And this is surprising why?

From Matt Yglesias:

Under the circumstances, the Fed doesn’t get to just observe that the economic outlook is darkening. They are making it darker. It is true that central bankers aren’t wizards who can just make anything they want happen. The US economy faces real supply-side constraints.

So sometimes a central bankers needs to say “hey, we’re running up against real restraints so unless someone else does something to solve those problems we’re going to need tighter money and slower growth to head off inflation.” But that’s not what Bernanke is saying here. Nor is he offering a forecast. He’s stating a policy preference—namely a preference for a short-term slowdown in demand growth—and members of congress aren’t really challenging him on why that’s his preference. Maybe he really thinks that 8 percent unemployment is a small price to pay for cheap gasoline. Maybe he thinks Mitt Romney being elected president would be better for the long-term health of the country so he’s trying to help out. But whatever he thinks, it’s not that the economy is slowing down and then separately he’s considering what to do about it. Demand growth is slowing because he and his colleagues are refusing to stabilize it.

Matt jumps on this all the time, and yet he rarely mentions that, well, you know, Bernanke is a conservative Republican, and this is what they, you know, do. The guy was the Chairman of GWB’s Council of Economic Advisors, one of the key economic policy making positions in the White House. So, why would anyone be surprised that he prefers to see massive unemployment continue rather than allow a modest uptick in inflation. When has this NOT been the GOP position?

But here is the kicker. Obama had the opportunity to replace Bernanke, but instead he reappointed him in 2009.

Here’s the other kicker. The two biggest failings in the Obama Administration have been the management of the economy, which continues to be sluggish after four years, and the decision to massively expand the war in Afghanistan. The Afghanistan decision was shepherded by then Secretary of Defense Robert Gates… another Republican.

Giving the most important foreign policy post to a Republican is bad enough, entrusting the most important economic post to a Republican borders on madness. But there it is.

 

UPDATE: Fixed typos. Yeah, I suck. Sorry






120 replies
  1. 1
    IM says:

    I don’t think blaming Gates is fair.

  2. 2
    joes527 says:

    The popcorn is popping as I type!

  3. 3
    LittlePig says:

    Poor ol’ Caspar Milquetoast just can’t find it in his heart to tell Bernanke banksters they can’t run the place.

  4. 4
    JGabriel says:

    Bernard Finel @ Top:

    Obama has the opportunity to replace Bernanke, but instead he reappointed him in 2009.

    Minor typo alert, Bernard: Obama has should be Obama had.

  5. 5
    TooManyDans says:

    Minor typo alert? I like the thoughts this guy produces, but he might as well be Yglesias with the whole proofreading thing…

  6. 6
    Hill Dweller says:

    I agree Bernanke has been a disaster, but if you’ve read any of his papers, especially on Japan, he is failing to follow his own advice/policies.

    Furthermore, with both Geithner(especially) and Bernanke, the Obama admin, despite wanting a change, didn’t think they could get anyone else confirmed. It’s hard to overstate how devastating the Senate Republicans’ obstructionism has been to the recovery.

  7. 7
    General Stuck says:

    I agree with you on Bernanke, and also Obama hiring Geitner and Summers, though as it turned out, things could have been a lot worse, considering where we were at that time.

    I don’t agree with Gates. I don’t think Gates is anything like a war monger type. And the decision to expand the war in Afghanistan is all on Obama, and he said he would do just what he did. And now, having seen the situation from the catbird seat, went against the generals and set a date for withdrawal.

  8. 8
    RP says:

    It is true that central bankers aren’t wizards who can just make anything they want happen.

    So what can the fed do about it?

  9. 9
    JPL says:

    To me Geithner seemed reasonable because he knew where the bodies were buried.
    To me Bernanke seemed reasonable because he was a student of the Great Depression.
    BTW..I’m apparently an idiot but who will vote for the President because the downside is a country I don’t want to live in.

  10. 10
    NonyNony says:

    The Afghanistan decision was shepherded by then Secretary of Defense Robert Gates… another Republican.

    Obama campaigned on winding down the war in Iraq so that there would be forces available to ramp up the war in Afghanistan. He campaigned on sending troops into Pakistan if necessary to go after al Qaeda targets. Blaming Robert Gates for doing what Obama campaigned on doing seems … odd.

  11. 11
    schrodinger's cat says:

    The two biggest failing in the Obama Administration

    Failings not failing. Speaking of which is this place turning to FDL? Are we all firebaggers now?

  12. 12
    Yutsano says:

    So Republican automatically equals bad? Aren’t we dealing with that kind of tribalism with the teabaggers? I suppose Roy LaHood must really get your goat!

  13. 13
    Xantar says:

    The two biggest failing in the Obama Administration have been the management of the economy, which continued to be sluggish after four years,

    You lost me here. The economy wasn’t just Obama’s personal responsibility or even the responsibility of his whole administration. He would also have needed Congress to come along with his policies. And in point of fact, the economy was doing an OK recovery until the 2010 elections let the loons into the house.

    We have a pluralistic government. Obama is not totally helpless, but he is still just one component in the government machine.

  14. 14
    JGabriel says:

    @TooManyDans:

    Minor typo alert?

    You’re right, there are two more typos: “his prefers” and “he’s the other kicker”. Still, as someone prone to typos myself, I’m not the kind to be overly critical. Just point them out so the author can fix them, is my motto.

  15. 15
    Jeff Spender says:

    I’m with JPL on this one. On all three counts.

    I know–my opinion is shared by another so I get to be lazy because someone already spelled it out.

  16. 16
    El Cid says:

    Bernanke: ‘If only there were someone in charge of the Fed who might listen to me!’

  17. 17
    schrodinger's cat says:

    BTW the interests rates are hovering close to zero, what can Bernanke do? We need a fiscal stimulus, monetary policy is not going to help much if at all.

  18. 18
    BGinCHI says:

    Until I tune into MSNBC’s Lockup Raw and see a whole episode devoted to former banksters knocking each others’ kidneys out with sharpened spoons, I have no hope that things in finance are going to be anything but piracy.

  19. 19
    General Stuck says:

    @Yutsano:

    Plus we have own set of purity trolls on this blog, grading people, for being the right kind of liberal and democrat.

    This post seems more like the FNG probing the wire, to see what he’s up against. And I say that not in any negative sense. I might do the same. If I weren’t already one of the snakes in this pit.

  20. 20
    schrodinger's cat says:

    @Yutsano: Didn’t he say yesterday that he was a Republican before he saw the light? He does have the zeal of a convert.

  21. 21
    Jeff Spender says:

    @schrodinger’s cat:

    Well, with your name I had hoped you’d come up with a scenario in which Bernanke was both living and dead at once until we actually observed him, and then we find out he’s actually a turnip.

    There’s only so much a turnip can do.

  22. 22
    28 Percent says:

    So if we elect Democrats it doesn’t really make any difference because they just hand the keys to the castle over to Republicans anyway? This is heading dangerously into Ralph Nader territory, and we all know what happens when that mentality takes over. No matter how bad electing Democrats who govern like Republicans has turned out, electing Republicans who govern like unrestrained wildebeasts has been empirically worse.

  23. 23
    Hill Dweller says:

    The biggest drag on the economy during Obama’s term has been state/local(almost entirely in Republican states) austerity.

    As in past recessions, the federal government should have provided states the funding to close their budget gaps, but the wingnuts in congress have prevented that from happening. And even if funding had been provided, most of the wingnut governors would have made the teachers layoffs anyway, because the right wing wants to privatize the public education system.

  24. 24
    JGabriel says:

    I don’t know what exactly just got changed, but new comment format is nearly perfect. Thank you, John Cole and whoever else implemented it!

  25. 25
    me says:

    FYI, this post broke the page layout.

  26. 26
    clone12 says:

    Bernanke might be a Republican and he might be an inflation hawk, but to cast him as some sort of a hard money ideologue ignores teh fact that quantitative easing is not something you would do if you believe in fighting inflation at all cost.

  27. 27
    gene108 says:

    Bernanke was also Paul Krugman’s boss, while he was at Princeton and hired young Paul for the job.

    Just shows how deep Bernanke is entangled into subverting everything for the new conservative order. (/snark)

    *********************

    There are some things Bernanke could be doing better, but in the 2009, with such a lack of confidence and Bernanke actually stepping up and taking aggressive action, I can see wanting to keep him in place.

    Right now, there’s not a lot the Fed can do.

    The bigger problem lies on the fiscal side of things and that means Congress needs to push through new fiscal spending bills to boost the economy and that’s not happening.

  28. 28
    gian says:

    I wonder what secretary of state Clinton thinks of being a republican in the most important foreign policy post. Might come as a shock to her

  29. 29
    schrodinger's cat says:

    @Hill Dweller: Word. Not as sexy as blaming Obama though.

  30. 30
    ericblair says:

    I’m not near the pointy end of the DoD stick by any means, but I haven’t seen anything that would make me think that Gates has gone off the Obama reservation or any show of partisanship.

    With Helicopter Ben and the Fed, as far as monetary policy goes we’re pushing on a rope here and it’s fiscal policy (and therefore Congress) that needs to act. Congressional goopers are deliberately trying to sabotage the US economy to unseat Obama, which sounds like sedition to me, and until they get tossed out there’s only some stuff around the margins that the executive branch and the Fed can do.

  31. 31
    JGabriel says:

    @me:

    FYI, this post broke the page layout.

    Yep. Damn. I thought it an improvement to the commenting system.

    But you’re right. The page format is screwed up too.

  32. 32
    TooManyDans says:

    OK, let’s point them out.
    Missing “one” in the intended phrase “one of the.”
    Sentence that begins “So, why would” should end in a question mark.
    “his prefers” should be “he prefers.”
    “What has this NOT been the GOP position?” should start with “When.”
    “He’s the other kicker” should be “Here’s the other kicker.”
    “Obama has” should be “Obama had.”
    “two biggest failing” should be “two biggest failings.”
    “continued to be sluggish” should be “continues to be sluggish.”

    I’m not normally a nit, but this many errors in this short of a post makes it harder to read. And the other posts were the same way.

  33. 33
    schrodinger's cat says:

    @me: Is Tunch sitting on the servers?

  34. 34
    Tractarian says:

    Someone’s been using Matt Yglesias’s keyboard!

  35. 35
    Davis X. Machina says:

    Not uncommon to see Republicans appointed by Democratic Presidents in these two areas.

    Clinton re-appointed Greenspan to the Fed, and Cohen to Defense. Kennedy appointed McNamara to Defense, and C. Douglas Dillon.

    Hell, Reagan re-appointed Volker to the Fed…

  36. 36
    BGinCHI says:

    @Hill Dweller: This. Also something ignored by the beltway but constantly in local news.

  37. 37
    The Bobs says:

    Obama has the opportunity to replace Bernanke, but instead he reappointed him in 2009.

    I don’t believe that. The Republicans made it clear that no one else would be approved.

    Obama has been hamstrung from day one.

  38. 38
    El Cid says:

    Some poster blockquoted all the other posts on the front page, apparently.

  39. 39
    LAC says:

    @schrodinger’s cat: Exactly! Why is this firebagger point finger and whine bullshit on this page anyway? Is Jane hamisher giving out blowjobs and lollipops?

  40. 40
    Bernard Finel says:

    Okay, sorry about that. Fixed a bunch of typos.

    About Gates… I disagree. He allowed guys like Petraeus and McChrystal to crap all over the policy process. It is his job to ensure good civil-military relations. Remember, Obama wasn’t even provided alternative options, even when he specifically requested them.

    You can read my more thorough assessment of Gates here.

  41. 41
    wrb says:

    @Hill Dweller:

    The idea of having universal health care coverage in the United States is obviously one that would have horrified the Framers, who clearly wanted poor people, and those of moderate means to die for want of proper medical care.

    Since the banking industry, through the regional Feds, get to appoint the majority of the Fed board members, there is going to be little the chairman is going to be able to do to bend policy in a more borrower-friendly direction, regardless of the beliefs expressed in his past writings

    That said, I do wish that he would use hill bully pulpit. He could achieve a lot by calling bullshit, bullshit.

  42. 42
    JGabriel says:

    @gene108:

    Right now, there’s not a lot the Fed can do.

    There’s a lot more that the Fed could be doing. There’s a reason Bernanke is called “Helicopter Ben”. It’s because he wrote a paper in response to Japan’s 90s recession advocating measures as extreme as dropping money from helicopters on the population, if that’s what was needed to stimulate the economy again.

    I’m still waiting for my helicopter drop, Ben.

    The truth is that the Fed is doing so little at this point that even Ben’s student and protege, Paul Krugman, argues that it fecklessly amounts to helping the GOP, whether through partisan leaning or fear of appearing to help the administration/country.

    .

  43. 43

    @The Bobs:

    Obama has been hamstrung from day one.

    This.

    Short of arresting every Republican in Congress for Treason, I’m not sure what magical powers or procedure he was supposed to use to get confirmations that he would never be able to get.

    (Not all who succumb to the notion of “Imperial Presidency” are on the right).

  44. 44
    Herbal Infusion Bagger says:

    Like JPL, I thought Bernanke was a good appointment because he was an expert on the Great Depression.
    However, I can’t see a universe where an inflation dove like e.g. Janet Yellen would have been appointed as Fed Chair. For God’s sake, they wouldn’t let Peter Diamond’s nomination to the Fed board, and he WON THE F**KING NOBEL PRIZE for work on unemployment. But hey, it’s not like the GOP would believe we need an expert on unemployment on the Fed Board right now, right?

  45. 45
    agorabum says:

    @schrodinger’s cat: Well, the funny thing is that Bernake wrote a series of papers about this in the early 00’s, when Japan was having a similar issue, and he found all kinds of things that the Japanese fed could and should have done to stimulate the economy.
    And based on those papers, there were a lot of sensible economists (like Brad deLong and even Krugman) who said that Ben has studied this issue, he knows what to do, and he knows the right solutions.
    He knows them, he’s just not doing them.

  46. 46

    I’m not a Fed watcher, so enlighten me. Who were the credible alternatives to Bernanke at the time? I recall reading that he was perfect because “preventing another Depression” was his entire life’s work. Who do you think would have been a better choice and could have gotten 60 votes (Bernanke got 70 I believe) in 2009?

    I’m perfectly willing to entertain the possibility that Bernanke was the biggest mistake of Obama’s first term… and the one that might cost him his second… but I need a little more info on plausible alternatives.

  47. 47
    General Stuck says:

    @Bernard Finel:

    Even so, you can’t get past the fact that Obama himself campaigned on expanding the war in Afghanistan, from the very beginning. Now Gates could have had, and likely did, input on the details of that escalation, but it wasn’t his decision regardless if he was for it.

    What you are seeming to base this on is some problem with Gates and the military command and control itself. That is a different thing than suggesting he was behind an escalation that Obama has always been for.

    And he might have requested alternatives to escalation, but it was still a campaign promise, even if bad policy, and Obama in my view, has taken his campaign promises more seriously toward efforting them into reality, more so than any president in my lifetime. It is a net plus imo, but hardly without some klunkers as well.

  48. 48
    wrb says:

    The two biggest failings in the Obama Administration have been the management of the economy, which continues to be sluggish after four years,

    How the FUCK is that Obama’s failure.

    What degenerate firebaggery.

    And the guy was sounding smart for a couple of posts.

  49. 49
    Citizen_X says:

    Obama had the opportunity to replace Bernanke

    Oh, you funny.

    Don’t you realize, allowing Nobama to appoint anyone for anything would be he most unconstitutional thing EVER?

  50. 50
    slim's tuna provider says:

    i think the bernank is terrified, but not of being seen as helping obama. i think he is terrified of the tea party — and by “terrified” i mean “emotionally unprepared” for the type of populist vitriol that has been unleashed on the fed. my completely uninformed guess is that he was ready to take criticism from elites, but has been shocked by the amount of outrage that was immediately heaped underservedly on the fed starting with that awful summer of 2009. he might think that the only way to save the institution at all is to keep his head as low as possible. now if thought that way, i’d resign…

  51. 51
    The Tragically Flip says:

    @J.W. Hamner:

    I’m not a Fed watcher, so enlighten me. Who were the credible alternatives to Bernanke at the time? I recall reading that he was perfect because “preventing another Depression” was his entire life’s work. Who do you think would have been a better choice and could have gotten 60 votes (Bernanke got 70 I believe) in 2009?

    Why is it a critic’s job to come up with this? The President has a staff for this. And I would rather he tried to appoint an actual Democrat, or even better, a liberal, or failing all that at least someone who wasn’t someone George Bush would and did pick for the job.

    At least have the fight rather than preemptively surrender to a supposed certain Republican filibuster and victory.

    I’d note the Republicans did not filibuster 2 Supreme Court nominees. High profile positions like that tend to make the quiet death filibuster less of an option. If Obama picked someone clearly qualified and make a stink about it, I think it would pass. The GOP did block a Fed board appointee, but Fed Chair gets so much more attention.

  52. 52
    A moocher says:

    @Yutsano: Yeah, pretty much. Under what circumstances would a Republican not favour high enemployment?

  53. 53
    The Tragically Flip says:

    I’m really with Atrios. The experiment in independent central banking is a failure. The technocrats aren’t technocratic, they’re just a different sort of partisan ideologue than the elected type.

    I don’t know what the answer is, but this system doesn’t work.

  54. 54
    NonyNony says:

    @General Stuck:

    and Obama in my view, has taken his campaign promises more seriously toward efforting them into reality, more so than any president in my lifetime. It is a net plus imo, but hardly without some klunkers as well.

    This is exactly true. And his efforts towards keeping those promises is actually the source of a lot of grumbling from the left side of the aisle. He promised to expand the war in Afghanistan, he promised to go extra miles to work with Republicans, he promised to not raise taxes on anyone making under a quarter million a year, he promised to be the guy who finds compromises instead of the guy who forces his way into solutions.

    We’re seeing this campaign an Obama who clearly learned from the promises he made last time and he’s making different ones.

    The two complaints in this post – Ben Bernanke and expanding Afghanistan – are the direct results of promises that Obama made on the campaign trail. His desire to “work with Republicans” led to Ben Bernanke keeping his job, and he flat out told EVERYONE that he wanted to expand the war in Afghanistan from the time he hit the campaign trail. It isn’t like these decisions should have come as some kind of surprise.

  55. 55

    @Bernard Finel:
    From your article, this paragraph confuses me (I’m excerpting the entire paragraph so as to keep all context):

    The main problem with Gates was his tendency to see his job as that of quartermaster or personnel chief. Instead of providing high-level leadership, he tended to see his job as intervening at lower levels to solve specific problem. Soldiers are killed by improvised explosive devices? He worked to get more MRAPs into theater. Units not having enough time to rest, refit and train between deployments? He signed off on temporary force-size increases. Various programs overbudget or facing technical challenges? Gates was willing to kill them to fund more pressing priorities.

    I agree with everything in this list… and yet, I take the above as evidence that Gates has actually been a reasonably non-political, non-partisan problem solver (given the hand he was dealt), regardless of his party affiliation.

    How is anything on the above list wrong? And then:

    But in all of this, where was the strategic leadership we expect from our senior leaders?

    Two simultaneous land wars in Asia that we were losing, badly, due to the decisions of others who came before him. Gates did what he could to address the issues as they were found, by addressing operational concerns as they arose.

    What ‘strategic leadership’ were you looking for, exactly?

  56. 56
    Steeplejack says:

    @clone12:

    [. . .] quantitative easing is not something you would do if you believe in fighting inflation at all cost.

    But Bernanke is ignoring the evidence before his own (apparently lyin’) eyes, as well as his own research on Japan in the ’90s, that inflation is the least of our problems right now.

    (See: any number of Krugthulhu rants on this.)

    ETA: What JGabriel said.

  57. 57
    Strandedvandal says:

    Who is this frackin’ guy? Are we trying to make nice with the firebaggers now?

  58. 58
    RP says:

    Once again, what exactly could Bernake do at this point?

  59. 59
    Bernard Finel says:

    The reality is that given GOP intransigence, the only real credible and effective response to the recession would an increase in inflation. Three reasons: First, it would help with deleveraging of debt and reduce balance-sheet drag on the economy. Second, it would effectively turn interest rates negative, which would discourage people who do have cash from sitting on the sidelines. These two dynamics are the key facts in explaining why demand is so low. People with a lot of debt can’t get out from under it and people with a lot of cash have no incentive not to just hoard it given economic uncertainty. Third, it would reassure investors that economic growth would not be strangled by rising interest rates.

    Bernanke can’t do all this by himself, but he unquestionably has a great deal of power to set inflation expectations. Indeed, even if he were just making this case loudly it would be incredibly helpful.

    On Gates, I’ll say it again. Obama campaigned on doing more in Afghanistan, but when faced with the reality of ordering a massive escalation he had doubts. When he asked for alternative options, these were suppressed by the DoD. I think that if DoD had properly staffed out Biden’s “counter-terrorism plus” we might have been able to head off the December 2009 decision.

  60. 60
    Bernard Finel says:

    @Strandedvandal: I can’t tell. Am I am firebagger plant? Or a VSP coming to infect the place? I’ve been called both now.

  61. 61
    NCSteve says:

    Did I stumble onto FDL, or did BJ become a place where people also believe presidents are dictators unconstrained by other branches of government who can “manage the economy” using their unlimited power to rule by decree?

    And anyone who knew anything about Bernake’s scholarly criticism of the Japanese central bank for doing exactly what he’s doing in the face of economically similar problems–high unemployment and deflationary pressures–would be surprised.

    Christ. I don’t always agree with every person who blogs here, but this is just sophomoric twaddle.

  62. 62
    Strandedvandal says:

    You’re annoying and not worthy of reading or spending any more time on. Firebagger backseat driving is a dime a dozen. Not sure why you seem to think you are anything different than the screaming masses at FDL. Enjoy your stay, I hope it is short lived.

  63. 63
    Bernard Finel says:

    @Judas Escargot, Acerbic Prophet of the Mighty Potato God: The problem is that we then had to undo all of those decisions. MRAPs were okay in Iraq, but now they are rusting because they are too bulky to use in Afghanistan. On that one, for instance, Gates could have, instead accelerated something like the Joint Light Tactical Vehicle program — just as mine resistant as MRAPs, but light enough to serve as HUMVEE replacement. MRAPs fixed, temporarily, a short-term problem, but did so in a way that was expensive and ultimately wasteful. Just billions thrown away on a purchase that had no utility anywhere else. A strategic leader should be able to balance current needs with future requirements, not just sign off on the easiest short-term course of action.

  64. 64
    General Stuck says:

    Hey now. Give the new guy some slack why don’t you. I don’t see firebagging here, I see someone trying to find their way in a strange town. If it was firebagging, why would he seem to blame the Afghanistan escalation as more Gates doing, than Obama.

  65. 65
    Hoodie says:

    This post reeks because of a oversimplified demonization of Bernanke and because of a disregard for the abject failure of Congress. Obama didn’t have much choice but to reappoint Bernanke given the politics of the Senate. Plus, more monetary easing has the downside of funneling more money into corrupt banks, who play the interest rates to make derivative bets instead of lending. Krugman and others have advocated more easing, but mostly out of desperation because they’ve given up on Congress doing anything. Under those conditions, I imagine that Bernanke is afraid of actively doing anything that is viewed as political, even though he is inadvertently implementing Republican strategy by sitting on his hands. The real failure of the independent monetary authority is not Bernanke per se, it’s that it is impossible for the Fed to operate independently because it cannot escape politics.

  66. 66
    Wazmo says:

    @Herbal Infusion Bagger: Given that most of the recent financial system disasters have had Ph.D’s as their main architects (Gramm, Greenspan, Summers, Bernake, Sholes and Merton (The LTCM fiasco)), I’d be very weary of anyone with such baggage dealing with economies and central banks; given how many times their grand ideas blow up.

  67. 67
    TooManyDans says:

    I think on the economic front, as well, you need to take into consideration that our sluggish economy is actually doing better than much of the developed world, and that some of our pain is due to the inability of other countries to sort their own messes out. With a more relative assessment, I don’t think Obama’s record economically is nearly as bad as everyone is always making it out to be.

  68. 68
    schrodinger's cat says:

    @Bernard Finel:

    Three reasons: First, it would help with deleveraging of debt and reduce balance-sheet drag on the economy. Second, it would effectively turn interest rates negative, which would discourage people who do have cash from sitting on the sidelines. These two dynamics are the key facts in explaining why demand is so low. People with a lot of debt can’t get out from under it and people with a lot of cash have no incentive not to just hoard it given economic uncertainty. Third, it would reassure investors that economic growth would not be strangled by rising interest rates.

    You are calling for higher inflation and are also worried about rising interest rates. Higher inflation will lead to rising interest rates.

    So what is it exactly that you want Bernanke to do?
    Do you want the interests rates to be high or low?
    Do you want more quantitative easing?
    It is not at all clear what you are saying.

  69. 69
    wrb says:

    Why Bernanke seem like a good choice at the time:

    NY Times Mag Profile

  70. 70
    El Cid says:

    Damn it feels good to be a Banksta.

    Britain’s biggest bank allowed rogue states and drugs cartels to launder billions of pounds through its branches.
    __
    HSBC stands accused of fostering such a ‘polluted’ culture it became a conduit for criminal enterprises.
    __
    A top executive at the bank sensationally quit yesterday in front of a US Senate hearing that exposed the scale of the scandal.
    __
    …HSBC – one of the few UK banks to survive the financial crisis with its reputation intact – now faces up to £640million in penalties. A devastating 335-page Senate report accused HSBC of ignoring warnings and breaching safeguards that should have stopped the laundering of money from Mexico, Iran and Syria.
    __
    The bank failed to monitor a staggering £38 trillion of money moving across borders from places that could have posed a risk, including the Cayman Islands and Switzerland.

    The failures stretched to dealings with Saudi Arabian bank Al Rajhi, which was linked to the financing of terrorism following 9/11.

    HSBC’s American arm, HBUS, initially severed all ties with Al Rajhi. But it later agreed to supply the Saudi bank with US banknotes after it threatened to pull all of its business with HSBC worldwide.
    __
    According to the report, HBUS also accepted £9.6billion in cash over two years from subsidiaries without checking where the money came from.
    __
    In one instance, Mexican and US authorities warned HSBC that £4.5billion sent to the US from its Mexican subsidiary ‘could reach that volume only if they included illegal drug proceeds’.
    __
    Concerns over the bank’s links to Mexican drug dealers included £1.3billion stashed in accounts in the Cayman Islands. One HSBC compliance officer admitted the accounts were misused by ‘organised crime’.
    __
    London-based banker David Bagley, head of HSBC’s compliance division, which is meant to prevent breaches of the law, quit in front of the Senate committee. He had been with the bank for 20 years.

    Yes, yes, so narco-paramilitaries got to launder some more money — a longtime specialty of big banks, American ones especially.

    The vast profits made from drug production and trafficking are overwhelmingly reaped in rich “consuming” countries – principally across Europe and in the US – rather than war-torn “producing” nations such as Colombia and Mexico, new research has revealed. And its authors claim that financial regulators in the west are reluctant to go after western banks in pursuit of the massive amount of drug money being laundered through their systems.
    __
    The most far-reaching and detailed analysis to date of the drug economy in any country – in this case, Colombia – shows that 2.6% of the total street value of cocaine produced remains within the country, while a staggering 97.4% of profits are reaped by criminal syndicates, and laundered by banks, in first-world consuming countries.
    __
    “The story of who makes the money from Colombian cocaine is a metaphor for the disproportionate burden placed in every way on ‘producing’ nations like Colombia as a result of the prohibition of drugs,” said one of the authors of the study, Alejandro Gaviria, launching its English edition last week.
    __
    “Colombian society has suffered to almost no economic advantage from the drugs trade, while huge profits are made by criminal distribution networks in consuming countries, and recycled by banks which operate with nothing like the restrictions that Colombia’s own banking system is subject to.”
    __
    His co-author, Daniel Mejía, added: “The whole system operated by authorities in the consuming nations is based around going after the small guy, the weakest link in the chain, and never the big business or financial systems where the big money is.”
    __
    The work, by the two economists at University of the Andes in Bogotá, is part of an initiative by the Colombian government to overhaul global drugs policy and focus on money laundering by the big banks in America and Europe, as well as social prevention of drug taking and consideration of options for de-criminalising some or all drugs.

    Clearly these “economists” fail to understand that they, as inferiors who live beneath the US border, have to stand by and watch as their communities descend into chaos and narco-paramilitaries take over whole swathes of their country and slaughter hundreds of thousands of people that we have to maintain their profitable consumer drugs market here in the US for our moral principles, our private prison industries, our aspiring tough-on-crime conservative politicians, and our banks’ profitability.

    Crazies! Conspiracy theorists! Why, no respectable big bank would ever allow such… um, well, certainly no two banks would, well, SHUT UP.

    Keep your heads down and if you don’t have a job, maybe you can make a run for the border with bags of coke in your intestines.

  71. 71
    Cacti says:

    @schrodinger’s cat:

    Failings not failing. Speaking of which is this place turning to FDL? Are we all firebaggers now

    No, but they seem well represented among the front pagers.

    Although, this one is a bit less asinine than the “Obama is George Zimmerman” bit that Anne Laurie vomited out the other day.

  72. 72

    @Yutsano:

    So Republican automatically equals bad?

    Yes. SAFSQ.

  73. 73

    @Bernard Finel:
    JLTV isn’t supposed to be fielded until 2015. How do you get those to Afghanistan in 2009? It’s not really possible to ‘accelerate’ (ha!) a DoD program by half a decade, no matter how much money you throw at it.

    Not even the US Military can defeat the Mythical Man Month.

    MRAPs fixed, temporarily, a short-term problem, but did so in a way that was expensive and ultimately wasteful.

    The ‘short-term problem’ of kids having their balls blown off and flesh roasted by IEDs needed to be addressed then, not in 2015. MRAPs could be quickly deployed, so they were. And IED-related casualties were reduced by up to 80%.

    Do you seriously have a problem with that?

    A strategic leader should be able to balance current needs with future requirements, not just sign off on the easiest short-term course of action.

    A ‘strategic leader’ also recognizes when immediate problems must be addressed, immediately. First staunch the bleeding, then heal the wound.

  74. 74
    Cacti says:

    This thread is something of a firebagger buzzword bingo.

    So far we’ve got Obama, Failure, Afghanistan, and Bully Pulpit.

    Can we get a Bradley Manning for the win?

  75. 75
    Spatula says:

    @schrodinger’s cat:

    Speaking of which is this place turning to FDL? Are we all firebaggers now?

    You really can’t abide even ONE non-Bot voice here, can you?

  76. 76
    PST says:

    @JGabriel: Not that it matters, but Krugman is hardly Bernanke’s “student and protege,” even if the latter happened to chair the economics department at Princeton when Krugman was hired there. Krugman was a year senior to Bernanke as grad students at MIT, and he’s the one with the Nobel Prize. What is relevant, though, is between attending grad school together and serving on the same faculty, Krugman was in an excellent position to make predictions about how Bernanke would handle this crisis, and he thought Bernanke would do well. In his recent criticism he wrote:

    Bernanke was and is a fine economist. More than that, before joining the Fed, he wrote extensively, in academic studies of both the Great Depression and modern Japan, about the exact problems he would confront at the end of 2008. He argued forcefully for an aggressive response, castigating the Bank of Japan, the Fed’s counterpart, for its passivity. Presumably, the Fed under his leadership would be different.

    So given the difficulty Obama would have had getting a better candidate of his choice through the Senate, reappointing Bernanke must have seemed like a good idea at the time. If Krugman couldn’t foresee trouble, I can’t see how Obama could be expected to.

  77. 77
    Spatula says:

    Plus we have own set of purity trolls on this blog, grading people, for being the right kind of liberal and democrat.

    Yes, and you are one of them.

  78. 78

    Personally, when I see people respond to leftwing criticism of Obama, no matter how tepid, with hysterical shrieks of “FIREBAGGER! HAMSHER! NADER!” it sounds to me exactly like when a Teabagger responds to some perfectly innocuous thing Obama has done with “MUSLIM! KENYAN! MARXIST!”

  79. 79
    Mike G says:

    The Village is hard-wired for Serious Repuke rule, and must be placated. No matter how disastrous or inferior.

  80. 80
    Spatula says:

    @wrb:

    That said, I do wish that he would use hill bully pulpit. He could achieve a lot by calling bullshit, bullshit.

    No. Oh no.

    It was decided long ago by the Obamatariat here that the bully pulpit is a myth and does not exist and thus cannot be used.

  81. 81
    Sly says:

    Why does Yglesias acknowledge supply constraints but not policy constraints?

    When it comes to problems of aggregate demand the Fed has limited a set of options, all of which revolve around making it cheaper for private entities to acquire credit. Therefor, these policies are most effective when there is a low or constrained supply of credit; i.e. when interest rates or inflation expectations are high.

    But that’s not what we’re dealing with. Expected investment (including hiring workers) is determined by an expected rate of return combined with the opportunity costs of the interest rate. When the opportunity costs are high (you’re better off sticking your money someplace else other than things like new workers), you get less investment. When the expected rate of return is low (i.e. when there is not enough expected demand to soak up the expanded capacity), you get less investment. The Fed has more than enough tools to deal with the former, especially in the short term, but not the latter.

    American households lost about $15 trillion in assets in the first year of the recession alone (a more than 20% drop, the largest since the Fed has been keeping records), so the latter is what we’ve got.

    The Fed can’t do much with such a crisis, and the abilities it does have are ones that work on the margins. It strikes me that Yglesias believes that the Fed can do a lot and, because it isn’t doing a lot, that they just don’t want to. That there are members of the FOMC who will not tolerate any talk of raising inflation expectations (which is stupid) makes reaching that conclusion easy but, again, these are tools that have reduced effectiveness in present conditions.

    The problem is that we’ve taken fiscal policy (i.e. Congress) off the table, and what expansionary fiscal policy has been pursued has been drowned out by contractionary policies at the state/municipal level. That’s what is making this recession longer than it needs to be. The Fed is unable. It’s Congress that is unwilling.

  82. 82
    Spatula says:

    @wrb:

    Yes, here we go again and again:

    “We MUST elect Obama because the Republicans are horrible.”

    “Obama has no power to do anything because the Republicans are horrible.”

  83. 83

    @schrodinger’s cat: He could listen to K-thug, or Atrios, for starters. Or read papers he once wrote for another. You do know that The Ben Bernank isn’t even following advice he was once dispensing, right?

  84. 84
    Spatula says:

    @The Tragically Flip:

    At least have the fight rather than preemptively surrender to a supposed certain Republican filibuster and victory.

    NOT fair!

    You just dissed the entire Obama administration legislative strategy.

    That’s not done here.

  85. 85

    @Sly: You are wrong. Even Ben Bernanke admits he could do more. But he doesn’t want to. What’s so f–king hard to understand about that?

  86. 86
    Spatula says:

    @Strandedvandal:

    Who is this frackin’ guy? Are we trying to make nice with the firebaggers now?

    This thread and the Bot response to this post are great reminders to Cole of how he has allowed BJ to become, in the minds of most of its most ardent and insane commenters, a fortress of Obotism.

    Don’t you people ever read the posts where Cole himself rags on Obama for this or that?

  87. 87
    Spatula says:

    @Bernard Finel:

    I can’t tell. Am I am firebagger plant? Or a VSP coming to infect the place? I’ve been called both now.

    Bernard, please take the Obot cries of anguish as a tribute to your writing. They have become so used to being pampered by DougJ that the actual front paging of other viewpoints is bound to drive them quite mad.

    yay

  88. 88
    Ben Johannson says:

    Dear Mr. Finel,

    I’m sorry but Mr. Yglesias is entirely incorrect. Dr. Bernanke is, after four years of failed monetary policy, acknowledging the reality that the Federal Reserve cannot stimulate aggregate demand. The central bank cannot control the money supply, it can only control interest rates which are currently at 25 bps. There is literally nothing more it can do.

    The supposed “unconventional” monetary policies that professional know-nothings such as not-so-young-any-more Mr. Yglesias champion are literally a rehash of what the Fed has been doing since 2008: lowering interest rates and pumping up bank reserves. But a bank’s capacity to make loans is not affected by its reserve position because banks are not reserve constrained. They can always obtain whatever reserves they need. Banks’ ability to make loans is governed by capital requirements and consumer and business demand. Unless of course Mr. Yglesias wants to arrest people for not borrowing.

    What libertarians such as Yglesias are really hoping to avoid is discussion of the one government action which can end our economic problems, which is fiscal policy.

  89. 89
    Spatula says:

    @Strandedvandal:

    Poor wittle baby.

  90. 90
    Mino says:

    @El Cid: You may have noticed that this was not being reported when governments might have been forced to curtail the activity, though it was widely known at that time.

  91. 91
    Mino says:

    @Phil Perspective: What will be the inflationary effect of this years’s huge drought? Corn products are everywhere.

    Inflation is Bernanke’s passion, not employment.

  92. 92
    Spatula says:

    @Cacti:

    Obama is George Zimmerman

    Yes, you’re correct: That is an entirely accurate representation of Anne’s post. No twisted perception on your part; none whatsoever.

  93. 93
    El Cid says:

    @Citizen Alan: It certainly could be the case (meaning possible by the laws of physics or whatever) that the policies or rhetoric of Barack Obama were the exact, Platonic ideal or at least Candidean best of all possible worlds policies or rhetoric.

    But it also must be the case that such policies or rhetoric might not be the absolute Platonic ideal or Candidean possibility.

    Unfortunately, there’s no omniscient supernatural entity divulging to us which of those possibilities is correct for any given matter, so we mere humans are left to decide for ourselves if some Obama policy or rhetoric is the absolute possible perfection or if it is not.

    Now, can one possibly conclude that it is not, and not be a firebagger? Or is the definition of ‘firebagger’ as a stand-in for petulant political immaturity based upon leftist or leftish fantasy coterminous with failing to agree (and safest done in advance) that whatever Obama action or statement in question is and must be the absolute perfect given the realities assumed to be in place?

    Is it too risky, then, to even allow oneself to think about these matters?

    If you ask yourself whether or not some action or wording by Obama is the most absolutely perfect action possible, isn’t there a risk of concluding that it is not?

    If it is impossible to conclude that some Obama policy or statement is less-than-perfect-within-the-bounds-of-the-possible without becoming a ‘firebagger’ or Naderite, why would you take such a risk by thinking about such things?

    And if one assumed, and though this sounds heretical I assure you it is simply for philosophical inquiry, that it might not only be possible but humanly discoverable or arguable that some Obama initiative or wording was less than the absolute perfect which was indeed humanly possible by contemporary human civilization, couldn’t it likewise be at least contemplated that one could arrive at such a conclusion without transubstantiation into the firebaggerati?

    It’s a difficult question. Especially since there is always an upcoming election with a true Republican threat. Perhaps any expenditure of thought regarding Obama policy or rhetoric is simply too dangerous to undertake at any time, given that any conclusion worth arriving at which might provoke comment would cause those comments to potentially be seen as undermining the electoral scenario.

    It might be that it’s better not to ask oneself these questions, at least, not anywhere outside of a sealed confessional among other trustworthy political friends in conversations pledged by oath never to be repeated elsewhere.

    Any other approach risks coming to a conclusion which is not electorally helpful. What other purpose could thought and discussion be for?

    Let’s not forget — this isn’t just some light-hearted “blog” where people post sarcastic stuff: this is the place where citizens come to decide whether they will or will not vote for Democrats. We just can’t take chances here.

  94. 94
    Catsy says:

    The two biggest failings in the Obama Administration have been the management of the economy, which continues to be sluggish after four years

    No. Just stop there.

    There’s this little matter of a four-year Republican campaign to sabotage said economy, the credit rating downgrade that was a direct result of Republicans deliberately holding the debt ceiling hostage, and their flat refusal to compromise with or pass any legislation that might boost the economy in order to undermine Obama at the nation’s expense.

    Any attempt to blame Obama for the state of the economy that does not devote so much as a single word to the above is devoid of credibility from the outset. Try again.

  95. 95
    Just Some Fuckhead says:

    You apparently didn’t get the memo. We ignore Big Media Matt over here.

  96. 96
    SectarianSofa says:

    Meh.

  97. 97
    Chris T. says:

    Well, as Krugman notes, military spending (“Weaponized Keynesianism”) may be a rather sucky form of Keynesianism, but it’s still Keynesian.

    [Maybe the biggest single policy change Obama needs to push through in his second term is getting the “elite kids” (“elites” here referring to the same group as Hayes’s new book) to wind up in the military too, so that we don’t wind up starting lots of new Wars of Choice. It’s a dreadful solution, though, and as we’ve seen (W, Cheney) even a “universal” draft did not prevent Vietnam. So maybe that’s a fruitless approach. I don’t know.]

  98. 98
    wrb says:

    @Spatula:

    No. Oh no.
    It was decided long ago by the Obamatariat here that the bully pulpit is a myth and does not exist and thus cannot be used.

    My comment seems to have been misunderstood by at least two here. I was talking not about Obama’s Bully Pulpit, but about a special one owned by the Fed Chair, who is widely considered some sort of non-partisan technical expert.

    Both Volker and Greenspan used it effectively.

    I’ll accept that Bernanke can’t get the Fed- that is his board- to do what he would recommend if he was in the private sphere.

    He could, however, be telling congress what they should be doing, when he’s asked (stimulate, idiots). Instead he gives these milquetoast evasive answers.

    He seems to have decided that making clear that we have a divided Fed, and that the policies that it has adopted are, in fact, likely to fail in his opinion- if I read his opinion accurately from his previous work- would be too damaging, so he will speak for his board, projecting unity and order.

    He also seems to be terrified of being seen as a partisan, so he won’t tell congress what they should be doing, even when it is bloody obvious.

  99. 99
    El Cid says:

    @Catsy: Actually, a question does arise: if we evaluate the situation and do in fact agree that the generally Republican-led class war explains the origin and still sorry state of the situation, how do we then go on to decide what we think of Obama’s role?

    Given the former, once granted, is it no longer sensible to ask?

    Logically, if Obama takes some action (including no action) on some matter, it can be argued about as more or less successful on some scale. That simply has to be true.

    And that’s going to be true whether or not one is 100% in support of Obama’s re-election or 100% opposed. Sure, the scale has to be selected and the criteria defined, but it is our job as citizens to try to think these things through for ourselves.

    For example, I might be convinced that on matter X some leader did a really good job, or even just a good job. But on reflection something better seems to me to have been possible. It needn’t be reduced to a battle between great and perfect, either. “Better” can never be dismissed as just meaning a desired dream world where chickens fly through the air plucked and wholly roasted for us to grab whenever hunger strikes. It could mean ‘very slightly’ or ‘almost imperceptibly’ better, as well as notions of more significant improvement.

    If I were to conclude (and we can all be right or wrong about things, including in arguments about what “is” or “isn’t” politically possible) that something better could have been done, does this mean I am now an opponent of that actor?

    That I’ve forgotten all other factors? That I need to make sure each and every time and in every forum and context to recite the factors causing or worsening and perpetuating the situation, before I get to my thoughts on the possibility of some better action having been taken?

    I apply this standard to myself.

    There have been plenty of things I’ve done (including problems I’ve solved) regarding which I could argue I did a good job or even a really good job, and yet when I reflected upon them I didn’t forget the context or who caused the problem or how it arose or was compounded, and if I later concluded that I also could have done A or B as well or done something better, I’m not now an opponent of myself or a self-hating Cidbagger.

  100. 100
    Sly says:

    @Phil Perspective:
    The mantra of the Fed for the past three years has been “We can only do so much and what the economy needs is expansionary fiscal policy.” It is embedded in every public statement a memo issued by Bernanke. The statement printed in the WSJ is no different:

    He highlighted two other now-familiar short-term risks to the economy: the euro-zone debt crisis and the volatile combination of expiring tax cuts and federal spending reductions set for January.

    Shorter Bernanke: Contractionary fiscal policy is contractionary.

    Yglesias tries to make the point (by not even linking to the story, just a screen grab of the headline and the first paragraph) that because Bernanke isn’t all gangbusters on the state of the recovery (and who is?), that this reflects a desire to see the economy languish. He cautions the reader not to assume that the Fed is populated by wizards who can fix everything with some monetary policy sorcery, and then goes on to make that same assumption. And Congress is removed from the picture.

    Lawmakers gave the central-bank chief starkly different advice. Democrats pressed him to move swiftly and aggressively to stimulate growth with easy-money policies, while Republicans demanded caution and warned about inflation or a falling dollar.

    Now, I could make the asusmption that Yglesias is ignoring Congress because he’s a stooge for moronic Republicans who are needlessly fretting about inflation, and placing blame squarely on Bernanke provides them with political cover to continue to be moronic, but I won’t. Because that would be pretty fucking stupid of me.

    What’s so fucking hard to understand about that?

  101. 101
    wrb says:

    @El Cid:

    that is extremely cute, clever and witty but this

    The two biggest failings in the Obama Administration have been the management of the economy, which continues to be sluggish after four years,

    remains that laziest sort of unsupported nonsense- almost craven enough to qualify the author to gas on the teevee.

  102. 102
    Maude says:

    @Phil Perspective:
    Atrios keeps saying give people money.
    That makes no sense. The Federal Reserve can’t fix what is wrong with the economy.
    It is up to congress and the Repubs have been too busy blocking Obama to care about anyone in the country.
    A lot went wrong for the economy to tank in 2008. There isn’t an easy solution. It’s childish to think that there is a simple answer to a complex problem.
    The Republican Governors are harming the poor and the public sector in their states.
    Wages are way too low and a lot of jobs have been off shored.
    The Republicans refused to reverse the off shore tax policy. Obama asked twice in 2010.
    The financial industry has way too much power and the Obama admin is cutting it down, but it takes time.
    This is just the tip of the iceberg.
    Give everyone free money? What happens when the money runs out? Where are the living wage jobs?

  103. 103
    OzoneR says:

    @gene108:

    Bernanke was also Paul Krugman’s boss, while he was at Princeton and hired young Paul for the job.

    And Paul endorsed Bernanke’s reappointment. Does anyone seriously think he’d do that if he thought Bernanke was a Republican ideologue. Maybe he will and Krugman sucks too now. Who knows?

    But as for the question of why Bernanke won’t endorse a policy position, probably for the same reason Krugman doesn’t, he’s not a politician.

  104. 104
    Catsy says:

    @El Cid: I think there are fair criticisms that can be made of the way Obama has approached dealing with the economy. I think it’s fair to criticize his choice of appointments, or to note that the stimulus should’ve been larger.

    But I think it’s pretty much impossible to divorce those issues from the broader context: a Congress controlled by an opposition party so extreme that it’s willing to literally hold the country and the economy hostage in order to politically damage the President.

    At some point it really stops mattering in any meaningful way what actions Obama does take or what policies or legislation he proposes. There’s very little he can do when faced with a Congress that refuses to even allow a vote on anything favored by the President that might help the economy.

    Where I primarily fault Obama is in not doing more to publicly hammer the borderline-treasonous, do-nothing Republican Congress, and drive home in the minds of voters exactly who is responsible for the state of the country. Holding the debt ceiling hostage was where the GOP really crossed the Rubicon, and at that point Obama should’ve been holding a press conference every single day to quote the Republicans on their explicitly-stated plan to sabotage the economy and hold the country’s credit rating hostage, and call them out for their actions.

    It was an act of explicit and deliberate economic terrorism, and even if he can’t go so far as to call it that, he can and should go a hell of a lot farther than he has.

  105. 105
    Grumpy Code Monkey says:

    But here is the kicker. Obama had the opportunity to replace Bernanke, but instead he reappointed him in 2009.

    Who else was going to get Congressional approval? Seriously, give me a name, and then ask if that person was going to be approved by a Republican majority Congress.

    Right now, Congress and state legislatures are more to blame for the state of the economy than Obama. Congress refuses to do its goddamned job and has been actively working to undermine any recovery, because it’s more important to protect the Permanent Republican Majority than to actually, I dunno, serve the goddamned public interest.

    And that’s nobody’s fault but our own, Jack. Congress is the people’s branch of government, but when the people can’t be bothered to give a shit, you get what we have now.

    Has Obama fucked up? Yes, more than once. Is he the real problem? Fuck no. Is there a better choice for President at the moment? Not a goddamned chance. Not until Congress gets the collective spanking it so richly deserves.

    the decision to massively expand the war in Afghanistan. The Afghanistan decision was shepherded by then Secretary of Defense Robert Gates… another Republican.

    Fighting the war in Afghanistan like we goddamned mean it is exactly what we should have been doing a decade ago. If it hadn’t been for that GODDAMNED SIMPLE SON OF A BITCH and his merry band of fucking neocon enablers getting a hard on for Iraq and putting Afghanistan on the back burner, we’d have been out of this mess years ago.

  106. 106
    Matt in HB says:

    @Ben Johannson:

    I’m sorry but Mr. Yglesias is entirely incorrect. Dr. Bernanke is, after four years of failed monetary policy, acknowledging the reality that the Federal Reserve cannot stimulate aggregate demand. The central bank cannot control the money supply, it can only control interest rates which are currently at 25 bps. There is literally nothing more it can do.
    The supposed “unconventional” monetary policies that professional know-nothings such as not-so-young-any-more Mr. Yglesias champion are literally a rehash of what the Fed has been doing since 2008: lowering interest rates and pumping up bank reserves. But a bank’s capacity to make loans is not affected by its reserve position because banks are not reserve constrained. They can always obtain whatever reserves they need. Banks’ ability to make loans is governed by capital requirements and consumer and business demand. Unless of course Mr. Yglesias wants to arrest people for not borrowing.
    What libertarians such as Yglesias are really hoping to avoid is discussion of the one government action which can end our economic problems, which is fiscal policy.

    Ding-ding-ding-ding-ding

    Mr. Johnson is right!

    We’ve reached the pushing on a string phase of monetary policy. What the Fed can do now would be fiddling around the edges at best. Sane fiscal policy is what is needed at this point, as Bernanke has rightly pointed out on a number of occasions. Unfortunately, given the Congress we’ve got, that won’t happen. Fiscal policy matters, now more than ever and monetary policy doesn’t work by magic. Plus, Bernanke runs a committee, not a dictatorship.

    Frankly, I think Bernanke has done a reasonably good job — excellent and innovative in 2008 and 2009, adequate and conventional since then, but poor leading up to the crisis.

  107. 107
    OzoneR says:

    @Catsy:

    Where I primarily fault Obama is in not doing more to publicly hammer the borderline-treasonous, do-nothing Republican Congress, and drive home in the minds of voters exactly who is responsible for the state of the country.

    Catsy, the voters know, Poll after poll has shown that.

    They

    don’t

    care

    A third of the country wants the GOP to hold the country hostage and burn the house down if need be, another third lives in a delusion that no one would ever do such a thing.

  108. 108
    TenguPhule says:

    There’s this little matter of a four-year Republican campaign to sabotage said economy, the credit rating downgrade that was a direct result of Republicans deliberately holding the debt ceiling hostage, and their flat refusal to compromise with or pass any legislation that might boost the economy in order to undermine Obama at the nation’s expense.

    This this, a thousand times this.

  109. 109
    Catsy says:

    @OzoneR:

    Catsy, the voters know, Poll after poll has shown that.

    Not enough of them.

    A third of the country wants the GOP to hold the country hostage and burn the house down if need be, another third lives in a delusion that no one would ever do such a thing.

    The 27%ers are beyond help. I think we’re all aware of and more or less resigned to the fact that close to a third of the country is either effectively insane or so buried in epistemic closure that they might as well be for our purposes.

    It’s that “another third” that needs to be hammered with evidence and examples of the truth until it breaks through the bubble of denial.

  110. 110
    OzoneR says:

    @Catsy:

    It’s that “another third” that needs to be hammered with evidence and examples of the truth until it breaks through the bubble of denial.

    If you have ever dealt with those people, you’d realize there is no breaking that bubble, to do so would literally shatter every delusional “America is a good place and people need to work together” belief they have. Even faced with Mitch McConnell himself saying he wanted to make Obama a one-term president, I have seen them deny it, wave it off as just another partisan attack. They will NOT believe it. That’s what makes them delusional.

  111. 111
    JGabriel says:

    __
    __
    PST:

    Not that it matters, but Krugman is hardly Bernanke’s “student and protege” … Krugman was a year senior to Bernanke as grad students at MIT, and he’s the one with the Nobel Prize.

    Thanks for the correction, PST.

    So given the difficulty Obama would have had getting a better candidate of his choice through the Senate, reappointing Bernanke must have seemed like a good idea at the time. If Krugman couldn’t foresee trouble, I can’t see how Obama could be expected to.

    I agree. While there may be flaws in Obama’s handling of the economy, I can’t particularly blame him for Bernanke’s failures at the Fed.

    In retrospect, I wish Obama had replaced Bernanke. But at the time, it seemed like a reasonable compromise choice.

    .

  112. 112
    OzoneR says:

    @Catsy:

    It’s that “another third” that needs to be hammered with evidence and examples of the truth until it breaks through the bubble of denial.

    That third is the third that tune out after “Republicans are wrong because…”

  113. 113
    Original Lee says:

    And of course, Cantor refusing to let the Farm Bill come to the floor of the House has nothing whatever to do with the economy. They have proven, once again, that they are perfectly willing to f**k over their own constituents to make a political point, although I honestly have no idea what that point might be in this case.

  114. 114
    El Cid says:

    @wrb: You know, maybe it was just me, but when I first read those sentences, I didn’t see it as FAILINGS OMG HE’S A FAILURE but more like ‘of the things Obama has done which worked better and worse the two which worked the most poorly are…’

    I didn’t see that as implying that it was FAIL FAIL FAIL, and the economy does remain sluggish, so on a scale of what someone things Obama did with (a) the most and most noticeable success or (b) the least and/or least noticeable success, he put ‘the economy’.

    Certainly plenty of people argued that the best possible was done.

    However, the category would still remain:

    Of all the things Obama has done, which would you list as the two least successful? Or if nothing strikes you as less than powerfully successful, which ones had the least noticeable success?

    Logically, being human, Obama has to have failings. There is no way whatsoever his policies or rhetoric have been 100% perfectly and maximally successful.

    Lots of wonderful, great people had failings, as people, and as policies.

    So what, if anything, would you place in that category for Obama?

    Surely it can’t be screamingly anti-Obama just to suggest that the man has failings, or that among his policies his least successful were X and Y.

    And if not, something would have to fall into that position if you have such things within your purview to think about. So what would it or they be?

  115. 115
    OzoneR says:

    @El Cid:

    Of all the things Obama has done, which would you list as the two least successful?

    would have to say mortgages and would probably agree with Afghanistan. But that’s not to say better options or options with better likelihood of success were available. Sometimes there are no good options, often there are no great ones.

    It’s like saying I wouldn’t have knee pain if I had better knees. No shit, but better knees aren’t available, therefore I have to work with what I got.

    Logically, being human, Obama has to have failings.

    And I’ve always said his biggest failing was believing he could “change” the country for the better. Sorry, a black guy can win an election in certain circumstances, like a severely unpopular incumbent/bad economy, and maybe could legitimately govern via the status quo, but change? That is the biggest nightmare of every white person in this country, the idea that a minority will “change” the country. Maybe his rhetoric was all crap to get elected, perhaps, then his failing is stoking the flames of cynicism.

  116. 116
    Jonathan says:

    @Ben Johannson:

    Matt Yglesias backs fiscal policy measures to boost demand all the time. He also realizes it’s a non starter with the current congress.

    I think his beef with Bernanke and the Fed is that they don’t message well. If Bernanke came out and said “We’re targeting 5% inflation, and we’ll do whatever it takes to get to that point” then that’s setting some expectations.

    Also, worth noting, Matt has also stated that keeping Bernanke in his role was possibly the worst mistake the Obama team has made.

  117. 117
    Tripod says:

    @Just Some Fuckhead:

    Holds envelope to forehead….

    What are super-trains, D.C. height restrictions and goofy glibertarian diatribes on local licensing fees…

  118. 118

    You and Yglesias are wrong. If Bernanke preferred slower growth, he would not be calling for more fiscal stimulus (he has been for decades). The key assumption that Yglesias makes is that Bernanke is being frank when he claims that the Fed could do more and will if it becomes (even more) necessary.

    Bernanke could say “I don’t think there is any more we can do, because we are in a liquidity trap” but that would have only costs and no benefits.

    Importantly Yglesias doesn’t even bother explaining how the Fed could stimulate an economy in a liquidity trap. He just notes that say Peter Diamond disagree with him and then assumes Diamond is wrong.

  119. 119
    Joel says:

    Bernake was a boo-boo. But who knows what the alternatives were. The seas at the time, as you may remember, were mighty rough.

  120. 120
    Joel says:

    Bernake was a boo-boo. But who knows what the alternatives were. The seas at the time, as you may remember, were mighty rough.

Comments are closed.