"The Hill" titles a must-read piece as follows:
After Obama rips lobbyists, K St. insiders get private briefings.
Here are excerpts:
A day after bashing lobbyists, President Barack Obama’s administration has invited K Street insiders to join private briefings on a range of topics addressed in Wednesday’s State of the Union.
The Treasury Department on Thursday morning invited selected individuals to “a series of conference calls with senior Obama administration officials to discuss key aspects of the State of the Union address." . . . .
A handful of lobbyists told The Hill on Thursday morning that they received the invitations and were planning to call in.
Some lobbyists say they are extremely frustrated with the White House for criticizing them and then seeking their feedback. Others note that Democrats on Capitol Hill constantly urge them to make political donations.
One lobbyist said, “Bash lobbyists, then reach out to us. Bash lobbyists [while] I have received four Democratic invitations for fundraisers.”
In his State of the Union on Wednesday, Obama once again targeted K Street: “We face a deficit of trust — deep and corrosive doubts about how Washington works that have been growing for years. To close that credibility gap, we have to take action on both ends of Pennsylvania Avenue — to end the outsized influence of lobbyists; to do our work openly; to give our people the government they deserve.”
Hypocrisy we can believe in?
Moral to the president: People who run as a saint/Messiah are held to at least ordinary standards of consistency. "The Hill" mightn't bash you with such a pointed title and text had you not posed as other than a Chi-town pol, which is how you have been behaving.
Copyright (C) Long Lake LLC 2010
Showing posts with label Obama. Show all posts
Showing posts with label Obama. Show all posts
Thursday, January 28, 2010
Wednesday, October 14, 2009
Thinly Disguised Bribery Proposed by the President
In Obama Seeks More Payouts, the WSJ reports that the President, upset at the lack of price increases, proposes to have Congress print or borrow $13 B more for 57 million Americans, allegedly to be nice to them so that they can have a cost of living (equivalent) increase of 2%. Thus the other 250 million Americans will lose the same amount of money.
There is no economic point to this "payout". This is the equivalent of bribery to get votes, as the recipients will notice the money whereas the mass of Americans won't know the difference. There is also no fairness to this bribery, as it will presumably go to wealthy seniors but not to struggling non-seniors. Seniors are already the wealthiest Americans . . . but they vote the most.
The President is the leader of a Party that went wild when President G W Bush tried (and succeeded) to pass legislation with at least the argument that a permanent (or, semi-permanent) reduction in tax rates for all taxpayers would help the economy grow. Bill Clinton had a deficit-reduction public argument for his 1993 tax increase (and a private one, which was to fund healthcare reform in 1994). Likewise, G H W Bush and Ronald Reagan had arguments for their tax increases and tax cuts, respectively.
Just as the recent President Bush had a weak argument for his tax cut of spring 2008 and no good argument for an almost open-ended TARP and lots of other examples of him and Gentle Ben throwing other money at large complex financial institutions, the current President is just throwing money around.
I would like to be out of my gold holdings. I enjoyed being bearish on gold year after year from 1980 to 2001; rooting it down, as it were. But the politicians and Big Finance make it hard to regain my prior enthusiasm for conventional assets.
It's time to do things the old-fashioned way. Spock could have said the following.
"Work hard and prosper."
Payouts which are just handouts are symptomatic of the much larger handouts to the financial class. Favored groups get the fruits of the labor of others. Not fair. And not the way to retain world financial dominance.
Copyright (C) Long Lake LLC 2009
There is no economic point to this "payout". This is the equivalent of bribery to get votes, as the recipients will notice the money whereas the mass of Americans won't know the difference. There is also no fairness to this bribery, as it will presumably go to wealthy seniors but not to struggling non-seniors. Seniors are already the wealthiest Americans . . . but they vote the most.
The President is the leader of a Party that went wild when President G W Bush tried (and succeeded) to pass legislation with at least the argument that a permanent (or, semi-permanent) reduction in tax rates for all taxpayers would help the economy grow. Bill Clinton had a deficit-reduction public argument for his 1993 tax increase (and a private one, which was to fund healthcare reform in 1994). Likewise, G H W Bush and Ronald Reagan had arguments for their tax increases and tax cuts, respectively.
Just as the recent President Bush had a weak argument for his tax cut of spring 2008 and no good argument for an almost open-ended TARP and lots of other examples of him and Gentle Ben throwing other money at large complex financial institutions, the current President is just throwing money around.
I would like to be out of my gold holdings. I enjoyed being bearish on gold year after year from 1980 to 2001; rooting it down, as it were. But the politicians and Big Finance make it hard to regain my prior enthusiasm for conventional assets.
It's time to do things the old-fashioned way. Spock could have said the following.
"Work hard and prosper."
Payouts which are just handouts are symptomatic of the much larger handouts to the financial class. Favored groups get the fruits of the labor of others. Not fair. And not the way to retain world financial dominance.
Copyright (C) Long Lake LLC 2009
Saturday, September 12, 2009
More on the Obama Tire Tariff
Bloomberg.com has a thorough discussion of some of the facts involved in the 35% tariff that Team O imposed upon tires made in China (see EBR post immediately below). Per the article:
"Four U.S. companies have operations in tire production in China and they account for two-thirds of exports to the U.S."
Let us hope that the U. S. has not shot itself in the foot with this action.
Copyright (C) Long Lake LLC 2009
"Four U.S. companies have operations in tire production in China and they account for two-thirds of exports to the U.S."
Let us hope that the U. S. has not shot itself in the foot with this action.
Copyright (C) Long Lake LLC 2009
Friday, September 4, 2009
On Unexpected U-Turns and Priorities
The headline you thought you would never see, absent another Pearl Harbor: Obama Urged to Rally Support for War.
This within a few days of an address to Congress to rally support for healthcare reform, or health insurance reform, or whatever.
And both of the above when the economy is still apparently losing jobs, which to the average person is the only definition of "recession". If you have any doubts about that, ask George H. W. Bush and Bill Clinton ("It's the Economy, Stupid) circa November 1992, which turned on the economy about a year-and-a-half after the recession officially ended.
A reminder: It's still the economy, Mr. President.
Copyright (C) Long Lake LLC 2009
This within a few days of an address to Congress to rally support for healthcare reform, or health insurance reform, or whatever.
And both of the above when the economy is still apparently losing jobs, which to the average person is the only definition of "recession". If you have any doubts about that, ask George H. W. Bush and Bill Clinton ("It's the Economy, Stupid) circa November 1992, which turned on the economy about a year-and-a-half after the recession officially ended.
A reminder: It's still the economy, Mr. President.
Copyright (C) Long Lake LLC 2009
Friday, July 24, 2009
More on the President and Doctors Who Allegedly Perform Unnecessary Surgeries to Make More Money
Last night, EBR presented President Obama's allegation that doctors recommend unnecessary surgery for financial reasons. Of course, every doctor in America aware of his comments immediately dusted off their lawyer jokes. See It's Time for Lawyer Jokes for our brief post. Here's a follow-up from the ear-nose-throat doctors' organization AAO (American Academy of Otolaryngology):
“We, too, are in favor of evidence-based medicine that supports quality patient care. President Obama’s statement highlights the complexity of medical decisions like this. However, the AAO-HNS is disappointed by the President's portrayal of the decision making processes by the physicians who perform these surgeries. In many cases, tonsillectomy may be a more effective treatment, and less costly, than prolonged or repeated treatments for an infected throat.
“For the past several years, the Academy has been developing clinical guidelines based on evidence and outcomes research, including ‘Quality of Life after Tonsillectomy,’ a January 2008 supplement to the journal Otolaryngology—Head and Neck Surgery. We are in agreement with the President’s statement that physicians, patients, and hospitals should make the decisions, based on the evidence, about what’s best for patient care.”
Perhaps the President should stay away from commenting on medical details and review why healthcare "reform" to him and his Party never ever means doing something about the medical malpractice lottery that, I can attest, drives some part of health care spending in America.
Copyright (C) Long Lake LLC 2009
“We, too, are in favor of evidence-based medicine that supports quality patient care. President Obama’s statement highlights the complexity of medical decisions like this. However, the AAO-HNS is disappointed by the President's portrayal of the decision making processes by the physicians who perform these surgeries. In many cases, tonsillectomy may be a more effective treatment, and less costly, than prolonged or repeated treatments for an infected throat.
“For the past several years, the Academy has been developing clinical guidelines based on evidence and outcomes research, including ‘Quality of Life after Tonsillectomy,’ a January 2008 supplement to the journal Otolaryngology—Head and Neck Surgery. We are in agreement with the President’s statement that physicians, patients, and hospitals should make the decisions, based on the evidence, about what’s best for patient care.”
Perhaps the President should stay away from commenting on medical details and review why healthcare "reform" to him and his Party never ever means doing something about the medical malpractice lottery that, I can attest, drives some part of health care spending in America.
Copyright (C) Long Lake LLC 2009
Wednesday, July 22, 2009
DC Dems to California: Drop Dead; State's Federal Representatives and Media Take it Lying Down
In a narrative you might not have believed if you read it in a novel, an Administration headed by a Democrat has blithely handed out tens of billions of dollars to Goldman Sachs, Deutsche Bank and other large financial companies (via the AIG conduit) but has left California to financially cut off many working people and the needy and weaken one of the once-great public education systems in the nation. The Democrats who controlled Congress since 2007 were thrilled to give George Bush and Hank Paulson (and their successors, who they expected to be a Democrat) $750 B of TARP money to use with few questions asked, but even California's Democratic Senators appear to have been unaggressive in requesting just a few billion bucks please from Barack Obama and/or their fellow Congresspeople. What's a reliable 55 electoral votes anyway?
Further along the amazement road is the lack of complaint from the major news organizations in the state. Apparently if a Democratic President disses their state, it's OK. Every night lately I have checked in on the LA Times online, and often the SF Chronicle. The LA Times appears to care more about sports and Hollywood goings-on that about this financial crisis. It does feature an amazingly lame interoperable calculator that offers the reader a chance to "fix" the crisis by choosing which cuts to make. For some reason, another news organization headed by an Aussie has some interest in California's plight.
Consider the following from the (non-California-based) Wall Street Journal:
State's Cities Brace for More Sacrifice:
California cities and counties, already reeling from their own fiscal problems, are about to take a new hit: Gov. Arnold Schwarzenegger and legislative leaders plan to take more than $5 billion from them over the next two years under the state's tentative budget deal.
If California's legislature approves the compromise reached Monday, the state will take as much as $1.7 billion out of local gasoline-tax funds, another $2 billion from local property-tax receipts and $1.7 billion in redevelopment funds that now go to cities and counties in a move to close an estimated $26 billion budget shortfall.
Local officials up and down the state were scrambling Tuesday to plan how to further cut their budgets to account for the state's rare move. Meanwhile, some cities and counties began laying the groundwork for possible lawsuits against the state.
The city of El Monte in Los Angeles County just closed a $9.5 million budget deficit for the fiscal year that began July 1 by action including furloughing most of its 375 employees, laying off 17 police officers and shutting down its aquatics center during all but four months of the year. Now the city faces an estimated additional $2 million loss in gasoline taxes and an as-yet-undetermined amount more being taken by the state. "It's devastating," said Jim Mussenden, city manager of the community of 125,000. "We've already worked very hard to reduce our budget, and now we will have to look at more cuts."
The state's cut into local funds, economists said, could have an outsized effect in delaying California's recovery.
Los Angeles city officials in said they expect to lose about 2,300 construction jobs because of a proposal in the budget agreement to take $72 million of its funds for redevelopment projects. . .
Further amazing is that the WSJ is running not one but two articles on this topic, leading with Budget Agreement Deepens California's Pain, which begins with the following:
The budget deal struck by California Gov. Arnold Schwarzenegger and statehouse leaders is expected to hurt a broad band of state residents and crimp the state's recovery from the current, deep recession.
Fiscal experts said the negative effects of the budget plan, crafted in an attempt to keep the state solvent, will offset much of the intended beneficial effects of President Barack Obama's federal stimulus package.
California's economic decline, economists predicted, will last longer than downturns in other states. They said the proposed cuts in the budget deal will compound the continuing impact from other recessionary blows, including an 11.6% state unemployment rate, widespread foreclosures on homes and depressed real-estate values.
Mr. Schwarzenegger and legislative leaders Monday evening agreed to close the budget shortfall by slashing $15.6 billion in spending. The major cuts include $6 billion from kindergartens and community colleges, $2.8 billion from other higher education, $1.3 billion saved through state-worker furloughs, $1.3 billion cut from a state health-care plan and $1.2 billion trimmed from prison spending.
Another New York paper has taken note with two articles. The Times writes in Denied Tax Revenues, Local Officials in California Are Fuming that (among other points):
. . . the budget would cost 4,000 jobs in public works departments statewide. In suburban Contra Costa County east of Oakland, the public works director, Julia R. Bueren, said her department would lay off more than a third of its staff by the end of August. . .
That situation may be worse in rural areas like Calaveras County, a sprawling triangle that runs from the foothills of the Sierra Nevada to higher elevations. Tom Garcia, the county’s newly appointed public works director, said he was bracing for a loss of about 20 percent of his budget, meaning many snow-packed mountain roads could go unplowed this winter.
“In order to get anywhere in our county, its all on local roads,“ said Mr. Garcia, adding that resorts in the Sierra region could take a hit as well. “If they can’t get to the services in this county because the roads aren’t open, we’ve lost our winter income.”
The Times is also running a news analysis titled Pinch of Reality Threatens the California Dream which is pedestrian. Why are New York papers more interested in California than its own major press organs?
California chronically sends more money to Washington than it receives. Now it's amongst the needy states. It's time for the Feds to help it and other needy states. From a national policy standpoint, money sent to California will help the country more than the same money sent to Michigan (a state I was once a resident of and bear no animus against). Sorry, Michigan, but California routinely changes the world through technology innovations, moving pictures, etc.; Michigan is just too chronically depressed. And it's too cold in winter! A thriving California will help revive America and the world.
Just imagine the outcry if this happened when a Bush was President. This news is breaking the very same week that Neil Barofsky, Inspector General for Congress in overseeing TARP ("SIGTARP") reported that direct and guaranteed expenditures for the financial "system" totaled $23.7 TRILLION dollars. That's TRILLION as in TRILLION. Does the Administration really believe that with all the "stimulus" money not yet spent that it could not allocate more to directly assist states in their time of need?
Of course, California overspent. (But it did not under-tax.) California did not, however, cause the current economic financial crisis. New York-based financial companies, Washington politicians and the Fed, and the big North Carolina banks caused it, with an assist from scamsters and speculators in California, Florida and elsewhere involved in the real estate bubble (amongst other causes).
In my humble opinion, it borders on lunacy to be sending tens of thousands of additional soldiers to one of the most horrid places on Earth and to have sent tens of billions of dollars to non-needy large complex financial companies while simultaneously not assisting a temporarily needy populace of the single most important State in the Union, as well as continuing to back-end a "stimulus", when there are so many needy people throughout this country who have been harmed and at times driven to tent cities because of cheats and speculators linked to the same Big Finance that Barack Obama has aided with the people's money: money that the people now need back.
In addition to being terrible policy, it is bad politics.
Copyright (C) Long Lake LLC 2009
Saturday, April 25, 2009
The Administration Says: Please Buy a New Car But Leave Home Without It
The Administration is all over the auto industry these days. On the one hand, there is immense effort to deal with the miserable condition of GM and Chrysler. The government is in charge and will have its way, one way or another, with all the other parties trying to game the system as best as they can.
On another related front, one of the centerpieces of the stimulus program was an enhanced roads program. We recall VP Biden proudly standing in Michigan touting the alacrity with which a 4-lane roadway was being transformed into one with 6 lanes.
And many of us remember Dr. Christina Romer on Meet the Press 6 weeks ago saying the following:
I think we know that consumers have lost a lot of wealth and that normally what you'd say is they should be saving more. I think the truth is consumers have also not done a lot of spending for the last 14 months. So what I would predict and I think would be a perfectly reasonable thing is you go out and you buy that car that you've been thinking about for 14 months and you do some of the spending.
So Barack Obama is strongly in favor of keeping lots of people busy building autos, making driving hassle-free, and of course busy adding another vehicle to the roads.
There is however a great big green BUT . . .
Barack Obama personally has informed us that we must reduce our carbon emissions. Being green means to the administration that every human exhalation is contributing to the rising of the seas. Therefore, every time anyone drives a vehicle anywhere, some grains of sand on a beach are being murdered as the oceans rise in response.
The U. S. contains about 9 motorized vehicles for every ten Americans. The green solution is to reduce that ratio substantially. The politically expedient solution is for taxpayers to keep subsidizing all of the following: auto manufacturers, the pensions of the UAW, the providers of financing to purchasers or lessees of the vehicles, and the maintenance and expansion of the roadways. Not to forget that taxpayers are going to subsidize improvements on the internal combusion engine.
Houston, we have a contradiction. An important part of Federal policy is to support the auto industry as we know it. Please don't use the end product, though, because when you do, you are an environmental villain.
We have other contradictions. Since this is a President who is emphasizing personal responsibility, what about him ending his addiction to cigarettes? Every time he lights up, he is adding to the global burden of carbon in the air. In addition, he is supporting some of the worst of the worst corporate offenders. He is adding a health care burden on society. He is setting a horrible example for American teenagers. Etc.
Cumulatively, if 60 million Americans smoke an average of 20 cigarettes a day, is that not as meaningful from an environmental + health point of view than the recent Administration goal of taking $100 M out of Federal expenditures is to a $3+ trillion budget?
Mr. President, put out that butt! (Please)
Copyright (C) Long Lake LLC 2009
On another related front, one of the centerpieces of the stimulus program was an enhanced roads program. We recall VP Biden proudly standing in Michigan touting the alacrity with which a 4-lane roadway was being transformed into one with 6 lanes.
And many of us remember Dr. Christina Romer on Meet the Press 6 weeks ago saying the following:
I think we know that consumers have lost a lot of wealth and that normally what you'd say is they should be saving more. I think the truth is consumers have also not done a lot of spending for the last 14 months. So what I would predict and I think would be a perfectly reasonable thing is you go out and you buy that car that you've been thinking about for 14 months and you do some of the spending.
So Barack Obama is strongly in favor of keeping lots of people busy building autos, making driving hassle-free, and of course busy adding another vehicle to the roads.
There is however a great big green BUT . . .
Barack Obama personally has informed us that we must reduce our carbon emissions. Being green means to the administration that every human exhalation is contributing to the rising of the seas. Therefore, every time anyone drives a vehicle anywhere, some grains of sand on a beach are being murdered as the oceans rise in response.
The U. S. contains about 9 motorized vehicles for every ten Americans. The green solution is to reduce that ratio substantially. The politically expedient solution is for taxpayers to keep subsidizing all of the following: auto manufacturers, the pensions of the UAW, the providers of financing to purchasers or lessees of the vehicles, and the maintenance and expansion of the roadways. Not to forget that taxpayers are going to subsidize improvements on the internal combusion engine.
Houston, we have a contradiction. An important part of Federal policy is to support the auto industry as we know it. Please don't use the end product, though, because when you do, you are an environmental villain.
We have other contradictions. Since this is a President who is emphasizing personal responsibility, what about him ending his addiction to cigarettes? Every time he lights up, he is adding to the global burden of carbon in the air. In addition, he is supporting some of the worst of the worst corporate offenders. He is adding a health care burden on society. He is setting a horrible example for American teenagers. Etc.
Cumulatively, if 60 million Americans smoke an average of 20 cigarettes a day, is that not as meaningful from an environmental + health point of view than the recent Administration goal of taking $100 M out of Federal expenditures is to a $3+ trillion budget?
Mr. President, put out that butt! (Please)
Copyright (C) Long Lake LLC 2009
Sunday, March 15, 2009
War Without End Must End
With a kickoff by Uncle Warren Buffett a few days ago, the Obama administration has unveiled yet another war for the Government to fight. Stranger than could be imagined, this administration is somehow channeling its non-hero, one G W Bush. This latest war is in addition to the escalation of the Afghanistan-theater war, which of course was begun by Mr. Bush in 2001 but which was left to meander along in favor of beginning and then semi-concluding the Iraq War.
What is our new war, which joins the War on Drugs and the War on Terror (the War that dare not speak its name but which is basically the justification for escalating war in Afghan-land)?
Actually, we're not quite sure, which- to let the cat out of the bag- is part of the problem, but it has something to do with the economy. As the Chair of the Council of Economic Advisers, Dr. Christina Romer, said today on Meet the Press:
I think he's (Mr. Buffett) absolutely right, it is an economic war. We have inherited a crisis like none since we've--since we had the Great Depression. So absolutely, it is something we need to deal with. I think we are. We haven't won yet. We have staged a wonderful battle.
A wonderful battle? What did I miss? What battle was waged? Where? When? Against whom or what? And whenever and wherever this battle was waged, what about it on G-d's green earth was wonderful?
I thought that war is Hell.
I don't know about you, but I am weary of war. I think back to my birth year of 1950, in the shadow of WW II, by far the bloodiest war ever. The Cold War had just begun. The hot Korean War was raging (which technically has never ended). A decade after the Korean armistice, the alleged peace candidate (LBJ) defeated the alleged dangerous candidate (Barry Goldwater) and immediately escalated another land war in Asia. LBJ also began a War on Poverty. These two wars plus the Great Society nearly ruined the finances of this country. After financial disaster ensued, the credit of the U.S. was so bad that it was forced to borrow at double digit interest rates, some of which was no longer in U.S. currency; around 1980 IBM was able to borrow money at a lower rate than the U.S. Government.
Following the humiliation in the sands of Iran with Desert One crashing during the hostage crisis, the Cold War ramped up, to be followed after victory there with multiple smaller military actions and wars while Bush I and then Bill Clinton were President: the Gulf War, Panama, Somalia, Haiti, two in the former Yugoslavia, Iraq again (bombing only).
Then, under Bush II, there was the War on Terror, involving two land wars in Asia (Iraq is in Asia) as well as threats of two more (North Korea, Iran). Somehow, I realize that during my entire life, my country has continuously either been engaged in, recovering from or preparing for land war in Asia. 58 years worth. Plus the nine years prior to 1950. We're looking at 67 years of Asian-theater war, with no plan in sight for an end to it.
Plus the never-ending War on Drugs for half my life.
All these wars have required lots and lots of deficit spending: great for the Merchants of Debt and, except for the War on Poverty, also great for the Merchants of Death. What these wars were not great for was the living standards of the American people. Not to mention the damage to the American psyche.
Wars are horrible for the economy (human toll aside). One of the greatest fallacies extant is that World War II qua a Big War was that it cured the Great Depression. Nothing could be further from the truth. Had the Second World War ended inconclusively, that would have been bad for the economy; had it been lost, it would have ruined the economy. People's living standards were severely depressed during the war; inflation was high; and when the soldiers returned home, a major economic downturn ensued, as they had nothing to do.
What was good for the U.S. economy about World War II was that the U.S. won it unequivocally, had an undamaged homeland, and thus dominated the world economically till this day. Winning wars can ultimately be good for the economy, but only if they are sweeping enough.
Now, Barack Obama wants to print or borrow more money to finance expanded war in Afghan-land, while maintaining 50,000 troops in Iraq indefinitely. How is this different from anything the supposed warmonger Bush would have done? And at least Bush did not have this economic crisis going on while ramping up military action, so at the time it appeared we could afford all the warring.
Not content with relatively minor military action, Obama is channeling LBJ in declaring a domestic war and also justifying vast deficit spending to wage this "war". To date, though, this War is the first War since the "War of 1812" in American history with no name.
What is Obama's ultimate solution to our crisis?
Unbelievably, it is the Bush solution that Obama's party was once supposedly horrified about: the American consumer needs to borrow and spend, according to the new President.
I am not making this up. Dr. Romer again on MTP:
MR. GREGORY: Final point here. What is the responsible thing for consumers to do at the height of this global crisis?
DR. ROMER: That, that's an excellent question. I think we know that consumers have lost a lot of wealth and that normally what you'd say is they should be saving more. I think the truth is consumers have also not done a lot of spending for the last 14 months. So what I would predict and I think would be a perfectly reasonable thing is you go out and you buy that car that you've been thinking about for 14 months and you do some of the spending. And then over the long haul I'm hoping we'll come back to probably a higher savings rate, because we know we were at kind of a historic low before this all happened. (Emphasis added)
You couldn't make this up, you really couldn't. Even John McCain criticized the Bush guns and butter policy both before and after 9/11 and the Afghan War. The Dems were harsh about the President not calling for sacrifice in wartime and instead urging Americans to respond to the 9/11 attacks by . . . going shopping.
Read the above again and weep. Barack Obama believes that the "responsible thing" for Americans to do is to replay the past few years and buy what they can't afford. In his memoir, "Dreams From My Father,"are these dreams about owning a new car? On credit? Is this why the youth of America rallied to his cause?
Now, in the eeriest sort of replay, we're again sending troops to Afghanistan and a new war has been announced; no sacrifice from Americans is asked except to increase their debt load to enjoy some material benefit. Let's call it the Bushbama or Obush policy. Identical. And how close to zero is the chance that the Bushbama/Obush policy will really turn fiscally responsible one vague day in the future?
Throughout history, governments, especially ones trying to maintain troops in foreign venues, have fallen or at least gone bankrupt pushing deficit spending to the max. Think it can't happen here? If you disagree, please think again. It can happen anywhere.
Let's get back to basics in this country. Here are some basic principles.
First, land wars in Asia don't work. Stop them. And bring the troops home: Korea for the Koreans and Japan for the Japanese. Every empire has eventually fallen throughout history. Why should this greatest and suavest empire in history be any different? Note that the Chinese have had no wars for decades. They are just building out their country and building their financial strength. Smart. America did that a hundred years ago. When will the changing of the guard occur? Perhaps sooner than the "experts" think, perhaps not, but on this trajectory, I say sooner rather than later.
Next, opposition parties should mean what they say when they are in the minority. They shouldn't say whatever it takes to gain power and then do what they criticized. Guns and butter brought us to this crisis. Much more of the same will ruin us.
Third, we must have a definition of what this new economic "war" is. Is it another Great Society-type War on Poverty? Is it a war against an amorphous thing called a recession, and if so, how do you go to war against an economic trend? Who or what do you aim at?
Is Obama going to war against Americans who don't buy that new car that they are dreaming of but can't afford? Is he against the finance company that doesn't want to lend this car-dreamer money if the dreamer is a bad credit risk? Is the President going to war against that small businessman who can get by without expanding and doesn't want to take the financial and operational risk of borrowing to expand during an economic crisis?
If the Fed is not going to monetize the deficit, then isn't the vast increase in Government spending to finance this unnamed and undefined economic war simply going to suck up most of the world's savings and thus crowd out the non-Federal use of those same savings? Why is U. S. Government spending better than other spending?
In other words, it is the belief here that people are acting rationally and it is the Government that as usual has lost its mind, perhaps crazy with the fear that the Debt Society could morph into a Savings Society and thus deprive the financial community of the riches generated by keeping the populace chronically on the edge financially, always staying in debt and paying once-illegally high finance charges under the conveniently-repealed usury laws, while on the other hand paying savers nothing or next to nothing to store their money in the banks under government guarantee.
The Obama Presidency is thus already transformational in an unexpected way. By continuing the Bush policies of continual war in Asia; massive deficit spending to "combat" another recession; unbelievably massive direct wealth transfers to large complex financial institutions; no call for sacrifice but instead more tax cuts and cash giveaways to citizens in the name of anti-recession policy; and now the announcement of a new War, it is now clear that nothing has changed in the economic or financial sphere. America is effectively a one-party state except for issues peripheral to the maintenance of Establishment/state power, such as Federal policy on embryos or fetuses or exactly how the banksters at AIG get compensated (higher salaries in the future but decreased bonuses).
George Orwell prophesied the current situation in '1984': wars without end on the periphery of empire, such wars always being used to justify whatever diminished standard of living the Establishment wanted to impose on the workers. (And occasionally a domestic "War" as well in the U.S. version of Oceania.) Plus all sorts of peripheral matters in the news to distract the public from what's going on, a la the diverting headlines about executive compensation when the real news is the greatest transfer of wealth from taxpayers to private corporations in the history of the world.
PETITION TO PRESIDENT OBAMA
In order to avoid becoming another nearly-bankrupt but larger version of California, America's government must stop spending more and more money it simply doesn't have. Money really doesn't grow on trees. Invoking Wars year after year should no longer justify grossly irresponsible government finances. Stop the fiscal madness. Preserve the AAA financial rating of the United States Government. If you are brave enough to just sit back and take care of Federal finances in a prudent manner, the economy will over time right itself on its own schedule according the needs of the people and their companies. Promise!
End the Culture of Debt.
Promote a Culture of Saving (get back to where we once belonged).
Stop insulting our intelligence by telling us to save the economy by buying stuff we can't afford.
Stop the wars.
Copyright (C) Long Lake LLC 2009
What is our new war, which joins the War on Drugs and the War on Terror (the War that dare not speak its name but which is basically the justification for escalating war in Afghan-land)?
Actually, we're not quite sure, which- to let the cat out of the bag- is part of the problem, but it has something to do with the economy. As the Chair of the Council of Economic Advisers, Dr. Christina Romer, said today on Meet the Press:
I think he's (Mr. Buffett) absolutely right, it is an economic war. We have inherited a crisis like none since we've--since we had the Great Depression. So absolutely, it is something we need to deal with. I think we are. We haven't won yet. We have staged a wonderful battle.
A wonderful battle? What did I miss? What battle was waged? Where? When? Against whom or what? And whenever and wherever this battle was waged, what about it on G-d's green earth was wonderful?
I thought that war is Hell.
I don't know about you, but I am weary of war. I think back to my birth year of 1950, in the shadow of WW II, by far the bloodiest war ever. The Cold War had just begun. The hot Korean War was raging (which technically has never ended). A decade after the Korean armistice, the alleged peace candidate (LBJ) defeated the alleged dangerous candidate (Barry Goldwater) and immediately escalated another land war in Asia. LBJ also began a War on Poverty. These two wars plus the Great Society nearly ruined the finances of this country. After financial disaster ensued, the credit of the U.S. was so bad that it was forced to borrow at double digit interest rates, some of which was no longer in U.S. currency; around 1980 IBM was able to borrow money at a lower rate than the U.S. Government.
Following the humiliation in the sands of Iran with Desert One crashing during the hostage crisis, the Cold War ramped up, to be followed after victory there with multiple smaller military actions and wars while Bush I and then Bill Clinton were President: the Gulf War, Panama, Somalia, Haiti, two in the former Yugoslavia, Iraq again (bombing only).
Then, under Bush II, there was the War on Terror, involving two land wars in Asia (Iraq is in Asia) as well as threats of two more (North Korea, Iran). Somehow, I realize that during my entire life, my country has continuously either been engaged in, recovering from or preparing for land war in Asia. 58 years worth. Plus the nine years prior to 1950. We're looking at 67 years of Asian-theater war, with no plan in sight for an end to it.
Plus the never-ending War on Drugs for half my life.
All these wars have required lots and lots of deficit spending: great for the Merchants of Debt and, except for the War on Poverty, also great for the Merchants of Death. What these wars were not great for was the living standards of the American people. Not to mention the damage to the American psyche.
Wars are horrible for the economy (human toll aside). One of the greatest fallacies extant is that World War II qua a Big War was that it cured the Great Depression. Nothing could be further from the truth. Had the Second World War ended inconclusively, that would have been bad for the economy; had it been lost, it would have ruined the economy. People's living standards were severely depressed during the war; inflation was high; and when the soldiers returned home, a major economic downturn ensued, as they had nothing to do.
What was good for the U.S. economy about World War II was that the U.S. won it unequivocally, had an undamaged homeland, and thus dominated the world economically till this day. Winning wars can ultimately be good for the economy, but only if they are sweeping enough.
Now, Barack Obama wants to print or borrow more money to finance expanded war in Afghan-land, while maintaining 50,000 troops in Iraq indefinitely. How is this different from anything the supposed warmonger Bush would have done? And at least Bush did not have this economic crisis going on while ramping up military action, so at the time it appeared we could afford all the warring.
Not content with relatively minor military action, Obama is channeling LBJ in declaring a domestic war and also justifying vast deficit spending to wage this "war". To date, though, this War is the first War since the "War of 1812" in American history with no name.
What is Obama's ultimate solution to our crisis?
Unbelievably, it is the Bush solution that Obama's party was once supposedly horrified about: the American consumer needs to borrow and spend, according to the new President.
I am not making this up. Dr. Romer again on MTP:
MR. GREGORY: Final point here. What is the responsible thing for consumers to do at the height of this global crisis?
DR. ROMER: That, that's an excellent question. I think we know that consumers have lost a lot of wealth and that normally what you'd say is they should be saving more. I think the truth is consumers have also not done a lot of spending for the last 14 months. So what I would predict and I think would be a perfectly reasonable thing is you go out and you buy that car that you've been thinking about for 14 months and you do some of the spending. And then over the long haul I'm hoping we'll come back to probably a higher savings rate, because we know we were at kind of a historic low before this all happened. (Emphasis added)
You couldn't make this up, you really couldn't. Even John McCain criticized the Bush guns and butter policy both before and after 9/11 and the Afghan War. The Dems were harsh about the President not calling for sacrifice in wartime and instead urging Americans to respond to the 9/11 attacks by . . . going shopping.
Read the above again and weep. Barack Obama believes that the "responsible thing" for Americans to do is to replay the past few years and buy what they can't afford. In his memoir, "Dreams From My Father,"are these dreams about owning a new car? On credit? Is this why the youth of America rallied to his cause?
Now, in the eeriest sort of replay, we're again sending troops to Afghanistan and a new war has been announced; no sacrifice from Americans is asked except to increase their debt load to enjoy some material benefit. Let's call it the Bushbama or Obush policy. Identical. And how close to zero is the chance that the Bushbama/Obush policy will really turn fiscally responsible one vague day in the future?
Throughout history, governments, especially ones trying to maintain troops in foreign venues, have fallen or at least gone bankrupt pushing deficit spending to the max. Think it can't happen here? If you disagree, please think again. It can happen anywhere.
Let's get back to basics in this country. Here are some basic principles.
First, land wars in Asia don't work. Stop them. And bring the troops home: Korea for the Koreans and Japan for the Japanese. Every empire has eventually fallen throughout history. Why should this greatest and suavest empire in history be any different? Note that the Chinese have had no wars for decades. They are just building out their country and building their financial strength. Smart. America did that a hundred years ago. When will the changing of the guard occur? Perhaps sooner than the "experts" think, perhaps not, but on this trajectory, I say sooner rather than later.
Next, opposition parties should mean what they say when they are in the minority. They shouldn't say whatever it takes to gain power and then do what they criticized. Guns and butter brought us to this crisis. Much more of the same will ruin us.
Third, we must have a definition of what this new economic "war" is. Is it another Great Society-type War on Poverty? Is it a war against an amorphous thing called a recession, and if so, how do you go to war against an economic trend? Who or what do you aim at?
Is Obama going to war against Americans who don't buy that new car that they are dreaming of but can't afford? Is he against the finance company that doesn't want to lend this car-dreamer money if the dreamer is a bad credit risk? Is the President going to war against that small businessman who can get by without expanding and doesn't want to take the financial and operational risk of borrowing to expand during an economic crisis?
If the Fed is not going to monetize the deficit, then isn't the vast increase in Government spending to finance this unnamed and undefined economic war simply going to suck up most of the world's savings and thus crowd out the non-Federal use of those same savings? Why is U. S. Government spending better than other spending?
In other words, it is the belief here that people are acting rationally and it is the Government that as usual has lost its mind, perhaps crazy with the fear that the Debt Society could morph into a Savings Society and thus deprive the financial community of the riches generated by keeping the populace chronically on the edge financially, always staying in debt and paying once-illegally high finance charges under the conveniently-repealed usury laws, while on the other hand paying savers nothing or next to nothing to store their money in the banks under government guarantee.
The Obama Presidency is thus already transformational in an unexpected way. By continuing the Bush policies of continual war in Asia; massive deficit spending to "combat" another recession; unbelievably massive direct wealth transfers to large complex financial institutions; no call for sacrifice but instead more tax cuts and cash giveaways to citizens in the name of anti-recession policy; and now the announcement of a new War, it is now clear that nothing has changed in the economic or financial sphere. America is effectively a one-party state except for issues peripheral to the maintenance of Establishment/state power, such as Federal policy on embryos or fetuses or exactly how the banksters at AIG get compensated (higher salaries in the future but decreased bonuses).
George Orwell prophesied the current situation in '1984': wars without end on the periphery of empire, such wars always being used to justify whatever diminished standard of living the Establishment wanted to impose on the workers. (And occasionally a domestic "War" as well in the U.S. version of Oceania.) Plus all sorts of peripheral matters in the news to distract the public from what's going on, a la the diverting headlines about executive compensation when the real news is the greatest transfer of wealth from taxpayers to private corporations in the history of the world.
PETITION TO PRESIDENT OBAMA
In order to avoid becoming another nearly-bankrupt but larger version of California, America's government must stop spending more and more money it simply doesn't have. Money really doesn't grow on trees. Invoking Wars year after year should no longer justify grossly irresponsible government finances. Stop the fiscal madness. Preserve the AAA financial rating of the United States Government. If you are brave enough to just sit back and take care of Federal finances in a prudent manner, the economy will over time right itself on its own schedule according the needs of the people and their companies. Promise!
End the Culture of Debt.
Promote a Culture of Saving (get back to where we once belonged).
Stop insulting our intelligence by telling us to save the economy by buying stuff we can't afford.
Stop the wars.
Copyright (C) Long Lake LLC 2009
Saturday, February 28, 2009
Rendezvous With Bankruptcy
At times of crisis, countries turn to their leaders to learn the truth and what needs to be done based on the facts. Thus, FDR, the crippled man leading a crippled country, didn't sugar-coat matters. In what sadly was a prophetic speech in 1936, he said:
There is a mysterious cycle in human events. To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny.
As a Boomer, much was given to my generation. The generation of Boomers' children is inheriting an America of bankruptcies of the largest and previously best-respected companies, and something other than the truth, the whole truth and nothing but the truth out of our business and political leaders.
These young adults are scared and depressed. They voted heavily for Barack Obama because they wanted real change. They don't want the same-old same-old out of Washington. Unfortunately, that is exactly what they are getting from the new boss, same as the old boss (from Jake Tapper at ABC News) in an article today called, if you can believe it:
Obama Will Restore Fiscal Discipline
The article describes the comments of Peter Orszag, director of the Office of Management & Budget, who pointed to the current budget deficit (created by a Democratic Congress, which authorizes all Federal spending and revenue measures):
The first step in addressing this very deep fiscal hole is honesty.
Our truth-meter comes out whenever a member of any administration has to promise that he (she) is going to be honest. He went on:
This budget will not play the games that are typically played . . .
Double uh-oh. Will they play atypical games, play the old games (perhaps under different names), or both?
The article continues:
Orszag pointed out four ways the deficit will be reduced:
1- The recovery act and "normal business cycles" will cause the economy to eventually recover.
DoctoRx responses to Mr. Orszag:
It's past time for real change.
Copyright (C) Long Lake LLC 2009
There is a mysterious cycle in human events. To some generations much is given. Of other generations much is expected. This generation of Americans has a rendezvous with destiny.
As a Boomer, much was given to my generation. The generation of Boomers' children is inheriting an America of bankruptcies of the largest and previously best-respected companies, and something other than the truth, the whole truth and nothing but the truth out of our business and political leaders.
These young adults are scared and depressed. They voted heavily for Barack Obama because they wanted real change. They don't want the same-old same-old out of Washington. Unfortunately, that is exactly what they are getting from the new boss, same as the old boss (from Jake Tapper at ABC News) in an article today called, if you can believe it:
Obama Will Restore Fiscal Discipline
The article describes the comments of Peter Orszag, director of the Office of Management & Budget, who pointed to the current budget deficit (created by a Democratic Congress, which authorizes all Federal spending and revenue measures):
The first step in addressing this very deep fiscal hole is honesty.
Our truth-meter comes out whenever a member of any administration has to promise that he (she) is going to be honest. He went on:
This budget will not play the games that are typically played . . .
Double uh-oh. Will they play atypical games, play the old games (perhaps under different names), or both?
The article continues:
Orszag pointed out four ways the deficit will be reduced:
1- The recovery act and "normal business cycles" will cause the economy to eventually recover.
DoctoRx responses to Mr. Orszag:
A. The "recovery act" (ARRA, aka the "stimulus" bill) is a gigantic budget-buster.
B. What is normal about the current business cycle?
2- Allowing "high income tax provisions to expire when they are scheduled to expire, at the end of 2010" and closing tax loopholes.
A. Fair enough.
B. "Closing tax loopholes" is an old canard. Close one loophole, open two, that's how it works in D.C.
3- "Winding down the war" in Iraq.No new news there. The Obama policy is a direct continuation of the Bush policy. The war has already wound down. But what about the unknown costs of escalation of the war in Afghanistan and Pakistan?
4- Making government more efficient.
The President spoke afterwards on that topic:
Obama promised that when the full budget is developed in the spring that the administration will “go through our books, page by page, line by line, to eliminate waste and inefficiency," and promised that no part of the budget will be free from scrutiny or untouched by reform.
Ha! Double ha! We've heard that one before from Jimmy Carter, Ronald Reagan, etc.
Optimistic economic projections are made, as usual out of the White House:
Christina Romer, chairman of the President's Council of Economic Advisors, predicted negative 1.2 percent GDP growth for 2009 but expected it to grow by 3.2 percent in 2010 and 4 percent in 2011.
The best economic seer this cycle has been Nouriel Roubini, previously an adviser to the Clinton Treasury Department. His projections are for more like a 3% GDP decline this year and at best 1% growth in 2010 and 2011.
President Obama -- flanked by his economic team -- acknowledged that in terms of his budget released today, that additions need (to be) made to the deficit in the short term to provide relief over the long run.
When Roosevelt gave his rendezvous with destiny speech in 1936, he foresaw general war a few years hence. We don't have a few years; our economic and financial war is here. Flash from the front line: we are losing. A change in strategy is needed.
Promising to be fiscally responsible in the future while proposing deficits unheard of since WW II is like my alcoholic patients promising to stop drinking someday. Trotting out optimistic economic projections and promising to make the Government more efficient via a line-by-line review of something or other is not change anyone can believe in, even my children.
The President needs to utilize the gloomy economic projections of Dr. Roubini, not the politically-motivated ones of Dr. Romer. If he's too gloomy, great- he can either retire some debt or spend more. But let the upside surprise happen first! The President needs to drop the cant about making government more efficient. He needs to tell us that we can't keep borrowing massive amounts of money from overseas forever. He needs to tell us that individuals can't borrow their way to prosperity, and neither can the Government on our behalf.
In other worlds, he needs to channel FDR or the best parts of JFK and inspire us while keeping the focus on how difficult our problems are, not how a "normal" business cycle will rescue us.
Unfortunately, as predicted here consistently, Barack Obama is continuing the essential Bush-Bernanke policies to spend money we don't have and to give massive amounts of this borrowed or printed money to stupid lying corrupt large financial companies while not preparing America for worst-case scenarios about which the public is rightly terrified.
Do you wonder why the stock market has gone down for six straight months?It's past time for real change.
Copyright (C) Long Lake LLC 2009
Thursday, February 26, 2009
No Way Out
Obama’s Budget Proposes Up to $750 Billion More Bank-Rescue Aid (Bloomberg.com)
The (senior administration) official, speaking on condition of anonymity, said the White House hasn’t decided whether the $750 billion in additional aid to the financial industry will be needed. He said it will be put in the budget as (a) “placeholder.”
Placeholder? How is that ruse any better than pretending that Iraq and Afghanistan War appropriations were off-budget?
That sounds bad, but wait: budgetary hope is on the way- it's only going to cost $250B:
The official said the aid would appear in the budget as about $250 billion because the rules require policymakers to record the plan’s net cost to taxpayers. The government anticipates it would eventually recoup some, though not all, of the money expended to help financial companies.
As was the senior administration official, I would also want to be anonymous having to come clean about this turkey.
Mr. Obama continues Mr. Bush's policies of giving your money to large financial companies. The rationale makes no sense other than that he likes them better than he likes them better than he likes taxpayers. He wants them to be healthy so they can make a profit by charging you to borrow money from them- even though their money came from you (via your Federal Government), which you either borrowed from someone else or your central bank created out of thin air.
Fiscal rectitute is however demonstrated in the Obama Administration, by proposing to take money away from Americans of varying income levels:
1) The budget would eliminate the Advance Earned Income Tax Credit, a tax break for low-income earners that government officials have said is poorly administrated.
2-5) The administration proposes to finance the budget in part by limiting tax deductions for couples earning more than $250,000 a year, raising taxes on hedge-fund managers, cutting defense spending and paring subsidies to insurance companies participating in the government’s Medicare health-care system.
#1 speaks for itself. Just two night ago, the President promised that if you earn under $250,000, you will see no tax increase. Well, that promise didn't last long!
#2: "High earners": In what part of America is a couple earning $270,000 rich? Certainly not in metro New York, L.A., S.F., D.C., or Miami. These often-professional people are just the ones who present the best credit risks to lenders when they want to expand their professions or small local businesses. So under the Obama logic, they need to pay higher taxes so that "aid" can be given to the largest, worst-managed financial companies, so that these companies can charge them prime + 2 to expand their businesses. Looking-Glass logic, for sure.
#3: Hedge-fund managers: Not much money there these days!
#4: Cutting defense spending: How does that square with ramping up the war in Afghanistan and candidate Obama's plan to enlarge the size of the military? And when push comes to shove, what's more important: a robust Citigroup, or a robust national defense? At least the benefits (if any) of military spending are shared by all of us.
#5: Health insurance company (managed care) cuts: As a doctor, I say good for the Administration on this one given how detestable both the concept and the reality of Medicare HMOs are, but I suspect that 90% of the country would agree with me that between money going to health care insurers or some other part of health care and money going to Citigroup et al, it should go to the health care system one way or the other.
This blog has argued from inception last year that on the financial crisis, there was going to be no real difference between the Obama Administration and that of George Bush. Case proved. Guilty as charged.
And so the crisis continues, with our Government raising taxes on the successful and poor alike in order to feed the black holes caused by the greedy gamblers known as banksters.
Copyright (C) Long Lake LLC
The (senior administration) official, speaking on condition of anonymity, said the White House hasn’t decided whether the $750 billion in additional aid to the financial industry will be needed. He said it will be put in the budget as (a) “placeholder.”
Placeholder? How is that ruse any better than pretending that Iraq and Afghanistan War appropriations were off-budget?
That sounds bad, but wait: budgetary hope is on the way- it's only going to cost $250B:
The official said the aid would appear in the budget as about $250 billion because the rules require policymakers to record the plan’s net cost to taxpayers. The government anticipates it would eventually recoup some, though not all, of the money expended to help financial companies.
As was the senior administration official, I would also want to be anonymous having to come clean about this turkey.
Mr. Obama continues Mr. Bush's policies of giving your money to large financial companies. The rationale makes no sense other than that he likes them better than he likes them better than he likes taxpayers. He wants them to be healthy so they can make a profit by charging you to borrow money from them- even though their money came from you (via your Federal Government), which you either borrowed from someone else or your central bank created out of thin air.
Fiscal rectitute is however demonstrated in the Obama Administration, by proposing to take money away from Americans of varying income levels:
1) The budget would eliminate the Advance Earned Income Tax Credit, a tax break for low-income earners that government officials have said is poorly administrated.
2-5) The administration proposes to finance the budget in part by limiting tax deductions for couples earning more than $250,000 a year, raising taxes on hedge-fund managers, cutting defense spending and paring subsidies to insurance companies participating in the government’s Medicare health-care system.
#1 speaks for itself. Just two night ago, the President promised that if you earn under $250,000, you will see no tax increase. Well, that promise didn't last long!
#2: "High earners": In what part of America is a couple earning $270,000 rich? Certainly not in metro New York, L.A., S.F., D.C., or Miami. These often-professional people are just the ones who present the best credit risks to lenders when they want to expand their professions or small local businesses. So under the Obama logic, they need to pay higher taxes so that "aid" can be given to the largest, worst-managed financial companies, so that these companies can charge them prime + 2 to expand their businesses. Looking-Glass logic, for sure.
#3: Hedge-fund managers: Not much money there these days!
#4: Cutting defense spending: How does that square with ramping up the war in Afghanistan and candidate Obama's plan to enlarge the size of the military? And when push comes to shove, what's more important: a robust Citigroup, or a robust national defense? At least the benefits (if any) of military spending are shared by all of us.
#5: Health insurance company (managed care) cuts: As a doctor, I say good for the Administration on this one given how detestable both the concept and the reality of Medicare HMOs are, but I suspect that 90% of the country would agree with me that between money going to health care insurers or some other part of health care and money going to Citigroup et al, it should go to the health care system one way or the other.
This blog has argued from inception last year that on the financial crisis, there was going to be no real difference between the Obama Administration and that of George Bush. Case proved. Guilty as charged.
And so the crisis continues, with our Government raising taxes on the successful and poor alike in order to feed the black holes caused by the greedy gamblers known as banksters.
Copyright (C) Long Lake LLC
Tuesday, February 24, 2009
Obama Through the Looking-Glass
No matter how well you deliver a speech, it is what you say that ultimately counts. Regarding this blog's major cause to help in a small way to redirect this country- its economics and culture- away from a reliance on lending (credit) back to its prior pride in being as debt-free as possible, President Obama decisively sided with the debt culture tonight:
The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.
But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.
We will do so in several ways. First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.
Instead, the President could have recalled John F. Kennedy's First Inaugural Address and in economic terms paraphrased JFK's words, which were:
And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country.
My reading of the text of the President's speech suggests that the greatest sacrifice he asks of the American people is to help their children with their homework, or for younger people to attend at least one year of education beyond high school. Not to get on my own soapbox, but I have to believe that during this financial and economic crisis, Americans fully believe that they and this country have a rendezvous with destiny, and will restrict current consumption to secure their financial future: it's called saving. It's an old virtue that is actually making a comeback, despite the exhortations from the Fed, the Feds and the media that a crisis is a terrible time to regain that old-time religion.
Instead, Mr. Obama, in calling for more and more flows of credit, ignored the fact that plenty of lending is still going on and that it makes sense to borrow and lend less when the pace of business is slower and bankruptcies are on the rise. His assertion that "credit has stopped flowing the way it should" is questionable at best. How should credit flow? Who should create it? Why should the quantity of credit keep increasing when it has nearly led to the ruination of our economy? Why would anyone think that future loans will be made any better than those made pursuant to the negligent lending practices of recent times?
Equally important to the above thematic discussion is the sad fact that the speech could not quite hide the fact that the President insists that taxpayers must sacrifice on one thing: they must provide open-ended subsidies to the banks so that the banks can then turn around and lend them money- at a profit to the banks so they can get off life support. From the speech:
Still, this plan will require significant resources from the federal government – and yes, probably more than we’ve already set aside. But while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade. That would be worse for our deficit, worse for business, worse for you, and worse for the next generation.
I want to say to the President: "Mr. Obama, tear down these banks."
There are plenty of well-run banks that will prudently fund the small businesses the President professes to care so much about. They are asking for no taxpayer money. They only want the Feds to stop subsidizing their poorly-run larger competitors. Mr. Obama's argument, which is identical to that of George W. Bush, is that we collectively should borrow money and then simply give it to the banks so that the banks can then lend our own (borrowed) money back to us would be recognized as illogical if such were argued in front of the Supreme Court, but in the court of public opinion it is known that the public is more knowledgeable about Britney's comeback than it is about financial matters.
A public hooked on debt is being asked to double down on it. We are being asked for the ultimate sacrifice: rather than just keep the money we have, we are supposed to add to our debts so that some of us can beseech a lender to lend some of our own money back.
It's Looking-Glass economics.
Copyright (C) Long Lake LLC 2009
The concern is that if we do not re-start lending in this country, our recovery will be choked off before it even begins.
You see, the flow of credit is the lifeblood of our economy. The ability to get a loan is how you finance the purchase of everything from a home to a car to a college education; how stores stock their shelves, farms buy equipment, and businesses make payroll.
But credit has stopped flowing the way it should. Too many bad loans from the housing crisis have made their way onto the books of too many banks. With so much debt and so little confidence, these banks are now fearful of lending out any more money to households, to businesses, or to each other. When there is no lending, families can’t afford to buy homes or cars. So businesses are forced to make layoffs. Our economy suffers even more, and credit dries up even further.
That is why this administration is moving swiftly and aggressively to break this destructive cycle, restore confidence, and re-start lending.
We will do so in several ways. First, we are creating a new lending fund that represents the largest effort ever to help provide auto loans, college loans, and small business loans to the consumers and entrepreneurs who keep this economy running.
Instead, the President could have recalled John F. Kennedy's First Inaugural Address and in economic terms paraphrased JFK's words, which were:
And so, my fellow Americans: ask not what your country can do for you - ask what you can do for your country.
My reading of the text of the President's speech suggests that the greatest sacrifice he asks of the American people is to help their children with their homework, or for younger people to attend at least one year of education beyond high school. Not to get on my own soapbox, but I have to believe that during this financial and economic crisis, Americans fully believe that they and this country have a rendezvous with destiny, and will restrict current consumption to secure their financial future: it's called saving. It's an old virtue that is actually making a comeback, despite the exhortations from the Fed, the Feds and the media that a crisis is a terrible time to regain that old-time religion.
Instead, Mr. Obama, in calling for more and more flows of credit, ignored the fact that plenty of lending is still going on and that it makes sense to borrow and lend less when the pace of business is slower and bankruptcies are on the rise. His assertion that "credit has stopped flowing the way it should" is questionable at best. How should credit flow? Who should create it? Why should the quantity of credit keep increasing when it has nearly led to the ruination of our economy? Why would anyone think that future loans will be made any better than those made pursuant to the negligent lending practices of recent times?
Equally important to the above thematic discussion is the sad fact that the speech could not quite hide the fact that the President insists that taxpayers must sacrifice on one thing: they must provide open-ended subsidies to the banks so that the banks can then turn around and lend them money- at a profit to the banks so they can get off life support. From the speech:
Still, this plan will require significant resources from the federal government – and yes, probably more than we’ve already set aside. But while the cost of action will be great, I can assure you that the cost of inaction will be far greater, for it could result in an economy that sputters along for not months or years, but perhaps a decade. That would be worse for our deficit, worse for business, worse for you, and worse for the next generation.
I want to say to the President: "Mr. Obama, tear down these banks."
There are plenty of well-run banks that will prudently fund the small businesses the President professes to care so much about. They are asking for no taxpayer money. They only want the Feds to stop subsidizing their poorly-run larger competitors. Mr. Obama's argument, which is identical to that of George W. Bush, is that we collectively should borrow money and then simply give it to the banks so that the banks can then lend our own (borrowed) money back to us would be recognized as illogical if such were argued in front of the Supreme Court, but in the court of public opinion it is known that the public is more knowledgeable about Britney's comeback than it is about financial matters.
A public hooked on debt is being asked to double down on it. We are being asked for the ultimate sacrifice: rather than just keep the money we have, we are supposed to add to our debts so that some of us can beseech a lender to lend some of our own money back.
It's Looking-Glass economics.
Copyright (C) Long Lake LLC 2009
Tuesday, February 3, 2009
Baby, It's Cold Everywhere
This blog has taken a special interest in former Majority Leader Daschle's nomination for Secretary of Health and Human Services, due to my background in actually providing health care for humans.
It was initially thought here that the coup de grace would be the revelation that even after Mr. Daschle paid his back taxes, he neglected to pay his Medicare surtax of 2.9%. Doesn't he know? He voted for that revenue raiser as a Senator.
Questions have been raised about both the thoroughness of the Obama team's vetting process and the President's interest in hewing strictly to his theme of ultra-high ethical standards.
Before Mr. Daschle resigned today, Nancy Killefer withdrew her candidacy for first chief performance officer for the federal government. Here is her situation, as reported by the Huffington Post.
The AP reported that on March 7, 2005, the D.C. Department of Employment Services slapped a tax lien on her home in the upscale Wesley Heights neighborhood. The local government alleged that beginning three years after she left the high-powered Treasury post she failed to pay unemployment compensation tax for a household employee. She failed to make the required quarterly payments for a year and half, the D.C. government said, whereupon a lien for $946.69 was placed on her home.
That sum included $298 in unpaid taxes, $48.69 in interest and $600 in penalties. Killefer didn't get the lien extinguished for almost five months, until July 29, 2005.
During that period, Killefer and her husband, an economics professor, had two nannies to help care for their teenage son and daughter, and she had a personal assistant to run things when she was on the road, she told Harvard business students back then.
Bobby Tucker, chief of D.C.'s unemployment insurance tax division, said filing tax liens is "not a common practice" for his office. D.C. law authorizes such liens when an employer "neglects and refuses" to pay the levy that helps pay for unemployment benefits for those laid off or fired. Tucker said his auditors have discretion to use tax liens based on "the number of attempts to collect contributions owed, whether or not the employer responds to written attempts, phone calls and-or in-person visits" to collect the tax.
From today's Huffpo update:
It wasn't clear whether the administration was aware of Killefer's tax errors before Obama named her. Gibbs refused to say what administration vetters knew about the problem or when. Gibbs maintained that Obama has confidence in the vetting system. But late on the day Killefer was first named, an administration official asked an AP reporter how the AP had found the tax lien against her.
Not encouraging. Here we have the Treasury Secretary, for whom Mr. Obama fought hard, overseeing the IRS despite being a tax chiseler/cheat/ignoramus; the health care czar/presumptive HHS Secretary, who had Mr. Obama's full and repeated support as recently as yesterday; and the first "chief performance officer" of the Federal Government, all bloodied over tax issues.
Both the "stimulus" program and the bank rescue program are floundering. Different trial balloons and senatorial proposals come and go. Gone are the heady days after the election in which giddy Democrats agreed to work day and night to get a stimulus bill to the new President on or around Inauguration Day.
This blog has consistently argued that on the core financial matters of the day, which are the Great Recession and the insolvency of the money-center financial institutions, the Obama Administration was going to be similar to the Bush team. So it has gone. There was no plan other than to follow the Bush-Reid-Pelosi plan of last year to give a one-time tax break and to fiddle while the banks burned, and to also include a large amount of spending that is both unfunded and for the most part in line with traditional and modern Democratic priorities but is not customized to stimulate. And so the markets continue to meander; the hoped-for Obama-mania/FDR-JFK-style inspiration peaked on or before Election Day, perhaps when Mr. Obama began acting like the economic affairs President before he was inaugurated, and as usual, economic reality drives the markets. Hope is rapidly fading that Barack Obama can make the recessionary tides recede other than on their own pace. In the meantime, please ask yourself what to do with your money when you just know that Citigroup and Bank of America are insolvent, and Wells Fargo and JPMorgan Chase may be as well.
Barack Obama said on the campaign trail that Americans would have to tighten their belts. He should continue on that theme, especially now that Mr. Bush still is blamed by the public for the economy. We need an old-style capitalist society built on saving, not consumption, and therefore on equity, not debt. If Mr. Obama, who by multiple accounts is quite a bright and well-informed President, can propound that theme over and over again, he will find a receptive public. The rest will fall in place, no matter exactly what is done to the banks.
Copyright (C) Long Lake LLC 2009
It was initially thought here that the coup de grace would be the revelation that even after Mr. Daschle paid his back taxes, he neglected to pay his Medicare surtax of 2.9%. Doesn't he know? He voted for that revenue raiser as a Senator.
Questions have been raised about both the thoroughness of the Obama team's vetting process and the President's interest in hewing strictly to his theme of ultra-high ethical standards.
Before Mr. Daschle resigned today, Nancy Killefer withdrew her candidacy for first chief performance officer for the federal government. Here is her situation, as reported by the Huffington Post.
The AP reported that on March 7, 2005, the D.C. Department of Employment Services slapped a tax lien on her home in the upscale Wesley Heights neighborhood. The local government alleged that beginning three years after she left the high-powered Treasury post she failed to pay unemployment compensation tax for a household employee. She failed to make the required quarterly payments for a year and half, the D.C. government said, whereupon a lien for $946.69 was placed on her home.
That sum included $298 in unpaid taxes, $48.69 in interest and $600 in penalties. Killefer didn't get the lien extinguished for almost five months, until July 29, 2005.
During that period, Killefer and her husband, an economics professor, had two nannies to help care for their teenage son and daughter, and she had a personal assistant to run things when she was on the road, she told Harvard business students back then.
Bobby Tucker, chief of D.C.'s unemployment insurance tax division, said filing tax liens is "not a common practice" for his office. D.C. law authorizes such liens when an employer "neglects and refuses" to pay the levy that helps pay for unemployment benefits for those laid off or fired. Tucker said his auditors have discretion to use tax liens based on "the number of attempts to collect contributions owed, whether or not the employer responds to written attempts, phone calls and-or in-person visits" to collect the tax.
From today's Huffpo update:
It wasn't clear whether the administration was aware of Killefer's tax errors before Obama named her. Gibbs refused to say what administration vetters knew about the problem or when. Gibbs maintained that Obama has confidence in the vetting system. But late on the day Killefer was first named, an administration official asked an AP reporter how the AP had found the tax lien against her.
Not encouraging. Here we have the Treasury Secretary, for whom Mr. Obama fought hard, overseeing the IRS despite being a tax chiseler/cheat/ignoramus; the health care czar/presumptive HHS Secretary, who had Mr. Obama's full and repeated support as recently as yesterday; and the first "chief performance officer" of the Federal Government, all bloodied over tax issues.
Both the "stimulus" program and the bank rescue program are floundering. Different trial balloons and senatorial proposals come and go. Gone are the heady days after the election in which giddy Democrats agreed to work day and night to get a stimulus bill to the new President on or around Inauguration Day.
This blog has consistently argued that on the core financial matters of the day, which are the Great Recession and the insolvency of the money-center financial institutions, the Obama Administration was going to be similar to the Bush team. So it has gone. There was no plan other than to follow the Bush-Reid-Pelosi plan of last year to give a one-time tax break and to fiddle while the banks burned, and to also include a large amount of spending that is both unfunded and for the most part in line with traditional and modern Democratic priorities but is not customized to stimulate. And so the markets continue to meander; the hoped-for Obama-mania/FDR-JFK-style inspiration peaked on or before Election Day, perhaps when Mr. Obama began acting like the economic affairs President before he was inaugurated, and as usual, economic reality drives the markets. Hope is rapidly fading that Barack Obama can make the recessionary tides recede other than on their own pace. In the meantime, please ask yourself what to do with your money when you just know that Citigroup and Bank of America are insolvent, and Wells Fargo and JPMorgan Chase may be as well.
Barack Obama said on the campaign trail that Americans would have to tighten their belts. He should continue on that theme, especially now that Mr. Bush still is blamed by the public for the economy. We need an old-style capitalist society built on saving, not consumption, and therefore on equity, not debt. If Mr. Obama, who by multiple accounts is quite a bright and well-informed President, can propound that theme over and over again, he will find a receptive public. The rest will fall in place, no matter exactly what is done to the banks.
Copyright (C) Long Lake LLC 2009
Sunday, February 1, 2009
I Second That Evasion: Follow-Up You Could Not Make Up
The repeated ironies and hypocrisies are too delicious to resist, so herewith follows a brief post on the Daschle tax holiday flap. From Bloomberg.com's Daschle Raised Tax Question in June, Finance Report Says comes the detail that one could not invent:
Medicare Payments Due
The former senator has agreed that he will have to adjust again his 2005, 2006 and 2007 tax returns because he didn’t pay Medicare taxes on the additional taxable income he incurred with the use of the car, the Finance Committee staff reported.
As Health and Human Services secretary, Daschle would oversee Medicare, the insurance program for the elderly and disabled.
As a reminder, Mr. Daschle apparently consulted with his accountant in June 2007 because the former Senator suspected that the private use of a chauffered limo was in fact a taxable service, paid back taxes and interest in January 2008 after being nominated for Secretary of Health and Human Services, but no one noticed the continued underpayment (!?).
There is a wild and crazy pattern here. Mr. Obama feels that only a tax evader, Mr. Timothy Geithner, is the right person to run the Treasury Department; by far the greatest number of Treasury employees work for the Internal Revenue Service. Now, Mr. Obama feels that despite having no special expertise in healthcare policy, the right person to run HHS is Mr. Daschle, a lawyer who, despite having an accountant, was apparently unaware that there is a 2.9% surtax on earned income allegedly to finance Medicare.
Not to forget, but the new Secretary of State famously shot her Presidential candidacy in the foot when she repeatedly told the untrue story about landing in Bosnia under sniper fire as First Lady.
Next, to replace Mr. Gates as Defense Secretary, a draft dodger?
Copyright (C) Long Lake LLC 2009
Medicare Payments Due
The former senator has agreed that he will have to adjust again his 2005, 2006 and 2007 tax returns because he didn’t pay Medicare taxes on the additional taxable income he incurred with the use of the car, the Finance Committee staff reported.
As Health and Human Services secretary, Daschle would oversee Medicare, the insurance program for the elderly and disabled.
As a reminder, Mr. Daschle apparently consulted with his accountant in June 2007 because the former Senator suspected that the private use of a chauffered limo was in fact a taxable service, paid back taxes and interest in January 2008 after being nominated for Secretary of Health and Human Services, but no one noticed the continued underpayment (!?).
There is a wild and crazy pattern here. Mr. Obama feels that only a tax evader, Mr. Timothy Geithner, is the right person to run the Treasury Department; by far the greatest number of Treasury employees work for the Internal Revenue Service. Now, Mr. Obama feels that despite having no special expertise in healthcare policy, the right person to run HHS is Mr. Daschle, a lawyer who, despite having an accountant, was apparently unaware that there is a 2.9% surtax on earned income allegedly to finance Medicare.
Not to forget, but the new Secretary of State famously shot her Presidential candidacy in the foot when she repeatedly told the untrue story about landing in Bosnia under sniper fire as First Lady.
Next, to replace Mr. Gates as Defense Secretary, a draft dodger?
Copyright (C) Long Lake LLC 2009
Tuesday, January 27, 2009
Boldly Go?
Is someone in the Obama Administration reading this blog?
Two days ago, we posted "On Economy, Not Obama's Style to Boldly Go Where No Man Has Gone Before". The post ended: "Be bold. Be Kirk."
Well! In checking out the proprietary Econblog Review Bloomberg Video Indicator this AM (which is neutral) with the morning cup, we see the video clip titled: "Geithner says Treasury to be Source of Bold Initiative".
Great! I won't overload the Dream Team with too many suggestions, but I will comment. Henry Paulson had a bold bazooka. Boldness in the maintenance of the status quo is no virtue.
(If you're under 50 and get that reference, good for you.) Think different (oh, I forget, Mr. Obama is into the B-berry, not the IPhone). Enough fooling around-you get the idea. If Mr. Obama wants durable approval ratings of 80%+ like Brazil's Lula, he should identify the Merchants of Debt as his ideological enemies and lead the nation forward under the banner of equity.
Moving on to the Big Boss himself, the President repeated his plea to Congress to push forward his $825 B "stimulus" plan, saying yesterday's layoffs prove the need for it to act with a "sense of urgency".
The take from this blogger is more nuanced and thoughtful (my wife always called me Spock). High-powered public Congressional hearings about this plan would be nice after TARP etc., which lacked any such thoughtfulness. Why (for example), after all the yelling by the Party now in power about the unfunded tax cuts pushed through during the last recession by the President whose name is now Mudd but whose middle initial was W (the latest possible shape of this recession), are some hundreds of billions less in receipts to the Federal Government suddenly a good idea? After all, back in the relatively sunny days pre- 9/11, U.S. Government finances were quite good (ignoring long-term entitlements); now, there is serious talk about default on the Federal debt. And while I have nothing against Caterpillar staying afloat, I remain skeptical that multi-year construction projects will do anything special about the current recession.
In that vein, DuPont, Texas Instruments and American Express have reported poor earnings and gave poor forward guidance. Yet the stocks are tipped to open higher. This continues to suggest that the market "knows" that we are in a severe recession. Recessions do end. Perhaps Mr. Obama's urgency for the Government to go into yet more debt has something to do with the fear that perhaps sooner than expected, the end of the recession will be predictable, and then America will channel its inner Perot and start wondering why the Feds are so into debt when ordinary Americans have learned the virtues of saving?
Copyright (C) Long Lake LLC 2009
Two days ago, we posted "On Economy, Not Obama's Style to Boldly Go Where No Man Has Gone Before". The post ended: "Be bold. Be Kirk."
Well! In checking out the proprietary Econblog Review Bloomberg Video Indicator this AM (which is neutral) with the morning cup, we see the video clip titled: "Geithner says Treasury to be Source of Bold Initiative".
Great! I won't overload the Dream Team with too many suggestions, but I will comment. Henry Paulson had a bold bazooka. Boldness in the maintenance of the status quo is no virtue.
(If you're under 50 and get that reference, good for you.) Think different (oh, I forget, Mr. Obama is into the B-berry, not the IPhone). Enough fooling around-you get the idea. If Mr. Obama wants durable approval ratings of 80%+ like Brazil's Lula, he should identify the Merchants of Debt as his ideological enemies and lead the nation forward under the banner of equity.
Moving on to the Big Boss himself, the President repeated his plea to Congress to push forward his $825 B "stimulus" plan, saying yesterday's layoffs prove the need for it to act with a "sense of urgency".
The take from this blogger is more nuanced and thoughtful (my wife always called me Spock). High-powered public Congressional hearings about this plan would be nice after TARP etc., which lacked any such thoughtfulness. Why (for example), after all the yelling by the Party now in power about the unfunded tax cuts pushed through during the last recession by the President whose name is now Mudd but whose middle initial was W (the latest possible shape of this recession), are some hundreds of billions less in receipts to the Federal Government suddenly a good idea? After all, back in the relatively sunny days pre- 9/11, U.S. Government finances were quite good (ignoring long-term entitlements); now, there is serious talk about default on the Federal debt. And while I have nothing against Caterpillar staying afloat, I remain skeptical that multi-year construction projects will do anything special about the current recession.
In that vein, DuPont, Texas Instruments and American Express have reported poor earnings and gave poor forward guidance. Yet the stocks are tipped to open higher. This continues to suggest that the market "knows" that we are in a severe recession. Recessions do end. Perhaps Mr. Obama's urgency for the Government to go into yet more debt has something to do with the fear that perhaps sooner than expected, the end of the recession will be predictable, and then America will channel its inner Perot and start wondering why the Feds are so into debt when ordinary Americans have learned the virtues of saving?
Copyright (C) Long Lake LLC 2009
Friday, January 23, 2009
Krugman v. Obama: Fight Over in a Technical Knock-Out
I recently posted what I thought was a brilliant analysis of a Paul Krugman op-ed in the Times, and pointed out the implicit criticisms of Mr. Obama's economic thinking, in Krugman v. Obama (Jan. 19). There were no plans to revisit this topic, till the following screed from the good doctor in his piece today, "Stuck in the Muddle":
"Like anyone who pays attention to business and financial news, I am in a state of high economic anxiety. Like everyone of good will, I hoped that President Obama’s Inaugural Address would offer some reassurance, that it would suggest that the new administration has this thing covered.
But it was not to be. I ended Tuesday less confident about the direction of economic policy than I was in the morning."
It gets harsher. What could be a more stinging insult than the following?
"Also, one wishes that the speechwriters had come up with something more inspiring than a call for an “era of responsibility” — which, not to put too fine a point on it, was the same thing former President George W. Bush called for eight years ago."
Obama as Bush? And proving it with Bush's own words? This is not a fair fight. Think of Ali v. Liston in Lewiston, Maine. (And, as a fillip, note that Dr. Krugman dissed the idea that Mr. Obama wrote his own speech: carefully note his use of the term "the speechwriters".)
The Nobel and a TKO in only two columns over the highest-achieving lawyer in the US of A? The crowd's on its feet in admiration. What can Dr. K do for an encore? We watch with bated breath.
On the economy, Krugman's hot, Obama's not.
Copyright (C) Long Lake LLC 2009
"Like anyone who pays attention to business and financial news, I am in a state of high economic anxiety. Like everyone of good will, I hoped that President Obama’s Inaugural Address would offer some reassurance, that it would suggest that the new administration has this thing covered.
But it was not to be. I ended Tuesday less confident about the direction of economic policy than I was in the morning."
It gets harsher. What could be a more stinging insult than the following?
"Also, one wishes that the speechwriters had come up with something more inspiring than a call for an “era of responsibility” — which, not to put too fine a point on it, was the same thing former President George W. Bush called for eight years ago."
Obama as Bush? And proving it with Bush's own words? This is not a fair fight. Think of Ali v. Liston in Lewiston, Maine. (And, as a fillip, note that Dr. Krugman dissed the idea that Mr. Obama wrote his own speech: carefully note his use of the term "the speechwriters".)
The Nobel and a TKO in only two columns over the highest-achieving lawyer in the US of A? The crowd's on its feet in admiration. What can Dr. K do for an encore? We watch with bated breath.
On the economy, Krugman's hot, Obama's not.
Copyright (C) Long Lake LLC 2009
Monday, January 19, 2009
Obama Implores: Be a Debtor Nation
I thought I heard that one wrong. I thought we should be a better nation. Well, maybe Mr. Obama means both things. But the Bloomberg.com headline reads:
"Obama Advisers Say They Will Aim TARP Funds at Widening Credit"
Quotes from the article make it crystal clear that the Obama team is following the scenario laid out in Econblog Review that it there are to be no fundamental changes that the financial system of the U.S. should remain based on debt.
"Top advisers to President-elect Barack Obama signaled they will emphasize getting credit to consumers and businesses rather than helping banks as the new administration deploys the second half of the $700 billion rescue fund."
"'The focus isn’t going to be on the needs of banks; it’s going to be on the needs of the economy for credit,” Lawrence Summers, the president-elect’s top economic adviser, said on CBS’s “Face the Nation” program yesterday."
“'The point is to get credit flowing again to businesses and families across the country -- that hasn’t happened with the expenditure of the first $350 billion,” Axelrod said."
The view here and at many other places is that too much credit was extended to too many people, businesses, and governmental entities for too long. The view is further that this should represent the end of a supercycle in credit expansion and more broadly in the "financialization" of the economy of the U.S. and its allies. This ended badly in the 1920's credit boom and has gone bad now. Last year's "solutions" failed because the financial institutions were broke.
What's happened is a mess and a disgrace, as we see with AIG (allegedly still worth almost $4 Billion in stock market value!) and Fannie Mae and Freddie Mac (each still "worth" significant sums in the stock market). Here is another mess from Britain:
"RBS May Post 28 Billion-Pound Loss as Crisis Deepens"
This is about a 42 billion dollar loss. How can a bank lose 42 billion dollars making loans? It can't! Bloomberg goes on to report that the company spent almost $90 B (ninety billion dollars) on takeovers since the start of this millenium.
These giant financial institutions have proven they are too greedy to succeed. The Royal Bank of Scotland is 282 years old. When I started in the financial field about 30 years ago, RBS boasted of its stinginess and of its prudence. Another almost as ancient bank, Barings (1762-1995) was allowed to fail when, allegedly, a rogue trader named Leeson lost vast amounts of money.
Why are Fannie Mae, Freddie Mac, American International Group, Royal Bank of Scotland and many other companies that are broke still in business and still with significant stock values? They should be allowed to fail. Failure means the Lehman Brothers bankruptcy solution, but an orderly bankruptcy this time.
The answer goes back to the lack of change between the new Administration and the old one here in the U.S. The Remocrats and the Depublicans are united as an Establishment that built up and is sustained by the same financial companies that have grown so fast and were so fat that like Icarus, they fell to earth with a thud. The over-stuffing of American "homeowners" (often renters in disguise) with first, second and third mortgages was only part of the problem. The problem goes beyond bad and excessive lending. It includes the systemic overpricing of public stocks for years in the 1990s and most of this millenium by all prior criteria.
Right now, though, the stock market is no longer the dog but rather at best the tail that the dog wags. The main problem is the folly of policy-makers in the U.S. and the U.K. to revive the credit-based economy rather than foster one of decreased debt. The U.S. and the U.K have become addicted to "credit" just as they have become addicted to empty calories. The results are in and they are bad. The average 13-year old in America is over 30 pounds heavier than 30 years ago. The same is more or less true in Britain. And the debt loads of the people are similarly gargantuan.
It makes no difference in the scheme of things if the Obama administration forces more credit directly onto consumers and postures that the Bush Administration was too friendly to the big banks. It's two sides of the same counterfeit coin.
The American people have already begun to do the right things. The savings rate has risen. It should continue to rise. If that means that "production" will be a little slow for a little longer, so be it.
Unfortunately, when easy credit is again pushed by the Merchants of Debt, much of the public will be unable to resist even if knows it is making a mistake, just as dieters as a class cannot resist being around sweet, good-looking food, or alcoholics are at risk just from seeing liquor ads. The lure of having and spending is simply that powerful.
Knowing that enablers of the rise of the finance-based economy remain in power in Washington will lead to huzzahs for Mr. Obama from Wall Street. Unfortunately, the tide is going out for this trend. Everyone knows, or knows of, people who are in financial trouble because of too much credit card use, over-aggressive borrowing against their home, etc. They see that the downside of living beyond one's means can be severe. With the 1990s Perot movement and the consistent popular support for a balanced Federal budget (well, sort of balanced- entitlements were excluded from the Gov's books), the public showed the same good sense it is showing now in rebuilding savings. The public is in fact willing to sacrifice and will support a President Obama who leads them to the path of sound financial practices and away from overindebtedness.
Barack Obama is not even President, yet it is time for him to change course.
Copyright (C) Long Lake LLC
"Obama Advisers Say They Will Aim TARP Funds at Widening Credit"
Quotes from the article make it crystal clear that the Obama team is following the scenario laid out in Econblog Review that it there are to be no fundamental changes that the financial system of the U.S. should remain based on debt.
"Top advisers to President-elect Barack Obama signaled they will emphasize getting credit to consumers and businesses rather than helping banks as the new administration deploys the second half of the $700 billion rescue fund."
"'The focus isn’t going to be on the needs of banks; it’s going to be on the needs of the economy for credit,” Lawrence Summers, the president-elect’s top economic adviser, said on CBS’s “Face the Nation” program yesterday."
“'The point is to get credit flowing again to businesses and families across the country -- that hasn’t happened with the expenditure of the first $350 billion,” Axelrod said."
The view here and at many other places is that too much credit was extended to too many people, businesses, and governmental entities for too long. The view is further that this should represent the end of a supercycle in credit expansion and more broadly in the "financialization" of the economy of the U.S. and its allies. This ended badly in the 1920's credit boom and has gone bad now. Last year's "solutions" failed because the financial institutions were broke.
What's happened is a mess and a disgrace, as we see with AIG (allegedly still worth almost $4 Billion in stock market value!) and Fannie Mae and Freddie Mac (each still "worth" significant sums in the stock market). Here is another mess from Britain:
"RBS May Post 28 Billion-Pound Loss as Crisis Deepens"
This is about a 42 billion dollar loss. How can a bank lose 42 billion dollars making loans? It can't! Bloomberg goes on to report that the company spent almost $90 B (ninety billion dollars) on takeovers since the start of this millenium.
These giant financial institutions have proven they are too greedy to succeed. The Royal Bank of Scotland is 282 years old. When I started in the financial field about 30 years ago, RBS boasted of its stinginess and of its prudence. Another almost as ancient bank, Barings (1762-1995) was allowed to fail when, allegedly, a rogue trader named Leeson lost vast amounts of money.
Why are Fannie Mae, Freddie Mac, American International Group, Royal Bank of Scotland and many other companies that are broke still in business and still with significant stock values? They should be allowed to fail. Failure means the Lehman Brothers bankruptcy solution, but an orderly bankruptcy this time.
The answer goes back to the lack of change between the new Administration and the old one here in the U.S. The Remocrats and the Depublicans are united as an Establishment that built up and is sustained by the same financial companies that have grown so fast and were so fat that like Icarus, they fell to earth with a thud. The over-stuffing of American "homeowners" (often renters in disguise) with first, second and third mortgages was only part of the problem. The problem goes beyond bad and excessive lending. It includes the systemic overpricing of public stocks for years in the 1990s and most of this millenium by all prior criteria.
Right now, though, the stock market is no longer the dog but rather at best the tail that the dog wags. The main problem is the folly of policy-makers in the U.S. and the U.K. to revive the credit-based economy rather than foster one of decreased debt. The U.S. and the U.K have become addicted to "credit" just as they have become addicted to empty calories. The results are in and they are bad. The average 13-year old in America is over 30 pounds heavier than 30 years ago. The same is more or less true in Britain. And the debt loads of the people are similarly gargantuan.
It makes no difference in the scheme of things if the Obama administration forces more credit directly onto consumers and postures that the Bush Administration was too friendly to the big banks. It's two sides of the same counterfeit coin.
The American people have already begun to do the right things. The savings rate has risen. It should continue to rise. If that means that "production" will be a little slow for a little longer, so be it.
Unfortunately, when easy credit is again pushed by the Merchants of Debt, much of the public will be unable to resist even if knows it is making a mistake, just as dieters as a class cannot resist being around sweet, good-looking food, or alcoholics are at risk just from seeing liquor ads. The lure of having and spending is simply that powerful.
Knowing that enablers of the rise of the finance-based economy remain in power in Washington will lead to huzzahs for Mr. Obama from Wall Street. Unfortunately, the tide is going out for this trend. Everyone knows, or knows of, people who are in financial trouble because of too much credit card use, over-aggressive borrowing against their home, etc. They see that the downside of living beyond one's means can be severe. With the 1990s Perot movement and the consistent popular support for a balanced Federal budget (well, sort of balanced- entitlements were excluded from the Gov's books), the public showed the same good sense it is showing now in rebuilding savings. The public is in fact willing to sacrifice and will support a President Obama who leads them to the path of sound financial practices and away from overindebtedness.
Barack Obama is not even President, yet it is time for him to change course.
Copyright (C) Long Lake LLC
Sunday, January 18, 2009
"It May Be Distasteful"
Banking remains at the epicenter of the economic news, unfortunately. The Establishment has been executing its plan over the last year to massively transfer national wealth to the financial giants. This transfer of wealth in this sort of quantity has never been overtly done to any other industry in my memory. (The closest one can come is to blame wars such as Iraq, Viet Nam and World War I on a desire to enrich the captains of industry, if one has that sort of belief. And even if such were the case, at least the companies actually provided goods and services in support of the war(s).) Here, the companies being aided are keeping the funds rather than producing anything with them (because they are more or less insolvent).
To keep things positive, before reading me beat up on a Bloomberg.com article, please consider reading two articles by the noted economist Willem Buiter (both published by the Financial Times.com:
No change, no hope: Obama’s Transition Economic Advisory Board
November 10, 2008 (this is actually an entertaining, witty writeup)
To keep things positive, before reading me beat up on a Bloomberg.com article, please consider reading two articles by the noted economist Willem Buiter (both published by the Financial Times.com:
No change, no hope: Obama’s Transition Economic Advisory Board
November 10, 2008 (this is actually an entertaining, witty writeup)
and
Time to take the banks into full public ownership
January 16, 2009 (more important and sober).
Dr. Buiter has impeccable academic, governmental and regulatory credentials (listed by his writeups) and is famous for having "spoken truth to power" last summer, as reported by Naked Capitalism: "Buiter Provokes Wrath at Jackson Hole, Says Fed Too Close to Wall Street".
In any case, the Establishment continues to keep up a pathetic but in the aggregate effective drumbeat of concealed advertising in favor of the bailouts. To wit, from today's Bloomberg.com:
"Obama Bank Rescue May Make New Effort to Resolve Toxic Assets"
"President-elect Barack Obama is likely to back a financial-rescue effort that channels capital to banks and deals with troubled assets clogging balance sheets, according to people familiar with the matter."
“We have a deteriorating real economy and deteriorating financial sector feeding on each other,” said Raghuram Rajan, a former chief economist for the International Monetary Fund who’s now a professor of finance at the University of Chicago. “It may be distasteful but we need to put more money in the banks.”
DoctoRx here: No we don't. We should follow the lead of Sweden about 15 years ago and let the failed ones fail, no matter how big, but in an organized way. This will save the "system", and let taxpayers reap the profits from "Newco" banks that we will finance, grow, and privatize later on.
Another snippet from the article:
"Obama is set to take office on Jan. 20 and his advisers have been working to craft a comprehensive blueprint for overhauling the bailout."
The bailout bill was written entirely by Congress, under control by the Democrats, the party that has been led by Barack Obama since summer 2008. Mr. Obama voted for the bill; I recall that he expressed no reservations with the Reid-Pelosi-Frank etc. legislation at the time. Now Bloomberg is reporting without saying so that the bill, passed merely 3 months ago, has failed and needs an "overhaul". What Bloomberg should have been reporting is what I just wrote, not what it wrote. I have been writing consistently in my posts that Congress held no hearings of any substance in putting together this bail-out turkey. Oh, it was an "emergency" (such an emergency that the smart money starting exiting the financial stocks at least as far back as 2006 and the housing stocks in Q2 2005). Bush and Paulson are going, going, gone. They were good pinatas for putting the left-wing side of the Establishment in total control of the Federal Government. I have also been writing that the Obama Administration was going to continue the Bush-Paulson-Bernanke-Reid-Pelosi consensus policies on finance. These policies are to use all necessary efforts to continue the failing and flailing policies that support the Merchants of Debt.
I said yesterday in On "Financial Reform" that I would have more to report on the RiskMetrics/Volcker etc. G30 report and recommendations on Financial Reform. I have reformed my thinking. Please read that post and Dr. Buiter's posts referenced above. 'Nuff said.
What is going on now is momentous. Because the stakes are so high, the Establishment media such as the New York Times and Bloomberg.com are virtually ignoring the core issues. The same NYT that put Abu Graibh abuses on its front page for daily for well over one month should be doing the same with this issue.
Will society get back to where we once belonged, where people actually owned things free and clear and adjured debt? The profitability of selling debt can be seen in the unbelievable number of credit card solicitations sent out yearly even now and in the hysterical Establishment reaction to "save" the banks, "distasteful" though it is.
It is looking more and more as if the Obama Administration is going to simply re-market the same debt-based system that brought us to the most severe economic downturn since the Great Depression, but with more regulators sucking more money from you and me to support them. Mr. Obama now has the bully pulpit. If he were to issue a clarion call for greater personal responsibility, restraint in purchasing material goods until personal savings were available to properly pay for them or conservatively finance them, and took on the Merchants of Debt as Teddy Roosevelt took on the "malefactors of great wealth", his popularity would soar and he could become as transformative a President as was TR. He needs to decisively set the tone and put forth policies that guide the country from a finance-based economy to a 21st Century one. The outlines of a 21st Century economy are clear: medical technologies, information technologies, cost-effective energy-generating and energy-transmitting technologies: knowledge-based stuff. Stuff with real products such as life-saving drugs. No more creating "wealth" that is simply a financial construct.
To do this, he needs to clean house. Force the "too-big-to-fail" failing "banks" - which are really giant holding companies with no real interest in the boring job of taking insured consumer deposits and doing prudent (i.e. low-profit) things with them, to disclose all details of their "Tier 3" and even "Tier 2" assets. Don't have the Federal Government buy them. They should sell them for what they are worth. Then all institutions that have Government guarantees should be banned from holding illiquid assets such as those.
Who will buy these "assets"? I don't care and neither should you. A modest proposal: over the last decade, individuals working for financial firms have snarfed up hundreds of billions of dollars of personal income, perhaps trillions, from bonuses and capital gains made by building up this system that has now suffered a heart attack/stroke/short-circuit/disaster. Let these gentlemen, huge numbers of whom are rich beyond Croesus' imagination, buy them at the same price at which the former IMF official expects the Federal Government to buy them at. Let Bill Gates and Warren Buffett, who are so generous to so many non-Americans (and on occasion to Americans as well, to be fair), help us out and spend a portion their tens of billions of net worth on paying generous sums to these financial institutions for their troublesome assets. That would be an act of real charity to a suffering populace and to their country. Unlike Haim Salomon, who helped save the Revolution, and who died a pauper, they need not go quite so far!
It would be nice to believe that after a disaster of the current magnitude, there would be real hearings in Congress as well as an independent commission (not the G30), a la the "Pecora Commission" (see my Jan. 7 post, Where Is Jurassic Park When You Need It?) about the root causes of how matters came to the current sorry state.
Don't hold your breath. But please contact your Congressional representatives to let them know that you need your money, the Federal Government needs its money, and you find it "distasteful" and more than that for our money to keep being thrown down a rathole.
After taking the oath of office, President Obama will give a great speech Tuesday. Will that be associated with an Obama stock market rally? I don't know and I don't care. Because he has already signaled that in the fields of economics and finance, the candidate of change is not going to make any fundamental changes.
Copyright (C) Long Lake LLC
Friday, January 16, 2009
CPI Understates Deflation; or, Requiem for a Heavyweight?
The Bureau of Labor Statistics has released the CPI data today.
The annualized rate of prices for the last three months is a negative 12.7%. This is Great Depression-level deflation.
This report understates current deflation because of the following:
"Continuing decreases in the indexes for lodging away from home, airline fare, and new and used motor vehicles, along with downturns in the indexes for apparel and recreation, offset increases in other indexes including rent and owners' equivalent rent, medical care, and education." (emphasis added)
Housing is NOT making a positive contribution to the cost of living. It is making an important negative contribution. Even if we understand and agree that the Government goes out of its way to make matters look less inflationary than they really are, I think that we can agree that currently there is no price increase almost anywhere that can "stick" except whatever is imposed by law or regulation.
The markets "get it" and are taking stock prices down, especially the financials, the latest rally of which has vanished. I suspect that a lot of Governmental and Fed officials have been talking to the Swedes about their nationalization of their banking system in the early 1990s following a real estate bubble. We appear to remain in the teeth of the economic storm.
While what is happening in economics and finance is disastrous, the continuity vibes coming out of the incoming Administration do not encourage me. In my opinion, Mr. Obama needs to bring into his Administration and amongst his advisers those who foresaw that the TARP bailout was hastily and wrongly designed. The complaints about its implementation ring hollow when the complaints come from those who crafted and fought for the legislation. Mr. Obama and his people need to come out hard in favor of equity and not debt. This is not an issue du jour but rather the key to long-term economic recovery. If he does not embrace this issue, the Republicans might do so and unexpectedly gain the edge in what could the most important economic theme of the next supercycle (though it takes time to build such a movement). The productive capacity of the U.S. is unimpaired; the cost of imported goods is plummeting; the people are eager to work; there are no major state enemies; Al Qaeda is on the run and its financial backers are going broke.
Therefore these can be the best of times, and soon. However if the new Administration persists on the failed long-term path of a debt-based economy rather than a true ownership society, not the Bush version that was based on debt (we know Obama will fight for a "fair" society as well), Econblog Review predicts that the best it is going to do is patch the aging fighter up to survive to fight another round or two.
Copyright (C) Long Lake LLC
The annualized rate of prices for the last three months is a negative 12.7%. This is Great Depression-level deflation.
This report understates current deflation because of the following:
"Continuing decreases in the indexes for lodging away from home, airline fare, and new and used motor vehicles, along with downturns in the indexes for apparel and recreation, offset increases in other indexes including rent and owners' equivalent rent, medical care, and education." (emphasis added)
Housing is NOT making a positive contribution to the cost of living. It is making an important negative contribution. Even if we understand and agree that the Government goes out of its way to make matters look less inflationary than they really are, I think that we can agree that currently there is no price increase almost anywhere that can "stick" except whatever is imposed by law or regulation.
The markets "get it" and are taking stock prices down, especially the financials, the latest rally of which has vanished. I suspect that a lot of Governmental and Fed officials have been talking to the Swedes about their nationalization of their banking system in the early 1990s following a real estate bubble. We appear to remain in the teeth of the economic storm.
While what is happening in economics and finance is disastrous, the continuity vibes coming out of the incoming Administration do not encourage me. In my opinion, Mr. Obama needs to bring into his Administration and amongst his advisers those who foresaw that the TARP bailout was hastily and wrongly designed. The complaints about its implementation ring hollow when the complaints come from those who crafted and fought for the legislation. Mr. Obama and his people need to come out hard in favor of equity and not debt. This is not an issue du jour but rather the key to long-term economic recovery. If he does not embrace this issue, the Republicans might do so and unexpectedly gain the edge in what could the most important economic theme of the next supercycle (though it takes time to build such a movement). The productive capacity of the U.S. is unimpaired; the cost of imported goods is plummeting; the people are eager to work; there are no major state enemies; Al Qaeda is on the run and its financial backers are going broke.
Therefore these can be the best of times, and soon. However if the new Administration persists on the failed long-term path of a debt-based economy rather than a true ownership society, not the Bush version that was based on debt (we know Obama will fight for a "fair" society as well), Econblog Review predicts that the best it is going to do is patch the aging fighter up to survive to fight another round or two.
Copyright (C) Long Lake LLC
Saturday, January 3, 2009
"Stimulus" Plan Deconstructed
Multitudes are bidding up stocks and are, more broadly, expecting good things for the economy, because of America's second "stimulus" plan. The first one, hastily put together a year ago, did manage to prop up stock prices long enough to let all who saw matters clearly exit the market at attractive prices. This one has now been described today by the Pres-Elect. This blog would like to be an "Early Responder" on a hot Miami afternoon in winter.
What follows are Obama quotes in boldface and DoctoRx responses.
" . . . we risk falling into a deflationary spiral"
-Puh-leese! Ben knows how to pilot the Fed-i-copter. Since the Fed was created, money has lost about 97% of its value. Prior to creation of the Fed, prices were stable over centuries in this country. In any case, prices are up substantially over the last several years. A little settling back would help all consumers and savers.
"We'll put people back to work . . . building wind farms and solar panels; fuel-efficient cars . . ."
1. Wind farms and solar panels are highly cost-ineffective at anywhere near current energy prices. So, the cost per job will be gigantic. Welfare would likely be cheaper.
2. The Japanese, Koreans, and even Americans are already building fuel-efficient cars. Prius sales were down about 50% in November. Government should not direct production of one type of car or another. Tax incentives, gasoline taxes, etc. are perfectly adequate for those purposes.
"I will need and seek support from Republicans and Democrats . . ."
No, you don't need Republican support. What you are signaling is that Republican legislators, Governors and mayors can be sure that their constituents will share in the loot.
"What is not negotiable is the need for immediate action."
There were no significant Congressional hearings before the first stimulus package, the Bank of America-written housing bill in the summer, the TARP bill, etc. Congress has been lounging around all December and will continue to do so until they must show up in a cold D.C. this month. Where are the hearings and the research?
Translation: We let Bush and Paulson reward their friends with hundreds of billions of dollars. It's our turn now.
"Right now, there are millions of mothers and fathers who are lying awake at night wondering if next week's paycheck will cover next month's bills . . . These Americans need help, and they need it now."
This should argue for help to states for unemployment insurance, Medicaid, etc. Yet the plan is all about construction and a "down-payment" on something or other. The future, I think it is. Thus the invocation of people who are indeed hurting is irrelevant to the "stimulus".
Overall comment: Mr. Obama stated he intends to sign a bill promptly after taking office. One would think that for this alleged emergency, Congress would have been working non-stop to evaluate how best to spend the money, with safeguards against the inevitable waste and fraud that go into gigantic construction projects.
I conclude that the stimulus program is a fraud. Money will be borrowed from savers in the U.S. and worldwide, and/or printed out of thin air, for projects that will largely occur when the cyclical downturn has become a cyclical upturn. Many projects will never be completed. Some years from now, it will be reported on how large a percentage of this program was wasted.
Sen. Obama voted for the bogus "stimulus" package of a year ago, most of which helped out financial institutions, as most of it was saved. He voted for the alleged housing assistance bill this summer, which was reported to have been essentially written by Bank of America, and which was recently reported to have helped out almost no homeowners.
He voted with the rest of the Establishment for the corrupt bail-out "TARP" bill.
He was a gigantic recipient of Fannie/Freddie lobbying money in his short tenure as Senator.
There should be no doubt: This is a Government of continuity. The only real change is which branch of the Establishment is now ascendant. The ancien regime concluded that with the Bush/Republican brand in disrepute for the nonce, a biracial, well-spoken man would serve its interests better than a former President's wife. Help is on the way- for the entrenched powers in this country. But not for anyone you know- except "contractors". And not for investors- not yet.
What follows are Obama quotes in boldface and DoctoRx responses.
" . . . we risk falling into a deflationary spiral"
-Puh-leese! Ben knows how to pilot the Fed-i-copter. Since the Fed was created, money has lost about 97% of its value. Prior to creation of the Fed, prices were stable over centuries in this country. In any case, prices are up substantially over the last several years. A little settling back would help all consumers and savers.
"We'll put people back to work . . . building wind farms and solar panels; fuel-efficient cars . . ."
1. Wind farms and solar panels are highly cost-ineffective at anywhere near current energy prices. So, the cost per job will be gigantic. Welfare would likely be cheaper.
2. The Japanese, Koreans, and even Americans are already building fuel-efficient cars. Prius sales were down about 50% in November. Government should not direct production of one type of car or another. Tax incentives, gasoline taxes, etc. are perfectly adequate for those purposes.
"I will need and seek support from Republicans and Democrats . . ."
No, you don't need Republican support. What you are signaling is that Republican legislators, Governors and mayors can be sure that their constituents will share in the loot.
"What is not negotiable is the need for immediate action."
There were no significant Congressional hearings before the first stimulus package, the Bank of America-written housing bill in the summer, the TARP bill, etc. Congress has been lounging around all December and will continue to do so until they must show up in a cold D.C. this month. Where are the hearings and the research?
Translation: We let Bush and Paulson reward their friends with hundreds of billions of dollars. It's our turn now.
"Right now, there are millions of mothers and fathers who are lying awake at night wondering if next week's paycheck will cover next month's bills . . . These Americans need help, and they need it now."
This should argue for help to states for unemployment insurance, Medicaid, etc. Yet the plan is all about construction and a "down-payment" on something or other. The future, I think it is. Thus the invocation of people who are indeed hurting is irrelevant to the "stimulus".
Overall comment: Mr. Obama stated he intends to sign a bill promptly after taking office. One would think that for this alleged emergency, Congress would have been working non-stop to evaluate how best to spend the money, with safeguards against the inevitable waste and fraud that go into gigantic construction projects.
I conclude that the stimulus program is a fraud. Money will be borrowed from savers in the U.S. and worldwide, and/or printed out of thin air, for projects that will largely occur when the cyclical downturn has become a cyclical upturn. Many projects will never be completed. Some years from now, it will be reported on how large a percentage of this program was wasted.
Sen. Obama voted for the bogus "stimulus" package of a year ago, most of which helped out financial institutions, as most of it was saved. He voted for the alleged housing assistance bill this summer, which was reported to have been essentially written by Bank of America, and which was recently reported to have helped out almost no homeowners.
He voted with the rest of the Establishment for the corrupt bail-out "TARP" bill.
He was a gigantic recipient of Fannie/Freddie lobbying money in his short tenure as Senator.
There should be no doubt: This is a Government of continuity. The only real change is which branch of the Establishment is now ascendant. The ancien regime concluded that with the Bush/Republican brand in disrepute for the nonce, a biracial, well-spoken man would serve its interests better than a former President's wife. Help is on the way- for the entrenched powers in this country. But not for anyone you know- except "contractors". And not for investors- not yet.
Wednesday, December 31, 2008
Ring in the Old
With a sort of victory in Iraq (i.e., non-defeat) and a record collapse of oil prices, the New Year should be being greeted with optimism. Instead, the public mood is sour. Current and future economic conditions are adjudged terrible by consumers and business people alike. Why?
The problem is that there's nothing new and exciting. Record low Treasury borrowing costs are new, but not exciting. Neither is another refi wave, tonic though it may be for a while. Neither is, anymore, the digitalization of the world. The stock market is boring. Stocks are Old Economy, manipulated, and suffer from prices that are a decade old. Old institutions such as broker-dealers are despised, but nothing new is apparent to take their place. Large companies that own banks also own lots of their own bad loans and have sucked the life force out of the economy. The result is that an equally old industry, retail, has received no government largesse and is collapsing. An old but less old industry, automobile assembly, has maxed out and is in at best a no-growth state in the industrialized world. Margins have nowhere to go but down. The war in Afghan-land is old, boring and depressing. That there is steady progress in medical therapy is marvelous, but we take it for granted and so is no longer new or exciting on a big-picture basis. Even our very safe country, with the fear following 9/11 faded, is (happily) boring.
The newest new thing, a President with an African father, is proposing a very old solution to our economic problem: build and repair roads. One can imagine a Roman emperor prescribing the same remedy. To keep people off the streets, put them to work on the streets. The problem is that unlike in FDR's time, or even Jimmy Carter's, the US Gov is itself financially over-leveraged. It beggars common sense to believe that what is wrong with America's economy is insufficient well-paved roadway. It therefore beggars common sense to believe that borrowing and printing money to improve the quantity and quality of roadway will fix our problems. More likely, it will just lead to more traffic delays. Motorists will be treated on a larger scale to viewing lots of heavy equipment by roadways with no one working, or perhaps a road crew here or there. So this new President hasn't yet proposed an exciting solution.
And it is hardly worth mentioning that the current crew in DC hasn't come up with anything new or exciting. Even though an economically dysfunctional Executive Branch is leaving, a dysfunctional Congress remains, and a dysfunctional Fed continues to bail out no one you know. The three most important Cabinet posts in the Obama administration are going to: Clinton's last Treasury Sec'y, Clinton's wife, and the current President's Sec'y of Defense. This is not change anyone can believe is change. It's not new and it's not exciting. It is at best competency/experience and at worst evidence of the thinness of our "bench" and/or of Obama's real lack of zest for change.
We would love to put old bad things behind us. The problem is that there is no new new exciting big thing visible. And so we slouch toward the new year that feels like the old one.
The problem is that there's nothing new and exciting. Record low Treasury borrowing costs are new, but not exciting. Neither is another refi wave, tonic though it may be for a while. Neither is, anymore, the digitalization of the world. The stock market is boring. Stocks are Old Economy, manipulated, and suffer from prices that are a decade old. Old institutions such as broker-dealers are despised, but nothing new is apparent to take their place. Large companies that own banks also own lots of their own bad loans and have sucked the life force out of the economy. The result is that an equally old industry, retail, has received no government largesse and is collapsing. An old but less old industry, automobile assembly, has maxed out and is in at best a no-growth state in the industrialized world. Margins have nowhere to go but down. The war in Afghan-land is old, boring and depressing. That there is steady progress in medical therapy is marvelous, but we take it for granted and so is no longer new or exciting on a big-picture basis. Even our very safe country, with the fear following 9/11 faded, is (happily) boring.
The newest new thing, a President with an African father, is proposing a very old solution to our economic problem: build and repair roads. One can imagine a Roman emperor prescribing the same remedy. To keep people off the streets, put them to work on the streets. The problem is that unlike in FDR's time, or even Jimmy Carter's, the US Gov is itself financially over-leveraged. It beggars common sense to believe that what is wrong with America's economy is insufficient well-paved roadway. It therefore beggars common sense to believe that borrowing and printing money to improve the quantity and quality of roadway will fix our problems. More likely, it will just lead to more traffic delays. Motorists will be treated on a larger scale to viewing lots of heavy equipment by roadways with no one working, or perhaps a road crew here or there. So this new President hasn't yet proposed an exciting solution.
And it is hardly worth mentioning that the current crew in DC hasn't come up with anything new or exciting. Even though an economically dysfunctional Executive Branch is leaving, a dysfunctional Congress remains, and a dysfunctional Fed continues to bail out no one you know. The three most important Cabinet posts in the Obama administration are going to: Clinton's last Treasury Sec'y, Clinton's wife, and the current President's Sec'y of Defense. This is not change anyone can believe is change. It's not new and it's not exciting. It is at best competency/experience and at worst evidence of the thinness of our "bench" and/or of Obama's real lack of zest for change.
We would love to put old bad things behind us. The problem is that there is no new new exciting big thing visible. And so we slouch toward the new year that feels like the old one.
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