A nation of savers?

April 28, 2009

Something Charlie Rose said while interviewing David Brooks got me thinking:

“Time” magazine said that Obama is betting his
presidency on our ability to change — our ability to change our behavior.
That he has some confidence in our ability to change. The big idea is, can
we change from consumption to savings?

It sounds plausible, and achievable, considering we’ve already adjusted our habits drastically during the downturn.

So why would this be a good thing?  Because it would…

  1. Support demand for Treasuries which lowers offered interest rates.
  2. Reduce the crowding-out effect of the expanded national debt on domestic private investment.
  3. Lessen the fiscal impact of prolonged deficits, as larger portions of interest are paid to domestic debt holders and reinvested in the U.S. economy.
  4. Dampen demand for Chinese products, which would cool their growth and reduce our trade imbalance, and delay the coming about of their middle-class as the principal economic force in the world.


April 28, 2009

Could anyone have imagined 50% of us would think things are getting better just four short months after staring the next Great Depression on the face?

Sure much of it may be based on questionable ‘green shoots’, phantom bank profits and Obama’s cool, but it is great news nonetheless as confidence is an absolute requirement for recovery and confidence is coming back.  Fast.

What to do about torture?  I’m torn.

Yes, we must get to the bottom of it and penalize the culprits to make sure it doesn’t happen again.  We have a moral obligation, and as a practical matter it is needed to regain our standing in the world, and the moral high ground if we are ever to criticize China on Darfur, etc.

But at what cost?

David Brooks thinks Obama is trying to build a 60% majority, and all the recriminating would kill that by turning off many independents.

Lincoln Mitchell is afraid that “Opponents of the president will see these prosecutions as license to prosecute members of President Obama’s administration when they leave office”.

They may be right, but I’m more afraid about losing our focus and giving up healthcare, energy and education reform, just for starters.  Did we forget how the stimulus package was starting to look troubled before Obama’s P.R. blitz?  Part of his success has been in driving the message and cutting through the media chatter to speak directly to people in plain terms.  But what if everyone stops listening?

Case in point:  How many people know a climate bill was being deliberated over the last week?  There was nary a word about it amid the waterboarding and impeach Bybee stories.  Today Waxman delayed further action until next week.

If we do go ahead, it should definitely be a bipartisan independent commission, and I like Andrew’s terms: “Give it two years to report, to allow emotions and tempers to cool. Then and only then make a decision on prosecution, so that there is no scintilla of haste or heat.”