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John Taylor Vomits All Over Zandi And Blinder's Cover Letter For Modestly Paid Treserve Posts
Yesterday's "paper" (more in the napkin sense than as a synonym for "intellectual effort") by Mark Zandi and Alan Blinder, which was nothing more than a glorified cover letter for selected perma-Keynesian posts in the administration's Treserve complex, was so outright bad we did not feel compelled to even remotely comment on its (lack of any) substance. A man far smarter than us, Stanford's John Taylor (the guy who says the Fed Fund rates should be -10%, not the guy who says the EURUSD should be -10), has taken the time to disassemble what passes for analysis by the tag team of a Princeton tenurist (odd how those always end up destroying the US economy when put in positions of pwoer), and a Moody's economist, who is undoubtedly casting a nervous eye every few minutes on the administration's plans for EUCs and other jobless claims criteria. Below is his slaughter of dydactic duo's demented drivel.
From John Taylor's Economics One:
Yesterday the New York Times published an article about simulations of the effects of fiscal stimulus packages and financial interventions using an old Keynesian model. The simulations were reported in an unpublished working paper by Alan Blinder and Mark Zandi. I offered a short quote for the article saying simply that the reported results were completely different from my own empirical work on the policy responses to the crisis.
I have now had a chance to read the paper and have more to say. First, I do not think the paper tells us anything about the impact of these policies. It simply runs the policies through a model (Zandi’s model) and reports what the model says would happen. It does not look at what actually happened, and it does not look at other models, only Zandi’s own model. I have explained the defects with this type of exercise many times, most recently in testimony at a July 1, 2010 House Budget Committee hearing where Zandi also appeared. I showed that the results are entirely dependent on the model: old Keynesian models (such as Zandi’s model) show large effects and new Keynesian models show small effects. So there is nothing new in the fiscal stimulus part of this paper.
Second, I looked at how they assessed the impact of the financial market interventions. Again they do not directly assess the interventions. They just simulate the model with and without the interventions. They say that they have equations in the model which include the financial interventions as variables, but they do not report the size or significance of the coefficients or how they obtained them.
Third, the working paper makes no mention of previously published papers in the literature which get different results. It is rather standard in research to provide a literature review and to explain why the results are different from previous published papers. For the record there are different results in papers by John Cogan, Volcker Wieland, Tobias Cwik and me in the Journal of Economic Dynamics and Control, by John Williams and me in the American Economic Journal; Macroeconomics, or by me published by the Bank of Canada or the St. Louis Fed
Finally, when I read the paper I discovered in an appendix that Blinder and Zandi find that policy was not as good as the model shows and was in fact quite poor when one does a more comprehensive evaluation. They say in Appendix A that “Poor policymaking prior to TARP helped turn a serious but seemingly controllable financial crisis into an out-of-control panic. Policymakers’ uneven treatment of troubled institutions (e.g., saving Bear Stearns but letting Lehman fail) created confusion about the rules of the game and uncertainty among shareholders, who dumped their stock, and creditors, who demanded more collateral to provide liquidity to financial institutions.” I completely agree with this statement, but how can one then argue that policy intervnetions worked, when, in fact, viewed in their entirety they caused the problem?
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Quoting Tyler,¨ dydactic duo's demented drivel¨
Say that 3 times after 3 scotches,,, great alliteration
6 times after a 6 pack. I'm saving my little bit of Scotch for when I can put my Dow 5000 hat on again.
The smart money:
It's a slaughter?
http://www.google.com/url?q=http://s0.ilike.com/play%23Front%2B242:Slaughter:287647:s7821709.8106476.4128927.0.1.46%252Cstd_b43edf60da885331f75d5e31d3bc9ae7&sa=X&ei=a45RTJ_CF8KBlAen3-DXBQ&ved=0CBMQ0wQoADAA&usg=AFQjCNGtGGTLQJWI5RQmpv3lT2ulC3_fVQ
How did we settle on treserve. I prefer Fedsury much more.
The Washington Post's pom pom squad shows up to Zandicon.
http://voices.washingtonpost.com/ezra-klein/2010/07/zandi_financial_resc...
Academic masturbation.
GIGO: Garbage In, Garbage Out.
If you laid all the Fed and Treasury economists end to end, they still would not reach a valid conclusion.
Meanwhile, we are deflating and Harvard Winthrop housemates Bernanke and Geithner don't know what to do.
Hint: Re-read David Ricardo, Alois Schumpeter, Adam Smith, Hayek, von Mises and the Bible ban on usury.
Command economies do not work, as the failed Sino Soviets proved conclusively...
Winthrop House--that explains the demented drivel driven duo of dunces!
Yes, why use arguments when ridicule is way easier..
The downward slope of many economic variables was as steep, or steeper in 2008 than it was in 1930. Then something arrested that downward movement. What was it?
http://shareholdersunite.com/2010/07/04/keynesianism-zerohedge/
A temporary monetary mirsage creating yet more destructive debt...
Yes, this was the "mission accomplished" moment - when much effort/propaganda is made to suggest that we have "won".
But the real test is yet to come. And history will view the actions with a much clearer and complete perspective.
stpioc ,
After the customary editorial banter, the main article here has no ridicule at all. It very logically challenges the unmerited assumptions of Zandi and Blinder's position. Are you making a straw man argument, or was your attention span too short to read the actual article?
simulations on stimulations are only mental masturbations
Sufferin' succotash, they are shooting blanks to boot.
The Fed's vasectomy has made a vas deferens in our lives.
Hahaha...
That twasn't no vasectomony, they got neutered. Nada cajones.
Wait, it all makes sense now.
Reflation efforts will continue until consumer morale improves. There is no other plan. There is no backup plan. Henceforth, the term austerity is a profanity banned from all Squid and .gov emails.
The morale will not improve until the people have jobs. Endless reflation attempts will be the result.
This fits into the saying, "The beatings will continue until morale improves." Replace beatings with stealing.
we would like to vomit on this tooo.
Goldman bans profanity in e-mails...:
http://online.wsj.com/article/SB1000142405274870489500457539555067240679...
Fuck that motherfucking cocksucking shit Godfuckingdammit!
Word !
Fab tourres emails come to mind reading this..............
" Suck it , Fishies and birdies".......right
Goldman's just being proactive. They understand there will continue to be public disclosures of their e-mails as they are repeatedly sued by the SEC for blood money to fill the government (blood funnel) coffers. Goldman doesn't want the American public to know how many of them have potty mouths.
Keep the squid clean boys. And while you're at it, in the interest of full transparency, make sure you keep the lobby windows nice and clean. New company policy. Didn't you get the memo?
It just wouldn't be proper for those that do "God's work" to use such vulgar language.... LOL!! What a joke. I can't wait to watch these Scum Bags go down hard.
I don't think their problem with phrases like "shitty deal" is the crude language, but rather the clear meaning. Management would prefer usage of long obscure confabulations that, if needed, can be interpreted 10 ways by 20 lawyers for as long as it takes.
u r right ...if they just say" shitty deal" ....people know that they r upto something sinister
Mark Zandi and Alan Blinder are paid keepers of the public myth. There job is to present a biased and conflicted justification for public policies. And sometimes private polices blessed by the powers that be. They're doing a heck of a great job.
The public myth is the assorted public lies force feed to us on a daily basis through various mass media outlets. Either we don't believe some or all of them or we wish to believe them or need to believe them or are paid to believe them. Paid keepers of the myth (who are often paid by "private" sources) are our modern day magicians and sorcerers.
Now where did I put that Pixie dust.
fairies gone wild
http://fc08.deviantart.net/fs39/f/2008/354/8/a/Pixie_Dust_by_FantasyLost.jpg
CD,
While i agree the jist of their message is pure rhetoric at best, and is as 'good' as the reporting done in MSM, Zandi was actually the only guy from the rating's agencies to blow the whistle on subprime. In the 2nd 1/2 of '06, he was the only guy from Moody's to step up and say the current subprime market could "precipitate a global financial event".
Im not sure what stuff hes smoking or who's kool-aid hes drinking in his recent market message, but suffice to say i dont believe that guy is as dim as the MSM or worse, CNBC.
The public myth isn't one message in particular but rather a general direction composed of many nuances. It's in the interest of the public myth and TPTB to have some "offical" speakers of the "truth" (meaning contrary to the official spin) in order to maintain plausible deniability.
For example, the keepers of the myth are now beginning to co-op the so-called "truth movements" in order to manage the contrary indicator. Once you can no longer hold back the rushing waters, you then try to channel or direct the flow.
One of the keys to organizing and controlling public myth keepers is for those keepers to actually believe what they're saying and to occasionally encourage and enable them to stray off message. People work much harder at their jobs when they feel empowered and independent.
Consider the people who comment here on ZH that are clearly apologists for big oil. While I suspect one or two of them are actually paid, the vast majority of them self recruit without ever being asked or even enabled. All it takes is a huge ego and a large slice of rationalization mixed with righteous indignation and you have many self organizing troops fighting on "your" side.
I've been studying this subject for years and it all ties in with crowd dynamics and crowd/human psychology.
I think this is just a subset of a larger group whose life philosophy is tied to the concept of "bigness." Not all that long ago many business philosophy books alluded to need of sharks to constantly move, feed, and grow -- or die. This imperative was carried over to all economic activity, the implication being that we must constantly drill, pump, and burn more oil; pave over more farmland; cut down more forests. Every business must constantly expand by any possible means. The concept of "enough," the idea that a modern civilization could seek balance and harmony, yet still thrive, was considered betrayal of our capitalist ideals. People whose minds are owned by this imperative will always oppose any perceived threat. If reports of damage to the GoM threatens growth of oil production, the will, with all sincerity, deny those reports. In this case this they will become defenders of big oil and deniers of ecological damage from this incident; but any similar event would trigger a similarly vehement response.
Or so it seems to me.
For some reason I am reminded how much I dislike simulated bacon bits.
Has anyone else noticed how the phrase "I don't think..." has become epidemic in daily discource, as in "First, I do not think the paper tells us..."? Why would anyone take seriously a statement that begins with that phrase? It's a pathetic nation of zombies, where even the intelligentsia "don't think" and are completely unconscious.
Aside from the philosophical deliberations, it makes for poor writing.
I think I agree.
I feel the same way when I see this: As a Republican, I think we should...
As Cramer looks on with approval.
John Kenneth Galbraith used to say that the only function of economic forecasting is to make astrology look respectable.
Speaking of which, what's up with Cardinal Climax?
Crawford's forecast of an apocalypse appears to be a dud.
Crawford said from 30 to 3rd of august was the critical zone.
I remember watching a Zandi presentation to the National Association of Home Builders, where he specified the precise date of the bottom of the home building recession, and the exact number of homes to be built that year--very entertaining, but hardly rigorous or empirical. This is a falacy Emanuel Durman pointed out--the belief that the model is reality.
Do I get my posting privileges taken away if I say, history has shown than Keynesianism seems to have worked "sometimes".
The US application of Keynesianism seems to be intertwined with Ponzi-debt (planned inflation) and banker fraud designed to elevate bankers as a priviledged and non-value adding parasitic class.
Again, it seems to me that the only way a country such as the US can PAY for parasitic non-value adding activities is through increases in money supply and inflation... if it goes on forever then it is Ponzi-accumulative.
Fundamentally, increasing money supply increases economic activity and inflation and decreasing money supply does the opposite. One would argue that if the Fed is controlling money supply then logically they have caused, in a premeditated manner, the bubbles and the busts.
One REAL question in my mind is whether Keynsianism implies or insists that interest rates must be the mechanism used to control money supply.
And, must a central bank along with distribution banks be so important to the system that economic cures cannot be enacted so that the banks must be saved. I think today's example is more that our application of Keynesianism and the use of sacrosanct and fraudulent banks is wrong. IMO, the sacrosanctity of the banks, along with bank intervention in government policies, add other variables that have corrupted Keynesianism's effectiveness and would most likely have corrupted the Austrian system as well.
Keynesianism can't exist without legal tender laws and a central banking cartel put in place by the government to debase the money supply. The success of the economic policy is measured by how much real wealth in an economy the power elite are able to destroy. In that aspect it's a proven, 100% success
As I recall, Keynes also says that surpluses should be held in good times so that some ammo would be on hand to spend in bad times. Well, effin' DUH. You mean like nature intended? Keynesianism cannot have been considered to fail if his tenets are violated in their most expansive form.
these idiots should be publishing something like this article by Max KEiser, the great MAX keiser:
http://maxkeiser.com/2010/07/27/max-keiser-the-market-is-a-hologram-mask...
I think even Keynes wanted the stimulus to stop at some point! These guys in charge I think are much more interested in re-distribution of wealth than fixing the economy. There have to be limits on stimulus or the end result is always destruction of said currency and an economy that crumbles, defaults and then the long recovery.
The politicians from both parties are only interested in their own power and self-interest. These guys & gals in DC are lawyers, not economists and business people. While there are many good lawyers, most of them are just sucking off the tit of societies habit of not wanting to take responsibility for their own actions. Someone else must be at fault, right?
As for this piece, I'll take John Taylor's opinion over Zandi and Blinder any day. Come on, Zandi might have warned about sub-prime loans but at he same time he and his rating company, Moodys made how much money rating all these piles of mortgage dung as AAA? Blinder is an irrelevant one-horse wonder.
Oh, just my opinion...
So you think Taylor's rational expectations assumption that joe six pack reduces spending now because he expects higher tax burden in the future is real?
How many people do you know that base daily spending decisions upon expected higher future tax burdens?
Without that assumption...his argument is toast.
And yet, if you look at the large net migration of working people and businesses from California to Texas, you see concrete evidence that many people are making big life-decisions, driven by their expectations of future tax burdens. I contend that the evidence is there, if you trouble to look for it.
This might not show up as reduction in spending, but in this example - moving from California to Texas - does the spending contribute to production or efficiency, or is it more of a friction loss?
duplicate post
Not to repeat myself (but one cannot repeat this enough), Alan Blinder is to economics what an exploding toilet is to spewing feces.
It speaks volumes of the quality -- or lacking in quality -- of Princeton to have Dr. Blinder on their faculty,
http://www.brettonwoods.org/members/index.php/3/International_Council_Forum
but then, they also have Dr. Marta Tienda
http://www.brettonwoods.org/members/
and Dr. Helen Milner
http://www.brettonwoods.org/members/
and Prof. Peter Kenen
http://www.brettonwoods.org/members/
and Dr. Harold Shapiro
http://www.brettonwoods.org/members/
Hmmm... and they all belong to what international lobbyist group for the super-rich????
Anyone care to take a guess???
Blinder/Zandi is in-your-face fatal conceit drivel, begging to be publicly mocked. God bless Zerohedge.