Nobody has nearly enough information to know with any degree of certainty if Bush’s massive 700 billion bailout and Obama’s approximately 800 billion dollar stimulous packages are going to help or hurt us in the long term. Clearly in the short term this will make the economy look better, but it will also leave us with all the unintended bailout consequences money can buy. Big money means big unintended consequences and when you are talking trillions of dollars you are talking about Government spending unlike anything we have ever seen.
The New York Times has a good spreadsheet summary of who got the money, though I always hate it when charts use the smaller number “in millions” to reflect huge numbers. e.g. on this chart the number is a million times greater than the number.
TARP Chart at NYT
Although the extravagance and fervor of CES 2009 made the economy look pretty good to me, it was a huge contrast to the barren corporate landscape in the rest of Las Vegas where commercial real estate is on hold, visitation is down, and you can begin to sense the trouble brewing throughout much of the economy there. More significantly the broad numbers suggest we are firmly in the grips of recession and I think no responsible voices are suggesting things are going to spring back anytime soon. In my view the markets are now waiting for Obama to take office. If I had to try to call the shot here I think I’d predict we’ll something of a “fake rebound” in the markets when Obama takes office and announces plans. The high optimism will lead to higher prices but this will soon fade as more and more bad news pours in and millions more lose their jobs in 2009. In my opinion the *best case scenario* in this economy is that we’ll have a bad 2009 and start to recover in 2010. The *likely* scenario is that we’ll have a very bad 2009 and 2010 as the entire global economy shrinks, shredding the excess home values and company valuations of the past decade, and in 2011 or so we’ll start to stabilize.
However even though it appears the bailout money is not doing much so far I think the stimulous package will change the game very much in favor of public spending and companies that do infrastructure work. We’ll see more bridge repair than at any time in history and a lot of spending on energy innovations, education, and health. How this will filter into the broader economy nobody knows and the failure of the first $350,000,000,000 bailout to do much is not a positive sign.
congress gave 350 Billion to the treasury dept without any regulation or program. this money got to the banks and they are turning their audit sheets to black. nothing has gone beyond the bank vaults. another 350Bs will do nothing to get the money to the public. housing is completely in the tank and there is no bank that will venture out into this swamp. so housing will remain the outcast and values and prices will continue to plummet, and more jobs will go and more foreclosures will appear (big time!). banks are not interested in housing. someone bold and brilliant has to come forward and reinvent housing. don’t ask congress to come up with the solution, they created the mess in the first place–b.Frank and C.Dodd.
until you get housing stabilized you will not cure this failed economy. and no one is talking about it. they are talking about the banks and wall street, where people don’t invent anything like housing, they just play monopoly.
Raymond I think Monopoly …. is a good analogy for the approach we are now taking to try to fix the economy.
(2) Joe especially since this election Frank and the others that are fully responsible for this mess got the infamous get out jail free card!!!
Just a thought. Had the government given the public (each adult) the money instead of the businesses, think of how each person could have stimulated the economy. Let’s put some numbers to it. Bush provided $700,000,000,000. With the US Census Bureau stating that there are 225,081,715 adults (18 years and older) in the nation, each adult would have received $3,109.98. Now with Obama’s TARP money set aside in the amount of $800,000,000,000. Using the same population number, each adult would have received 3,554.26. That’s a total of $6,664.25. I don’t know about you, but I could definitely stimulate the economy with $6,500.00.
Even if you reduced it on a per household basis. Again, using the US Census Report of 127,901,934 households, each household would receive a total of $11,727.74.
After hearing about Citigroup’s “rethink” of purchasing a private jet – I can’t help but think that “we the people” (in general) could use the money in a better suited manner.
Giethner Unveils Overhauled Financial Bailout, Expands Lending Program to $1 Trillion
Geither’s big approach to solve this issue is to increase TARP to $1 trillion…so basically we are at $2 trillion since Sep…
Guess I wasn’t so far off this fall on the ridiculous numbers that this was going to take to only FAIL even further.
I couldn’t believe when I heard Obama’s comments about FDR’s failings…the only reason FDR wasn’t successful was because he didn’t spend ENOUGH.
Welcome to the world of the irrational thought process driving decisions that will haunt us for generations to come.
IT IS A FACT that the NewDeal and other insane spending programs during the Depression only extended the misery until the early 50’s.
We did this to ourselves by electing inept politicians focused more on personal benefit than for our country and our reckless spending inspired by bad Government programs and regulations. Our country deserves to be in a recession and/or depression for our irresponsibility. It is unfortunate that instead of trying to learn from our foolishness we just seem to propagate it to proportions that will only lead us to one outcome – another global war.
It is not a fact that the New Deal extended the misery until the 1950s.
You’ll believe anything. Anything.
Lee I wish more thought had gone into that option which my gut says would do more than the current plans. My understanding is that the architects of all this are following conventional economic theory which says that if you handed we the people a check we’d tend to save rather than spend it and since the stimulus effect (in theory) requires massive and immediate spending they are going to throw the money at “shovel ready” Gov projects.
I’m not nearly as skeptical as Glenn but think the Trillion will go fast and lead to only a modest level of stimulus, leaving our kids with the debt burden and us with a still troubled economy.
I do give the Obama team a lot of credit for the high level of transparency and communication that surrounds this package. At the very least it does appear we’ll know what the heck is going on here, and hopefully watchdogs will keep a close eye on every dime … well, at least on every billion of the approx 3 billion per day we are about to spend on what will go down as the biggest economic intervention in all of history.
Listen to the idiot Schumer…this sums it all up. This is the mentality we are dealing with in regard to their spending habits.
And now the Geithner plan is looking more like $2 trillion (now that the number I thought we would be starting at and would end up around $4.7 trillion is the estimate I think really needed for the banks – however I don’t think it should be done – the banks should fail, the automotives should fail, etc.) Bad business decisions, bad policies are going to lead to bad results.
And when you listen to Geithner this is scary crap:
GEITHNER: ‘WE ARE NOT GOING TO PUT OUT DETAILS, UNTIL WE GET IT RIGHT’…
Give me a break…Joe you call this transparency? Sounds like Pee Wee Herman…I meant to do that!
Gee I guess I was wrong on my worst case scenario with TARP…they have blown away any amount I thought would be possible.
TARP could now reach $23.7 trillion. The only true goal they have is to completely destroy our economy and capitalism…it is basically all over. Joe still not skeptical?
JCH you should really try to understand the issues. Take off your raging left loon glasses so you can see clearly.
Despite Franklin Roosevelt’s aggressive spending, unemployment reached 25 percent in 1933, fell only to 14 percent by 1937, and was back up to 19 percent in 1939.1 In the end, the New Deal did little or nothing to resuscitate the economy. Certainly, inept monetary policies helped prolong the Great Depression, as did tax increases, constant interventions in the conduct of business, and the erection of global trade barriers, beginning with the Smoot-Hawley Tariff in 1930, more than two years before Roosevelt took office. There was a stretch of twelve years from the stock-market crash to Pearl Harbor, and, during that time, fiscal stimulus simply did not jump-start the economy (or, in Keynes’s own metaphor, “awaken Sleeping Beauty”). Now, some do attempt to make the case that Roosevelt did not increase government spending enough during the early and mid-1930’s and that it took World War II and the unprecedented infusion of government dollars into the economy to provide the stimulus that finally pulled America from the swamp.
But even if that were true—and considering the fact that federal spending tripled during the Great Depression, rising from 3 percent of the country’s gross domestic product to nearly 10 percent in 1939,2 it does not seem the likeliest explanation—it still does not offer much in the way of guidance through our current thicket. Few economists today believe the United States could tolerate the kind of budget deficits that developed during World War II, which ran more than 50 percent of gross domestic product, or about $7 trillion annually in current terms. When the federal government ramped up its spending during the war, it had not yet grown into the entitlement cash machine it is now, spitting out trillions of dollars a year in retirement and health-care benefits.
Not only was the stimulative effect of Great Depression fiscal policy non-existent, but follow-on efforts during the ten subsequent recessions proved equally ineffective. As a result of that hard-won experience, the consensus until recently among economists was that attempts at stimulus through emergency fiscal policies—as opposed to monetary policies and the automatic effects of increases in unemployment assistance and decreases in tax payments—were useless at best. Typical was the statement of Martin Eichenbaum of Northwestern University in the American Economic Review in 1997: “There is now widespread agreement that countercyclical discretionary fiscal policy is neither desirable nor politically feasible.” Martin Feldstein, then president of the National Bureau of Economic Research, agreed. Fiscal stimulus, he said in 2002, “has not contributed to economic stability and may have actually been destabilizing.”
There are very reasonable and sensible people not willing to revise history that will look at the facts and understand what is going on. Unfortunately the liberals are like the classic patient that keeps going from doctor to doctor until they find a doctor that will tell them what they want to hear.
History is very clear on these stupid moves…in fact 6 times prior to CRA we tried and every single time it ended up in a housing bust in this country.
It is also clear that all GREAT economic crisis’s like our current one ultimately all end up in war. It is unfortunate but it will probably take some form of enemy occupation on our soil before we actually wake up and understand how things really work and just how damn lucky we were before to have our freedoms. Perspective is everything!
Another great excerpt from that article:
A good place to turn to understand the failure of the jump-start is the work of Frederic Bastiat, a French politician of the early 19th century. “In the economic sphere,” he wrote,
an act, a habit, an institution, a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.
To prove his point, Bastiat described what happens when a vandal breaks a shopkeeper’s window. The seen effect is that repairing the glass creates economic value in the payment to the glazier, who then has money to buy a new suit or hire a part-time employee. What is unseen is that the shopkeeper has to pay the glazier with money that he would otherwise have used to buy a suit or add an employee. “The broken-window fallacy, under a hundred disguises, is the most persistent in the history of economics,” wrote the economic journalist Henry Hazlitt in 1946.
Like payments for broken windows, tax rebates and new roads (the seen) do not come free. The stimulus money that flows to taxpayers, government agencies, and businesses has to come from somewhere (the unseen). During a recession, it is usually borrowed, and the anticipation of taxpayers is that they will have to repay these loans, which means their taxes will rise in the future. This knowledge makes people anxious about spending the extra money, or even about investing it in the kind of ventures that help an economy grow.
Just in case you don’t take the time to read the whole article at the link in my previous post…here is the summary and ABSOLUTELY spot on:
Stimulus—that is, fiscal intervention with the express purpose of speeding up the normal regenerative process that Grant describes—is unnecessary and almost certainly harmful, a policy based on hubris and anxiety, rather than on history and good sense. Under such circumstances, the proper way to analyze discrete proposals today for spending or taxing is on their own merits, not on their supposed ability to stimulate something else. There may, in fact, be a good reason for government to spend billions of dollars today on building highways, and it has nothing to do with stimulus. It is that long-term interest rates are at historic lows and that the right highways can boost the economy in the long term. There also may be a good reason, again far apart from stimulus, for revising the tax code and reforming Social Security and Medicare. It is that Americans now understand that the economic future is not so assured as they believed a couple of years ago, and it is time for decisions to be made—in a manner careful, sensible, and unstimulated.
Glenn it *appears* that we’ll have a total accounting of all the money – that’s what I mean by transparency.
If this fails as badly as you predict then you may get your wish in 2010 and 2012 with a huge sweep out of the current establishment. I’ll be surprised if this has negative short term effects but don’t expect a lot of positive ones either.
Joe still think we have total accounting of the money?
(11) I’ll be surprised if this has negative short term effects but don’t expect a lot of positive ones either.
SO WHY WASTE TRILLIONS OF DOLLARS…
It’s a fools errand and it designed to garner votes and establish far left liberal platform within our country.
Think about how insane it would be if we had a stimulus package that just gave money to schools that had a connection to religion…the outrage would be overwhelming but for some hypocritical reason it is ok to state we will give NO money to any school that is connected to religion.
This is ALL a very dangerous game that really only appeals to about 11% of the population at max.
What will we do when the small percentage of people that will be footing the tax bill for all of this realize that “hey we no longer have taxation with representation” – the entire basis for putting taxes in place in the first place. A small minority of people will be required to pay all the taxes and basically get nothing from the Government. The entire foundation of our country will be thrown out the window and civil violence and strife will ensue. The American people will not tolerate a taxation system without representation.
Glenn- it’s only fair to point out that Glassman, the author whose arguements you cite repeatedly above, also co-authored the book “Dow 36,000” some years back – actually it came out in late 1999 at almost the exact peak of the tech stock bubble.
You’ll forgive me if I take his arguments – and his credibility – with one very large grain of salt.
(13) Paul I try to find as many perspectives as I can about the issue. Funny how you do mention anything about many of the other people’s articles referenced that were dead right about the housing fiasco.
Glassman as well as the others cannot be right about everything all the time. That is one of the biggest issues with economics it is not an exact science…however until history was recently revised by liberals with an agenda it was generally accepted in ALL circles that FDR’s programs did a lot more harm than good and now all of sudden we think the answer is…”he just didn’t spend enough money” ironically that when the Democrats were screaming about the deficit all of their principles back then went out the window. That is clearly a sign of a corrupt organization that has NO principles only an ideology that must be forced if necessary on the population.
The fact that NO Democrat voted to oust Rangel from his chairmanship is absolute proof that the Democrat party is filled with corrupt and immoral participants.
We need to get GOOD and HONEST people elected to our Congress. This is beyond absurd at this point.
So the latest gem of wisdom from Barney Frank. He defines an executive bonus as a BRIBE. Yeah that’s right…I wonder what he calls it when a lobbyist provides him incentive to do as Barney likes to say: “the right thing”.
Another prime example of how twisted their perspective on how the world should operate. Why should a top CEO get bonuses? Unbelievable. Frank is probably just a commie hiding in the closet…he already proved he is an expert about hiding his true beliefs for years. These people think it is a legitimate discussion on capping what a person can make. Next it will be hey you can’t drive a $100k Mercedes…why would you need that? Or you can’t live in that $5 million dollar house on the beach? And sorry we can’t justify a medical procedure that cost $20k because you’re just too damn old.
If this type of crap doesn’t scare you then you need to take your head out of the sand and understand what these raging left loons are trying to do to our country. Certainly nothing like our founding fathers envisioned.
Here is Barney’s wonderful statement:
BARNEY FRANK: Let me ask you, on the incentive, and I’m glad to see that you’re not, many of you are not taking bonuses. But I have to say this: if you believe in bonuses, then is that something bad? I mean, I guess, you’ve gotten bonuses over time. If in good times you were told you weren’t going to get a bonus, what part of your job would you not do? I mean, if you weren’t getting a bonus, would you like leave early on Wednesday? Or would you take longer lunches? Would you bypass a certain class of investors? I guess that’s, you say, and somebody said, well, your incentive comes in shares that align your interests with that of the company’s. Here’s one of the problems: why in the world do some of the most highly-paid talented people who have jobs that are fun. Let’s be clear, not always fun, this is not amusement park time. Why do you need to be bribed to have your interests aligned with the people who are paying your salary? And this is part of the problem. I know it’s a problem at the lower end who get bonuses and that’s been built into their compensation. But at your level, again, why do you need bonuses? Can’t we just give you a good salary, or give yourselves a good salary, you’re in charge of that — and do the job? This notion that you need some special incentive to do the right thing troubles people.
Barney Frank’s comments aside, I do have a huge problem with how Wall Street structures compensation – it encourages extreme risk taking with other peoples money. Compensation packages for traders and portfolio managers at most firms routinely carry provisions for large bonuses – often many times base salaries – if they make substantial gains in a given year. Given that these same executives have base salaries comfortably in the triple digits, it’s not difficult to see why they would swing for the fences at every opportunity….at worst they continue to make their egregious salaries and potentially can double or triple them if their risk taking work out. They might get fired, but until this debacle occurred, the chances were good they could just go elsewhere and start the game over with a new employer.
It is not just bad luck that Bear Stearns, Morgan Stanley, Merrill Lynch, JP Morgan and Goldman Sachs imploded – these firms were taking horrific risks in an effort to bolster their bottom lines without truly understanding the potential downsides of the derivative instruments they were using. They did so, in part, because their compensation systems reward such behavior.
I don’t know about bonuses, but the way that Wall Street compensates people needs to change in a way that rewards prudence as well as risk taking, that recognizes that capital preservation should not be forgotten when attempting to achieve capital growth.
(16) Paul the government should not have any say whatsoever in the private sector compensation plans. Those plans are agreed to at a board level and pushed through. If the shareholders don’t like it they have the ability to do something about it.
The day we let the government dictate anything regarding compensation in the public companies…that will the end of the stock market period. There would be absolutely no reason for going public. Our capital markets would cease to exist.
If they messed with private companies like they probably want to you would see companies leave the USA in a heartbeat to be domiciled elsewhere. Already because of our outrageous tax system the US is #2 in the most expensive countries to HQ your company. Japan is #1.
The writing is on the wall. We clearly understand a great deal of the problems we are faced and in fact literally every single situation we are currently experiencing has happened before and yet can’t seem to learn from it. It all comes down to our elected officials not wanting to give up any control and power…some of the best solutions that would actually solve a very large set of our current problems would require that Congress would have to shift a lot of power back to the people. But according to the people in power the American taxpayer is just too damn stupid to do anything right.
In two years the backlash from this insanity is going to be so strong I think we will head to a very far right wing extreme and unfortunately a lot of “middle of the road” ideas and programs are going to vanish.
Nobody seems to get this country isn’t far left or far right but the fact that a group that represents about 11% of the population of this country can be in power, unchecked and able to force their agenda on the remaining 89% is not a recipe for success.
Many of us just want sound fiscal policy backed with accountability and a real track record reported. Enough of the stupid games (i.e. derivatives, CRA, etc) they are all designed to leverage gray areas which always lead us into trouble.
This country today is more divided than it ever has been…so much for Obama being able to bring us all together.
I hope we don’t end up in violent conflict because no one wins then and every family will suffer something far worse than losing some money.
And Paul as predicted yesterday…we see the ongoing comments from Barney Frank…now we wants to CAP CEO salary at ALL companies.
Frank should be tarred and feathered – PERIOD. This guy is so out of touch with what is right – it is clear to see how he screwed up the banking and housing industries. He is right about one of his comments: He said there is deeply rooted anger on the part of the average American – YEAH and IT’S TOWARD FOLK JUST LIKE YOU!!! Amazing how these raging left loon’s will say anything.
Congress will consider legislation to extend some of the curbs on executive pay that now apply only to those banks receiving federal assistance, House Financial Services Committee Chairman Barney Frank said.
“There’s deeply rooted anger on the part of the average American,” the Massachusetts Democrat said at a Washington news conference today.
He said the compensation restrictions would apply to all financial institutions and might be extended to include all U.S. companies.
More truth to be read…
Glenn when a worthless company gets a tax bailout do you still think they have the right to distribute money as they see fit? That’ll lead to *totally* out of whack systems where everybody is just grabbing for the free money before the ship sinks.
We’re in really bizarre territory now where companies will fail without Government intervention – but Gov intervention will probably lead to what are likely to be even more inept decisions about how those companies are run.
(20) Joe the only thing more stupid than Barney Frank’s comments is the bail-out. It is absurd. What about the 10’s of thousands of other businesses that have gone out of business because the myriad of bad decisions made over the last several years.
Now Obama, Geithner and Frank want to pass legislation that limits pay for ALL companies. This is socialism. It will destroy the leadership in companies.
What else should they be able to do? Determine what products they make now? Determine who they should be able to hire? Maybe these companies that received the money should only be able to hire illegal aliens.
The leadership within these companies is key to the long-term success of them. How about companies that had to take tarp (NOT FORCED as some were) the executive team should be replaced. What is wrong with that? What is wrong with tying executive pay to performance…why pick an arbitrary amount?
This is just another peg in the approach where they are trying force their socialist goals on America.
Glenn sure we should save on TARP and Stimulus borrowing and let the bad companies and many biz just fail, saving only those that are essential to preserve stability and let the market shake out the rest of the story (which it will anyway – the Gov simply can’t do enough to really move this economy as much as most think). It is very foolish for any of us to think we can restore the economy to the former state which was unstable anyway. Houses *were never reasonably valued* at the prices they were selling for in 2005-06.
However *if* my taxes go to those guys then I want a very heavy hand in terms of getting back the taxes and whipping the SOBs who let short sighted greed crush their own companies.
(22) Joe but that is exactly the point you and every other taxpayer should be demanding that not one penny of our hard earned money should go to any of these bums.
Your money doesn’t have to go…if you let your voice be heard. Call your Congressman and let them know how you feel!
The idea that a politician can even begin to understand the private sector of business is crazy…most of these guys have never had to make a payroll, etc…they are the absolute opposite of anyone we want to impact businesses and their ability to attract talent.
What drives me nuts is the fact they are handing over billions to the same lousy execs that put their companies at risk to begin with. How does that make sense? They should have ALL been replaced as part of the deal. Also the taxpayer should be FIRST in line if the business fails and assets are liquidated.
Can you believe that the taxpayers are NOT first in line with the bail-out of the automakers? That has to be the stupidest business investment move I have ever heard of. You don’t “loan” someone funds of this level without a first rights lien on the assets. This is how reckless they are with this spending. We wouldn’t let children squander a few dollars they way they are squandering and wasting BILLIONS and ultimately TRILLIONS.
I still don’t understand why people are surprised. What exactly did they think was going to happen when we had a government let and encourage really bad business practice. The NINJA mortgages…aye yi yi.
We are getting exactly what we deserve from the economy at this point. And unfortunately Americans still need to learn some big lessons because they voted in the very same people that enabled all of this mess to begin with and now for some reason people have an expectation that a stimulus and bail-out plan is going to actually work? Did somehow magically overnight these same very people get a hold of some smart pills?
Sheep and ostriches in this country and we are all being led to the slaughter.
“ad a government let and encourage really bad business practice. The NINJA mortgages…aye yi yi. …:”
If you voted for GW and the Republican congress, then you voted for the above.
(24) JCH…I didn’t vote for him. You can try to pin this on GW like you do everything else. We could have video of Barney Frank stealing your wallet from your pants and you scratching his face with DNA evidence under your nails and somehow you would find Barney Frank innocent and you would blame GW.
At least I can say I didn’t vote for any of the idiots now ruining our country like you so proudly did.
What a joke the house passed the tax theft bill today with NOT ONE MEMBER reading it. Most didn’t even have a copy however the lobbyists ALL DID! How could you vote on the single most expensive waste of taxes in history without reviewing the bill? That is how careless and reckless JCH’s buddies are. Remember this in two years when our country is in even worse shape now primarily because of this bill but I am sure JCH will find a way to blame GW while he is on his ranch in Texas.
You’ll believe anything, and you’ll say anything.
And Barney Frank, as you have been told so many times, was in the minority for all but the last two years of Bush administration. He did not have any authority.
The right-wing-liar society tried to pin this on Frank, and they lost. Get over it. The gay guy smacked the crap out of you fools.
As for it getting worse, the economy is in free fall. It was in free fall before Obama took the oath, and it remains in free fall. It is in free fall because of abject incompetency of George Bush, and the garbage he believes in, which, I’m sorry, is the same garbage in which you believe. For instance, George Bush was taught to hate FDR. The Bush family has been involved in FDR hatred since long before FDR was elected. They’re Hoover people. They mimic Hoover. Even to the point of causing another Great Depressions. And they have probably succeeded.
It’s quite a stretch to pin the economy – good or bad – on the President and certainly it can’t be pinned on one or even all the congressman. Sure, Gov has a role in this as does Wall Street greed, but the more I understand the mess the clearer it becomes who the real culprit was here. That would be the group of people who *benefitted the most* – by a staggering and huge margin – in the subprime mortgage debacle where mortgages were both oversold and underexamined.
That group would be you and me = USA mortgage holders.
CNBC has a nice piece on the ‘house of cards’ and one of the mortagage dudes interviewed noted quite correctly that borrowers “did not have a gun pointed at their head”. He’s right of course and I’m not sympathetic to people who borrowed too much, sometimes under false statements of income, and now are whining because the bank should not have loaned them the money. Sure, the banks lent foolishly and the CEO’s of broken companies who are not already broke should become broke due to their incompetence, but the real villians in terms of the folks that took out money and spent it foolishly or bought houses they can’t afford…. are regular folks like you and me.
(27) But people like myself did not jump on those bandwagons. We stayed within what we thought were reasonable risk levels with our purchases, credit, investments, etc. so why should we be required to pay enormous taxes to pay for the people that were irresponsible regardless of them being in the congress, wall-street, whitehouse, etc. It isn’t right and it isn’t fair to punish people that live their life in accordance with the law and consistently do the right thing.
This is total BS. Why should we continue to be responsible for when all the irresponsible get a pass and bailed out by the rest of us.
In regard to Congress…the reason blame lays squarely on them is because they knew this stuff was going on in the credit markets, housing markets, wall-street…etc and yet they did nothing about it. In fact they fought every attempt to do something about it because their ideology trumped sound reasoning and fiscal responsibility. For that they can never be forgiven – it was criminal to put this country at such risk, exposure and our current result. Barney Frank, Chris Dodd and the rest that knew the risk and yet continued to push it regardless of our exposure should be prosecuted no differently than a Maddoff. They are all part of the same breed.
Don’t forget it was in late July when Barney Frank made the public statements that Freddie and Fannie were fine, etc..etc.etc…and we ALL know that was a complete fabrication. He should be held accountable. My god he got his boyfriend an executive position there with huge monies paid to him just another fine example of the corruption in the our government and now with the Democrats in power they are the most corrupt and deserve as much hassle as we can throw at them.
Look at how Pelosi handled the stimulus and how it was passed even before the members received the actual legislation to review…who in the their right mind would execute a contract without reviewing it. Just the wild west now…and we are going to pay dearly.
Glenn a lot of folks have not defaulted or abused the system, but enough did that things got royally screwed up. My point is that the most important single factor in all this was probably at the single mortgage level – that is where the big money has been lost, sending the system into a tailspin.
But the *cause* and the *solution* may not be closely related and just because I didn’t mess up does not mean it’s not in my best interest to pitch in to fix things. We agree that the stimulus probably won’t do as much as advertised though I’m confident it will have some short term positive benefits.
In many ways we are cutting loose the people who caused this – at the individual level a lot of folks are ruined and contrary to most reports most rich people are getting hammered much worse than poor. The big gains weren’t always (were not usually) fair because they came from a speculative frenzy and the losses aren’t fair either, but that’s how economies work most of the time anyway. I do agree that we should try to avoid having low risk folks bail out high risk folks but that does not appear to be happening yet – it might with the mortgage help programs though if they keep people off the street it might be worth the cost.
(29) Joe our tax system has always been a small percentage bailing out others.
How about if you take money from the FED you give up your right to vote until you pay it back?
How about if this stimulus plan fails the people that put it through get prosecuted?
What happened to everyone being able to see the bill before it was voted on? What happened to all the transparency we were promised?
Shouldn’t the small percentage of people who PAY the vast majority of taxes have some say in how this money is appropriated? The people that are paying all the taxes do not have representation in our government and that goes to the very core on how our country even allowed taxation to begin with?
Its no wonder someone like Obama got elected the same greedy people buying houses when they couldn’t afford one, or that big expensive car, or taking out a ridiculous number of credit cards…they all voted for him. So we have the people in power that enabled the mess, we have the people on wall street that personally profited and exploited the mess still in power and getting a free ride with lots of money from the government and the people that made bad decisions in the first place ALL benefited from the biggest scam ever to hit our country and people think those that are getting stuck with the bill for ALL of this recklessness are just going to accept and idly stand by.
I don’t think so.
Glenn there is no reasonably alternative to letting the Democratic process work it’s …. ummm …. magic here. Sure we have a huge problem in democracies with people tending to vote to redistribute income in their own direction, and thus we have a lot more redistribution from rich to poor than the other way around, but you seem to be asking for an Aristocracy where only those who pay or are making good choices get to vote. That approach went out over a century ago. You have to take the good with the bad in this system, and given that the stimulus concept was supported by the legitimate reps of the people that’s how it’s got to be. If you are saying we should have a third party based on balanced budget and fiscal restraint and small government I’m very supportive of that for 2010 by which time I think it’ll be clear that the stimulus money was mostly just sucked into our massive economy without much effect – much like the huge sums we dump into military (a trillion every 2 years) and social programs (trillions per decade). That money does not do much because the ROI on that Government spending is extremely low as will be the stimulus ROI.
There are plenty of people who voted for Obama who live within their means, own a house they can easily afford, use little to no credit, are not leveraged to the hilt, and who are as indignant and upset about this financial malaise as anyone.
There used to be a party that sought a balanced budget, encouraged fiscal restraint and believed in small government – they were called Reagan Republicans…and a few of them even still exist….not many, but a few.
Paul it’s true the Reagan folks preached that but they practiced deficit spending – though not nearly to the extent that GW and now the Dems will do. I’ve yet to see a party that suits my agenda which is small government *including small defense*, and a budget that *must* be balanced with no tax increases allowed.
Paul what’s your take on the stimulus? And Glenn I do expect a lot of transparency we have yet to see. I’m confident that Obama will provide this online and we all need to insist on tracking every million of our money through this whole fiasco…I mean stimulus.
Glenn what in the world do you mean you don’t think people should stand idly by?
(34) Joe I think people are pretty much fed up (no pun intended) with government waste and the continuing erosion of our freedoms, etc. People are going to start doing something about it and with the media playing the socialist/liberal agenda it doesn’t leave very many options. I think the fairness doctrine will push things too far and we will see the results.
Funny how they want to take people’s freedom of speech away but they won’t enact campaign finance reform. Every single thing the Democrats and the Obama administration is doing right now is setting up the votes for 2010 and beyond. What business is of the Whitehouse to be in control of the next census – there is only one reason for that? So they can insert an ACORN style of corruption into the census process to further their agenda against anyone not walking, talking and behaving the way they want the sheeple to be.
You look at the stimulus and really start to see just how little this bill can actually accomplish. There are NO permanent job created with this bill. There are many hundreds of billions of dollars wasted on programs that have NOTHING to do with job creation. This is going to be biggest expansion of welfare in the history of this country and that NEVER works. We need to get people working not sitting back and taking a check.
Since the government is so set to run on massive deficits now why not implement a plan that nearly 100% of America would have been behind without all kinds of wasteful spending. Something that would have super simple to implement, super effective and super popular. An example of this would have been the suspension of the personal income tax and capital gains taxes for 2009. Can you imagine how that would have directly and immediately impacted the economy?
How about stating to businesses you get to deduct your payroll expense and travel expenses but you are taxed 18% on the rest (no other deductions)?
This would have streamlined the tax collection process would have put some level of tax revenue forecasting in place and as the economy started to rebound the corporate tax base would increase. They also would have incentive to hire people to increase their deduction.
A strategy of investment and savings from the private sector would be exactly what America needs right now. A streamlined and predictable business model where jobs are being created is exactly what we need right now.
Not some outrageous spend of money all for temporary jobs and to support a liberal agenda that basically a small minority supports.
We needed a plan that had wide appeal and that would actually do something. If Obama wanted to “heal” America that is what he should have done. But as predicted the Obama/Pelosi/Reid hat trick is doing exactly the opposite and we will all pay dearly for it in the long run.
I laugh when you say you think you will see a lot of transparency. You will only ever see what they want you to see and if only it supports their agenda. We were promised the opportunity to see this ENTIRE bill for at least 48 hours before it was voted on, etc…that hasn’t happened. Look at Obama’s campaign finances…total sham and we will never know the details of it. The list goes on and on. The corruption in our government is expanding at an alarming rate now and that corruption ultimately only leads to one conclusion – failure.
You may not like Corsi as a person but his background and track record in regard to financial reporting, etc is spot on. The following read should open your eyes to why we really need to change our course.
Once you understand the actual depth of our debt and what exposure it creates for us as a free nation you should realize that ANY expansion of a socialistic or wasteful spending programs are the EXACT OPPOSITE of what we need right now.
As the Obama administration pushes through Congress its $800 billion deficit-spending economic stimulus plan, the American public is largely unaware that the true deficit of the federal government already is measured in trillions of dollars, and in fact its $65.5 trillion in total obligations exceeds the gross domestic product of the world.
The total U.S. obligations, including Social Security
and Medicare benefits to be paid in the future, effectively have placed the U.S. government in bankruptcy, even before new continuing social welfare obligation embedded in the massive spending plan are taken into account.
The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion previously reported by the Congressional Budget Office, according to the “2008 Financial Report of the United States Government” as released by the U.S. Department of Treasury.
The difference between the $455 billion “official” budget deficit numbers and the $5.1 trillion budget deficit cited by “2008 Financial Report of the United States Government” is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.
But the numbers in the 2008 report are calculated on a GAAP basis (“Generally Accepted Accounting Practices”) that include year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.
Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.
So President Obama told the world we couldn’t wait one more day to pass the stimulus bill. That everyone had to focus on getting that through, etc…it was dire…we were about to fall into the abyss and NEVER recover.
So Pelosi (so she didn’t have to change her trip) rammed the legislation through the house without ONE SINGLE member able to review this massive legislation. According to Obama the most significant thing our country had to do…but no one bothered to review it before signing off on the largest single spending expenditure in the history of our country.
It then was voted on by the Senate and passed. That was Friday.
Now it is Tuesday and Obama is finally going to get around to signing it into law. So what’s the deal if this were so important how come he didn’t sign it on Friday?
Now we understand that between 5-10% of the stimulus is actually going to be used THIS YEAR!!!! So why not pass 5-10% of the stimulus now…make sure it is working and then do more…they couldn’t do that because this stimulus package has NOTHING to do with stimulus and is just another boondoggle disguised at stimulus to push through the biggest socialization agenda in the history of our country.
We are already bankrupt and this is just going to further weaken our position on the global scene and the ramifications will be significant.
Joe I know you want to believe there are honorable and honest people in our congress but it seems the only honest people are the one with the ethics and principles to reject this outrageous spending. If the people that voted for this bill had any ethics there wouldn’t have been one penny spent on pork. The fact that pork exists in the bill demonstrates the corruption that exists in our governmental process and that we NEED to change. Too many people want to accept that as a part of getting the job done. We deserve better than that.
As more analysis is done on the stimulus package the true cost of the stimulus is around $3.27 trillion.
Aye yi yi…the Obama/Pelosi/Reid hat trick is as bad as I could have ever thought it would be!!!
What stimulates the economy? Try hard, Glenn.
(39) JCH you think the government is the answer to all of your problems and everyone else. I think the government can and should provide a very minimum level of support. Every single time congress manipulates our system ALL for their own lobbied driven benefit it screws something else up.
Look at our current tax code, it has gone beyond the level of absurd. It is well over 14,000 pages of broken ideas and concepts. You can order a full printed copy if you like (for the bargain price of $1000 or so).
You and others that think the government is answer just don’t get that what we have now is really broken. No one is proposing solutions that actually fix the problems we have…they just want to mask them and push them on to the next generation. It is getting beyond the point of any sensible form of management. Soon the cost just to support our system will be more than the government can bring in and support all the extra costs.
The fact is this stimulus package does not and will not create 1 single job. That is a crime. Every single thing in this stimulus package is temporary and only going to make our current situation much worse. The markets are reacting as they should to this stimulus – it’s a joke and we are left with the tab.
The government isn’t the answer. The answer is people doing the right thing, and those that don’t do the right thing they should be prosecuted. If you run a business outside the law and rip people off you should be held accountable. If you are a congressman and you violate ethics, etc you should be thrown out of office and held accountable.
Lobbying should be allowed in the idea of free speech but no financial gain should occur ANYWHERE. There should be no money involved. There should be NO PAID ACCESS to our government.
It is amazing to me that someone like you would think the blind faith you have in the liberal agenda is going to actually pay off. You probably think it is ok that our lawmakers didn’t even bother to read the legislation before voting on it.
They promised 48 hours to review it…guess we didn’t read the fine print that was only for the lobbyists.
The hypocrisy from Pelosi & Co is staggering and we hard working Americans deserve better than what we are getting.
BTW…The single biggest thing our government could do to dramatically impact our economy is to implement The Fair Tax. It is a game changer and as a liberal you would actually appreciate how it keeps every single taxpayer above the poverty line in this country. But it does it with a manageable and predictable mechanism that doesn’t keep our country in the read. Take some time and really read about the idea – it would work and would provide results almost immediately and 100% of the country would get behind it – if people actually took the time to understand it.
Just in case you use a liberal search engine JCH…here is the link to the Fair Tax.
JCH I would like to hear you describe one thing that is bad about the Fair Tax or why you don’t think it would work?
Before you try to use one of the liberal myths about it you might want to read this first as well.
It reimburses all taxes paid by people below the poverty line.
House Republican Leader John Boehner also put out a statement hammering the deal.
“The flawed bill the President will sign today is a missed opportunity, one for which our children and grandchildren will pay a hefty price,” he said. “It’s a raw deal for American families, providing just $1.10 per day in relief for workers while saddling every family with $9,400 in added debt to pay for special-interest programs and pork-barrel projects. It will do little to create jobs, and will do more harm than good to middle-class families and our economy.”
Global banks lending money to other countries including “the playground of the Middle East” may have angered Congressmen, but Lisa Myers investigation didn’t point out that those critics of how the banks lent money voted for TARP (Troubled Asset Relief Program) in the first place.
In a segment on March 11 “NBC Nightly News,” Myers, NBC’s senior investigative correspondent, probed into why three particular banks – Citigroup (NYSE:C), Bank of America (NYSE:BAC) and JPMorgan Chase (NYSE:JPM) – made loans to overseas institutions, but supposedly neglected domestic institutions.
Paul are you finally ready to concede that the TARP is failing, has failed and was a huge mistake?
The molasses-like pace of American International Group’s breakup got a jumpstart last night after Treasury Secretary Timothy Geithner said he’ll work with AIG boss Ed Liddy to unwind the beaten-down insurance giant.
Those comments came as Geithner threw his support behind the AIG CEO, who’s gotten a heavy dose of criticism during the past few days as the public outcry over the company’s payment of $165 million in bonuses grows louder in the wake of the insurer receiving some $170 billion in rescue money.
“As long as he is there, we will work with him on measures to wind down AIG in an orderly way and protect the American taxpayer,” Geithner said in a letter sent to congressional leaders.
Of course they need all this time to cook the books so America won’t ever be able to learn the truth surrounding AIG and it’s special relationships with our politicians!!!
Yes another dismal failure by Obama…just a bunch of clowns in a circus that we as taxpayers are having to pay for and we don’t deserve this below average performance.
Geithner should not have been confirmed. He didn’t know what he was doing at the NY Fed and he certainly has proven he can’t handle the job…hell he can’t even use Turbo Tax correctly!
Florida Republican Rep. Connie Mack called for Treasury Sec. Tim Geithner to lose his job Wednesday, becoming the first Capitol Hill lawmakers to call for his ouster over AIG’s using tens of millions of taxpayer dollars for executive bonuses.
“Quite simply, the Timothy Geithner experience has been a disaster. The Treasury Department is in disarray. Taxpayer dollars are being wasted. America’s economy hangs in the balance. America needs and deserves a treasury secretary who can truly lead us forward,” Mack said in a written statement.
He called on Geithner, the former New York Federal Reserve chief, either to resign or be fired, and said President Obama should nominate a new secretary with “the experience and leadership skills America deserves.”
White House Press Secretary Robert Gibbs said Tuesday that Obama has “complete confidence” in Geithner, as lawmakers began to question why the Treasury Department didn’t do more to prevent American International Group from paying $165 million in bonuses even after receiving more than $170 billion in federal bailout money.
Though the administration claims Geithner found out about the bonuses only last Tuesday, Mack suggested he was more involved.
“Before Timothy Geithner became secretary of the Treasury, he was working hand-in-hand with AIG and other financial institutions to provide them hundreds of billions of dollars of taxpayer money as one of the key architects of the financial sector bailout,” he said. “I’ve had serious concerns about Secretary Geithner from the moment he was nominated. In the months since, he has shown us time and again why he was the wrong choice for this critical post.”
Geithner faced criticism during his nomination over personal tax problems but ultimately won confirmation.
WOW – FDIC criticizes bank with NO BAD LOANS for being too cautious.
Perfect example of how corrupt politics interferes with sound business practice. Only in an Obama administration could we expect such absurdity…can you believe this? Haven’t we learned our lesson?
A Massachusetts bank that has defied the odds and remained free of bad loans amid the economic crisis is now being criticized by the Federal Deposit Insurance Corp. for the cautious business practices that caused its rare success.
The secret behind East Bridgewater Savings Bank’s accomplishments is the careful approach of 62-year-old chief executive Joseph Petrucelli.
“We’re paranoid about credit quality,” he told the Boston Business Journal.
That paranoia has allowed East Bridgewater Savings Bank to stand out among a flurry a failing banks, with no delinquent loans or foreclosures on its books, the Journal reported. East Bridgewater Savings didn’t even need to set aside in money in 2008 for anticipated loan losses.
But rather than reward Petrucelli’s tactics, the FDIC recently criticized his bank for not lending enough, slapping it with a “needs to improve” rating under the Community Reinvestment Act, the Journal reported.
The problem, according to FDIC data, was that from late 2003 through mid-2008, East Bridgewater Savings made an average of 28 cents in loans for every dollar in deposit — a sharp contrast to the 90 percent average loan-to-deposit ratio among similar banks, the paper reported.
“There are no apparent financial or legal impediments that would limit the bank’s ability to help meet the credit needs of its assessment area,” the FDIC wrote in the CRA evaluation.
The agency also faulted the bank, which does not have a Web site, for not promoting its loan products enough, the Journal reported.
Considering his bank is doing well in tanking industry and even the FDIC’s deposit insurance fund is in trouble after paying for an upswing in bank failures, Petrucelli told the Boston Business Journal that the negative rating caught him by surprise.
East Bridgewater Savings ended 2008 with $135 million in assets, deposits of $84 million, $87,000 in profit, and a Tier 1 risk-based capital ratio of 31.6 percent — more than three times higher than many community banks in Massachusetts, the Journal reported.
Its net loans and leases equaled 21 percent of assets, compared with 72 percent among 385 similar banks across the country.
It’s all over…unbelievable. The truth is out and this is not going to go well. Not even 90 days into Obama’s Presidency and he is a COMPLETE DISASTER…
House Speaker Nancy Pelosi (D-Calif.) kicked blame for the insertion of a provision allowing for AIG bonuses to go forward to the White House and the Senate on Thursday morning, saying House Democrats bore no responsibility for the bonus language at the center of the AIG storm.
ROFL that along with her stating: “I am not partisan”
unbelievable…almost surreal watching this theater of absurdity played out right in front of our eyes…I wonder if Rome was like this when it was collapsing…
Rangel is a complete idiot and a perfect example of what is exactly wrong with this country. They should tar and feather this guy and make a public spectacle of him.
I love Rangel’s response to his tax issues…he literally says it is being investigated by HIS OWN committee.
This AIG debacle and this outrageous tax on their bonuses is completely wrong. Americans should be furious with ALL these idiots that caused this entire mess to begin with.
Same people keep coming up…Frank, Dodd, Schumer, etc…I wonder where the REAL problems are?
What started out as a few hundred billion which most of us thought was nuts…now we see the true figures they have spent or committed to with this continued bail-out!
$12.8 trillion!!! This has gone beyond insanity. America must boycott all companies that have benefited from the bail-out.
March 31 (Bloomberg) — The U.S. government and the Federal Reserve have spent, lent or committed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.
New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.
President Barack Obama and Treasury Secretary Timothy Geithner met with the chief executives of the nation’s 12 biggest banks on March 27 at the White House to enlist their support to thaw a 20-month freeze in bank lending.
“The president and Treasury Secretary Geithner have said they will do what it takes,” Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein said after the meeting. “If it is enough, that will be great. If it is not enough, they will have to do more.”
A very straight-forward set of 5 videos from Rolling Stone about the influence of Goldman Sachs in our current financial meltdown.
He also provides the background that shatters the belief that the housing crisis was caused by the Republicans. Watch it and learn…don’t forget Rolling Stone isn’t know to do hit pieces on the liberal left.
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