Good News for the GOP?
Tea Party activists are trying to take over the establishment, ground up.
Across the country, they are signing up to be Republican precinct leaders, a position so low-level that it often remains vacant, but which comes with the ability to vote for the party executives who endorse candidates, approve platforms and decide where the party spends money.
A new group called the National Precinct Alliance says it has a coordinator in nearly every state to recruit Tea Party activists to fill the positions and has already swelled the number of like-minded members in Republican Party committees in Arizona and Nevada. Its mantra is this: take the precinct, take the state, take the party — and force it to nominate conservatives rather than people they see as liberals in Republican clothing.
I am cautiously optimistic that this is going to be a good thing for the Republican Party in the long term. Should Tea Party activists rise in the party from the bottom up, they’ll begin from the mistaken premise that the GOP is in a mess because it elects closet liberals. As I’ve noted before, this is incorrect: though Tea Party attendees may imagine that the folks who sold them out during the Bush Administration were insufficiently conservative in their ideology, the fact of the matter is that folks like Karl Rove and Tom Delay were calling the shots and doing the most harm. I’ve heard those men called corrupt, but I’ve never heard them called RINOs.
Actually taking over the GOP by rising through the ranks, however, is inevitably going to open the eyes of these new politicos to what actually goes on inside the conservative movement, and hopefully over time they’ll seek candidates who are less like Sarah Palin and more like Gary Johnson. This presumes that the Tea Party folks are earnest in their small government beliefs, and that they won’t be corrupted by rising through the ranks. Some of them obviously will be corrupted, but while I don’t imagine they’ll be spectacularly better than what we’ve got now, I do think that the way they came to power might make them marginally less corrupted by the power they’ll eventually wield… if only they don’t fall prey to the catastrophic success that Ross Douthat and Ramesh Ponnurru are smartly worrying about.
“I’ve heard those men called corrupt, but I’ve never heard them called RINOs.”
Huh?
Unless Immigration, Imperialism, and Insolvency are the heart of Republicanism (which, I will concede, after six years of Karl Rove calling the shots might be true), then Karl Rove is a RINO.
— Steve Sailer · Jan 15, 11:34 AM · #
Can’t be anything more morally and politically bankrupt than the Republican Party over the last decade.
— Lev · Jan 15, 03:13 PM · #
So you think it is good thing that a small group of angry, irrational, propogandized, zenophobic, proudly ignorant, fundamentalist take over the republican party? Didn’t that already happen in the 90’s? Isn’t that why the republicans are currently a unabashadly fundamentalist Christian party with all that that entails? Isn’t this previous take over why the Republicans have currently withdrawn from governance, morality, and thought? What do the tea partiers really have to add to this?
I think tea partiers, Glenn Beck, Bachman, and Palin are all the same thing: an angry populist movement. We have seen it before. They do not have the numbers or the appeal to win major elections. Not the presidency, that’s for sure (they could win a few house or senate races). Most likely they will have the same kind of outsider/thirdparty success as Barry Goldwater, George Wallace, Jesse Jackson, or Ralph Nader. Independants are not going to vote for them becasue they are not just angry, they are crazy. The things they say make no sense.
This is all the fruit of the Southern Strategy, which is the fruit of the civil war, which is the fruit of the compromises the founders had to make to form the union. I find it fascinating that people still take the angry peckerwood contingent seriously after all these decades (centuries?) of failure.
If the republicans were smart they’d go into rebuilding mode. Alienate the peckerwoods so that they break off and form their own doomed party (All they have to do to achieve this is put Happy Hollidays on the official republican christmas card). Then they design a platform that will appeal to independants and conservative democrats. They’d lose a few elections until they got their platform right, but if they continue to tie themselves to the dumb-white-power-party then they are going to lose a million elections.
There is nothing new in what I am saying. But, Connor, as a non-peckerwood conservative, you should be hoping for a schizm, not an infiltration.
— cw · Jan 15, 04:16 PM · #
“(All they have to do to achieve this is put Happy Hollidays on the official republican christmas card)”
Funniest thing written on TAS since I left New York!
— Tony Comstock · Jan 15, 04:29 PM · #
“Connor, as a non-peckerwood conservative, you should be hoping for a schizm, not an infiltration.”
The problem is that schizm would be a bit dicier and potentially destructive than you seem to think. The GOP has been stoking the fires or irrationality and assholery for decades now and I’m not sure those flames will be quite so easily doused if they get out of control.
Mike
— MBunge · Jan 15, 04:56 PM · #
“they’ll seek candidates who are less like Sarah Palin and more like Gary Johnson.”
say wut?
Brown is EXACTLY like Palin, just another example of grifter politics. All Brown demonstrates is that the teabaggers are starting to get that they might have to abandon core principles like LIFE! and not-appearing-naked-in-f*ck-books to get elected in blue states.
Brown is pimping the same clueless fantasy that Manzi is.
“My plan for the economy is simple: an across-the-board tax cut – in the tradition of John F. Kennedy – for families and businesses that will increase investment and lead to immediate new job growth. More tax increases will hurt our recovery. That’s why I have taken a no-new-tax pledge. My opponent will raise taxes.”
Just tell the lower half of the bellcurve what they want Conor.
— matoko_chan · Jan 15, 05:19 PM · #
There’s one born every minute.
/spit
— matoko_chan · Jan 15, 05:21 PM · #
“So you think it is good thing that a small group of angry, irrational, propogandized, zenophobic, proudly ignorant, fundamentalist take over the republican party?”
CW,
No, it’s that I don’t think the best among the Tea Party activists at the local level are irrational, proudly ignorant propagandists.
— Conor Friedersdorf · Jan 15, 06:10 PM · #
“…I don’t think the best among the Tea Party activists at the local level are irrational, proudly ignorant propagandists.”
You are going to have to give me some examples. From everything I have seen ignorance and irrationality are the basic requirements for teapartying. For instance, could you be a tea partier and publicly state that Barak Obama is not a socialist.
— cw · Jan 15, 06:21 PM · #
“…I don’t think the best among the Tea Party activists at the local level are irrational, proudly ignorant propagandists.”
But they are still grifters….they just exploit the irrational and proudly ignorant by tacitly agreeing with them.
— matoko_chan · Jan 15, 08:09 PM · #
Consider Dr. Manzi’s somewhat hysteric multi-post defense of deregulation.
Who says that deregulating markets causes innovation?
Correlation is not causation, and you guyz cite that like some sort of sacrament.
He’s just another grifter.
You are all grifters on the conservative express….carny barkers and shills for ignorant white christian populism and the rapacious, soulless invisible hand of the market.
— matoko_chan · Jan 15, 08:25 PM · #
Strictly speaking, the market is us. It is the result in aggregate, of the buying and selling and borrowing and investing and productive-work decisions of all of us. Collectively.
If it is soulless and rapacious – the market – then perhaps that is because we are soulless and rapacious.
— Keid A · Jan 15, 10:40 PM · #
matoko_chan, You do sound quite racist and very shrill. “You are all…” That’s how a bigot (right or left wing) begins sentences. How do you know my race, my political affiliation? There are plenty of pro-market democrats and moderate liberals (President Clinton for instance). There are non-whites (and non-Americans!) who see the virtues of the market.
De-regulation itself does not cause innovation. But the wrong sort of government regulation certainly does hamper it.
— JC38 · Jan 15, 11:32 PM · #
“But the wrong sort of government regulation certainly does hamper it.”
Here’s the thing, though. Worrying about government regulation in the wake of a near market collapse enabled largely through deregulation is a bit fanatical, if not outright insane. Many conservatives have revealed themselves over the last 18 months to be more theological than ideological when it comes to the economy.
Mike
— MBunge · Jan 16, 12:02 AM · #
Let us agree that someone has to regulate. If the market is not to be allowed to regulate itself, through bankruptcy of the most-imcompetent.
If there is to be such a category as “Too Big To Fail” – then someone else has to regulate – or the hungry tigers will eat us all.
Remember though that the market, left to its own devices, would certainly have already eliminated all the banksters and financial oligarchs – this time – when the markets seized-up and froze. At that moment they would all have died. The government saved them.
In fact truth-be-told, the real market would possibly have eliminated them three bubbles ago, without the protection of the Fed and its exertions.
— Keid A · Jan 16, 12:30 AM · #
“Remember though that the market, left to its own devices, would certainly have already eliminated all the banksters and financial oligarchs – this time – when the markets seized-up and froze. At that moment they would all have died. The government saved them.”
And they would have dragged the world down into a depression. The government saved them to mitigate this. Is that so hard to undestand? Best of two bad choices?
— cw · Jan 16, 02:10 AM · #
They weren’t always so big cw. Each time they got rescued, they continued to grow and came back even larger next time. So next time there is an even larger bust.
These catastrophes and bailouts have been happening at regular intervals, at least since the Latin American debt default in the early 1980’s. Always similar players; always the same excuses.
I call it regulatory capture or crony capitalism.
The question you really need to ask yourself is: How big will the next crash be? At what point is the USA itself “Too Big To Fail”?
— Keid A · Jan 16, 02:36 AM · #
cw,
It took me a while to relocate this cartoon.
I think it summarizes beautifully what is wrong with the current policy approach.
— Keid A · Jan 16, 03:22 AM · #
Mike,
You are throwing out words like “insane” and “fanatical”. Who is that supposed to impress? I am concerned about job growth and the recovery. Of course the government has a role in it – as it does in regulating the banks, etc. All the regulations that could have stopped the melt down were already on the books. But nobody in the government (or outside of it) had the ability or wisdom to stop it. The government’s ability to control the market is very limited – no one person or institution has the knowledge or competency to do it. No one can predict the market or human behavior with enough certainty to do it. Its why price fixing always fails. The rules and personnel can be improved, certainly. But what will create jobs? More highway projects? More stimulus? Or taking steps to create conditions that make hiring new employees desirable or possible? There’s no easy fix. But creating disincentives for employers to hire more employees is not a good idea right now. I won’t use your hollow fighting words against you.
— JC38 · Jan 16, 04:22 AM · #
Keid A,
There have been bailouts before but I’m pretty sure that none of the banks involved have been bailed out before. The banking industry has been undergoing deregulation over the past 30-40 years, by both democrats and republicans, and that is the reason the banks got so big and were involved in such risky investments. Which meant they were too big to fail. Which the still are which is why they need to be reregulated. Not that I think that will happen.
This recession is the result and refutation of betting on the wisdom of the market and chicago-style economics.
— cw · Jan 16, 06:48 AM · #
Strictly speaking even the “Greenspan Put”, in so far as it drives the interest rates down below their market levels, any time the system is in trouble, “bails out” the system.
Washington’s Blog had something about the Latin American crisis late last year.
— Keid A · Jan 16, 07:44 AM · #
Yesterday I had a sprawling 5 hour debate at the Marigot bakery with a gay, christian, die-hard bushie, obama-hating fulltime cruiser. (IOW, this teabagger really was a teabagger.)
Mostly it was fun and personable. I found him surprisingly receptive to my notion that in some contexts religion can be every bit as inappropriate as sexuality.
But I was AMAZED how he would light up in defense of Bush and in attack of Obama; almost like a trance came over him. I’d only ever seen that sort of thing happen to liberals, (mostly over Starbucks).
— Tony Comstock · Jan 16, 02:43 PM · #
JC38
Racist? Being pro-social democracy and pro-regulation is now racist?
I’m a white grrl.
You know…Sarah Palin’s famous wink sums up grifter politics perfectly, as does Brown’s newly spawned pro-choice sentiments. It says, “I’ll say w/e to get elected, but you and I know that is only fair, because the elites and teh high IQ meritocrats and the college-educated and the youth and the nigrahs will UNFAIRLY keep us down, so lying and cheating is really patriotic noble behavior.”
— matoko_chan · Jan 16, 04:41 PM · #
Ayn Rand expressed views of people and how they function, both as herd members and individuals, showing a preference for individual freedom. America was founded on individual freedom, simply because there was no other choice at the time to follow the Old World herd model. Our Founding Fathers gave us a definition of what Americans created, then a system to keep it going. We had three constitutions to define the limits of the national system, as we kept our individual governance close, starting between the ears and in the heart up to the County level that was supposed to be no further than a days horseback ride. In the 21st century, our elected representatives took an Oath to keep what was established, yet turned on it immediately and trashed it in order to reintroduce the Old World system rejected almost 400 years ago, by force just over 200 years ago. They moved government away from the individual to a distant city and founded it as the center of organized crime, as if it were just an extension of Haiti. Then, they picked our pockets and destroyed our economy. Claysamerica.com
— clay barham · Jan 16, 05:12 PM · #
clay you ignorant slut.
The founders and framers defined our country as a democratic meritocracy.
that is your problem now.
The slaveholder south birthed the welfare state and killed the white patriarchy social cohesion paradigm when the local governments and churches refused civil rights and civil welfare to black citizens.
— matoko_chan · Jan 16, 06:05 PM · #
The thing white christian conservatives doesn’t seem to understand…..is that the system is WAI, Working As Intended.
Cultural and demographic evolution are shifting the power from the white protestant demographic that was the electoral majority.
Who knew the Framers were fans of ToE?
— matoko_chan · Jan 16, 06:15 PM · #
— Keid A · Jan 16, 06:38 PM · #
“Strictly speaking even the “Greenspan Put”, in so far as it drives the interest rates down below their market levels, any time the system is in trouble, “bails out” the system.”
There is quite a leap from lowering “prime interest rates” for all banks to “Bailout.” I don’t buy it.
— cw · Jan 16, 07:46 PM · #
cw,
I don’t buy it.
Because you are so used to it, and perhaps you haven’t thought the implications through.
The interest rate is one of the most important prices in a economy. It regulates practically all economic behaviour. It reflects the community’s time preference, its desire to spend now rather than in the future and it signifies how much of its wealth it is willing to devote to speculative, future oriented activity. When you have central banks, they manipulate the interest rate to control economic activity and risktaking.
There are two ways that the banking system profits from manipulated interest rates.
First banks make their money borrowing short-term and lending long. This is intermediation. Giving them access to cheap, even free money at the zero interest-rate bound, is a vast subsidy. Because they make money from the spread. As long as cash is supercheap, the banks can make huge profits lending it long – even if they only lend it back to the government itself by buying long treasuries. – Risk-free profits.
So when the banking system is stressed, even if the banks’ own speculative overlending is what fed the boom that led to the bust in the first place, they suddenly find themselves making huge profits in the middle of a recession. They don’t even need to lend to stressed borrowers to earn higher rates. The central bank has engineered such a spread that lending to the government itself is enough to reflate the banks’ balance sheets, while everyone else starves for credit.
This means they never fully face the consequences of their irresponsibility. Whenever the boom stalls the Fed bails the economy out. The banks, who are the prime beneficiaries of the low interest rates, cruise through.
Secondly, and this is esentially Hyman Minky’s argument: When you, over a period of time, have an (artificially engineered) period of stability; It causes risk itself to become seriously, even gravely mispriced.
The entire economy starts to engage in increasingly wild speculative behavior. In the end it devolves to pure “Ponzi finance”. There is wild speculation in financial assets – stocks and real estate say – whose price rise is then used to collateralize still further loans – which feed the asset prices still higher.
This is financial wealth built on financial wealth built on air. It is the result of systemic mispricing of risk, particulary in economies that have been artificially engineered to be “stable”.
— Keid A · Jan 17, 01:07 AM · #
“No, it’s that I don’t think the best among the Tea Party activists at the local level are irrational, proudly ignorant propagandists.”
Conor, you were the guy behind GOP Speaks, giving these local activists an opportunity to speak their mind. Take a look back at the results of that: http://thegopspeaks.blogspot.com/. How many serious ideas do you see, and how many results are “Obama’s a Marxist…No Bailouts…ZOMG Czars!!!11eleven11!!!”?
I want to believe grassroots conservatives aren’t irrational propagandists, but I’d need some evidence first.
— Dan L · Jan 17, 02:25 AM · #
“First banks make their money borrowing short-term and lending long. This is intermediation. Giving them access to cheap, even free money at the zero interest-rate bound, is a vast subsidy. Because they make money from the spread.”
I think you are talking about the federal funds rate, the target interest rate for interbank overnight borrowing. The spread between the federal fund rate and the prime rate—the best rate the public can get from a bank is almost always 3% from what I have read. THe fed rate today is .25% and the prime rate today is 3.25%. So it seems to me that the spread is always the same. So lowering the fed rate will help banks by lowering interest rates for the public so they borrow more, but I don’t see how “Giving them access to cheap, even free money at the zero interest-rate bound, is a vast subsidy,” becasue the spread is always the same.
— cw · Jan 18, 07:53 AM · #
The prime rate is of course a reference variable rate and tends to track the Fed Funds rate, as you say.
Naturally there is no opportunity to gain from term-intermediation there.
The real counterargument to what I said, is that there is a case that the Fed does not set short term rates independently, rather that it merely follows the expectations of the market. And if you believe that, then it’s a corollary that there is no opportunity for “windfall profit” for those who have the first access to the Fed Funds rate. So the case could fall on the question of whether the Fed generally leads or lags the market.
— Keid A · Jan 18, 09:23 AM · #
And even if the Fed does actually lead the market – at least sometimes when it does something unexpectedly – It then matters: How long does the intermediation opportunity actually persist?
Does the term-structure adjust instantly? i.e. as soon as the information that the Fed has changed rates hits the newswires? Or does the term structure adjust gradually as the “liquidity disturbance” flows into all corners?
I am not familiar with the research on this particular question, especially for the USA. But my guess would be that some of the term structure adjustment is near-instantaneous and the rest catches up over an extended period.
I believe, as a matter of historical record, that banks do well from falling FF rates. And that delay in passing on cuts is part of the windfall. This is more true the further out you go along the maturity curve. The further reaches of the yield curve simply don’t follow the cyclical variations in the FF rate that closely.
— Keid A · Jan 18, 03:30 PM · #
Consider what happens if Brown wins and the conservatives get their semi-permanent filibuster. Do you think, Conor, the Framers didn’t plan for this? They were geniuses in human nature.
I expect HCR will still pass, either by reconciliation or by the House passing the bill as stands.
And I expect filibuster reform also.
The Framers never planned for NO change, they planned for slow, reasoned change.
All the right side has anymore is tactics….maintaining the stautus quo is tactical, not strategic.
And it is a game theoretic tautology that strategy always eventually beats tactics in an iterated game.
We all know what happens to the cow on the tracks of progress.
Unless the right can return to rationally abrogating radical change instead of just saying no and attempting to preserve the status quo, conservatives are doomed to 40 years in the wilderness.
I keep telling you that Obama is a Machiavellian pragmatist. The Founders and Framers read Il Duce too.
Niccolo— I am not interested in preserving the status quo; I want to overthrow it.
— matoko_chan · Jan 18, 03:56 PM · #
Matako-good comment
Keid- after a little research I find that, as you suspected, bank rates are slower to match decreases in the Fed rate (and quick to match increases). But it seems very complicated. There are all kinds of banks and all kinds of rates depending on who you are. For instance you can get a line of credit tied to the fed rate or LIBOR. Banks are also in competition with one another, so some banks will have lower interest rates and some higher, depending on what they are trying to do. The Fed lowering the rates also signals economic downturn which means higher risk of loan default, so it makes sense for banks to adjust there rates more slowly to cover this risk. And if banks make money when the Fed lowers rates, then they also lose money when the Fed raises them.
I am not at all opposed to the idea that banks have too much power with the fed. gov. and shape regulations that favor them, but from what I can see the system is way too complicated to characterise Federal monetary policy as a “bailout” for the banks. And I don’t think that having the Fed abandon their attmepts to manipulate the money supply would mean that a bunch of banks would suddnely fail. In other words, I don’t really see how Fed monetary policy “supports” banks. They lower interest rates based on economic factors other than bank health.
Having said that, I think the fed was complicit in the housing bubble by keep rates low to boost the economy during the first years of the Bush admin. I don’t think it was political, rates are low now with a democratic pres. Maybe it was just a mistake, or some kind of trade off. And low rates was just one factor in the housing bubble The crazy financial instruments were a much bigger factor in the bank failures. That was a result of lack of regulation.
— cw · Jan 18, 04:40 PM · #
cw,
Here’s a good example of an arbitrage play that would have been profitable. Look at the 2 year Treasury for 2009:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s1[id]=WGS2YR&s1[range]=5yrs
and the Fed Funds rate for the same period:
http://research.stlouisfed.org/fred2/graph/?chart_type=line&s1[id]=FF&s1[range]=5yrs.
The spread has not gone away. Anyone willing and able to borrow short lend long in this market would have made money.
cw,
if banks make money when the Fed lowers rates, then they also lose money when the Fed raises them.
Except that it is widely believed by the cynics that rate rises are passed on with great speed and efficiency – Unlike rate cuts.
— Keid A · Jan 18, 05:24 PM · #
My links don’t work because of the little red 1’s
They should be open square bracket 1 close square bracket
Textile markup is messing up my links.
— Keid A · Jan 18, 06:00 PM · #
Compare:
The two year Treasury for 2009
The Fed Funds rate for 2009
The spread doesn’t go away.
— Keid A · Jan 18, 06:11 PM · #
If you look at those same charts it shows that in 2007 the treasury rate was 5% and the Fed rate was 5+%. In 2008 both rates were the same.
I can see that there are ways to make money with taking advantage of the fed rate, but I still don’t see how this is the federal government “bailing out” banks or the fed intentionally or unintentionally keeping bad banks afloat with the target rates.
— cw · Jan 18, 07:32 PM · #
The story as I read it in the entrails – this is not investment advice this is closer to magic dreaming:
Let’s say that the authorities have a view on what the shape of the yield curve ought to be in order to achieve their overall goals. They decide how to partition their Treasury sales with that goal in mind. They just aren’t going to allow any part of the curve to invert for long at any point in the current circumstances. Even allowing that the Treasury market is now a pas de deux with the PBoC.
I think the authorities understand very well, that even with the suspension of the “mark to market” accounting rules, the zombie banks can live only so long as they have a reliable safe source of positive cashflow.
And if that means the poor consumer can’t get credit, well the Fed itself has been the major buyer in the MBS markets, Fannie, Freddie, etc. God knows what junk they are taking onto their books. They say they are about to end all that. We’ll see how long it lasts.
It does not help that the totally disfunctional banks care more about paying executive bonuses than about rebuilding their balance sheets. The Administration’s outrage is understandable. In China the banksters would have been shot. In USA they get to keep the bonuses.
— Keid A · Jan 18, 08:24 PM · #
tyvm my Dark Master.
Have you considered, O Dr.Manzi otaku of genetic algorithms, and Conor also, what happens to the organism that refuses to evolve?
A political philosophy that refuses adaptive behavior, will likewise go extinct.
Refusal to evolve is not an option.
— matoko_chan · Jan 18, 09:00 PM · #
Keid-
Conspiracy theories, my friend.
— cw · Jan 19, 07:15 AM · #
Yes that’s true. I believe governments often protect their perceived national interests through secrecy. The challenge is to figure out what’s going on behind what’s going on.
The goal for an investor is always to avoid large losses. Anyone can profit in a boom. Bull markets make everyone a genius. The problem is to keep it. Paranoia goes with the territory.
Fortunately my paranoia protected me from nearly all of this crash.
— Keid A · Jan 19, 10:03 AM · #