Links on the current crisis from Greg Mankiw

Here are some links worth reading. I'd be interested in hearing some of the issues brought up here addressed, especially from the less interventionist authors.

The End of the Republican party?

There seems to be almost universal accord among mainstream and liberal economists on the bailout plan (it's bad but necessary given political constraints). There are some really strong feelings about this . . .

Delong: Time to Shut the Republican party Down

Mark Kleiman:

Magnitudes: Total value of the bailout bill: $700 billion. Net cost to the taxpayer: unknown, but much less than that [$100 billion]. Drop in the value of U.S. stocks today when the bill failed to pass: $1.3 trillion.

That's not quite the right comparison. There is also a loss of $2.0 trillion or so in lost wages corresponding to the lost expected profits that are reflected in the stock market declines.

The House Republicans thus have a benefit-cost ratio of -30-to-1.

How much will the bailout cost?

Two useful links:

James Galbraith: How much will it cost and will it come soon enough?

Paul Krugman: Where will the money come from?

Horray, we're possibly doomed

House to Wall Street: Drop Dead

Newsweek: Palin is not ready

Not to kick this unfortunately living horse again, but . . .

Fareed Zakaria: Can we now admit the obvious? Sarah Palin is utterly unqualified to be vice president. She is a feisty, charismatic politician who has done some good things in Alaska. But she has never spent a day thinking about any important national or international issue, and this is a hell of a time to start.

Go Home Mrs. Palin. Please.

Jeffrey Goldberg: Sarah Palin Endorses Hamas (unwittingly)

Live From New York it's Sarah Palin again!

Krugman holding his nose on Paulson Plan

I'm not going to pretend to understand what he's talking about well enough to make any kind of commentary, but many others who know what they're talking about seem to share Krugman's sentiments. The extra links and bolding are mine of course.

Krugman: The fundamental problem in the financial system is too little capital; bizarrely, the Treasury chose not to address that problem directly, by (say) purchasing preferred shares in financial institutions. Instead, the plan is premised on the belief that toxic mortgage-related waste is underpriced, and that the Treasury can recapitalize banks on the cheap by fixing the markets’ error.

The Dodd-Frank changes make the plan less awful, mainly by creating an equity stake. Essentially, this makes it possible for the plan to do the right thing through the back door: use toxic-waste purchases to acquire equity, and hence inject capital after all. Also, the oversight means that Treasury can be prevented from making the plan a pure gift to financial evildoers. But it’s still not a good plan.

So is it better to have no plan than a deeply flawed plan? If it was the original Paulson plan, no plan is better. Dodd-Frank-Paulson may just cross the line — let’s see what details we have if and when agreement is reached.

If the plan looks not-awful enough, I’ll be pro. But I won’t be cheering — I’ll be holding my nose.

To McCain: Send this poor lady home

I just watched "the interview" with Katie Couric. As I watched, I kept saying to myself, "Who is this woman?" In all seriousness, and putting my prejudices aside as much as possible, she did not know what she was talking about. She was so obviously unprepared that I started to feel bad for her; it's not her fault (mostly) that she's in this mess. The vice president should command respect and at least a certain level of reverence for her knowledge and abilities, not pity.

If she (or the McCain people these days) had any respect for our nation's institutions, she'd be booked on the next available flight to Anchorage and replaced with Mitt Romney or someone, you know, serious.

Anyway, here's the interview for anyone who missed it.

Part I



Part II

Drama at the Capitol

Talks Implode During Day of Chaos

Krugman's commentary

A good look at the candidates' tax plans

Here's a newly updated (within the last couple weeks) analysis of Obama's and McCain's tax plans from the Tax Policy Center. It's worth reading at least the abstract.

And here's what seems to be a fairly well-argued and brief statement from Brad DeLong on why Obama's plan is better.

What, pray tell, is McCain accomplishing by skipping the debate?

I realize I am biased, but I really don't see anything except the basis for a cheap campaign commercial. I guess I can imagine it being a good idea to postpone the debate a little since no one is really focused much on foreign policy. But lets not pretend that John McCain is going to give that decisive shot of economic wisdom that is going to save the financial system. Feel free to enlighten me if you understand it differently (there ARE people who read this blog, right?). Some pertinent snippets:

Colbert King: The Right Soapbox for McCain

What is John McCain going to do in Washington this week? The Senate banking committee, led by Sen. Christopher Dodd (D-Conn.), has the lead in fashioning legislation to enable a bailout of the financial industry.

McCain is not a member of that committee.

He serves on the armed services committee, the commerce committee and committee on Indian affairs. Those committees do not have oversight of the financial markets nor responsibility for putting together a rescue package.

Banking committee members -- Republicans and Democrats -- don't need to check with the GOP presidential nominee before they act. Nor should they. After all, McCain has already admitted that he needs to get up to speed on the economy. He'll have plenty of time to express himself once a bill is reported out of committee . . .

CNN: McCain suspends campaign

"It's my belief that this is exactly the time when the American people need to hear from the person will be the next president," Obama said in Clearwater, Florida. "It is going to be part of the president's job to deal with more than one thing at once. It's more important than ever to present ourselves to the American people." . . .

"I am calling on the president to convene a meeting with the leadership from both houses of Congress, including Sen. Obama and myself. It is time for both parties to come together to solve this problem."
. . .

Senate Majority Leader Harry Reid issued a statement saying. . .

"It would not be helpful at this time to have them come back during these negotiations and risk injecting presidential politics into this process or distract important talks about the future of our nation's economy," the statement said. "We need leadership, not a campaign photo op.

"If there were ever a time for both candidates to hold a debate before the American people about this serious challenge, it is now," he added.

. . .

Sen. Chuck Schumer, D-New York, said McCain's move was "just weird."

"We haven't heard hide nor hair of Sen. McCain in these negotiations," said Schumer, chairman of the Senate Banking Committee. "He has not been involved except for an occasional, unhelpful statement, sort of thrown from far away, and the last thing we need in these delicate negotiations is an injection of presidential politics."

The Economist on McCain

My those Brits are mean.

Richard Milhous McCain . . . Rick Perlstein, the author of “Nixonland”, points out that, from Nixon’s time onwards, “culture” has always been just one part of the Republican trifecta, which also includes economic management and foreign policy. Richard Nixon and George Bush senior offered mastery of foreign policy. Ronald Reagan offered a revolutionary mixture of free-markets at home and assertiveness abroad. But this year the Republicans are left with nothing but a culture war to sell to the voters—Richard Nixon with the redeeming features left out.

More Krugman on the financial crisis

Ahoy me hearties! It be talk like a pirate day!

talklikeapirate.com

Ye Dave Barry column that made it famous.

Hooray! The Economy is tanking!

Only an economist could show this much academic (self-congratulatory?) glee over finding an analogy that means we're all royally screwed. Probably worth paying attention to since this man seems to be right about everything else (After reading Krugman a few years ago, I told a relative not to invest in real estate because there was a housing bubble, then got to say "I told you so" after his investment went badly. I felt smart . . .).

Krugman: Titanic events in the market

September 17, 2008, 4:03 pm

Titanic events in the market

A sinking feeling

A thought I had today: as I understand it, when the Titanic hit that iceberg, at first the crew didn’t think it was so bad. The ship’s hull was divided into watertight compartments, and not enough of them had been ripped open to sink the ship. But the flooding from the initial hole tipped the ship, and the compartments were open at the top, so that compartments that hadn’t been ripped open by the impact of the iceberg started filling up, tipping the ship even more, flooding more compartments …

Remind you of anything in the news lately?

Tina Fey is Brilliant

Reason for Pause

You know your reading is slanted, when Amazon recommends this based on your past purchases.

"The Incredible Shrinking Cereal Box"

The idea behind this article from CNN/Money is that rather than raise prices, food companies are opting to put less in the box. The article presents it as some kind of underhanded theft, but I'm not convinced it's a bad trend. From what I've read, people tend to eat and be satisfied with what is placed before them (to an extent of course). So if food comes in lower quantities, could this help fight obesity? Just a thought.

Politico on the McCain Campaign

Politico: Why McCain is going so Negative

I really do somewhat feel for John McCain. He was more or less unsuccessful at the national level as long as the "straight talk" rule stood. His high-mindedness in the 2000 election was brutally and savagely shown to be ineffective against a politician lots of money and no shame like George W. Bush. He is now more popular than he has every been (which reflects as badly on his supporters as anyone). This revelation is well-put in the above article. A few excerpts:

We recognize it’s not going to be 2000 again,” McCain spokesman Brian Rogers said, alluding to the media’s swooning coverage of McCain’s ill-fated crusade against then-Gov. George W. Bush and the GOP establishment. “But he lost then. We’re running a campaign to win. And we’re not too concerned about what the media filter tries to say about it.”

...

“Every day not talking about the economy, the war and how to fix a broken system is a victory for McCain,” said John Weaver, a former top strategist to the nominee who left the campaign last year. “They’re going to ride it as long as they can and as long as the mainstream media puts up every ridiculous charge.”

...

“If they don’t attack her [Palin], she’s going to go back to being the vice presidential nominee,” Nelson said of the Democrats. “And in the natural scheme of things, the focus will go back to McCain and Obama.”

This last point seems to be important, and is part of the reason I try not to talk about Palin anymore unless I'm asked (I have two days and counting). She is relevant because she reflects badly on McCain's judgement and character. If the focus can be brought back to McCain, I think he will drop back down to a more socially optimal level in the polls.