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Politics : President Barack Obama -- Ignore unavailable to you. Want to Upgrade?

To: ChinuSFO who wrote (52477)	3/22/2009 2:27:19 PM
From: koan	Respond to of 149317

More on the banks by Krugman. And he has been screaming for months for Obama to get off his ass. Me too-lol. March 22, 2009, 12:09 pm Brad DeLong’s defense of Geithner Brad gives it the old college try. But he shies away, I think, from the central issue: the non-recourse loans financing 85 percent of the purchases. Brad treats the prospect that assets purchased by public-private partnership will fall enough in value to wipe out the equity as unlikely. But it isn’t: the whole point about toxic waste is that nobody knows what it’s worth, so it’s highly likely that it will turn out to be worth 15 percent less than the purchase price. You might say that we know that the stuff is undervalued; actually, I don’t think we know that. And anyway, the whole point of the program is to push prices up to the point where we don’t know that it’s undervalued. So default on those non-recourse loans is a substantial possibility, which means that there is a large implicit subsidy involved. That’s why Christie Romer’s claim that we’re relying on the “expertise of the market” rings so hollow: we’re giving investors a big subsidy, so this has nothing to do with letting markets work. And a final point: I’m with Atrios here. If getting the prices of toxic assets “right” isn’t enough to rescue the banks, that doesn’t mean that we’re doomed; it means that we actually have to, you know, rescue the banks, Swedish style, rather than rely on fancy financial engineering to make the problem go away.

To: ChinuSFO who wrote (52477)	3/22/2009 2:32:56 PM
From: koan	Read Replies (1) \| Respond to of 149317

krugman.blogs.nytimes.com March 21, 2009, 7:29 am CBO projections Just a quick note on the new, pessimistic CBO budget projections: 1. These projections have no bearing on the case for a large stimulus now — none. Adding, say, another $600 billion to stimulus spending would, on net, add around $400 billion to debt a decade from now (net is less than gross because the stimulus expands GDP, which leads to higher revenues that partly offset the initial outlay.) This would make essentially no difference to the outlook. Peter Orszag has this exactly right. 2. What the projections suggest is that Obama’s longer-term agenda, or a progressive agenda in general, needs more revenue; that’s probably true, although there’s huge uncertainty about any long-term projection. That revenue might come from environmental policies: I’ve been hearing that realistic projections of the revenue from cap and trade might be much higher than assumed in the budget. In any case, however, it’s really a political question: are we willing, ultimately, to pay the modest costs of a better society.