Does that response answer that question? Is it too much debt to take on? Now, I am an old trial lawyer. In the courtrooms of America, you can't legitimately respond to a valid argument by attacking the other side's failings on the same point. In other words, to put it in terms understood by all of us, if my daughters overused their credit cards (and they have not), would it be responsible for me, as a father, to accept their retort that I had overused mine? Would it change their behavior? Would it move them in the right direction? Or would it be better for them to learn from my mistakes, adjust their behavior, and avoid having to live through the unfavorable consequences of bad debt management?
When asked about the bill's failings on its intended purpose, economic stimulus, he said, "First of all, when I hear that from folks who presided over a doubling of the national debt ... I just want them to not engage in some revisionist history." Again, this is artful (split infinitive aside) deflection, but it is not a valid or utilitarian response. Again, did he answer the question? There was no "second of all ..." Do Americans really care any more if the last guy got it wrong? Or are they more interested in the new guy getting it right?
Only in politics, the world of the unreal and of pointless rhetoric, does that work. If I had responded in trial to an appropriate argument by the other lawyer by merely pointing out that he had once done the same thing, any judge worth his salt would have shut me down immediately, to the harm of my clients. It is sad that many Americans don't know that a legal education is not enough to make one an effective lawyer, and that experience in such things DOES matter. We have elected a guy who is a pure politician, who responds based on the politics of the moment, who points a finger rather than accepting responsibility. That is bad enough, but he also has an agenda that includes massive government growth, redistribution of wealth, and payoffs to supporters on the left.
We will soon learn we can't afford this guy and his "People's Troika" (Obama, Summers, Geithner). They believe in central planning, but where is the plan? I listened carefully for any indication that he gave Congress any real guidance, and all I heard was that his metric for success would be "the saving or creation of 4 million jobs." Of course, that metric can't effectively be measured, so we will never know if this will be successful, nor will anyone be able to prove it was not. How does one measure "jobs saved"? I do intend, however, to hold him to a measure on job creation - I will watch the next six months to see if jobs are "created" and unemployment declines. If those things don't happen, of course, we will still have to pay the bill, for the rest of our lives and those of our children and grandchildren. Nancy Pelosi said yesterday that Congress will be held accountable. I can only hope she is right. And we had better hope some jobs are created, because we are going to need them to pay for this mess!
3 comments:
so...if Congress is held accountable, will they pay for the mistake out of their own paychecks?
...Obama doesn't accept responsibility? Whatever do you mean?!? I've read all of the blogging world that O is an Honest, trustworthy man that takes credit for his actions. Where on earth are you getting that he's anything but, General?
/sarcasm.
People's Troika. Ya gotta love it.
So what's up for the next round? Now that Congress has made a collective fool of itself, what can we expect from the "central planners"?
Let's review some recent history: In TARP I and other measures, spent so far on huge, irreponsible bankers --
Bank of America Corporation
$15,000,000,000
Bank of New York Mellon Corporation NY
$3,000,000,000
Citigroup Inc. NY
$25,000,000,000
JPMorgan Chase & Co. NY
$25,000,000,000
Morgan Stanley NY
$10,000,000,000
State Street Corporation MA
$2,000,000,000
The Goldman Sachs Group,Inc. NY
$10,000,000,000
Wells Fargo & Company CA
$25,000,000,000
Total
$115,000,000,000
Those figures are from the GAO's January, 2009 Report to Congressional Committees. http://www.gao.gov/new.items/d09296.pdf.
Now, we are looking at another trillion. This is to save the markets and the banks, which, after huge infusions of cash, have managed to save and pay their incentive bonuses, in preparation for the compensation limits that will be imposed shortly. Why, after all the hype, did Geithner's speech have such a bumpy landing? Shortly after he started talking, stocks began to fall. By the end of the day, the Dow lost 5%. What happened?
Geithner announced a three-part program, 1) expansion of the Fed's TALF program by seeding it with a direct infusion of c. $100 Billion, with the Fed then providing additional leverage to purchase up to $1 Trillion in assets, including commercial and residential mortgages (those toxic ones, one would guess). 2) Treasury will set up a public-private program to buy even lousier assets from banks, offering loss caps or very cheap financing to private investors, thus avoiding the cost of doing this by government directly, and spreading some (but not most) of the risk. This one could go as high as $500 Billion. 3) You guessed it - the above list was/is not enough for these folks who helped cause the devastation in the markets with Option-ARM NINJA loans securitized by high risk CDO's pawned off on the world markets - so there will be yet another capital injection into US financial institutions, with more nationalizing through the purchase of convertible preferred securities (we can all make money on this, of course).
So why did this cause a negative market reaction? Because Geithner was full of bluster and fancy phrases, but very short on details. Because, with all his credentials, he is basically a bureaucrat with mediocre communication skills and a very average understanding of the markets. Why would you do a two-week build up to this great, important speech, then announce that you had the beginnings of an idea about how to come up with a plan? These programs, moreover, don't seem to be anything more than bigger versions of the same things that have failed, or enjoyed only limited success, under Paulson, et al. Remember the "Super SIV", TAF, TSLF, etc.? At best, they have combined to keep failed banks alive slightly longer, and have merely delayed a much needed market adjustment. Right now, today, commercial loan originations are down 80% from 4Q 07; and more than 1/2 of home-loan borrowers who have re-financed to avoid foreclosures are again behind in their payments. Investors who have funds to buy real estate for speculation, at greatly reduced prices, are being ignored by banks who are hoping that they won't have to do these write-downs, so the market is essentially frozen in place.
My friends, hold on to your wallets, the worst is almost sure to come. Neither the stimulus, which does almost nothing to stimulate, nor this poorly planned and executed bailout #3 (4?) is likely to work.
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