Author Topic: Fear Strikes Out  (Read 452 times)

Benny B

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Fear Strikes Out
« on: March 22, 2010, 08:35:07 AM »
March 22, 2010

Fear Strikes Out
By PAUL KRUGMAN

The day before Sunday’s health care vote, President Obama gave an unscripted talk to House Democrats. Near the end, he spoke about why his party should pass reform: “Every once in a while a moment comes where you have a chance to vindicate all those best hopes that you had about yourself, about this country, where you have a chance to make good on those promises that you made ... And this is the time to make true on that promise. We are not bound to win, but we are bound to be true. We are not bound to succeed, but we are bound to let whatever light we have shine.”

And on the other side, here’s what Newt Gingrich, the Republican former speaker of the House — a man celebrated by many in his party as an intellectual leader — had to say: If Democrats pass health reform, “They will have destroyed their party much as Lyndon Johnson shattered the Democratic Party for 40 years” by passing civil rights legislation.

I’d argue that Mr. Gingrich is wrong about that: proposals to guarantee health insurance are often controversial before they go into effect — Ronald Reagan famously argued that Medicare would mean the end of American freedom — but always popular once enacted.

But that’s not the point I want to make today. Instead, I want you to consider the contrast: on one side, the closing argument was an appeal to our better angels, urging politicians to do what is right, even if it hurts their careers; on the other side, callous cynicism. Think about what it means to condemn health reform by comparing it to the Civil Rights Act. Who in modern America would say that L.B.J. did the wrong thing by pushing for racial equality? (Actually, we know who: the people at the Tea Party protest who hurled racial epithets at Democratic members of Congress on the eve of the vote.)

And that cynicism has been the hallmark of the whole campaign against reform.

Yes, a few conservative policy intellectuals, after making a show of thinking hard about the issues, claimed to be disturbed by reform’s fiscal implications (but were strangely unmoved by the clean bill of fiscal health from the Congressional Budget Office) or to want stronger action on costs (even though this reform does more to tackle health care costs than any previous legislation). For the most part, however, opponents of reform didn’t even pretend to engage with the reality either of the existing health care system or of the moderate, centrist plan — very close in outline to the reform Mitt Romney introduced in Massachusetts — that Democrats were proposing.

Instead, the emotional core of opposition to reform was blatant fear-mongering, unconstrained either by the facts or by any sense of decency.

It wasn’t just the death panel smear. It was racial hate-mongering, like a piece in Investor’s Business Daily declaring that health reform is “affirmative action on steroids, deciding everything from who becomes a doctor to who gets treatment on the basis of skin color.” It was wild claims about abortion funding. It was the insistence that there is something tyrannical about giving young working Americans the assurance that health care will be available when they need it, an assurance that older Americans have enjoyed ever since Lyndon Johnson — whom Mr. Gingrich considers a failed president — pushed Medicare through over the howls of conservatives.

And let’s be clear: the campaign of fear hasn’t been carried out by a radical fringe, unconnected to the Republican establishment. On the contrary, that establishment has been involved and approving all the way. Politicians like Sarah Palin — who was, let us remember, the G.O.P.’s vice-presidential candidate — eagerly spread the death panel lie, and supposedly reasonable, moderate politicians like Senator Chuck Grassley refused to say that it was untrue. On the eve of the big vote, Republican members of Congress warned that “freedom dies a little bit today” and accused Democrats of “totalitarian tactics,” which I believe means the process known as “voting.”

Without question, the campaign of fear was effective: health reform went from being highly popular to wide disapproval, although the numbers have been improving lately. But the question was, would it actually be enough to block reform?

And the answer is no. The Democrats have done it. The House has passed the Senate version of health reform, and an improved version will be achieved through reconciliation.

This is, of course, a political victory for President Obama, and a triumph for Nancy Pelosi, the House speaker. But it is also a victory for America’s soul. In the end, a vicious, unprincipled fear offensive failed to block reform. This time, fear struck out.
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Benny B

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Re: Fear Strikes Out
« Reply #1 on: March 22, 2010, 08:38:32 AM »
Dr. Krugman tonight my heart is conflicted: Joy because the Healthcare bill has finally passed and horrendous sorrow because of how the protesters treated John Lewis yesterday. For these people to call him these despicable racist names and literally spit on him was deplorable. Then on Sunday to see Mr. Lewis marching towards the house with the leadership to vote for Healthcare, in the front row with Steney Hoyer literally holding his hand as they walked almost made me cry. Are there no lows Republicans will stoop to for money and power? Mr. Lewis is not only an honorable man he is an integral part of our American history. He marched with Dr. King regularly and was historically photographed with his head busted open and blood running down his face. What do these people want for a person of color to qualify to be an American? These racist must not be afforded room nor power in this United States of America.

When Mr. Gingrich made the point of this being as climatic as President Johnson signing the Civil Rights Amendment, that was not by accident. He as speaking in dog-whistle racist code and he knew what he was doing. He was “pre” co-signing the individuals who would turn around to hurt and humiliate Mr. Lewis.



A year's worth of lies and misinformation, a lifetime's worth of racism, hatred and demagoguery and still the Republicans couldn't win. This supreme victory against the forces of Evil (it can't be anything less than that) makes this day all the more sweet. Showing up the charlatans for the clowns and liars they are AND providing those among us who truly are in need with the means to live their lives without fear of early death or indigence at the hands of rapacious insurance overlords (those folks who thrive under Republican protection).

Hurray for all those who stood fast in the face of lies and hatred.

Perdition for those they stood against.

A great day for American any way you look at it.
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BM OUT

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Re: Fear Strikes Out
« Reply #2 on: March 22, 2010, 08:39:51 AM »
John Lewis is a filthy piece of shit.Too bad someone didnt finnish the job from black Sunday.

Straw Man

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Re: Fear Strikes Out
« Reply #3 on: March 22, 2010, 09:09:44 AM »
John Lewis is a filthy piece of shit.Too bad someone didnt finnish the job from black Sunday.

you must be a really miserable human being

I feel sorry for anyone who has to put up with you in real life


Soul Crusher

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Re: Fear Strikes Out
« Reply #4 on: March 22, 2010, 09:15:52 AM »
you must be a really miserable human being

I feel sorry for anyone who has to put up with you in real life



Billy has done more good deeds and works in the last year than you, Pelosi, obama, et al have in your entire life fool.   

Soul Crusher

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Re: Fear Strikes Out
« Reply #5 on: March 22, 2010, 09:23:47 AM »
March 18, 2010
Fear The New Krugman
By Brady Willett

 
 
 Such explosive growth in debt can't go on forever, and it won't. Yet our current leaders and their apologists insist that the problem will magically solve itself.  Paul Krugman ~ November 4, 2003

The U.S. borrows and spends beyond its means and almost everyone realizes that tough policy choices must be made to avert disaster.  However, rather than confront the imbalances that have resulted from U.S. profligacy by ending U.S. profligacy, there is the growing threat that policy makers are in search of ‘magical’ alternatives. One such alternative is trying to force China to stop ‘manipulating’ its currency.

While the Yuan ‘manipulation’ theme is not new, the contrast of little or no growth in America versus supergrowth in China has sparked renewed interest. Highlighting this interest was a recent letter from 130 Members of Congress to the Treasury demanding that China revalue the Yuan or risk tariffs and a popular commentary from Paul Krugman entitled ‘Taking On China’. In Krugman’s article some fantastic speculations are made about what might happen if the U.S. enacts a 25% surcharge on Chinese goods:

“It’s true that if China dumped its U.S. assets the value of the dollar would fall against other major currencies, such as the euro. But that would be a good thing for the United States, since it would make our goods more competitive and reduce our trade deficit. On the other hand, it would be a bad thing for China, which would suffer large losses on its dollar holdings. In short, right now America has China over a barrel, not the other way around. In short, right now America has China over a barrel, not the other way around. (bolds added)
So we have no reason to fear China. But what should we do?”

Apparently Krugman assumes – a la the not too hot and not too cold doctrine - that if China starts dumping U.S. assets the U.S. dollar would fall enough to seriously hurt China but not enough to hurt U.S. interests.  But what if instead of a controllable ‘fall’ the dollar crashes in response to China dumping U.S. assets? Krugman continues:

“What you have to ask is, What would happen if China tried to sell a large share of its U.S. assets? Would interest rates soar? Short-term U.S. interest rates wouldn’t change: they’re being kept near zero by the Fed, which won’t raise rates until the unemployment rate comes down. Long-term rates might rise slightly, but they’re mainly determined by market expectations of future short-term rates. Also, the Fed could offset any interest-rate impact of a Chinese pullback by expanding its own purchases of long-term bonds.”

As Krugman explores the outcome(s) to China dumping U.S. assets further it is impossible to not acquire a sense of unease. Think about it: Krugman tells us (incorrectly) that interest rates are efficiently set by ‘market expectations’ and in the next line he claims that the Fed can set long-term interest rates to whatever level it wants. Which is it Krugman?

Rather than continue to attack Krugman with my words, why not do so with his own?  Keep in mind when reading the quotes below that since 2003 the U.S. has grown more dependent on foreign capital, China has become the largest holder of U.S. debt, and the projected fiscal deficits for the U.S. have grown significantly larger.

“…the U.S. currently has very little leverage over China. Mr. Bush needs China's help to deal with North Korea -- another crisis that was allowed to fester while the administration focused on Iraq. Furthermore, purchases of Treasury bills by China's central bank are one of the main ways the U.S. finances its trade deficit.
Nobody is quite sure what would happen if the Chinese suddenly switched to, say, euros -- a two-point jump in mortgage rates? -- but it's not an experiment anyone wants to try.” The China Syndrome - September 5, 2003

Why did Krugman speculate about a 2-point jump in mortgage rates only 7-years ago while arguing that there would be no impact from a major Chinese reserve switch today?

“…we've developed an addiction to Chinese dollar purchases, and will suffer painful withdrawal symptoms when they come to an end.” The Chinese Connection - March 20, 2005

Anyone care to speculate why Krugman now advocates a pain-free withdrawal from the U.S.’s addiction to Chinese dollar purchases?

“…there's no sign that anyone in the administration has faced up to an unpleasant reality: the U.S. economy has become dependent on low-interest loans from China and other foreign governments, and it's likely to have major problems when those loans are no longer forthcoming.” The Chinese Connection - March 20, 2005

Again, why ‘major problems’ when China stops lending the U.S. money yesterday but no problems observed today?


Ignoring the contradictions, Krugman currently believes the following: the U.S. can attack China for manipulating its currency because the only blowback would be an advantageous (to the U.S.) devaluation of the U.S. dollar. Krugman also believes that even if China were to ‘dump’ its holdings long-term interest rates wouldn’t rise because the Fed wouldn’t allow this to happen.

Even if you agree with Krugman, it is obvious that this issue is not about currency prices and interest rates alone. An excellent summary of the U.S./China theme from Brookings recently explored this idea:

“But can China make a big difference to U.S. interest rates ...? The answer lies not in the absolute amounts of financing that China brings to the table, but in how its actions could serve as a trigger around which nervous market sentiments could coalesce.”

What are some of the actions and their impact on market sentiment Brookings may be talking about? Consider a hypothetical: In response to the U.S.’s 25% surcharge China dumps Treasury Securities, enacts retaliatory tariffs against the U.S., invests $100 billion in Iran, and occupies Taiwan.  As global stock prices crash and the Fed expands its Treasury purchase program by trillions, reports of a panicked move out of paper currencies and into precious metals abound. Thanks a lot new Krugman!

Embellishment aside, while focusing policy based upon the premise that the U.S. financial markets and U.S. dollar are too important to fail can, arguably, be beneficial to the U.S., this may only be the case if the policies adopted do not directly endanger the U.S.’s ability to borrow money at attractive rates of interest longer-term. In other words, before undertaking a risky protectionist experiment the U.S. would be well served to try and get its financial house in order (the Krugman of old would probably concur).  The U.S. would also be well served to remember that there is ample reason to fear China so long as the U.S. is in pursuit of novel schemes to intentionally ‘manipulate’ the dollar lower…


BWillett@fallstreet.com


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Krugman is a muppet and a joke.