Wall Street drops 400 points when they realize Obama isn't providing an easy out

Paul Krugman gives some possible insight into the new bailout plan announced by Treasury Secretary Tim Geithner:

"So what is the plan? I really don’t know, at least based on what we’ve seen today. But maybe, maybe, it’s a Trojan horse that smuggles the right policy into place."

Obama adds a little more clarity and context, as usual (this is an excerpt from ABC Nightline to air tonight):

TERRY MORAN: So, Treasury Secretary Geithner today has laid out the plan for the banks, and judging by the reaction in the markets Wall Street really doesn't like it.

PRESIDENT OBAMA: [LAUGHS] Well, you know, Wall Street I think is hoping for an easy out on this thing and there is no easy out. Essentially what you've got are a set a banks that have not been as transparent as we need to be in terms of what their books look like.

It's obvious Geithner lacks the charisma of Obama, so the roll out today was awkward. In the coming days it will be clearer. In the meanwhile we just need to have a little faith in the administration. We have to unlearn what we were taught for 8 years.

THE STIMULUS PLAN – WHAT DO THE ECONOMISTS ADVISE?

There are a zillion economists, and most of them aren't worth the price of a Radio Shack calculator.  You see most of them on cable news as generic talking heads.  However, there are some good ones.

1) PAUL KRUGMAN is a Nobel Prize winner, author, and critic of Reagan/Bush supply side economics that the GOP continues to romance.  Though liberal, he has been critical of Obama's stimulus plan as too conservative.  He believes a 1.2 trillion plan is the appropriate size.

He is deeply critical of the Senate comprimise bill forged by the Dem and GOP moderates:

"a plan that was already too small and too focused on ineffective tax cuts has been made significantly smaller, and even more focused on tax cuts. My first cut says that the changes to the Senate bill will ensure that we have at least 600,000 fewer Americans employed over the next two years. This is really, really bad."

2) ALAN VIARD, a Bush administration economist, use to think the right size for a government spending bill was "probably zero" and use more Fed cuts to stem the bleeding. Basically what the Bush folks did last fall.  He's altered his view since:

"Viard shares the view that a stimulus package is needed, although he would prefer one limited primarily to tax cuts and direct benefits for victims of the recession, such as increased unemployment benefits. This is a severe recession."

3)  JOSEPH STIGLITZ, a Nobel Prize-winning economist at Columbia University and former chief economist at the World Bank, said that the stimulus package was "probably too little, especially given that it is badly designed [and] we haven't yet fixed the mortgage problem so the financial sector is likely to continue bleeding."

Stiglitz said that most households would save rather than spend the money from tax cuts and that the business tax cuts were not closely enough linked to new investments. He said that while plans for infrastructure spending were flawed, it was "unlikely to be wasted as badly as the private financial market has wasted resources in last five years.

Despite the differences in how to split up the stimulus, here is what is agreed on almost unanimously:

A STIMULUS IS NEEDED.

IT IS ABSOLUTELY URGENT IT HAPPENS IMMEDIATELY.

READ MORE.

"So how much bipartisan outreach can you have when 36 out of 41 republican senators take their marching orders from Rush Limbaugh?"

Paul Krugman is an exceptional Nobel Prize winning economist. He slams Obama as much as anyone, and he is telling us what the GOP refuses to hear. Please do not let the GOP in Senate trick you.

As a small business owner and the father of a 6 year old, I have a vested interest in the future, and I am in support of the Obama package. Period.

Does Obama have the political balls to nationalize the banks?

During the campaign, Sarah Palin scared legions of low-information voters with red baiting. The ominous words "Experimenting with Socialism" triggers mental images of Soviet style Communism, even in the minds of those who know better.

In reality, we do have some socialist practices right here in the States... Social Security, for example. Unfortunately years of cold-war propaganda programming may be shooting us in the foot. In essence, if John Wayne may have fought in a movie, it is out... WAY OUT. And it may just be required to do this stimulus right.

We have been seeing plenty about the banks lately we don't like. They don't seem to be able to keep themselves out of hot water, and every day it's keeps simmering, presenting the nation more examples of outrageous spending and poor judgement. Many voices, including Paul Krugman in his latest op-ed are screaming for nationalization of the banks for a limited amount of time.

And yet... Obama and his brain trust seems determined to avoid this. But why? Is it because it's the wrong thing to do, or because it's politically risky? Is he afraid the GOP will gain further traction by slamming nationalization as "experimenting with Socialism?"

Perhaps it is politically disasterous, but I agree with blogger Bob Cesca when he states "Nationalizing the banks would be an enormous political risk. However, if it's going to be done anyway, sooner is way, way, way better than later."

In reality, the more this debate goes on, the more the GOP will be able to spin it as socialist or unrestrained spending, and the stimulus will continue to get watered down. I hope Obama will get this under control and push it through soon, and have the political balls to do what he has to. He didn't ask for this when he ran, but the economy may be the make or break for his first year, if not his Presidency.

Krugman's advice to Obama on opponents of stimulus package: Fuck 'em.

From the Huffington Post

Krugman: Obama Should Ignore "Huffing And Puffing" Stimulus Opponents

Economist Paul Krugman has been somewhat critical of President Obama's stimulus plan. But today in the New York Times he defends the proposal:

"As the debate over President Obama's economic stimulus plan gets under way, one thing is certain: many of the plan's opponents aren't arguing in good faith. Conservatives really, really don't want to see a second New Deal, and they certainly don't want to see government activism vindicated. So they are reaching for any stick they can find with which to beat proposals for increased government spending."

Krugman goes on to debunk some of the arguments against the plan -- particularly the idea that tax cuts are inherently superior to new spending. But, he concludes, the critics don't matter much: "Most Americans aren't listening. The most encouraging thing I've heard lately is Mr. Obama's reported response to Republican objections to a spending-oriented economic plan: "I won." Indeed he did -- and he should disregard the huffing and puffing of those who lost."

READ THE WHOLE COLUMN

Obama appears to listen to opposing viewpoints... goddamn socialist.

After two Bush stories which drip with his arrogance and lack of humility, I have an Obama story which illustrates the opposite...

As you may know, Barry-O has been running around Washington trying to get members of Congress to sign on for his stimulus package. This isn't an easy sell, cause Congress has been catching hell for being stupid enough to expect the money they all ready handed to Bush would be spent appropriately (or at least could be tracked in some way).

So Obama has been laying out his plan, and has encountered some criticism. Notably, Paul Krugman (who I think is super – read Conscience of a Liberal) wrote quite a rebuke of the plan last week in The New York Times in an article called The Obama Gap:

"Mr. Obama’s prescription doesn’t live up to his diagnosis. The economic plan he’s offering isn’t as strong as his language about the economic threat. In fact, it falls well short of what’s needed."

Rather than ignore his critics, Obama issued a statement looking to talk to Krugman: 

"I want this to work," said the president-elect. "This is not an intellectual exercise, and there's no pride of authorship. If somebody has an idea for a tax cut that's better than we've proposed, then we'll embrace it... If Paul Krugman has a good idea, in terms of how to spend money efficiently and effectively to jump-start the economy, then we're going to do it."

Say what?  

And Krugman took him up on the statement in his latest column: Ideas for Obama.

How un-Bushian!  How Obama-rific!  Here is Jon Stewart being mystified by all of this:

The Daily Show With Jon StewartM - Th 11p / 10c

President Goofus and President Gallant - Peer Pressers

Barack Obama Interview
John McCain Interview

Sarah Palin Video
Funny Election Video

And if you think that this blog is little more than an Obama lovefest/circle-jerk... you're right.  Until I hear different, I think this dude is an answer to the country's prayers.  

And, it should be noted that I am a cynical son-of-a-bitch.

Paul Krugman: "It's time for GOP to stop whining"

THWACK!!

"As the new Democratic majority prepares to take power, Republicans have become, as Phil Gramm might put it, a party of whiners.

Some of the whining almost defies belief. Did Alberto Gonzales, the former attorney general, really say, "I consider myself a casualty, one of the many casualties of the war on terror"? Did Rush Limbaugh really suggest that the financial crisis was the result of a conspiracy, masterminded by that evil genius Chuck Schumer?

But most of the whining takes the form of claims that the Bush administration's failure was simply a matter of bad luck — either the bad luck of President Bush himself, who just happened to have disasters happen on his watch, or the bad luck of the GOP, which just happened to send the wrong man to the White House.

The fault, however, lies not in Republicans' stars but in themselves. Forty years ago the GOP decided, in effect, to make itself the party of racial backlash. And everything that has happened in recent years, from the choice of Bush as the party's champion, to the Bush administration's pervasive incompetence, to the party's shrinking base, is a consequence of that decision."

Read on...

2008's Heros of the Evolution: Economist Paul Krugman

If you need an antidote from the gray-faced economists that talk in jargony circles and make your brain hurt, meet Nobel Prize winner Paul Krugman.

Krugman is both professor of economics and international affairs at Princeton University and op-ed columnist for the The New York Times, but he does a hell of a lot more than that.  

He is smart, practical – and most importantly – KICKS TOTAL ASS.

Since 1988 Krugman has written extensively for non-economists. Because of  him, I've had the surreal pleasure of sitting in my truck riveted by economic theory.  Yeah, riveted.  His insights into political movements and their effect on American economic prosperity fly in the face of economics 101, but recent events have backed-up  his theories.  

In particular, his recent book The Conscience of a Liberal dissects the past 150 years of American history and comes to the conclusion that the GOP's takeover by extreme factions of the right (inspired by Reagan and perfected by Bush 2) precipitated a systematic attack on the advances made in economic equality from FDR's New Deal to the ever-improving middle class of the 1960s.  Erosion of health care benefits, lower wages, and the disintegration of the middle-class resulted.

It's an persuasive proposition, and especially prophetic in the 2 years since he wrote the book's first edition. Especially fascinating is that you can watch his theories work in real-time as you read the papers.

What's even better, Politico recently reported that President-Elect Obama has been accessing Krugman's ample intellect.

This is the best financial news I've heard in a long time.  Rock on, Economics Geek!