Tuesday, September 23, 2008

Got Questions?

September 23, 2008, 6:45, 10:00 a.m.

Currently Most Popular Blog Entries

"University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present (incorporating and updating original blog entry, "UI Sexual Assault Update," July 19-August 9).
"Extra: Stolar Report," September 18 and 19, 2008.
"How Much Do You Owe the Chinese?" September 8, 2008.
"Rational Responses to Stolar and Global Finance," September 20, 2008.
"Random Thoughts on Law School Rankings," April 29, 2008.
"Global Finance: The Great Fountain Pen Robbery," September 21, 2008.
"Hawkeyes' Criminal Record Lengthens," February 25 and 27, 2008.
"Rumors, Reporting and Reputations," September 13, 2008.

And see, Database Index of 500-plus blog entries

Got Questions? Like: Who's the latest addition to the football team's criminal record? Who said, "[I don't] care how many women the football team rapes, as long as it keeps winning"? What's the answer to "Guess who's not coming to dinner"? Which UI prof went toe-to-toe with President Sally Mason in the Press-Citizen's op ed pages? Should we really advocate for victim advocates? Congress decides the future of global financial collapse and "The Great Fountain Pen Robbery" on Wednesday, the first presidential debate is Friday, Homecoming is Saturday -- so what's happening Thursday? You'll find the answers on this morning's updated "University of Iowa Sexual Assault Controversy -- 2007-08," July 19-present.

Mattresses Enter Commodities Markets
Mattress futures must be climbing about now. At least that's Bob Patton's view of our present financial dilemma:
The headlines on the newpapers in the rack read "U.S. Near Financial Chaos" and "Where is our money safe?" One of the "Mattress Store" workers is saying, "Call me an alarmist, but I still say they know something we don't" as four customers are running down the street with mattresses on their heads. [Credit: Bob Patton, "Economic 'Down'turn?"
Posted September 16, 2008; and Iowa City Press-Citizen.]

What they may know is that Treasury Secretary Henry Paulson has declared that his $1.3 trillion remedy must be enacted by Congress immediately, as he says, "Clean and quick."

Why have I always associated that phrase with a killing -- whether by the mafia, or the military, or of domestic animals?

Here we have another sense of a killing -- a killing being made, a killing being made by the bankers. The only folks actually being killed are us. And I don't think those killings are going to be "clean and quick." I have a sense they'll be messy and slow, perhaps going on for years and years. (See, Nicholas Johnson, "Global Finance: The Great Fountain Pen Robbery," September 21, 2008.)

On the other hand, as the Maverick episode put it, "If you can't trust your banker, whom can you trust?"

I'm not an economist -- "but I play one on this blog." So it's always reassuring when, after relying on gut instinct to think through a problem and present the results here as a blog entry, a couple of days later the "experts" in whatever area may be involved seem to be engaging in an analysis either identical to, or at least consistent with, my own.

Paul Krugman is a distinguished academic economist as well as a New York Times columnist. He is currently a Professor of Economics and International Affairs in the Woodrow Wilson School at Princeton, and was formerly Ford International Professor of International Economics at the Massachusetts Institute of Technology (from which he received his Ph.D.). He has also served on the U.S. Council of Economic Advisers. That may not mean he's "right," but it at least means he's well informed.

So take a look at his column from last Sunday: Paul Krugman, "Cash for Trash," New York Times, September 21, 2008 ("[Secretary of the Treasury Henry] Paulson is demanding extraordinary power for himself — and for his successor — to deploy taxpayers’ money on behalf of a plan that, as far as I can see, doesn’t make sense. . . . [His plan] will be crippled by inadequate capital unless the federal government hugely overpays for the assets it buys, giving financial firms — and their stockholders and executives — a giant windfall at taxpayer expense. Did I mention that I’m not happy with this plan? . . . [T]he financial system needs more capital. And if the government is going to provide capital to financial firms, it should get what people who provide capital are entitled to — a share in ownership, so that all the gains if the rescue plan works don’t go to the people who made the mess in the first place."). There's more to his analysis. The column is definitely worth reading.

I don't know Krugman's politics, but I do know former Speaker Newt Gingrich's politics, so for the benefit of those who might be more persuaded by an avid Republican spokesperson, this former Speaker of the House of Representatives and author of the "contract on America" thinks "what they're doing is just wrong. And I think that it's likely to fail, and it's likely to make the situation worse over time. And I think that [U.S. Treasury] Secretary [Henry] Paulson has shown almost no understanding of how a democracy operates. His initial draft would have given him $700 billion of your tax money with no oversight, no judicial review, no accountability. I mean, we're not a dictatorship." For more along the same lines see the transcript of his NPR interview and his National Review article. "Gingrich on Why Bailout Plan is 'Just Wrong,'" All Things Considered, National Public Radiio, September 22, 2008, Newt Gingrich, "Before D.C. Gets Our Money, It Owes Us Some Answers," The Corner, National Review, September 21, 2008 ("Congress has an obligation to protect the taxpayer. Congress has an obligation to limit the executive branch to the rule of law. Congress has an obligation to perform oversight. Congress was designed by the Founding Fathers to move slowly, precisely to avoid the sudden panic of a one-week solution that becomes a 20-year mess.").

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