The Babbling Brooks of the NYT Babbles Blunders into a Financial Reality Zone.

Abstract: David Brooks has mumbled about the h0urs’s old Little Timmie Geithner speech. He wanders around the Snake Pit with comments on personalities and nostrums about leadership and how Timmie will come up a solution without “without freaking everybody out.” I just freaked out. The details of the speech include some crude outline of a ‘program’ that will spend a couple of trillion dollars very quickly and ignores the Specter of Hyperinflation, which is now a certainty. We are going to spend our way out of terminal debt.  Apparently, the standard notion that we can spend our way to prosperity and that will be tested very soon.  The loyal ‘main street’ minorities who voted for the Messiah will now have their mortgage principle and rates ‘adjusted’ to suit their political views at the expense of the taxpayers, who are in a different economic class. We can thank the Two Twits from Maine and The Magic Bullet Man for allowing the Democrats this opportunity to plunder the assets of America. Inflation will destroy our society and we will probably revert to food riots, race riots and open war in the streets.

As we read the NYT—aka the Walter Duranty Papers[1]--a turn-of-the-crank Marxian fog horn that signals when we are cruising at full power against the rocks, always provides us with some entertainment and quirky predictions for the demise of capitalism.  Facing an world-wide financial meltdown the New York Times , today, as is their custom, features the tokenic[2] prose of  their  Chief Babbler David Brooks,[3][4] [5] an interesting conservative ‘token’ who pretends at objective journalism at the behest of the Old Gray Lady. Today, Brooks instructs us in government finance and bailouts:

“It’s no fun being a leader in a financial crisis. You’ve got to be bold but reassuring, free-spending but disciplined. You must decisively crush the short-term problem without freaking everybody out

To my mind, the stimulus packages on Capitol Hill fail to strike these balances. They are broad but sloppy, too slow to make a quick difference and too enduring to avoid fiscal damage.”[6]-- Showing Some Discipline by David Brooks Op-Ed Columnist Published: February 9, 2009  [Emphasis is mine in all quotes.][All quotes are from this link in this essay today unless otherwise indicated.]

It is interesting that David Brooks manages, in one deftly orchestrated swipe, to destroy the concept, intent and viability of the current frantic bailout program in Washington. And all this proceeds the Eternal Message of Hope delivered must minutes ago by Little Timmie Geithner[7], of DirtMyth and John’s HopCan.  How nice to have a whiz kid like in the LBJ/Viet Nam era like Robert McNamara and from Brooklyn and parts of Asia too.  Diversity is at hand.

 Some words from Timmie:

"As President Obama said in his inaugural address, our economic strength is derived from 'the doers, the makers of things.”[8]—Except from Geithner’s Speech Excerpts from Geithner's speech on bank plan.

Comment: We must struggle to get at the substance here. Have the thinkers and planners been marginalized here? This looks like pitch to the unions. There are no details here.

"Instead of catalyzing recovery, the financial system is working against recovery, and that's the dangerous dynamic we need to change.”

"It is essential for every American to understand that the battle for economic recovery must be fought on two fronts. We have to both jump-start job creation and private investment, and we must get credit flowing again to businesses and families.”-- Except from Geithner

My Rebuttal:

This is sophomoric as to be hilarious. What do they teach little winkies at Dirt Myth? The ‘financial system’ is direct result of the laws of supply and demand and the financial crash, well predicted in advance[9], was caused by a falling market in house prices, euphemistically known as a bubble. This was caused by lending precious to people who could not afford to pay back the loans. The capitalist system worked very properly here as overbought and overbuilt real estate reached a point where any change in growth would force a contraction of the price. That is what happens in supply and demand structures—the prices fall to coincide with the market forces.  The alternative, which we might see soon, is for of the government to set prices of homes or, better, and adjust the mortgages of those homes according to income or political status. This would be a cunning way to circumvent capitalism and show that governments know best. That means that the loyal voters of Obama’s Main Street would get their housing subsidized at taxpayer’s expense (as the failed Fannie May mortgages are now the responsibility of the taxpayers) and most ‘main street’ citizens do NOT pay taxes. Quite a redistribution of wealth! Lenin would have been partially impressed.

More adventures are planned:

"Third ... together with the Fed, FDIC and private sector, we will establish a Public Private Investment Fund. This program will provide government capital and government financing to help leverage private capital to help get private markets working again for the legacy loans and assets that are now burdening the entire financial system.

"By providing the financing the private markets cannot now provide, this will help start a process of providing a market for the real estate-related assets that are at the center of this crisis. Our objective is to use private capital and private asset managers to help provide a market mechanism for valuing the assets.”-- Except from Geithner

From the LATrines[10], we get this translation[11]given in part here:

[1] The government will spend up to 1 trillion to try to buy up toxic mortgage-backed securities and another trillion to ‘spur consumer and business lending.’

[2] There is a future ‘plan’ for reducing mortgage payments and lowering mortgage interest rates. 

That last quote has the intriguing concept of a soon-to-be-invented market mechanism for valuing the assets. This is a wild convolution of economic theory and political commentary.  We already have a market mechanism and that is called the mechanism of the free market. All this can be simplified by stating flatly that your worthless government will now just print money to fix a natural and predictable variation in the housing supply and demand schedules with special attention to Democrats who voted for Obama.  When a market changes in a politically unacceptable direction, we now can use taxpayer tax liability to ‘correct’ the problem and keep votes on the leftist dockets. Thus, the rich can subsidize their own trip to the finance guillotine.

This is a massive transfer of wealth to the low class and will produce astonishing inflation.

Brooks takes the following view after apparently reading or envisaging the Geithner message massage:

“The whole policy is still unfolding. But one gets the sense that it is being designed to fit the crisis, not a prefab agenda. Geithner is proposing a huge intervention, but at least he seems to be running against his natural instincts. If we’re going to have a finance czar, he should at least dislike the role.”-- David Brooks

I have struggled with this for two hours and have no hint of what it might mean. If it is designed to obfuscate and befuddle the reader then Brooks has succeeded in my case. This comment soars beyond blather, hokum and credibility. That stock market at 2:27 pm 10 Feb 2009 is down 340 points [and more[12] as I continue to write]on this grand news.  Gold is up $21/oz. Does any of this give us a hint at what Obama is up to?

We must wait a few months for David Brooks to counsel us on how to deal with a depression mixed with hyperinflation. This new phony process will fail, of course, and will give us social unrest and a major change in our political system. We can look forward to wondering what Europe is going to do as they are farther down the slippery slope than we are. Maybe we can get some sound advice from our European Brothers[13] for the first time. We shall see.

rycK

Comments to: ryckki@gmail.com