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Hullabaloo


Thursday, July 12, 2012

 
The Village media now permanently lives in bizarroworld

by digby

I have been taking a little break from cable news the last few weeks and tuned in today to see it's even worse than usual. This segment between Andrea Mitchell and Steven Rattner captures the ongoing state of decay. The first three minutes are unremarkable twaddle about Romney and Bain but at about 3:30, Mitchell hits her stride:

Visit msnbc.com for breaking news, world news, and news about the economy



Here we have it:

Mitchell: I want to ask you about the fiscal cliff and what we face because you have been such a persuasive proponenet of doing something and taking a tough decision.

This is a conversation between some players you know very well, Warren Buffet and Simpson and Bowles on "Squawk Box."

[video] Buffet: The US economy is doing better than virtually any other large economy in the world. The US has come back a long way, with the exception of housing, from where it was a few years ago.[cut] I still think housing should come back significantly to move us generally upward.
[cut]
Bowles: I think if I had to take the probability, I'd say the chances are we're going over the fiscal cliff.

Host: And why do you think the odds are that we do go over the fiscal cliff?

Bowles: Because it's politically painful

Simpson: You'll get beat..

Buffet: It's not going to get less painful in the future..[end video]

Mitchell: This of course at Herb Allen's annual retreat, the summer camp for rich people, I think.

Rattner: and moguls

Mitchell: Let's talk about this.. there's no indication from either camp that anybody wants to speak truth to the American people in this campaign.

We're arguing about Bain Capital! We're arguing about a lot of other things which are big issues. But what about what we're about to face in the fall after the election?


Rattner: Well you're right. The solutions to the fiscal cliff are painful and they involve sacrifice on all sides so it's not surprising that when you're running a political campaign it isn't your first choice to deal with a very substative policy.

Mitchell: Walter Mondale proved that in 1984...

Rattner: Walter Mondale on the tax issue. But the fact is this deadline is coming. I'm not quite as pessimistic as Erskine is because it's so insane to go over the fiscal cliff that I have to believe that at the end of the day people will somehow avoid that.

But what's starting to happen, you're starting to see in the markets, I think, nervousness about this. People are starting to focus on it. There's something called the fear index, there are some other indices around that are suggesting now that this is something now that is getting through to the investor community that we have a problem.

Mitchell: And just one other point. There is some conversation on the Hill. There was a Politico story yesterday that McCain, Lindsay Graham, and other big players, John Kerry, are talking about taxes.

Rattner: I think there are a lot of conversations going on on the Hill among the responsible poeple, including the people you just mentioned, who recognize that going over the cliff is crazy. But it's kind of like a little foreplay, I don't think they're down to anything seroius. But the other thing is that the special interests like the defense industry are starting to use thier muscle to get what they want out of this so I tihnk the games have begun.
He also said this:
"Imagine if you're sitting in France or Germany or London and see us fooling around with the debt limit and say, 'We may not want to let the government borrow another penny,'" said Steven Rattner, an investment banker who headed Treasury's auto industry task force. "There's going to be a lot of market dislocation, a lot of volatility and lot of worrying."
Oh wait. That was last year, during "Armageddon." How did his prediction hold up anyway?

Right.

But let's look at the whole discussion. First, Mitchell superciliously asserts that the campaigns are refusing to be "honest with the American people" about the painful sacrifices "we" are going to be required to make. (We're talking about that silly Bain capital when we should be pimping Social Security and Medicare cuts 24/7!) This is one of her (and Luke Russert's) favorite tropes. Since she is a multi-millionaire TV celebrity I have a hard time imagining that having her social security slashed or having a slightly higher tax rate is going to have much impact on her financial security. But hey, it's the thought that counts.

Then we have these multi-millionaires --- one a Wall Street master of the universe himself, the other married to the Oracle of Greenspan, implying they aren't part of the Herb Allen financial elite that includes the likes of Buffet, Bowles and Simpson, which is fatuous in the extreme.

Finally, there's the whole notion that this fiscal cliff is anything more than yet another artificial, arbitrary self-imposed deadline that can easily become yet another artificial, arbitrary, self-imposed deadline. The good news is that these people have cried wolf so often on this debt nonsense that nobody's listening anymore.

We have a weak economy with high unemployment. The rest of the world is shaky. Now is not the time to be asking for more "sacrifice" from the American people in order to solve a problem that is not urgently important. How do we know it's not urgently important? This:

The Financial Times reports that there was record demand for 10-year Treasurys this week. “The $21 [billion] sale of 10-year paper sold at a yield of 1.459 per cent, the lowest ever in an auction.” William O’Donnell, a strategist at RBS Securities, told the FT that “we were expecting good auction results but this one has left me speechless.”

Remember: Low yields means we’re getting the money for a cheap. It means the market thinks we’re a safe bet. And it means we have the opportunity to get capital for almost nothing and invest it productively...

The market will literally pay us a small premium to take their money and keep it safe for them for five, seven or 10 years. We could use that money to rebuild our roads and water filtration systems. We could use that money to cut taxes for any business that adds to its payrolls. We could use that to hire back the 600,000 state and local workers we’ve laid off in the last few years.

Or, as Larry Summers has written, we could simply accelerate payments we know we’ll need to make anyway. We could move up maintenance projects, replace our military equipment or buy space we’re currently leasing. All of that would leave the government in a better fiscal position going forward, not to mention help the economy.

The fact that we’re not doing any of this isn’t just a lost opportunity. It’s financial mismanagement on an epic scale.
That's Ezra Klein saying that, by the way, not some lefty radical.

Mitchell wasn't wrong when she said the campaigns weren't being honest with the American people. That's true, they aren't. But then neither is she. And frankly, the campaigns aren't as bad as these Villagers are by ginning up a phony crisis in order to slash the safety net at a time when the nation should be borrowing cheaply and spending more. It's oppositeland.

But there's no reason to think they won't flog this horse as much as they can and no guarantee that the politicians won't respond and make some reprehensible deal to close a couple of loopholes in exchange for deep cuts to the safety net. That seems to be the working assumption. They've put a lot of energy into creating this phony crisis. They are very reluctant to let it go until they have what they want.

And by the way --- letting the tax cuts for those over 250k expire in exchange for cuts for average people isn't adequate either. No cuts. They're not necessary at the moment. Put people back to work, then we'll talk.


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