Monthly Archives: October 2012

Paul K’s Strange Logic

By Joe Firestone

In an October 12th Post entitled “Foreigners and the Burden of Debt,” Paul Krugman made the following comment.

”. . . we’d all agree that deficits make us poorer if they crowd out investment spending — which they would if the economy were near full employment, but won’t if we’re deeply depressed. All we have to do is realize that net foreign investment — purchases minus sales of assets from and to foreigners — is also a form of investment. Or to put it a bit more simply, sure, budget deficits can make us poorer as a nation if they lead to bigger trade deficits.”

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Public Briefing: Erskine Bowles Determined to Reduce Private Sector Income, Stifle US Economy – Pt. 2

By Michael Hoexter

Bowles Would Have Us Repeat the Errors of the Euro-Zone

That Bowles is currently lionized in Washington policy circles is particularly striking given the slow-motion economic catastrophe occurring within the Euro-Zone.  Bowles’s ignorance or willful disregard of macroeconomic accounting processes and insistence that the US government institute laws that reflect that ignorance, repeats the errors made by the Euro-Zone countries when they signed the Maastricht Treaty in 1992.  With a more than adequate understanding of macroeconomic accounting, Wynne Godley predicted in 1992 that the Euro Zone would not withstand a substantial financial crisis because of the budgetary restrictions required by the Treaty.  The 3% limits in budget deficits to GDP mandated by the treaty indicated to Godley already at the formation of the Euro-Zone that its founders were woefully ignorant of the stabilizing, supporting and leadership role of government in the economy, especially during times of crisis.

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Public Briefing: Erskine Bowles Determined to Reduce Private Sector Income, Stifle US Economy – Pt. 1

By  Michael Hoexter

The electoral competition between Barack Obama and Mitt Romney seems to be largely over and barring an “October Surprise” for Mr. Obama, the attention now shifts to how he and the newly elected Congress will manage the US federal government.  The composition of that Congress matters somewhat though there is surprising unity between the two major parties on the goal of neutering the federal government’s ability to help state governments and the larger economy through pro-active fiscal policy.  Mr. Obama’s listless first debate performance has added suspense but so many factors seem to be now weighing in his favor that it would require substantial efforts at self-sabotage or a sharp pre-election slump in the economy for Mr. Obama to lose.  Recent favorable job numbers suggest that the latter will not happen and the former is up to Mr. Obama and his own determination to be President for a second term or not.

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The Business of Health Insurance and “Obamacare”: What Can We Expect?

By Robert E. Prasch

Over the past couple of years there has been considerable back-and-forth over what has been accomplished by the Patient Protection and Affordable Care Act of 2010 (PPACA).  While a short post cannot survey the entirety of this multifaceted law, several elementary confusions have been repeated in public discussions and should be addressed in the interest of clarification.  The most urgent of these is to point out that, despite the Act’s (deliberately misleading?) title, it addresses neither the practice of medicine nor its cost.  At most a government-sponsored institute has been authorized to find and make suggestions.  The Act, then, is not about making health care affordable, but an effort to make health-care insurance affordable – a related but separate topic.  To understand the implications of this, we must consider the business of health insurance.

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Emergency Room Free for All: Why America’s Emergency Rooms Are Not the Key to Improved Health Care Access or Lowered Cost

By June Carbone

Mitt Romney has been going around telling newspaper editorial boards that the Affordable Care Act is redundant, that – to quote him in the Central Ohio Dispatch – “you go to the hospital, you get treated, you get care; and it’s paid for, either by charity, the government or by the hospital.”   (10/11/12 Ohio Dispatch)  Over the last few days, Paul Krugman and Nick Kristof have pointed out that limiting health care to emergency room visits already means that people die unnecessarily.   It’s just that when they are not the Harvard roommates of New York Times columnists no one except their families notices. Continue reading

Ryan and Romney’s Secret Plan to Cut the Deficit – and why Romney opposes it

By William K. Black
(Cross posted at Benzinga.com)

My favorite scene from  The West Wing is the episode in which the President’s press secretary is recovering from a root canal and Josh Lyman decides to handle a press briefing.  Lyman is a young whiz kid who believes he is the smartest guy in the room, but the briefing goes disastrously.  Lyman has to explain to the President that he has, sarcastically, told the press that the President has “a secret plan to fight inflation.”  The press, fed up with Lyman’s arrogance, has decided to report Lyman’s statement about the secret plan without noting the sarcasm.  Worse is still to come, for upon questioning Lyman about the incident, the President asks in exasperation:  “Are you telling me that not only did you invent a secret plan to fight inflation but now you don’t support it?” Continue reading

Romney is shocked to learn how the Fed creates money

By William K. Black

The following passage from the transcript of Governor Romney’s secretly videotaped May 17, 2012 fundraiser has not received any attention in the media.  It is a fascinating passage, however, from the perspective of Modern Monetary Theory (MMT).  Here is the full context of the passage:

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The Vampire Squid has feelings and Obama is no longer her BFF

By William K. Black

Matt Taibbi famously dubbed Goldman “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.” Taibbi knew his metaphor worked a deep injustice on Vampyroteuthis infernalis, a small animal that feeds on carrion and excrement (I will let the reader explore the metaphorical possibilities).    Goldman Sachs’ leaders were always secretly flattered by Taibbi’s metaphor.  They like being thought of as hyper-aggressive and intimidating.  Saying that an investment banker’s goal is to make money is to state the obvious and causes no embarrassment. Continue reading

Chief Economist to VP Biden Tells Stephanie Kelton to Run for President

The Best Way to Rob a Bank is still to Own One: a Postscript

By William K. Black

The central questions for a theorist are whether his theory showed strong explanatory power and to what extent it proved useful in diverse settings.  A distinguished economist, Dr. Jayati Ghosh, has addressed those questions in an article in which she was explaining to Indian readers that a large fraud, Satyam, was not the product of unique defects in Indian regulation.

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