Links and Quick Takes 11/28/08

Rocketman Crosses Colorado Gorge InfoPackets

Can the US Do An IMF On Itself? Sudden Debt (hat tip reader Scott)

Rescue Plan Strained by Lack of Staff Wall Street Journal

GM asks government to block public tracking of jet Reuters

Fall in house prices may be slowing, say analysts Independent. However, the source is the Nationwide Building Society (um, nominal sales prices often fail to reflect builder concessions). And even though consumer sentiment also improved a tad, some consider the response underwhelming given an unexpected 1.5% interest rate cut.

Too many cooks in Obama’s economics kitchen Willem Buiter. ” My first impression is that, with Geithner, Summers, Romer, Goolsbee, Volcker, Orszag and Furman, we have too high a ratio of ego to team spirit.”

Support for Gordon Brown plummets over economic rescue Times Online. Note very high propensity to save among respondents (paying down debt is a form of savings):

More than half the public (54 per cent) say that they would save any money they end up with as a result of Mr Darling’s measures. But 28 per cent say they would use any money to “catch up on bills” that they have fallen behind with. Middle-class people are much more inclined to save and working-class voters to catch up on bills. Just under a fifth (18 per cent), evenly spread across the classes, would spend any money on “things you might not otherwise have bought”.

This is very similar to the results of the US stimulus package (Gary Shilling concluded 80% was saved) and says any stimulus needs to be well designed to be effective.

C Bailout Scurvon Investing

A time for humility Martin Wolf (hat tip Mark Thoma)

‘Shadow ECB’ calls for immediate and drastic rates cuts Ambrose Evans-Pritchard, Telegraph

Financial markets and a lender of last resort Eric Hughson and Marc Weidenmier, VoxEU

Antidote du jour (hat tip reader Rolfe):

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  1. john


    As Thanksgiving winds down, I would like to thank you for your blog and to the regular contributors in the comments who keep this my favorite source for info as we collectively try to sort out exactly what the hell is going on.

  2. ndk

    Martin Wolf: But what if we are now making new and even bigger errors in rushing back to Keynes? The thought worries me. What if now that households in the US and UK are no longer able, or willing, to borrow any more, we are set on breaking the back of taxpayers, instead? Is the end of this crisis the destruction of the credit of some of the world’s most creditworthy governments?

    Yes!! :D :D Why does it always fall to the British economists to put the kool-aid down first? Challenging groupthink in its own house!

    What we need right now is water: a.k.a. debt liquidation. And the longer we fail to recognise this simple fact, the longer we fail to provide it, the worst it’s going to get later on.

    SuddenDebt’s words, and I couldn’t agree more.

    Thanks, Yves, this was a really uplifting set of links.

  3. Yves Smith


    Thanks for the holiday wishes (and to those of you who also extended Thanksgiving greetings that I neglected to thank in earlier posts today. I did read them and very much appreciated the fact that you took the trouble to write).


    I really did like the Wolf post. The FT has also featured some comments that have worried out loud about the failure to consider the risks of the rescue program. I am afraid, however, that the prevailing mindset will remain intact: if the current program fails to bear fruit, the assumption is that we need more stimulus, as opposed to considering that we might need a different set of remedies.

  4. ndk

    I am afraid, however, that the prevailing mindset will remain intact: if the current program fails to bear fruit, the assumption is that we need more stimulus, as opposed to considering that we might need a different set of remedies.

    Summers isn’t renowned for his humility, is he?

    But at some point the empirical evidence should become too strong for even the most hardened ideologue to ignore. The lack of success is obvious, but there are also visible detrimental effects that were easily predicted by theory and models.

    I think they’ll catch on, but by then, I think it’ll also be too late. If it isn’t already.

  5. Anonymous

    Yves and Co, hope all enjoyed succulent bird with all the trimmings. Wish I could have shared some of my old family recipe with you all. 2KG of cranberry’s and a bottle of fine Bourbon, set to soak for two weeks, yummy!


  6. fresno dan

    The Wolfe link was also my favorite. Touches on my favorite themes of group think and that maybe, just maybe, ecomonic “science’ isn’t a science at all.

  7. River

    Yves, Schiller expresses his doubts about the effectivness of the bail outs in the three part You Tube link below. Schiller seems to be one of the few that realize that the ‘cultural mood’ of the people has changed and he makes several comparisons of the current crisis to the great depression. Schiller points out that his wife is a psychologist, as is mine. Perhaps that is why we both have similar takes on fiscal/monetary stimulus vs ‘public mood’.

    It appears to me that those in charge of the Fed/Treasury and the administration in general believe that monetary and fiscal response will overcome a shift in ‘cultural mood’. I doubt very much if those in charge are correct. Ego is at work, imo. Those in power are loath to admit that situations arise that they cannot correct. Of course, such an admission would be admitting defeat.

    Shiller: Crisis May Run For Years and Years

  8. River

    RE: GM Asks Government To Block Public Tracking Of Corporate Jets…

    ‘NEW YORK (Reuters) – General Motors Corp (GM.N: Quote, Profile, Research, Stock Buzz), whose chief executive was blasted last week by U.S. lawmakers for flying on a private jet to ask for public funds, has asked the U.S. Federal Aviation Administration to prevent public tracking of a jet it leases.’

    These GM folks are truely clueless. With decisions like this request they have demonstrated that they spend Millions of $s yearly on PR, yet understand nothing about PR. Doh! So CEO was imbarrased by congressional testimony…then made a hasty decision to call the FAA??? Some CEOs should have a nanny in attendence.

  9. russell1200

    The comment posted under the “C Bailout” story was interesting. The WaMu failure as conspiracy theory make for an interesting story.

    I am not sure I buy it, but it does feel a little like the second coming of Fisk and Gould.

  10. John Emerson

    The cat picture reminds nme of the time a cat snagged a mourning dove right beneath my bird feeder. He seemed surprised when he caught it and didn’t seem to know what to do with it.

  11. Tortoise

    This being a slow day, I would like to submit a link of a goodie though slighly oldie article:

    Highlights: America’s massive current account deficit absorbs about 75 per cent of the world’s surplus saving… A sharp decline in asset prices is necessary to rebalance the US economy. It is the only realistic hope to shift the mix of saving away from asset appreciation back to that supported by income generation. That could entail as much as a 20-30 per cent decline in overall US housing prices and a related deflating of the bubble of cheap and easy credit… As consumption slows and household saving rises in the US, the need to import surplus saving from abroad will diminish… The global economy will emerge bruised, but much better balanced.

    That’s Stephen Roach in January 2008. Could it be that we are not experiencing a crisis but rather the painful side effects of the cure that was needed all along? Food for thought.

  12. mundanomaniac


    in my words
    as this giving a house to any simpl was simply a bastard New Deal, this giving a gift without notion, poisoned the apel.

    Hölderlin said:
    “Wo aber Gefahr ist, wächst das Rettende auch” (Patmos)

    But where is danger
    there also grows remedy
    (sorry my englisch)

    I thank you and all of
    your commentators
    for this blog

    thanks to Lehman,
    I met you

    “naked capitalism” is capitalism in the cradle and me and my donkey*, we are feeling for a humble gesture

    have a nice thanksgiving


  13. dearieme

    Martin Wolf in cracking form:-
    “Keynes said, of course, that “practical men … are usually the slaves of some defunct economist”. So, of course, are economists, even if the defunct economists are sometimes still alive.”

  14. Anonymous

    Steven Roach was saying the same thing in 2004. He was called many things for his draconian, but correct, views.

    Roach was the original Dr. Doom.

  15. lineup32

    Tortoise said…
    This being a slow day, I would like to submit a link of a goodie though slighly oldie article:

    Thanks for the link. Another bit from the link:

    “Washington policymakers and politicians need to stand back and let this adjustment play out. Yet the US body politic is panicking in response – underwriting massive liquidity injections that produce another asset bubble and proposing fiscal pump-priming that would depress domestic saving even further. Such actions can only compound the problems that got America into this mess in the first place.”

  16. lineup32

    LBJ used the cover of the Gulf of Tonkin Resolution and Bush the horror of 9/11 to expand their powers and justify greater powers.
    Presidents tend to use a crisis to expand their powers and reaches, I expect Obama will be no different.

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