Friday, February 03, 2012

has any economist ever gotten it so wrong?



truthdig | That Lawrence Summers, a president emeritus of Harvard, is a consummate distorter of fact and logic is not a revelation. That he and Bill Clinton, the president he served as treasury secretary, can still get away with disclaiming responsibility for our financial meltdown is an insult to reason.

Yet, there they go again. Clinton is presented, in a fawning cover story in the current edition of Esquire magazine, as “Someone we can all agree on. ... Even his staunchest enemies now regard his presidency as the good old days.” In a softball interview, Clinton is once again allowed to pass himself off as a job creator without noting the subsequent loss of jobs resulting from the collapse of the housing derivatives bubble that his financial deregulatory policies promoted.

At least Summers, in a testier interview by British journalist Krishnan Guru-Murthy of Channel 4 News, was asked some tough questions about his responsibility as Clinton’s treasury secretary for the financial collapse that occurred some years later. He, like Clinton, still defends the reversal of the 1933 Glass-Steagall Act, a 1999 repeal that destroyed the wall between investment and commercial banking put into place by Franklin Roosevelt in response to the Great Depression.

“I think the evidence is that I am right about that. If you look at the big players, Lehman and Bear Stearns were both standalone investment banks,” Summers replied, referring to two investment banks allowed to fold. Summers is very good at obscuring the obvious truth—that the too-big-to-fail banks, made legal by Clinton-era deregulation, required taxpayer bailouts.

The point of Glass-Steagall was to prevent jeopardizing commercial banks holding the savings of average citizens. Summers knows full well that the passage of the repeal of Glass-Steagall was pushed initially by Citigroup, a mammoth merger of investment and commercial banking that created the largest financial institution in the world, an institution that eventually had to be bailed out with taxpayer funds to avoid economic disaster for millions of ordinary Americans. He also knows that Citigroup—where Robert Rubin, who preceded Summers as Clinton’s treasury secretary, played leading roles during a critical time—specialized in precisely the mortgage and other debt packages and insurance scams that were the source of America’s economic crisis.

Advertisement
Even Clinton, in a rare moment of honest appraisal of his record, conceded that his signing of the Commodity Futures Modernization Act (CFMA), legalizing those credit default swaps and collateralized debt obligations, was based on bad advice. That advice would have had to come from Summers, his point man pushing the CFMA legislation, which Clinton signed into law during his lame-duck days.

When the British interviewer reminded him of Clinton’s comment, Summers, as is his style, simply bristled: “Again, you make everything so simple, when in fact it’s complicated. Would it have been better if the whole financial reform legislation had passed in 1999, or 1998, or 1992? Yes, of course it would have been better. But … at the time Bill Clinton was president, there essentially were no credit default swaps. So the issue that became a serious problem really wasn’t an issue that was on the horizon.”

That is a lie. Credit default swaps had been sold at least since 1991, and collateralized debt obligations of all sorts quickly became the rage during the Clinton years. Summers surely remembers that Brooksley Born, the legal expert on such matters that Clinton appointed to head the Commodity Futures Trading Commission (CFTC), warned about the ballooning danger of those unregulated derivatives. Born, who served with Summers as one of four members of the President’s Working Group on Financial Markets, tried repeatedly and in vain to get her colleagues to act. When her pleas fell on deaf ears, she issued a “concept release” calling attention to an unregulated derivatives market that was even then spiraling out of control.

58 comments:

nomad said...

Just wondering. What are black economists saying . I've seen, in my journey through the Internet, that the economy is being used to wage class warfare. The rich against the rest. We, blacks, are the heart of the rest. If the economy is the battleground, what are our black economists saying? Are there any black economists?

CNu said...

Come on magne stop playing!

You know that's a kwestin for the afrodemic community which professes to be doing a whole lotta sophisticated and high-falutin meditating on these issues - what with all their vast "ism" priors.

Seriously though, the only person I know who could point you in useful directions would be my man Spence http://www.lesterspence.com/blog/

nomad said...

Thanks, man. Alright then. "Economics is the issha. Do you have a plan witcha? If you got a plan. If you got a master plan. Got to vote for you."

Tom said...

I'm guessing if they want tenure, they have to say the same things everybody else says to get tenure.

nanakwame said...

Comfort is illusion  and dangerous at many times augmented realities: image status, family, self-satisfaction, affinities, you got man.

In
1950, Klinenberg reports, 4 million American adults lived alone, which
accounted for 9 percent of households. Today, that number is 31 million, a
whopping 28 percent of all households.

Tom said...

Nana, I don't understand

nanakwame said...

Our parents society made it too easy for individualism and has come back to bite us. They even have articles in Live Science about 50 year old women having babies. Why at that age?

Uglyblackjohn said...

...and the resources required for EVERYONE to have his own home, his own car... even his own tv are not sustainable.
Many people watching the same show, living in the same house, sharing the same car saves resources.

Uglyblackjohn said...

Oh those Larry's...
Larry Fink is doing just as much damage while in the private sector.

Temple3 said...

I think there is some truth to that, but I think the larger challenge is one of academic rigor. Black economists cannot mimic the original better than the original can merely be. These folks simply need to carve out new paradigms with sound empirical and non-empirical approaches. They actually need to see through the illusion that is Europe and "Western civ" and the academy. Harold Cruse figured this out at the University of Michigan back in 1967 when he wrote, "Crisis of the Negro Intellectual." He was teflon in Ann Arbor until he passed. 

Temple3 said...

Economists are usually wrong if they subscribe to flawed paradigms. Summers' MO is really about facilitating systemic theft. Everything else is lip service. 

CNu said...

My broadly misunderstood critique of 2nd/3rd line inheritors of the civil rights movement is straight outta Cruse http://en.wikipedia.org/wiki/Harold_Cruse

Many believed Cruse was an opponent of "integration" which he
referred to as "assimilation" because its policies were only geared
towards integrating blacks into white society and not whites into black;
betraying an inherent unacceptability of blackness in mainstream
America. But in reality Cruse simply believed in a pluralistic society,
any group must amass and control its own political, economic and
cultural capital before true integration was possible. Without group
self-determination, any group, but particularly American blacks would
rely on the benevolence of other groups with political, economic and
cultural capital, to voluntarily integrate with blacks which would lead
to the dismantlement of black institutions and cultural traditions;
rather than facilitate an equal and negotiated sharing throughout
society.


While Cruse was very critical of American society, he reserved the
bulk of his criticism for black intellectuals and leaders who he
believed did not have the academic appetite to master the various
disciplines necessary to advocate for real and effective societal
change.

Temple3 said...

Amen. 

nanakwame said...

Quite a self-made man, yet; nostalgia for present future like Farrakhan; enjoyed Cruse more. 

Tom said...

integrating blacks into white society and not whites into black; betraying an inherent unacceptability of blackness in mainstream America

As far as anything that matters, doesn't sound like it has changed much at all.  The Black stuff that does catch on seems to be mostly narcissistic crap that meshes with our own narcissistic crap.  

Areas where I feel whites desperately need to integrate into Black society, for example being able to listen to what Chomsky says about how the world works  & being able to understand what the heck he's saying?  That's still "inherently unacceptable" for the most part.  In the '70s we at least listened to Muhammad Ali.  Right now, what are whites importing culturally that has any significance at all?

Not as much as it was five years ago, though.  Not quite as much.

Well, ok, dunno if this tangent is interesting or not.

Tom said...

"not as much as it was five years ago" -- I'm saying Chomsky is not as "inherently unacceptable" (in what Francis Holland has called the whiteosphere) as was the case five years back.

Tom said...

No doubt.   Any economist who values economic rigor needs out of the absurd fantasy world they live in.    (Agreed that Black economists are going to have a tougher time career-wise even if they lie just as persistently as the as white ones do.)

CNu said...

 Uncle Wally http://en.wikipedia.org/wiki/Walter_E._Williams and Uncle Tom http://en.wikipedia.org/wiki/Thomas_Sowell eatin good....,

Temple3 said...

I think so many Black economists are irrelevant precisely because their theoretical approaches are bankrupt imitations of European and white-American schools of thought. There are African economists who've written extensively and done some modeling based on Black economic organization, but the work is simply exhausting and requires indefatigable scholarship. It requires truly collaborative efforts to marshal resources in different languages (French, Hebrew, Greek, Arabic, etc.) and across different disciplines. I don't see a future for Black economists in making incremental contributions to solving the induced scarcity dilemmas of their masters...but if that's what they like...

CNu said...

I don't see black folk in America objecting to or pushing back away from the non-negotiable Uhmurkan way of life anytime soon either - just as long as we preserve 5/5ths "opportunity" status within the polity.

Tom said...

Well, good for them.  I've even heard of Sowell before. 
Hey, personally, whatever I have that wasn't paid for by the military-industrial complex, was paid for by my father's salary as an academic economist.  So I'm not telling anybody to go and starve to carry out Temple3's mission.    

Tom said...

Well, yeah, unless they're independently wealthy it would be incredibly punishing.  Even then, how do you get the work published in the mainstream (aka libertarian-dominated) journals?  

And I'm not wild about the far left either, they're good on current events but imo their theories are even wackier than the ones we use now.

Big Don said...

Thomas Sowell...[Wiki - 
Thomas Sowell (born June 30, 1930) is an American economist, social theorist, political philosopher, and author. A National Humanities Medal winner, he advocates laissez-faire economics]

CNu said...

 lol, these are two of the most outlandishly self-abasing porch-monkeys peddling mendacious mischief in the world today. very few rise to their respective/collective level of ignominy save perhaps the one and only Ward Connerly  http://www.nytimes.com/2012/01/18/us/ward-connerly-faces-allegations-of-fiscal-misdoing.html?pagewanted=all

CNu said...

 Blackest economists popularly teaching and publishing at this moment http://www.paecon.net/PAEReview/

Tom said...

Ok, and the last thing I'm saying is that mainstream economists are good moral people based on what they teach, publish, and advise.  

The Cold War ended, not with a nuclear or chemical  assault, and not with the type of biological warfare that   had been envisioned by the military, but with a rain of Harvard-trained economists airdropped onto a helpless enemy.But if we don't judge Sowell and Williams by the idealistic expectations that come with the Black moral brand, are they really very far from the median level of evil for US economists?   (Based  on their views, not on pulpit size.)

CNu said...

 Ok, and the last thing I'm saying is that mainstream economists are good
moral people based on what they teach, publish, and advise. 


rotflmbao..., uh, no.

Calvinists and Catholics cannot be accounted as "good moral people" no matter how closely they hew to the precepts of their denominational ideology.

Teaching, publishing, and advising magical thinking puts you outside the pale of either the "good" or the "moral".  Draw your own conclusions wrt the moral condemnation and disdain that this presupposes for a Sowell or a Williams who have no earthly excuses for not knowing better.

Tom said...

I think we have a misunderstanding here?  I'm saying mainstream economists are basically immoral because they teach nonsense.

Dale Asberry said...

E. F. Schumacher is (was) my economics go-to-guy.

Dale Asberry said...

You forgot to use the [sarcasm /on] and [sarcasm /off] switches ;-)

Tom said...

I expressed myself clumsily.  By "the last thing I'm saying is X" I meant "my god I wouldn't say X," but it reads either way.

CNu said...

 Jay Hanson (decidedly NOT an economist) is mine: Economic theory for scientists and engineers.

nanakwame said...

http://www.livescience.com/18478-midnight-paris-oscars-nostalgia.html 
The profession by itself is dead, as was visioned by 1800's thinkers
http://www.economonitor.com/ 

nanakwame said...

btw Doc keeping pushing, and now Google taking over Motorola wow

http://www.theatlantic.com/business/archive/2012/02/envisioning-a-post-campus-america/253032/

CNu said...

 I worked with an engineer yesterday to clear http://mylanguage360.com/products/ for teaching Mandarin at one of our local language immersion schools.

Simple, elegant, and non-proprietary fusion of Adobe Connect/Canvas/Google Apps

Audio with Webcams for synchronous interactive instruction - inexpensive, highly effective - the homeschoolers will get on board with these distance learning technologies first.

DD said...

 Their grasp of the english language on that link leaves much to be desired. It should probably be "turn-key," not turnkey, which is a weird word to use anyway, "gives schools the ability to painlessly launch new world languages classes" should be "language classes", right?

Expired copyright and much more...cool idea but that baby needs some sizzle or it's not gonna sell to them edumacators.

Dale Asberry said...

It's not the edumacators that'll be buying although that's how they seem to be pricing. If they can create a more competitive pricing point than Rosetta Stone, I'd buy. 'Educators' sole purpose seems to be continuing their stranglehold on job security rather than making sure our children learn.

CNu said...

Bingo!!!

This is a straightforward disintermediation play with none of the overhead of proprietary software development. Pitching a still-scarce content piece (Mandarin) they're leveraging unmet demand in the market to get in the door, and then simultaneously offering the less scarce content (French/Spanish) because once the students become accustomed to the one, the other(s) can begin to fall into place in very short order.

This offering is a quantum leap past Khan Academy (which is really just kind of a flea market scale attraction) and just one piece behind what you need for full-tilt online distance learning.

All-in-all, I'm very impressed with the ingenuity and hustle behind their approach.

Tom said...

So this meaning of "Black economists" I can apply in the real world.   The idea that economists designated Black according to the mean US color line should be held to a higher moral standard, I can't (or won't) apply to anything.

And anyway, even if an ethnically-derived distinction might actually help academic rigor in the short term, a concept that appeals to some of my own magical thinking ... ultimately if we use ethnic terminology we are going to divert our attention away from academic rigor.   We must call it academic rigor vs Bull, not blackness vs whiteness.

CNu said...

lol, http://www.visioncircle.org/archive/004113.html

"blackness" is an aspirational cultural state born of pressures and conditions unique to the American experience. As goes blackness, so goes America.

Tom said...

Aaaaaargh!   Another of your impossible damn reading assignments!

Temple3 said...

That's dizzzzzzope!!

Tom said...

1. So Sowell and Williams are just not black.   They look vaguely like they might be black, and people sometimes assume they're black, but they're no more black than my dad is.  Maybe even slightly less, from what I've read.

2. A  hesychasm link has died in one of your posts.  Interesting that comes up now; I've been reading about hesychasm on my own, and experimenting with it.  I seem to have some data that I score higher on chess problems while praying that way, which is odd and makes me uneasy in case the Big Guy is watching me misuse his ware.

Tom said...

BTW while we're talking about mental states, have you ever read Drawing on the Right Side of the Brain by Edwards?

CNu said...

 Never even heard of it. Thanks, I'll commence to looking into it now.

nomad said...

As if you could draw on the left side. Didn't read it, but that left/right brain way of thinking was part of my approach to art.

Tom said...

Nomad, I'm no great shakes at art but I'm taking a painting class ... and the teacher seems dead set on teaching me to use the left side.  

CNu said...

Practicing knife-throwing with my son and he is of course shocked by the amount of "beginner's luck" he obtains throwing with his normally underutilized left hand.

nanakwame said...

I was taught to eat withboth hands young. Playing the conga helpalso, for the left hand is like rhythmic hand

nomad said...

That's great. If you've got the temperament . I think integration of the 2 is probably best.

nomad said...

Supposedly, if I member correct: Left side of body controlled by Right brain.

CNu said...

That's correct, hemispheric lateralization like that applies almost uniformly throughout the body and has some particularly interesting manifestations in the control and editing of vision.

All my practice as a teenager came back to me today, and I was throwing flat and smooth with about an 85% stick rate. Lil'boy was highly upset as he always wants to compete and no matter what cannot get it through his ego-head that the competition is less about results than about process.

Being mindful of the movement, the process and repeating the correct movement over, and over, and over again so that and because it feels right.

Dale Asberry said...

I'm ambidextrous, more or less. However, I've always had issues with poor balance and body space misjudgment (running into things).

nomad said...

Me too. Not ambidextrous but poor balance. I lose it for no reason, as if I were drunk.

nomad said...

I'm terrified of walking over overpasses.

Dale Asberry said...

 I do the 'drunk' stumbling when I wake up in the middle of the night and first thing after I get up in the morning.

nanakwame said...

Taught to box early and learn to lead with right hand
NB
http://www.livescience.com/18567-wacky-physics-heisenberg-uncertainty-principle.html 

Mandrien Consulting Group said...

You are not right dude, Economists are part of our life and if they will not do their job properly then all we can put in a very big trouble. I know that sometime economists are false but not every time remember that.

The Wuhan Cover-Up by RFK Jr.

brownstone  |   In the final chapters of The Wuhan Cover-Up , RFK, Jr. focuses on several key figures in the biowarfare-industrial-complex...