Monday, March 9, 2009

My suggestion for the White House economic recovery web site: blog and Twitter

The White House has an "okay" web site for the stimulus package,, but it needs a blog and they need to exploit Twitter. I sent them the following suggestion:

The web site needs a blog and Twitter feeds to provide us with more timely information.

See the NY Fed site for Twitter examples:


-- Jack Krupansky

They do have a blog on the main White House web site, so it is not an unnatural request.

Somehow, I find it amusing that the New York Federal Reserve Bank is on Twitter!

In any case, I at least gave them some useful feedback. Have you??

-- Jack Krupansky

My suggestion for the White House economic recovery web site

It is all well and good that the White House has a web site for the stimulus package,, but I did not find it immediately helpful in terms of how much money is actually flowing into the U.S. economy. I sent them the following suggestion:

What is missing and really needed is a classic thermometer that shows the amount of stimulus funding that has actually been disbursed or spent by each agency and is actually out there in the economy.

There should be a daily log listing the agency, specific program, and amounts for daily disbursements and expenditures into the economy above the agency/program baseline budget that is directly attributable to the ARRA stimulus spending.


-- Jack Krupansky

It will be interesting to see if they actually can tell when each dollar of ARRA money is disbursed or spent.

In any case, I at least gave them some useful feedback.

-- Jack Krupansky

Is the nation at the brink of a depression?

What a great name for someone alleging that we are on the "brink of a depression": Specter. According to an Associated Press article entitled "Specter says nation on 'brink of a depression'":

The nation is on the "brink of a depression," but there's a "reasonable chance" that the $787 billion economic stimulus package will help ease the situation, Sen. Arlen Specter said Monday.

Specter, R-Pa., said the nation's economic situation is more dire than the public has been told, but did not elaborate.

"Our economic problems are enormously serious - more serious than is publicly disclosed. And I think we're on the brink of a depression," he told reporters at the state Capitol.


"Had there been no stimulus, I think we'd have gone right off the edge," he said. "I think we're pretty close to the edge anyway, to be very brutally blunt about it."

This is the same Arlen Specter who concocted the infamous Single-Bullet Theory of the JFK assassination and here he is concocting a conspiracy theory about the U.S. government allegedly withholding information about the economy. Yeah, right.

In truth, there is no "edge" or single trigger event for a depression. A true depression is a very long, very slow downward slide. Sure, people worry about whether our current slide might have that lasting potential, but there is no evidence of that yet -- even if the dear senator might have fearmongered himself into believing so.

It may not feel like the government actions are having much of an effect, but that is because the Federal Reserve, Treasury, et al are still busy putting all of the elements into place and it will take more than just a few months to see fruit borne of those efforts.

My theory is simply that we need to finish burning off the excess "growth" of the past several years which was fueled by super-cheap credit and exotic financial instruments. That might mean a net hit of 5% to 10% to GDP, employment, income, and spending, but this is not a long-term depressionary process. Sure, such a "structural contraction" is much worse than a garden-variety inventory-based recession, but we already have enough structural supports in place to effectively preclude a true depression.

If we are at a brink, it is a brink of starting to see the positive impact of the stimulus and the Federal Reserve efforts to restart non-bank lending (what was called the "shadow banking system.")

The simple reality is that politicians love to peddle one of two things: sunny-day fantasies or deep, dark gloom. The latter gets a lot of traction these days regardless of what reality might be.

-- Jack Krupansky

Has the economy really fallen off a cliff?

Colorful metaphors are great fun, but never terribly enlightening. Warren Buffet is an endless source of colorful metaphors, the latest of which is his allusion that the U.S. economy has "fallen off a cliff." He uttered this odd characterization in an interview on CNBC [but... but... but... I thought their credibility had "fallen off a cliff" after Jon Stewart's "takendown"!!! Have they rehabilitated themselves already?!?!] that is summarized in a Reuters article by Jonathan Stempel entitled "Buffett says economy fell off cliff, fears inflation."

Now, to be fair, maybe Mr. Buffett considers any recession to be a "cliff." Sure, any contraction of economic activity is not to be desired, but the simple fact is that the "fall" to date of the U.S. economy has been only a "few" percent, which is hardly a cliff.

Now, the stock market can be legitimating characterized as having "fallen off a cliff", but there has been no comparable decline in the overall real economy, whether you look at GDP, employment, income, or spending.

To be clear, yes, the U.S. is experienced a severe "structural contraction", that may leave the U.S. economy 5% to 10% smaller over the next year or two, but that hardly constitutes a "cliff."

A fall from a cliff is not something that you survive. The U.S. economy is surely going to survive.

Mr. Buffett enjoys being colorful, something that CNBC is well-positioned to promote, but not for any socially useful purpose.

-- Jack Krupansky

Wednesday, March 4, 2009

Zombies and nationalization, what's it all about?

With all of the non-stop, mega-volume talk about "zombie banks" and how nationalization of banks is the only way to go, one has to wonder whether President Obama and his team are really as bone-headed stupid as their critics suggest. So, what is really going on?

Put simply, it is all about sour grapes and lobbying.

First, let's acknowledge that there is always more than one way to skin a cat, and that includes dealling with so-called zombie banks. So, maybe critics half a half a point in that their proposals could work. The problem is that these critics refuse to accept what I just said, namely that there are in fact multiple possible paths that lead out of the current financial swamp. Alas, pride, ego, and ideology prevent the critics from admitting any such thing.

Second, the whole concept of a bank being a so-called "zombie" is predicated on all of their "risky" credit assets effectively being worth zero or at least something very far from 100 cents on the dollar. The real problem is that we will not know the true value of many of these assets until the economy is back to normal growth mode. Until then, hard-core freemarketeers will insist that all "risky" assets are effectively worth zero. Their ideology and possibly even personal trading positions prevent them from allowing that a significant fraction of these risky assets will be worth something much closer to 100 cents on the dollar a few years from now. In short, one man's "zombie" is simply another doctor's hospital patient. Never confuse the present with the future. The future has to be worth something to any sane person, but those who drone on and on about zombies can admit no such thing.

Third, many of these critics are probably just shilling for pals who have bearish trading positions that are bets on the decline or failure of the various financial institutions. Even if they do not have a direct position, they may pal around with traders and speculators who do and essentially be their mouthpieces.

And then there is the media. They love a juicy story. Negativity sells. They are out to make money, not enlighten you.

The real bottom line is that many of the critics are much more interested in lobbying for their pet plans than allowing that the administration economic team might succeed.

Treasury and the Federal Reserve may not yet have all of their ducks lined up yet, but they are actually doing an outstanding job and much more likely to succeed than their critics will ever be willing to admit, even after the fact.

Yeah, our major banks sure have made a lot of mistakes over the past five years, but it would be far better to allow the administration economic team to continue their efforts, which includes course adjustements as reality evolves, than to try to bend to every self-serving criticsim and proposition that critics lob at them.

Personally, I do not see any of the big banks as likely to fail or in need of true nationalization. All of them are in fact lending, but not to the excess we saw during the housing boom. I see no merit in referring to them as zombies. Yes, more bailout money will clearly be needed (a trillion, maybe two?), but their trajectory is getting better as each day, week, and month goes by.

The good news is that the evil old Wall Street which was the primary driver of the excesses of recent years is rapidly vanishing.

In short, no sane American need lose even a moment of sleep at night worrying about "zombies" and "nationalization".

-- Jack Krupansky

Tuesday, March 3, 2009

What are we doing in Afghanistan?

I am no fan of New York Times Op-Ed columnist Bob Herbert, but in his column entitled "Wars, Endless Wars" he does raise troubling questions concerning just what exactly the U.S. is doing in Afghanistan. As he puts it:

The U.S. economy is in free fall, the banking system is in a state of complete collapse and Americans all across the country are downsizing their standards of living. The nation as we've known it is fading before our very eyes, but we're still pouring billions of dollars into wars in Afghanistan and Iraq with missions we are still unable to define.

Bob expresses his concerns, but does not really try to dig deeply to identify the root problems other than a sense that there is simply no clear strategy.

Is it really all about Iran, keeping them boxed in and under pressure to abandon their support for terrorism (Hamas and Hezbollah) and their "nuclear ambitions"? Maybe, but not quite since there are also troubles in Pakistan.

Is it really all about religious extremists? If so, major military operations are probably not likely to ever reach a point we could call success.

Is it maybe at heart a war on Islam? Could be, but nobody will admit that in public.

Is it driven by yet another crackpot worldview and policy initiative of the shadowy so-called Pro-Israel Lobby? Once again, it could be, but nobody will admit that in public.

Whatever it is, we do not appear to have a robust exit strategy identified and in place and underway.

Are we fighting "terrorists" or shadows or even illusions? Maybe all three.

-- Jack Krupansky