The Note, 4/10/2009: Bouncing ’Round — Obama talks up economy — amid (gasp!) positive signs
Email By RICK KLEIN What storyline is most likely to hold our interest through the weekend and beyond? Defense cuts? War funding? The Sanford stimulus rebellion? The immigration push (and walk-back)? The coming of the First Puppy? (That’s an easy question — and the answer to that provides one small window into how the Obama White House is working the Washington system.) In the meantime, don’t look now, but could we be seeing a rebound? (And if we’re not — will the political hurdles grow for the administration?) President Obama is jumping back into the economy Friday with something he hasn’t had in a while: some breathing room. The markets are calm(er), the headlines are kind(er), and the Congress is quiet(er). “President Barack Obama’s meeting on Friday with top government economic officials likely sets the stage for more aggressive White House action soon on the economy, despite emerging signs of hope,” John D. McKinnon and Damian Paletta write in The Wall Street Journal. “The Dow Jones Industrial Average is up by more than 20% in recent weeks, and initial claims for jobless benefits fell more in early April than in any week this year — among other hopeful signs. But administration officials are reacting cautiously, fearful of allowing complacency to set in, and of raising expectations too high.” Always be closing: “From his perch in the Roosevelt Room of the White House, the president donned his salesman’s hat and pitched the benefits — for you, and of course, for the American economy — of home mortgage rates at their lowest levels in 35 years,” Jeff Zeleny writes in The New York Times. “Seldom has the president sounded so much like the host of a late-night infomercial, stopping just shy of imploring people to call the toll-free number at the bottom of their television screens.” “This presidential marketing approach doesn’t have quite the dignity of an FDR fireside chat, but it is, undeniably, very 21st century. And, for better or worse, it seems to have become a regular part of the presidential oeuvre,” The Washington Post’s Dana Milbank writes. “Barack Obama: Your First Choice in Home Loans.” (Speaking of salesmanship — the latest Clinton campaign [!] fundraising pitch, signed by James Carville: “These amazing prizes are only being offered online and are available only for a limited time — so please don’t delay in acting today.” Prizes include a day with President Clinton, a weekend with Carville and Paul Begala, and tickets to the “American Idol” season finale.) This might help make the big sales: “The ailing financial and retail sectors showed tentative signs of strength yesterday, an encouraging shift for an economy whose prospects are tied to their recovery,” Annys Shin and Renae Merle write in The Washington Post. “The worst days of the most severe recession since the 1930s may be over, as an increasing number of signs suggest the economy is beginning to stabilize,” Robert Gavin writes in The Boston Globe. “At last, after a nerve-racking six-month descent, the economy appears to be leveling off.
But don’t assume the bumps are over,” writes the AP’s Jeannine Aversa. Says Larry Summers: “I think the sense of a ball falling off the table — which is what the economy has felt like since the middle of last fall — I think we can be reasonably confident that that’s going to end within the next few months and you will no longer have that sense of free-fall,” Summers told the Economic Club of Washington (where he ignored the protesters calling for his resignation), per ABC’s Matthew Jaffe. Guidance from Treasury, ahead of the 11 am ET White House meeting: “On Friday morning, Secretary [Tim] Geithner will join President Obama for a meeting with Federal Reserve Chairman Ben Bernanke, FDIC Chair Sheila Bair, SEC Chair Mary Shapiro and Comptroller of the Currency John Dugan to update the President on a broad range of economic and financial topics, including ongoing efforts to stabilize our financial system and get lending moving again so that it supports economic recovery. These efforts include steps to stabilize the housing market; jumpstart securitization markets for auto, student and small business loans; clean up bank balance sheets by creating markets for legacy assets; and provide banks with a capital cushion to withstand a more severe economic downturn.” Will it all work? Paul Krugman, skeptical again: “My sense is that policy makers are still thinking mainly about rearranging the boxes on the bank supervisory organization chart. They’re not at all ready to do what needs to be done — which is to make banking boring again. . . . Part of the problem is that boring banking would mean poorer bankers, and the financial industry still has a lot of friends in high places. But it’s also a matter of ideology: Despite everything that has happened, most people in positions of power still associate fancy finance with economic progress.” Who can answer these questions? “As one of the most dizzying bear market rallies in Wall Street history enters its second month, a nagging question faces investors: Is the stock market making real progress, or glossing over deeper problems in the economy that will start a new wave of losses?” Jack Healy and Eric Dash write in The New York Times. “Companies continue to shed jobs and consumers are hunkering down in anticipation of a halting recovery. Most of the nation’s retailers on Thursday signaled that they expected to see a continued steep decline in sales as they waited for consumers to come out of hiding.” As for the autos: “The federal government is taking an increasingly hard line with the creditors of General Motors Corp. and Chrysler LLC, trying to squeeze billions of dollars in concessions out of banks, bondholders and others,” per The Wall Street Journal. “President Barack Obama’s auto task force, meantime, has made it ‘crystal clear’ that its members think a managed, or ‘prepackaged,’ bankruptcy is GM’s best option, but it is letting GM pursue the out-of-court option for now, said people familiar with the matter.” Testing his political capital: How many Democrats will vote no? “President Obama is seeking an additional $83.4 billion for military operations in Iraq and Afghanistan, a request that will drive the cost of the two wars to nearly $1 trillion since 2001,” per the Los Angeles Times’ Julian Barnes. “Obama’s request, including money to send thousands more troops to Afghanistan, would push the costs of the two wars to almost $1 trillion since the Sept. 11, 2001, terrorist attacks, according to the Congressional Research Service. The additional money would cover operations into the fall,” per the AP’s Andrew Taylor. Is Afghanistan Obama’s Iraq? “Today’s Afghanistan situation is eerily similar to the Iraq situation in 2005,” Alex Conant writes at Huffington Post. “Then, as now, a president with a fresh electoral mandate used his political capital to push his domestic agenda, rather than to build support for a vital but faltering war. Like his predecessor, Obama is focused on using his presidential bully-pulpit to make the case for reshaping domestic policies, rather than preparing the nation for the potentially tough war fighting ahead. Considering recent history, that is clearly a potentially perilous strategy.” Judging the foreign trip — Charles Krauthammer sees disasters in Obama’s wake: “With varying degrees of directness or obliqueness, Obama indicted his own people for arrogance, for dismissiveness and derisiveness, for genocide, for torture, for Hiroshima, for Guantanamo and for insufficient respect for the Muslim world. And what did he get for this obsessive denigration of his own country?” he writes in his column. “It is passing strange for a world leader to celebrate his own country’s decline. A few more such overseas tours, and Obama will have a lot more decline to celebrate.” Charting that new course: “The CIA is decommissioning the secret overseas prisons where top al Qaida suspects were subjected to interrogation methods, including simulated drowning, that Attorney General Eric Holder, allied governments, the Red Cross and numerous other experts consider torture, the agency said Thursday,” McClatchy’s Jonathan S. Landay reports. Choose your own direction: “On all major issues, Obama’s solutions are more likely to sustain public support if they accommodate diverse perspectives,” Ronald Brownstein writes for National Journal. “If Obama accepts the liberal insistence that outreach is futile, and seeks consensus only within his party, he will inevitably produce legislation that reflects the center of his coalition, not the center of the country. Over time, that space can swallow a presidency. . . . Each upcoming issue will present Obama with a choice between confrontation and inclusion.” Why immigration may be moving more quickly than anticipated: “While [Rahm] Emanuel once predicted that comprehensive immigration reform wouldn’t be considered until the second term of a Democratic president, he now says conversations on the issue will begin this year to lay the groundwork for possible action in 2010. The issue is also likely to arise next week when President Barack Obama travels to Mexico to meet with President Felipe Calderón,” Laura Meckler writes in The Wall Street Journal. Or maybe not: “Despite renewed interest in tackling comprehensive immigration reform this year, Democratic and Republican aides in the House and Senate said prospects for serious action on the thorny issue remain uncertain at best,” Roll Call’s John Stanton reports. “Aides also warned that the complexities and politically toxic nature of immigration reform would almost certainly force one or more of President Barack Obama’s top-line agenda items off the table for the year.” The stimulus pushback, from Gov. Mark Sanford, R-S.C.: “South Carolina Gov. Mark Sanford (R) is taking to the airwaves to defend his decision to reject $700 million in federal stimulus dollars,” per ABC’s Teddy Davis. “The ad featuring Sanford is paid for by Carolinians for Reform, a 501(c)3 group. The group is spending $230,000 to air the ad statewide in South Carolina. It follows an ad from the Democratic National Committee which accused Sanford, who is eyeing a 2012 run for president, of playing politics on the stimulus.” Says Sanford in the ad: “But the easy thing isn’t always the right thing.” “Sanford thinks a silent majority of South Carolinians support him, but some polls have indicated otherwise. In the past few weeks, Sanford has canvassed the state and appeared multiple times on cable news shows to defend his position,” The State’s John O’Connor writes. Gov. Sarah Palin, R-Alaska, is jumping into the fight over Defense cuts: “I would like to express my deep concern over your proposed budget cuts to the Missile Defense Agency,” writes Palin in a letter to Defense Secretary Robert Gates. “In these crucial times of rocket design and technology development by North Korea and Iran, I believe the global missile defense shield is more important now than ever.” Such a shame to see partisanship return . . . . “Republican strategist Karl Rove called Vice President Biden a ‘liar’ on Thursday, dramatically escalating a feud between Biden and aides to former President George W. Bush over Biden’s claims to have rebuked Bush in private meetings,” Bill Sammon reports for Fox News. “I hate to say this, but he’s a serial exaggerator,” Rove said on Fox. “If I was being unkind I would say liar. But it is a habit he ought to drop.” Rove added: “You should not exaggerate and lie like this when you are the Vice President of the United States.” Coming up on “This Week,” on Easter Sunday: Pastor Rick Warren is George Stephanopoulos’ guest. Where will the First Family spend Easter? “President Obama has not been to church since he took office — 11 Sundays! — despite telling ABC News he looked forward to getting to know the churches in the D.C. area,” ABC’s David Wright reports. “Come Easter Sunday, President Barack Obama will attend a local church for the first time since taking office, but aides say that won’t necessarily be the church he and his family join,” Politico’s Nia-Malika Henderson writes. “The White House wouldn’t say where Obama will be on Sunday — but did say that the Obamas search for a more lasting spiritual home in the capital has been going on for some time.” A fond farewell to ABC’s Jennifer Duck, who says goodbye to White House pool duty, convention chaos, and ABC NewsNOW’s “Ahead of the Curve” after a splendid run. We wish her the best in her new reporting job in Bakersfield, Calif. The Kicker: “Apparently Jewish [sic] here and in neighboring states are now calling wondering why they have not been invited.” — Internal White House e-mail discussion, mistakenly included in the daily schedule sent to reporters. “Sooon!” — First Lady Michelle Obama, to CBS’ Mark Knoller, on when the puppy will arrive. Don’t miss “Top Line,” ABCNews.com’s new daily political Webcast, hosted by Rick Klein and David Chalian, at noon ET. Friday’s guests: Friday’s guests: Democratic strategist Chris Kofinis and Republican strategist Alex Conant, and ABC’s George Stephanopoulos. Follow The Note on Twitter: http://twitter.com/thenote For up-to-the-minute political updates check out The Note’s blog . . . all day every day:
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Santorum: Money Will Not Defeat Obama, Ideas Will 
Rick Santorum's Full Speech at CPAC 2012
Somebody please explain how for the past three months we’ve been told this is the worst economy since the last Depression, Detroit is swimming in a sea of unsold cars, there is an ocean of unsold houses and offices, more people out of work than ever before, giant banks like Wells Fargo are buried in toxic assets, and at the same time Wells Fargo makes a RECORD profit???? For some this might build confidence, I suppose. But, for a regular Josephine like me, it makes absolutely no sense and it smells fishy – like rotten TARP (close relative to carp). — AND, PLEASE, I’M NOT INTERESTED IN PARTISAN POSTURING.
Posted by: Theresa | April 10, 2009, 9:27 am 9:27 am
“PLEASE, I’M NOT INTERESTED IN PARTISAN POSTURING.”
That’s a relief. Yesterday’s comments dissolved into ugly partisan rhetoric pretty quickly.
Honestly, I get my economic information from the Jon Stewart Show. Wednesday he had on an author of a book about Bear Stearns. Bottom line: the banks took outrageous risks buying bad assests and now the same people are getting money to fix what they did. I still don’t understand it, but I learn a little bit more every time Stewart questions economic experts. Stewart should get the Pulitzer Prize for journalism, in my opinion.
Posted by: Amy in Maine | April 10, 2009, 10:01 am 10:01 am
Theresa P.S.
I think it has to do with something called liquidity. The banks got stuck with bad house mortgage loans (which unscrupulous mortgage brokers made and sold to the banks for huge profits.) Because the banks hold all these bad loans and the housing bubble has burst, they aren’t lending money to businesses or consumers for car loans, etc. so that causes a crisis in the economy: a car dealership in my area recently closed because the bank wouldn’t lend them money even though their business was good. That’s called a liquidity problem, I believe.
Posted by: Amy in Maine | April 10, 2009, 10:09 am 10:09 am
After a long week of Klein hype, all I can offer is:
Klein, bite me.
Posted by: gus amaral | April 10, 2009, 10:18 am 10:18 am
Theresa, our economy was slowly destroyed in the last eight years. Recovery will come back, but slowly. It may be hard to notice, but its surely there.
Posted by: Dew5050 | April 10, 2009, 10:27 am 10:27 am
Theresa..I have seen this same post in other places..I am assuming your whole question boils down to Why Wells Fargo is all of a sudden showing a profit???
Posted by: cowgirl | April 10, 2009, 10:42 am 10:42 am
WThe 50% surge in net income from $1.99 billion, or 60 cents a share, a year earlier came largely from the acquisition of Wachovia Corp. on Dec. 31 and resurgent mortgage volume as interest rates decrease.
Wells Fargo also got a boost from a smaller-than-expected loan-loss provision, which some analysts criticized but others said could mean U.S. financial institutions are coming to grips with all the troubled loans piling up during the recession.
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Bloomberg News
CFO Howard Atkins said Wells Fargo has put a lot of Wachovia losses behind it.
“We have put a lot of their losses behind us when we closed the deal,” Wells Fargo Chief Financial Officer Howard Atkins said in an interview, referring to the purchase of the Charlotte, N.C., bank, battered by losses from adjustable-rate mortgages. “We are now enjoying some of the benefits from their revenue.”
Wells Fargo plans to report full first-quarter results on April 22.
WSJ-today: I usually googleWSJ or bloomberg for answers to financial market questions and check a couple of sources
Posted by: cowgirl | April 10, 2009, 10:51 am 10:51 am
Wells Fargo’s record qtr is because of Wachovia acquisition. Q109 earnings include combined Wells Fargo & Wachovia results, prior earnings comparison include just Wells Fargo. So by reporting what is not “an apples to apples comparison” which companies do all the time Well Fargo was able to report a record earnings qtr.
Why does the Note report on anything that Karl Rove has to say? Hasn’t he been thouroughly discredited by everyone except partisian zealots. Didnt he preside over the demise of the republican party (remember in 2004 Republicans controlled the presidency, Senate & the House). Rove calling someone liar?, need we remind people that Rove divulged classified information and lied about his role in doing so.
Posted by: Darryl | April 10, 2009, 10:55 am 10:55 am
Theresa, take a look at this segment about the situation (aired a week ago on PBS). Banks like Wells Fargo and our government are not interested in telling the truth. Geithner, who was President of the NY Fed has been involved with covering things up with the banks for a long time. I know people want to feel better, but there is something very rotten, not just “fishy”. http://www.pbs.org/moyers/journal/04032009/watch.html
Posted by: Will | April 10, 2009, 10:57 am 10:57 am
Including this week, Wall Street has now had five consecutive winning weeks since the stimulus bill and bank bill have passed. Mortgage rates are in the 4.85 to 5.5% for the first time in a long time, since Obama’s bills have passed. Banks are lending again. Hopefully those laid-off will be soon called back. Of course the Republicans and their leader Limbaugh are probably pissed–after all, they want the President to fail.
Posted by: William J. LePetomane | April 10, 2009, 11:00 am 11:00 am
The only only people to do well out of this mess are the big bankers and hedge fund managers (not investors just the managers) and people like David Axelrod and Rohm Emanuel. We were promised change and a government free of lobbyst. We were conned.
Posted by: Tomkker | April 10, 2009, 11:09 am 11:09 am
Karl Rove needs to get a job at the dunk tank at the circus..every time he lies-he gets dunked…waterboarding I can get behind…
Posted by: cowgirl | April 10, 2009, 11:12 am 11:12 am
For the somebodies who are offering input without the Partisan Posturing thank you. It is this whole notion of RECORD profits during the months of such deep economic crisis that makes no sense. I am watching the PBS video. Why doesn’t this information get disseminated on the major networks. I’m wondering if we live in a “see no evil” society. My gut feeling, is we are trying to sweep reality under the rug with headlines and information that twists data and turns phrases – like comparing apples with oranges – all with the notion that doing so will build confidence. Thanks again.
Posted by: Theresa | April 10, 2009, 11:18 am 11:18 am
Tomkker..You are dead wrong– the pension plans holding stock of these institutions, are the life savings and retirement plans of millions of hard working americans..I lost most of 1 of my 401ks when they let Lehman go bust..We are all bitching about the bailouts..but you just have no idea how many of pension plans got invested in these financial(supposedly -low risk banking and ins. co.s….They let these big banks fail and the american worker loses their retirement..This is bigger than..I am mad as hell..and not going to take it..that would be like shooting yourself in the foot with a cannon…
Posted by: cowgirl | April 10, 2009, 11:19 am 11:19 am
There are five brave soldiers killed in Iraq today and its not posted on abc here. 85 billion to fund the war and there is no out cry here just pass it. Cindy Shehan where is your embarrassing big mouth and why are you not camped out at Obamas house??
Posted by: Jim Rod | April 10, 2009, 11:28 am 11:28 am
terressa, i watch Moyers every week, he always has interesting people on that you don’t see on the regular media outlets…very few politicians..who are useless in terms of real information..but you also have to remember..this is 1 mans opinion, and i did find it very interesting, just as I find Krugman interesting…but lacking in details as to how HE would actually solve the problem in a different way…and then address the solutions to the problems that will come with his way…THERE is no easy way out..thats what you have to understand…american people are going to suffer..no matter what means we use..LONG TERM… suffering could possibly come with letting them fail…It just doesn’t look like any real good solution that lets ordinary americans off the hook…first we lost it in the market..now we pay for their mishandling and greed…I don’t like it one bit..if anyone sees a solution that doesn’t involve the tax payer…I am all ears..
Posted by: cowgirl | April 10, 2009, 11:34 am 11:34 am
Jim Rod…maybe you didn’t get the news…we are pulling out of iraq slowly over the next year and 1/2????
Posted by: cowgirl | April 10, 2009, 11:45 am 11:45 am
The White House needs to be careful that they don’t devolve into becoming a Bush-style cheerleader for a sick economy.
http://www.political-buzz.com/
Posted by: matt | April 10, 2009, 11:55 am 11:55 am
Is this Mr. Obama’s “Mission Accomplished” moment? Time will tell…
Posted by: Terry | April 10, 2009, 12:09 pm 12:09 pm
Theresa – Thank You!!! i am so glad to know that there are still some independent thinkers in america. People these days just want to believe what they hear, eventhough is half truth, government only wants to build confidence with more lies, I like facts, not unrealistic statistics, been down that road before. I ask, where is the economy seeing positive results in Washington? Not here in Florida, New York, California, Michigan.
What is truths: Banks, Investors, Wallstreet – all took on risky loans, and for a job well DONE, GOVERNMENT GAVE THEM A FREE PASS – TRILLIONS $$ IN BAILOUT, no accountability. Great message to the working class americans, that are losing their homes to foreclosure, small business owners having to close, NO FREE PASS FOR US, RIGHT!!!!
Posted by: reality | April 10, 2009, 12:15 pm 12:15 pm
I have an idea that i am going to give to my senators and N. Pelosi and harry reid..As a means topay off the evergrowing national debt..the government needs to find a way to pay for it..OTHER than..taxes…by issuing government credit cards at say 5% interest to americans..with say 5,000 credit limits..they use that resonable interest rate to generate income for the government..americans get areasonable credit card rate and when they pay their interest..they are actually paying down the national debt..instead of 18-30% interest to money grubbing banks..your paying your interest to lower the national debt..If the banks want to compete..they can lower their rates..and still make a profit..so the government is not puting the banks out of the credit card business..its free market- yes? so instead of just complaining..we can actually do something about paying off the national debt–without getting taxed..I see no downside..feel free to point out one…
Posted by: cowgirl | April 10, 2009, 12:17 pm 12:17 pm
Terry — I had the very same feeling when Obama was in Europe and used the phrase that last week we reached the “Turning Point” in the economy.
Posted by: colleen | April 10, 2009, 12:22 pm 12:22 pm
check out this link. PBS interview of the guy who dealt with the Savings and Loan Crisis… He explains exactly what happened to the banks… It is a crying shame that the government refuses to acknowledge the problem and then try to fix it. Rather, obama and crooked Timmy Geithner are hiding the truth from the america people with the help of a compliant press… The government is simply taking our kids’ future and flushing it down the drain by imposing future astronomic debt burdens on them to cover the market losses of the people that caused the problem in the first place… outrageous and horribly depressing… go to whitehouse.gov and senate.gov and house.gov and contact your representatives and raise hell!!!! We as Americans need to try to stop this crap…
http://www.pbs.org/moyers/journal/04032009/transcript1.html
Posted by: bob | April 10, 2009, 12:57 pm 12:57 pm
People attack him for being “too pessimistic,” and then they attack him for being “too optimistic.” I think maybe “attack” is the most important word here.
Posted by: jock59801 | April 10, 2009, 1:03 pm 1:03 pm
cowgirl
That’s an interestimg idea, but I think the debt still has to go somewhere. Either the people have to pay it back, or the tax payers would have to cover it. Either way we would be giving money to the government, so I don’t know why it would be better just because we call it “interest” rather than “taxes.”
Posted by: jock59801 | April 10, 2009, 1:11 pm 1:11 pm
bob….I think what really happened started before Pres. Obama took office.
Posted by: try the truth | April 10, 2009, 1:12 pm 1:12 pm
Jock–if you have a credit card..you are going to pay interest..if the government issued credit cards at the low interest..they would get a huge amount of card holders..applying that low interest to the national debt pays down the debt without having to raise our taxes to do it..My point is..the government needs to get in the business of paying its debts without putting the burden entirely on the backs of the american people…instead of all this arguing over taxes that has gone on for ever..kind of like the state lottery system generating revenue for the states
Posted by: cowgirl | April 10, 2009, 1:19 pm 1:19 pm
Bob, I watched the program last week.its just 1 mans opinion…and he didn’t offer workable solutions…thats what I am looking for..solutions..anyone with a piehole can offer critisism or a conspiricy theory…we all do it every day..and its meaningless unless you have a solution..I remember when Moyers had Rev wright on last fall, in an effort to redeem rev. Wright, who was very soft spoken and gentle on moyers..Next week he was back giving speeches to incite..so its just a matter of what you choose to believe..if you thought it was a conspiracy before, you might have come away feeling vindicate…however if you were looking for solutionw..the guy on Moyers…didn’t have them…a problem solver has solutions…the rest just make statements..never haviong to back them up with ideas…
Posted by: cowgirl | April 10, 2009, 1:27 pm 1:27 pm
Bob, I would like to point out that even he acknowledged in that interview that the savings and loan crisis was alot smaller…it wasn’t systemic..it was confined to those banks..which were pretty small-in comparison to the world wide nature of the prioblems these institutions..so its apples and apples all right-but one of those apples is on steroids and as big as a house..so what he is saying…proably..won’t work in these circumstances…its the details that kill it…
Posted by: cowgirl | April 10, 2009, 1:33 pm 1:33 pm
Jock, from Bob… yes,, bush and paulson were much worse than obama and geithner.. it is just way more disheartening that someone who promised more transparency in government is working hard to hide the truth.. as you know, it is the mom and pop investors that see the news that all is well who are going to get back into the stock market and get destroyed a second time. if they would tell the truth about the banks, maybe some of the normal people could avoid giving their money to wall street swindlers via stock losses….
Posted by: Bob | April 10, 2009, 1:33 pm 1:33 pm
Dr. Nouriel Roubini, at rgemonitor.com has called every aspect of this crisis. I have followed him for years. He has been offering specific solutions for years and was largely ignored until all of his predictions were validated. Now, he is everyone on TV and at the big economic conferences. If you want to see solutions, and see his explanation of the fraud – which tracks the interviewee’s thoughts, go to his website.
Posted by: Bob | April 10, 2009, 1:38 pm 1:38 pm
Does Obama Really Work For Wall Street?
Henry Blodget|Apr. 10, 2009, 6:46 AM|25
PrintTags: Wall Street, Tim Geithner, Barack Obama, Editors’ Picks
So far, we’ve laid the Obama administration’s decision to keep propping up failed banks at Tim Geithner’s feet. Geithner’s boss, meanwhile, has so far avoided blame. We wonder how long that will last.
First, it was the administration’s ongoing insistence (via Geithner) that this is a liquidity crisis, not a credit crisis–the Wall Street view.
Then it was the failure to do anything more than express “anger” at the AIG bonuses.
Then it was Geithner’s plan to, yet again, bail out banks at taxpayer expense.
Then it was the administration’s decision to force GM into bankruptcy, fire its CEO, and hit its bondholders–setting up a bizarre double-standard with Wall Street.
Then it was a “stress test” for banks in which the baseline scenario has already been eclipsed by the deterioration of the economy–once again slamming the administration’s credibility
Then it was the revelation that Larry Summers made $5+ million from Wall Street last year, which added to the perception that he, Geithner, Rahm Emmanuel, etc. are reluctant to bite the hands that feed them.
Now it is the leaked announcement that “all banks have passed the stress test!”, combined with a refusal to share the results of that stress test on a bank-by-bank basis.
Obama has never explained why he’s acting so out of character here, so we have to speculate. The charitable explanation is that Tim Geithner is paralyzed by fear of triggering another post-Lehman credit meltdown and has convinced Obama that that’s what will happen if the government holds banks and their bondholders accountable or just comes clean about the shape that banks are in.
As we’ve said, we disagree with this No one is arguing for the sort of uncontrolled bankruptcy that Lehman went through. And the seizure, restructuring, and sale of a few major institutions should not be unmanageable, especially if the bondholders are required to pick up the tab.
The more disturbing explanation, meanwhile, is that the Obama administration really is in Wall Street’s hip pocket. Jonathan Weil at Bloomberg thinks there’s a chance this is the case. And Obama certainly isn’t doing anything to discourage this.
By maintaining a double-standard and refusing to address the elephant in the room, Obama is risking his credibility and his reputation for telling it like it is. This behavior, both toward the banks and toward Americans, is a disturbing echo of the Bush administration. It’s time for Obama to address it head on.
Posted by: bob | April 10, 2009, 1:52 pm 1:52 pm
BOB, Roubinis take???Even so, many economists predict a rebound in the global economy as a result of the impact of cheap money and large-scale government spending.
Jim O’Neill, head of global economic research at Goldman Sachs, emphasised the glimmers of hope, especially in China and even in the UK, as financial conditions normalised. “It is unlikely that the world will continue decelerating at the rate at which it has been doing since October,” he said in a Financial Times video debate with Mr Roubini.
But even when the global economy does revive, policymakers will face some daunting dilemmas. Pressure will increase to lift interest rates quickly to prevent the emergence of more damaging asset price bubbles. That, though, would sap the strength of any incipient recovery and raise borrowing costs for many governments, which are struggling to restrain runaway public finances.
“The exit issue is a serious issue: how you mop up this liquidity, how you sell back to the market all these illiquid and toxic assets you bought, how you make sure these fiscal deficits are shrinking so you don’t have to monetise them so you don’t cause longer-term inflationary pressures,” Mr Roubini said. “This question is not for today or next year, but by 2011 we will have to start thinking about those questions.”
The four options to redress public finances – default, inflation, increased taxes, or decreased spending – are also economically unpalatable and, in political terms, potentially lethal.
For the moment, labour militancy has been relatively restrained as many employees fear losing their jobs. But as economic prospects brighten so will employees’ demands for higher pay and greater protection.
The danger is that things will grow worse politically just as they improve economically.
Posted by: cowgirl | April 10, 2009, 2:09 pm 2:09 pm
Cowgirl and bob
Would you people actually do some research before you start frying Bush for the housing/banking crisis (as the liberal media has taught you to do so). bush actually spoke out against the reckless loans being given out and guess what the opposition shouted back “YOU JUST DON’T LIKE POOR PEOPLE!”
This opposition was comprised of over enthusiastic community organizers, liberal senators/congressmen, and an anti-capitalist media. These people FORCED banks to make loans to people who could never pay them back. If the banks refused, they faced lawsuits from the community organizers and penalties from the gov’t.
Barney Frank, chris dodd, chuck schumer, harry reid, maxine waters used to sit on capitol hill and spout about the need for “affordable housing” on a daily basis. Please don’t take my word for it, just look up on the web any number of the senate hearings that were held to discuss fannie/freddi.
Once you watch them(you tube has plenty of these hearings as well) you will see that the democrats are the ones who brought our financial system to its knees with their socialist agendas.
Posted by: Jill | April 10, 2009, 3:14 pm 3:14 pm
“These people FORCED banks to make loans to people who could never pay them back. If the banks refused, they faced lawsuits from the community organizers and penalties from the gov’t.”
This is a blatent lie. Have you no shame?
Posted by: Amy in Maine | April 10, 2009, 4:17 pm 4:17 pm
Jill: you said “sit on capitol hill and spout about the need for “affordable housing” on a daily basis. Please don’t take my word for it” ….I am not taking you word for it…talking about the “need for it” and legislating it are two different things..or perhaps you don’t understand how laws are made
Posted by: cowgirl | April 10, 2009, 5:01 pm 5:01 pm
Jill, give me the bill #, or isn’t rush handing out that info???
Posted by: cowgirl | April 10, 2009, 5:03 pm 5:03 pm
BOB..you do understand when they say…”bond holders will pick up the tab”…that means american investors..little people whos pension plans are invested through their companies management funds..I didn’t know i was invested in Lehman until I got the notice i had lost my 401k plan..I was one of those bondholders they talk about taking the hit when you let these banks fail..all the little people with their retirement plans who were invested in low risk banking bonds…there are no free passes on this..americans are going to take the hit one way or another…and the blame lays at the feet of the greedy ceos, boards and hedgefunds…Don’t listen to jill-she doesn’t know what shes talking about…
Posted by: cowgirl | April 10, 2009, 5:11 pm 5:11 pm
Thanks to Bob..thank you Bob,I went and read some articles and watched some videos of Mr Roubinis-which i found very informative and thoughtful..even though they called him Dr. Doom..he was among the few to predict this…He did however seem to support geithner in his video interview…the need to do the stress tests, and then seperate those assests out-good from bad- before deciding on which way to go with the banks…
Posted by: cowgirl | April 10, 2009, 5:21 pm 5:21 pm
I am starting to think Obama is a punk? Bla Bla Bla. Next he will kissing Iran as they plot to kill us – his response will be nothing – no guts – we most likely give them money after all its not his but every American.
It doesn’t look good for us – they think they can buy us out of their mistakes. I have never been worried about our country in 65 years but now I am.
We are in trouble – and Obama is not up to the challenge – never was – Buy a gun and move out of the cities.
Posted by: a citizen | April 10, 2009, 6:52 pm 6:52 pm
ECONOMIC REBOUND, EH OBAMA??? STILL DISHING OUT THE BULL **** THAT GOT YOU ELECTED, I SEE!!! WHAT HAVE YOU REALLLY ACCOMPLISHED? WHERE IS THE BIG CHANGE???
Posted by: brannigonforall | April 10, 2009, 7:28 pm 7:28 pm
Like the door to door salesman who are coming around and trying to sell me Verizon FIOS that I dont need (and rook me into a 3 year contract which I cannot break) NO – we dont want what you are selling Obama. If it was good you wouldnt need to hard sell it! I see the USA as a corporation/information technology business person does. Obama doesnt hes a clean cut Harvard/ACORN guy. Not a businessman. We simply have no need and the current infrastructure is better and requires no sacrifice. Now if only Microsoft would take a cue and offer a new version Windows XP for Offices so I could go get a job installing it to workstations again. I see the upcoming Windows 7 as a flop also. Businesses with custom software/legacy dont want to mess up the computer systems that are working either. They cant afford to hire developers. There is no need to upgrade from the status quo. Business are not looking to spend more money or hire!
Posted by: obamaisbad4u | April 10, 2009, 9:39 pm 9:39 pm
How are banks now saying they are making billions in profit when last year and this year they were on life-support and near collapse (I heard this out of the mouth of both BUSH and OBAMA)!!!!
Posted by: paulieshere2 | April 10, 2009, 9:42 pm 9:42 pm
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Sarah
http://blanket.ws
Posted by: Sarah | April 11, 2009, 1:21 am 1:21 am
Misdirection. Washington wants your attention away from the culprits who caused the crisis. Why don’t you hear about it? Follow the money. What group give the most money to Washington?
Posted by: deanbob | April 11, 2009, 10:32 am 10:32 am
http://www.nationalpost.com/news/story.html?id=1479501
U.S. industry urges Washington to settle trucking spat with Mexico
Posted by: deanbob | April 11, 2009, 10:39 am 10:39 am
This a giant setup for what is to come , higher taxes , fuel , cost of living and smaller Automobiles , think Great Brittan .
Hussein is not through yet , control of major industries was just the beginning .
Posted by: Trilobite collector | April 11, 2009, 2:10 pm 2:10 pm
Concerning measuring GDP. market indexes as a gauge for the state of our nation. RFK said it better than I ever could a few weeks before he was murdered. Forgive the long post:
“We will find neither national purpose nor personal satisfaction in a mere continuation of economic progress, in an endless amassing of worldly goods. We cannot measure national spirit by the Dow Jones Average, nor national achievement by the Gross National Product. For the Gross National Product includes air pollution, and ambulances to clear our highways from carnage. It counts special locks for our doors and jails for the people who break them. The Gross National Product includes the destruction of the redwoods and the death of Lake Superior. It grows with the production of napalm and missles and nuclear warheads…. It includes… the broadcasting of television programs which glorify violence to sell goods to our children. “And if the Gross National Product includes all this, there is much that it does not comprehend. It does not allow for the health of our families, the quality of their education, or the joy of their play. It is indifferent to the decency of our factories and the safety of our streets alike. It does not include the beauty of our poetry, or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials… the Gross National Product measures neither our wit nor our courage, neither our wisdom nor our learning, neither our compassion nor our devotion to our country. It measures everything, in short, except that which makes life worthwhile, and it can tell us everything about America — except whether we are proud to be Americans.”
Posted by: cowgirl | April 11, 2009, 2:17 pm 2:17 pm
I certainly would like to hope that things are getting better. The only factory left in my town is laying off this week. 180 people to go on the 1st cut. The workers have already been cut to 4 days a week, from 7 days with overtime. I know more people out of work or who have taken part time & low paying jobs, that used to prosper fairly well. The restraunts & pizza joints are less crowded. Store are less crowded, & have less workers on duty & at the check outs. More vacent stores & businesses going out of business. Gasoliene is going up. No one I know plans to vacation this year. Tourism must be really sufferring. People I know still won’t buy new clothes, or anything. I know of people who want to refinance & can’t get a loan, there are alot of lousy excuses from the banks. So far things still look pretty bad to me.
Posted by: from Ohio | April 12, 2009, 2:58 am 2:58 am
Where are the real signs of improvement with unemployment at 8.5 percent in this country. Now Obama wants to sink 8 billion dollars into ‘inter-city high speed rail’ heres a news flash Mr. Obama. We already have trains people take from city to city. The problem is the companies in the city take NYC for instance are all laying off. Lets face it no one really wants to work in NYC as its obviously a terror attack target and your are being all kissy-face with the Islamo-Fascists overseas. How about sinking that 8 billion into more ‘extended unemployment’ before it hits 10% nationwide and we are in a full depression. You have more than that to banks and GM and banks even reported making profits this year! How can that be if they were on ‘life-support’ and about to collapse. Why not do the right thing by the American people/citizens Mr. Obama?!? Just this once!
Posted by: obamaisbad4u | April 12, 2009, 10:10 am 10:10 am
Obama can’t kiss it and make it better-it is just going to take time for and economic recovery to hit mainstreet..thats the way it has always worked..thats what all the economists say..at this point we have to wait it out..at this point in time -blaming Obama is like blaming the tooth fairy for taking your tooth…Unemployment estended benifits go until Dec 09. so that is covered in the stimulus plan..I personally think its a wrong move to save the banks-gut them out, break them up, and lets get on with it..this upcoming insurence bailout is worse than the rest..in that those companies went out and bout failing banks so they could qualify for TARP funds…If the government falls for that…I will be protesting..enough is enough.
Posted by: cowgirl | April 12, 2009, 11:15 am 11:15 am
The banks assets/loans/mortgages are worth more when a bank goes bankrupt because they will get sold to someone else. If you keep bailing out banks the assets are worth less and less. You are just prolonging the inevitable. You can easily cook the books to say you made a profit. But why bail out a bank that made a 3 billion dollar profit?
Posted by: obamaisbad4u | April 12, 2009, 12:55 pm 12:55 pm
The poor saps/customers who bank at Wells Fargo must feel used and abused if bailed-out Wells Fargo can suck record profits from them.
Posted by: frazier | April 12, 2009, 9:26 pm 9:26 pm
I recently came across your blog and have been reading along. I thought I would leave my first comment. I don’t know what to say except that I have enjoyed reading. Nice blog. I will keep visiting this blog very often.
Sarah
http://blanket.ws
Posted by: Sarah | April 12, 2009, 10:56 pm 10:56 pm