Thursday, December 4, 2008

The GOP Game Plan

Ed Kilgore at The Democratic Strategist asks the mutli-trillion dollar question:

After watching a media appearance by Fred Thompson, Josh Marshall poses a very good question: do conservatives and/or Republicans actually favor a deep recession as a way to purge the economy of speculative excesses and debt?

While I am quite sure that Republicans are not about to hoist banners reading "Deflation Now!" a look back at the conflicts over the first "bailout" package and some of the GOP rhetoric surrounding the presidential campaign should make it clear that there is in fact a strong undercurrent of conservative hostility to any sort of relief measures that don't simply involve tax cuts or deregulation. Those who convinced themselves that the mortgage crisis was caused by ACORN and poor and minority borrowers certainly are in no hurry to succor such Obama-supporting miscreants. More generally, there's always been a large faction of conservatives who favored the occasional "healthy" recession to wring "excess demand" out of the economy. One of the innovations associated with the GOP's embrace of supply-side economics was a partial abandonment of that point of view as "root canal" or "Hooverism." But in the face of an actual recession, like the one St. Ronald Reagan presided over in 1981-83, there was no notable conservative support for any economic stimulus that didn't focus on high-end or corporate tax cuts.

At Open Left today, Matt Stoller argues that conservatives aren't that interested in economic stimulus because creditors actually benefit from debtors in a deflationary climate. That's true so far as it goes, though it's not clear the rank-and-file base of the GOP can currently be described as the "creditor class." But I think there is a large and important kernal of truth in Matt's analysis, not on economic grounds, but on moral grounds: conservatives like to think of themselves as sober and self-reliant people who don't get themselves into the kind of financial trouble that merits government intervention. For those who don't immediately face personal financial calamity in the current economy, it's easy and very seductive to think of "economic stimulus" as identical to moral hazard, and deeply resent the use of tax dollars to relieve less worthy citizens of the consequences of their risky behaviors, particularly if a recession is thought of as good for the economy in the long run.

While this is excellent analysis, the reality is much simpler if you go on psychology of Republicans rather than economic theory:

  1. The Republicans just got their asses kicked in the elections.
  2. They want to get back in power.
  3. The easiest way to get back in power is to blame the economy on Obama.
  4. Therefore, the GOP will do everything in their power to obstruct Obama's economic policy and then blame the Democrats.
That's it. That's the next two years, if not four years of GOP policy: stop the Democrats from passing any legislation, then blame the Dems when things go to shit. If it's anything like the last two years, the Dems will promptly fold time and time again and give in to nearly every GOP concession, and then get donkey punched in the back of the head anyway when the GOP then turns around and blames the Dems for the weak, incremental legislation that gets passed as a result.

The GOP will run Washington and will do so with help from the Village Idiot class, who will helpfully launch "The Economy Was Better Under Bush!" articles left and right.

That's it. That's the plan. You don't need to understand economics. Hell, the GOP doesn't understand economics at all, that's how we go into this. The Right Wing Noise Machine doesn't understand a damn thing about economics. But they understand spin.

They will ruthlessly attack Obama and the Dems. It's nothing more than obstruct legislation, force concessions, claim victory, blame the Dems, repeat.

The GOP doesn't have any solutions to this mess. They simply want to paint anything Obama does as bad and will as a result blame him for everything bad that will happen over the next two years, and then hold up "The Librul Media's Treatment Of Bush" as their argument that payback is a bitch.

Then they figure they'll swoop in and sharply reduce the Democrat's margins in Congress in 2010 and outright take back Congress and the White House in 2012, and Obama will go down as The Worst President Ever Because He's Worse Than Bush Was.

That's it. That's the entire plan, folks.

And unless the Dems finally find their spine and fight back, it will play out exactly like above. I guarantee it.

Rates Near Historic Lows! ACT NOW!

...because Treasury wants to cut the rates on new mortgages to 4.5% as I pointed out this morning. The questions about the plan are thus: Cui bono? Who benefits from the leak of this plan? Not the mortgage industry. Home sales this week have dried up as buyers are now backing out, waiting for this new lower rate. Not Treasury, because now they have to do this or else. I can't see a reason to do this, especially when the plan itself is still in the larval stage.

The other question is "Will it work?" Remember how we got into this mess? Historically low interest rates and easy credit after the 2002 recession when Alan Greenspan lowered the Fed rate to 1% and mortgage rates dropped. Everyone and their mom bought a home...and now Treasury wants to drive those rates even lower. Stop and think about that for a second. Greenspan dropped rates so low that everyone bought homes on easy credit and cheap financing and it created a massive multi trillion dollar housing bubble. When it popped, BOOM went the entire global economy.

So, somebody explain to me how the best plan for stabilizing the housing market is to destabilize the housing market into an even larger housing bubble than before, will ya? This is like fighting fire with lava.

The Stupidity Will Not Die

The wingnuts' favorite Obama Conspiracy Theory is that he's not a natural-born citizen of the US. Lawsuits in fact were filed in order to try to stop the election to prevent Obama from becoming President and handing us all over to one billion Muslim killers riding cyborg velociraptors armed with heat-seeking laser pods and fusion-powered jump jets.

Despite the fact that the state of Hawaii's Republican governor has produced a birth certificate and the most egregious lawsuit, Donofrio v. Wells, was summarily dismissed as frivolous time-wasting crapola, Clarence Thomas (yes that Clarence Thomas) apparently thinks it would be a good idea to at least discuss the "merits" of the case. With the Supreme Court. Of the United States. Of America.

No, seriously.

The U.S. Supreme Court's justices will discuss at their Friday conference tomorrow the Obama's-not-a-natural-born-citizen lawsuit known as Donofrio v. Wells.

As Chicago Tribune reporter James Janega writes:

The suit originally sought to stay the election, and was filed on behalf of Leo Donofrio against New Jersey Secretary of State Nina Mitchell Wells.

Legal experts say the appeal has little chance of succeeding, despite appearing on the court's schedule. Legal records show it is only the tip of an iceberg of nationwide efforts seeking to derail Obama's election over accusations that he either wasn't born a U.S. citizen or that he later renounced his citizenship in Indonesia.

In one of those delicious ironies that makes life so interesting, the justice who distributed the case to his colleagues was none other than Clarence Thomas, only the second African American to sit on the high court. I can only assume the justice saw some potentially interesting legal issue in the lawsuit.

I for one welcome our mysteriously competent Chief Executive. Clearly he's not a product of American education, he's far too intelligent. Ergo, he must be an Indonesian Muslim sleeper agent who will take our guns and kill us all in our sleep, but not if we band together to fight him WOLVEREEEEEEEENS!

The Stupid, it hurts.

I'm Just Blown Away

It seems every six months or so we see a leak to the Jerusalem Post from Israeli defense officials stating plans to attack Iran. This time around the difference is that Israel is openly saying it's not going to wait for the US to approve of an attack.
Israel is drawing up plans to attack Iran's nuclear facilities and is prepared to launch a strike without backing from the US, it has been reported.

Officials in the Israeli Defence Ministry told the Jerusalem Post that while they prefer to act in consultation with the US, they were preparing plans that would allow them to act in isolation.

"It is always better to coordinate," a senior Defence Ministry official told the newspaper. "But we are also preparing options that do not include coordination."

Will Israel go off the reservation, or is that the plan all along?

Dear America:

"Let's just exterminate a billion Muslims. That'll fix em."

--Ben Shapiro

...No seriously. He said this.
Our enemies are determined. They will not quit just because we offer them Big Macs, Christina Aguilera CDs, or even the freedom to vote. They will not quit just because we ensure that they have Korans in their Guantanamo cells, or because we offer to ban “The Satanic Verses” (as India did). They will only quit when they are dead. It is our job to make them so, and to eliminate every obstacle to their destruction.
This is what passes for international discourse in 2008...the open advocacy of genocide.

Thursday Job Numbers

Weekly unemployment figures dropped a smidge to 509,000 this week, but AT&T just announced it's eliminating 12,000 jobs.

Not good. If even AT&T is cutting back five figures on layoffs, we're in for a brutal year in 2009.

Banking On Bankruptcy

Yesterday I discussed my reasons for believing that the Big 3 automakers weren't going to make it, bailout or no bailout. This morning comes the news that GM and Chrysler may indeed be considering bankruptcy in order to secure a bailout.
General Motors Corp and Chrysler LLC are considering accepting a pre-arranged bankruptcy as the last-resort price of getting a multi-billion dollar government bailout, Bloomberg reported, citing a person familiar with internal discussions.

In response to automakers' bailout plea, staff for three members of Congress have asked restructuring experts if a pre-arranged bankruptcy -- negotiated with workers, creditors and lenders -- could be used to reorganize the sector without liquidation, Bloomberg said.

General Motors and Chrysler could not be immediately reached for comment by Reuters.

Industry executives and analysts say the immediate carnage from a bankruptcy of General Motors Corp, Ford Motor Co or Chrysler would spread throughout an industry that is bleeding cash in a global slowdown.

All three automakers have urged Congress to authorize $34 billion in loans and credit lines, saying they will restructure, and cut models, jobs and executive pay to remain viable.

My argument stands: would you buy a car from GM or Chrysler right now knowing the company is going to be facing bankruptcy?

I'm betting the answer to that is no. We're looking at the end of an industry here.


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