This semi-opinion piece from the AP is to my mind, less about the economy than it is about the MSM’s changing view of Obama’s economy. The gist of it is that Obama’s ability to pin the current woes on his predecessor declines with each passing day. There’s a line that will be crossed at some time in the future. How far are we from it?
Although the administration likes to say it “inherited” the recession and trillion-dollar deficits, the economic wreckage has worsened on Obama’s still-young watch.
Every day, the economy is becoming more and more an Obama economy.
More than 4 million jobs have been lost since the recession began in December 2007 — roughly half in the past three months.
Stocks have tumbled to levels not seen since 1997. They are down more than 50 percent from their 2007 highs and 20 percent since Obama’s inauguration. …
And that’s just for openers. Here’s a line which encapsulates an argument I’ve been consistently making. Obama has sold the country a comprehensive solution tomorrow whose efficacy cannot be verified today. He’s promised that someday his stimulus package will lift us into the broad uplands. But today, We Dine In Hell.
“You created a situation where you cannot be wrong,” the chairman of the Senate Finance Committee, Montana Democrat Max Baucus, told Geithner last week.
But what if you are?
It has been argued that the prospect of being hanged clarifies the mind wonderfully. It can also make people drop their partisan preferences and more readily face facts. The Moderate Voice is not a right wing site by any measure. But now it is beginning to realize that the Democrats also played a leading role in creating the subprime mortgage mess. “This is a video from 2004 where Democrats seem to oppose and Republicans seem to favor stricter review and regulation of Fannie Mae and Freddie Mac. This is not to say that the Democrats did not favor stricter review or that the Republicans are innocent from blame and I do blame both sides for the mess. But for those who try to paint the other picture, the Democrats being those who fought for regulation against the GOP, it does change things a bit. It’s all in their own words, so watch it for yourself.” Why is this ancient history important? For one big reason: this means that many of the same people who were the cause of the problem have joined the ranks of the Saviors. Again:
“You created a situation where you cannot be wrong,” the chairman of the Senate Finance Committee, Montana Democrat Max Baucus, told Geithner last week.
But what if you are?
The NY Post reports that “On Wall Street, they’re call ing the Obama economic team “the gang that couldn’t shoot straight,” after Jimmy Breslin’s novel about a bunch of moronic mobsters.
The sad thing is, the “gang” took office with high hopes on Wall Street. Treasury Secretary Tim Geithner, the former New York Fed chief, was supposed to have the experience needed to handle the banking crisis. Larry Summers, the head of the president’s National Economic Council, was part of the brains behind the Clinton-era recovery.
And Paul Volcker, chairman of Obama’s Economic Recovery Advisory Board, helped save the free world back in the late 1970s and early ’80s as chairman of the Federal Reserve when he squeezed inflation out of the economy and (along with President Ronald Reagan) helped return us to prosperity.
… The disappointment on Geithner starts with the fact that, since taking the job at Treasury, he’s failed to articulate a way to bail out the imploding banking system – even though knowledge of the banking system’s ills was supposed to be his strong suit. Worse, the word is that Geithner is still having trouble putting together a senior staff so he can come up with a bailout plan.
Thanks to all the class warfare produced by his boss, I’m told, Geithner can’t find qualified people from Wall Street (the folks who know markets better than anyone else) to help solve the crisis. Instead, one saddened Obama supporter from Wall Street told me, “He’s looking at a combination of bureaucrats and academics for these jobs.”
Larry Summers? Everyone knows he’s smart, but the word from Wall Streeters who are trying to pass him ideas for solving the banking crisis is that his ego’s as large as his intellect. That is, they’re finding him impossible to deal with.
Perhaps the biggest disappointment is Volcker, a true American hero who as Fed chairman tamed the stagflation of the ’70s – but seems to be muzzled at a time when the country needs him most.
Volcker, possibly the world’s most experienced economist, is being treated like the crazy aunt in the attic. He’s around, wandering the halls – but no one in the administration seems to care what he thinks.
What if they don’t care? What do you think, Hugo?
Update: Plus, maybe the honeymoon is starting to end when Washington Post editorials start calling you “George W. Obama”. The writer, Jackson Diehl, is deputy editor of The Post’s editorial page.
Whoopi Goldberg is ranting that is is unfair to tax her at higher rates.
That’s rich.
And what if the very people you’ve promised the moon and the stars to, start figuring out that their future is destroyed?
Teen unemployment skyrockets; Unemployment numbers far worse for blacks
What then?
OT:
Ye gods, take a look at this (on Obama and narcissism):
http://tinyurl.com/c9pxz2
Also, you can see he has some fans on Amazon so, at the very least, he doesn’t appear to be some random nobody off the street (or some out-of-left-field crackpot):
http://tinyurl.com/dcgtws
There’s more on the usual search engines if you want more corroboration on his credentials.
It would be nice if some adults from the Democratic party showed up at the White House and told Obama to stop, its over.
But since the Democrats are by definition the party of childish magical thinking, its not clear there ARE any adults there anymore. Plus most/all of the Democratic leadership are co-conspirators, and heavily invested in this insanity.
There are some nasty, viscious, self-serving pols though, who at some point may be willing to throw Obama under the bus in last-ditch self-defense.
Care to bet how much longer it takes for the rotten eggs to start getting tossed at congress-critters?
Without the Clinton metastastization of the Community Reinvestment Act in 1995, the whole sub-prime mortgage mess could not have occurred. Under it, banks were coerced by government into lending good money to bad-risk borrowers, at first in inner cities to buy votes. After Fannie and Freddie developed those anonymizing ‘mortgage-backed securities’ to sell to suckers who didn’t know about the bad risks, it ballooned and popped. And it’s still on the books.
And it’s revealing that the so-called ‘stimulus’ just signed by Obama is called the ‘Recovery and Reinvestment Bill’. Obviously he’s part of the same cabal that took pride in diverting good money to bad risks with the CRA, and it’s not hard to see that the ‘stimulus’ is just a massive reapplication of the same principle.
Now, in spite of a huge press effort to demonize mortgage lenders in blame for that government-mandated bubble, public is beginning to catch on to its root causes in the CRA. Wonder how long it’ll be before someone says ‘This Isn’t The Reinvestment Bill That I Knew’.
The road to gerontocracy is in many ways irreversible.
Europe I think will see a huge wave of young people emigrating, but this is of course a reversion to the historical pattern, rather than anything new.
The economy is not an Obama economy, IMHO, mainly because it is utter nonsense to pretend that a man who has been in office for less than two months could really have had any material impact to this point. The economy has a very long feedback loop; there are millions of decisions made each year that we cannot assess for a decade. Was it worth getting that college degree? Was opening that new plant in Indonesia a good investment? Was hiring that CEO a good decision by the board? Was that house a good deal? Will that new backhoe pay for itself?
Anything that involves the transformation of human or physical capital has a long OODA loop. This is why a stable legal system, clear property rights, and predictable taxation on investment is so important for improving our society.
However, the stock market is different. Why? Because equity markets are forward-looking aggregators of information. They bring together, using a single price signal, all of the various judgments made by investors about the future performance of a company (and, by extension, the economy). Markets are not perfect, of course, for a variety of reasons. But they are a “vote” from the investor class, based upon their perceptions of the future. And perceptions can change very fast: in the blink of an eye. Literally.
So while this may not be the Obama economy, it is most assuredly the Obama stock market.
Can we spook an entire, critical segment of our nation’s economy (investors) after just 30 days in office?
Yes We Can!
L3
Wretchard,
Who would have ever guessed that businesses would be unlikely to pay teenagers $10/hour (California minimum wage) in a Recession/Depression?
Never crossed my mind.
The “create or save” X-many jobs so-called prediction was another weasel-word phrase, which anyone with any respect for the English language would have pegged as such.
The “saved” jobs can be any number the administration wants it to be, because it’s based on “what likely would have happened” (but didn’t actually, in reality, happen) scenario, as drawn by economists and pundits most favorable to their cause, natch. It’s a hypothetical employment number based on equally hypothetical length-of-recession and severity-of-recession (depression?) numbers.
Like hurricane path prediction, the farther out you go from where we actually are now, the less accurate the model becomes.
Which gives Obama enormous squish room to make just about any claim he wants, as long as he can keep the supposed basis of prediction far enough “out there” in hypothetical land.
I disagree with Sen. Baucus’ choice of words. What the Obama administration has created is a MODEL or a SCENARIO in which they “cannot be wrong.” Not a “situation.” A scenario is a hypothesis — which is where Washington, D.C. lives. A situation is reality — which is where the rest of America lives.
This is the disgrace at the heart of all central planning. They don’t know enough — they can never know enough — to command and control something as huge and complex as the American economy. And yet the nimrods persist in acting like they can.
Blind men? Elephant?
Check.
There are some nasty, viscious, self-serving pols though, who at some point may be willing to throw Obama under the bus in last-ditch self-defense.
Live by the bus, die by the bus!
It would be the zenith of political poetic justice, wouldn’t it? Which is why it’ll never happen.
Leo Linbeck III,
You and others on this board have provided (and are providing) a high intensity cram course in post grad economics for those willing to read.
Thank you.
Just in case someone wants to pretend that the Fannie/Freddie disaster wasn’t foreseen, and that attempts by the Bush administration to head it off weren’t made, see following video.
Said disaster, after the ‘blame Bush’ election, now in the capable hands of many of the same blokes who nurtured the CRA through its growth stage.
http://themoderatevoice.com/26947/interesting-video-on-fannie-mae-and-freddy-mac/
programmer says:
Thank you.
L3 responds:
You are very welcome, and thank you for your contributions.
Cheers.
L3
We beg to differ, Leo!:
—
Witch Hunt Meets Dogfight
“Want to lose one million more jobs? Just keep talking.”
The ad slams “political rhetoric and short-sighted legislation” banning luxury travel by companies whose financial problems have prompted taxpayer bailouts.
Citing a recent industry study, the U.S. Travel Association says that 20% of companies that have not received taxpayer help have nonetheless cancelled events and meetings, FEARING PUBLIC CRITICISM.
Travel Industry Slams Obama, Congress Proposals in New Ads
In February, Mr. Obama rebuked financial institutions, saying,
“You can’t take a trip to Las Vegas or down to the Super Bowl on the taxpayers’ dime.”
Industry executives say there has been a wave of trip cancellations by corporations worried about “bailout backlash.”
Among them: Wells Fargo & Co., which got $25 billion in government money, recently cancelled plans to send 40 employees to a Las Vegas conference.
(the Wachovia open will not be called the Wells Fargo Open, either, although it will receive a million w/o notice or attribution)
Meanwhile entities still brave enough to risk bookings to Maui do so under a Pseudonym.
Geoff Freeman, the travel association’s senior vice president for public affairs, said the group is soliciting 60-second video auditions from industry employees, seeking a “face of the industry.”
“You’ve all heard of Joe the Plumber…well, we’re looking for Joe the Bellman,” he said.
—
Gulfstreams for Nancy, Greyhounds for the rest of us.
(AF One for THE One, of course)
One of four print ads in the campaign includes a photograph of the back of President Barack Obama’s head, superimposed over an empty stadium.
“Imagine holding a convention and no one showed up,”
the headline says.
“Until political conventions are held via conference call, we shouldn’t expect business to do so either,”
the text reads.
A quarter million jobs here, a quarter million jobs there,
pretty soon you’re talking real unemployment.
“The Department of Labor is reporting a loss of nearly 200,000 travel-related jobs in 2008, and Commerce Dept data predicts a loss of an additional 247,000 travel-related jobs in 2009.
THAT NUMBER MAY GROW IF THE RHETORIC IS NOT TONED DOWN.“
#3 The Old Guy
Reference your question at the end: Eggs are a source of protein that may be too valuable let rot and expend in such a way, given the economic hard times. There are a number of natural, non-organic, and eminently reusable items to hand that can substitute; and they don’t contribute to “gorbal wormening”.
Subotai Bahadur
Forcing the banks to give money to people who could not repay in the near future was the Clinton Recovery! there was nothing else from the loser and crew, it alone spured the economy and now we are reaping their fruits! thats why Clintons old team ain’t got the magic no more, there never ws any and won’t be any…
The Mortgage/Financial Crisis – A Visual Reminder Of How We Got Here
Agree with Programmer. Fascinating and instructive reading, always. My thanks to L3 and all other knowledgable commenters for the insight and education.
“The “saved” jobs can be any number the administration wants it to be, because it’s based on “what likely would have happened” ”
Bogie:
This is similar to the superiority of formulas over headcounts in taking a Census.
“This is the number of [insert desired minority here] likely to live in this block ”
(given the “proper” assumptions)
Doug,
Your example demonstrates the kind of impact a President can have on the economy, and I wouldn’t want to claim that there’s been no impact – especially since such a claim would be false.
But vast majority of the economy is not yet impacted by anything Obama has done – for the better or the worse. The financial meltdown was the result of 10 years of easy mortgage money leading to a housing bubble. The auto industry was broken years ago by the collusion of unions, management, and government. Las Vegas was overbuilt even before Obama’s silly remarks; the gaming industry is rolling craps for three reasons – excessive leverage, fierce foreign competition, and changing consumer preferences – none of which have anything to do with Obama. (Note that all three of these thrived in a consumption-oriented society that may never return. Oh well.)
But the impact is coming. Rest assured, if Obama’s budget passes, he nationalizes health care, raises taxes on investment, and imposes his environmental religion on the nation, these things will have a massive, long-term impact.
Then it will be certainly be appropriate to call it the “Obama Economy.”
Or “Europe” for short.
Cheers.
L3
I think L3 is right. We’re not in the Obama economy yet. And maybe the reason why the market has reacted so sensitively is because it reflects the expected value of their traded companies.
The Prof asks And what if the very people you’ve promised the moon and the stars to, start figuring out that their future is destroyed?
For Democrats, it is always the Republicans, and rich people, who are the cause of all of their problems.
The Depression lasted for the first ten years of FDR’s Administration, and to this day, devout Democrats blame it on Hoover. You’ll notice Obama, Hillary, Kerry, all of them blaming every single thing on Bush now, it’s how they open virtually every speech they give. (What a vast difference between the very gracious gentleman, Mr. Bush. Can anyone google any nastiness remotely approaching the routine aspersions cast by today’s ruling Democrats ever coming out of Bush’s mouth?)
In Philly, Democrats have ruled the city in an unbroken domination for sixty years. The school budget is $2.3 billion, with a 50% dropout rate, and of the ones who “graduate” from high school, 2/3 test as less than proficient in math and English. In the bluest of the blue neighborhoods in Philly, the adult male unemployment rate is 50%. More than one-third of these adult males have criminal convictions. And all of this is still the Republicans’ fault, the fault of the “rich people” who live in the suburbs. Hell, even murderers get a pass. Our last commissioner is famous for saying that the atrocious number of homicides in the city are “caused by guns.” Got that? If the evil rich people didn’t manufacture guns, the murderers would be nice guys.
When the true Obamans find out their future has been destroyed, they will absolutely know who to blame – the “rich” and the Republicans.
Leo,
Also if he continues to catastrophize everything
“because a crisis is a terrible opportunity to waste”
the dominoes will continue to fall.
…but what else does he know?
In Franklin Raine’s World of “Riskless Assets” all’s fair.
Gulfstreams have become the new SUV equivalent of choice for demonization.
Meanwhile our professional pols travel as per usual, and party on $100/lb Kobi.
Some Pigs are indeed more equal.
The song remains the same.
…as do the results.
CRISIS IS ‘GREAT OPPORTUNITY’
WASHINGTON (AP) – President Barack Obama on Saturday challenged his country to see its hard times as a chance to “discover great opportunity in the midst of great crisis.”
“That is what we can do and must do today. And I am absolutely confident that is what we will do,” Obama said in his weekly radio and video address, taped a day earlier at the White House.
The work week ended on more down news, with the report of 651,000 more American jobs slashed and an unemployment rate climbing to 8.1 percent. That is the highest rate of people out of work in more than 25 years, as the recession continued to put enormous pressures on families and industries.
Programmer @ 11
I concur in your comment about Leo Linbeck III and others. And you, yourself, are no slouch as a source of information.
Best wishes,
Jim
Wretchard quoted:
“Thanks to all the class warfare produced by his boss, I’m told, Geithner can’t find qualified people from Wall Street (the folks who know markets better than anyone else) to help solve the crisis.”
Joe Kennedy (John Kennedy’s father) operated in that gray area between ruthless businessman and gangster. Franklin D. Roosevelt realized that it took a thief to catch one and made Joe Kennedy head of the SEC (a correct decision IMHO).
Leo Linbeck III said:
“The economy is not an Obama economy … However, the stock market is different. Why? Because equity markets are forward-looking aggregators of information. They bring together, using a single price signal, all of the various judgments made by investors about the future performance of a company (and, by extension, the economy). Markets are not perfect, of course, for a variety of reasons. But they are a “vote” from the investor class, based upon their perceptions of the future. ”
I have to join the chorus and express my agreement with L3′s wise comment. I’ll add by saying that I often learn something from L3′s comments who is among the brighter commentators at Belmont Club.
Housewives are forward-looking.
Builders are forward-looking.
Airlines are forward-looking.
Hoteliers are forward-looking.
etc.
…and, as Wretchard writes, fear is a powerful motivator.
It’s varieties are unlimited.
More commentary on the farm from the rank and file.
(gigolo file)
Kerry: ‘Animal House’ Party Days Are Over for Banks…
Wretchard,
“Unemployment numbers far worse for blacks
What then?”
That one’s easy. It’s obvious that racism isn’t dead yet.
US Companies Pay the Highest Taxes in the World
ex-helo:
I’d appreciate informed commentary on this article from you and RWE:
V-22 – Osprey Retirement Plan –
Call me paranoid, but I want to know — can Obama actually launch a nuclear war by himself, without any adult supervision? Or are there fail-safes in place?
The pathological narcissism issue really has me worried. When he fails, he just might want to bring the whole world down with him.
Obama is crashing the credit market, and in particular, private credits spreads are blown out. The damage is coming a lot faster than the legislation or executive orders.
On any given market day, $2,000,000,000 in corporate bonds must be rolled over. One only look at the Synthetic CDO market and the covered risk pool to see what the impact of a market lock-up would have.
Go to Calculated Risk to see regular updates on the spreads nightmare.
In the typical syn-CDO the investors in the vehicle are receiving premium income on top of their underlying asset pool, typically AAA or US Agency/ Treasury…
As against that premium the assets stand at risk in favor of the syn-CDO true sponsor, the bank, for a 100% payout should companies A,B,C,D,E,F,G,H go into default.
Defaulting conditions are broad and cross-linked.
The Synthetic-CDO market is pure clonery… So the last straw breaks the whole market and you’re left with a field of fetid pumpkins.
The companies covered by the syn-CDO are pretty well known:
GM
Ford
Citigroup
Lehman Bros
Merrill Lynch
Morgan Stanley
JP Morgan Chase
Wells Fargo
Washington Mutual
Fannie Mae
Freddie Mac
GMAC
FMAC
GE
AIG
Goldman Sachs
plus dozens more…
Many of these have already triggered the default clauses of the Syn-CDO’s…
However, the full payout is only triggered when seven or eight firms default.
The whole list of candidate triggers typically is about 100 companies/ entities.
In short, the whole world is on the edge of a catastrophic blow to investor confidence. The total implosion of the syn-CDO’s will happen at detonation wave speed.
The margin of trigger is virtually gone, and is one of the key reasons that AIG gets unlimited funding from Timmy.
If at any time AIG goes then the market would experience the Lehman Brothers Effect on steroids.
BTW, if you were paying attention, it was party politics and election polling that did in Lehman Brothers. In the days before September 14, 2008 the McCain Campaign began a strategic attack on the bailouts. He was tied in the polls with momentum rising. Paulson went political on Lehman and made high minded speeches about moral hazard and a lack of statutory authority… Remember?
Then, kaboom, September 15th… McCain released an ad specifically calling attention to his objection to bailing out Lehman Brothers.
The inter-party risk crisis was upon us and the markets locked up.
McCain blew the bailout, and blew the election. He didn’t understand that Lehman is not a just a broker…
Lehman Brothers was a MAJOR MARKET MAKER/ SECURITIES ORIGINATOR and letting it go under meant that a slew of securities lost their patron trading desk. Lehman had issued them and until the last moment was the buyer of last resort. The resolve to stand behind their stuff is what held up the Lehman market. Remember, these securities are not exchange traded. Lehman’s desk WAS the market for them.
At a stroke the market for everyone’s RMBS, CDO locked up as no new product/ re-products could be unloaded to investors by Lehman’s peer competitors, either. Without Lehman, her securities universe took an incredible pounding. Poof, she had no book equity. The levitator was dead.
The spell is permanently broken, but Timmy wants to get it back. He might as well start clicking his heels together and say,” I want to go back, I want to go back…”
The way forward is to permanently kill the syn-CDO. This needs to be done yesterday.
Next the MBS market has to be shut down. Bring back S&L lending.
Next, cycle through all loans that are solid credits by permitting them to refinance at essentially the Federal cost of credit on a recourse basis but with a P&I schedule of 180 months. This will not kill the Treasury yet it will flow through funds into existing RMBS on an accelerated basis decreasing the size of the problem.
The flood of liquidity coming through the market would shorten the weighted maturities of the RMBS. These receipts would be recycled into the traditional bond markets while the RMBS would be rolled up.
There should be enough good credits that the super-senior tranches should be liquidated and then an attack on the senior tranches could begin.
This US Government Mortgage Bank would restrict itself to mortgages outstanding that are bundled into existing RMBS. No further RMBS would be permitted.
Aggressive liquidation of the RMBS market would cause the more junior tranches to rise in market value as the prospect of payment in full would be accelerated. Certainly, they would rise in seniority.
The various beat-downs that are to be suffered by lenders will be what must be: theirs.
As consolation the SBA limits will be entirely lifted during the emergency period… and the Agency fraction of such lending can be securitized….
The profits from these commercial loans will permit the institutions to bear the pain. The SBA liquidity window will allow normal commercial lending to resume quickly. The forms and procedures are established. So the above items can be executed with paper and pen quickly.
Minnesota Bank Asks Why It Pays for Wall Street Greed
March 6 (Bloomberg)
– TCF Financial Corp., the Wayzata, Minnesota-based bank that never made a subprime loan and hasn’t lost money since 1995, is asking why it should help clean up the mess made by Wall Street.
“I’m kind of bitter,” said William Cooper, chief executive officer of the 448-branch bank, adding that over the years TCF has invested about $1 billion in the Federal Deposit Insurance Corp.’s fund that guarantees bank deposits. “We pay for the excesses of our competitor over and over again.”
TCF is among more than 8,300 banks and lenders insured by the FDIC facing increased fees and a one-time “emergency” charge designed to raise $27 billion this year for the agency’s depleted coffers. Community banks may take a 10 percent to 20 percent hit to 2009 earnings even if the FDIC halves that charge, said Camden Fine, president of the Independent Community Bankers of America.
The ICBA and its 5,000 mostly locally owned member banks are rebelling against the costs, as well as curbs on pay and business practices imposed on recipients of U.S. capital after public outrage over bonuses and perks. Community banks rely more on deposit funding, so they suffer a “much heavier burden” as a result of deposit insurance proportionate to size than peers such as New York-based Citigroup Inc. and Wells Fargo & Co., with its headquarters in San Francisco, Fine said.
‘Incompetence and Greed’
Community lenders “are feeling like they are paying for the incompetence and greed of Wall Street,” Fine said this week in an interview.
The Depression lasted for the first ten years of FDR’s Administration, and to this day, devout Democrats blame it on Hoover.
I can tell you exactly what I learned as a squirt in grade school about the Great Depression. Its caused boiled down to three words: “Hoover did nothing.”
And in celebration of the Bicentennial (70s kid here), we performed what was on the whole a pretty good & fun musical version of the history of America. (“The Inventors’ Song” still unbeaten.) Looking back now, knowing what I know, I find that buried in the midst of this otherwise fairly fine musical endeavor was a number about the Great Depression/New Deal that, um, is kind of … how shall I say it … Maoist? in its puffery of FDR. It listed everything the Great and Good Government was going to do for The Sheeple, and its chorus (yes, I remember the lyrics & tune exactly to this day) was:
“We’re getting a Newwwww Deal!
Newwwww Deal!
Everybody’s gonna get a Newwww Deal!
So hitch your wagon to a star
Cause FDR
Is givin’ us all a brand New Deal!”
And to think, I got what was, comparatively, an excellent education! (Catholic school, natch!)
But then there was my father, the former Marine. Went through the Depression, his dad lost his construction biz & the family lost their home. His older brothers dropped out of high school to find jobs to help the family. They were working class through and through. Dad was the first one in the family, ever, to go to college, and he did so on a swimming scholarship.
His blunt, first-hand view of the 1930s and the New Deal?
“FDR was who made me a Republican.”
I should have listened to Dad more & the “experts” in the history textbooks less! Would have saved me many years of wandering in the ideological wilderness.
Obama is crashing the credit market, and in particular, private credits spreads are blown out. The damage is coming a lot faster than the legislation or executive orders. …BTW, if you were paying attention, it was party politics and election polling that did in Lehman Brothers. In the days before September 14, 2008 the McCain Campaign began a strategic attack on the bailouts. He was tied in the polls with momentum rising. Paulson went political on Lehman and made high minded speeches about moral hazard and a lack of statutory authority… Remember?
Then, kaboom, September 15th… McCain released an ad specifically calling attention to his objection to bailing out Lehman Brothers.
The inter-party risk crisis was upon us and the markets locked up.
McCain blew the bailout, and blew the election. He didn’t understand that Lehman is not a just a broker…
Lehman Brothers was a MAJOR MARKET MAKER/ SECURITIES ORIGINATOR and letting it go under meant that a slew of securities lost their patron trading desk.
That’s really interesting because it captures how a key process can be far more important than the visible parts of a system. The economy as a whole may still represent the cumulative result of the past operation of processes, just as the body represents our history of growth. But if you destroy the key processes, then a huge body can die or deteriorate relatively quickly. Now my question is, and I’m not being facetious, what portion of BHO’s efforts so far have fixed or helped the processes?
Meanwhile, the perfect toy for the Obama bear market: a 9-inch stuffed bear with the One’s face plastered all over it:
http://neoneocon.com/2009/03/07/its-official-its-the-obama-bear/
Maybe we should be grateful Michelle chose plastic helicopters from the White House gift shop for the Browns’ little boys rather than two of these.
Other pressing matters:
Naked short selling must be stopped. The DTCC must be audited and the offending parties prosecuted. This can not happen too soon.
FTD: it’s not a flower service!
Next the CDS market must move to an exchange. Positions that lack privity of contract must be denied/ cancelled.
Next, hard assets should be purchased with currency exports so as to stop a complete crash in international trade and a disruption in energy markets. Just be sure to get Buyers-Market prices. ( China just bought a slug of oil for $25/bbl over the next twenty years from Putin!)
Next, all due speed should be placed on Palin’s Pipeline. Our energy policy should be to transition to Nat Gas as a motor fuel, typically in a dual-fuel system.
Next, we should join with Mexico to explore her best prospects which are closer to our border. We both need this. I suspect it will have to be government to government due to the nutty politics of oil in Mexico. She just won’t play ball with Big Oil.
We have work to do.
I’m beginning to think Obama has more in common with this guy than anyone else:
http://toorcon.org/2007/talks/2/wimpy.jpg
Barack “Wimpy” Obama’s battle cry:
“I will gladly save the economy on Tuesday, for your tax dollars to-day.”
Doug,
“V-22 – Osprey Retirement Plan – ”
I have seen that view previously, about it being one of the likely targets if the military has to make budget cuts.
Based on the tone of the article, I would take the statistics with a grain of salt; it seems like the author has an axe to grind.
Certainly the Osprey is quite a bit more expensive than the helicopter alternatives. I know that when it was still in the test and development stages, I thought that it would be perfect (even considering the relative cost) for the missions, because of it’s range and speed.
However, I have been out for 12 years, and have not followed the Osprey closely enough to be be able to give an informed opinion on how it is doing in actual operations in the fleet/field.
ECM @ ##:
Here is another take on Obamas narcissism from Ali Sina of FaithFreedom:
http://www.faithfreedom.org/obama.html
I really respect his views. He is a Islamic apostate who writes about a lot of things.
The interweb thing seems to have discovered Vaknin but he was not the first to notice that “The Won” is a big zero and perhaps dangerous.
Wretchard writes:
“We’re not in the Obama economy yet.”
But we are in the 0Bama budget cycle. Since Pelousy and Retard Reid did not pass the GWB budget last fall, “The Won” gets to own the ’09 budget along with the Porkzilla non-bailout.
Evil @35:
Don’t worry, his long slide to failure will be very public and very slow. I predict that by Sept-Oct the Republic will have had enough of his schtick.
BTW, the local bi-annual gun show is this weekend. The locals are forming lines which is unheard of for our little local market. Everyone is worried that Holder and Co will try some backdoor nonsense soon. Especially with the cartel wars heating up on the border and the fact that they are spilling into the rest of the SW.
Thanks, Robohobo. I need that reassurance. Considering the final days of narcissistic leaders, they tend to want to take the world with them when they go.
ECM @ 3
Regarding Sam Vaknin and his diagnosis of Obama as a narcissistic personality disorder: I am no fan of Obama, but I would be leery of about the professional competence of Vaknin to make psychological diagnoses.
His CV on his website states he has a “PhD in Philosophy (major: philosophy of physics”) [hardly a qualification for psychological diagnosis] from Pacific Western University, California.
This is some of what Wikipedia states in its entry about that institution:
“California Miramar University (CMU) is an unaccredited proprietary institution of higher education located in San Diego, California. From 1977 to 2007 it was known as Pacific Western University of California (PWU). [1][2] Pacific Western University was also the name of a now defunct university in Hawaii (Pacific Western University (Hawaii)). . .”
“California Miramar University is not accredited[3][2] by any higher education accreditation agency recognized by the U.S. Department of Education or the Council for Higher Education Accreditation (agencies that recognize the accepted higher education accreditors in the United States). . . . . In some jurisdictions the use of degree titles from the university may be restricted or illegal.”
He also inflates his academic credentials by saying he is a “Graduate of numerous courses” in finance theory and international trading.
He is currently in a tiff with Wikipedia about their unflattering comments about him, such as “author, infamous self-promoter, and outre psychological theorist with radical theories which have been discounted by mainstream psychology”.
Full disclosure: As a psychiatrist and psychoanalyst, with 9 years of specialty training beyond medical school, I do not like such a self-proclaimed expert discrediting my profession by speaking as if he has some competence in it.
There is a difference between disapproving of Obama’s policies and acts (many of which I do oppose) and attacking with unsubstantiated “diagnoses”.
Best wishes,
Jim
blert@36 & 41
Any chance of you becoming Treasury Sec?
#46, Jim
Interesting. I’m glad to hear your point of view, as it decreases my paranoid fears somewhat. I always tend to consider the worst possible situation, and Obama has me spooked.
You’ve brought me down to earth a little.
My brother-in-law suggested it, too. Since I predicted the market’s moves over the last fifteen months, he might have been serious, too.
He’s a banker, BTW.
I’d sure be moving a lot faster than Timmy.
The realistic fix: Volker in, Timmy out.
Another Obama Summit, the economy Plummets!!!!
You are now entering “the Obamarket”
Blert has my vote for SecTres. Seriously.
Wretchard for SecState!!
It has been argued that the prospect of being hanged clarifies the mind wonderfully. It can also make people drop their partisan preferences and more readily face facts.
Straight talk – ignored so far.
“He’s looking at a combination of bureaucrats and academics for these jobs.” Apparently, these types fear hanging less, or have never experienced true wrath.
“George W. Obama” slurs from curs.
Whiskey@1 – Actually, less-rich.
Wretch@2 – Fit’em for jackboots and get’em trained-up?
Bogie@9
Can they control the vast US economy if they make it much smaller and simpler?
Tony@23
What’s the out-of-wedlock birth number? Oh my, we’re not allowed to call them bast*rds, are we?
Doug@25
The SUVs the pols use constantly belong to US, driven by security details, so what’s to complain about?
EvilPun@35
Well, I wouldn’t go as far into your paranoia as suggesting bringing down the world. But, a few of those rebellious cities in the South and West, that’ll work.
50. Obamarket:
Where is Rod Serling when we need him most?
We’re entering the
“0 Zone“
For all the kind feedback, heartfelt thanks. It’s great to be a member of The Belmont Club; I’ve learned a lot as well.
Cheers.
L3
Blert has my vote for SecTres. Seriously. Wretchard for SecState!!
I’m not qualified, even as a joke. Besides, I might serve Richard’s Wild Irish Rose at a diplomatic function in a fit of absentmindedness. Why not? It’s got “wild fruit and ginseng”.
Now, Now Wretchard…do not sell yourself short.
Hillary is blazing a path for us all.
As to the beverage you can just claim it is some Philippino tradition.
Here is another site you can go to for very good explainations of what is happening in the market:
http://market-ticker.denninger.net/authors/2-Karl-Denninger
L3, you can put me on your fan list too.
Simple graffiti can be very effective:
O < 0
The Old Guy,
You wrote: “There are some nasty, viscious, self-serving pols though, who at some point may be willing to throw Obama under the bus in last-ditch self-defense.”
Hmm. To do this would be to alienate the black vote. Even the Clintons during the campaign would not do this, although I am sure they had dirt on him.
Leo III,
In addition to the stock market, the Bond markets are very forward thinking as they have to look 5 – 10 – 20 years out . And they do not like what they see. Interest rates on 10 Year US treasuries have increased 1% in one month.
What effects interest rates? Inflation, currency changes (I am a foreign country investing – I have to convert the interest payments and my principal back at some point), and fear of default.
What was once an unheard of though, the US Government defaulting is suddenly becoming a possible scenario based upon Obama’s massive spending, on top of a ticking time bomb of our entitlements that the dems want to ignore.
The increase in CDS’ on US Treasuries, a better indicator on how people think the US can make payments, have been increasing at an alarming rate in the past 2 months
Some other interesting blogs
Automatic Earth
Calculated Risk ( lefty commentariat, great charts )
Mish ( Mike Shedlock ) ( libertarian, towards Ron Paul )
Naked Capitalism ( nice cross links )
Blert/41; The DTCC must be audited and the offending parties prosecuted. This can not happen too soon.
http://www.deepcapture.com (scroll down 55% +/-)
“…at the heart of our nation’s stock settlement system, and hence, at the heart of the issues of concern to DeepCapture, is a nearly unknown corporation called “The DTCC.” The company provides settlement for the nation’s capital market: $1.5 quadrillion in trades are settled there every year (that is, about 30X the economic output of the entire planet). For most of its history it has largely escaped regulation: state regulators are admonished that they cannot peer inside because the DTCC is federally regulated, and the DTCC has told federal regulators it escapes their regulation due to its strange ownership structure (one former federal regulator, and one former employee of the DTCC, have both told me the feds would not know where to begin if they tried to regulate it).
In short, at the heart of the world’s economy is an enourmous black box that is regulated except on the days it’s not, and through which 30X the economic output of the world flows. It is my contention that much of Wall Street’s illegal activity is funneled through this strange entity.
The huge, nondescript building in downtown Manhattan that houses the DTCC is something of a Fort Knox. Long-gun toting guards watch the entrances, and journalists who have been inside tell me that entering it is tougher than getting into the Federal Reserve or any comparable institution.
(read more)
Could you ‘splain how much a quadrillion is, Mr Larsen?
Michelle Obama’s Huey Newton Chair Photo
Doug,
A quadrillion is a thousand trillion just as a trillion is a thousand billion just as a billion is a thousand million just as a million is a thousand thousand just as a thousand is a thousand one’s.
Of course, if we look at the coming inflation, we will start talking about quintillions, sextillions, septillions, octtillions, nonillions, and decillions.
Too bad that greenback dye is hard on septic tanks –but the paper is a little stiff anyway.
i’m fortunate to work for one of the wealthiest private investors in the US/world, and he has made his fortune over time by creating value. while he hasn’t whispered his strategy into my ear, i will tell you that my observations are:
1) in spite of having billions in liquidity, he is nowhere close to reaching into his pocket to buy anything yet
2) it appears that he believes anything acquistion that might interest him will only get cheaper, which can be challenged as no one really knows where the bottom of this market is
3) but traders must recognize trends, and the key trends in play are amateur hour at the White House, increased govt intervention from medical to carbon to assault on capitalism, a Europe that is only waking up to its dependency on both the US for protection but Russia for energy, and a greater penchant for deviant foreign powers to create mischief.
4) not only is the current lending crisis being addressed (great job on Blert’s posts above), but there is absolutely no framework in place for what lending needs to look like going forward.
given all of that, who would take liquidity and trade it into a positive vote on these markets. the IDB article about “Capitalism on Strike” is the most pithy explaination I have read about all of this.
Wretchard, thanks so much for bringing this group of voices together.
re geoffgo #52 ‘Fit’em for jackboots and get’em trained up.’ It does make one wonder if this is where the manpower for the domestic security corps is coming from? Every aspiring tyrant needs a cadre of agressive young thugs to do his bidding.
Leo Linbeck III said:
“The economy is not an Obama economy …”
I understand what the inestimable Leo is saying, but almost disagree.
When Capt Sullenberg hit those geese with his airliner they were not “his” geese. They were there and he had to handle the results as best he could.
But if Capt Sullenberger had decided the answer to the situation he found himself in was to hit some MORE geese and in order to slow the airliner down and reduce the effects of the inevitable impact with the ground – then those additional geese would be “Sully’s Geese.” Of course, this action would have been utterly disaterous for a great many reasons that probably even non-pilots can understand.
As far as I can see, Obama is trying to hit more geese.
or even, every goose there is in the sky.
As the phrase goes: long time listener, first time caller. I’m an engineer at the Lockheed Martin Skunk Works in beautiful (not!) Palmdale, CA. I’ve followed The Belmont Club for several years now, and I want to thank Wretchard and the rest of you commenters for helping to keep me grounded in the midst of economic disaster. You folks are kindred spirits, voices of sanity in the middle of madness and despair. Wretchard’s cool, reasoned analysis and keen insights are nearly always right on the money, and accord very closely with my own thinking. He’s usually two steps ahead of me, though. And I want to extend a special commendation to Leo Linbeck, too, for his always exceptional analysis of whatever problem is at hand. I always seek out his comments with extra enthusiasm.
We readers at this site share a mutual disgust at Liberals’ childish inability to understand economics. Among their usual incorrect analysis is an incorrect perception that “the rich” are somehow less compassionate and less generous than the virtuous poor. My experience has been exactly the opposite. Rich people are, in my experience, if anything, more generous. Indeed, only the rich can afford to be extraordinarily generous. While a poor man’s compassion is every bit the equal of a rich man’s compassion, a poor man’s generosity is not, and cannot be, by definition. And only through wealth is it possible to lift men out of the slime into greater ease and freedom. Increasing wealth may be an inefficient means of lifting mankind, but it works in small increments. Destroying wealth is the surest path to dropping mankind back into that slime we’ve worked so hard to escape.
My two cents’ worth. (And by tomorrow, that will be worth a fortune!) Resist the New Communism!
#75
Contribute your ideas please! At least to keep things from being inbred.
W.
the Skunk Works –wow –performance pedigree: peerless.
The diplomatic and financial achievements of Barry make him the skunk at the garden party.
Thanks for the kudos…
Here’s the campaign spot that ran September 15, 2008…
It was obviously developed over the weekend.
http://www.youtube.com/watch?v=pd-pMhboEX4
Obama And Geithner Try To Team Up With Their Enemies
– A.I.G. for Dummies –
(that would be me)
Now, however, A.I.G. not only has to meet collateral calls as the value of the debt it insured withers, but also has to post collateral related to the interest rate swaps.
Another troubling aspect of these deals is how long it takes to untangle them when they go awry. Back to Mr. Buffett’s recent shareholder letter: when Berkshire acquired the insurance company General Re in 1998, he wrote, General Re had 23,218 derivatives contracts that it had struck with 884 counterparties.
Mr. Buffett wanted out from under the contracts and he began unwinding them. “Though we were under no pressure and were operating in benign markets as we exited,” he said, “it took us five years and more than $400 million in losses to largely complete the task.”
So, Blert and Leo, what should be done with A.I.G.?
– The Ploy of Inaction –
Is President Obama Lazy or is Inaction a Calculated Political Move?
—
“Come on Helicopter Ben–we’ll just use a bunch of jargon and hopefully these idiots will fall asleep.”
(enemies link, above)
Is Obama responsible for Wall Street’s meltdown?
Worse:
When it turns out that people like Lloyd Blankfein, the CEO of Goldman Sachs, who took home $68 million in 1997, was the only Wall Streeter in a meeting last September at the New York Federal Reserve to discuss the initial AIG bailout with Tim Geithner, then New York Fed chair, among others, at the very time Goldman was AIG’s largest trading partner, a distinct scent of self-dealing begins to emanate.
When it turns out that Citigroup got a bailout deal last October far more generous than that given to any other distressed bank, when a top Citi executive was advising the Treasury and Fed, the scent increases. Goldman’s past CEO was treasury secretary at that time, by the way, and another former Goldman CEO was a top Citi official and also a former treasury secretary.
I am not suggesting anything so crude as corruption. But could it be, given these tangled webs, that — innocently, unintentionally, perhaps even subconsciously — the entire bailout effort was premised on saving these companies rather than protecting the public? Or that the distinction between the two was lost, and still is?
That other guy, referred to but not mentioned by name, is Robert Rubin, B Clinton’s famous “it’s the bond market, stupid’ Treasury Sec. He also got the GDP-of-France bailout, tho i think he did make a big splash forgiving his Citi board per-diem or somesuch ‘oh wow’ underwhelment. But, re the question asked, is it possible? yes it is. And adding the several qualifiers, why even ask?
Look for some large holdings in Indonesia to change hands, to be bought by the XXX Foundation, an NGO registered in Burkina Faso, or perhaps Moon Colony Investments, Do Buy, Dubai.
Great post, Wretch… and the comments on this have been astounding. Just when I was beginning to think that there were too few signs of intelligent life, I found this post and commentary.
Of course, we’re still all going to economic Hell in a hand basket, but I’m still holding out hope for that bus.
Mrs du Toit, i’d like to personally apologize for what a certain presidentially-ambitious northeastern USA senator once did to your former home country, and then i’d like to apologize again (at some multiple, for the insult of the repeat) for pretty much the same thing happening again right here, at home in the old 57.
Due, this time not, as in the previous presidential-aspirant-led yahoo-whooping yankee yeehaw trade embargo against your fine former nation, but rather to a blinding success at cornering the market in a sadly proprietary wetware product commonly –and with no small jab lately of criticism –called “dumbass”, for which the demand has disconcertedly rapidly recently evaporated, just as (wouldn’t you know it) the supply has careened to 100% of storage capacity and levelled out in a state of being known colloquially as “stuck on stupid”.
Well, just as every dark cloud should walk a mile in another silver shoe, our missionary-zealous enthusists (securely “stuck on stupid” and “dumbass” to the proud invincible core), having run out of other parts of the world to languidly envelop in vapidity just when flights, squadrons, wings of pandoran troubles began rocketing like Saturn III moths out of all the cupboards money had moments ago thought to have been piled like buttered continents, are now the new chickens of old aphorism, come home to roost and to peck around, down-coop now, for pocketchange perhaps yet still afloat in the tranches of poop.
Must be cold comfort to regions out there, somewhere, at the unboxed ends of the compass, but i won’t ask. Anyway, best to you, and in hopes of better tomorrows, i remain.
FINALLY, the MSM financial press is noticing that IF the new pres WAS an enemy agent –he’d be doing the same things the same way as he IS doing right now! Duh –what’ve we been screaming about for the last month?
Wot a coincidence, such high jinx, well, tut tut, someone simply *must* ‘splain it to him.
If not ayers, the next likely candidate of Obama Ghost writer visited the White house
http://en.wikipedia.org/wiki/Cornel_West
Obama is living the dream.
Unfortunately it is alinsky/xerxes vs the adam smith/Lincoln.
He dissed our friends the UK during Brown’s visit and flitted in and out of Canada unceremoniously. Will be interesting to observe who he does eventually accord full state honors.
WillDoMath For Food–
It is not that the leftists does not understand economics, but rather, as Krushchev said, it is a subject that does not greatly respect one’s wishes.