Wednesday, January 30, 2008

The Fed Is Crazy

Just in case you wondered. Faced with an economic crises caused largely, IMHO, by the inability of the general populace to pay the debts they have now, the Fed's response has been: to make it even cheaper to borrow money! They've now dropped the fed funds rate by an entire percent, from 4% to 3%, in 2 weeks - four months ago it was 5.25%! That's almost a 50% drop!

As for the bipartisan stimulus package we heard so much about, that was before it got to the Senate. The senate thinks the elderly should get the rebate too - oh, and we can't leave out the rich people... We should leave out the rich people. Actually we shouldn't do this at all, it will have minimal effect and is an extended exercise in CYA. And if the Senate is allowed free rein by the party leaders, we won't do it, because the House won't sign off on the changes. So maybe the Senate's insistence on rewriting the package is a good thing.

The House's idea wasn't bad, actually - apart from the fact that the money won't get to people soon enough to make a difference, and that it won't go to new spending anyhow. I can't recall where I read this, but someone did a survey on the lines of "if you had $X hundred right now what would you do with it?" The general assumption is that poor people spend and rich people save - the response to this survey was that something over 40% of poor people said they would pay down debt with it, and another 20% said they would sock it away. None of which would do a thing for the economy.

But the Fed and its rate cuts - it's the old saying: to a man with a hammer, every problem looks like a nail.


  1. Anonymous8:47 PM

    Off topic (again), hedera. I just posted a response to your comment over on FA, a longer response than I intended. Sometimes I can't quite get my intended tone of voice right, but please read it as if I were sitting in the faculty lounge sharing suspicions with a colleague whose thoughts and observations I valued.

    Anonymous David

  2. Anonymous8:28 PM

    Off topic once again. Here's another take on McCain that includes some things I managed to either miss or forget. I think this guy is correct about just how dangerous a McCain presidency would be, and it is made much more dangerous by the support he is enjoying among independents and conservative Democrats.

    Anonymous David

  3. We obviously have NO choices amongst the five still standing contenders.

    But the two who worry me the most are Obama and McCain.

    I actually thought we ought to have had an election that pitted Bradley against McCain 8 years ago. At least, that would have pitted two half-way decent and intelligent men--at opposite poles of the political spectrum--and given Americans a decent and graphic choice. No such luck.

    In those intervening years, Bush got us into a war, and now McCain has bought into it and wants, obviously, to continue it, and even expand it into Iran, and even invade Pakistan. What fun.

    What I find most mystifying, is the press's honeymoon with Obama. Here's a candidate, as slick as they come, who's strategized his run, modeled it after Dubya's effective 2000 strategy: The present campaign has less substance, less specificity, and more hype and excelsior than any in recent memory. Obama's mantra of "change change change, hope hope hope" means exactly nothing, because he furnishes NO specifics about policy, program or position. He's running a campaign designed precisely along the lines of Bush II's first one ("I'm your compassionate conservative"). The press waddles along after him reciting this "lyrical narrative" crafted to seduce Blacks, disaffected White professionals, and women who think he's "cute" or "inspirational". His "oratorical gifts" are cited as evidence of his sophistication and insight, despite the lack of pertinent or profound observations, criticisms or knowledge of subject. The "uniter" theme, you will recall, was exactly the tack Dubya used as the classic "Washington outsider" on a mission to "clean up the Beltway" on behalf of God-fearing Red State lower middle-class Whites. That was a lie, and so is this new version.

    Obama resembles nothing so much as an obsequious Presbyterian choir boy playing up to the minister in hopes of getting his Eagle Scout God & Country Merit Badge. He's careful not to offend anyone, to take no hot-button issue stands, and to portray himself as the ombudsman of conflicted partisanships.

    The Press has made a big phony story out of Americans' assumed "frustration" with Washington "grid-lock". Of course, that has never been the real problem at all. The real issue has been the capitulation of the Democratic Party for the last 15 years, first during the Clinton Administration, which in its "Centrist" policies was actually Republican in theme (lower taxes, anti-labor, smaller government, pro-business, God Bless), and then during Bush's two corrupt fascist terms. This set the stage for another "great uniter".

    On NPR this morning, they were even singing about Obama's "poetry". His "poetry"???

    What are Mr. Obama's positions about disengagement from Iraq?

    About National Health Care?

    About the environment?

    About tax cuts for the rich?

    About the loss of pensions and seniority?

    About illegal immigration?

    About the defense budget?

    About education?

    About welfare?

    About stem cell research?

    About abortion?

    About global warming?

    About bank bail-outs and the mortgage crisis?

    About homeland security?

    About the national debt?

    About the (im)balance of payments?

    About the shrinking American dollar?

    About the exportation of American jobs, and capital fleeing offshore?

    About the infiltration of religious dogma into our political institutions?

    About unemployment and wages?

    Before I consider giving my vote to anyone, I'd certainly need to have some vague idea, to say the least, about where a candidate stood on these vital issues. So far, we've heard NOTHING from Obama. No candidate who dodges all these issues deserves to be given serious consideration. When will the press, and American voters, wake up from their daydream?

    This guy is a fake! A con man. It's written all over him.

  4. What's lacking in our present fiscal policy is a sense of proportion.

    The Iraq War was designed by the conservative Republicans to accomplish several things: Line the pockets of the military contractors, re-inflate the national debt and divert money away from social domestic programs (both now and in future), seize control of Mideast oil reserves, etc.

    If you build up the National Debt, and lower the taxes on the rich, guess who ends up paying the bills? If the middle class goes away, there's then no money to support all the programs that government can do. It's a recipe for a South American top-heavy plutocracy in which you have vast numbers of peasants, and a tiny elite controlled by a few obscenely rich families and syndicates. A strong middle class (politically speaking) is the enemy of the rich. The Republican agenda for the last 100 years has been tailored to these specifications. For 40 years we had the rich on the ropes in this country, roughly speaking, but ever since Reagan's first term, they've been re-taking ground. We're at a watershed time. In another 15 years, we could be a debtor nation with no industry and no middle class. It's not a pretty picture.

  5. Anonymous7:55 PM

    No quarrel with where we are or where we're headed, Curtis. And should I win the lottery, I will likely become an expatriate in Europe who still visits frequently and willingly contributes to anyone genuinely and insightfully striving to extricate America from the deep, dark hole into which it has fallen.

    But I disagree with your take on Obama. First, read his two books to get an idea of who he is. Then look at his history. The best measure of who any elected official will be is who they have been, and the least useful measure is usually the campaign. The voters who will determine the outcome of this election do not investigate candidates or the issues. Obama understands that. Bush's coming close enough in '00 to be able to steal the election and be appointed president is proof of same. Clinton won in '92 only because he was an effective campaigner and because Perot so hated the Bushes that he mounted a third-party campaign that siphoned off Republican votes.

    Obama has made some very telling statements recently about the failure of the "surge," and he has made no bones about the war being a mistake, and that we must engage in dialogue with our enemies (I think it was Begin who said that we don't need to negotiate with our friends). There are little clues, but you have to listen for them. And you need to set aside scathing contempt, even though in general scathing contempt for where our leaders have taken America is more than justified.

    McCain is the phony here. Any integrity he might have had, any independence of mind, was jettisoned when he was defeated in South Carolina by the slimiest of race-baiting, and then basically gave a co-dependent hug to Bush. He is also so hot-headed that the more moderate of the two Republican senators from Mississippi said that the idea of a McCain presidency gave him the creeps, and that McCain was tempermentally unfit to serve as president.

    And as you noted, he embraces Bush's Mideast militarism, and would even out neocon Bush. He has also said that he still believes the Viet Nam War was a noble cause that we could have won if we'd tried harder. That's who the man was, it's who he is, and who he will always be: a delusional militarist who, while playing the maverick, and actually getting a couple of things right, like his conversion to acknowledging global warming after having his staff research it and bring him up to speed (he's not quick enough or intellectually curious enough to have figured it out for himself back when anyone with a clue, and without blinders, was already onto it), ultimately bows to power, sucks up to whoever can advance his political ambitions, refused to join with Kerry in '04 and change the course of history for the better, and has an arrogance and a temper beyond even that of W. He's also a colossal goddamned jerk.

    Anonymous David

  6. My, you two have certainly torn the election campaign apart, and that wasn't even what the original post was about!

    Curtis, we'll just have to disagree about Obama. I'm on David's side of the argument here. I would remind you that Obama's earlier incarnation was as a community organizer on the south side of Chicago; this has to have given him a feel for the ordinary joe, which is a useful thing for a President to have.