Posted by: Dark Defender | September 25, 2008

More Amity and me on chicken littles

My econ crush Amity Shales gave an interview to NRO today.  Read it!

I do want to comment on something she said and disagree with part of it

Kathryn Jean Lopez: Did the president need to give that address?

Amity Shlaes:
Yes.

Lopez:
What did you think of what he had to say?

Shlaes:
Bush did a fine job. But it seemed all pain and no good news. At issue here, as Bush pointed out, is relative competitiveness. Money flowed into the U.S. Missing tonight was a promise of good changes that would sustain U.S. attractiveness. The White House is too embarrassed to talk about markets and tax cuts at this point. They would be mocked. But a cap-gains rate of five percent, more tort reform…. items like that would hasten recovery.

Lopez:
Is McCain overreacting with his delay-the-debate plea?

Shlaes:
This seemed a counterproductive on move on McCain’s part. Foreigners watching U.S. markets T.V. learn that a leading politician is actually interrupting campaigning because of the crisis. That’s unusual for the U.S., it takes the emergency to a new news level, and so sends a creepy message. McCain’s version of crisis mode generates fear, not calm. He shoots from the hip way too much on the economy. No wonder the Nikkei has already fallen two percent (9:52 P.M.). It’s disappointing since he has the capacity to lead an adequate clean up action.

Lopez: Are conservatives right to have some reservations about this Paulson plan?

Shlaes: Absolutely. Too much discretion for the executive branch.

I agree with her that McCain (disclosure, whom I’ve donated money to and voted for in the primary and intend to vote for in November) is stoking panic irresponsibly.  The suspending the campaign and constant talk of crisis while perhaps smart politically, is unhelpful to the economy.  His initial reaction was correct, “the fundamantals of the economy are strong” talking down the economy for political gain is not “putting country first”.  He is essentially saying he’d rather have a recession than lose an election.  If the other options weren’t even worse I wouldn’t be voting for him.

What I think Amity misses however is that the Bush administration’s chicken little impression is equally unhelpful.  “The Plan” is calling for nearly a trillion dollars and unprecedented governmental intervention in the economy.  It will add nearly 10% to our national debt (not defecit DEBT (and frankly I think thats a lowball estimate of what this will cost in the end), and they want it passed in a week.  Why? Because if we dont its THE END OF THE WORLD!!! Well I think thats crap, I think they are intentional promoting panic in order to ensure that their pet plan goes through.  

This is a real serious crisis absoltuley, one which is largley the New Deal’s chickens coming home to roost (I seem to have a thing for chickens today) but acting percepticously is not a good idea.  There is no good reason we cant take a deep breath, get a sense of how bad things really are and then come up with a plan designed to address whats actually happening, rather than what the “experts” who got us into this mess to begin with tell us might happen. 

Even if you believe in the bailout, an objective appraisal of the situation shows we dont need to panic, we can take time to do the right thing instead of freaking out and just doing “something”.  

While I live in terror of what they may eventually add to the bailout, I applaud the democrats for slowing this process down and forcing at least some deliberation.  If something is passed this week or really even next week I dont think its enough, but for now the dems did a good thing. 

Finally I want to point out that if true panic takes hold and there is a run on the banks or consumer confidence crashes and we end up in a recession.  It is going to be the fault of the doom merchants in the Administration and McCain who have been stoking people’s fears for their political gain.

My econ crush

My econ crush, Amity Shales

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Responses

  1. […] completely shocked  but I think this is a good thing.  As Ive posted previously, I think that the crisis is real, but that the bailout this cure is worse than the disease.  […]


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