Monday, October 20, 2008

Bribing Americans With Their Own Money

The Dems have been pushing another stimulus package, and today Helicopter Ben threw his weight behind more outright bribery of the American public.
Federal Reserve Chairman Ben Bernanke told Congress on Monday that another wave of government spending may be needed as the economy limps through what could be an extended period of subpar growth.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke told a congressional panel.

It was the first time the central bank chairman had explicitly endorsed a second stimulus package. The government sent out about $100 billion in tax rebate checks over the summer to try to jump-start the economy, but consumer spending has struggled since then. Retail sales fell for three consecutive months through September.

The White House also appeared to be warming to the idea of another spending program. Spokeswoman Dana Perino said the Bush administration was "open" to a stimulus plan, depending on its makeup, and would look to Bernanke and others for guidance.

There's no way the White House can oppose this...not two weeks before the election. Well played by the Dems politically.

Of course, it was our money to begin with...

Somebody Explain This To Me

Why is Obama letting Colin Powell off the hook and giving this asshole a job?

Former US Secretary of State Colin Powell will be asked to serve as a White House adviser if Barack Obama is elected president, the Democratic nominee said today.

Mr Powell, a retired four-star general and widely-respected Republican, crossed party lines to back Mr Obama yesterday as he described his rival John McCain's campaign as petty and troubling.

The coveted endorsement will help Mr Obama tackle criticism that he is too inexperienced on foreign policy and military issues to become the 44th president of the United States.

Today, the 47-year-old Illinois senator said his high-profile supporter would have a key role in an Obama administration.

``He will have a role as one of my advisers,'' Mr Obama told NBC's Today show.

``He's already served in that function, even before he endorsed me.

``Whether he wants to take a formal role, whether that's a good fit for him, is something we'd have to discuss.''

Mr Obama also said he ``would love to have him at any stop'' on the campaign trail and added that Mr Powell has an ``open invitation'' to join him.

Once again this emphasizes my major problem with Obama: his foreign policy is in many ways just as bad as Bush/McSame. The fact that he's even considering Powell after his involvment in lying to the world about Saddam's "mobile chemical weapons labs" and being the worst SecState ever (yes, even worse than Condi Rice) means Obama should be measuring Powell for prosecution, not a goddamn job offer.

Colin Powell's endorsement is fine, if you consider an endorsement from a man with that much blood on his hands as a good thing. But there is no good reason for Obama to then turn around and say "Hey come join us."

Barry, we don't want the lying sack of crap. He's an albatross at best, he's using you to salvage his own reputation, and at worst, he's hoping you'll pardon him or something.

Tell him "thanks for the endorsement" and let him suffer out in the cold. He's responsible for the deaths of hundreds of thousands through the sins of cowardice and inaction. Why would anybody want him around Obama as an advisor?

Unless, surprise! Obama's foreign policy is really Bush's foreign policy, only with more talking before we fucking bomb civilians and create more terrorists.

The one thing that will not change is America's foreign policy. That's not change that Obama believes in, apparently.

Republicans Killed Fannie/Freddie Reform

...not the Democrats. In fact, Freddie Mac apparently forked over $2 million to a GOP consulting firm to scuttle the legislation.
Freddie Mac secretly paid a Republican consulting firm $2 million to kill legislation that would have regulated and trimmed the mortgage finance giant and its sister company, Fannie Mae, three years before the government took control to prevent their collapse.

In the cross hairs of the campaign carried out by DCI of Washington were Republican senators and a regulatory overhaul bill sponsored by Sen. Chuck Hagel, R-Neb. DCI's chief executive is Doug Goodyear, whom John McCain's campaign later hired to manage the GOP convention in September.

Freddie Mac's payments to DCI began shortly after the Senate Banking, Housing and Urban Affairs Committee sent Hagel's bill to the then GOP-run Senate on July 28, 2005. All GOP members of the committee supported it; all Democrats opposed it.

In the midst of DCI's yearlong effort, Hagel and 25 other Republican senators pleaded unsuccessfully with Senate Majority Leader Bill Frist, R-Tenn., to allow a vote.

"If effective regulatory reform legislation ... is not enacted this year, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose to the housing market, the overall financial system and the economy as a whole," the senators wrote in a letter that proved prescient.

Unknown to the senators, DCI was undermining support for the bill in a campaign targeting 17 Republican senators in 13 states, according to documents obtained by The Associated Press. The states and the senators targeted changed over time, but always stayed on the Republican side.

In the end, there was not enough Republican support for Hagel's bill to warrant bringing it up for a vote because Democrats also opposed it and the votes of some would be needed for passage. The measure died at the end of the 109th Congress.

McCain, R-Ariz., was not a target of the DCI campaign. He signed Hagel's letter and three weeks later signed on as a co-sponsor of the bill.

By the time McCain did so, however, DCI's effort had gone on for nine months and was on its way toward killing the bill.

Both sides still are responsible for the Fannie/Freddie meltdown, let's not forget that the Dems blocked the reform efforts from the beginning, but Hagel reform measures included the elimination of programs for minority homebuyers. It turns out the "free market" took care of these subprime targets all too well, the only reason Republicans were willing to add "regulation" to Fannie and Freddie were so they could shut out minority homebuyers from federal mortgage cash by cutting funding for low-income housing programs.

But the Republicans also turned on ANY notion of reforming Fannie and Freddie once the lobbyist money started flowing, and they were able to buy off both sides of the aisle too. The mortgage companies then stepped into the gap, and when the GOP saw how much money was being made, they quickly abandoned efforts to fix Fannie and Freddie.

Still, the fact that the GOP-led Congress wouldn't even let the measure up for a vote says something.

Credit Markets Finally Thawing Out

LIBOR rates dropped dramatically today, even the 1- month and 3-month rates dropped by a massive 43 basis points and 36 basis points respectively. That's nothing short of incredible. The TED spread dropped 36 basis points too. This actually is good news (short-term anyway), and will stoke a pretty significant rally in the next few days, especially if these numbers keep dropping at this pace.

But the base problem of the world housing depression remains. Third quarter will be a recessionary one, guaranteed, as will 4Q 2008 and most likely 1Q 2009. It could spread deep into 2009, depending on the new administration's first few moves in January. We're still looking at a long-term bear market here. The good times are over.

And it will get worse before it gets better. We've set a huge land mine with trillions in the bailout plans. When that liquidity shakes loose in the money markets -- and indications are that's thawing out now -- the other shoe drops.

Hyper-inflation. We've solved one problem by making the base problem worse. Yes, the housing collapse means massive deflation. But the massive bailout means massive inflation too. Which one will win out?

Best case scenario is that we've taken trillions in real estate values and equity and given them to banks...a transfer of wealth on an unprecedented scale. We've taken away trillions of American homeowner wealth...not that we had all that much to begin with, and given it to banks and the market by creating fiat money instead.

I'm voting for inflation. Lots of it. And very, very soon. The credit markets are thawing only to reveal the the long frozen inflation beast hidden under all that ice like Godzilla buried under the North Pole, and it's about to wake up and go on a rampage.

Obama's Job Creation Versus McSame's Spending Freeze

The debate raging on how to fix the economy is the government's role in all of this, whether or not we should increase spending right now, or sharply curtail it and cut taxes instead. Both plans will increase the deficit. That's the important thing to remember. McSame wants to cut the tax rate on corporations and businesses and deregulate health care coverage, but cut spending across the board. Obama wants to increase spending on health care and education, and cut taxes on the middle class, but raise taxes on the wealthy.

The first approach, McSame's, is best described by Digby: Neo-Hooverism.
I see that Donna Brazile signed up for neo-Hooverism on the Sunday chat shows this morning, seeking to constrain a potential Democratic Administration by suggesting we have to tighten our belts in the middle of a recession, which is nothing short of economic suicide. I can tell you that this is not a unanimous view inside the Democratic inner circle, based on what I experienced yesterday.

I was fortunate enough to see Bill Clinton at a small-group discussion in Century City for a group of entertainment industry professionals. This was not a campaign event, and indeed the President was somewhat constrained by campaign finance laws to really advocate for any candidate. But aside from Clinton announcing his preference for Gray's Anatomy and Boston Legal, what was most notable was his discussion of the hypothetical "first 100 days" for a new President. This is from my notes:

The next President is going to face much different challenges than what I faced in 1993, and he can't do the same things... he shouldn't try to fix the deficit right away, but he's going to have to stimulate the economy by paying for things that are useful... we have had too much risk and not enough legislation... we need a government strong enough to prevent the market from devouring itself... I was happy to see Senator Obama call for a moratorium on foreclosures, and we also need to do what we did in the 1930s by buying up these mortgages and giving homeowners the ability to stay in their homes, to minimize disruption and maximize confidence... so let's stimulate the economy, and give birth to a new economy based on old-fashioned financing and modern products. It cannot be based on finance.

Obviously Clinton is part of a different side of the Democratic Party than Senator Obama. But there's a significant amount of overlap, and to hear the President who ushered in deficit reduction and fiscal responsibility in the 1990s recognize very clearly the need for stimulus, in the areas of infrastructure, job creation and the new energy economy, makes me very much reassured and hopeful. And indeed, in the last debate Obama pushed back on the idea of reinstituting PAYGO during a time of recession. This idea of helping state and local governments, putting money into infrastructure and green energy and jobs is very much a part of Obama's stimulus policies. They need to be bigger, but there's no trace of neo-Hooverism there.
If McSame's approach is Neo-Hooverism, then the opposite is what we need. If both the Clinton and Obama wings of the Dems agree that stimulus spending and job creation, a sort of Neo-New Dealism, is the way to go, like Digby I've got hope.

But the GOP will do everything they can to stop it, as will the Village. Neither one of them is interested in seeing Government help people. They yell "Socialism!" even as the financial system gets trillions in taxpayer money redistributed to it, with the full intention of saying "OK, we got ours, we simply can't afford to help YOU poor schmucks now. You're on your own. You get to use the free market, and since you can't compete with lose. Have a nice day."

On the other hand, we will have to eventually massivley restrain spending or massively raise taxes. Bush doubled our national debt in 8 years. We have no choice, America is still in hock to China and Saudi Arabia, not to mention held hostage by entitlement programs. Obama has decided to go with raising taxes for a bit, while McSame wants to cut spending.

We've gone with 30 years or so of cutting taxes. Didn't work...and spending exploded anyway. It's time for a different approach.

That is if the economic system doesn't fall apart. There's no guarantee that we're out of the worst of the crisis yet...we've just punted into an undetermined point in the future.


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