The Pain Caucus

http://www.nytimes.com/2011/06/10/opinion/10krugman.html?hp#

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"It's not what you tell your players that counts. It's what they hear." (Red Auerbach)

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Many times I find my vocabulary enhanced by reading the opinions that Paul Krugman has. In this case, the "Pain Caucus" is: the group that advocates doing nothing to help the unemployed. The argument against helping is framed in terms of economic risks: do anything to create jobs and interest rates will soar, runaway inflation will break out, and so on. Of course interest rates are at historic lows. Inflation (even including oil and food) is still low.

Krugman feels the "Pain Caucus" members can be defined as "rentiers:" these are people/institutions who derive lots of income from assets, who lent large sums of money in the past, often unwisely, but are now being protected from loss at everyone else's expense.

So, we know who the bad guys are.

Krugman has concluded that the latest economic data have dashed any hope of a quick end to America's job drought, which has already gone on so long that the average unemployed American has been out of work for almost 40 weeks. I couldn't agree more.

Krugman is often associated with the "left." Or, being a "Democrat." (OMG!) Way back when the worldwide financial crisis started, Krugman and Warren Buffet together said that the U.S. government was not spending enough money to properly restore the economy (jobs, institutions, infrastructure, etc.). So, does that make Warren Buffet a "Democrat?" Incidentally, Buffet may be a Democrat but that's not the point. Both Krugman and Buffet are Americans with sophisticated opinions about the economy. I believe they were right about the under investment in restoring the economy. Buffet put his money where his mouth was at the time by spending at least $5 B on G.E. and and another $5B on Goldman. I seem to recall that Goldman felt much in need of that money at the time.

So, today we have what both Krugman and Buffet anticipated: stagnation. As Krugman says, the only real beneficiaries of the Pain Caucus policies (aside from the Chinese government) are the rentiers: bankers and wealthy individuals with lots of bonds in their portfolios: "And that explains why creditor interests bulk so large in policy; not only is this the class that makes big campaign contributions, it's the class that has personal access to policy makers - many of whom go to work for these people when they exit government through the revolving door."

Krugman's conclusion is that "creditor-friendly" policies are crippling the economy. He's right.

This situation reminds me of Citigroup spending $19 million dollars on "lobbying" (2008? I'm not sure I remember the year) during that worst of the financial crisis after the U.S. government had lent them $45 billion in taxpayer money for their "survival." And, speaking of lobbying, where does the Dodd-Frank legislation stand now? I don't hear a lot of good things.