Dean Baker for Commerce Secretary!

^co-sign redwood 100%.

If Obama let a Commerce Sec Baker implement even 3 ideas of his Conservative Nanny State book, that would be excellent for the US economy & the vast majority of Americans.

What about implementing price regulation policies for the assets to control the price rise to unacceptable level.i think that will bring back investors confidence.perhaps faster than any other packages or policies.If the same 'fixing' measures are being followed the history also has to repeat some day.

Typical of a broken political party to jump on Filipino WW2 veteran compensation; some of those guys were on the Bataan death march, even if they weren't officially US military. Good way to piss off another immigrant constituency, i.e. future voting bloc, as well.

Dean,

You are correct that WaPo should have been clearer, more accurate and more specific, but I think you are also missing something and thus criticizing them excessively.

Suppose I have a credit card on which my interest rate on cash advances is variable and will always equal to whatever interest rate the Treasury is paying on the national debt. (Yes, I realize that's unrealistic -- this is just a hypothetical for illustration.) I already have a substantial balance on this credit card, I'm borrowing a lot every year, and I expect my expenses over the next few decades to increase much faster than my income. Now suppose my friend Joe suggests I take out a cash advance for an amount that equals 6% of my income, and suppose I am concerned about adding that much to my debt and thus to my projected debt-to-income ratio over the next few decades (and it will all remain as incremental debt, since I won't be paying off my debt, or for that matter even reducing it). I tell Joe, "Hey, my debt on that credit card is already equal to 40% of my income (i.e., my debt-to-income ratio is 40%) and I'm concerned about making that 46% by adding this additional debt, which will always remain as incremental debt of that size (plus interest). Joe replies, "Don't worry. It's not nearly that bad. It's not equivalent to 6% of your income, but only to 2% of your income, because you'll only be taking out that money in thirds over the next three years." Well, an appropriate response to Joe is "But Joe, that doesn't really change the picture much. Yeah, it saves me a relatively small bit on interest expense vs. if I borrowed it all in Year 1, but the effect is essentially the same, from Year 3 onward well into the distant future, on my balance sheet, interest expense, and debt-to-income ratio."

So WaPo putting the size of the deficit-financed stimulus package in terms of a percent of GDP is actually useful and not nearly as misleading as you imply.

Over at Angry Bear contributer Noni put up a piece on the " 'illions" trying to put the 'm's the 'b's and the 'tr's into some sort of spacial context. But I sadly fear she was just wasting her time some people seem to loose track after a thousand. It all just sounds like 'big money'.

I myself put up a 'Pick your pork' challenge asking people if they could really substantiate the still current claim that the Stimulus bill was just larded up with liberal pork. And nobody could do it. I further went on and scored the pork lists as found in a Ruben Navarrette piece on CNN.com, a Columbus Dispatch editorial, and then on the Republican Senators list of 'wasteful' spending. These ended up scoring 0.1%, 0.4%, and 2.15% of the then current package respectively. And for the GOP Senators to even get that far they had to take the hatchet to Homeland Security and the Coast Guard, not normally thought to be exclusively liberal priorities,

That is this argument has never really been about the actual effectiveness of the package. I mean the Senators when pressed scored it as 97.85% effective which would historically make it maybe one of the cleanest appropriations bill ever. No instead it has all been about exploiting general innumeracy when it comes to big numbers in general. (I recently had a friend ask we 'how many billions in a trillion?' and silently concluded 'We are so screwed').

Republicans want tax cuts. That is their Alpha and Omega. And everything in between is just Mumbo-Jumbo designed to dazzle the innumerate.

"...a change in the tax code put in place by Treasury Secretary Henry
Paulson that allowed banks to write off the bad debts of banks that they
acquire."

I wasn't aware of this one, but it's consistent with a deliberate push
toward consolidation of banks and confounding of commercial and investment
banking that Paulson showed in other ways. The number of banks has been pretty
steadily shrinking since the 20's. I don't know that it's a good idea to go back
to lots of little banks, as David
Ignatius suggests in his WaPo column today, but
people should be aware that finance has increasingly come under the control of a
small number of big capitalists and CEOs. The evolution has been away from a free market and toward plutocracy (assisted of course by the Nanny State). It would be nice to see the Obama administration take some concrete steps away from this trend

Politicians and the media like to give scary-sounding numbers without historical context, but here are some deficit/GDP percentages from the WW II years:

1942 14.2
1943 30.3
1944 22.7
1945 21.5
1946 7.2

The economy was hardly crippled by these deficits. The people working then and their descendents, who are us, had no trouble paying the debt off.

redwood 5:41pm: AGREED!

Dean Baker on CBC Sunday.
not be missed.
http://www.cbc.ca/sunday/2009/02/021509_4.html

Further to James Galbraith's comments about credit "flowing":

He states you need a lender and a borrower WITH SUFFICIENT COLLATERAL. Unless he was using the term "collateral" in a sense broader that common parlance, he is missing the most important piece.

In the mid 1960's I was doing post-doc work in law at a German university and in return for office space I translated a book titled "Bank Kredit". The underlying premise of the book, repeated in each chapter in a different way, was "The lender must know how the borrower will get the money to pay back the loan."

Collateral security is just that. It is "collateral" to the borrower's ability to earn enough money to pay back the loan.

Let me repeat that. Collateral security is "collateral". The real security is the borrower's ability to earn enough money to pay back the loan.

How could the entire financial system have forgotten that basic principle?

By the way, Dean, congrats to you. Way to go again!!!

logical conclusion drawn from the fact the James Galbraith's book are not taught in econ class is that Corporations didn't want anything that doesn't try to dismantle the New Deal to be taught.
So people like Friedman and the Chicago school basically won and the end result is the current situation. Now if the progressives do recreate the New Deal again, the corporations will again try to dismantle it. Only problem is that US is not the engine of the world and does not have all the oil with it did in the 30-70s. There is no such thing as increasing the pie.

Well, George Will (on ABC's This Week) called $787 billion equal to 9% of GDP. Which, I suppose, would be true if we were living in 1997. http://abcnews.go.com/Video/playerIndex?id=6882538

It is neither the size of the stimulus bill nor the appropriations it makes that matter one wit. None of it even comes close to adequately addressing the investment deficit we face as a nation.

Rather, what matters is the simple fact a consensus exists allowing rapid passage of legislation meant to take positive action. To some this is a threat. Yet to many, many others it is momentum that must not be lost if we are to survive as a nation.

I wonder why all the Republicans' explanations about the meaning of "trillion" didn't use the handy comparison of the national debt increases produced by the Reagan tax cuts and the G.W. Bush tax cuts ? Instead, as Jon Stewart showed, we got explanations using dollar bills as measurement tools or structural materials !