Sacrifice, bitches

A few weeks ago we wrote:

Look for the “sacrifice” meme to become even stronger now that we’re in a recession (after all, everyone knows that if consumers would just stop buying stuff, the economy would be fine).

Today, Chuck Todd asks:

God, these people are predictable.
Update: Matt Yglesias sums up the “paradox of thrift” pretty well:

If Vikram Pandit sacrificed some of the money he has and mailed it to some unemployed former manufacturing workers in the rust belt, they’d be in somewhat better shape. But if Americans were to collectively sacrifice—everyone agree to eat only potatoes on Wednesdays or something—that wouldn’t help anyone except the potato farmers. Consumption in a market economically is almost always a positive-sum exchange; economic growth, and therefore prosperity, requires more economic activity, not more sacrifice. If the big national problem were a giant war, things might be different—we could all conserve gasoline and save it to fuel the tanks. But it’s hard to see how sacrifice could solve the problem of rapidly rising unemployment.

Update #2.

And when you ask them, how much should we give?
They only answer more! more! more!

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86 replies
  1. 1
    ed says:

    Pretty nice response from El Prezzo. Lectured that young man pretty good.

  2. 2
    valdivia says:

    I am so tired of Teh Stupid. Now Obama was jealous of Cuomo so his answer to Gossip Boy Henry was really a way of getting back at him….

  3. 3
    mvr says:

    There seems to be the idea that all "sacrifice" is equal. Every little bit matters if you don’t have much. But people seem to think it is too much when those in the 30+% tax bracket can only can deduct 28% of what they give to charity (to reference a later question). Or at least reporters seem to think that.

  4. 4
    figgylu says:

    Chuck makes me sad. He was fairly decent during the election…now, so sad. What a dumb question. How much did I want Obama to say "uhh, well the middle class are sacrificing their homes and jobs right now, the poor are sacrificing their ability to get food from food banks and pay their rent and the great sacrifice by the wealthy of putting off their purchases of Sub-Zero refrigerators has diminished the supply of appliance boxes for housing"

    A girl can dream.

  5. 5
    nylund says:

    Not to mention that from an economic point of view, pushing people to cut back could cause "a paradox of thrift".

    In short, if everyone cuts back on spending, the companies have to cut back on production, which means less need for workers, which leads to people working/earning less. These people then spend even less so companies cut back more, and so on and so forth causing a vicious downward spiral.

    In short, the last thing you want to do during a recession is to tell people to cut back on their economic activity.

    Chuck Todd officially fails econ 101.

  6. 6
    Betsy says:

    That question pissed me off, as did the stupid dude who kept pestering Obama about why he didn’t express his anger DAYS EARLIER LIKE ANDREW CUOMO? HUH? HUH?
    But Obama handled it well and made him look like a fool, so then I felt better.

  7. 7
    MikeJ says:

    Don’t say there’s nothing to do in the doldrums. It’s just not true. /chucktodd

  8. 8
    Betsy says:

    Oh ha and if I’d read the below post before I commented on the Cuomo thing, I would have seen that John Cole beat me to it. Oops.

  9. 9
    SpotWeld says:

    They’re like lawyers.
    They only ask questions they pretty much already know the answers to.

  10. 10

    Chuck Todd made a big deal of asking what you’d ask the POTUS and this was the best he could do? I mostly like Todd but that was about as stupid a question as I’ve heard. I do mean stupid, like dumbassedly stupid. WTF sacrifice? I’m dry, nada, busted, broke – so you want what, Chuck?

  11. 11
    Kyle says:

    This is the same puppy press that clapped like trained seals when Chimp’s response to 9/11 was "everybody keep shopping".

  12. 12
    Davis X. Machina says:

    Todd was angling for a commitment by Obama to filetting Social Security. That’s the ‘sacrifice’ the Borg is jonesing for.

  13. 13
    ImJohnGalt says:

    I don’t get it.

    First, he compared an actual war (where only a few are asked to sacrifice by risking their lives) to an economic crisis which affects (pretty much) the entire country.

    Now, you may recall that because only a few were being asked to sacrifice in the actual war, many people thought it wouldn’t be too much to ask non-military people to, you know, help pay for the war by paying a bit more in tax. This was widely seen as a modest "sacrifice" in no way on the order of what was being asked of our troops, but helpful nonetheless. Such people were derided as dirty fucking hippies, and no such request ever came.

    This economic crisis (which, you recall, was compared to the war) affects pretty much everyone, but those hardest hit in terms of being able to eat and shelter themselves and their families seem to be sacrificing an awful lot as it is. The sacrifice now being asked is of the very wealthy, who are only asked to give up a few percent of their annual income so that others might actually get healthcare and the opportunity to work again on stimulus projects.

    So, why isn’t Obama asking for more sacrifice? Because after all, the war and the economic crisis demand exactly the same solutions and sacrifices of everyone.

    The question practically demanded to be asked, amirite?

    [headdesk]

  14. 14
    TheOfficialHatOnMyCat says:

    Todd and Obama met before the presser. Obama says, sup homey, I need a Q that I can hit outta the park. Something kinda provocative, but a hanging curve ball, just sits there on the middle of the plate and says bust me in the ass, and I swing and ten minutes later they still don’t think it has come back down yet.

    Todd says, for my brotha, One, I will make a mistake in your wheelhouse and you can knock it into the next state.

    They fist bumped, and the game was on.

    later ….

    Todd throws, and there’s a long drive to left center field, I think!

    Oooooooh, baby!

  15. 15
    PanAmerican says:

    If one subscribes to the notion that these flunkies serve the interests of the corporate media…

    Then corporate media needs better water carriers.

    They can’t move fast enough to flush these boobs. They’ll hang themselves with the stupid and further legitimize non-traditional media types.

  16. 16
    slaney black says:

    Chuckie: If I want to know how 50+ year old Presbyterians in Pinellas County are gonna vote, I’ll ask you.

    If I want to know why Nancy Pelosi’s approval rating is up among college-educated quadripalegics in Michigan’s Upper Peninsula, I’ll ask you.

    If I want to know why Hispanics in Yazoo City are splitting the ticket between the Republican candidate for state agriculture commissioner and the Green party candidate for dog catcher, I’ll f***ing ask you.

    Otherwise, sit down.

  17. 17
    DougJ says:

    Testing.

  18. 18
    Brachiator says:

    Look for the “sacrifice” meme to become even stronger now that we’re in a recession ….

    I kept waiting for Obama to tell Todd that a metaphor about a problem (the economic crisis as a war) is not the same thing as a complete understanding of a complex problem. Or shorter, "Chuck, are you a fool?"

    Consumption in a market economically is almost always a positive-sum exchange…

    People who want to talk about the economy in these terms lack common sense. If people see that their wages are stagnant, if workers lose their jobs or fear losing their jobs because they see people all around them being kicked to the curb, then they are not going to spend (or, if you prefer, consume). I get so tired of pundits who talk about the economy as some kind of abstract mechanical market in which there is "credit" and "spending" (or a lack of spending), but who are unable to grasp the simple reality that if wages are driven down and jobs evaporate, the economy evaporates, too. And you can toss onto the garbage heap of stoopidity progressives who whine about a distribution of wealth and who have no comprehension of the importance of a dynamic economy in which people can earn money, and produce goods and services.

  19. 19
    MikeJ says:

    Testing.

    Argh! I didn’t study! And I’m naked!

  20. 20
    TheOfficialHatOnMyCat says:

    @MikeJ:

    BOB called and wants you to send a picture.

  21. 21
    [delurk]...[/delurk] says:

    I can’t make myself think it’s just economic ignorance that’s driving this "sacrifice" meme. Personally, I think it’s a very well-thought-out strategy to ensure that the depression continues until election day, 2012.

    No one can possibly think that encouraging people not to spend in a deflationary crisis of confidence like we have now is the way forward. There are ulterior motives at work.

  22. 22
    MikeJ says:

    That guy who talks about nothing but pie?

  23. 23
    TheOfficialHatOnMyCat says:

    @MikeJ:

    That and railroad electrification.

  24. 24
    Brian J says:

    Hasn’t he already called for some sacrifice from the more well off in society by either strongly hinting or directly stating he’s going to raise their taxes in a few years more than a few times since he’s become president? Didn’t he say something very similar during the two years he ran for the nomination and then as he was running for president?

    If you’re looking for something more specifically relating to dealing with the problems in the housing market or in the financial sector, haven’t we been called on to sacrifice something–our tax dollars, possibly for many years–by subsidizing institution and investors?

    The problem with Todd’s metaphor, of course, is that we aren’t fighting a war against an enemy or some foreign power. If you want to classify this as a war at all, it’s more like a civil war, where there are two groups in the same country going at it. But in the end, the comparison is really flawed. It’s hard to say why in a succinct way, but it really doesn’t work in a literal way.

  25. 25
    passerby says:

    @figgylu:

    What a dumb question. How much did I want Obama to say "uhh, well the middle class are sacrificing their homes and jobs right now, the poor are sacrificing their ability to get food from food banks and pay their rent and the great sacrifice by the wealthy of putting off their purchases of Sub-Zero refrigerators has diminished the supply of appliance boxes for housing"

    Well said. When he asked the question, this is exactly what came to my mind and I too wished Obama would’ve said this because this is what is obvious: the middle class are sacrificing their homes and jobs right now…

    When I re-watched DougJ’s video clip I thought, man, this question is down right stupid. Are these "press" folk really this obtuse? and out of touch?

    Wow just wow.

  26. 26
    Will Danz says:

    Obama: nice comeback to Chuck "Gingerballs" Todd.

  27. 27
    Martin says:

    In short, if everyone cuts back on spending, the companies have to cut back on production, which means less need for workers, which leads to people working/earning less. These people then spend even less so companies cut back more, and so on and so forth causing a vicious downward spiral.

    That works fine right up to the point that you start borrowing. After that, you’re exchanging between 10% and 30% of each dollar that you convert to spending. More and more money flows to bankers rather than to manufacturing and services.

    In case you hadn’t noticed, we’ve had at MOST a 0% savings rate the last few years, dipping negative from time to time.

    What’d work better over the long term is to crank up minimum wage, get that sector of the population to actually be consumers of some degree which will serve as something of a tax on consumption for everyone in the middle class up. The flatter the income distribution, the flatter the spending and tax distribution.

  28. 28
    KCinDC says:

    This is just insane. After starting a war (a war Republicans claim is more important than World War II), the Republican president doesn’t ask for Americans to sacrifice but instead calls for them to go shopping. The media lap it up.

    On the other hand, in the middle of the greatest economic crisis in decades, when cutting back on spending hurts the country (even if it is the only real choice for many households), the media whine that the Democratic president isn’t asking for more sacrifice from the people losing their jobs and homes.

  29. 29
    JenJen says:

    @figgylu: During his question, I was thinking, "Chuck, I kinda feel like I got drafted into this war, to be honest with you. I’m, like, sacrificing, I really am."

    And then POTUS set him straight. It was one of his better responses tonight; he seems to have much more of a grip on what is actually happening across the country than Chuck Todd does.

    Which is too bad, because as I said in the last thread, I liked Todd an awful lot back when he was setting the NBC talking heads straight, night after night after night.

    I can’t begin for one moment to try and understand what kind of answer Todd was looking for here. Anyone?

  30. 30
    figgylu says:

    @passerby:

    Thanks, that question just really astonished me. Aren’t we ALL sacrificing right now? Somehow because it wasn’t a "choice" its less noble and less desperate. People are suffering horribly right now and the media couldn’t give a shit. I’m planning to dump my Newsweek subscription and get one for Ebony. Apparently they still have journalists at that publication.

  31. 31
    Corner Stone says:

    @MikeJ
    Motherfucking win.

  32. 32
    figgylu says:

    @JenJen:

    Exactly, because we were drafted our sacrifices are less. Right.

    by the way, I’m a JenJen too, my family still calls me that…and I’m kinda old now ;))

  33. 33
    passerby says:

    @Betsy:

    But Obama handled it well and made him look like a fool, so then I felt better.

    And IIRC, didn’t the audience react with a chuckle? thereby pantsing the poor bastard who asked it? In fact, Obama ignored the question causing the asker to repeat it–in all of its glorious stupidity–then get zinged. He’d have been better off to just let it go.

  34. 34
    Corner Stone says:

    And OT – you may not like bluegrass but you gotsta respect the badassness of a banjo picking fool.
    That is all.

  35. 35
    Joel says:

    Question for Chuck Todd:

    What personal sacrifices are you planning? Specifically, I’m hoping (for your sake) that you’re going to sacrifice that shag that’s growing off your face.

  36. 36
    passerby says:

    @JenJen:

    I can’t begin for one moment to try and understand what kind of answer Todd was looking for here. Anyone?

    I’m inclined to agree with this observation:

    From Davis X. Machina @12

    Todd was angling for a commitment by Obama to filetting Social Security. That’s the ‘sacrifice’ the Borg is jonesing for.

  37. 37
    JenJen says:

    @figgylu: To me, it was more tone-deaf than anything else. Comparing the days after 9/11/01 to the days after 9/15/08 just doesn’t make any sense. The situations are not remotely similar, the political climate is different, and asking a sitting President to atone for a former President’s perceived failure to rally public sacrifice? I mean, WTF?

    What answer was Todd seeking? What kind of sacrifice, and from whom, was he talking about? Is this one of those "Hey send me your ideas on Twitter" winners or something?

  38. 38
    MikeJ says:

    I can’t begin for one moment to try and understand what kind of answer Todd was looking for here. Anyone?

    OMG! Communist Obama demands you give up (whatever) for the good of the state!!!!

  39. 39
    Clio says:

    @Betsy:

    He so cut that bastard off at the knees. It was awesome to see. It is so hilarious watching establishment Washington try to deal with him and the fact that he’s governing instead of playing footsie.

  40. 40
    Brachiator says:

    @Martin:

    What’d work better over the long term is to crank up minimum wage, get that sector of the population to actually be consumers of some degree which will serve as something of a tax on consumption for everyone in the middle class up.

    If there are no jobs (or even massively fewer jobs), cranking up the minimum wage is meaningless: 8, 9, 10 or even $15 multiplied by zero is still zero. And you will have, you already have, skilled workers and retirees competing for minimum wage jobs because their standard of living has declined as they have been thrown out of work or seen their retirement savings disappear. Note that I am not against increasing the minimum wage, but note that an increase is irrelevant to your proposition.

    The flatter the income distribution, the flatter the spending and tax distribution.

    Huh? I don’t think this is true, but even if it were true, so what? Perhaps you think that if there is a flatter income distribution, then a wider segment of the population has income, but this is not necessarily the case. And you seem to want income distribution to be independent of employment and wages.

  41. 41
    Joel says:

    For the record, Chuck Todd is hilarious in Flight of the Conchords.

  42. 42
    passerby says:

    24
    Mar
    Sacrifice, bitches

    by DougJ

    A few weeks ago we wrote:

    Look for the “sacrifice” meme to become even stronger now that we’re in a recession (after all, everyone knows that if consumers would just stop buying stuff, the economy would be fine).

    BTW DougJ, gold star. You saw this coming a mile away. Your original post on the sacrifice meme is date Jan 20. This issue has been lurking in the background waiting to hatch. I think Chuck T lacked the courage to be more direct in asking about SS and Medicare.

    Too nuanced Chuck. Made you look dumb hon.

  43. 43
    MikeJ says:

    For the record, Chuck Todd is hilarious in Flight of the Conchords.

    I’m glad I’m not the only one who thought of that. BTW, while I’d love to see more eps of FotC, Sunday night’s was possibly the very best ending of the series we could hope for.

  44. 44
    GSD says:

    Is there an office where formerly seemingly intelligent people like Chuck Todd go to have their brains scooped out with a melon baller once the graduate to the upper ranks of the Twitteratti?

    -GSD

  45. 45
    figgylu says:

    @JenJen:

    Of course it was. I think passerby is right in quoting Davis X. Machina. The "middle class" which the Chuck Todd’s of the world seem to think is everyone he knows should really ease up on the purchases of the Beemers. Everyone he doesn’t know needs to really ease up on the bitching about healthcare, education, gas prices and generally stop whinging. FUN. I would give a great deal of money to be Chuck Todd, and BTW, he’s not the Flight of the Chonchords guy he’s totally Dante from the Quik Stop. He’s a man of the people. Jeez

  46. 46
    wilfred says:

    Consume what? Any increase in consumption now will only help reduce the staggering amounts of surplus production amassed over the past few years. That isn’t going to put anybody back to work, nor will it until most, if not all, of that surplus production is sold off. Produce-consume-stall: that’s capitalism. Listen: boom and bust is capitalism.

    It really is remarkable to see how complete the change has been from leeriness about credit to patriotic dependence on it. Whatever happened to "neither borrower nor lender be"? Economic recovery depends on American citizens going further and further into debt. That is fucking unbelievable.

    The Matrix as Marxist allegory actually makes sense these days.

  47. 47
    mr. whipple says:

    @slaney black:

    Chuckie: If I want to know how 50+ year old Presbyterians in Pinellas County are gonna vote, I’ll ask you.

    I dunno if I would even ask that. I had a series of email exchanges with him just before the election wherein he kept claiming that PA was gonna be very, very close for Obama.

  48. 48
    Ninerdave says:

    Oh come on Doug,

    He’s a fantastic analysis guy. You know it and I know it. Maybe he won’t be the best White House reporter, maybe he’ll be the next Helen Thomas. You don’t know yet. He’s been at the gig for what, three months?

    I have to say the Balloon-Juice beat up on the press is starting to get tiresome.

    Do they deserve it? A lot do. Does it need to be every fucking post on this blog? No.

  49. 49
    Ninerdave says:

    rant on

    and another thing. now admittedly I was working during the presser and had steaming on one of my computers. I was only half listening, but I thought the questions by and large were relevant. No body asked him about Leno or other trivial shit that’s been brought up in the last couple of weeks. I thought his answers were well thought out and articulated. With that in mind….

    President Obama smacked all the Drudgites in the mouth. Fucking Ed Henry had already written down his question so even though President Obama had already thoroughly answered about the deficit TWICE he still asked again. What a bunch of fucking losers. Major Garrett, Ed Henry, Chip all gets the gas face tonight. I was just hoping JMart would get his ass handed to him as well but Politico sent the other cat instead. I do have a question though, why doesn’t that dickhead Michael Scherer ever ask a question?

    They better stick to trying to haggle Robert Gibbs. Obama is WAY out of their league.

    WTF does that even mean?

    Cole:

    CNN now has John King describing a word cloud of the press conference as part of their post press conference “analysis.” I wish I was kidding. These guys are in so far over their head with Obama and they don’t even realize it. I wonder if they will bring back the “human hologram.”

    What the fuck does that have to do with the press conference? Maybe I’m reading it wrong in light of the comment above, but that’s just CNN trying to be "hip". Ridiculous? Yes. Anything to do with reporting at the presser? No.

    Does anyone out side of political geeks pay attention to cable news, blogs or other? No.

    Oh, God, the gormless race question. "You’re black. Do you govern like a blackitty-black-black black man, or do you feel as if people treat you differently because you’re a blackitty-black-black black man? Not counting this question, Your Blackness, of course."

    And if you think race isn’t still an issue, and Obama isn’t center to that discussion that no one wants to have, come move to Oakland, CA. Where some white cops slaughtered a black man on New Years day and a black guy slaughtered four white cops this weekend. Race and everything surrounding it is completely destroying my city. Go listen to any of the KGO broadcasts from the talk shows this week
    /rant off

  50. 50
    BDeevDad says:

    You all are missing the point. Todd thinks we all should be taking on more debt, by shopping. The media are freaked that people are actually saving more.

    Personal savings rose $128.7 billion in January to $545.5 billion. The personal savings rate, expressed as a percentage of disposable personal income, jumped to 5% from 3.9% in December. At 5%, the savings rate is at a 14-year high.

  51. 51
    TenguPhule says:

    Look for the “sacrifice” meme to become even stronger now that we’re in a recession (after all, everyone knows that if consumers would just stop buying stuff, the economy would be fine).

    I think we need to return to Aztec sacrificing.

    We can start with Dick Cheney and work our way down.

  52. 52

    The particularly distressing thing about Todd now is that he wasn’t just good during the election campaign; he was good with numbers. Given the prevalence of innumeracy among the press corps, that means that there is a very real niche for him to fill. He seems to be avoiding doing that. A do wonder how much of it is Todd himself, and how much is him doing what his boss tells him to do.

  53. 53
    wilfred says:

    @BDeevDad:

    Multinational capitalism depends on constant consumption. Look, why do China and Japan continue to buy so much American debt? It’s the price they pay for a) free trade with the US and b) keeping their own labor force engaged in production. If American consumers stop buying who will pick up the slack? If nobody does, then a lot of people will be out of a job: surplus production = surplus labor. The Chinese will be dealing with a 100 million pissed off workers and won’t be so keen to buy up the newly minted 1 trillion dollars in American mega-debt.

    Now India is producing the Nano, the world’s cheapest car, giving their own workers a chance to spend some of the cash they’ve made exporting to the industrialized world. Only the Indians are breaking the pattern by not buying the surplus auto production of the West.

    It’s the death spiral of capitalism – the only way to avoid being killed is to committ suicide – thus more debt and more consumption.

  54. 54
    figgylu says:

    ====
    \*v*/
    \o/
    #

    oohhh no, I think I just asked the question that’s going to send me back to the minors.

    chuck t.

  55. 55
    Atanarjuat says:

    The sacrifice question was actually a good one, but Obama decided to hit back with pretentious snark (as if a guy who made several million dollars for writing a book really cares who lost their job — Obama got his).

    Predictably, hive-minded leftists are cheering all the presidential dodging and weaving while they clap their flippers raw with orgasmic glee. Just read the worshipful comments in the prior "Press Conference Open Thread" for abundant evidence of this.

    -A

  56. 56
    El Cid says:

    @Davis X. Machina:

    Todd was angling for a commitment by Obama to filetting Social Security. That’s the ‘sacrifice’ the Borg is jonesing for.

    Yes. That’s it.

    Can someone please invent one of those Star Trek instant translators to translate Beltway / Punditariat Speak into English?

    Chuck Todd: "So Mr. President, when are you going to start hacking away at Social Security benefits and Medicare for those greedy old and sick people? Huh? If we’re having a tough time, why aren’t you going out and goring those liberal oxen, huh, like a lot of us talky-talk types want you to do?"
    What’s funny, though, is that I’m less afraid that Social Security will be privatized so that Wall Street can get its hands on all that cash, ever since Wall Street figured out it can just get the money handed to it directly without having to go that route.

  57. 57
    Karmakin says:

    The "sacrifice" idea is a good one.

    Obama should be encouraging employers to sacrifice by holding the line on employment, or even increasing employment during lean times in order to dull and shorten the effects of the recession. And should be encouraging shareholders to support this, as a bit of sacrifice now will result in more profits in the future.

  58. 58
    Xenos says:

    A call for volunteerism and support for local charities could have been a good response here. Obama seemed to want to clearly show himself in control of the press conference, though.

    The best moment was O’s discussion of the cut in the rate for charitable deductions. Reframed the issue as one of basic fairness, and moved on.

  59. 59
    kay says:

    I thought the stem cell question was the best. The reporter posing the question was completely sincere, and that question goes to how Obama makes decisions.
    In my opinion, that’s what to look at: not individual good or bad decisions (he’s going to make hundreds, some will suck, some have already sucked) but how he gets there.
    I’m satisfied with Obama’s process, as laid out in the answer to that question. It’s broad.
    I always felt Bush’s decision-making metric was way too personal and narrow. I resented being taken along for the ride while former President Bush pursued what I saw as his erratic individual objectives and specific moral sense.

  60. 60
    mistermix says:

    @Xenos:

    A call for volunteerism and support for local charities could have been a good response here.

    Hmm, perhaps you were watching a different press conference. Here’s part of Obama’s answer to Chuckles:

    What I’m looking from the American people to do is that they are going to be doing what they’ve always done, which is working hard, looking after their families, making sure that, despite the economic hard times, that they’re still contributing to their community, that they’re still participating in volunteer activities, that they are paying attention to the debates that are going on in Washington.

  61. 61
    Xenos says:

    OK, that is what I get for multitasking. I completely missed that part of the response. Thanks.

  62. 62
    Redhand says:

    I was amazed at how mind-bendingly stupid this question was. Why didn’t he ask what level of "sacrifice" the Pres. was expecting of schmucks like Citi’s Vikram Pandit and BoA’s Ken Lewis?

  63. 63
    Napoleon says:

    @Brian J:

    Hasn’t he already called for some sacrifice from the more well off in society by either strongly hinting or directly stating he’s going to raise their taxes in a few years more than a few times since he’s become president?

    Maybe, but from radio reports this morning it sounds like Sen. Kent Conrad is going to push to have Obama’s tax cuts for the middle class which were just put into place expire in a year or so. So you already have them trying to head off tax increases on the rich by increasing taxes on poorer people, and you just know that if that at that point Obama suggest increasing taxes on the rich Conrad is going to tell him it is no longer needed.

  64. 64
    Davis X. Machina says:

    Sacrifice is for the little people.

    I heard on NPR this morning that the Democratic Senate leadership, in a move to bring down the deficit, is thinking of limiting Obama’s middle-class tax cut to one year.

    1.) Worrying about deficits right now is like worrying about the cholesterol number of an accident victim. It’s not not a problem, it’s just not the biggest problem now.

    2.) It’s nice to see that there are issues that bring people together from both parties, across the aisle, like killing off any attempts to crank some progressivity into the tax code.

  65. 65
    El Cid says:

    Nouriel Roubini clarifies his view on the Geithner plan. Several reports have quoted him as basically approving it.

    However, in his clarification, Roubini emphasizes that Geithner’s plan only works for the toxic assets of banks which are solvent. Krugman, for his part, is focusing precisely on that portion of the banking system he believes to be fundamentally insolvent and unsound. So there doesn’t appear to be any disagreement, yet it will likely be portrayed as such.

    Again, Roubini concludes that the Geithner plan works for solvent banks while insolvent banks must be nationalized.

    So to clarify my viewpoint: I see the Geithner plan as being relevant only to banks that are solvent.

    For those that are found — after stress tests — to be insolvent I see as the proper solution — as I have widely written — to nationalize them and thus clean them up to prepare them for re-privatization.

    The stress test should do a triage between banks that are illiquid and undercapitalized but solvent given the provision of capital and liquidity and those that, under a reasonable stress scenario are effectively insolvent. Those that are insolvent should be nationalized.

    Those that are solvent will still have many toxic assets that need to be disposed of; and the Geithner plan provides a way to properly dispose of the toxic assets of solvent banks.

    So my partial support of the Geithner plan – with all the appropriate caveats regarding forcing banks to sell toxic assets and accepting the results of the auctions – is consistent with the complementary idea of nationalizing the insolvent financial institutions.

    The bad assets of insolvent banks that are nationalized could be separated from the good assets and then worked out by the government (but the government is not very good in that business); or they could be sold to private investors through an auction mechanism along the lines of the Geithner plan; or they could be sold – together with the good assets – to the investors purchasing a privatized bank that was temporarily privatized (along the lines of the Indy Mac deal where the investors purchasing the bank received a government guarantee on the bad assets after a first loss).

    The toxic assets of the solvent banks still need to be disposed of as no private investor will participate in the recapitalization of solvent banks that are still full of bad assets.

    Of the four available options for disposing of the toxic assets of the of solvent banks (the government purchashing them in a reverse auction; keeping them on the banks’ book with a guarantee after a first loss (the approach talken with Citi and Bank of America); selling them to private investors with a guarantee after a first loss; or finally the Geithner plan) the Geithner plan provides a solution that is likely to be superior to the other three.

    If the government were to buy these assets it would be the only bidder in a reverse auction and price revelation problem would be severe.

    Keeping them on the banks’ books with a gurantee after a first loss has been a disaster – as the experience with Citi and Bank of America shows.

    Selling them to private investors with a guarantee after first loss would be very non-transparent in the price revelation objective.

    So, having private investors bidding for the toxic assets – as in the Geithner plan – ensure a better price revelation that would be impossible in a reverse auction where the government is the only bidder. Also note the the idea – supported by many including myself – of converting some of the unsecured debt into equity to recapitalize banks – works for insolvent bank that go through a receivership proces; it cannot be applied to solvent banks that need recapitalization.

    In conclusion the Geithner plan is not an alternative to nationalization: insolvent banks should be nationalized and the Geithner plan should not apply to them. But solvent banks still need to have their toxic assets disposed of; and for this banks the Geithner plan provides a solution that – all in all – is better than the alternative.

    Those who dont like the Geithner plan on the basis that they prefer nationalization are right – as i agree – that the insolvent banks should be nationalized. But they usually don’t give an explanation of how they would dispose of the toxic assets of solvent banks. They seem not to like the Geithner plan because it would provide a subsidy to the investors. But ensuring participation of private investors in the risk and in the price revelation is worth that subsidy.

    Otherwise those who criticize the Geithner plan as a solution to the toxic assets of solvent banks should come up with an alternative that works and that is less costly to the government than the Geithner plan.

    Maybe among the people with whom Roubini has discussions and dialogue it has been common to make this distinction between solvent & insolvent institutions. But as far as I can see, Geithner’s plan has been presented publicly as a way of addressing both. And that is what frightened me.

    I don’t think a lot of people just go nuts because some government subsidy might be involved. Where a lot of people, like myself, go ‘nuts’ or ‘populist’ is when not only do subsidies go to undesirable parties but that it doesn’t seem to be addressing the major problem of institutions which give me nightmares of collapse.

  66. 66
    harlana pepper says:

    Obama: the sacrificial altar for newborns and virgins is out on the WH lawn. Next question.

  67. 67
    The Other Steve says:

    Am I drinking Kool-Aid, or is El Presidente Obama wiping the floors with these clowns?

    I listened to much of it on the radio, and it was just bad. The reporters I mean. Lousy questions.

  68. 68
    Aries M. says:

    Sacrifice? Prez Obama missed the most obvious response. He is asking people to educate themselves about this crisis and think critically about what we need to do next.

    Gone are the days when Teh Decider funneled pre-approved facts to the public on a need-to-know. Obama is asking people to face up to the big scary truth and think through the options. He’s asking people to realize this is not going to get resolved over night and to understand that there are no magic buttons to press. He is asking people to weigh for themselves, "Is the cost of doing nothing now greater than the cost of doing something?"

    It’s a new era.

  69. 69
    Ash Can says:

    OK, I didn’t watch the press conference or any of its aftermath, but I read all the live blogging and commentary here and at GOS, watched a couple of the video highlights, and slept on it. Now, over my morning coffee, I find I can’t really pile on Chuck Todd, because there’s just something weird about a TV reporter who distinguished himself during the campaign and election all of a sudden getting vapor lock when he’s called on at a WH press conference. It makes a lot of sense if, as has been suggested here, he was actually getting at the Social Security issue. But why beat around the bush this way? And this is after soliciting questions from the public in the days prior?

    And from the pattern of the commentary I’ve read, he wasn’t the only one. For example, I read comments somewhere that Ann Compton seemed "flustered" when she was called upon. She’s been reporting for years; what’s up with that?

    I get the impression that there’s one of two things going on behind the scenes, or maybe both at once. First, I’m wondering about these reporters working with this admin vs. the last one. The way Bush was insulated, with his hand-picked audiences etc., I can clearly see reporters being concerned about having their access to the prez and other admin sources limited, either implicitly or explicitly, if their questioning got a little too pointed. Maybe there’s some gun-shyness going on here, and they simply haven’t acclamated to an admin that’s telling them, "No, really, bring it on. We can handle it." (Seeing Rahmbo standing off to the side stifling grins probably doesn’t help — I keed, I keed.)

    Second, I’m wondering how much latitude these reporters are actually given with their questioning. The idea of their bosses making them toe a party line and forcing them to repeat Republican talking points is too tinfoil-hat for my taste. However, the idea of those bosses saying, "No, that question’s too technical; ask this instead, this is what will sell" isn’t. Then it becomes an issue of, "How can I ask what I think is a good question and still keep my boss happy?" In other words, when the cameras are on them, they’re performing a high wire act (that no one but they and their bosses can see), and the question ends up mangled by the process.

    Just my $0.02 worth of trying to make sense out of some stuff that, in hindsight, flat-out doesn’t.

  70. 70
    The Moar You Know says:

    OT but still of considerable interest: FedEx decides to point a gun at America’s head over card check.

  71. 71
    Napoleon says:

    @The Moar You Know:

    I don’t think their issue is card check, but a seperate labor law issue. Regardless it is still blackmail.

  72. 72
    ksmiami says:

    Maybe we could ask Chuckie to sacrifice by sparing the audience of his stupid, economically-tone deaf questions

  73. 73
    Eric S. says:

    Man, is it just me, or does Chuck Todd look like Murray from Flight of the Concords?

  74. 74
    NonyNony says:

    @Ash Can:

    However, the idea of those bosses saying, "No, that question’s too technical; ask this instead, this is what will sell" isn’t.

    I dunno – maybe. OTOH, I tend to think of the Peter Principle when it comes to positions like this. It doesn’t surprise me that a bunch of them may be total tools – just because you’re good at your last job doesn’t mean that you’ll be good at a job that is slightly harder than your last job. (And you wouldn’t have noticed it so much with the last president because, frankly, any question harder than "what did you have for breakfast this morning" was considered a "tough question" or even a "gotcha" moment. With Obama they have to be sharper, and most of them probably aren’t up to the task.)

    As for the specific example of Chuck Todd – I don’t recall seeing him ever conducting an interview, or asking anyone questions during the election. I just recall him being the guy that would run down the facts and explain things coherently. That’s a different skillset than what he’s doing right now. It wouldn’t surprise me in the least if Todd just isn’t that good at being the guy who asks questions in a press conference because that’s not his strength as a journalist. (I’d also bet that this is just a stepping stone for him to get into an anchor position or a moderator on a Sunday show position anyway. So he should work on his interviewing skills, but I don’t expect him to get much better with the "asking a question in a press conference" thing because, unlike Helen Thomas, I doubt he sees a lifetime role for himself in the White House press corps.)

  75. 75
    georgia pig says:

    @El Cid:
    My guess is they’re working around to potential nationalization of the bad ones by preparing a foundation for it. They need more clarity on that to provide a mandate for nationalization and a basis for implementing it. Just because you come to the conclusion that some banks need to be nationalized, you still have to figure out which ones. Otherwise they stand the risk of being accused of arbitrarily choosing winners and losers and, BTW, why nationalize a bank that doesn’t need to be nationalized? It’s pretty hard to definitively say whether a bank is truly insolvent when so many of their assets are thinly traded. As Roubini points out, the Geithner plan is about thickening the trade for at least some of them. If your junk doesn’t sell under the favorable terms in the Geithner plan, you need to be put out of your misery. If the Geithner plan "works", then there really aren’t any really bad ones, so, yes, it ends up being an alternative to nationalization.

    This is Obama’s gradualism and "persistence" on open display. That press conference was fine because Obama can handle that kind of shit with ease but, jeez, a lot of those reporters really are a waste of space. What do they pay guys like Ed Henry? It’s too much, whatever it is. I had to turn off CNN’s after-speech yakking because of his "I caught him in an inconsistency about when he was mad about AIG!." What a pissant. CNN is godawful these days.

  76. 76
    someguy says:

    Here’s a good start on the kind of sacrifice people need to make, from an AIG exec:

    After 12 months of hard work dismantling the company — during which A.I.G. reassured us many times we would be rewarded in March 2009 — we in the financial products unit have been betrayed by A.I.G. and are being unfairly persecuted by elected officials. In response to this, I will now leave the company and donate my entire post-tax retention payment to those suffering from the global economic downturn. My intent is to keep none of the money myself.

    Shorter DeSantis: Waaaah. Waaaah. Waaaaaah. Gwone-ups took my toys and now I’m mad. Waaaah.

    I hope Cuomo and Blumenthal seize the rich bastard’s house and his bank accounts before he moves them off shore. This guy’s example should be used to pressure the other AIG execs into giving back their bonuses too. Name and Shame is right.

  77. 77
    El Cid says:

    @someguy: I’ve worked pretty hard the past 12 months too, often without pay, and I have zero life savings expectations from it. I’m just trying to survive, help my company to survive, and help it help my coworkers to survive.

  78. 78
    Paul L. says:

    Why are you and Matt against Sacrifice?
    Hasn’t Al Gore and the other climate alarmists (Balloon Juice Favorite James Hanson) been calling for Sacrifice to combat Anthropogenic global warmingclimate change?
    Selfish Gaia destroyers.

    The Power is Yours

  79. 79
    Svensker says:

    @Paul L.:

    Why are you and Matt against Sacrifice?
    Hasn’t Haven’t Al Gore (who is fat) and the other climate alarmists (Balloon Juice Favorite James Hanson) (scientists who aren’t as smart as my weatherman) been calling for Sacrifice to combat Anthropogenic global warmingclimate change?

    Fixed for grammar and accuracy.

    Are you German? Why do you insist on capitalizing nouns? Maybe you’re only half-German since you only capitalize half of the nouns? It must be confusing being you!

    (I predict that WordPress will screw up all my strike-thrus.)

    I WIN! It didn’t do any of the the strikeouts. Imagine them, please.

  80. 80
    someguy says:

    El Cid – you work at AIG or some Fortune 500 company? I have no sympathy for anybody who works for a company that holds us all hostage, and these people can’t be made destitute fast enough for my taste. I don’t see how pushing AIG and the Wall Street bigs could possibly hurt you. It’s really only the very wealthy who are going to be asked to sacrifice, and like DeSantis points out in that article, he’s got enough money to do just fine even if he doesn’t get paid. If he’s got that much, he really needs to be sharing it with the less fortunate. Shit, my state and local taxes are about to jump a bunch, and I strongly suspect that even though I’m well below the magical $250k household income mark, maybe somewhere below half of that if the wife & I have a really good year, we’ll lose plenty of deductions and have to pay a lot more this year. Whatever, I can handle it, we can get more mileage out of the kids’ sneakers, eat beans more often, whatever, sell the second car and I get up earlier to take the bus to work. My 401(k) is destroyed, there goes retiring at 62, but that milk is spilled. My parents had cut way back in the hard times when I was a kid, and the parents had it much tougher. No sense bitching about it, you heard what the man said last night, time for some sacrifices for the common good. It may be time to retool the economy, put the health care and financial industries under government supervision, and maybe a bunch of other industries that have been raping us like the energy and communications sectors (WorldCom, anybody?). All I know is that we tried the Republican way and it’s been a horrendous miserable failure, time to try the other way.

  81. 81
    Brachiator says:

    @Davis X. Machina:

    I heard on NPR this morning that the Democratic Senate leadership, in a move to bring down the deficit, is thinking of limiting Obama’s middle-class tax cut to one year.

    This is a bad sign, if true, and Obama needs to do all he can to oppose this. And I can’t see the Democratic Congress caring much about bringing down the deficit. This seems to be a dodge to push their own pet spending proposals.

    Worrying about deficits right now is like worrying about the cholesterol number of an accident victim. It’s not not a problem, it’s just not the biggest problem now.

    I tend to agree. However, it seems that once the government came up with their $750 billion rescue plan, they lost all sense of restraint, and don’t even flich at the idea of trillion dollar deficits.

  82. 82
    El Cid says:

    @someguy: You misunderstand.

    I work at a regular, non-elite job, and I have endured many sacrifices without either (a) helped (directly or indirectly) drive my corporation into debt many times its value over, or (b) insisted on free taxpayer money no strings attached to pay for my company and my wages / benefits / commissions etc.

    Therefore I do not find Mr. Dude’s letter of complaint compelling.

    I am sorry that he complains of losing money, but it is not the public’s responsibility to ensure that he would make money from past contracts. I too had other money coming to me, and if my company goes under, I will not be insisting that the taxpayer pay for my company and all income and benefits I once agreed to during a company’s profitable period.

    I will be fortunate to simply continue being paid and surviving.

  83. 83

    […] he continue to deny reality?   After all, in down economic times, we “all” have to make sacrifices.  Like, say, slashing social security, medicare and unemployment benefits.  Or raising taxes […]

  84. 84
    Paula says:

    OMFG chuk tod u r n asshole.

  85. 85
    MNPundit says:

    The extra paradox is that people OVER spent for so long, they can’t afford to NOT cut the spending. The only way for most people to spend more these days would be to go deeper into debt and asking them to do that is insane (as it was when Bush asked it).

    That’s why the government has to spend so soften the fall until people can afford to do so again. Sometimes government can also help people afford it faster as well.

  86. 86
    TenguPhule says:

    However, it seems that once the government came up with their $750 billion rescue plan, they lost all sense of restraint, and don’t even flich at the idea of trillion dollar deficits.

    We’ve already got them from Furher Bush.

    A trillion more won’t shit the bed any more at this point.

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