TomGrey's blog

http://www.facebook.com/home.php?ref=home#/profile.php?id=746220992&ref=nf;

Sorry if you can't see it.

Martin came from Communism, where the leaders promised free speech and religious freedom, but then took away guns, took away free speech, and took away free religion.

A lot like Obama is promising.

Thanks, Nina; thanks Martin.

Newt Gingrich likes to talk about Republicans regaining popular support by championing an agenda that has the support of an “overwhelming majority” of Republicans, Democrats and independents.  But how do Republicans regain intellectual credibility after so many retrograde years of anti-intellectualism?  Perhaps Republicans should look at areas where overwhelming majorities of the academic elites agree, then craft policies around those broad areas of intellectual agreement.  And then, let the Democrats take the anti-intellectual, self-discrediting positions for awhile.  Of the list below, #'s 2, 5, 6, 7, 8, 9, 11, 13 and 14 seem like excellent areas of agreement around which Republicans can make good policy. - Jon Henke

Greg Mankiw has a great set of the mostly in agreement propositions:

Today, far too many people hear and believe the Dem, anti-market message that Unregulated Banker Greed caused these problems.

What is the consitent Republican Narrative?  We need the best, most true narrative to fight against the false, anti-market, anti-greed smearing that the Dems and their MSM enablers want to spread.

A great start is the Cato Unbound series of blog posts and continuing conversations, starting with a fine Austrian, Larry White on What Really Happened.

Perhaps later I'll revisit this suite of essays, extracting bullet points, and listing them.  Because that's what Reps need, the fairly complete set of bullet points about what happened.

(1) Federal Reserve credit expansion that provided the means for unsustainable mortgage financing, and (2) mandates and subsidies to write riskier mortgages. The enumeration of regrettable policies here is by no means exhaustive.

This list gets longer, and more detailed, in later posts by Larry and others, including useful dissent from J. Bradford DeLong, a prolific blogger and supporter of Paul Krugman.

But the final note by Larry i, while academically fully defensible, s a too weak political conclusion:

It is thus reasonable to think that the crash in the mortgage market was “in some sense,” i.e. to some extent, the fault of excessively risky lending by Fannie Mae and Freddie Mac.  Whether or not we call it “the dominant feature of the mortgage market in the 2000s” (emphasis added), it is safe to say that it was an important feature.  Fannie Mae and Freddie Mac did push the lending financed by their implicit government guarantee “past the limits of prudence.

Republicans need to repeat, over and over, that the primary causes were 1) cheap money, and 2) Gov't interference in the market, pushing to get banks to lend more to risky borrowers.

Other points could be extracted as well, but the main points need to be few, and simple, and true.

The BBC has a good Timeline.

From 2004-2006:

After a two year period between 2004 and 2006 when US interest rates rose from 1% to 5.35%, the US housing market begins to suffer, with prices falling and a rise in homeowners defaulting on their mortgages.

Default rates on sub-prime loans - high risk loans to clients with poor or no credit histories - rise to record levels ...

Then the sub-prime mortgage brokers start going bankrupt.

It's interesting, and telling, that there is no mention of builders going bankrupt.  But residential construction lost over 500 000 workers, and probably far more if the undocumented illegals were to be included.

Because finance IS crucial to successful growth, there are good reasons to be extra careful with the financial system.  However, there's been far too huge growth in Finance, fuelled by the easy profits of mispricing CDS risk and collecting fees w/o giving true value added.

It's easy to understand that overbuilding in houses means a huge drop in construction, and a drop in construction jobs.  Similary, overbuilding in Financial Instruments like Credit Default Swaps, means a huge drop in finance jobs.

All the Big Banks are insolvent, we should be preparing Pre-Packaged Chapter 11 Bankruptcy proceedings, to wipe out shareholders and most bondholders and all top executives.  Let their true loan assets be sold, and their toxic assets be held for a massive clearing house matching  & consolidation exercise to be held by the SEC / Fed / Treasury / Justice.

Bankruptcy of the bad BigBanks will allow space for good mid-banks to grow.  The country needs growth, not salvage of insolvent orgs in an overbuilt industry.

Reps should be pushing Tax Cuts first, immediately.  With separate debates and considerations for all other major spending programs.  People know what they would do with 'more money' -- whatever helps them the most, right now (including better preparation for the future).

The best help for the banks: huge Tax Cuts, now, for people and companies, so that there can be more savings flowing into the banks while at the same time reducing the indebtedness of people and firms. It's insane that an argument against Tax Cuts is that not enough will be spent, because too much will be saved -- while at the same time arguing for special gov't cash to go into the banks

The Atlantic's Rober Barro interview had him pushing tax cuts for the income effect, and the incentive effect.  Barro specifically doesn't like shovelling money at people.

<!--break-->

But I do.  The country is better off if the gov't shovels money at people, now, and let's them decide how to spend it, or save it.  The stimulus is going to have gov't decide, and gov't be full of corruption and waste.

What is curious is that Barro does admit the Financial System has a problem, and sort of supports the gov't helping out that problem.  But I see two obvious options, a) direct gov't bailout to banks, and b) indirect support for banks by REDUCING personal debt.

 Tax cuts now, giving folks more cash, will result in many of them saving / paying off their credit card debt.  This is good, even if it's not immediate stimulus.  It means the long term indebtedness of the taxpayer goes down. AND it helps the banks, by them having fewer loans outstanding / more savings (tier 1 capital).

More recently, Tyler lists

#1, but we need Pre-Packaged Chapter 11 bankruptcy for ALL the Big Banks with toxic assets they've poisoned themselves with.  Bankruptcy, not nationalization.The 40% share of corporate profits being made in 2006 by the financial industry was Ponzi scheme betting on bets made by betters who didn't know they were betting -- except everybody knew "house prices never go down".Like not needing newspapers, the internet means the future USA doesn't need nearly as many bankers for taking saver's cash and allocating it to good production / distribution / service businesses.The growth of 'finance' was huge mal-investment; even worse than over-building residential houses.The best help for the banks: huge Tax Cuts, now, for people and companies, so that there can be more savings flowing into the banks while at the same time reducing the indebtedness of people and firms.It's insane that an argument against Tax Cuts is that not enough will be spent, because too much will be saved -- while at the same time arguing for special gov't cash to go into the banks.

 Greg Mankiw has been following and participating in this debate as well, and notes that Keynes favored a cut in SS payroll taxes in bad times.

Tyler Cowen of Marginal Revolution notes how the pro-stimulus folks are much bigger on insulting the critics, than in producing evidence that stimulus will work.

 There are also theories of TARP evolution which are amusing.

The banks ARE insolvent. We need Pre-Packaged Chapter 11 bankruptcy for ALL the Big Banks with toxic assets they've poisoned themselves with. Bankruptcy, not nationalization. The 40% share of corporate profits being made in 2006 by the financial industry was Ponzi scheme betting on bets made by betters who didn't know they were betting -- except everybody knew "house prices never go down".

Like not needing newspapers, the internet means the future USA doesn't need nearly as many bankers for taking saver's cash and allocating it to good production / distribution / service businesses.

The growth of 'finance' was huge mal-investment; even worse than over-building residential houses.

The best help for the banks: huge Tax Cuts, now, for people and companies, so that there can be more savings flowing into the banks while at the same time reducing the indebtedness of people and firms.

It's insane that an argument against Tax Cuts is that not enough will be spent, because too much will be saved -- while at the same time arguing for special gov't cash to go into the banks.

Tax Holiday, or Payroll Tax Cuts would, over the current and next month, current and next quarter, and even over the whole year, be a better policy than the gov't spending stimulus.

One key measure of any anti-depression policy should be the % of the total policy $ that is spent in the immediate time period (month, quarter, year).  Via Fabius Maximus, one anti-tax cut article analyzes the 2008 tax rebate: “The Economic Outlook and Stimulus Options”, Mark Zandi ( Chief Economist of Moody’s Economy.com), Senate Budget Committee, 19 November 2008 (see  Table #1 on page 10.)

The point is that the Dems want to argue that Tax Cuts aren't good enough for stimulating the economy, relative to some other alternatives like more for Food Stamps and extending Unemployment Benefits (which Reps should support in these times).

My point is that, using the same measure of effectiveness, Payroll Tax Holiday is far, far better than what Obama has.  And the difference should be estimated and publicized.

The MAIN problem is that Republicans want workers to decide how to spend any stimulus, and Dems want elite, tax-cheaters to decide. 

This is also clear in the comments to Matthew Yglesias reasonable discussion of The Paradox of Thrift.  However, the main idea seems to be to oppose Tax cuts ... because they support too much savings.

Personal consumption will help the economy now -- personal savings will help allow the future economy to grow, as would reduced debt.

Paying later for gov't directed half-mal-investment will certainly reduce growth later.

There are huge problems in the economy right now, it is politically required (by voters, the boss) that gov't do something.

Big temporary deficits, thru a Big Tax Cut (Tax holiday), is what Reps should be proposing.  The money should not be borrowed, it should be printed, created by fiat.

Which, usually, would cause inflation.  But not now.  The tax holiday should continue until employment is positive for a month or a quarter.

The argument against tax cuts/ rebates is that they are not efficient enough, because many folk do not spend the extra, but save it.  Only spening 17-33%, for instance.

This is double silly bogus.  First, for the mid and long term, reducing household debt is great, and will mean more growth in the future.  Second, as compared to other programs, like the pork-stimulus, tax cuts increase cash for people FAST.  Most of the pork won't be paid for in the first month, nor even quarter; nor even year 2009!

The big Bush/ Rep failure was failure to reduce spending in the post-tax cut 'good years'. 

But the real failure is that of voters.  Voters have been consistently voting for spending more of Other People's Money, which is always less efficient and more wasteful than spending one's one money.

(Via Fiscal Irresponsibility)

Rep leaders must attack the culture of irresponsible greed--greed for spending & controlling Other People's Money.

In fact, it's the OPM that the voter is addicted to, and which must stop.  Only then can gov't realistically reduce spending, when voters accept it.

Via Roger Simon's Dinner in Gaza, I have a suggested pair of policy options for Israel.

Occupy better -- or leave.

M.A.D. ain't gonna work with Mad Mullahs. Probably. Who knows? I say it's an 80% of working, meaning that if Iran gets a nuke, within 5 years they, or 'someone (un-identified)', uses it on Tel Aviv. It's only a 20% (my guess -- why don't others try to quantify their own guesses?) risk! If I were King of Israel: yes, SECRETLY warn France that Paris WILL be a target if a nuke lands; and London, and Berlin, and ... even Rome???Certainly Moscow? or St. Petersburg (sub launched from Baltic?).  And of course Tehran & Cairo & Damascus & Riyad h. [But would the leaders believe the moral Jews would really do it?  I'm not sure I believe they would.][King /off]Evacuation is better.Really.  The Jews have FAILED at creating a democracy at peace with their Palestinian neighbors.  They FAILED at post '67 Occupation.If I were King (cont.)Re-occupy Gaza, about 100 000 Palestinians near the border at a time.  Use the streets and put up the big concrete barriers to reduce Palestinian movement.  Declare Martial Law in the new Israel Occupation Zone.  Draft all able-bodied Israeli Arabs into a new, Arab-Jew (not Muslim-Jew) reconcilliation force.Temporarily Evacuate that part of Gaza (~100 000 Palestinians), separating able bodied men from the rest. Israel should create a digital Palestinian passport, with foto and fingerprints, for all Palestinian 'guest refugees'.Create work camps and construction groups who build temporary structures, and do humane, productivity oriented re-education towards jobs.Daily bus tours, required, of the sex-segregated Palestinians thru Israel, explaining how Israel is successful thru loving peace, and Palestine is a failure thru accepting leaders the prefer death.Israel does NOT have time for the Palestinians to evolve their own civilized, peace-loving, neighbor accepting nation state.  Israel NEEDS to learn how to spread democracy at the point of a bayonet.There is no time to wait for a Gaza Awakening.  But there is still time to intensely do house to house searching, and find most of the bad Hamas guys among the first 100 000, and punish them.  Certainly if guns are illegal, and the houses are searched, and weapons found, those folks with fingerprints (matched against the Palestinian Passport) on the guns can be called terrorists.  Begin executing the 'terrorist spies', in accordance with the Geneva Convention.  Those Hamas folk who weren't wearing uniforms are spies.Maybe allow Hamas folk to emigrate / gain asylum, if some foreign country accepts them and they surrender any right to return, upon pain of death.Help groups of Palestinians start little companies, restaurants, merchant markets, computer repair work -- and provide real money for them to earn, with real interesting stuff to buy.  Focus primarily on the carrot, not stick, at changing behaviors -- do the desired stuff and get cash, don't do it, or object to doing it, and get no cash.In other words, Do Occupation & Re-Education Correctly.Special handling for UN folk -- challenge their support efforts thru following cash.  The cash they can't prove, thru documents, that went to aid, will be assumed to be used in support of terrorists attempting to murder Jews.  ???  Nahhhh.  If Israel doesn't so something different to change the minds of the Palestinians, then evacuation will be the last option better than MAD. (The USA should accept all Jews from Israel if Iran is within 3 month of getting a nuke.)

What the economy needs is private people making peaceful choices about where to spend their own money.  If the gov't wants the people to spend more, now, the easiest AND fastest way to do that is to have the gov't STOP TAKING it.

A one quarter, 25% tax holiday could be done with emergency legislation but not need any additional gov't workers.

Tax cut puts workers' money back in the decision making control of the workers, or companies, who created the wealth represented by the income.

For all other stimulus programs, Reps should ask for a) a requirement to fulfill, and publically document, every and all regulations on safety, environment, finances, etc., as well as b) a call to de-regulate for all so that all new endeavors can be done sooner.

If increased solar power use projects, which I support, are required to have EPA assessments done before they can be built, the regulatory delay is more clearly identified as an enemy of economic well being.

Obama promissed pragmatism -- the Reps should agree with him when he promises tax cuts. 

For we "Civil Unions but not gay marriage" types, it would be helpful if there was a state by state collection of all the contractual obligations and rights of a marriage. This book of forms could easily be filled out by any two adults who wanted to choose to enjoy the set of legal adult to adult rights that goes along with marriage.

It would also be a good civil education project for learning / teaching what the implicit rights and duties of marriage are, and how they're duplicated explicitly by the Union Contract.

I agree that two adults who care about each other, and want to live together for the rest of their lives, should be able to fairly easily arrange their economic and care precedance affairs.

However, 'marriage' is primarily for children, followed by society, and only in third place for the couple.  I oppose legalization of gay adoption, and think that all children with a homosexual parent will be at a small disadvantage in life as compared to those with married natural parents.  If the children are raised by two same-sex parents, I'd suspect that they their disadvantage would be less than being raised by a single parent, which is also becoming all too prevalent.

I am especially afraid of gay marriage becoming the type of norm that allows Hate Speech laws to be used against any religion which preaches that homosexual sex is sinful / evil.

This is already happening in Europe.

Support for Civil Unions, as the non-children equivalent of marriage, seems the best long term position for Reps to take.  It's certainly best for me.