The Cedar Lounge Revolution

Economy and ideology: Slate’s Big Money podcast… September 24, 2009

Listening to the Slate “Big Money” podcast is becoming an increasingly concerning exercise in terms of getting to grips with the financial situation in the US. Because, as noted in a piece on Slate late last month there is now a number of disparate groups in the US who are keen on the failure of the Obama economic policies, policies which are – so far – working as well, or as minimally, as one might expect. And by the way, what of the better economic news that we see from around the world, news that sadly appears to be passing us by.

Anyhow, on the Big Money podcast, Daniel Gross senior editor of Newsweek, Chadwick Matlin staff writer for the Big Money and Jim Ledbetter of Slate and the Big Money chewed over some of the issues of the day… First up, the one year anniversary of the financial melt-down.

Daniel Gross: Well, this time 2008 the worse had yet to happen…

Chadwick Matlin: It was blissful…

Gross: Things were going poorly but it was still two weeks before Lehman Bros and the world went into meltdown… it was primarily a US problem.

Jim Ledbetter: [What then of] ..the Obama failure caucus, the loose coalition of people and institutions who have a vested interest in Obama’s programmes not working…

Gross: I was at a dinner recently with a group of conservative people, who you’d generally think would be in favour of wealth and growth and markets doing well, and yet seemed horribly exercised at the fact that things had been improving and refused to believe that any of this recovery was real in any sense because of what had preceded it, namely the big expansion of the Fed's balance sheet and the stimulus package.

There are a fair chunk of people, politicians, economists, op-ed writers, who intuitively know that know stimulus doesn’t work, government intervention is bad, that expansionary Fed policy inevitably leads to inflation.

These are matters of faith, the evidence doesn’t mean anything to them. They put down a market when any of this happens no it can't work because of what I know about how the economy works. Every bit of evidence that comes in that shows something may be working is a rebuke to that worldview.

Matlin:Two things, one you said what they know abiout the economy, what they think is true about the economy is true… We’re dealing with two different sorts of truth… we’re dealing with…

Ledbetter:I think it’s called ideology.

Matlin: This all seems to me to be a high-brow couch of the Limbaugh thesis. Which is that… Limbaugh got into trouble because he said he wanted Obama to fail. This is similar because it says… I want the country to be on the right track, and if that means the economy has to fail first in order to kick out these policies then we’ll bring in…

Gross:  But say you work at CNBC… and your work is selling prosperity…the version of the prosperity gospel [The greatest story never told]  it puts that person in a conflicted position. Because they do want all the market data to do well, but in doing so it’s a rebuke of their record…

Matlin: Jim don’t you have a theory about the Fed and the Republicans that the Republicans are rooting…

Ledbetter: I’ve been amused and confused by some of the Republicans attacks on the federal government, excuse me the Fed, in the following sense.

For so long the cheerleader, drum major of deregulation was the head of the Fed, whether it was Alan Greenspan or through the Bernankie period… and the people who wanted small government, low interest rates, they were an important of part of the Reagan coalition, along with the religious right, and to see them now turning on Bernanke, to see them wanting to dismantle the Fed strikes me as political suicide because it’s taking out a key component of that traditional coalition. I’m sort of baffled by this Obama fail caucus…

Gross: Obviously the Republican House caucus which voted en masse against the stimulus… but it’s not only a phenomenon of the right, because it’s not so much that they think that the stimulus will fail [...] there’s a group of people who think that the bail-out package and the rescue of the banks was sort of conceived in sin and therefore it will bear poisonous fruit.. since we haven’t come to grips with the sheer awfulness of the financial sector, since we haven’t punished people, since many of the same people are staying in charge, and since we are trying to engineer a recovery in part by reflating and illegitimately propping up these failed businesses, to them seeing Wall Street and the banks make profits when they’re borrowing at zero % and lending at 5 and 6 [%] that is also a rebuke to their world view.

Ledbetter: It’s sort of funny the number of people on the left who have now picked up the cause of moral hazard… it was not really a concern of the left…

Matlin: We should remember the bank bailouts were not an Obama initiative, they were a Bush initiative. Everyone… is trying to take things on ideology, rather than actual facts on the ground.

Ledbetter: Well that’s what so confusing. It’s pure negativity, there really isn’t a coherent programme they’re offering as an alternative. It’s just refusal to accept.