Streetwise Professor

February 20, 2009


Filed under: Economics,Politics — The Professor @ 5:30 pm

Today’s FT has this mind boggling headline: “Summit to tackle ballooning US deficit.”  It reads: “Mr Obama will host a bipartisan summit on fiscal discipline next Monday that will aim to address America’s long-term struggle to control entitlement costs in healthcare and social security.” Fiscal discipline!  What a concept!

When reading this, my first thought was: “Did I sleep for a very long time?  Is it April First?”  But no, the dateline on the article is February 20, 2009.  So I guess it’s a real story.

What’s next?  Madonna leading a summit on virginity?  Octuplet lady convening a conference on family planning?  I mean, talk about locking the door after the horse is well and gone.  

I would feel better if this newfound commitment to the old time religion had occurred before a $800 billion fiscal stimulus bill, $300 billion mortgage bailout proposal, a potentially immense commitment to banks, and to automobile companies, and other mendicants.  Moreover, given the statement about “control[ling] entitlement costs in healthcare” I suspect that a newfound commitment to “fiscal discipline” may just be a cover to justify massive (additional) government intervention under the guise of economy.

But even putting aside that possibility, this summit is an absurdity, and the fact that it is apparently being proposed with a straight face is a testament to very deep cynicism.  This is talk the talk, after the money has already walked.  It merely adds insult to injury.



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  1. A “fiscal discipline” summit, excuse me, but, isn’t this the guy who has essentailly turned the management of this crisis over to the porkers in Congress? With each passing day it beomes clear that Americans put a Chauncy Gardner in the White House. It’s scary.

    Until we restore the financial system everything else is a wasted exercise in futility. Let the toxic banks fail, flush out the bad paper, let those banks that remain standing cannibalize the weak and rebuild the system, make it easy for them to do this and get on with it……am I being too simplistic?

    The summit is not only absurd it’s a waste of time that Obama or more important this meltdown doesn’t have.

    Comment by penny — February 21, 2009 @ 12:30 am

  2. I hope not.

    BTW, Surya, didn’t respond to your earlier comment re the curious pattern in the comments, with the Russian posts often unleashing a deluge, and the posts closer to my professional specialization getting few.

    I’ve made a similar observation, and in fact drafted a post on that over the holidays. I didn’t post it, though, because it could have appeared vain/navel gazing/postmodern writing about the writing.

    It is pretty clear that the Russian subject matter generates intense interest, and is probably of broader appeal to a certain segment of people that has migrated to SWP on a regular basis (something for which I’m quite grateful, and a little humbled.) The finance stuff is probably a little to technical at times. My dad, who though not a professional economist, is pretty knowledgeable about finance, tells me that he often has a hard time following some of my more involved analyses. He suggests I pare it down some.

    I’ve thought about that, but some of what I write on the blog is a first draft of what turns into an academic paper. (That’s true of a lot of the stuff on clearing.) I also use the blog as a kind of diary for capturing some of my thinking on economics/finance subjects. Thus, although making some of the posts shorter, more concise, and perhaps a little simpler would probably be useful for most readers (present company excepted, of course’-), it would defeat some of my personal/professional reasons for blogging. So, the equilibrium is more accessible Russian stuff, more technical finance stuff.

    The ProfessorComment by The Professor — February 21, 2009 @ 11:52 am

  3. Are we going to see Swedish style nationalization next? Roubini thinks so.

    Comment by Surya — February 21, 2009 @ 12:36 pm

  4. Please don’t pare your postings down, Professor, it’s an education for all of us.

    Surya, I saw the article too.

    I think that’s what is coming even though Obama is coyly backing away from that rumor. Two related articles that caught my attention:

    I honestly don’t know how to evaluate the merits of that strategy. Events are overwhelming my old brain.

    Any shareholders are dead in the water if they haven’t bailed if it happens, that includes pension funds. The dumbest thing I’ve done the past six months was closing short positions in the financial sector prematurely. Yes, stocks can be driven to zero. Lessons learned.

    Comment by penny — February 21, 2009 @ 6:31 pm

  5. Thanks Penny. I really appreciate it, and glad you find the posts useful/educational. No plans to pare, dad’s advice notwithstanding;-)

    The ProfessorComment by The Professor — February 21, 2009 @ 8:57 pm

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