

    And that’s a GIANT benefit to the deer.

  58. Gravatar of Major_Freedom Major_Freedom
    8. May 2012 at 11:04

    Steve:

    I’ve always suspected you as actually being a lobbyist for George Soros.

  59. Gravatar of Becky Hargrove Becky Hargrove
    8. May 2012 at 11:17

    Re: Sandowski – Warstler debate
    Cue Fleetwood Mac: “…I can still hear you saying you will never break the chain…”
    The chain: ideas to power, more ideas to power, power to ideas, power defeats ideas, more ideas are defeated by power, 2012, still delayed by power, tomorrow, ideas are once again the first link in the chain

  60. Gravatar of Becky Hargrove Becky Hargrove
    8. May 2012 at 11:19

    Mark, I’m sorry!
    Sadowski – Warstler debate

  61. Gravatar of Major_Freedom Major_Freedom
    8. May 2012 at 11:40

    Full Employment Hawk:

    People that support candidates that support policies that will lower their taxes and deregulate what they can do are plutocrats, no matter how poor they are.

    Franklin D. Roosevelt and Jack Kennedy were both rich, and were both plutocrats.

    Rich people that use their wealth to support economic policies that make them richer and give them freedom to spy on Americans and engage in other anti-social economic behavior are Plutocrats.

    Barack Obama is a Plutocrat.

  62. Gravatar of marcus nunes marcus nunes
    8. May 2012 at 15:58

    Mark Sadowski
    You´re becoming almost as long winded as Major_Freedom!

  63. Gravatar of Mark A. Sadowski Mark A. Sadowski
    8. May 2012 at 16:51

    marcus,
    I’ll gladly acknowledge Major_Freedom’s superior rank in generating hot air :)

  64. Gravatar of dwb dwb
    8. May 2012 at 17:04

    Mark Sadowski,
    fair enough, but as a manager he did not check with Mankiw or Hubbard before saying 4% UE and 500k/month jobs? at best its bad management.

    Morgan:
    hmm your choice of deer here is interesting. My experience with business people is that they have predatory instincts deer do not have (think sharks, not deer). Deer are mostly trying to avoid becoming the tasty meal. Sharks fight when food is scarce. However, your freudian slip confirms my gut feeling that Romney has the predatory instincts of a deer.

    On a scale of 1-10 on the economy I’d rate both candidates a -5. i will have to hold my nose while i vote.

  65. Gravatar of Morgan Warstler Morgan Warstler
    8. May 2012 at 21:58

    dwb, you carry the same bias.

    Again, all I hear is, “I don’t want businessmen to be the boss of me, nah, nah, nah, nah!”

    My only point is… businessmen are the boss of economists. Real economists don’t try to “nudge” businessmen, they try to service them. Meet them on their terms, and under tight orders, deliver that which is requested.

    Because there are two types of Businessmen, and you libs need to play them against one another.

    The sooner you adopt this mindset, the sooner you can play to optimal result for yourself and your goals.

    History says I’m right.

    —-

    Look, China was the C Power during the cold war, but they weren’t anybody’s bitch. They just nodded, smiled, and played A againt B.

    They are now B.

    YOU GUYS are China during the Cold War.

    You don’t have to bow and scrape, but your only real option right now is to coolly and coldly work to empower Main Street Republicans (the A power) to crush Wall Street (the B power).

    This isn’t going to make unions more powerful. It isn’t going to take money from the 1% and give it directly tot he bottom 60%…

    BUT, suddenly the 80-99% (A power), they will snatch coin from the 1% (B power), and there will be more folks buying fancy cars, travelling, eating out, etc. And that gives the C power more labor intensive customers to serve.

    This is trickle down game theory, the more A and B fight, the better of C is.

    —–

    So forget holding your nose, right now the GOP is the ONLY chance Main Street Conservatives have to strip the bark off Wall Street and the Public Employees and feast on their sweet meats.

    And that’s your optimal strategy.

    Imagine 100K little Boss Hogs each buying up local properties for cheap while the banks eat it. Imagine them paying less taxes, while Fortune 1000 management pay more.

    It is a Democrat nightmare, but it is the best chance you have for reducing inequality.

  66. Gravatar of dwb dwb
    9. May 2012 at 16:46

    @Morgan,
    I don’t want businessmen to be the boss of me,

    we’ll see. people said the same about Bush then came trillions in spending. A completely utterly wasted chance. personally i like a R house and D senate because it seems to clamp the spending down. Sometimes doing nothing is the best strategy. I think given that configuration POTUS might be immaterial.

  67. Gravatar of Major_Freedom Major_Freedom
    9. May 2012 at 18:39

    Mark Sadowski:

    I’ll gladly acknowledge Major_Freedom’s superior rank in generating hot air.

    Glad that you admitted you’re at least enlisted.

  68. Gravatar of ssumner ssumner
    10. May 2012 at 06:21

    FEH, I mostly agree with those observations.

    Steve, If Volcker really believes 2% inflation was too high, why did he have a 4% inflation target in the 1980s?

    FEH, You said;

    “Only a small minority of plutocrats, like Soros, put the common good above their narrow economic self interests.”

    But in 2008 most of the hedge fund money went to Obama, not McCain.

    Daniel, God help us if conservatives are so stupid that they think monetary policy should hinge on estimates of the NAIRU. We know that many liberals believe that nonsense, but I thought conservatives opposed that sort of reasoning.

    The is one reason, and one reason only, for monetary stimulus right now—since mid-2008 NGDP growth has been slower than any time since Herbert Hoover was President. That’s all. The NAIRU has no bearing on this issue.

    J Mann, You might be right. I don’t know enough about Senate procedure to comment either way.

  69. Gravatar of Jim Rose Jim Rose
    10. May 2012 at 19:47

    I recall that diamond’s subsequent op-ed was rather bitter and self-serving. He also showed a very 1960s Keynesian hue. No loss to the Fed

    Friedman, if in the same position, would have used the forum to explain why his views have better empirical support in terms of a recovery and stabilization.

    Friedman would never have been nominated because he was both over-qualified and too good a debater and coalition builder.

  70. Gravatar of Gozo Rabat Gozo Rabat
    12. June 2012 at 16:27

    How come you neither posted nor acknowledged my comment of 06/08/2012?

    Thanks,
    (($; -)}
    Gozo!

  71. Gravatar of Gozo Rabat Gozo Rabat
    17. June 2012 at 06:44

    OBAMA JUDICIOUS APPOINTMENTS NOT LIKELY TO STAVE OFF REPUBLICAN MALEVOLENCE-TO-COME:

    Our esteemed host writes: “…Matt O’Brien points out [that...President] Obama could just bypass the Senate with recess appointments. That’s what he did for the Consumer Financial Protection Bureau (CFPB) and National Labor Relations Board (NLRB). Why not do the same for the Federal Reserve (or the Federal Housing Finance Agency)?…There’s no good reason not to….”
    ____________________

    There is one good reason for President Obama’s extremely judicious use of the power to make recess appointments. Though the reason may not achieve its desired result:

    Current-day Republicans are clearly focused more on ideology than on pragmatism—on their need to stay true to their “values” rather than any need to get the people’s work done. This means that the Democrats—and the people of the United States—are already going to pay a high price for those CFPB and NLRB appointments.

    It appears that the President, knowing of this price, is doing his best to make the case of the Republicans’ deliberate obstruction of “advise and consent,” and hopes that his limited appointments—in the face of the game-playing that Congress played during the weeks of those appointments—may give him an edge.

    For my money, that kind of thinking lies behind a great deal of how President Obama has structured his accomplishments over the course of the Republican Obstruction Era (ROE). He has made fewer recess appointments than his recent predecessors, I believe.

    He has the public record of Republican Minority Leader Mitch McConnell’s statement, “The single most important thing we want to achieve is for President Obama to be a one-term president.” He has the refusal of the freshman class of Republican Representatives voting against paying America’s bills. The fact that this case does not make itself to the American people is a sad commentary.
    ____________________

    Remember Tom DeLay and his taking preemptive action to put the 2000 census counts into legislative redistricting as quickly as possible, rather than awaiting the circumstances that history had used for this purpose in the past?

    As we’ve seen during these Obama years, Republicans seem never to hesitate to say, “You did it first!” Regardless of any distinctions between the ways the two parties operate. Such as the cautious way that President Obama appointed Richard Cordray when the Republicans said, flat out, that their obstructionism was deliberately designed to block implementation of the duly empowered 2010 Consumer Protection Act.
    ____________________

    The Republicans under Representative DeLay pointed out that the party in power always gets to skew redistricting results in its own favor. The “Yeah, but” is that (1) the redistricting waited its turn, and (2) the redistricting was not so intensely partisan: where I live in Texas, our city of Austin is divided into three Congressional districts, each of which stretches more than a hundred miles, so that I share my Congressman with the people of Katy, Texas, which is practically a suburb of Houston. My neighbors share their Representative with the people down in McAllen, Texas, some 200 miles away, on the Mexican border. (Meanwhile, all the farmers stuck in the middle get representation from someone whose predominant ties are to our capital city, so far away.)
    ___________________

    This is the kind of viciousness that contemporary Republicans use to advance their ideological ideas. They do this seemingly without regard to any and all costs.

    The same sort of thing already is almost-certain to come from those two recess appointments. President Obama’s best chance of beating the imminent malevolence is to continue playing his cards as close to his chest as possible.

    Regards,
    (($; -)}
    Gozo!

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