Home > Main > Does anyone take the IGBC seriously? Yes.

Does anyone take the IGBC seriously? Yes.

September 1, 2011

It’s not very hard to find an economist who believes in the IGBC.  Tyler Cowen, NYT columnist, economic blog powerhouse, thinks he’s got to pay back government spending decided on by his crazy cousins.

I won’t link to Cowen – he’s a proven hack for Koch brother and Mercatus – but I will link to the awesome Ed Harrison.



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  1. beowulf
    September 2, 2011 at 8:56 am

    “Tyler Cowen, NYT columnist, economic blog powerhouse, thinks he’s got to pay back government spending decided on by his crazy cousins.”

    Ironically, Tyler is himself a government employee. He forgets that sometimes because the GMU Board of Visitors (appointees of the governor of Virginia) didn’t condition their offer of employment on Tyler teaching class in a letter carrier’s uniform. I believe that was an oversight.

    • TC
      September 2, 2011 at 11:45 am

      Tyler should be a food critic, not a prominent economist.

      Very few of his posts have any meaning in them at all. I feel like I am “conversant” in economics. Not an expert.

      But I rarely understand what he’s writing about when he writes his “serious” pieces. They are all over the place in content, don’t have anything like a conclusion or even a summary, focus on the obscure issues rather than the big issues, and ignore lots of obvious facts.

      Then, his default position is “We can’t do anything useful.” He’s a cheerleader for learned helplessness.

  2. wh10
    September 2, 2011 at 6:20 pm

    What happened to the IGBC debate with Nick? I liked where that one was going.

    • TC
      September 2, 2011 at 11:49 pm

      I had some other work to do and it was making my head hurt.

      If x can’t equal zero, neither can anything that”s defined to be equal to x.

  3. beowulf
    September 2, 2011 at 10:34 pm

    TC, the backstory of that “Bury the lede” story is pretty heavy.

    From what I’ve read Geithner has tried to do a wholesale refi of Fannie and Freddie mortgages since last year, but it was blocked by guy DeMarco, a Bush holdover who’s acting director of FHFA (Senate wouldn’t confirm Obama’s appointment and of course he wouldn’t do anything as bold as a recess appointment). FHFA is a new independent agency to oversee Fannie Mae and Freddie Mac— those are the key words “independent agency”, which means neither the President nor Geithner can fire the guy (though Ezra Klein says Geithner has been looking for a way) so the guy who has veto power over a multitrillion dollar housing restructuring that is of the highest importance to the President and the Secretary… Demarco who decided to up the ante by suing the banks today for billions (not saying he’s in the wrong, only that he’s not President).

    Now here’s the twist, there is recent legal precedent (a Supreme Court case last year, an appeals court case a couple months ago) that makes me believe if the President sent the Attorney General into court and said the voters hired Obama to run the railroad not this guy DeMarco (forgive me for not bothering to look up his first name), Its a 100% lock the President wins that case on constitutional grounds and in the process puts all independent agencies under his thumb (where in truth they should be). So he and Geithner get the super-refi program they want.
    There’s just one catch with that plan. Wanna guess what other independent agency that legal action would unavoidably strip of its independent status? The Federal Reserve!

    The legal bind the Administration is in here is kind of hilarious really.

    • TC
      September 2, 2011 at 11:28 pm

      Well, this makes a much more sense.

      I was wondering why the biggest story of the last 4 years (it’s been 4 years since the recession started) was getting buried.

      Sometimes I talk to my dad and try to tell him that he’s really mad about peanuts and ignores the big stuff. This lawsuit could force BoA into receivership, and it’s not even on Naked Capitalism?

      And why now? why not 18 months ago? And why at all?

      • beowulf
        September 3, 2011 at 2:16 am

        Its a pretty messy situation. The executive branch has at least four different actors involved of which the President only controls one– Tsy, the Fed, FHFA and FDIC (which will be stuck with BoA if FHFA drives it into receivership). How much room does Tsy have under the new debt ceilng? Though if banks start collapsing, I doubt FDIC’s $500B credit line would be enough. Either the Fed will have to bend some rules to fund FDIC directly or Tsy will have to start depositing platinum coins with FDIC (giving it, effectively,an unlimited agency bond issuance authority).

        If that FHFA lawsuit is filed on Tuesday (there’s a Wed. deadline on its SOL to sue), then any chance to do a mass refi is dead. The President will have to rewrite his big speech for Thursday.


        • TC
          September 3, 2011 at 8:56 am

          If he files the suit, the banks are going under.
          If they are in the process of going under, they can’t do refis for 12 months. Credit of all types contracts.
          If they can’t do refis, the economy either tanks or stagnates, just in time for 2012 elections.
          A bank collapse draws debt – right up to the debt ceiling. So a debt ceiling debate during July of 2012.

          ok, it all makes sense.

    • TC
      September 2, 2011 at 11:48 pm

      I have a friend who always reads the Saturday NYT. All the important stories are reported there.

      What kind of losses did they take on 196bn of those MBS? 🙂 I bet the losses were only like 2% or so.

    • : (
      September 3, 2011 at 1:03 am

      (Senate wouldn’t confirm Obama’s appointment and of course he wouldn’t do anything as bold as a recess appointment)

      Seriously – WTF. Why won’t he do simple, legal things to make the nation and the world a much better place? Why, god, why?

      • beowulf
        September 4, 2011 at 2:38 pm

        Right, recess appointments are part of the simple blocking and tackling of a modern presidency, sort of like using the filibuster-proof reconciliation process to move legislation through the Senate with only 50 votes (and the VP breaking the tie). By wimping out on small decisions early on, it leaves the conflict-avoiding Obama left with only huge steps. For one thing, the only way to keep Tsy and the eight financial “independent agencies” that regulate the economy is for the President to go to court to assert unitary executive authority over all of them.

        I was reading through Dodd-Frank last night. the FDIC is now charged with taking both failed banks and failed TBTF nonbanks entities into receivership. Failed banks run into the $500 billion cap on direct Tsy loans (plus the debt ceiling)– only way to blow past that is if Tsy exercises pre-existing authority to deposit public monies (that is, jumbo platinum coins) into the Deposit Insurance Fund. The workaround here is that FDIC is unconstrained on issuing its own agency bonds (which the Fed could scoop up at market) so long as bonds outstanding are less than the amount of cash on hand.

        Takeovers of Too Big Too Fail nonbanks are handled differently (with a separate Liquidation Fund). FDIC isn’t authorized to sell OMO agency bonds itself but the only cap on direct Tsy loans here is the debt ceiling. So for TBTF nonbank funding, Tsy would use jumbo coins to buy bonds directly from FDIC. They could hold them or sel in OMO. Ironically, Tsy’s sales proceeds could then be used to buy back public debt subject to the ceiling.

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