Partisan Divide Over Economic Outlook Worries Ben Bernanke | Hacker News Reader

Partisan Divide Over Economic Outlook Worries Ben Bernanke

nytimes.com

28 pointsjonwachob9143 comments

I feel like no one here has read the article, and is just having their fun doing some character assassination.

  > “The election result completely reversed people’s views 
  > of the state of the economy. Republicans who thought that 
  > we were in a dystopia now think things look great, and 
  > Democrats, the opposite. And it shows that it isn’t all 
  > based on an objective assessment of the economy.”

Seems a pretty salient and uncontroversial observation.

That's one thing that drives me crazy when I talk to people. When the other party does something they are outraged but when their own guy does it, it's suddenly OK. I guess the parties have achieved the final goal. People are not even capable of looking at a situation anymore and make up their mind. Instead they just blindly follow what they are being told.

I believe in a quite majority that is perfectly capable of independent thought and self-awareness, but lacking news outlets they trust to give them anything but narrative. It could be the slow death of newspapers that led us here.

The lack of newspapers they trust is just a consequence of political parties undermining that trust. You still can read the New York or Wall Street Journal and get enough information to form a reasonable opinion.

I disagree. Media seems to me to have gotten much more sensationalist and click baity over the last decade and often really stretches the facts in interests of agenda. To be fair maybe they feel this is necessary to survive in the face of the internet.

Trust is hard to establish but only takes an instant to break.

I agree that media has gotten more sensationalist. CNN for example is just horrible. But I would still say that it's not difficult to filter out real facts if you want to. Most people don't want to though.

Ya, true enough. Most people want to believe what they want to believe.

People have become too politically consistent. Thoughtlessly so.

A huge part of that is perceptions of Obamacare's impact on the economy and the outcome of the election's expectations to change it.

It's just interesting to see how quickly the flip happened. I think it's in part due to the fact the Democrats have tried, and failed, to capture the business interests the Republicans have largely accumulated over the decades. I even remember back in '98 hearing from folks who called themselves the "new" Democrats which were supposedly business friendly but also socially progressive. Clearly that approach didn't work and I don't think it'll ever work since businesses have no interest in pushing for social change when largely it doesn't improve their profits. So now the Democrats are going back (sorta) to their roots of being for the "little guy" but the fact that folks like Pelosi continue to squawk about being capitalists shows how fake that change is that it amuses me to no end. The fact Pelosi even freaks out at the idea of single payer healthcare proves the Democrats can't or won't really change and this is all for show.

It's impossible for economic policy to not be politicized. Look around the world, all political parties are distinctly grouped by their economic beliefs. If anything, the US political landscape needs to be more far more political on the economy. Differentiating republicans and democrats on their economic policies is almost impossible. Especially compared to literally every other country (excluding dictatorships). This almost identical belief about the economy has made an incredibly toxic and arbitrary system where people misplace their anger at each other because they have not been educated on what the true source of their anger is or what their alternatives are! It's made an ugly tribal political system where it's us vs them.

I agree. The economic policies of Democrats and Republicans is really indistinguishable from Goldman Sachs economic policy.

Thats why I own GS stock!

That's why I own a prepper bunker!

Private enterprises don't have economic policies.

You don't think private enterprises lobby for economic policy? Maybe you're just making an argument about wording?

Wording is important. The current US president is a good example of what happens, when one is careless with one's language.

GS doesn't define U.S. economic policy. It might lobby for some specific issues, sure. But it isn't interested in defining the entirety of economic policy.

Also, I don't see lobbying as a problem, if it is transparent.

Wording is important. And I intentionally worded my OP to convey my concern that US economic policy is indistinguishable from GS wishes. It's just a little artistic expression, and it was clearly effective since you apparently knew exactly what I meant. I'm not writing an article in the Quarterly Journal of Economics here. When US economic policy is indistinguishable from the wishes of GS, GS may as well have an economic policy.

What bothers me is the conspiracy-theory-like obsession with GS. No mention of JPM, or BofA, or Citi, and so on. It's not about you concretely, just in general what I often hear and see. Your comment was just an example of the focus.

It's like GS is the only bulge bracket bank with lobbying interests and deep Washington connections. GS are mostly smart and mean. Sure. But do you really think that their competition does nothing and lets them dictate their interests in DC willy-nilly?

It's because GS alum are consistently finding themselves in high political office. Rahm Emanuel, Obamas Chief of Staff, was on the GS payroll for $3k/mo while in office. His job description at GS was to "introduce us to people." Here's an article about GS ties to Trump's White House. https://www.nytimes.com/2017/01/12/business/goldman-sachs-co...

BofA, JPM, etc. definitely have ties, but it never seems to be as blatant as with GS.

It is more or less similar for G7 countries. Most Western parties converge to similar economic policies.

The toxicity in American politics, IMO, comes for the two party system and the structure of representation. Things look very different in parlamientarian republics.

“You have to recognize realistically that A.I. is qualitatively different from an internal combustion engine in that it was always the case that human imagination, creativity, social interaction, those things were unique to humans and couldn’t be replicated by machines,” he said. “We are coming closer to the point where not only cashiers but surgeons might be at least partially replaced by A.I.”

I think the politicians will finally get it when income tax revenues start eroding (maybe as soon as this year?). I'd expect this to force a pivot to a sales/transaction tax model. Hopefully (but I'm not optimistic) this is paired with a final capitulation on the necessity of a UBI.

Quote from him ca 2006 - we haven't seen a nationwide housing bubble. Predicting is hard, even if you have tons of data. Greenspan used to take long hot baths (according to his book I read) to finalize the estimates. Guess what, he was really good at it.

Alan Greenspan, you mean?

Yes, Alan Greenspan, the former fed chairman. Just a typo.

He said the same thing in his book "Courage to Act". I genuinely believed it until I read "The Short". You didn't have to have tons of data to predict the bubble, you just had to take the time to read the loans. Everyone saw this bubble long before Bernanke did.

  I genuinely believed it until I read "The Short"

You mean Michael Lewis' "The Big Short: Inside the Doomsday Machine"? [1]

[1] http://www.goodreads.com/book/show/26889576-the-big-short

Everybody saw the bubble, it made the cover of the Economist many times in the 4 years before the crash.

The hard part is predicting when and how it would pop, and nobody could do that. Tons of people lost their shirts shorting against the bubble. They weren't wrong, just early.

"The market can stay irrational longer than you can stay solvent" - Keynes

The how was important -- everybody acknowledged that the market was in a bubble, but many people predicted that it wouldn't pop catastrophically as it did.

found it! http://www.economist.com/node/4079027 they def called that one. "Interest-only loans"

I feel a lot of commenters here don't differentiate between economics as subject of policy and economics as tool for politics.

Economy has always been political, since thr discipline was founded as political economy, the part which modern economists have excised from their expertise. Good books on political economy include those by Ricardo, Smith, the excellent critique of political economy Capital by Marx and those books by Proudhon.

Bernanke made the choice to resolve bad housing loans by handing out trillions (through the purchase of mortgage-backed securities) to the lenders instead of the borrowers. I think his analysis would be improved if he recognized that was a political decision, not just an economic one.

Not handing out, but lending out.

Bailing out households would be a far more political decision. The Fed could impose constraints on banks participating in TARP, to make sure the money gets paid back. The same wouldn't be possible to practically do with households.

In addition to the loans and direct investments in banks, there was a large asset purchase program:

https://en.wikipedia.org/wiki/Public%E2%80%93Private_Investm...

It can be cost neutral by way of selling the assets back to the market, but that isn't happening at any sort of rapid clip. The Fed currently has ~$1.8 trillion of mortgage backed securities.

https://fred.stlouisfed.org/series/MBST

The bailout targeted the entire economy. Imagine the pinch we'd be in if housing all of the sudden wasn't too expensive to buy (and thus not a glorious asset for all the people that have it).

Thank you for the insight! I haven't considered "sector targeting". 1.8 trillion USD MBS is a bit unsettling, I must say.

It's "only" about 12% of the market.

https://www.federalreserve.gov/econresdata/releases/mortouts...

TARP was a legislature-led bailout, has nothing to do with the Fed. Parent is talking about the Fed bailout, which exists under a number of alphabet soup names (like PPIP), and continued under QE1, QE2, QE3, etc. I wish there was a good do-it-all source I could point you to to educate you on what happened, unfortunately I am blanking at the moment.

I am not that familiar with the exact schemes how QE/bailouts were done in the U.S., so thank you. But can one then say that QE programs were more political than TARP?

they were both political, but TARP was an act of legislation passed by elected political representatives whereas QE* was enacted by an unelected technocrat who made the decision without being politically accountable for it.

now, maybe it was the right call and the (nominally) non-political nature of the Fed board is a necessary arrangement to allow for these decisions to be made where a politically accountable body could never be expected to do so.

or maybe it wasn't the right call and the political act of selecting who would prosper and who would suffer was made by a man without an appropriate mandate to make a decision that so profoundly affected millions of people.

lending out at rates that were designed to nearly guarantee profitable returns for those companies. it was, in essence, an exceptionally huge windfall profit that they "earned" by nearly going bankrupt and taking the whole global finance system to the brink with them. it was ransom money, in other words.

you're right that the practical concerns about trying to address the borrowers were significant and discouraged the Fed from even trying it (and congress wouldn't go near it either). however, that there is now a long-simmering batch of political backlash and ill-will should surprise nobody.

Bernanke broke the moral hazard limit and now we're suffering the consequences in our national polity and discourse.

It's not like the net impact on borrowers of reinflating the housing bubble was negative.

People in areas with poor housing markets and with terrible mortgages got the worst of it, but the wider housing market benefited from it.

"To Mr. Bernanke, when the economy — as well as the basic statistics that undergird it — becomes politicized, the result is bad policy. “A lot of the emotion is not really susceptible to nuanced policy arguments,” he said, shaking his head."

Not the same! He didn't say that!

He is correct in a way. As long as the government is trying to "control" the economy, it will be "politicized". The only way to not "politicize" the U.S. economy is to get rid of the Federal Reserve, etc.

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