Monday, June 6, 2011

Peter Diamond or Ned The Wino?

Back in June last year, I wrote a post entitled Imbeciles Coming out of the Woodwork where I ridiculed the unbridled hubris of one Fed senior economist Kartik Athreya. I did so after the good PhD doctor penned a piece Economics is Hard. Don't let Bloggers Tell You Otherwise.

Others on the net took issue with uber-imbecile Athreya as well. One might think that, after that exercise, seeing sheer idiocy on display and in print hence preserved for future generations to mock and ridicule, other 'smartest guys in the room' , would be much more careful about what the disseminate to the public.

Well, you would be wrong.

Not to be outdone, one Peter Diamond, multiple time Obama nominee for the Federal Reserve has submitted an op-ed piece to the NY Times that even one Stuart Smalley from Saturday Night Live might blush at, humbly entitled When a Nobel Prize Isn't Enough.

Here are a couple of snippets from the extraordinarily humble professor:

LAST October, I won the Nobel Prize in economics for my work on unemployment and the labor market. But I am unqualified to serve on the board of the Federal Reserve — at least according to the Republican senators who have blocked my nomination. How can this be?

The easy answer is to point to shortcomings in our confirmation process and to partisan polarization in Washington. The more troubling answer, though, points to a fundamental misunderstanding: a failure to recognize that analysis of unemployment is crucial to conducting monetary policy.

In April 2010, President Obama nominated me to be one of the seven governors of the Fed. He renominated me in September, and again in January, after Senate Republicans blocked a floor vote on my confirmation. When the Senate Banking Committee took up my nomination in July and again in November, three Republican senators voted for me each time. But the third time around, the Republicans on the committee voted in lockstep against my appointment, making it extremely unlikely that the opposition to a full Senate vote can be overcome. It is time for me to withdraw, as I plan to inform the White House.

But understanding the labor market — and the process by which workers and jobs come together and separate — is critical to devising an effective monetary policy. The financial crisis has led to continuing high unemployment. The Fed has to properly assess the nature of that unemployment to be able to lower it as much as possible while avoiding inflation. If much of the unemployment is related to the business cycle — caused by a lack of adequate demand — the Fed can act to reduce it without touching off inflation. If instead the unemployment is primarily structural — caused by mismatches between the skills that companies need and the skills that workers have — aggressive Fed action to reduce it could be misguided.

"In my Nobel acceptance speech in December, I discussed in detail the patterns of hiring in the American economy, and concluded that structural unemployment and issues of mismatch were not important in the slow recovery we have been experiencing, and thus not a reason to stop an accommodative monetary policy — a policy of keeping short-term interest rates exceptionally low and buying Treasury securities to keep long-term rates down. Analysis of the labor market is in fact central to monetary policy"

Instead of going to the Fed, however, I will go about my congenial professional existence as a professor at M.I.T., where I have taught and researched since 1966, and I will take advantage of some of the many opportunities that come to a Nobel laureate. So don’t worry about me.

Analytical expertise is needed to accomplish this, to make government more effective and efficient. Skilled analytical thinking should not be drowned out by mistaken, ideologically driven views that more is always better or less is always better. I had hoped to bring some of my own expertise and experience to the Fed. Now I hope someone else can.

Peter A. Diamond is a professor of economics at the Massachusetts Institute of Technology.

How can you not admire and stand in awe of this master of the financial universe. Believe me good professor I certainly will NOT be worrying about your arrogant little ass.

The good professor Diamond is so bright, so qualified, so necessary to our economic survival. You want to know how? Because he and the trough feeding maggots on the Nobel committee think so as well. Acutally I am surprised he didn't invoke the ever-popular do what I say or armageddon will ensue argument.

This may come as a shock to many but the one common denominator I see around me is the abundance of Nobel prize winners, Ivy league economic PhD's, and purportedly brilliant people among us, who never saw any of the issues we face coming.

I have come to the conclusion that, statistically speaking, we would at better if not at least have a fighting chance, with Ned the Wino from Good Times at the helm of monetary policy in this country. I don't worry about the good professor Diamond not because I am a heartless idiot bloggert but because I know he enjoys the good life via the cushy confines of the student tuition financed perks of MIT. What I'd really like to see is if Dr. Diamond can successfully run a hot dog vending stand to suggest if he knows his economic ass from his elbow.

For some reason, after watching the above video on Ned the Wino, he has inspired more confidence in me than Dr. Diamond. I hereby nominate Ned The Wino for the Federal Reserve. The best part is when he is rejected we won't have to read some tantrum laden rant in the NY Times.

Does any post secondary institution offer a PhD in thick skin?

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