We must act immediately to stop the Weapons of Mass Destruction! oh wait this time I mean Economic Meltdown

[Chris Austin]

Oakman wrote:

How bleeping hard is that for the U.S. Senate to understand?

I just don't get these people. They have obviously set aside common sense. Have they even looked at statistics that show the affects of these no/low down mortgages have vs a traditional note? There is a reason that Fanny Mae eliminated the 3% seller contribution down payments; they were 3X as likely to be foreclosed on vs even the buyer putting down only 10%, Now, they have just said in essence that it is OK to pay your MasterCard bill with your Visa. Plus, I know firsthand, that no one is willing to buy notes from the originator these days without a minimum of 10% down and 3 months to a year of seasoning.

Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?

[Rob Graham]

More frightening, or enraging, depending on ones perspective, is the $350B has already been parceled out, yet there is little sign that the banks have even begun to increase lending. Perhaps the wrong Banks got all the money, or maybe they didn't tell us what they really wanted to do with it...

[wolfbinary]

JPMC actually came out and said they won't say what was done with it. Most of the banks are acting that way. I don't think they even know where it went. It just went into the general fund and that's it.

[Reagan Conservative]

Jon --- you are starting to sound like me! As I said in my "whine" post a week or so ago, when is "the change" going to start taking place?? This is worse than "the same old politics of the past". It has reached a new height in less than 3 weeks on the job.

AF Pilot

[Reagan Conservative]

I see Carson didn't have a reply for that one!! Got my 5!

AF Pilot

[led mike]

Oakman wrote:

Of course. These days, Summers's paychecks are signed by the president. Once you work for the Prez, you toe the Prez's line

You could be correct of course. Although the difference might be that Summers is now working in politics and has faced the ugly reality that our honorable *gulp* civil servant congressmen and senators are incapable of doing the right thing. Of course they get a lot of help from the honorable *gulp* private sector. ;) Did I ever tell you my theory about atmosphere. The universe was once filled with atmosphere. Today it only exists around this small planet because people suck so hard. :-D

[Oakman]

Reagan Conservative wrote:

I see Carson didn't have a reply for that one!! Got my 5!

Thanks, but in fairness to John, his sleep schedule is about 12 hours off from ours.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

[Rama Krishna Vavilala]

Oakman wrote:

and the Senate approved - a $15,000 no-pay-back tax credit for anyone who buys a new home.

Not because Johnny Isakson is my senator (from Georgia), but to me the proposal does make sense. Won't that simulate people to buy home? What am I missing here.

[Chris Austin]

Rama Krishna Vavilala wrote:

What am I missing here.

There is tons of historical data that shows that people who can't or don't make a down payment on their homes get foreclosed far more often than others. Fanny Mae closed a program in october that they had that was similar because the foreclosure rate was very high.

Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?

[Rama Krishna Vavilala]

Isn't that 15,000 a tax credit just like the interest rate deduction? So it should encourage people to buy homes especially the investors with money who are looking for bargains. That is why, this bill seems to be a great one to me,

[Chris Austin]

Rama Krishna Vavilala wrote:

Isn't that 15,000 a tax credit just like the interest rate deduction?

My understanding is that it is for a primary residence.

Rama Krishna Vavilala wrote:

So it should encourage people to buy homes especially the investors with money who are looking for bargains.

Investors with money are buying houses. But not at retail, we are buying them at 40 to 60 cents on the dollar.

Sovereign ingredient for a happy marriage: Pay cash or do without. Interest charges not only eat up a household budget; awareness of debt eats up domestic felicity. --Lazarus Long Avoid the crowd. Do your own thinking independently. Be the chess player, not the chess piece. --?

[John Carson]

Oakman wrote:

Sorry, but that is no longer true. More and more economists, including nobel laureates are saying that the package should be pared down to goals that are, essentially, what Summers defined last summer

I'm not impressed. Creationists can also come up with lists of academic supporters. There are many thousands of economists in the US. If just 10% oppose the plan, that would provide the basis for a much longer list than the one you provide. A quick visual scan of the list suggests that only two universities have significant representation: the University of Chicago and George Mason University, both bastions of free market economics. By contrast, there is only one person from Harvard, noone from Yale, noone from MIT, and the only people from Stanford are from the right-wing Hoover Institution, where Milton Friedman went after he retired from the University of Chicago. Of the three Nobel prize winners, two (James Buchanan and Vernon Smith) do not work in macroeconomics. James Buchanan is a "public choice theorist" whose opposition on libertarian grounds to a large role of government in the economy has been the unifying thread to his entire career. Vernon Smith does laboratory experiments focussing on consumer decision making and other microeconomic matters. I'm not denying that there are some distinguished economists on the list. I only claim that they represent a small minority of the profession (and a small minority of the opposition to the bill). If a vote was taken on the bill before the Senate among the economics profession, it would pass with a filibuster proof majority (and by a wider margin still if the vote was restricted to macroeconomists).

John Carson

[Oakman]

John Carson wrote:

I only claim that they represent a small minority of the profession (and a small minority of the opposition to the bill). If a vote was taken on the bill before the Senate among the economics profession, it would pass with a filibuster proof majority (and by a wider margin still if the vote was restricted to macroeconomists).

Unfortunately, economics claims to be a science - and as far as I know, scientists did not vote on whether to pass Newton's Laws, but rather subjected them to rigorous examination and testing. If, indeed, a number of (your word) distinguished physicists found what they perceived to be serious flaws in, say General Relativity, I would hope that they would not be shouted, down, voted out, or simply ignored. Perhaps things work differently in Economics and 50% +1 is enough to discover a new absolute truth.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

[John Carson]

Oakman wrote:

Unfortunately, economics claims to be a science - and as far as I know, scientists did not vote on whether to pass Newton's Laws, but rather subjected them to rigorous examination and testing. If, indeed, a number of (your word) distinguished physicists found what they perceived to be serious flaws in, say General Relativity, I would hope that they would not be shouted, down, voted out, or simply ignored. Perhaps things work differently in Economics and 50% +1 is enough to discover a new absolute truth.

1. Noone is shouting them down or ignoring them. It is simply a question of whether or not to accept a minority judgement over a majority judgement. It is worth noting in this context that there is very substantial overlap between the anti-government spending economists and the anti-bank-regulation economists. Their credibility is not at an all-time high at the moment. 2. The people who are objecting fall into two main camps: those providing nitpicking objections to small parts of the package and those with a blanket opposition to government spending in general on ideological grounds. There is a third much smaller camp of people like Martin Feldstein who don't object to the basic idea of a large stimulus package with substantial government spending, but are critical of the design of the package (doubting that it is offering the best bang for the buck). This last camp may be right but, even if they are, the package as currently constituted is still vastly better than that favoured by the no-additional-spending crowd. 3. This "truth is not determined by majority vote" stance is perfectly appropriate for those engaged in debating the substance of an issue from an expertly-informed position. For laypeople, it rarely makes sense and is very selectively applied. In another forum, I discussed the issue of climate change. With appropriate adjustments, I think the argument applies here as well.

His position, if I may summarise, is that what matters for determining scientific questions is the weight of evidence, as found in publications in refereed scientific journals. Fine, but how is a layperson to judge what the weight of evidence actually is? While it may be reasonable to expect a climate scientist to be familiar with the weight of evidence in the published literature (from reading enough of it), it is fantastic nonsense to expect that the typical citizen will be. The typical citizen needs to take someone's word for it. If s

[Oakman]

John Carson wrote:

It is simply a question of whether or not to accept a minority judgement over a majority judgement.

But it does refute the argument that all economists favor the Pelosi bill.

John Carson wrote:

Their credibility is not at an all-time high at the moment.

I don't think that there are very many economists, especially academic economists. that are seen as having a great deal of credibility. That may be unfortunate, but it is also true. That they have nothing to offer except the possibility that theories dismissed 30 years ago as unworkable are (with some tweaks) right after all, probably contributes to this situation.

John Carson wrote:

With appropriate adjustments, I think the argument applies here as well.

And it seems that the same arguments would have been advanced 25 years ago to assure the lay people that simply manipulating interest rates would solve all economic woes - or (still using the same appeal to expertism) that we were facing global starvation by 1990, or (still bowing down before the altar of Those Who Know Things) that we were about to experience glaciation. Of course experience and knowledge count. (Although I prefer to listen to people who think they still have something to learn over those who believe they only have something to teach.) Men and women recognized as knowing something about a subject should be listened to - carefully. But it doesn't mean that a reasonably intelligent human being needs to turn off his bullshit detector.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

[Lost User]

Oakman wrote:

or (still bowing down before the altar of Those Who Know Things) that we were about to experience glaciation.

This is a claim I see you repeating quite often (that they were predicting an ice age in the 70s?); it has been clarified/debunked at Realclimate.[^] As the article says, the popular press often says whatever they want and are an unreliable indicator of scientific literature consensus, for the reasons John states and for the reason that journalism is about presenting 'both sides of the story' - even if both sides of the story don't bear the same weight of evidence.

- F

[John Carson]

Oakman wrote:

But it does refute the argument that all economists favor the Pelosi bill.

Unanimity is virtually never achieved.

Oakman wrote:

I don't think that there are very many economists, especially academic economists. that are seen as having a great deal of credibility. That may be unfortunate, but it is also true. That they have nothing to offer except the possibility that theories dismissed 30 years ago as unworkable are (with some tweaks) right after all, probably contributes to this situation.

I think academic economists should have far more credibility than business economists and other "guns for hire". They operate with far more integrity. The essential change that took place 30 years ago was that the economics profession came to recognise that macroeconomics needed to give a lot more attention to supply issues alongside their concern with demand issues. Supply issues weren't a big problem during the long post WWII boom that lasted until the early 70s and so economists got into the habit of not paying a lot of attention to them. It was also the case that some supply problems (notably huge increases in oil prices) were not readily fixable, and certainly not by just manipulating demand. That didn't mean that the understanding of the determinants of demand was wrong, just that it wasn't of central relevance. Demand issues are of central relevance for the current crisis, which is fundamentally a crisis of demand.

Oakman wrote:

And it seems that the same arguments would have been advanced 25 years ago to assure the lay people that simply manipulating interest rates would solve all economic woes - or (still using the same appeal to expertism) that we were facing global starvation by 1990, or (still bowing down before the altar of Those Who Know Things) that we were about to experience glaciation.

I don't think there was anything like a professional consensus on any of those three issues. But I never claim that the consensus of experts is an infallible guide --- merely that it is better than any alternative.

Oakman wrote:

Men and women recognized as knowing something about a subject should be listened to - carefully. But it doesn't mean that a reasonably intelligent human being needs to turn off his bullsh*t detector.

I agree. One of the reasons why is

[Oakman]

John Carson wrote:

Unanimity is virtually never achieved.

36 hours ago it was, according to you, unanimous except for Rush Limbaugh and his ilk. I'm sure I don't need to quote you in order to remind you of your blanket statement. My whole point in publishing that list was to make it clear that there was no unanimity.

John Carson wrote:

They operate with far more integrity.

And with far less accountability? There are too many people in trouble for a bunch of academics to shrug helplessly in a couple of years and say "ooopsie."

John Carson wrote:

The essential change that took place 30 years ago was that the economics profession came to recognise that macroeconomics needed to give a lot more attention to supply issues alongside their concern with demand issues.

And what, I think I have reason to wonder, will the economics profession recognise during the next 30 years that causes them to reverse course once again?

John Carson wrote:

merely that it is better than any alternative.

Not if the experts have a track record of getting it wrong. If NASA has two shuttle crashes in 40 years, that's an acceptable fail rate - especially since only ten lives are lost. If they have one shuttle out of two crash, then we need new experts.

John Carson wrote:

One of the reasons why is that a lot of issues involve values and ideology and not just technical issues, and it is important to try to figure out to what extent a policy recommendation is based on technical considerations and to what extent it is a matter of values/ideology (which is not to endorse the attitude that it is "all ideology" and you should only believe people of the same ideological stripe as oneself).

We are in total agreement. But what am I to do? My bs detector goes off no matter which solution is put forth as the One True Answer. I find myself actually agreeing more with Keynes (before his message got interpreted by his apostles) than anyone else - and that scares me a bit, too. As to the so-called stimulus bill, I am afraid that there is far more pork in it than you may realise or than Obama wants to admit. This morning I listened to the mayor of Shreveport, LA explain why eight Harleys and two water slides for the city park were going to create

[Oakman]

"A survey completed last year by Dr. Murray Mitchell of the National Oceanic and Atmospheric Administration reveals a drop of half a degree in average ground temperatures in the Northern Hemisphere between 1945 and 1968. According to George Kukla of Columbia University, satellite photos indicated a sudden, large increase in Northern Hemisphere snow cover in the winter of 1971-72. And a study released last month by two NOAA scientists notes that the amount of sunshine reaching the ground in the continental U.S. diminished by 1.3% between 1964 and 1972." - Newsweek, April 28, 1975 Experts, all.

Jon Smith & Wesson: The original point and click interface Algoraphobia: An exaggerated fear of the outside world rooted in the belief that one might spontaneously combust due to global warming.

[John Carson]

Oakman wrote:

36 hours ago it was, according to you, unanimous except for Rush Limbaugh and his ilk. I'm sure I don't need to quote you in order to remind you of your blanket statement.

Evidently, I need to remind you. I referred to "the large majority of serious opinion", not the "unanimous view of serious opinion" and said: "The other side mainly consists of the Rush Limbaugh know-nothing crowd" --- mainly, not exclusively.

Oakman wrote:

And with far less accountability?

Less accountability and less power.

Oakman wrote:

And what, I think I have reason to wonder, will the economics profession recognise during the next 30 years that causes them to reverse course once again?

It is not a matter of reversing course. It is a matter of becoming more sophisticated. There are missteps, but things are learned and progress is made.

Oakman wrote:

Not if the experts have a track record of getting it wrong. If NASA has two shuttle crashes in 40 years, that's an acceptable fail rate - especially since only ten lives are lost. If they have one shuttle out of two crash, then we need new experts.

Not if the new experts produce 9 out of 10 crashes. And where do you propose getting these new experts?

Oakman wrote:

As to the so-called stimulus bill, I am afraid that there is far more pork in it than you may realise or than Obama wants to admit. This morning I listened to the mayor of Shreveport, LA explain why eight Harleys and two water slides for the city park were going to create jobs more efficiently than fixing up the Interstate. (And those line items are in there in this non-earmarked bill WTF ) As I said, almost ten days ago, I wouldn't have any problem with us spending twice as much money as the present bill talks about - If it were to go to repairing bricks and mortar. And two trillion is about what the Society of Civil Engineers (see, I can hide behind experts, too) says it will take to restore our highways, bridges, water supply, etc. Items that will still be used by my grandkids when the bill for this mess comes due. Here I stand, I Keynes go no further.

I'm not going to defend every detail of the spending bill. I would make two points: 1. Pork creates jobs too. 2. In an 800-900 billion bill, pork that