James Pethokoukis

America’s challenge

January 22, 2010

From the great David Goldman:

When Reagan took office in 1981, the baby boomers were in their 20s and 30s, America had a 10% savings rate, the current account was in surplus, and America was the world’s largest net creditor nation. Reagan was able to cut taxes and finance an enormous budget deficit because the world’s demand for US Treasury securities was correspondingly large. In 2010, the baby boomers are in their 50s and 60s, America has saved nothing for a decade, the current account remains in severe deficit and the world is choking on the existing supply of Treasury securities. Cutting taxes to stimulate the economy is not as simple this time round.

Bernanke could be latest victim of Massachusetts Miracle

January 22, 2010

It seems that support for the renomination of Ben Bernanke is falling by the day, says ABC News. Liberals in Congress want him gone. Then again, they want pretty much the whole Obama economic team gone. But Geithner and Summers aren’t up for a Senate vote. Bernanke is. And if Dems start bailing, don’t expect Republicans to save him. No politician in America gains anything by voting for Bernanke. A “no” vote is a free vote. Wall Street still loves him, though. Geithner, too.

More on the new Obama bank plan

January 21, 2010

Mark Calabria of Cato, a supersmart observer of the financial sector in DC, gives me his two cents:

Nicole Gelinas on the new Obama plan

January 21, 2010

She emails me on the Obama plan to limit bank activities:

1) I think that they are now panicking and veering from solution to solution. They will roil the markets and just make themselves panic more. Politically, i’m not sure. It will be hard for republicans to be against this, just like it is hard for them to fight the bank tax. Although if markets fall by hundreds of points, it gives the GOP an opening to say that Obama doesn’t know what he’s doing.

Obama escalates his War on Wall Street

January 21, 2010

Obama’s plan to limit risky activities at big banks is more about forcing Republicans to take tough votes than preventing another credit meltdown.The Volcker Plan was already rejected by the WH econ team (Summers, Geithner) and this is being pushed by the political team (Rahmbo, Axelrod) in the wake of the Massachusetts Meltdown. (In fact, this may help tamp down pressure from congressional Dems to dump the econ team.)

Scott Brown the Black Swan

January 20, 2010

Ed Yardeni expands on my theme:

The political upset in Massachusetts yesterday may very well be one of those bullish Black Swans. In his 2007 book on this subject, Nassim Nicholas Taleb explained: “What we call here a Black Swan (and capitalize it) is an event with the following three attributes. First, it is an outlier, as it lies outside the realm of regular expectations, because nothing in the past can convincingly point to its possibility. Second, it carries an extreme impact. Third, in spite of its outlier status, human nature makes us concoct explanations for its occurrence after the fact, making it explainable and predictable.”

Brown win could spark Obama war on Wall Street

January 20, 2010

Scott Brown’s stunning capture of the Massachusetts Senate seat held for decades by Ted Kennedy was a political black swan, a near-unpredictable event.

Mass. U.S. Senate showdown: Brown vs. Coakley (Live Blogging)

January 20, 2010

Live blogging the Massachusetts US Senate race between Democrat Martha Coakley and Republican Scott Brown:

My chat on financial reform with Nicole Gelinas, part two

January 19, 2010

This is the second edition of my chat with the fabulous Nicole Gelinas, author of the phenomenal must-read, must-own After the Fall: Saving Capitalism from Wall Street and Washington.  (Part one is here.)

Brown vs. Coakley: The Bay State Brawl!

January 19, 2010

A few thoughts and observation about  the US Senate race Massachusetts:

1) No exit polls, so we’ll have to wait for the actual vote count as well as turnout in key counties.