Peer Steinbrück’s Peers (Weekend Comment Competition)

Everyone has their favorite politician.  Mine is Peer Steinbrück, Germany’s Minister of Finance.  In terms of having inappropriate – but revealing – things to say at just the wrong moment, Mr. Steinbrück is world class.

This week he blasted the US bank stress tests as worthless.  Back in October 2008 he famously denied there was any problem in the European banking system, shortly before the G7/IMF weekend that culminated in European bank rescues.  And in early 2008 he and his subordinates castigated the IMF for suggesting that Germany and the eurozone could experience even a mild slowdown – have you seen the latest data?

This comment competition is straightforward.  Find the politician (or other leading public figure in any country) with the most untimely quote of the past 18 months.  We’re looking for hubris and denial, preferably 24 hours before an abrupt policy U-turn – so please indicate the precise context that makes the quote appealing.  If your choice is Peer Steinbruck, pick his most perfect moment.

By Simon Johnson

43 thoughts on “Peer Steinbrück’s Peers (Weekend Comment Competition)”

  1. “We have sort of become a nation of whiners,” – Former Senator Phil Gramm, R-Texas; author of legislation deregulating derivative swaps and energy trading (see:wife, Wendy Gramm, Enron Board Member); current UBS Vice Chairman;

  2. Nuts, wonkguy beat me to the punch. I’ll take the first part of the quote:

    “You’ve heard of mental depression; this is a mental recession.” – Phil Gramm

  3. Trying to choose among the overwhelming number of candidates is giving me a severe headache. I think I’ll take a nap.

  5. Just hours before Lehman went down, if I recall correctly. I think I vote for this one too.

    (Not that a fantasy construct like Lehman represents fundamentals. But taking the Mccain quote as attempted propaganda, it too was just referring to the debt bubble fantasy.)

  6. How about the Borrower/Lender-in-Chief?

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aJsSb4qtILhg

    May 14 (Bloomberg) — President Barack Obama, calling current deficit spending “unsustainable,” warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
    “We can’t keep on just borrowing from China,” Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. “We have to pay interest on that debt, and that means we are mortgaging our children’s future with more and more debt.”
    Holders of U.S. debt will eventually “get tired” of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. “It will have a dampening effect on our economy.”

  8. Steinbruck is my second favorite politician. He has a twin brother who is even blunter and wrong:

    “Yosano rejects increased public spending

    By David Pilling and Mure Dickie in Tokyo

    Published: November 30 2008 20:02 | Last updated: November 30 2008 20:02

    Kaoru Yosano, Japan’s minister for economic policy, has attacked calls for higher public spending.

    He said Japan could not afford to add to its gross public debt, already about 180 per cent of national output, the highest in the advanced world.

    Mr Yosano told the Financial Times in an interview: “We are already deep in debt, so to create effective demand for instant pleasure would not be wise.”

    The minister said the government was unlikely to find many worthy targets for stimulative funding.

    Constructing more public buildings – a favoured economy-boosting method in the past – would be “stupid” since maintenance costs would be a long-term burden, he said.

    Faster expansion of the national Shinkansen high-speed rail network looked like a decent option, the economy minister said.

    But policymakers in the ruling LDP party are not keen.

    “We don’t have very good public works any more,” Mr Yosano said.

    Some may disagree. The government has been attacked for cutting incentives for private spending in technologies such as solar power that would help protect the environment and reduce greenhouse gas emissions.

    Direct government investment could, for example, play a vital role in building the recharging infrastructure needed to make electric vehicles more commercially viable. Mr Yosano did urge more spending on unemployment benefit, saying the government could mitigate the social effects of recession by, for example, doubling to a year the period that benefits could be paid.

    Conditions were unlikely to become as bad as 1929. “These difficulties are not impossible,” he said.

    Teizo Taya, special counsellor to the Daiwa Research Institute, said Japan had learnt that deficit spending was dangerous, and western economies would find that running big deficits could lead to uncontrollable inflation.

    “We are not that stupid. We are not that desperate in Japan,” he said. ”

    But then:

    December 13, 2008
    Japanese Leader Offers a Vast Stimulus Package
    By MARTIN FACKLER

    TOKYO — Japan’s prime minister announced an emergency stimulus package on Friday, hoping to bolster the world’s second-largest economy by spending billions to create jobs, increase business loans and help laid-off workers.

    In a nationally televised speech, the prime minister, Taro Aso, announced the sweeping package that he valued at 23 trillion yen (about $250 billion). It was unclear how much of that figure was new spending and how much was included in earlier stimulus packages, like the $50 billion proposal announced in October.

    “This is said to be a global recession, a great global recession, that comes once in 100 years,” Mr. Aso said in the broadcast. “Japan is not outside the path of this big tsunami, nor can it escape.”

    And now:

    “Asian markets higher on Japan stimulus plans
    9 Apr 2009, 1654 hrs IST, AGENCIES
    HONG KONG: Asian markets closed higher on Thursday, snapping two days of losses as investors cheered Japan’s record stimulus spending package and
    some rare positive news on the economy.

    The markets took their lead from Wall Street’s 0.61 percent rise on Wednesday after two days of declines as investors appeared to hedge against a tough corporate earnings reporting season.

    Japanese shares soared 3.74 percent to a three-month high after the ruling party approved a stimulus spending plan that amounts to more than 15.4 trillion yen (154 billion dollars), or about three percent of gross domestic product.

    A surprise rise in Japanese machinery orders triggered hopes that the economy may be close to a bottom. Risk appetite was revived across the region as Hong Kong ended up 2.95 percent, Sydney rose 1.44 percent and Seoul surged 4.3 percent.

    Jakarta was closed for elections while Manila was closed for a public holiday.

    TOKYO: Up 3.74 percent. The benchmark Nikkei-225 index climbed 321.05 points to end at 8,916.06.

    Investors were cheered by the government’s record stimulus package and a rise in Japanese machinery orders.

    The orders, seen as a forward-looking indicator of corporate capital spending, climbed 1.4 percent in February, snapping a four-month losing streak, the government said. Economists had expected a slump of about eight percent. ”

    Steinbruck is great, but Yosano is hard to beat. By the way, the question should apply to currently serving elected officials.

  9. Steinbrück will win hands down because he sometimes likes to use fascist terms.

    In the context of tax evasion he said the following directed at Switzerland during the recent G-20 meeting:
    the OECD-List is “the 7th cavalry of Yuma that you may deploy”. The cavalry need not necessarily ride out: “The Indians only need to know that it is there.”
    (die siebte Kavallerie vor Yuma, die man auch ausreiten lassen kann”. Sie müsse aber nicht unbedingt ausreiten: “Die Indianer müssen nur wissen, dass es sie gibt.”)

    http://www.spiegel.de/politik/deutschland/0,1518,614277,00.html (German language)

    Greetings from Munich!

  11. Why are we just picking on politicians? At least they have an excuse: making idiotic statements with absolute certainty is part of their job description. What about economists?

    “But it hasn’t happened this time: all through the period of the alleged bubble, inventories have remained at more or less normal levels. This tells us that the rise in oil prices isn’t the result of runaway speculation; it’s the result of fundamental factors, mainly the growing difficulty of finding oil and the rapid growth of emerging economies like China. The rise in oil prices these past few years had to happen to keep demand growth from exceeding supply growth.”

    I wish I could find it, but I’d also nominate Bradford DeLong’s comment that there was no housing bubble because the world was running out of interesting places to live. That was a pretty solid one…

    Plenty of silly statements to go around.

    Cheers,
    Carson

  12. For one who gave the appearance of being inarticulate, George Bush knew very well the power of words – and he used them well to accomplish his goals:

    16 words in his State of the Union: “The British Government has learned that Saddam Hussein recently sought significant quantities of uranium from Africa.”

    “Compassionate conservative.”

    “Brownie, you’re doing a heck of a job.”

    “I’m the decider.”

    “Mission Accomplished.”

    More on this here: http://wardonwords.blogspot.com/2009/01/words-matter-legacy-of-bush.html

  13. Simon,
    Is this another time-waster, like last weekend’s “competition”, with no feedback or follow-up from you?

  14. Sorry – realized you’re seeking words uttered in the last 18 months. Not sure there are many that match Bush’s….

  15. “Ich bin ein Hamburger.” (Just like his boss, Angela Merkel, who perches loftily at the Konrad Adenauer Foundation (www.KAS.de) KAS funds the Asian News Network. One of their members, the “China Post,” just published an article written by one Paul Nieman, that quoted Paul Krugman as saying that we are *in* a global depression and we don’t know how to get out. (As yet unconfirmed by other sources)).

    Pimco is a Deutsche Bank company. Hmmm… wonder if any of the Deutsche Bank people are members of the KAS klub too…

  16. Pingback: The Irish Economy » Blog Archive » Quotes for the day

  17. Oh boy, when I saw that I just thought “That used to be me!” Man, that guy must have had one hell of a hangover.

  19. Senator Chris Dodd (D-CT), Chairman of the Senate Committee on Banking, Housing and Urban affairs, released the following statement today in response to AIG’s decision to pay out $165 million dollars in bonuses for its executives.

    “This is another outrageous example of executives – including those whose decisions were responsible for the problems that caused AIG’s collapse – enriching themselves at the expense of taxpayers. A car mechanic or teacher in Connecticut shouldn’t have to subsidize the bad decisions of these executives. Executives at other companies receiving TARP funds have voluntarily foregone bonuses – there’s no reason why those at AIG shouldn’t do the same.”

    I guess he forgot he was the one who inserted the loophole into legislation that allowed the bonuses to be paid out.

  24. I have been following this and my jaw hit the floor when I heard Legislator Malik’s rebuttal, “This isn’t a helipad. It’s not a tennis court. It’s not horse manure. It’s not a moat. . . . It’s not a country estate”. As though stealing a little bit is ok so long as the guy next to you stole more. Ridiculous. He’s since stepped down. There seems to be a contagion world-wide. People are no longer responsible for their own actions.

  25. Taking us back several decades

    November, 1929

    “Any lack of confidence in the economic future or the basic strength of business in the United States is foolish.”

    —Herbert Hoover

    March 8, 1930

    “President Hoover predicted today that the worst effect of the crash upon unemployment will have been passed during the next sixty days.”

    —Washington dispatch

    May 1, 1930

    “While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States—that is, prosperity.”

    —Herbert Hoover, Address at annual dinner of the Chamber of Commerce of the United States

    October 2, 1930

    “During the past year you have carried the credit system of the nation safely through a most difficult crisis. In this success you have demonstrated not alone the soundness of the credit system, but also the capacity of the bankers in emergency.”

    —Herbert Hoover, Address before the annual convention of The American Bankers Association, Cleveland

  26. (Hope this works)

    Song for Simon
    by Jonathan Coultan
    Video by Spiffworld.com

    [ youtube=http://http://www.youtube.com/watch?v=BjMiDZIY1bM]

  29. I would go with almost anything Tim Geithner says. He has yet to say anything of substance. If you listen carefully, you hear lots of assuring language, basically saying nothing — he has the science of vague assurance down to a Tee. He speaks finance “wonkese” as well as anyone ever. He’s even better than Larry Summers. Specifically, though, any assuring language regarding the realism and reliability of the Stress Tests would do just fine.

  32. The real question is whether Steinbrück believes what he says. Remember that in a double-whammy election year, he is locked not only in a grand coalition, but in a struggle with the ex-comunnist Left party. The bottom-line of the SPD’s argument is that Anglo-American capitalism is to blame for the crisis, not the lovely German “social market economy”. The SPD blasts the lack of financial regulation. You wonder, of course, where German/European regulators were when Hypo Real Estate’s Irish subsidiary went off the cliffs. Never mind that Mr. Steinbrück’s party has been holding the Finance Ministry ever since 1998, which is responsible for the regulation of the financial sector. So it may be all “It’s politics stupid”. And so far the strategy has been holding up: The left has not gained in the polls.

    Politics aside, it is quite interesting how many disconnects there are: on the size of a economic stimulus, on the need for a stress test etc. I find it very interesting that Simon Johnson “too-big-to-fail-argument” hardly resonates in Germany. Commerzbank just bought Dresdner Bank (with government help), and Deutsche Bank is taking over Postbank….

  33. Stephen Harper. On November 27, 2008 introduced legislation cutting government spending, in spite of promises to do the opposite in response to the economic crisis. Opposition parties rebelled, threating to remove him as PM.

    So he shut down parliament.

    Months later, very little stimulus spending has occurred.

  34. The good governors of South Carolina, Louisiana, and Texas can not be left of such a list as this.

  35. In mid-November Hank Paulson pronounced the banking system sound and well-capitalized thanks to TARP on a Tuesday or Wednesday. Over the ensuing weekend the Treasury and Fed ponied up more TARP capital ($20-$25bn) and guarantees (>$300bn) for a Citigroup on the brink.

  36. The Latvian Finance Minister tops them all.
    The Bloomberg interview was done in December 2008. Latvian Q4 GDP -10,7% (Q1 2009 -18%). They have also applied for a loan from the IMF in the sum of €7.5B, but have been unable to secure it due to their inability to limit their budget deficit to less than 4.7% of GDP.

    (Fast forward to 1:20 for the best quote). Doesn’t he look like a pupil who has done something wrong and is in the principal’s office?

  37. Bayard,

    To get the Boehner video to “embed” in this blog you would use the following string:

    [ youtube=http://www.youtube.com/watch?v=sG4so76GN0U]

    But — exclude the space — between [ and y

    In other words, with the space you see the URL, without the space you see the youtube video player.

    Instructions found in this URL:

    http://en.blog.wordpress.com/2006/01/26/youtube-support/

  38. We must tip our hats to Bobby Jindal who mocked the idea of spending money on “volcano monitoring” in his speech responding to Obama’s inaugural address on behalf of the Republican Party. His speech was January 20, 2009. Mount Redoubt began a continuing series of eruptions 100 miles southwest of Anchorage, Alaska on March 22.
    “Instead of monitoring volcanoes, what Congress should be monitoring is the eruption of spending in Washington, D.C., ” Jindal said.

    Google “Redoubt eruption Jindal” for thousands of references.

  39. November 5, 2009 Former U.S. Senator Norm Coleman was ahead of Al Franken by a few hundred votes before a mandatory recount began: “If you ask me what I would do, I would step back. I just think the need for the healing process is so important. The possibility of any change of this magnitude in the voting system we have is so remote. That would be my judgment.”

    November 21, 2009, when asked about his prior statement: ”I ascribe that to not having slept for three days,” he said. http://minnesotaindependent.com/18256/norm-coleman-im-a-winner-and-most-challenges-will-be-dismissed

    Of course, Coleman was determined the loser by the Minnesota Canvassing Board which oversaw the recount. Coleman launched an election contest after which a three-judge panel confirmed that Franken was the victor. Coleman then appealed to the Minnesota Supreme Court, which has received briefs from both sides, and will hear oral arguments on June 1.

  40. Bayard:

    It’s distressing that Tim Geithner continues to come under attack at Baseline Scenario. He’s been accused of being an “oligarch”, of pandering to banking interests and squandering taxpayer dollars, and now you suggest he’s an apologist for stress tests that were, in your words, unrealistic and unreliable.

    Since the stress tests were announced in late Feb. the 90-day Libor has dropped like a stone, the Libor-OIS spread has narrowed and volumes in credit markets have started to climb. Financial institutions have begun with a vengeance to raise capital privately – IPOs, sales of securities, massive layoffs (500,000 jobs lost in the financial sector), spin-offs of divisions and subsidiaries, sale of minority interests, JV’s, bond issues – all, entirely and completely without taxpayer money.

    I’m sorry, the stress tests were remarkably successful and the country has much for which to thank Tim Geithner.

  41. It’s distressing that Tim Geithner continues to come under attack at Baseline Scenario. He’s been accused of being an “oligarch”, of pandering to banking interests and squandering taxpayer dollars, and now you suggest he’s an apologist for stress tests that were, in your words, unrealistic and unreliable.

    Since the stress tests were announced in late Feb. the 90-day Libor has dropped like a stone, the Libor-OIS spread has narrowed and volumes in credit markets have started to climb. Financial institutions have begun with a vengeance to raise capital privately – IPOs, sales of securities, massive layoffs (500,000 jobs lost in the financial sector), spin-offs of divisions and subsidiaries, sale of minority interests, JV’s, bond issues – all, entirely and completely without taxpayer money.

    I’m sorry, the stress tests were remarkably successful and the country has much for which to thank Tim Geithner.

  43. Pingback: A Poor Forecaster Gets One Right (Sort of) - Economix Blog - NYTimes.com

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