“Krugman nails the balloon - DAILY KOS” plus 1 more

Posted: 14 Aug 2010 07:17 PM PDT

by citizen k

Sat Aug 14, 2010 at 07:20:51 PM PDT

Paul Krugman attacked the Federal Reserve for "dithering" about joblessness and a recommended DailyKos diary applauded the attack, apparently not realizing that Krugman's proposed solution is that the government should give more money to bankers. Obama and Bernanke's economics cannot rationally be considered left-wing, but many of the criticisms we see of those policies, even from liberal/progressive commentators are actually criticisms from the right. The dominance of neo-classical economics in US political discussion is so overpowering that, contrary to the common wisdom, Larry Summers is on the extreme left wing of the very narrowly bound range of acceptable opinion. Krugman wanted Bernanke to buy more mortgage backed securities under the dubious theory that more capital would create more economic activity.

If you think that the economic policies of the government are too timid and too favorable to the rich and powerful (which they are), you may be tempted into the logical error of assuming criticisms of those policies must be right. But take a look at Krugman's argument.

What could the Fed be doing? Back when, Mr. Bernanke suggested, among other things, that the Bank of Japan could get traction by buying large quantities of "nonstandard" assets — that is, assets other than the short-term government debt central banks normally hold. The Fed actually put that idea into practice during the most acute phase of the financial crisis, acquiring, in particular, large amounts of mortgage-backed securities. However, it stopped those purchases in March.
http://www.nytimes.com/...

Here's the theory: the government buys securities from banks, the banks have more cash, the banks lend cash to business, business hires people. If you accept the ridiculous models of conventional economics, this all makes sense, but it really doesn't work that way. In reality, the banks are awash with cash that came in during earlier phases of the bailout and from the increased savings rates of Americans. The public has cut back on spending a lot and people have become less interested in buying stocks or investing in real-estate or other more dangerous activities.

"People are going to be more conservative going forward," said David Ader, head of U.S. government bond strategy at CRT Capital Group LLC in Stamford, Connecticut. "We have seen the risks, we are not going to leverage ourselves and try to create wealth necessarily. We are going to be more concerned about retention of our wealth."

The result is that the public is putting billions of dollars into bank accounts that pay nearly no interest.

The savings rate for American households increased to 6.4 percent, the highest level since June 2009, the Commerce Department said Aug. 3. At the same time, personal consumption and incomes were unchanged. The savings rate has averaged 5.9 percent since November 2008, the most for a 20-month period since 1992 through 1994. It fell as low as 0.8 percent in April 2005, and averaged 2.2 percent from 2005 through 2007.
bloomberg

The banks are in the position where they can invest that money in US treasury bonds

The biggest jump in demand this year among domestic buyers of Treasuries has been commercial lenders. Bank holdings of Treasury and agency securities increased 5 percent to $1.57 trillion last month, according to the latest data available from the Fed. That compares with a 3 percent gain in the first half of the year.

This is great for the public in one way - because it's pushing interest rates down on the Federal debt. And the situation is also good for big companies - as investors rush to buy top grade corporate bonds instead of stocks.

Corporate America has been availing itself of the public's willingness to lend, as the widely noted International Business Machines (IBM) sale of three-year notes at a 1% rate attests. The percentage of new corporate-capital issuance in the form of equity is near a 20-year low.
http://online.barrons.com/...

So there is a lot of money in the banks and a lot of money available to bond investors - but lending is still down dramatically.

Commercial and industrial lending by banks has fallen 20 percent since the end of 2008 to $1.2 trillion, as of March 31, the latest data available, according to the Federal Deposit Insurance Corp.
bloomberg

Conventional economics, whether practiced by right wing loons at the U. of Chicago or by nice liberals like Paul Krugman, relies on really counter-factual and simple models of the economy and ridiculous fictions such as the idea that companies act as if they were individuals. That is, a bank bloated with cash and seeing low interest rates available on government bonds should want to lend money to small business to get higher returns. Right? But in real life, a bank is not a person, and the people managing the bank don't necessarily have financial interests perfectly aligned with the bank. In a boom-time, those people don't want to be fired for missing out on opportunity that their peers are finding, and during a recession they don't want to be fired for making risky investments. If you are a banker on Wall Street in 2007 and your peers are making million dollar bonuses for investing in lottery ticket backed securities, you are going to be tempted to bet the banks money on lottery ticket backed securities, but if there are 10,000 newly fired bankers and you can safely keep your job by buying treasury bonds - you see risks differently.

More to the point, a lot of the lending of banks back in the good old days before the crash did not add value to the economy - it just kept the balloon pumped up. Companies expanded on debt fueled binges, malls and mall chains grew on expectations, huge developments of luxury housing and other ponzi real-estate projects were sucking down bank loans like they were going out of style. Just making money available again cannot re-inflate the bubble even if it were in our interests to do so. The reality is that many of the kinds of projects that would provide good jobs and do the necessary work in the economy are not attractive to conventional bankers, no matter how much money they have available. To see interesting lending, you have to look at credit unions, especially CDFIs or the loans from the government that our now funding education and factories, the Treasury department's CDCI program or the small business lending act.

What could or should Bernanke do? Beats me. But giving more money to bankers doesn't strike me as a solution. And it's certainly not a progressive solution.

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Letters: The debate on gay marriage - Oregonian

Posted: 14 Aug 2010 01:05 PM PDT

Published: Saturday, August 14, 2010, 10:04 AM

Print publication: Sunday, Aug. 15

Michael White argues in "Between one man and one woman" (Aug. 8) that opposing gay marriage is not bigotry. He wants gay couples to have all the legal benefits of being married, without actually being married. Such an arrangement may sound benign, but it carries the unmistakable subtext that same-sex couples are lesser than opposite-sex couples. There's just no way to elevate straight marriage without stigmatizing gay marriage.

Ross Douthat works harder to justify marriage as a hetero-only institution in his Aug. 10 column, "The marriage ideal and the new reality." He does an excellent job of debunking the most common arguments against gay marriage. He notes, correctly, that traditional marriage is a cultural institution and not a default biological reality. But in the end, he makes the same argument as White, without any solid justification. All he has is vague emotionalism ("one of the great ideas of Western civilization," "a unique and indispensable estate").

I'm sorry, but if you really feel that nontraditional families should be acknowledged as families, you must allow them to call it marriage. If you feel that gay couples are not real families and are unfit to raise children, please come out and say so. Then be prepared for a wealth of evidence to the contrary.

NEAL SKORPEN
Tigard

*****

Why is it that support for one man/one women marriage implies that a person is bigoted or frightened? This is what John Nichols states in his Aug. 8 opinion piece, "Moving to equality." Bottom line, discussion about marriage, civil unions and domestic partnerships is about sex and with whom one chooses to have it. Despite any change of standards or social opinions, the anatomy of the body hasn't changed. It's designed for male/female intercourse. The only way to produce a baby through natural design is from male/female intercourse. The belief that these two unchanging facts give society direction for marriage and family has nothing to do with fear or hypocrisy. It has to do with being able to read a biology book.

I wonder: Isn't it bigotry to label people "fearful and bigoted" when all that is known about them is that they believe marriage should be between one man and one woman?

DONNA SCALES
Lake Oswego

*****

A hundred friends decide to take a cruise together, destination to be determined by a majority vote. A 60-40 vote in favor of Mexico follows. As preparations are made, the person in charge of purchasing the tickets determines that Mexico is too hot and he hates salsa. He purchases tickets to Alaska.

California Proposition 8 is a contentious issue, but no matter what side we are on, we have a bigger problem. One of the tenets of a democracy is that the majority vote decides. To those who look to unelected judges to blow off the vote of their fellow citizens, I would say "be careful what you wish for."

Are your bags packed for Mexico? Add a heavy coat!

PAT HATFIELD
Southeast Portland

*****

Folks who are concerned that the recent judicial decision overruling the majority vote in the California gay marriage case is a case of anti-democratic judicial overreach should remember that tyranny by the majority is itself anti-democratic and unconstitutional. This is why Jim Crow laws were outlawed, and this is why it is important to confer the right to marriage upon all those who are eligible.

ERIC TSCHUY
Southeast Portland

*****

Michael White's position on gay marriage aptly illustrates the morally and intellectually bankrupt position of the self-styled marriage protection advocates. White mobilizes what he calls "facts" to support a view he believes is not bigoted ("Between one man and one woman," Aug. 8).

First, he argues that all throughout history and on every continent the only acceptable marriage arrangement has been between "one man and one woman." If he had just asked his friendly neighborhood anthropologist, he would have been promptly disabused of this false "fact." In fact, the predominant marriage arrangement has been forms of polygamy (more than one spouse), which we see in the Middle East, Africa, Asia and right here in North America in the form of polygyny (more than one wife). In certain parts of Asia, namely Tibet, polyandry (more than one husband) is a common practice.

White's second "fact" is that "nature itself is imprinted with this one-man-one-woman definition of marriage." Leaving aside the cosmological question of nature's indifference to humans' cultural configurations, had White consulted with his neighborhood biologist, he'd also have learned that his second fact is as much a fiction as his first: sexual preference, the science tells us, is not a choice, it's biologically inherited.

White's rehearsal of what in the end are fictions, not facts, promotes an ideological position that calls for the exclusion and discrimination of others -- which bears an uncanny resemblance to bigotry.

AARON GREER
Forest Grove
Greer is a visiting assistant professor of anthropology/sociology/social work at Pacific University.

*****

Regarding Michael White's Aug. 8 essay: One thing mystifies me in this debate: If the Oregon Family Council is "dedicated to defending religious liberties," why would members want the government telling them who they can marry?

ANDREA DOBSON
Northeast Portland

*****

In "Moving to equality" (Aug. 8), John Nichols invalidates his entire opinion piece in the third sentence and demonstrates firsthand why same-sex marriage remains a divisive issue: "... if Democrats and responsible Republicans choose to recognize. ..." California is one of the most blue states in the nation. Prop 8 could not have passed without significant support from Democrats, so why doesn't Nichols label these Democrat turncoats irresponsible?

As a lifelong responsible conservative, I take exception to being labeled irresponsible because I have a set of core values and beliefs that is counter to the same-sex crowd. Nichols illustrates why this issue is the most divisive issue in our culture as he limits those who disagree to second-class citizens who need to be dominated into submission.

DAN WYNKOOP
Tigard

*****

There is a strange cognitive dissonance in the column by Jeana Frazzini in support of the ruling on California's Proposition 8 made by Judge Vaughn Walker ("Making the same commitment," Aug 8). On one hand, she is supportive of the action taken by Walker, which has the potential to remove the issue of gay marriage from a public forum by making it impossible for the voters to have any say. On the other hand, she sincerely calls upon Oregonians to discuss the issue and claims that, no matter what the Supreme Court rules, gay marriage is ultimately an issue that will be decided by Oregonians.

I believe that she is being sincere and honest in both positions; the irony is that her support for Walker's ruling undermines her call for a civil discussion. With the courts taking up their cudgels and their rulings utterly immune to the wishes of the people, it will not matter what Oregonians decide; all discussions are moot when the courts have declared that the people may not decide the issue.

It is worth noting that in supporting Walker, Frazzini has eviscerated her own call for changing hearts and minds.

KEITH MOORE
Sherwood

*****

Michael White's essay on marriage, "Between one man and one woman," is earnest and presumably well-intentioned, but it is based on a decidedly false premise. According to White: "Throughout all of recorded history and across every continent on earth, the definition of marriage has always been a union between one man and one woman."

Apart from the many examples one could select from across time and human culture, one need only turn to the Bible to show how limited White's view is. In the book of Genesis the patriarchs of the Hebrew people clearly practiced polygyny, a form of marriage binding one man with multiple wives. Jacob, the grandson of Abraham, for example, married two sisters, Leah and Rachel, and had children not only with them but also with two of his slave women. Interestingly, Genesis presents Jacob's relationships and those of other patriarchs in a straightforward, nonjudgmental manner.

Contrary to White's assertion, marriage defined as one man/one woman, whatever its virtues, is clearly not the universal model he and many others believe it to be. It is not even the only model presented in the pages of Scripture.

DAVID GROFF
Southeast Portland

*****

As a believer in Jesus Christ, the one who told us that love was the most important of all, I still sometimes find Christians nauseating with their holier-than-thou attitude.

Let's try to remember a couple of things. God inspired the Bible but did not write it. The Bible was written by human hands and, sometimes, personal views were injected into the script.

Gay marriage or lifestyle has no negative impact on my life or my marriage. I do not find my marriage in danger because gays wish to marry. And, believe it or not, homosexuals are not going to go to hell.

Perhaps we need to spend more of our time and energy on more important things than telling others whom they should love. Sometimes we have no choice about whom we love; we just love them. Whomever we love, it can only have a positive impact on all our lives.

A starving child, a soldier dying in war, the sick unable to receive medical treatment, the homeless, the unemployed: We have serious problems that negatively impact all of our lives. But, love ... I think not.

XAN NEMETH GRAF
Northeast Portland

Fiction

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