Tuesday, October 14, 2008

Winners & Losers

A lot happened on Monday, October 13th. We have a veritable plethora of Winners and Losers!


1. Paul Krugman
Congratulations to Mr. Krugman for winning the Nobel Prize! He was awarded this prize based on his work in International trade modeling.


2. The American Tax Payer (sort of)
Why? Because instead of the "better than doing nothing" plan of the $700 Billion bailout plan that was originally proposed by Paulson and Bernanke, they finally have seen the light and have proposed a much better plan to inject capital into the banks and allow the Government to gain equity into the banks. To some die-hard Reagan conservatives out there it's almost like Halloween came early - yes we are semi-nationalizing private firms, life as we know it has ended, cats and dogs are marrying, etc.

However, this is along the same lines as what the Swedish Government did when they faced a similar situation. Both Brad Delong and Paul Krugman give their approval!


The United States should have been in a much stronger position. And when Mr. Paulson announced his plan for a huge bailout, there was a temporary surge of optimism. But it soon became clear that the plan suffered from a fatal lack of intellectual clarity. Mr. Paulson proposed buying $700 billion worth of “troubled assets” — toxic mortgage-related securities — from banks, but he was never able to explain why this would resolve the crisis.

What he should have proposed instead, many economists agree, was direct injection of capital into financial firms: The U.S. government would provide financial institutions with the capital they need to do business, thereby halting the downward spiral, in return for partial ownership. When Congress modified the Paulson plan, it introduced provisions that made such a capital injection possible, but not mandatory. And until two days ago, Mr. Paulson remained resolutely opposed to doing the right thing.

Brad Delong was an ardent proponent of this solution since the Lehman Crisis first started this Financial Meltdown.

Now it's time to go back to three principles. There are three options:

  • Do nothing.
  • Bailout (a la Paulson)
  • Nationalization (a la Sweden 1992)

Do nothing was last tried in 1929-1932. The result was called the Great Depression. Let's not do that again. Let's decide between bailout and nationalization.

Nationalization has the best chance of avoiding large losses and possibly even making money for the taxpayer. And it is the best way to deal with the moral hazard problem.


However, I was in doubts whether politically this would happen, as I would have thought Republicans would have gone bonkers over this proposal. We saw already what happened when the first vote came up with regards to the bailout. I guess Paulson realized that in a serious situation, ideology needs to go out the window in favor of pragmatism?


1. William Kristol
This man is the epitome of a bloviator. There are some intellectual conservative columnists that I can respect - like David Brooks. But if there was a Nobel Prize for writing journalistic nonsense, it would be William Kristol.

Regard his latest example, in yesterday's Op-Ed Column, he had this to say:

It’s time for John McCain to fire his campaign. He has nothing to lose. His campaign is totally overmatched by Obama’s. The Obama team is well organized, flush with resources, and the candidate and the campaign are in sync. The McCain campaign, once merely problematic, is now close to being out-and-out dysfunctional. Its combination of strategic incoherence and operational incompetence has become toxic. If the race continues over the next three weeks to be a conventional one, McCain is doomed.

What McCain needs to do is junk the whole thing and start over. Shut down the rapid responses, end the frantic e-mails, bench the spinning surrogates, stop putting up new TV and Internet ads every minute. In fact, pull all the ads — they’re doing no good anyway. Use that money for televised town halls and half-hour addresses in prime time.
With friends like this, McCain & Palin do not need any enemies. I sometimes wonder in just what reality does Kristol live in? Does he not get that if McCain were to fire his campaign staff less than 20 days before an Election, that he would look even MORE erratic? Moreover, he advises them to stop advterising, when he was the one advising them last week to go full on negative with the whole Ayers and Reverand Wright bit.

I will give Kristol his due, McCain's Campaign Managers, who might be successful lobbyists, are certainly terrible as campaign managers. They should be fired, but let's face it, it starts with leadership at the top.

In his first paragraph, Kristol points out exactly why Obama will win this year's election. It is due to the fact that Obama has been able to successfully lead his campaign and provide a clear message with his team, that he was able to win against Hillary Clinton. McCain is in just as much trouble, his campaign has been poorly managed, with no clear cut strategy, and does not have a winning message that has been able to successfully connect with the American Voters.

Hillary couldn't lead her own campaign team, how could we have expected her to lead a country? The same goes for John McCain. He can't even manage his VP Candidate to help as opposed to hurt his ticket.

Normally I don't like to call people names, because it's just not nice. But with Kristol, there is just no other word to describe him, other than "douchebag". I think we can safely say that no one will be hiring Mr. Kristol as a campaign manager any time soon.

2. Sarah Palin

The sheer boldness of Sarah Palin never ceases to amaze me. The report on "Troopergate" came out on Friday, and the Independent Investigator reports:

For the reasons explained in section IV of this report, I find that Governor Sarah Palin abused her power by violating Alaska Statute 2952.110(a) of the Alaska Executive Branch Ethics Act. Alaska Statute 2952.110(a) provides

“The legislature reaffirms that each public officer holds office as a public trust, and any effort to benefit a personal or financial interest through official action is a violation of that trust.”

She then has the "chutzpah" to say she has been cleared of any wrong doing!

While Sarah Palin was boarding her campaign bus this morning, a reporter seeking comment on the new Troopergate report shouted out to her, “Governor, did you abuse your power?” She responded:

If you read the report, you’ll see that there’s nothing unlawful or unethical about replacing a cabinet member. You’ve got to read the report, sir.

In what reality is she living in?

3. John McCain

I am starting to feel bad for him. He has incompetent campaign managers, a VP from hell, and a republican base that he actually doesn't like. It's been no secret that he has always been at odds against the Religious Fundamental base such as Dobbs and the American Family Foundation. But because of Palin, that's pretty much all he has been able to excite. His negative attack ads and his selection of Palin, as a completely unqualified VP, has totally turned off Intellectual Republicans and Independents. When you've lost Peggy Noonan, it's not a good sign, if you are a Republican:
"Obama seems older in a way," said the former Ronald Reagan speechwriter. "McCain has seemed herky-jerky. Obama has seemed like the older, steadier fellow since the economic crisis began."

"Her performance from day one mattered. What the American people saw over the period of five or six weeks, it has been very up and down. From an unveiling that gave rise to questions to a very strong convention speech, to interviews that were disastrous, to a debate in which she came back very strong, to now, ten days on the campaign trail, where I think it is fair to say: that didn't work."

Sphere: Related Content

No comments: