Penn Jillette's counterintuitive commentary

[Ernie M]

Penn Jillette writes about counterintuitive ideas, including President Barack Obama telling us to spend our way out of debt.

Commentary: Is Obama skidding or crashing?

Penn ties in a lot of thoughts in his commentary:
fire-eating
fire walking
turn in the direction of the skid
President Barack Obama "drips smart"
spend money to get out of debt

I think Penn has some interesting insights.

 

[dudalb]

Penn is a great magician, and I liked a lot of his "Bull---" episodes, but when it comes to politics and economics let us say his opinions are very questionable. He pretty much pushes the straight Libertarian line.

 

[lomiller]

Like any good magician it’s all about the misdirection. At no point has Obama said anything about “spending out way out of debt” if you really want to go with the car analogy he wants to get the car out of the skid before worrying about whether he’s driving on the correct road.

On a side note, the main “counterintuitive” thing about driving out of a skid is the description about how to do it. Most people don’t really understand what “steering into the skid” means, but if you tell them to “steer in the direction you want to go” it becomes pretty darn intuitive.

If you really want to apply a car analogy to that you can. You want the banks working and the economy growing steer in that direction to end the skid. Once you are out of the skid then you drive to where you want to go and reduce the deficit.

 

[Unabogie]

I have yet to hear any economist argue that government spending is not only essential at this point, but also the only recourse left.

GDP = consumer spending + investment + exports + government spending.

So consumers aren't spending because jobs are hemorrhaging, investment isn't happening because the fed has already lowered rates to zero and the market is tanking, and we're a net importer.

Has anyone even offered an alternative stimulus plan besides

1. Tax cuts
2. ????
3. Profit!

Or should we just let this situation play itself out? If so, why won't they argue for that explicitly?

 

[quixotecoyote]

I have yet to hear any economist argue that government spending is not only essential at this point, but also the only recourse left.

GDP = consumer spending + investment + exports + government spending.

So consumers aren't spending because jobs are hemorrhaging, investment isn't happening because the fed has already lowered rates to zero and the market is tanking, and we're a net importer.

Has anyone even offered an alternative stimulus plan besides

1. Tax cuts
2. ????
3. Profit!

Or should we just let this situation play itself out? If so, why won't they argue for that explicitly?

The latest one is

Tax Cuts
Almost as much spending as the current plan
Profit!

 

[Unabogie]

The latest one is

Tax Cuts
Almost as much spending as the current plan
Profit!

This is what I don't understand about modern conservatives. Rather than do what's obviously right in this situation, thereby regaining some credibility on the economy, they've decided to completely oppose Obama on everything, regardless of the merits, and to offer no serious plans as an alternative.

Especially since Obama is (to a fault) willing to work with them.

If I was running the RNC, I would be slapping Republican names on as many bills as I could to show that Obama + GOP = effective government.

Instead, the argument in 2010 will be "VOTE FOR GRIDLOCK!"

Is this really wise?

Really?

 

[Meadmaker]

Like any good magician it’s all about the misdirection. At no point has Obama said anything about “spending out way out of debt”

Let's be fair to Penn. At no point did Penn say that Obama was doing the wrong thing, or that it wouldn't work.

Penn expressed my feelings on the subject quite well. I know Obama is smart. In Penn's words, he is "dripping smart". He acts like he knows what he is doing, and he seems so smart and so confident that you really want to believe that this is a good idea. And yet, your intuition tells you that what he is doing is a very, very, bad, idea.

Sometimes, the right thing is counterintuitive. I hope this is one of those times, because my intuition tells me that spending this huge amount of money without raising the taxes to pay for it will end up quite badly.

 

[Unabogie]

Let's be fair to Penn. At no point did Penn say that Obama was doing the wrong thing, or that it wouldn't work.

Penn expressed my feelings on the subject quite well. I know Obama is smart. In Penn's words, he is "dripping smart". He acts like he knows what he is doing, and he seems so smart and so confident that you really want to believe that this is a good idea. And yet, your intuition tells you that what he is doing is a very, very, bad, idea.

Sometimes, the right thing is counterintuitive. I hope this is one of those times, because my intuition tells me that spending this huge amount of money without raising the taxes to pay for it will end up quite badly.

I understand your concern, but the whole point of this spending is that it's the best of a slew of bad options. The only good choice would have been to regulate the CDS market before it got so large that a 10% default rate on subprime mortgages would be enough to bankrupt half the country's banks.

The last quarter of 2008 had something like a 6% drop in GDP. No economists suggest anything other than spending from government to prevent a deflationary spiral, and no economists say such a spiral is unlikely.

If this were a fire, would you be arguing over the cost of water? That's the analogy here, as far as I can tell.

 

[XXX]

I don;t trust Penn at all in anything that he says. He deceptively edits the hell out of his "BS" show so that he can look better yelling at the people. And many times, as happens often on opinion shows, the coverage of other viewpoints, angles and facts can leave a lot to be desired. (Not that I have hated every episode or anything, I do like some of them.)

 

[Upchurch]

It's a classic argument from authority situation.

In terms of magic, tricks, and misdirection, Penn is a perfectly valid authority. As far as politics go, his opinion carries about as much weight as mine does.

 

[mhaze]

I have yet to hear any economist argue that government spending is not only essential at this point, but also the only recourse left.

GDP = consumer spending + investment + exports + government spending.

Now correct your formula for the effects of printing money and diluting the M1, M2, and M3 numbers.

The only good choice would have been to regulate the CDS market before it got so large that a 10% default rate on subprime mortgages would be enough to bankrupt half the country's banks.

THAT is a $130B problem. Problem was not with subprimes, and your argument about the current course being the best option is word salad.

Like that of the Admin.

 

[Unabogie]

Now correct your formula for the effects of printing money and diluting the M1, M2, and M3 numbers.
THAT is a $130B problem. Problem was not with subprimes, and your argument about the current course being the best option is word salad.

Like that of the Admin.

Wikipedia seems to agree with me.

But beyond that, you seem to misunderstand what I wrote, but I'll put some dressing on it so it goes down smoother for you. The problem is that the 10% default rate triggered trillions of dollars in credit default swap contracts to be called in. In light of that, the credit market froze shut. The sellers of these CDSs were assuming a default rate of only 5% in their projections, which was obviously wrong, and caused the situation we're in.

Here's a very good article on the insanity that led us to where we are now.

Now, with frozen credit markets and AAA rated bonds which were only propped up by CDS contracts, what options are there?

1. Nationalize the zombie banks.
2. Facilitate the buying of these assets to unwind them and sell off the actual homes and mortgages they were based on.
3. Nothing.

Please let me know if there are more options than what I've written, since you haven't offered an alternative other than insults (unless childish insults can get money flowing, then have at it).

 

[Meadmaker]

If this were a fire, would you be arguing over the cost of water? That's the analogy here, as far as I can tell.

A better analogy would be arguing about the level of the water in the reservoir.

 

[Beerina]

Penn is a great magician, and I liked a lot of his "Bull---" episodes, but when it comes to politics and economics let us say his opinions are very questionable. He pretty much pushes the straight Libertarian line.

Last century had hundreds of long-term economic experiments involving roughly 10 billion people, showing a direct correlation between amount of freedom, including economic freedom, and general wealth of nations.

The theory is this economic power derives from freedom since people can be secure in keeping the product of their own efforts. How hard would you run in a 100-m dash if your win was "taxed" away and awarded to someone else?


So I'm a bit confused as to why any theory other than laissez-faire capitalism, a libertarian's economic position, is still considered viable today?

In any other field, every damned one of you skeptics demands proof. But politics is the last great refuge of woo for some of you -- even those who have given up on their own religious beliefs.

 

[mhaze]

Wikipedia seems to agree with me.

But beyond that, you seem to misunderstand what I wrote....

Oh, wiki agrees with you when you look up GDP?

Shucks, you would not be inclined to look up Real GDP, would you?

The, uh, real kind of, uh, GDP?

Now where are we?

Addressing one part of your second assertion with your link, which I have read before:

... Now he saw. There weren’t enough Americans with ****** credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running”
​

Thus I repeat my prior assertion supported with evidence from your link.

THAT is a $130B problem. Problem was not with subprimes, and your argument about the current course being the best option is word salad.

Like that of the Admin.​

 

[DC]

Last century had hundreds of long-term economic experiments involving roughly 10 billion people, showing a direct correlation between amount of freedom, including economic freedom, and general wealth of nations.

The theory is this economic power derives from freedom since people can be secure in keeping the product of their own efforts. How hard would you run in a 100-m dash if your win was "taxed" away and awarded to someone else?


So I'm a bit confused as to why any theory other than laissez-faire capitalism, a libertarian's economic position, is still considered viable today?

In any other field, every damned one of you skeptics demands proof. But politics is the last great refuge of woo for some of you -- even those who have given up on their own religious beliefs.

laissez-faire cannot succeed in the USA, its french

 

[Meadmaker]

Last century had hundreds of long-term economic experiments involving roughly 10 billion people, showing a direct correlation between amount of freedom, including economic freedom, and general wealth of nations.

....

So I'm a bit confused as to why any theory other than laissez-faire capitalism, a libertarian's economic position, is still considered viable today?

Because it overlooks the restriction of freedom that comes from corporations and/or individuals who control vast sums of wealth. It assumes the only entity that can restrict freedom is the government. That simply isn't the case.

 

[Beerina]

Penn is a great magician, and I liked a lot of his "Bull---" episodes, but when it comes to politics and economics let us say his opinions are very questionable. He pretty much pushes the straight Libertarian line.

Besides, all he did was offer a prediction. It's no skin off your @$$ if he's wrong. Why so...touchy?

And, if he's right, you will ignore it in favor of some apologist explanation that allows you to maintain his wrongness and your rightness. Let's face reality here, folks.

 

[Beerina]

Because it overlooks the restriction of freedom that comes from corporations and/or individuals who control vast sums of wealth. It assumes the only entity that can restrict freedom is the government. That simply isn't the case.

Has nothing to do with the issue at hand. We're not talking a regulation here or there to describe what you're saying. We're talking about massive intervention, which has been shown to be a massive damper on the economy -- even with the best of intentions.

Also, consider this question: Are the worst of these trust-like pseudo-monopolies worse than what I just described? Of course not. Their "drag" on the economy is very little compared to the current level of government sitting atop the producers of the nation. Best not go there and investigate this.

 

[Meadmaker]

Has nothing to do with the issue at hand.

The "issue at hand" is, I'm guessing, the current economic crisis.

You're question, which is what I was answering, was why any theory other than laissez faire capitalism is still viable.

I will say that laissez faire capitalism will not result in the greatest degree of economic and other freedom, and that is why it is not the only viable theory.

That doesn't mean there ought to be massive intervention. I agree with Jillette's editorial. This whole process makes me very, very, nervous, and I hope this Obama fellow knows what he's doing. He seems awfully smart, but my intuition tells me that this whole thing ends very badly. Like Jillette, I hope Obama knows something I don't,

Also, consider this question: Are the worst of these trust-like pseudo-monopolies worse than what I just described? Of course not.

The East India company?