Category: financial meltdown

When Wingnut Prophecy Fails

As polling shows McCain falling farther behind and his campaign’s message floating farther and farther off any track which resonates with the American Public, Wingnuttia is awash in cognitive dissonance. Wizbang:

The polls are wrong this year, very wrong. I have been saying this for months, and I have backed up my claim with both statistical and anecdotal support. The claims I have made have inspired some, caused others to laugh in derision, and brought others to test their assumptions and revisit the hard data. Along the way, there have been a lot of questions about how and why the polls could be wrong. The most common complaint, is that for all of the polls to be wrong, there would need to be some sort of conspiracy, or else an incredibly stupid decision made across the board. Well, I am not a big believer in conspiracies, but I do think that the polling groups have fallen into a groupthink condition. I wrote earlier about the fact that of the major polling groups handling national and state polls, all of them are based deep in pro-Liberal, anti-Conservative territories.

~~~

What I think is happening, is this - the polls’ headquarters were based deep in liberal territory, where the assumption was that Obama’s candidacy would actually create a groundswell of pro-democrat voters unseen in the country since 1932. That McCain is more experienced with the key issues than Obama was ignored, that the historical significance of the debates shows that the effects appear several weeks later was also ignored. That the economy could be as reasonably blamed on the democrat-controlled Congress as on the republican President was never considered. That character would be a salient factor in the decisions of voters was rejected out of hand.

The polls are wrong. Make your own mind up, because your vote will matter.

From the Wikipedia entry for When Prophecy Fails, the classic study of emerging cognitive dissonance in a UFO cult where its belief system grew stronger even as massive evidence of the failure of the cult’s belief system and all it’s predictions accumulated.

Festinger stated that five conditions must be met, if someone is to become more fervent in a belief even after its disconfirmation:

* A belief must be held with deep conviction and it must have some relevance to action, that is, to what the believer does or how he behaves.

* The person holding the belief must have committed himself to it; that is, for the sake of his belief, he must have taken some important action that is difficult to undo. In general, the more important such actions are, and the more difficult they are to undo, the greater is the individual’s commitment to the belief.

* The belief must be sufficiently specific and sufficiently concerned with the real world so that events may unequivocally refute the belief.

* Such undeniable disconfirmatory evidence must occur and must be recognized by the individual holding the belief.

* The first two of these conditions specify the circumstances that will make the belief resistant to change. The third and fourth conditions together, on the other hand, point to factors that would exert powerful pressure on a believer to discard his belief. It is, of course, possible that an individual, even though deeply convinced of a belief, may discard it in the face of unequivocal disconfirmation. We must therefore, state a fifth condition specifying the circumstances under which the belief will be discarded and those under which it will be maintained with new fervor.

* The individual believer must have social support. It is unlikely that one isolated believer could withstand the kind of disconfirming evidence we have specified. If, however, the believer is a member of a group of convinced persons who can support one another, we would expect the belief to be maintained and the believers to attempt to proselyte or to persuade nonmembers that the belief is correct.

The Batshit Crazy Right has had 8 years to indulge in the various fantasies of Republican neoconservatism: a) ushering in pro-Western democracy in Iraq via military intervention, b) defeating al Qaeda decisively by expanding military conflicts in the Middle East, c) making America’s economy prosper beyond our wildest dreams through deregulation coupled with tax breaks for top income levels, d) the unbridled triumph of American militarism and neo-colonialism abroad, and e) the decisive capture of power by a permanent majority of radical social conservatives in American national politics.

None of the above things have occurred or are even remotely likely to occur under neoconservative policies, and yet the BCR cannot admit the failure of its ideology, even amid a Tsunami — or a category 5 hurricane — of disconfirmatory evidence.

Even as the McCain campaign degenerates into fit of off-message name-calling, robo-calls and $150,000 Nieman Marcus/Saks bills for its putative middle-class hockey mom of a Vice Presidential candidate, the mounting evidence of epic failure — the growing disaster looming in polls — has to be somehow refuted by the flimsiest of arguments: if the large polling companies, even those largely funded by Republicans, would only move their offices from New York to Wasilla, the polls would all show the impending McCain victory and reaffirm the efficacy of patently disastrous Neoconservative policies.

Assmissile wins Kool Aid guzzling contest

Via Lawyers, Guns and Money, this piece of scintillating Wingnut Kool Aid guzzling from PowerFools Assmissile:

The fundamentals of the economy are indeed strong, and John McCain shouldn’t hesitate to say so.

Cuz all this stuff about the librul media is spewing economy not being great is just another commie plot “socialize something, thereby killing the engine of American prosperity.”

You know, just like flouridation.

International Monetary Fund warns Third First World Debtor

The IMF took a break from making demands and issuing warnings to banana republics and developing nations to tell Uncle Sam to get its shit together.

The International Monetary Fund has added to the growing pressure on the US Congress to approve the Wall Street bail-out, as stockmarkets rose on optimism that a deal will be hammered out this week.

Dominique Strauss-Kahn, managing director of the IMF, warned last night that the US must take urgent steps to protect its economy from the ongoing financial crisis.

“We’re right at the moment where action is needed,” warned Strauss-Kahn. “A non-perfect plan is better than no plan at all,” he added, in an interview with Reuters in Washington.

It’s amazing, the amount of devastation 8 years of Bush’s Presidency has wrought. From the most powerful economy with a government running annual surpluses and leader of the free world, to the world’s biggest debtor getting pauper warnings from the IMF and an increasingly dubious reputation among our steadfast allies.

Turning on a dime

John McCain, recovered from Friday night’s anger-fest, lashes out at Obama:

In his first public appearance since Friday night’s debate, McCain said Democrat Barack Obama advocates tax-and-spend policies that “will deepen our recession,” and voted against funding for equipment needed by troops in Iraq and Afghanistan.

Just 12 days ago, McCain maintained that the fundamentals of our economy were sound, and denied that we were anywhere near a recession. If he had clue one about economics, or was even capable of truthfully recounting Obama’s proposals, he might have a little more credibility.

In the early days of the economic crisis, McCain seemed uncertain how to react. His first response was to say the fundamentals of the economy were strong. Then he backtracked, saying the workers form the foundation of the economy and they are strong. Then he called for a blue-ribbon commission to study the root causes of the debacle on Wall Street. Then he called for the ouster of Securities and Exchange Commission Chairman Christopher Cox, with each shift drawing ridicule from Obama.

But now he’s back to basics: lying about Obama’s tax proposal and claiming Obama’s economic proposals, which he doesn’t understand, will make the recession, which he not only doesn’t understand, but which up until recently he didn’t believe existed, worse.

But we can trust him because, you know, he’s so maverick-y. Or so he keeps on telling us.

Lawmakers reach agreement on revised bailout plan

Per CNN:

Lawmakers have reached agreement on a bipartisan counterproposal to the Bush administration’s $700 billion financial bailout plan.

Both parties and the House and Senate agreed Thursday to a set of principles on revisions to the rescue plan, which calls for the Treasury Department to buy up bad mortgage securities from banks in an effort to get them to lend again.

The proposal will help homeowners, curb executive pay packages at participating firms and provide oversight of Treasury’s actions, said Sen. Christopher Dodd, D-Conn., a key architect of the congressional effort. He did not provide details but said lawmakers will sit down with Treasury officials to discuss it.

“We’ve reached a fundamental agreement on a set of principles, one, for taxpayers, which is tremendously important,” Dodd said. “We’re very confident we can act expeditiously.”

And they did it without the supposedly critical intervention of John McCain, which is just as well since he apparently never got around to reading the proposed bill in the first. No definitive word yet on whether McCain still plans to bail out of his debate with Obama Friday night.

Panic We Don’t Need

McCain’s decision to suspend democratic process and debate in response to President Bush’s fear-mongering and demand for unilateral authority over our nation’s finances seemingly is an attempt to strengthen the moribund Bush’s hand and inject himself — or rather his photo ops –into the process of a crisis of which he was wholly ignorant just a week or so ago when he declared the economy “fundamentally sound.” But question whether McCain trying to fuel the panic constitutes any form of “leadership” which the candidate is so desperately trying to project, after bungling his response to the recent economic failures nearly as badly as his Veep selection mangled the finances of the small town she left saddled with $23 million in debt.

A Bailout We Don’t Need

Now that all five big investment banks — Bear Stearns, Merrill Lynch, Lehman Brothers, Goldman Sachs and Morgan Stanley — have disappeared or morphed into regular banks, a question arises.

Is this bailout still necessary?

The point of the bailout is to buy assets that are illiquid but not worthless. But regular banks hold assets like that all the time. They’re called “loans.”

With banks, runs occur only when depositors panic, because they fear the loan book is bad. Deposit insurance takes care of that. So why not eliminate the pointless $100,000 cap on federal deposit insurance and go take inventory? If a bank is solvent, money market funds would flow in, eliminating the need to insure those separately. If it isn’t, the FDIC has the bridge bank facility to take care of that.

Next, put half a trillion dollars into the Federal Deposit Insurance Corp. fund — a cosmetic gesture — and as much money into that agency and the FBI as is needed for examiners, auditors and investigators. Keep $200 billion or more in reserve, so the Treasury can recapitalize banks by buying preferred shares if necessary — as Warren Buffett did this week with Goldman Sachs. Review the situation in three months, when Congress comes back. Hedge funds should be left on their own. You can’t save everyone, and those investors aren’t poor.

Now, some might argue what some guy named Galbraith, who happens to be an economist educated at Harvard, Yale, and Cambridge, has to offer in the way of insights into the economy, when compared to the vast store of knowledge possessed by John “The Economy is Fundamentally Sound” McCain.

But what if this Galbraith character is right? His dad was considered very smart, after all. What if a panicked suspension of our most important democratic process — electing a President — and hurried passage of a flawed and perhaps unnecessary or wasteful law is not in our Nation’s best interest. What if calm and considered judgment, rather than fearful haste and grandstanding and a surrender to fear summoned by America’s Fearmonger-in-Chief, is what America needs?

And which candidate seems to be keeping a level head in this crisis, real or contrived it may be?

Bush Corporate Welfare Scheme Not a Hit With Economists

They write letters:

To the Speaker of the House of Representatives and the President pro tempore of the Senate:

As economists, we want to express to Congress our great concern for the plan proposed by Treasury Secretary Paulson to deal with the financial crisis. We are well aware of the difficulty of the current financial situation and we agree with the need for bold action to ensure that the financial system continues to function. We see three fatal pitfalls in the currently proposed plan:

1) Its fairness. The plan is a subsidy to investors at taxpayers’ expense. Investors who took risks to earn profits must also bear the losses. Not every business failure carries systemic risk. The government can ensure a well-functioning financial industry, able to make new loans to creditworthy borrowers, without bailing out particular investors and institutions whose choices proved unwise.

2) Its ambiguity. Neither the mission of the new agency nor its oversight are clear. If taxpayers are to buy illiquid and opaque assets from troubled sellers, the terms, occasions, and methods of such purchases must be crystal clear ahead of time and carefully monitored afterwards.

3) Its long-term effects. If the plan is enacted, its effects will be with us for a generation. For all their recent troubles, Americas dynamic and innovative private capital markets have brought the nation unparalleled prosperity. Fundamentally weakening those markets in order to calm short-run disruptions is desperately short-sighted.

For these reasons we ask Congress not to rush, to hold appropriate hearings, and to carefully consider the right course of action, and to wisely determine the future of the financial industry and the U.S. economy for years to come.

Signed (updated 9/24/2008 10:30AM CT)

Acemoglu Daron (Massachussets Institute of Technology)
Adler Michael (Columbia University)
Admati Anat R. (Stanford University)
Alvarez Fernando (University of Chicago)
Andersen Torben (Northwestern University)
Barankay Iwan (University of Pennsylvania)
Barry Brian (University of Chicago)
Beim David (Columbia University)
Berk Jonathan (Stanford University)
Bisin Alberto (New York University)
Bittlingmayer George (University of Kansas)
Boldrin Michele (Washington University)
Brooks Taggert J. (University of Wisconsin)
Brynjolfsson Erik (Massachusetts Institute of Technology)
Buera Francisco J.(UCLA)
Carroll Christopher (Johns Hopkins University)
Cassar Gavin (University of Pennsylvania)
Chaney Thomas (University of Chicago)
Chari Varadarajan V. (University of Minnesota)
Chauvin Keith W. (University of Kansas)
Chintagunta Pradeep K. (University of Chicago)
Christiano Lawrence J. (Northwestern University)
Cochrane John (University of Chicago)
Coleman John (Duke University)
Constantinides George M. (University of Chicago)
Crain Robert (UC Berkeley)
Culp Christopher (University of Chicago)
De Marzo Peter (Stanford University)
Dubé Jean-Pierre H. (University of Chicago)
Edlin Aaron (UC Berkeley)
Eichenbaum Martin (Northwestern University)
Ely Jeffrey (Northwestern University)
Eraslan Hülya K. K.(Johns Hopkins University)
Faulhaber Gerald (University of Pennsylvania)
Feldmann Sven (University of Melbourne)
Fernandez-Villaverde Jesus (University of Pennsylvania)
Fox Jeremy T. (University of Chicago)
Frank Murray Z.(University of Minnesota)
Fuchs William (University of Chicago)
Fudenberg Drew (Harvard University)
Gabaix Xavier (New York University)
Gao Paul (Notre Dame University)
Garicano Luis (University of Chicago)
Gerakos Joseph J. (University of Chicago)
Gibbs Michael (University of Chicago)
Goettler Ron (University of Chicago)
Goldin Claudia (Harvard University)
Gordon Robert J. (Northwestern University)
Guadalupe Maria (Columbia University)
Hagerty Kathleen (Northwestern University)
Hamada Robert S. (University of Chicago)
Hansen Lars (University of Chicago)
Harris Milton (University of Chicago)
Hart Oliver (Harvard University)
Hazlett Thomas W. (George Mason University)
Heaton John (University of Chicago)
Heckman James (University of Chicago - Nobel Laureate)
Henderson David R. (Hoover Institution)
Henisz, Witold (University of Pennsylvania)
Hertzberg Andrew (Columbia University)
Hite Gailen (Columbia University)
Hitsch Günter J. (University of Chicago)
Hodrick Robert J. (Columbia University)
Hopenhayn Hugo (UCLA)
Hurst Erik (University of Chicago)
Imrohoroglu Ayse (University of Southern California)
Israel Ronen (London Business School)
Jaffee Dwight M. (UC Berkeley)
Jagannathan Ravi (Northwestern University)
Jenter Dirk (Stanford University)
Jones Charles M. (Columbia Business School)
Kaboski Joseph P. (Ohio State University)
Kaplan Ethan (Stockholm University)
Karolyi, Andrew (Ohio State University)
Kashyap Anil (University of Chicago)
Keim Donald B (University of Pennsylvania)
Ketkar Suhas L (Vanderbilt University)
Kiesling Lynne (Northwestern University)
Klenow Pete (Stanford University)
Koch Paul (University of Kansas)
Kocherlakota Narayana (University of Minnesota)
Koijen Ralph S.J. (University of Chicago)
Kondo Jiro (Northwestern University)
Korteweg Arthur (Stanford University)
Kortum Samuel (University of Chicago)
Krueger Dirk (University of Pennsylvania)
Ledesma Patricia (Northwestern University)
Lee Lung-fei (Ohio State University)
Leuz Christian (University of Chicago)
Levine David I.(UC Berkeley)
Levine David K.(Washington University)
Linnainmaa Juhani (University of Chicago)
Lucas Robert (University of Chicago - Nobel Laureate)
Luttmer Erzo G.J. (University of Minnesota)
Manski Charles F. (Northwestern University)
Martin Ian (Stanford University)
Mayer Christopher (Columbia University)
Mazzeo Michael (Northwestern University)
McDonald Robert (Northwestern University)
Meadow Scott F. (University of Chicago)
Mehra Rajnish (UC Santa Barbara)
Mian Atif (University of Chicago)
Middlebrook Art (University of Chicago)
Miguel Edward (UC Berkeley)
Miravete Eugenio J. (University of Texas at Austin)
Miron Jeffrey (Harvard University)
Moretti Enrico (UC Berkeley)
Moriguchi Chiaki (Northwestern University)
Moro Andrea (Vanderbilt University)
Morse Adair (University of Chicago)
Mortensen Dale T. (Northwestern University)
Mortimer Julie Holland (Harvard University)
Muralidharan Karthik (UC San Diego)
Nevo Aviv (Northwestern University)
Ohanian Lee (UCLA)
Pagliari Joseph (University of Chicago)
Papanikolaou Dimitris (Northwestern University)
Paul Evans (Ohio State University)
Peltzman Sam (University of Chicago)
Perri Fabrizio (University of Minnesota)
Phelan Christopher (University of Minnesota)
Piazzesi Monika (Stanford University)
Piskorski Tomasz (Columbia University)
Rampini Adriano (Duke University)
Reagan Patricia (Ohio State University)
Reich Michael (UC Berkeley)
Reuben Ernesto (Northwestern University)
Roberts Michael (University of Pennsylvania)
Rogers Michele (Northwestern University)
Rotella Elyce (Indiana University)
Ruud Paul (Vassar College)
Safford Sean (University of Chicago)
Sandbu Martin E. (University of Pennsylvania)
Sapienza Paola (Northwestern University)
Savor Pavel (University of Pennsylvania)
Scharfstein David (Harvard University)
Seim Katja (University of Pennsylvania)
Shang-Jin Wei (Columbia University)
Shimer Robert (University of Chicago)
Shore Stephen H. (Johns Hopkins University)
Siegel Ron (Northwestern University)
Smith David C. (University of Virginia)
Smith Vernon L.(Chapman University- Nobel Laureate)
Sorensen Morten (Columbia University)
Spiegel Matthew (Yale University)
Stevenson Betsey (University of Pennsylvania)
Stokey Nancy (University of Chicago)
Strahan Philip (Boston College)
Strebulaev Ilya (Stanford University)
Sufi Amir (University of Chicago)
Tabarrok Alex (George Mason University)
Taylor Alan M. (UC Davis)
Thompson Tim (Northwestern University)
Tschoegl Adrian E. (University of Pennsylvania)
Uhlig Harald (University of Chicago)
Ulrich, Maxim (Columbia University)
Van Buskirk Andrew (University of Chicago)
Veronesi Pietro (University of Chicago)
Vissing-Jorgensen Annette (Northwestern University)
Wacziarg Romain (UCLA)
Weill Pierre-Olivier (UCLA)
Williamson Samuel H. (Miami University)
Witte Mark (Northwestern University)
Wolfers Justin (University of Pennsylvania)
Woutersen Tiemen (Johns Hopkins University)
Zingales Luigi (University of Chicago)

Some fairly prestigious universities there, although no faculty from Liberty University and no asshat bloggers employee by the University of Tennessee