Dean Baker's Blog, page 560

Senate Budget Committee Chair Kent Conrad Only Pays Attention to Economists Who Could Not See an $8 Trillion Housing Bubble

That's what the Washington Post told readers today in a front page article. It quotes Senator Conrad as saying:

"We cannot as a country fail to deal with the debt threat. .... Every serious economic analysis tells us we've reached the danger zone. And just kicking the can down the road? That can't be. We're better than that. We've got to be better than that."

This is not true. Many economists, for example Nobel Laureate Paul Krugman, have argued that the country is nowhere near its debt...

Senate Budget Committe Chair Kent Conrad Only Pays Attention to Economists Who Could Not See an $8 Trillion Housing Bubble

That's what the Washington Post told readers today in a front page article. It quotes Senator Conrad as saying:

"We cannot as a country fail to deal with the debt threat. .... Every serious economic analysis tells us we've reached the danger zone. And just kicking the can down the road? That can't be. We're better than that. We've got to be better than that."

This is not true. Many economists, for example Nobel Laureate Paul Krugman, have argued that the country is nowhere near its debt...

What's New About Politicians Saying They Care More About Principle Than Getting Re-elected?

In a discussion of Republican opposition to raising the debt ceiling the NYT tells readers:

"This time is different .... some freshmen in both chambers say they worry more about changing the ways of Washington than about getting re-elected."

How is this "different." Politicians always claim that they care more about their principles than getting re-elected. How many politicians proclaim that they will abandon every principle to get re-elected (even if it is true). There is little in t...

Baby Boomers Behaving Badly: Treating Thomas Friedman as a Serious Person

Okay, I stole the line from Thomas Friedman, but if there is truth to baby boomers behaving badly it is that we treat people like Thomas Friedman as serious intellects who have real insights to give us about politics and society. In fact, Friedman is someone who has made a splendid career for himself opining on issues of which he knows nothing. In addition to being a New York Times columnist, he is the author of numerous best-sellers and a frequent guest on the Sunday morning talk shows.

The ...

Economists and Economics Reporters Continue to Be Surprised by the Economy

David Leonhardt tells us that consumer demand is still surprisingly weak. This should have drawn a big "huh?"

The savings rate through most of the post-war period was around 8.0 percent. This began to fall at the end of the 80s and more rapidly in the 90s as the stock bubble generated trillions of dollars of bubble wealth. The wealth effect, which economists have known about for a century, predicts that consumers would spend 3-4 cents more for additional dollar of stock wealth. By the peak...

Romney Staffs His Campaign With Economists Who Could Not See an $8 Trillion Housing Bubble

That's right, the Washington Post told readers that the front-runner for the Republican presidential nomination is relying on two economists, Greg Mankiw and Glenn Hubbard, who completely missed the $8 trillion housing bubble whose collapse wrecked the economy. Unfortunately the Post neglected to mention this fact to readers.

Since Romney is making his ability to manage the economy the centerpiece of his campaign it would have been worth noting that his two top economic advisers were unable t...

The Ratings Agencies Who Rated Subprime MBS Investment Grade are Trying to Dictate Budget Policy

The Washington Post told readers that the credit rating agencies are threatening the United States with a downgrade if there is not a deal to reduce projected deficits in the near future. The article rightly pointed out that these credit rating agencies rated hundreds of billions of dollars worth of subprime mortgage backed securities as investment grade, although it attributes this inaccurate rate to misjudgment rather than deliberate corruption. Since the credit rating agencies received...

NYT Tells Readers that Governors are Fools or Liars

Okay, the article by Michael Cooper didn't use exactly those words, but it did say that:

"Governors from around the country — including Christine O. Gregoire of Washington, a Democrat, and Scott Walker of Wisconsin, a Republican — said that employers in their states had been reluctant to hire new workers because of the uncertainty [over the debt ceiling]."

If there are employers who are seeing enough demand for labor that they would ordinarily be hiring new workers, but are not doing so...

Charles Krauthammer Doesn't Know The Deficit Commission Did Not Issue a Report

Who could blame him? After all, it is hard to get news in Washington, D.C. Yes, yet again someone has referred to a deficit commission report that does not exist. Krauthammer is referring to the report of the commission's co-chairs, Morgan Stanley director Erskine Bowles and former Wyoming senator Alan Simpson. The commission did not vote on this package by President's deadline and the co-chairs report would not have gotten the necessary majority in any case. Therefore there is no commission ...

Credit Rating Agencies that Were Paid to Rate Subprime MBS as Investment Grade Threated to Downgrade U.S. Debt

Forgiveness is wonderful, but forgetfulness has no place in policy debates. The idea that the Moody's and Standard and Poors should be seen as impartial arbiters of the creditworthiness of the U.S. government, whose integrity and judgement is beyond question, does not pass the laugh test.

Their warnings over possible debt downgrades associated with delays in raising the debt ceiling may be made in good faith. Certainly the failure to raise the ceiling by August 2 would be very bad news for...