Obama's Radicalism Is Killing the Dow

[GibbsFactor]

Are 100% certain already that this won't work in the long run?

Long term? This won't even fix the short term.

[SkinsHokieFan]

Do you realize that "greed" is simply a synonym for "doing what you think will make the most money," which is what our entire economic system has been based on for the past 200 years?

Not that I'm annoyed that a stupid, incorrect word with bad connotations has replaced the entire methodology of capitalism or anything.

I know. I got no problem with "greed"

I should have re-phrased that

[Duckus]

Honestly I have no clue.

The cynic in me says the administration is allowing a major crises to be created to be able to lay the ground work for the type of "change" they really want. FDR type change

The realist in me says they don't know what to do yet, and no matter what they do, it isn't going to help

The problem with the theory on “FDR change” in my opinion is that his power to change society would be even greater if he was the hero of the economy. Is seems to me that the worse and worse the economy gets the more people are against stimulus and spending packages. However, if he turned the economy around from where we are now he would be unstoppable in anything he wanted to do. He could literally pass whatever he wanted whenever he wanted to.

I agree with #2, your realist theory.

This is one of those situations where I would love to see an alternative universe where a Republican President was in power. In my opinion, the economy is VERY similar to Iraq politically. It’s all talk until you find yourself in the position to make decisions, then you deal with reality.

Obama said he would remove troops and end the war. He got in office and realized how impossible that truly is.

I would bet anything that a Republican in office right now would have stimulus and bailout bills galore. Its easy to say don’t do it and let the banks fail when you are not the one making the decision, just like Iraq for Obama.

[GSF]

I am no expert in these matters, but it seems like the unemployment/job loss announcements is what really sends the Dow down. Most of these lost jobs are due to things that happened over the last 2 years, not 2 months.

Having said that, I have less confidence in Obama every time I watch him speak. I keep getting this feeling that I'm being fed a line by a very smooth talker.

I don't understand how you guys that are so strongly Rep or Dem can be so sure of your opinions right now. I personally don't know who to believe any more.

[Peeping Wizard]

I guess I never knew Obama was supposed to fix 8 years of mess in 30 days. I've learned one thing in life. It takes longer to clean up mess than it did to make it.

Why do I have a feeling you guys will be saying that for the next four years?

[GibbsFactor]

The problem with the theory on “FDR change” in my opinion is that his power to change society would be even greater if he was the hero of the economy. Is seems to me that the worse and worse the economy gets the more people are against stimulus and spending packages. However, if he turned the economy around from where we are now he would be unstoppable in anything he wanted to do. He could literally pass whatever he wanted whenever he wanted to.

I agree with #2, your realist theory.

This is one of those situations where I would love to see an alternative universe where a Republican President was in power. In my opinion, the economy is VERY similar to Iraq politically. It’s all talk until you find yourself in the position to make decisions, then you deal with reality.

Obama said he would remove troops and end the war. He got in office and realized how impossible that truly is.

I would bet anything that a Republican in office right now would have stimulus and bailout bills galore. Its easy to say don’t do it and let the banks fail when you are not the one making the decision, just like Iraq for Obama.

Good post.

[Peeping Wizard]

Aaaaand there's the number one problem here - the assumption that disagreeing with Obama is agreeing with Bush.

I'm gonna suggest something so straight-jacket crazy that most people probably shouldn't try to wrap their heads around it, because it will make their brains explode - maybe, just maybe, it's possible to disagree with both Bush and Obama.

I know, I know. Mind****.

At 22, you might be the smartest guy on here...

[DjTj]

Honestly I have no clue.

The cynic in me says the administration is allowing a major crises to be created to be able to lay the ground work for the type of "change" they really want. FDR type change

Allowing crises to be created? They were handed a huge crisis on a silver platter. They don't need to create any more crises than they already have.

It's the same thing Bush did after 9/11 with the Patriot Act and then invading Iraq. Events outside of the Bush's control gave him an opportunity to do what he really wanted to do. Events outside of Obama's control have given him an opportunity to do what he really wants to do.

Are they making the right choices? I have no idea, but I'm pretty sure that Bush believed he was making the right choices, and I am sure that Obama believes he is making the right choices right now.

The realist in me says they don't know what to do yet, and no matter what they do, it isn't going to help

Treasury is understaffed, the problems are difficult, and it's not a simple matter of just picking something and running with it. I am sure that every idea that they come up with in their meetings has upsides and downsides ... they will try their best, and maybe it won't help at all. But I don't doubt that they're trying their best. Bush was too.

[Chump Bailey]

To think it can be fixed in six months or 45 days is madness.

Of course not, but as of right now, the markets are clearly signaling to the administration that their current course is not being met with any enthusiaism. It is being rejected outright. The goal should be to instill some measure of confidence back into the market and to investors ASAP. It's not working, and getting exponentially worse.

[Hubbs]

At 22, you might be the smartest guy on here...

I like to think that I'm smart, but back in October, I also penciled us in for a playoff spot, so it seems that I'm just as dumb as anyone else.

[SkinsHokieFan]

I don't understand how you guys that are so strongly Rep or Dem can be so sure of your opinions right now. I personally don't know who to believe any more.

I agree. And I think its become impossible to defend any decision by any major player (Fed, President, Wall St, ordinary people, etc) over the past 10 years

The former President messed up. I am praying our current President pulls us out of this

[Thiebear]

Former 2+ Presidents actually.

AND at least 6 Sessions of the Congress

[SkinsHokieFan]

While I disagree with Krugman on the prescription, we are making the same point. People have the expectation of action, and it hasn't happened yet.

http://www.nytimes.com/2009/03/06/opinion/06krugman.html?_r=1&ref=opinion

The Big Dither

By PAUL KRUGMAN

Last month, in his big speech to Congress, President Obama argued for bold steps to fix America’s dysfunctional banks. “While the cost of action will be great,” he declared, “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.”

Many analysts agree. But among people I talk to there’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern.

Here’s how the pattern works: first, administration officials, usually speaking off the record, float a plan for rescuing the banks in the press. This trial balloon is quickly shot down by informed commentators.

Then, a few weeks later, the administration floats a new plan. This plan is, however, just a thinly disguised version of the previous plan, a fact quickly realized by all concerned. And the cycle starts again.

Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away.

Thus, in a recent interview Tim Geithner, the Treasury secretary, tried to make a distinction between the “basic inherent economic value” of troubled assets and the “artificially depressed value” that those assets command right now. In recent transactions, even AAA-rated mortgage-backed securities have sold for less than 40 cents on the dollar, but Mr. Geithner seems to think they’re worth much, much more.

And the government’s job, he declared, is to “provide the financing to help get those markets working,” pushing the price of toxic waste up to where it ought to be.

What’s more, officials seem to believe that getting toxic waste properly priced would cure the ills of all our major financial institutions. Earlier this week, Ben Bernanke, the Federal Reserve chairman, was asked about the problem of “zombies” — financial institutions that are effectively bankrupt but are being kept alive by government aid. “I don’t know of any large zombie institutions in the U.S. financial system,” he declared, and went on to specifically deny that A.I.G. — A.I.G.! — is a zombie.

This is the same A.I.G. that, unable to honor its promises to pay off other financial institutions when bonds default, has already received $150 billion in aid and just got a commitment for $30 billion more.

The truth is that the Bernanke-Geithner plan — the plan the administration keeps floating, in slightly different versions — isn’t going to fly.

Take the plan’s latest incarnation: a proposal to make low-interest loans to private investors willing to buy up troubled assets. This would certainly drive up the price of toxic waste because it would offer a heads-you-win, tails-we-lose proposition. As described, the plan would let investors profit if asset prices went up but just walk away if prices fell substantially.

But would it be enough to make the banking system healthy? No.

Think of it this way: by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or deserve to be rescued.

And this means that the government would have to lay out trillions of dollars to bring the financial system back to health, which would, in turn, both ensure a fierce public outcry and add to already serious concerns about the deficit. (Yes, even strong advocates of fiscal stimulus like yours truly worry about red ink.) Realistically, it’s just not going to happen.

So why has this zombie idea — it keeps being killed, but it keeps coming back — taken such a powerful grip? The answer, I fear, is that officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable.

But this refusal to face the facts means, in practice, an absence of action. And I share the president’s fears: inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

[DjTj]

Do you realize that "greed" is simply a synonym for "doing what you think will make the most money," which is what our entire economic system has been based on for the past 200 years?

I think "doing what you think will make the most money" is the definition of profit maximization at the heart of capitalism, but it is not necessarily the the same thing as "greed."

"Greed" implies some kind of excess, and that excess is part of what caused the current crisis. Giving out loans to people who couldn't pay was obviously NOT the way to make the most money. It was greedy. It was a way to make some money in the short term, but it has turned out to be a colossal failure in the long term.

Greed should not be synonymous with capitalism. Greed often represents a miscalculation of risk, a misguided attempt to maximize profits, and a course of action that the free market eventually punishes.

Not that I'm annoyed that a stupid, incorrect word with bad connotations has replaced the entire methodology of capitalism or anything.

Bankers should be criticized right now for being too greedy. Maybe the entire methodology of capitalism is receiving some unfair collateral damage, but if you believe in the free market, then you should believe that it will recover its reputation in time...

[Midnight Judges]

Aaaaand there's the number one problem here - the assumption that disagreeing with Obama is agreeing with Bush.

I'm gonna suggest something so straight-jacket crazy that most people probably shouldn't try to wrap their heads around it, because it will make their brains explode - maybe, just maybe, it's possible to disagree with both Bush and Obama.

I know, I know. Mind****.

I'm aware that you would disagree with TARP. You still agree with the foundations of 7 years of Bush economic philosphy of deregulation and tax cuts.

[Predicto]

So then, who thinks the banks need to be temporarily nationalized, then sold back out piecemeal? That's what the Economist suggests, IIRC.

And who thinks the GOP would not destroy Obama the Socialist if he tried it?

[Hubbs]

I'm aware that you would disagree with TARP. You still agree with the foundations of 7 years of Bush economic philosphy of deregulation and tax cuts.

Untrue. Not only is Obama's pushing for a moderate shift in tax burdens to the wealthy something that I think is a good idea, but I don't agree with tax cuts without equal reductions in spending to go along with them. Bush accomplished quite the opposite of that. In economic terms, I think he was a complete debacle.

[SkinsHokieFan]

And who thinks the GOP would not destroy Obama the Socialist if he tried it?

I don't think the GOP matters at all right now

[Peeping Wizard]

I like to think that I'm smart, but back in October, I also penciled us in for a playoff spot, so it seems that I'm just as dumb as anyone else.

Well, that makes both of us stupid...

[Peeping Wizard]

I don't think the GOP matters at all right now

True for the moment. Somehow I think things will change in the mid-term elections. Congress is not exactly spreading good will among the American public.

[GibbsFactor]

So then, who thinks the banks need to be temporarily nationalized, then sold back out piecemeal? That's what the Economist suggests, IIRC.

And who thinks the GOP would not destroy Obama the Socialist if he tried it?

Do you honestly think they would be sold back?

Honestly?

And if we were to really try to go Socialist, I bet many Democrats would pull back and side with the GOP.

[luckydevil]

And who thinks the GOP would not destroy Obama the Socialist if he tried it?

Well, they are trying. It simply doesn't matter.

[GibbsFactor]

I'm aware that you would disagree with TARP. You still agree with the foundations of 7 years of Bush economic philosphy of deregulation and tax cuts.

Not while subsidizing American Corporate Capitalism.

That's where the Bush admin failed.

[Destino]

True for the moment. Somehow I think things will change in the mid-term elections. Congress is not exactly spreading good will among the American public.

Conservatives have no solutions. Feel free to name one. Let them fail and go into a depression isn't a solution.

[luckydevil]

I am getting really sick and tired of the hackish talking point that Bush was a deregulator. He wasn't.