historiblogography

if we don't paint these rocks, a pony will die

Witness Warren Buffett's astounding PBS interview, much discussed over the last few days, and try to read this without cringing:

SG: But there is debate about whether there should be fiscal stimulus, whether tax cuts work or not. There is all of this academic debate among economists. What do you think? Is that the right way to go with stimulus and tax cuts?

WB: The answer is nobody knows. The economists don’t know. All you know is you throw everything at it and whether it’s more effective if you’re fighting a fire to be concentrating the water flow on this part or that part. You’re going to use every weapon you have in fighting it. And people, they do not know exactly what the effects are. Economists like to talk about it, but in the end they’ve been very, very wrong and most of them in recent years on this. We don’t know the perfect answers on it. What we do know is to stand by and do nothing is a terrible mistake or to follow Hoover-like policies would be a mistake and we don’t know how effective in the short run we don’t know how effective this will be and how quickly things will right themselves. We do know over time the American machine works wonderfully and it will work wonderfully again.

We have no fucking clue what we're doing, so let's do a whole lot of it. Or, switching on the English-to-Magik Faerie Duste translatatory machine-gizmo device:

1.) Give away massive assloads of government cash
2.) ???
3.) Commercial vitality!!!

When you don't know how to get from Point A to Point B, stop running around in circles. Taking action because it would be a "terrible mistake" to take no action, but it beats the shit out of everybody what action to take, leads to -- well, to 130,000 troops still on the ground six years later. The impossible-to-defeat bias toward intervention leads downhill; we do something merely so we're not doing nothing, and we're as likely to make the crisis worse as we are to make it better.

During the Bush years, I constantly wished we had a smart and effective opposition party to Bush's left. Instead, we got, you know, those fucking assholes. During the Obama years, I'm pretty sure I'll constantly wish for a smart and effective opposition party to Obama's right, a feeling I began to get about three minutes into the High Imperial Inauguration Rally. Instead, we'll get...

(Sighs heavily.)

Meanwhile, the pro-intervention punditry makes Kristolian leaps to show that the pony is in heaven, waiting to be born. Paul Krugman couldn't be a smarter guy, but look WTF he's writing, these days. Yesterday:

First, there’s the bogus talking point that the Obama plan will cost $275,000 per job created...

The true cost per job of the Obama plan will probably be closer to $100,000 than $275,000 — and the net cost will be as little as $60,000 once you take into account the fact that a stronger economy means higher tax receipts.

A mere $100,000 per ten dollar an hour retail job -- cheap!

At the risk of repeating myself, condominium prices in my neighborhood quadrupled between 2000 and 2007. Condominium values most certainly did not quadruple during those years; the price differential was created in Enronland, where money is grown in our collective ass. Fake wealth has vanished; free government cash is not going to make it reappear. The pony is dead. The $150 billion stimulus didn't work, and the Fed's lower interest rates didn't work, so we got a $700 billion stimulus and $2 trillion in so-cheap-it-makes-your-teeth-hurt commercial loans that followed a little-discussed expansion of the Fed's role in the economy. And that hasn't worked, so we'll get an $850 billion stimulus package full of social programs that are somehow supposed to make Circuit City not be dead (or something). And when that doesn't work?

I make my usual bet of one shiny notional silver dollar: We'll see a "financial surge" in 2011. And Obama's argument for reelection will be that "the surge worked."

The surge, ladies and gentlemen, will not have worked.

posted by Chris Bray @ 8:42 AM