Monthly Archives: January 2009

Christie Romer Is Confirmed

And so is now allowed to speak as CEA chair about House Republican claims that their stimulus is better:>CEA Director Romer’s view is that the House analysis is absolutely incorrect. The CEA estimates that the Republican plan would create only 1.7 million jobs, compared to 4.2 million for the Democratic plan.>**Question:** The House claims that based on the research of CEA Chair Christy Romer, their plan would create 6.2 million jobs. Isn’t that a more effective way of jumpstarting the economy?>**Answer:** The Republican House analysis is flat wrong in its claim that the House Republican stimulus is more effective. No matter what your analytical assumptions, as long as they are consistent the plan the President supports would result in substantially greater job creation than the House Republican plan. >Independent groups that have analyzed the President’s plan — from Macroeconomic Advisors to former McCain advisor Mark Zandi — have confirmed that the President’s plan will create between 3 – 4 million jobs–twice the number of the House plan. The President supports takes a broad, comprehensive approach. It includes substantial tax cuts – many of which mirror the provisions in the House Republican plan. But it also includes new spending programs that many economists across the spectrum believe will help create jobs and give our economy a kickstart right now. >**Question:** But doesn’t Dr. Romer’s research show that the economic impact of tax cuts is higher than even the Administration is assuming?>**Answer:** Dr. Romer’s research suggests that all types of fiscal stimulus, both spending and tax cuts, might well have a larger impact than is typically assumed and is assumed in the CEA’s analysis. It would be great if that were so. It would mean more job creation and more economic activity — which is exactly what we need right now. The Administration has based its analyses on more modest assumptions that are in line with those several independent forecasters – Republican and Democrat alike. >We should have an open discussion about these analytical issues.>We cannot afford to play political games with apples-to-oranges comparisons. Such political gamesw distract our attention from the magnitude of the substantive task at hand.Keep those White House talking points coming!

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Washington Post Crashed-and-Burneded Watch: David Ignatius Edition

Why oh why can’t we have a better press corps? Justin Fox:>The Curious Capitalist: I don’t mean to single out David Ignatius, whose failure to keep Israeli President Peres from vastly exceeding his allotted time apparently incensed the Turkish prime minister….. The prominence and self-importance of many of the speakers here, coupled with a certain cultural sensitivity… keep[s] moderators from exercising the discipline often needed to make discussions work. So it was refreshing this afternoon to watch the BBC’s Nik Gowing make no attempt to avoid obnoxiousness in a made-for-TV discussion about financial crisis and regulation…That there are other moderators (few, in my experience) at Davos who don’t do their jobs is no reason for David Ignatius not to do his job and so create an international diplomatic incident.Some bare minimal competence would be nice…

Department of “Huh?”

Megan McArdle writes:>All you have to do is believe . . . – Megan McArdle: The real question, I think, is how close the permanent income hypothesis is to being true.   The basic idea is that people are forward looking, and they try to smooth their consumption over time.  So if you give them a “temporary tax cut”, they save most of it, knowing that eventually they will have to give the money back. But of course, this should also be true of “temporary government spending”–if people think the money won’t be there next year, they’ll salt as much of the money away as possible.  This is a topic very underexplored in the various estimates of the stimulus multiplier…No it isn’t. This is a topic that economists have been exploring for fifty-five years. It is a topic that has been very thoroughly explored in all of the estimates of multipliers.

Prospects for Peaceful Coexistence Are Slim…

But we will make one last effort: a set of admonitions to the small furry and feathery woodland creatures:1. To a small member of class mammalia: The blue reflector embedded in Lucas Ct. is there so that the fire truck can find where the fire hydrant is in the dark. It is not a suitable place for defecation. We know you are there. You do not need to leave additional “messages.” Lucas Ct. is also used by a teenager next door with a license. Being squashed while defecating at midnight by a monkey-driven vehicle is not a dignified way to die.2. To another small member of class mammalia: The sewer cover embedded in Lucas Ct. is there in case we have a public-health emergency. It is not a suitable place for defecation. See (1).3. To a skunk: Spraying the BBQ is not good for either of us. We win when we use the BBQ. You win too–in grease and food scraps. If you spray the BBQ, we are less likely to use the BBQ. Capisce?4. To yet another small member of class mammalia: When I leave my hiking boots outside because they are muddy it does not thereby make them a fit receptacle for substances that even a small concern for the delicacy of my gentle readers prohibits me from mentioning.5. To sundry members of class aves, a subcategory of suborder theropoda, a subcategory of order dinosauria, a subcategory of class reptilia (what can I say? Linneaus did not get it right): You have your oak trees. We have our house. If you do not respect the border, we have our [vergeltungswaffen](http://www.contracostatimes.com/localnews/ci_10985480?nclick_check=1)–terror weapons: dinner plate-sized robot spiders that drop from the sky. Be warned.6. To sundry members of class aves, a subcategory of suborder theropoda, a subcategory of order dinosauria, a subcategory of class reptilia (what can I say? Linneaus did not get it right): Just because you are turkeys does not give you the right to perch on top of the Prius and defecate there.7. To yet another small member of class mammalia: Biting the house every four inches so that your needle-like teeth punch holes in it is annoying. There is a reliable source of year-round water 100 yards north north east at the spring in the blackberry thicket.

How They Used to Write…

William Cobbett (1834), *Paper Against Gold, or, The History and the Mystery of the Bank of England* (John Doyle: ):>The time has come, [my] doctrines have been verified, the sufferings [of the people] have taken place; and, therefore, *here is the book.* The scoffings, the scornings, the abuse, the reviling, the horrible calumnies and the base persecutions which this book and other efforts of a similar kind brought upon me, and the briefest notice of each instance of which would fill fifty volumes more bulky than this, are now amply avenged by the joy that I feel at that which *I know behold,* and which can no longer be hidden from even the blindest and most besotted of the people…

The Panic of 1825

The Bank of England’s policy. From Walter Bagehot (1873), *Lombard Street,* p. 73:>Jeremiah Harman: We lent [cash] by every possible means and in modes we had never adopted before; we took in stock on security, we purchased Exchequer bills, we made advances on Exchequer bills, we not only discounted outright, but we made advances on the deposit of bills of exchange to an immense amount, in short, by every possible means consistent with the safety of the Bank, and we were not on some occasions over-nice. Seeing the dreadful state in which the public were, we rendered every assistance in our power…