Archive for the ‘economy’ Category

Where Are the Leaders?

March 29, 2009

You wake up in the morning and once again the financial weather report calls for the Apocalypse followed by brief showers of despair. Seeking a ray of hope, you turn on the television and settle in to watch a Capitol Hill hearing. There in the hot seat is the man who holds the entire U.S. economy in his hands. And he looks like Harry Potter.

By David Rothkopf
The Washington Post

You wake up in the morning and once again the financial weather report calls for the Apocalypse followed by brief showers of despair. Seeking a ray of hope, you turn on the television and settle in to watch a Capitol Hill hearing. There in the hot seat is the man who holds the entire U.S. economy in his hands. And he looks like Harry Potter.
US bank chiefs to meet with President Obama

Go online, meanwhile, and you find the HTML version of the French Revolution, with left and right calling for poor Tim to be strung from a lamppost. You actually start feeling sorry for the guy. Arianna Huffington snipes that “the issue isn’t his delivery, it’s what he’s delivering.” Nobel Prize-winning economist Joseph Stiglitz concludes that Geithner’s plan “amounts to robbery of the American people.” Next you find Connie Mack, Republican senator from Florida, fulminating that “quite simply, the Timothy Geithner experience has been a disaster. . . . America needs and deserves a Treasury secretary who can truly lead us forward.”

On that point, at least, he’s right. We do need strong leadership. The world is in chaos. There are riots from Greece to China. Iceland has collapsed, and Mexico teeters on the edge. Pakistan is broke, melting down and awash in nukes. Yes, the stock market soared with Geithner’s toxic asset plan, but didn’t he and Obama dismiss Wall Street’s response when the first version of the bank bailout landed with a thud last month? Don’t we hate Wall Street? Obama and Geithner subsidize hedge funds on Monday and come back with heavy regulations on Thursday. What gives?

In this March 12, 2009, file photo Treasury Secretary Timothy ...

Gradually it becomes clear. This is not just a global economic crisis. It’s a global leadership crisis. Obama is still finding his footing, Gordon Brown is on his way out, Hugo Chávez is nuts and Wall Street management is larcenous. Isn’t there someone somewhere with decent values, a firm hand on the tiller and at least one big new idea? Where have all the leaders gone?

Read the rest:
http://www.washingtonpost.com/wp-dyn/cont
ent/article/2009/03/26/AR20090326034
22.html?hpid=opinionsbox1

Class Warfare? Obama Tears Down Rich Instead of Inspiring Others To Get Rich

March 28, 2009

Barack Obama wrote a book about hope and be came president promising it. So why’s he doing everything in his power to snuff it out?

Think about it: In Obama World, what are we supposed to “hope” for? Certainly not vast riches.

By Adam Brodsky
The New York Post

What would be the point? His budget swipes massive amounts of wealth from top earners.

Consider, too, his resentful rhetoric toward them. Recall his despicable failure to block the House from moving to rip up private contracts and confiscate past earnings via a 90 percent, retroactive tax.

Really, in this climate, who can muster enthusiasm for personal fortune-building?

“Bankers and executives on Wall Street need to realize . . . that the days of outsized rewards . . . have to be over,” Obama lectured Tuesday.

Yes, bankers and Wall Streeters hurt the economy. But most of their dubious activities occurred before government involvement, when their own fates (and their firms’) were still on the line. Wall Streeters couldn’t have intended to fleece taxpayers, because until last year no one imagined federal bailouts. Indeed, many risky loans were made at the behest of government — not in defiance of it.

No wonder people like AIG exec Jake DeSantis feel persecuted and betrayed. In his resignation letter, which ran in Wednesday’s New York Times, DeSantis describes how he and others like him (folks who, he says, had little to do with the shenanigans that ruined AIG) view the threatening demands to return their bonuses as broken promises, despite their “years of dedicated, honorable service.”

DeSantis doesn’t blame Obama, but the president has contributed to a culture in which such feelings of hopelessness among the well-off (and those who want to be) surely must be on the rise.

Consider Obama’s claim this week that the economy “only works if we recognize that we’re all in this together,” with “responsibilities to each other.” He seems to be saying the fruits of one’s labor must go to help others. Or that there’s no need to work hard; someone else will care for you. Gee, now that’s inspirational.

Anyway, he’s 180 degrees wrong: Capitalism works when folks compete with each other, when they take risks and try to score big — not when they let the other guy pay their way.

“Outsized rewards” motivate. They offer something to dream about.

In trying to strike gold, Wall Streeters made bets that channeled capital to where it was demanded, even if they wound up with snake eyes and dragged the nation down with them.

Obama talks about the national importance of personal financial motivation. Americans, he says, “can’t afford to demonize every investor or entrepreneur who seeks to make a profit. That drive is what has always fueled our prosperity.”

But he can’t have it both ways. And in his eyes, there’s just something amiss when some folks earn significantly more than others. “Twenty years ago,” he says, “if you went into investment banking, you were making 20 times what a teacher made. You weren’t making 200 times,” as some investment bankers do now. Yes, but what’s the problem?

Never mind that teachers, like those in New York, can now earn handsome six-figure salaries, with lifetime job-security and unmatched benefits. The question is, why shouldn’t folks on Wall Street hope to make big bucks — especially if they’re willing to take big gambles?

Obama says Wall Streeters “need to spend a little time outside of New York” — to see that folks in North Dakota, Iowa or Arakansas “would be thrilled to be making $75,000 a year.”

That’s backward: Wall Streeters shouldn’t go to Arkansas; Arkansans should come to New York — and see the grand opportunities that lie before them. That’s how you inspire hope.

Let’s face it: If youngsters can’t even fantasize about becoming the next Bill Gates or Warren Buffet, what “hope” is there for the American dream?

Not much — alas.

Welcome to Obama World.

Do we want to revive our economy, or do we want to punish the bankers?

March 28, 2009

The liberal backlash against President Barack Obama has begun with many prominent left-leaning economists in the US attacking the administration’s plans to bail out the banks.

Paul Krugman describes the toxic asset purchase plan as “cash for trash”. Jeffrey Sachs calls it “a thinly veiled attempt to transfer hundreds of billions of US taxpayer funds to the commercial banks”. Robert Reich depicts Tim Geithner, Treasury secretary, as a prisoner of Wall Street while Joe Stiglitz says the plan “amounts to robbery of the American people”.

By Edward Luce
FT
On the blogosphere and beyond, Democratic economists accuse Mr Obama – along with Mr Geithner, and Lawrence Summers, the president’s senior economic adviser – of taking dictation from the same financiers who have brought the economy to the brink of depression.

Mr Reich, who was Bill Clinton’s Labour secretary in the 1990s before resigning over the former president’s reluctance to pursue a strong public investment agenda, says that he and his colleagues fear a replay of the Clinton years under Mr Obama.

Mr Reich now talks of the “Paulson-Geithner approach” to demonstrate what he sees as the continuity between Hank Paulson, George W. Bush’s last Treasury secretary, and the current administration. Mr Reich says bank nationalisation is the only answer to today’s crisis.

“Bill Clinton chose to pursue a set of policies that Wall Street agreed with but at the expense of his long-term agenda of boosting public investment,” says Mr Reich. “Bill Clinton’s Wall Street agenda in the end brought America and the world crashing down with it. I hope we are not seeing history repeat itself with Mr Obama.”

Not every Democrat agrees. Brad DeLong, a former Clinton official, says that every banking crisis – barring the Great Depression – has been resolved by government recapitalisation of the banking sector, as Mr Obama is likely to attempt in the near future.

Nor, says Mr DeLong, is it fair to paint Mr Geithner as a creature of Wall Street.

“Hank Paulson is a man who grew up in American finance and cannot imagine a world in which America does well and its financial sector does badly,” he says.

“Tim Geithner, by contrast, is a bureaucrat and a policymaker. He has never pulled down a multibillion-dollar bonus. They are not the same type of people.”

But in reality the division is as much political as economic. Most of Mr Obama’s liberal critics argue he should have gone to Congress already and asked for a lot of money for bank recapitalisation. His defenders say that would be political suicide until the populist mood on Capitol Hill has died down.

“We have to ask ourselves: Do we want to revive our economy, or do we want to punish the bankers?” says Mr DeLong. “I don’t agree that we can do both.”

‘Card check’ bill loses key supporters

March 28, 2009
With Sens. Specter and Feinstein withdrawing their support, and the threat of a Republican filibuster, backers of the pro-union provision may have to consider less divisive alternatives.
By James Oliphant
The Lost Angeles Times
March 28, 2009

Reporting from Washington — Whether you label it the “card check” bill or the Employee Free Choice Act, you can also call it something else — in deep trouble.

Key senators this week appeared to cripple prospects for passing the highly polarizing measure, the labor movement’s top priority in Congress, which is aimed at making it easier for workers to join unions.

The latest hurdle came Friday, when Sen. Dianne Feinstein (D-Calif.) said she would seek alternative legislation that was less divisive. Feinstein, a past sponsor of the act, cited the flailing economy as a reason; other critics of the bill have said it would drive up operating costs for businesses at a perilous time.

“This is an extraordinarily difficult economy, and feelings are very strong on both sides of the issue,” Feinstein said in a statement. “I would hope there is some way to find common ground that would be agreeable to both business and labor.”

Feinstein’s words came days after Sen. Arlen Specter (R-Pa.) declared that he would not support the bill. Specter too had supported the act in the past, and his announcement was viewed as eliminating any chance that Democrats could muster enough votes to break a promised Republican filibuster.

The card-check bill would bypass the traditional union election process and allow workers to be certified as a bargaining unit if a majority signed cards indicating their support for a union. The proposal played a leading role in congressional campaigns across the country, with voters bombarded by televised ads applauding and demonizing the bill.

Now its supporters are scrambling to figure out their next move. It appears clear that if the legislation has a future, it will not be in its present form.

“We knew all along that this bill would be amended. It seems clear now we’ll have to look at some changes to get to the floor,” said Sen. Tom Harkin (D-Iowa), a cosponsor of the legislation.

Read the rest:
http://www.latimes.com/news/nationworl
d/nation/la-na-card-check28-2009mar28
,0,4048410.story

Geithner’s Toxic-Asset Plan on Slow Track as Values Deteriorate

March 27, 2009

The Obama administration’s plan to remove distressed assets from bank balance sheets may take three months to begin operating, risking further deterioration in the value of the securities and driving up rescue costs.

By James Sterngold
Bloomberg

No matter how well the plan is designed, delays could mean that prices for mortgage-related assets will drop, requiring banks to take bigger writedowns and seek additional capital from the government, said Christopher Whalen, senior vice president and managing director of Torrance, California-based Institutional Risk Analytics.

“The government has said it thinks the assets are worth more than the 30 cents they could get in the market now — that it’s 80 cents or 50 cents on the dollar,” Whalen said. “But that 30 cents is going to look good in three months. Loss rates aren’t going to peak until late this year, when those assets will be going for five cents or 10 cents on the dollar. Absolutely they should move faster.”

The three-part government plan, announced March 23 by Treasury Secretary Timothy Geithner, requires a two-week comment period for one program, an application process for asset managers, analysis of the troubled mortgage assets to be sold and assessments of how much debt investors can take on.

As a result, the programs might not be operating before June or July, said Curtis Arledge, a managing director at New York-based BlackRock Inc., which plans to apply to become one of the asset managers for the public-private partnerships.

Falling Asset Prices

Two government officials, who spoke on condition of anonymity because no announcements on timing have been made, confirmed that the program won’t be operating until the summer. Once launched, it will create public-private partnerships to purchase as much as $500 billion of bad debts and securities from banks. The aim, Geithner said, is to allow the banks to clean up their balance sheets, attract private capital and resume active lending.

“The longer it takes, the more likely it won’t do the job,” said Robert Barbera, chief economist at New York brokerage ITG Inc., who supports the program because he believes that cheap government financing for the asset purchases will lift prices. “This allows the squeeze on the real economy to continue. The longer credit is not available from the banks, the greater the drag on the economy, and asset prices drop further.”

Read the rest:
http://www.bloomberg.com/apps/news?pi
d=20601087&sid=agEBuyNoFyvI&refer=home

Clinton pushes for stronger China role

March 27, 2009

Secretary of State Hillary Rodham Clinton has moved aggressively and quickly to secure a stronger role in what she has called the world’s most important relationship: U.S. dealings with China. But military and economic tensions between the two powers keep getting in her way.

By Foster Klug
Associated Press

As the international financial crisis worsens, the two colossal economies have bickered over their intertwined interests. China is nervous about its position as Washington’s biggest foreign creditor, holding an estimated $1 trillion in U.S. government debt.

Beijing and Washington also have sparred over military matters, including a confrontation between American and Chinese vessels in the South China Sea and harsh words over Pentagon claims that China’s rapidly growing military strength could allow it to win short, intense conflicts against high-tech adversaries.

These issues will demand high-level attention from the Treasury and Defense departments. Clinton is pushing, however, to ensure that her diplomatic corps is not marginalized as the United States engages a country the Obama administration needs as a partner in efforts to solve the world’s major problems.

Clinton began staking out her claim on China early. A week after President Barack Obama’s Jan. 20 inauguration she signaled her determination not to stand on the sidelines in her first comments to reporters at the State Department.

“The strategic dialogue that was begun in the Bush administration turned into an economic dialogue,” Clinton said. “That’s a very important aspect of our relationship with China, but it’s not the only aspect of our relationship.”

In Beijing last month, on her first foreign trip as secretary, Clinton said she and new Treasury Secretary Timothy Geithner “will both be fully engaged” in discussions with China. Clinton then pleasantly surprised China by saying the Obama administration would not let its human rights concerns interfere with cooperation with Beijing.

Read the rest:
http://apnews.myway.com/article/20090
327/D97683SG1.html

What’s Behind the Geithner Debate?

March 27, 2009

If the United States was an aircrft, Obama has already touched every dial and lever in the cockpit.  And what does that mean?  Only one thing for sure: Uncertainty.  And a lack of confidence.  That’s why businesses are not yet rehiring and people are holding on to their money.  People are looking for more certainty and Geithner at Treasury isn’t offering that….

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By Will Marshall
Real Clear Politics

Progressives, who have so far marched in rare lockstep behind President Obama, are falling out over Treasury Secretary Tim Geithner’s plan to get credit flowing again. At issue are conflicting visions of exactly what kind of economy should emerge on the other side of today’s crisis.

Pundits and columnists traffic in certitudes, but the rest of us can be forgiven for not knowing whether the Geithner plan will actually work. We’re in terra incognita here, and analogies to the Great Crash of 1929, or more recent banking crises in Japan and Sweden, may be of limited utility. Amid all the complexity and uncertainty, the debate over Geithner’s proposal is a kind of ideological ink-blot test.

Some liberal critics charge that it is nothing more than a continuation of the Bush-Paulson policy of propping up failed banks and financial institutions until the crisis somehow resolves itself. They question whether Geithner, a former governor of the New York Federal Reserve, is capable of administering sufficiently harsh medicine to his former peers in the realm of high finance. Many conservatives, relieved by the voters of primary responsibility for fixing the mess, are hoping to exploit populist anger over the massive wealth transfer from taxpayers to Wall Street.

The essence of Geithner’s plan is to reanimate the market for the securitized mortgages and other loans that no one wants to buy now. Until banks can take these toxic assets off their books, they won’t be able to resume lending. Geithner proposes to use what’s left of the TARP (Troubled Assets Relief Fund) money to entice private actors, such as hedge funds, to buy the assets.

Treasury Secretary Tim Geithner.  (AP Photo/Gerald Herbert)

The basic idea here is that these private money-managers will do a better job of pricing the assets than the government ever could. If the spoiled assets regain their value, these private buyers win–but so do taxpayers, who would no longer have to foot the whole bill for the failures of the past.

Conversely, if the assets do not regain their value, then everybody loses. Well, almost everybody. In order to persuade private buyers to take the plunge into the toxic pool, the Geithner plan insures them against downside risk.

Despite their admiration of Obama, many liberals are unhappy with this arrangement. They decry the plan as yet another subsidy to the very people whose reckless risk-taking in search of outsized profits got us into this mess. They complain that Geithner’s plan is, at best, a palliative that doesn’t address the underlying cause of seized-up credit markets — namely, the fact that major U.S. banks are, for all practical purposes, insolvent. Elizabeth Warren, a Harvard law professor who heads the panel Congress set up to oversee TARP, likens the Geithner plan to an IV drip for “zombie banks.”

Putting the big banks on life support, in this view, merely prolongs the agony and could lead to a long period of Japanese-style stagnation. Better to follow the sterner Swedish model: Nationalize insolvent banks, wipe out equity holders, and return a smaller number of healthy banks with clean balance sheets to private hands.

But nationalization could wind up costing taxpayers a fortune, while also causing collateral damage to the secondary market for securities backed by mortgages in other loans. Congress’ hot-headed reaction to the AIG bonus scandal did little to inspire confidence in the federal government’s ability to manage financial companies. Furthermore, Obama’s economic team seems willing to bet that bank assets are worth more than today’s depressed market prices suggest.

In short, Obama and Geithner are working to restore the financial sector as it existed roughly a decade ago….

Read the rest:
http://news.yahoo.com/s/realclearpolit
ics/20090326/cm_rcp/whats_behin
d_the_geithner_deba

Related:
http://michellemalkin.com/2009/03
/27/the-strange-sacking-of-a-to
p-treasury-official/

U.N. ‘Climate Change’ Plan Would Likely Shift Trillions to Form New World Economy

March 27, 2009

Here is why you might think more about a president of the United States that favors a stronger UN and even a world government along with new “climate change” rules, regulations and spending….  We pay: they play….

Don’t forget this is the same UN whose leader called the U.S. a “deadbeat” nation a few short weeks ago:

From March 12: “

Speaking at a monthly briefing with reporters this morning, United Nations Secretary-General (SG) Ban Ki-Moon acknowledged that he referred to the United States as a “deadbeat” donor during a meeting yesterday with members of Congress. A Republican on the House Foreign Relations Committee, Ileana Ros-Lehtinen was clearly irked telling reporters later that the United States contributes “a whole lot of taxpaper dollars to the UN and doesn’t deserve to be called a deadbeat.”

“My point was simply that the United Nations needs the full support of the United States, ” Ban Ki-moon responded at the press conference today. “The United States is our largest contributor, and it is hard to follow up with few funds for growing peacekeeping missions and other activities.”

http://talkradionews.com/2009/03/uns-ba
n-ki-moon-questioned-on-deadbeat-comm
ent-on-united-states-arrears-of-over-1-billion/

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 A United Nations document on “climate change” that will be distributed to a major environmental conclave next week envisions a huge reordering of the world economy, likely involving trillions of dollars in wealth transfer, millions of job losses and gains, new taxes, industrial relocations, new tariffs and subsidies, and complicated payments for greenhouse gas abatement schemes and carbon taxes — all under the supervision of the world body.

By George Russell
Fox News

Those and other results are blandly discussed in a discretely worded United Nations “information note” on potential consequences of the measures that industrialized countries will likely have to take to implement the Copenhagen Accord, the successor to the Kyoto Treaty, after it is negotiated and signed by December 2009. The Obama administration has said it supports the treaty process if, in the words of a U.S. State Department spokesman, it can come up with an “effective framework” for dealing with global warming.

The 16-page note, obtained by FOX News, will be distributed to participants at a mammoth negotiating session that starts on March 29 in Bonn, Germany, the first of three sessions intended to hammer out the actual commitments involved in the new deal.

In the stultifying language that is normal for important U.N. conclaves, the negotiators are known as the “Ad Hoc Working Group On Further Commitments For Annex I Parties Under the Kyoto Protocol.” Yet the consequences of their negotiations, if enacted, would be nothing short of world-changing.

Read the rest:
http://www.foxnews.com/story/
0,2933,510937,00.html

Obama Budget: 42% See Help; 43% See Hurt

March 27, 2009

Voters are evenly divided over whether President Obama’s proposed $3.6 trillion budget will help or hurt the economy.

The latest Rasmussen Reports national telephone survey found that 42% believe it will help the economy while 43% say it will hurt.

The data, combined with two earlier surveys tracking the topic, shows that opinion on both sides of the debate are fairly entrenched. The data also indicates that proposals for health care reform are likely to be the central front in the budgetary debate.

Read the rest from Rasmussen:
http://www.rasmussenreports.com/pub
lic_content/business/general_business
/voters_divided_as_to_whether_obam
a_budget_will_help_or_hurt_economy

For Obama and Geithner: Action Would Speak Louder Than What We Have Now

March 27, 2009

“People have confidence in Obama and generally want him to succeed,” says Frank Luntz, an experienced pollster. “But they don’t necessarily translate that confidence into his policies or the government.”

Bingo.

Treasury is a confidence black hole.  Why?  Because despite many efforts to point the blame at Wall Street and greedy executives, nobody has said, “The regulaters screwed up.”  Instead we have been told “we inherited this Bush mess and Bush decreased regulations so we need more regulations — we need more government.”

We don’t need more government.  We need better government and more accountability: from the President through Barney Frank and the rest in congress and to Geither and all the other bureaucrats.

Who among us thinks Barney Frank and Christopher Dodd screwed up?  Who has trust and confidence that Barney and Chris and Tiny Tim Turbo Tax and even Obama can get us out of this?

Yesterday it looks like Mr. Geithner actually fired — or at least sent into the penalty box — one of his top deputies.  Now we are getting to the issue.

Scott Polakoff at Treasury’s  Office of Thrift Supervision  is on ice: and Treasury needs to explain why and take responsibility for him and his actions and fast.

Maybe we don’t need to make more rules: maybe we need to enforce the ones we have and enforce accountability.

Recovery will be about trust and confidence.  Without that, investors hold back, businesses don’t hire and workers don’t spend.

A government mea culpa would be a good first step: and continuing this line of “we inherited” is now more than paper thin it is a sign of impotence.

“What we need today is more optimism and more confidence,” Larry Summers said.

“Consumer confidence is slightly up. The market is slightly up,” Biden said.

“We need confidence to make this recovery work,” President Obama said.

Confidence can’t be produced with fairy dust or a magic wand.  We get it the old fashioned way: we earn it.

President Obama has to take dramatic action: not giggle through an appearance on Leno and “60 Minutes” or jabber on an Internet town hall.  That may work with tweens but it is not so good with real adults with real money.

Campaigning is for wannabees.  Those with real responsibility and accountability have to act to be credible and earn trust and confidence.

Now’s the time.

Related:
http://michellemalkin.com/2009/03/27/
the-strange-sacking-of-a-top-treasury-official/

Stumulus: Obama and Congress Sold Us A Lot Of Useless Swampland; Ready To Buy More?

Obama Buys Into Anger, Fear as Political Tool
Obama, Geithner, Summers Plan for “Toxic Assets” May be Toxic Itself

Obama’s public overexposure

Obama Still Thinks After Economy Recovers; Bank, Finance Good Times Can Return?

 Obama’s Economic “Rescue;” “The plan is very, very clever. Maybe too clever.”

 Stimulus: Way Fewer Jobs Than You Thought

 The Great Give Away of Taxpayer Money By Bigger and Bigger Government

 President Tries To Harness Public Anger To Move His Budget

Obama Dead Wrong On Stimulus, Caterpillar Company Jobs, Recovery