Obama Is Wrong On The Economics Blogosphere

[interestrateripoff]

http://blogs.telegraph.co.uk/edmund_conway...ics_blogosphere

So President Barack Obama has come out and warned against relying on economics blogs. His criticism is apparently that they can create an overly simplified assessment of the dilemma facing the world's economy and financial system.

"Part of the reason we don't spend a lot of time looking at blogs," he said, "is because if you haven't looked at it very carefully, then you may be under the impression that somehow there's a clean answer one way or another - well, you just nationalize all the banks, or you just leave them alone and they'll be fine."

In my view this criticism is completely misdirected - isn't this just as much the case for all mainstream pieces of economics analysis in newspapers, their online equivalents and, most egregiously of all, television coverage of the crisis? I sympathise with the argument - these are massively complicated issues to wrestle with; there is no silver bullet, and much as writers, columnists, bloggers and pundits may make a very eloquent or forceful point in favour of nationalisation, bail-outs or insolvency, for instance, the appropriate policy response is rarely so simple.

However, ‘twas ever thus. The job of journalists and commentators, whether they are writing online or in print or are simply talking on television or radio, is to present their readers or viewers with an easily digestible version of events. We tailor our articles to be as broadly understandable as possible while hopefully not losing sight of the sophistication or equivocal nature of life.

I believe our readers understand that: no-one truly believes that by reading one article by Paul Krugman, Simon Johnson or Greg Mankiw they will suddenly understand how this crisis will be solved. Or at least I hope not. It is patently clear that this is a far more complex and convoluted mess than that. Each article makes a partial contribution to our understanding of the crisis, in just the same way as President Obama and Prime Minister Gordon Brown receive from their advisors a menu of different possible policy options, and alongside them a list of pros, cons and possible risks.

Humans crave a simple narrative of life - this is something built into our cognition of the world. But life is complicated - it blows narrative apart. The illusion that there can be one coherent, linear record of what is going on, whether it be in the financial system, the economy, diplomacy, commerce or technology, is seductive but wrong. No-one should pretend otherwise.

Moreover, if there is one sector of the media which is less guilty than anyone else of trying to oversimplify it is the economic blogosphere. I'm working on an article on how economics blogs are gradually but profoundly changing the way economics works, which I will post up soon.

In the meantime, one fundamental point is that the best economics and finance blogs are even more detailed, discursive and deeply analytical than one can find in any newspaper. There is some dross out there as well but the good stuff is really, really good. Some of the analysis and charts I've found on my favourite sites have been truly mind-bendingly complicated (but, once you get your head round them, incredibly interesting) and could never grace the pages of the mainstream press.

Likewise, because of the inherently dialectic structure of blogging (bloggers often post in response to other bloggers' arguments) it would be patently clear to Obama if he bothered to read a few that the arguments are part of a bigger, more complicated and more diffuse debate. As a newspaper columnist one of the attractions of blogging has been to be able to engage with both those who comment here and those who blog elsewhere - you can't make those kind of assumptions when writing a newspaper column.

If Obama read certain forums he might get a better understanding.

However I am guilty of over simplifying the argument as I keep saying the problem is debt, you can't get it anymore simplified than that.

[Um_Bongo]

K.I.S.S.

[MOP]

http://blogs.telegraph.co.uk/edmund_conway...ics_blogosphere

If Obama read certain forums he might get a better understanding.

However I am guilty of over simplifying the argument as I keep saying the problem is debt, you can't get it anymore simplified than that.

Well he needs to start listening to someone with half a brain because Geithner and co. don't seem to have a fooking clue. The dow is down once again today.

[SMAC67]

So it's official then, Obama is an idiot, and righteous one at that. The old, "it's complicated, better leave it to me." argument so beloved of our elites. I would suggest that it is he who hasn't a clue, and why should he, his ilk caused the problems in the first place.

[1929crash]

I actually like qe from that perspective - nobody has a liability. Perhaps banks should not be able to create credit money with FRB. They should borrow the money from the BoE who control the supply with the rate they set on it.

Well when you put it that way I quite like the idea of being quantitatively eased, but don't tell Mandy.

[yaakov]

If you say the problem is debt, then under our system, you say the problem is money.

But I don't have a problem if I have money. It is just that someone, somewhere else, has a liability. And I'm not even particularly aware of that with my money in my wallet.

I actually like qe from that perspective - nobody has a liability. Perhaps banks should not be able to create credit money with FRB. They should borrow the money from the BoE who control the supply with the rate they set on it.

With QE doesn't the taxpayer have the liability as the central bank is expanding its balance sheet to buy Government bonds (or other bonds)?

In this way isn't this no different from a commercial bank creating credit?

edited for clarity

Edited March 9, 2009 by JimmyMac

[A.steve]

I actually like qe from that perspective - nobody has a liability. Perhaps banks should not be able to create credit money with FRB. They should borrow the money from the BoE who control the supply with the rate they set on it.

Please don't laugh... until a couple of years ago, I thought that was how it worked. I suspect a vast number of people still do.

[oracle]

So it's official then, Obama is an idiot, and righteous one at that. The old, "it's complicated, better leave it to me."

Yeah right.

When they say the economy is "stable",you need to do some right brained thinking.

They mean it is OSCILLATING in a stable fashion.

To the unwashed,we get a kind of economic bulemia,but for those who ride the waves it's surf up dude.

....like boom+bust will continue in the same timeframe,but the magnitude is bigger.

Edited March 9, 2009 by oracle

[yaakov]

Please don't laugh... until a couple of years ago, I thought that was how it worked. I suspect a vast number of people still do.

same for me. In fact I'm not sure I ever really thought about it very deeply until 2007.

However, I think hotairmail has QE wrong as I posted above.

Edited March 9, 2009 by JimmyMac

[D.C.]

So it's official then, Obama is an idiot, and righteous one at that. The old, "it's complicated, better leave it to me."

Yeah right.

When they say the economy is "stable",you need to do some right brained thinking.

They mean it is OSCILLATING in a stable fashion.

To the unwashed,we get a kind of economic bulemia,but for those who ride the waves it's surf up dude.

....like boom+bust will continue in the same timeframe,but the magnitude is bigger.

This reminds of a conversation I had years ago abseiling down the inside of an 800ft chimney debating terminal velocity

If you drop anything from a great height, eventually forces acting on it balance out and it ceases to accelerate, all of which is very interesting right upto the point it hits the ground at a great speed... Then the debate becomes academic, falling from a great height is always going to cause you a world of trouble

[eightiesgirly]

So it's official then, Obama is an idiot, and righteous one at that. The old, "it's complicated, better leave it to me." argument so beloved of our elites. I would suggest that it is he who hasn't a clue, and why should he, his ilk caused the problems in the first place.

Maybe he doesn't understand it and so, is 'leaving it to the experts'. Better not to comment, defer to the experts and stay away from it.

Crossed my mind the other day when he was soothing everyone back into the markets. Saying what his advisers told him to.

Time will tell but, possibly clueless on economics?

[interestrateripoff]

Time will tell but, possibly clueless on economics?

I thought that was a pre-requirement of all leaders.

[1929crash]

Maybe he doesn't understand it and so, is 'leaving it to the experts'. Better not to comment, defer to the experts and stay away from it.

Crossed my mind the other day when he was soothing everyone back into the markets. Saying what his advisers told him to.

Time will tell but, possibly clueless on economics?

Yeah, leave it to the experts. See what they said on the "famous last words" thread I posted earlier.

[eightiesgirly]

I thought that was a pre-requirement of all leaders.

Oh yes.

[yaakov]

no, you're wrong I'm afraid.

qe is created from nothing.

the money so created can be used to buy anything actually.

they are planning to buy not just gilts but also corporate bonds.

nothing to stop it being used to buy a dvd.

i'm just suggesting that it could be used to lend to banks at interest for lending to customers - instead of the frb and inter bank lending system

I could be wrong of course but now I am very confused and it is probably more likely that you are right than I am right

However, I still don't see how this is any different from a commercial bank creating credit. In both cases don't they just create a liability and an asset, expanding their balance sheet?

The money the central bank creates is backed by the quality of the assets in the same way a commercial bank's credit is backed by its assets.

They could just buy DVDs but then that would just store up problems for the future.

[Guest Steve Cook]

Maybe he doesn't understand it and so, is 'leaving it to the experts'. Better not to comment, defer to the experts and stay away from it.

Crossed my mind the other day when he was soothing everyone back into the markets. Saying what his advisers told him to.

Time will tell but, possibly clueless on economics?

Yes, I am getting the horrible feeling he is a bit clueless on economics

[MOP]

Yes, I am getting the horrible feeling he is a bit clueless on economics

A bit like Geithner, Summers, Bernanke and friends then. The blind leading the blind.

[yaakov]

Yes, I am getting the horrible feeling he is a bit clueless on economics

I think he will be another failure of a president.

He's employing many of the same old incompetents that got us into this mess and never saw it coming - Summers, Geithner, etc but not anyone outside of this group.

Volker is being ignored and marginalised.

He can talk better than Bush but his actions are little better.

[MOP]

I think he will be another failure of a president.

He's employing many of the same old incompetents that got us into this mess and never saw it coming - Summers, Geithner, etc but not anyone outside of this group.

Volker is being ignored and marginalised.

He can talk better than Bush but his actions are little better.

I don't believe he is any better or worse than Bush.

He relies almost completely on pre-written scripts and people are starting to notice:

Obama's safety net: the TelePrompter

Yahoo News

Thu Mar 5

President Barack Obama doesn’t go anywhere without his TelePrompter.

The textbook-sized panes of glass holding the president’s prepared remarks follow him wherever he speaks.

Resting on top of a tall, narrow pole, they flank his podium during speeches in the White House’s stately parlors. They stood next to him on the floor of a manufacturing plant in Indiana as he pitched his economic stimulus plan. They traveled to the Department of Transportation this week and were in the Capitol Rotunda last month when he paid tribute to Abraham Lincoln in six-minute prepared remarks.

Obama’s reliance on the teleprompter is unusual — not only because he is famous for his oratory, but because no other president has used one so consistently and at so many events, large and small.

After the teleprompter malfunctioned a few times last summer and Obama delivered some less-than-soaring speeches, reports surfaced that he was training to wean himself off of the device while on vacation in Hawaii. But no such luck.

His use of the teleprompter makes work tricky for the television crews and photographers trying to capture an image of the president announcing a new Cabinet secretary or housing plan without a pane of glass blocking his face. And it is a startling sight to see such sleek, modern technology set against the mahogany doors and Bohemian crystal chandeliers in the East Room or the marble columns of the Grand Foyer.

“It’s just something presidents haven’t done,” said Martha Joynt Kumar, a presidential historian who has held court in the White House since December 1975. “It’s jarring to the eye. In a way, it stands in the middle between the audience and the president because his eye is on the teleprompter.”

Just how much of a crutch the teleprompter has become for Obama was on sharp display during his latest commerce secretary announcement. The president spoke from a teleprompter in the ornate Indian Treaty Room for a few minutes. Then Gov. Gary Locke stepped to the podium and pulled out a piece of paper for reference.

The president’s teleprompter also elicited some uncomfortable laughter after he announced Kansas Gov. Kathleen Sebelius as his choice for Health and Human Services secretary. “Kathy,” Obama said, turning the podium over to Sebelius, who waited at the microphone for an awkward few seconds while the teleprompters were lowered to the floor and the television cameras rolled.

Obama has relied on a teleprompter through even the shortest announcements and when repeating the same lines on his economic stimulus plan that he's been saying for months — whereas past presidents have mostly worked off of notes on the podium except during major speeches, such as the State of the Union.

But be it extra precaution, style or a mental crutch, Obama has shown in the past that he needs the teleprompter. And while he still has his prepared remarks placed on the podium in a leather folder, the White House has shown no sign of trying to wean him off of it.

Before Obama entered a room in the Eisenhower Executive Office Building on Wednesday to announce his crackdown on defense contracts, a CNN reporter asked an Obama aide if the teleprompter could be moved further away from the podium or lowered. The answer was an unequivocal ‘no.’

“He uses them to death,” a television crewmember who also covered the White House under Presidents Bill Clinton and George W. Bush said of the teleprompter. “The problem is, he never looks at you. He’s looking left, right, left, right — not at the camera. It’s almost like he’s not making eye contact with the American people.”

Wednesday’s event posed another scenario photographers and television crews have to work around. Obama had five others join him at the announcement, including Sen. John McCain. The takeaway shot was of Obama and McCain. But the teleprompter on Obama’s left was almost directly in front of McCain.

“You couldn’t get a good angle on him with McCain,” said a White House photographer who also covered Bush. “So if there’s someone else important in the frame, it’s hard to get a shot without the teleprompter.”

http://news.yahoo.com/s/politico/20090305/...3VsdARzZWMDc3I-

Edited March 10, 2009 by Master Of Puppets

[Timm]

no, you're wrong I'm afraid.

qe is created from nothing.

the money so created can be used to buy anything actually.

they are planning to buy not just gilts but also corporate bonds.

nothing to stop it being used to buy a dvd.

i'm just suggesting that it could be used to lend to banks at interest for lending to customers - instead of the frb and inter bank lending system

My take is that QE is designed as a con. It looks like printing money to us, but to those in the know it does not, it just looks like a credible threat to print money. Let's just look at gilts for now.

The seller(s) of the gilt(s) [the outside world, the market] has not experienced any extra value (unless the BoE overpay). The BoE have spent money that they don't have on something that will earn them interest (the coupon) that they will pay to themselves. On maturity the principal will be returned to the holder (the BoE) who will destroy it, thus ending the life of the QE money.*

End result, just more borrowing from the future. Same old question; can it be paid back?

*The above all works if the BoE destroy the principal they get from themselves on maturity as promised. If they don't that is where we get the real problems.

[interestrateripoff]

I think he will be another failure of a president.

He's employing many of the same old incompetents that got us into this mess and never saw it coming - Summers, Geithner, etc but not anyone outside of this group.

Volker is being ignored and marginalised.

He can talk better than Bush but his actions are little better.

The man he beat came 2nd to Bush in 2000, do you think the republicans but anyone of quality up against him? No one wants the job because the know it's a poison chalice.