Economic Idiocy

I continue to wonder if Hillary Clinton has ever taken an economics class:

PHILADELPHIA – Senator Hillary Clinton yesterday expanded her previous calls for federal intervention to stem the nation’s rapidly unfolding housing and credit crisis while also recommending new protections for lenders, casting her ability to respond as a fresh test of presidential leadership.

“We need a president who is ready on day one to be commander-in-chief of our economy,” Clinton said, echoing language she has used to question Democratic rival Barack Obama’s fitness to handle international and military crises.

Clinton, seeking primacy on an issue crucial to working-class voters who are her core supporters, proposed that the Federal Housing Administration buy and restructure mortgage debt and called for a new $30 billion federal fund to help state and local governments fight foreclosures.

The New York senator, who a year ago proposed a moratorium on mortgage foreclosures and more recently a five-year freeze on interest rates, acknowledged that such action could be described as a bailout. But she cast her proposal as a populist parallel to last week’s relief for investment banker Bear Stearns by the Federal Reserve, saying “it’s now time for equally aggressive action to help families avoid foreclosure.”

My last economic course would have been nearly as long ago as Sen. Clinton’s but as I remember things the consequences of a five-year freeze on interest rates depend on what the “market clearing rate” would have been. If the set rate is higher than the rate at which interest rates would otherwise have been, it’s a price support. Government would be subsidizing the interest rate to the injury of borrowers and to the detriment of other segments of the economy. If the rate is set lower than the rate at which interest rates would otherwise have been, the number of loans would decrease as lenders refused to lend.

And, of course, the phrase “commander-in-chief of our economy” either betrays a lack of understanding of our system and how little influence the president has on the economy or knowing what her supporters want to hear and being willing to say it regardless of how idiotic it is.

5 comments… add one
  • I continue to wonder if Hillary Clinton has ever taken an economics class….

    Um, she was too busy dodging sniper fire?

  • She is very hot for this ready on day one thing, eh? Pity that her own words tend to bely her point.

  • I thought you’d be entertained by this, Lounsbury.

    The older I get the more I think that H. L. Mencken was right. He characterized our form of government as “boobocracy”, a system in which the boobs got together and engaged in a process to find the biggest boob, who then became president.

  • Dave, you don’t honestly think you’ll be hearing anything intelligent on the economy until after November, do you?

  • What I actually think is that both parties have painted themselves into absurd ideological corners on matters economic. The Republican Party has become completely phobic about taxes. Without an equivalent phobia about spending (which is obviously not on) fiscal insanity is inevitable.

    The Democrats are taking so many absurd positions on the economy—anti-business, anti-free trade, defining “the rich” as anybody who makes more than one standard deviation over the average income, thinking you can repeal supply and demand, and so on—that only a closely divided Congress can possibly save us from fiscal ruin. I think they’re reading their own press releases.

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