Clive Crook
Recently by Clive Crook
Mar 12 2009, 12:29PM
Recession? What recession?
Mar 5 2009, 9:12PM
More like France
I lived for about a decade, on and off, in France and later moved to the United States. Nobody in their right mind would give up the manifold sensual, aesthetic and gastronomic pleasures offered by French savoir-vivre for the unrelenting battlefield of American ambition were it not for one thing: possibility.
Feb 26 2009, 10:22AM
It depends what you mean by nationalize
Not even the most generous observer would say that the Treasury and the Fed have done a good job of explaining the thinking behind their financial stability plan. I think this note by Douglas Elliott does a much better job than they have. If you want to understand the logic of the administration's position, have a look.
On the underlying analysis, Elliott is with Geithner and
Bernanke most of the way, which lately puts him in the minority of
commentators. The main difference is that he is willing to say that
outright nationalization might be necessary for "one or two" large
banks, whereas Geithner and Bernanke persist in giving the impression
that they will avoid this if at all possible. Most economists who
follow this subject now seem to be arguing for outright nationalization
of many banks--or, as they put it, "the banks" (choose your own
number). People often seem to be talking past each other. Elliott
persuades me that some of the discussion of the Fed/Treasury plan is
muddled by terminology.
Feb 24 2009, 4:48PM
Obama's fiscal policy
This year's budget deficit will be about $1,400bn or roughly 10 per cent of gross domestic product. This comprises $1,200bn, as recently estimated by the independent Congressional Budget Office, plus another $200bn from the first year of the fiscal stimulus. What happens after that? A new analysis for the Brookings Institution by Alan Auerbach and William Gale estimates that the deficit will average at least $1,000bn a year over the next decade - and this on the basis of some pretty optimistic assumptions.
Feb 20 2009, 1:21PM
Some thoughts on Obama's housing plan
The administration's housing plan seems well thought out. All three parts address clear weaknesses in the present arrangements.
The refinancing element, aimed at borrowers in good standing, allows Fannie and Freddie to refinance loans where the value of the mortgage is between 80% and 105% of the value of the property. Up to now they have not been allowed to do this (unless the mortgage is insured). Many borrowers in good standing have seen their loan-to-value ratios climb into this range because of falling house prices. The rule preventing refinancing at current lower rates is self-defeating from the agencies' own point of view, since it increases the chances of default. The plan puts this right--helping both the GSEs and their borrowers. (Some complain that the change only helps borrowers with loans owned or guaranteed by the GSEs. Well, yes, those were the loans affected by the restriction in the first place.)
Feb 18 2009, 5:24PM
Is 1,400 pages a problem?
What Clive seems to be saying is that, at 1400 pages, the bill could not possibly have been reviewed in detail by many members of Congress before they voted for it given the rush to get it done. What he doesn't say is that most representatives and senators generally only review the parts of any bill that are important to them for some reason...
[C]iting the number of pages as a reason to think legislation is bad is ridiculous. That's on a par with football commentators talking about the number of minutes one team has had the ball compared to the other or the greater number of plays one team has run.
Stan, please, read what I wrote:
Feb 15 2009, 11:30AM
Fiscal stimulus: repent at leisure
Republicans have a point when they complain about the inordinate length of the bill--1,400 pages or thereabouts (the count does not seem to have settled down yet). Republicans are right to say that not a single senator or congressman voting for it can have read it. Of course, it is hypocrisy for them to say this: failing to read the law you are voting for is standard working method in Congress. But that doesn't invalidate the criticism, certainly not in the eyes of the public. Not every unread piece of legislation costs taxpayers $800 billion. It isn't too much to ask that the politicians voting for this law, even if they had to make an exception, had read it first.
Feb 11 2009, 2:57PM
Not exactly a vote of confidence
What Obama said on Monday struck me as a bit odd at the time, as though he was most concerned about the performance aspect. Now it seems odder. The president knew what we now know, that the next stability plan does not yet exist. The breathless build-up for today's announcement had led everybody to expect an actual plan. When the Treasury said, "We're still working on it," Wall Street recoiled, and the White House should not be surprised.
Feb 10 2009, 5:21PM
Dismal science, revisited
Feb 10 2009, 3:00PM
Son of TARP
The Obama administration knows that the politics of its new Financial Stability Plan is even more difficult than the economics--which is saying something. The country detests the Troubled Asset Relief Programme, now recast and renamed, regarding it as a vastly expensive rescue of the people who caused the crisis. Tim Geithner acknowledged this on Tuesday. The administration had to improve and expand the programme, while persuading voters that costs will be controlled and that the villains will be punished. The goals are complicated, and the result is a bit of a mess.
Feb 7 2009, 5:14PM
Protectionism and the stimulus
During the past few months, as the severity of the recession has become clearer, drawing parallels with the Depression of the 1930s has been a staple of economic commentary. Rightly so: This may yet turn out to be the worst economic setback for 70 years, and the Great Depression says something about how bad things can get if governments fail to respond quickly and about the need to learn from history.
Speaking of that, remember Smoot-Hawley? One can overstate its role, no doubt--it did not actually cause the Depression--but most economists, I think it fair to say, believe that the effort in the 1930s to boost domestic output by restricting imports made things worse. The collapse of world trade, and hence global output, was helped along by deliberate policies in the United States and abroad, as governments tried to keep employment high at home by shifting unemployment overseas. In the end, everybody was worse off.
Feb 3 2009, 9:26PM
The reckless stupidity of "Buy America"
The Buy America provisions in the House stimulus bill were bad enough. The Senate version threatens to make them even worse, extending them from government purchases of steel to government purchases of all manufactures. These measures are possibly illegal in international law, flatly contradict a commitment that the US made at the G20 summit in November, and (most important) are likely to hurt the economy more than help it. Is this the new spirit of US multilateralism? Smoot Hawley, anyone?
Read the analysis by Gary Hufbauer and Jeff Schott of the Peterson Institute.
Feb 2 2009, 3:25PM
Bad politics and urgent remedies
You can read the rest here.You could not call the fiscal stimulus passed by the US House of Representatives last week, without a single Republican vote, a beautiful piece of legislation.
With luck it will be improved over the next few weeks. But if you believe, as I do, that a big stimulus is needed, a measure of this sort, however unlovely, is far safer than the likeliest alternative -- which is further protracted delay.
While Washington quarrels about the details in this absurdly complex proposal -- it runs to more than 600 pages -- the recession worsens.
Politicians seem unaware. Jobs are evaporating, the housing market continues to deteriorate, a fresh and even larger wave of mortgage foreclosures may be approaching, the financial system is prostrate. Meanwhile, Democrats dream their dreams about reinventing America and Republicans recite their anti-government catechism.
Jan 29 2009, 7:00AM
Bill Easterly's new blog
I am a fan of Bill Easterly, author of "The Elusive Quest for Growth" and "The White Man's Burden". He is the most consistently interesting and provocative development economist I know. Strafing the aid industry, as he does, takes courage: it offends most right-thinking people and is apt to make you unpopular except with bigots and misanthropes (and Bill is as far removed from those last two categories as anyone could be). The great man has just started blogging. Add "Aid Watch" to your bookmarks.
One of his first entries is about an invitation from the UNHCR to a "Refugee Run"--in Davos, if you can believe it. "Experience life as a refugee!" At first, Bill says, he thought this was a joke, as one would. I had to google for myself. Apparently, it isn't:
Jan 27 2009, 1:24PM
The CBO on the fiscal stimulus
My main reaction to the CBO's new review of the House stimulus bill (see the director's blog; a fuller version) is that the package is much smaller than previously supposed. The CBO says it would increase the budget deficit by $816 billion during 2009-2019, but by only $525 billion when it is most needed, in the remainder of fiscal 2009 and 2010. The stimulus for the rest of 2009 is put at just $169 billion. The 2009-2010 stimulus needs to be much bigger, in my view. And the ten-year stimulus should be much smaller: if you are going to look that far ahead, you should see lower spending and higher revenues relative to baseline.
A lot of the front-loading, such as it is, comes from the tax-cut provisions that many Democrats object to. Almost the whole of the ten-year tax-cut stimulus, a little over $200 billion, arrives in 2009 and 2010. If the plan relied on spending alone, barely half of the ten-year stimulus would take effect in 2009-2010.
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