Archive for January, 2010

If you think your cash is trash, sit next to me

28 January 2010

Here is another unpublished letter to the editor, this time to The New York Times, in response to a small bit of their roundtable op-ed “Questions for the Big Bankers.”  Some fine folks there, including Simon Johnson, Bethany MacLean (who wrote Enron: The Smartest Guys in the Room), and Liaquat Ahmed (who wrote The Lords of Finance, about the gold standard and the Great Depression), which made it all the more incredible to me that the piece opened with this astonishingly dumb question by James Grant:

Bankers are dealers in money. The Federal Reserve is a creator of money — since the crisis began in August 2007, it has conjured up $1.1 trillion. Given the ease with which these dollars are materialized on a computer screen, how can they be worth anything?

So here was my reply:


James Grant says the Federal Reserve has created $1.1 trillion in new money since 2007 and asks how it can possibly be worth anything.  If Mr. Grant thinks that dollars have become worthless, then, considering that money is fungible, I want him to know that I would be happy to take the worthless dollars in his bank account off his hands.


Ranjit S. Dighe
Oswego, N.Y.

Jobs, jobs, jobs, stimulus, Depression

28 January 2010

It’s been noted that President Obama used the word “jobs” more times (29) than other word in last night’s State of the Union address.  Much of that was in connection with a jobs bill that he plans to introduce, and about which he mentioned a few reasonable-sounding specifics.  But indications are that he and his party will try to do this one on the cheap, rather than open themselves to the “big spenders” charge or the predictable cries of deficit scolds who think there’s nothing wrong with the economy that a good bloodletting won’t cure.

And, according to polls, last winter’s American Recovery and Reinvestment Act (a.k.a. the stimulus bill) is unpopular.  It was too small to make much of a dent in the massive unemployment crisis, and the continued high and rising unemployment has led many to conclude, by that famous fallacy post hoc ergo propter hoc and with the encouragement of countless politicians and talking heads, that the stimulus actually caused the rise in unemployment.  Brad DeLong has an excellent column on “America’s Employment Dilemma” right here.

Some on the right have likened the Obama stimulus bill and the still-high unemployment to the New Deal jobs programs and the Great Depression:  the argument is, if they didn’t end it, then they must have caused it.  (Which is kind of like blaming Doctors Without Borders for an earthquake.)  Others make the less extreme but still ridiculous argument that because unemployment is still high, the fiscal stimulus must not have created a single job.  (Which is hogwash — Prof. Menzie Chinn of Econbrowser shows that private studies by IHS/Global Insight, Macroeconomic Advisers, and Moody’s estimate that the stimulus has created 1.1 to 1.6 million jobs to date, and Chinn himself estimates that the number may be more like 2.9 million.  It’s wonkish stuff, but worth a look.)

Anyway, here’s an unpublished letter I wrote a few weeks ago to USA Today in response to a letter that made that bogus argument about how those New Deal programs that employed millions somehow didn’t employ anybody:


Quote of the day (II)

24 January 2010

A good day for metaphors:

“Bernanke is an airline pilot who pulled off a miraculous landing, but didn’t do his preflight checks and doesn’t show any sign of being more careful in the future – thank him if you want, but why would you fly with him again (or the airline that keeps him on)?”

Simon Johnson, opposing the reappointment of Ben Bernanke as chairman of the Fed.  Johnson’s preferred alternative appointment is a surprising one — so surprising that he himself scotched the idea as “crazy.”

Quote of the day

24 January 2010

Where only so much credit is due:

“Preventing the collapse of the financial system should probably seen as being comparable to a major league outfielder catching a long fly ball. It’s not that easy, but major league outfielders do it.”

Dean Baker, taking issue with the NYT’s contention that Tim Geithner and Larry Summers have gotten too little credit for preventing an all-out financial collapse in the USA.  Baker points out that no major country saw its financial system collapse in this crisis, so the US performance in this regard was nothing special by today’s standards.


8 January 2010

And 2009 ends with a third straight month of double-digit unemployment, the Bureau of Labor Statistics announced today.  The official unemployment rate is 10.0%, same as November; the more comprehensive “U-6” rate of unemployment, underemployment, and discouraged job-seeking is 17.3%.

Will add more later.  Meanwhile, The Replacements pretty much said it all about the job market back in 1981:

New York State of Confusion

7 January 2010

Had the pleasure yesterday of being part of the local NPR station’s (the fabulous WRVO FM) coverage of New York Governor David Paterson’s State of the State address.  I was on as the “economic expert” regarding New York’s budget mess, a topic about which I admit to knowing very little (other than that I’m on both sides of the ledger, as a taxpayer and a SUNY professor).  Preparing for this stint was enlightening, but the enlightenment has a long way to go.

One thing I learned is that it’s maddeningly hard to get basic information about the New York State budget, like basic breakdowns of expenditures and receipts by category (a NYS equivalent of those pie charts that the IRS includes with the 1040 instructions would be most helpful).  Every line of the budget is published information, of course, so I’m not accusing anyone of suppressing it, but I have to think the public discourse about NYS’s fiscal mess would be better if people could find such basic information online.  (A colleague of mine said he’d read somewhere that New York does a much worse job than most other states of putting its budget info online.)  Once I get around to digging up this information in a library, I’ll post it.

In the meantime, here are some links that I found useful yesterday and some interesting things I learned: