At the White House Fiscal Responsibility Summit on Monday 23.
A seemingly small detail about Treasury Secretary Tim Geithner and Chair Ways and Means Charlie Rangel that I mention in the Daily Beast piece I posted today is the center of interest to more than one of my most discerning readers. At the White House on Monday, at the bipartisan Congressional leader confab, the 60 or so members were divided into working groups with special topics. The White House assigned places (this means Rahm Emanuel assigned places). The tax group was led by the facilitators Tim Geithner and Economic Adviser chief Christina Romer. It included senior politicians who are regarded as bipartisan suspects on the upcoming budget negotiation, such as Olympia Snowe, Jon Kyl, Max Baucus, Nydia Velasquez and Charlie Rangel. The conversation was random, wide-ranging and then focused when Charlie Rangel addressed Tim Geithner. Rangel lectured Geithner in front of the other politicians and the onlooking from Brookings and other think tanks. This is the detail that worries those who hear it with concerns about the Treasury stability. Tax policy is ahead of us. The White House needs Rangel to write the tax increases and revenue transfers it need to ell its plan to the voters. Maybe it will come to nothing. But right now the Obama administration has as much friction with its Democratic side as it does with the shut out throwing GOP. Waiting for Tim and Charlie to start throwing tax hikes across the table at each other. The speech yesterday (Mrs. Clinton is right in front of the President's head, and Tim Geithner sits beside her) was invigorating, but it all depends upon revenue and right now there isn't much.
How Bad Can It Get?
Treasury announces that the stress test begins now and will conclude for the 19 largest banks sometime in April. Because a thorough outside stress test of the assets and debts and obligations of a big bank can take up to a year, Treasury will use the bank officials to measure the bank portfolio. The fox apprentice will examine the fox books. And then pass it onto the Fed. And the grade will not be pass or fail. More like, you have six months to get yourself healthy and how much do you needs? Treasury already admits that the 19 banks cannot pass the test if the recession continues through 2010, unemployment goes to 10%, and housing prices fall 29%. In sum, the banks are insolvent now for what is ahead, and may be insolvent now for what is here. Meanwhile, the markets will not wait and neither will the consumers, retailers, employers who fill the stores with what consumers buy. It can get much, much worse than anyone remembers. Why is this man smiling? The Obama team needs huge tax revenue receipts. From where? Mrs. Pelosi pushed though another half a billion in spending today. See a post from Calculated Risk:
Timothy Leary of Geithner writes:
Something like 92% of American Retailers that had been in business in 1929, were bankrupt by 1933.
Just to give you a glimpse of your past and present danger.
Timothy Leary of Geithner | 02.25.09 - 4:40 pm | #
And below a notice for radio audiences in New York City for April 3, 1933: another crisis, and another type of Treasury Secretary:
Obamas narrative does not quite echo FDR's so tidily just because of a slight accident of history which is that the presidential election this time around came 2 years too early - we are not at the bottom yet and Obama gets to ride it down through the worst that is yet to come. He may be brilliant, but, I think he has perhaps a blind spot, perhaps his arrogance and ego are such that he can't see the peril his presidency is in, and actually, why should he - his approval numbers are still sky high. His achilles heel may be his economic team, but, if not that, being that we are all human and inherently flawed, it would be another. Will they be this high tho when banks truly begin to fail, when unemployment is sky high. Hope still reigns high, delusion is still in the air - the time for a savior figure is when we the people are hurting so bad that we finally call uncle.
If there is still any doubt as to who won (what has been described as America’s culture war), those doubts can now be put to rest. Democrats won. It is they who now control the action; it is they who now define the terms of the narrative; it is they who will now move to exact their semi-random revenge and strengthen their position. Such is the nature of winning (a war). We can yet expect to find far worse from the likes of Sharpton, Olbermann, Pelosi, sexypoolboy, etc.
Ours is not one nation – or two or three, even. We are splintered into (mostly) tiny parochial groups. On one side are those who still love America as it has traditionally been. On the other stands a coalition of narrowly focused self-serving interests. Though, those who love America still represent the largest single segment, the coalition at present is larger. It has won by uniting under the banner of an ass. The largely manufactured animus that has set in is at least as potent as currently exists between the Israelis and Palestinians and we are bound by the reality of it. The American electorate has decided to marginalize the opposition. Democrats are now in a position to determine the colors of what we are shown, if not the substance. History is written by the winners. They can call the sky green, and we will be obliged to believe them.
It struck me the other day while watching President Barack Obama and Japanese Prime Minister Taro Aso sitting together for talks that Aso (who is having his own troubles at home) had no idea of who he was talking to. It’s difficult to blame the man. After all, it will still take ourselves quite a while longer to figure out just who Barack Obama really is. (Putin and others are beginning to get it.)
When they cast their ballots last November, Americans were simply hoping for a more effective, more articulate version of George Bush; one that would be able to withstand the daily attacks by the media which they rightfully thought diminished them as well. They were tired of serving in the role of piñata. The majority of Obama voters had no idea that their whole world would be turned on its ear in the biggest shift towards socialism (and possibly even beyond) this country has ever experienced.
It can’t happen here, most thought. And yet, Obama’s address to a joint session of Congress leaves no doubt that things have changed dramatically; that what Obama was proposing is impossible, at least under the old rules of fiscal propriety.
As such, the discussion above and in ‘The Daily Beast’ is moot. What succeeds or fails will no longer be determined by what John Batchelor says. Congressional critics can smile and carp all they want, hoping that when it all comes down around Obama’s generous ears, their gravitas as prescient thinkers will be enhanced and the nation will now rush to embrace them. Barack Obama himself will be the judge of all things. He will not retreat. He will never say he was wrong. His has always been a world where logic and fact don’t matter. All that matters is that the soil is turned; that ‘the first ones now, will later be last’. We’ve seen it happen before in Zimbabwe, for instance. And judging by the responses to Batchelor’s article in ‘The Beast’, he should have a relatively easy time maintaining the edge as long as there are enough dixie cups and lids to go around.
Peter I too was suprised by the comments at the Daily Beast. People have a short term memory not remembering the obstructionist democrats who blocked Bushs judicial nominations or selection of John Bolton. The MSM has been used by Obama and the democrats to point the responsibility at the republicans who heretofor were in charge. They will still will go with the narrative that their actions were warranted by Bush's incompetant policies.
However we have entered into an era of moral hazard. Individuals are delaying purchasing and refinacing decisions waiting for more goodies from Obama. Investors are taking their money out waiting to see what Obama decrees. Most of the Insurance industry that have Medicare HMOs got clobbered by Obama's health plan announcement. Also look what happened to Sally Mae.
People wanted change but I am not so certain so drastic a change. Venture capital and investment will dry up seeing how the government at the drop of the hat can create policy which will desroy your business. Large businesses will be afraid to conduct business and these major initiatives will only extend the recession. Obama see the nose dive in the dow requiring action not realizing that their actions are exacerbating the situation.
*In response to the little peeps writing on Mr B’s *Daily Beast* post, I wrote:*
‘Ain’t it wunnerful!! All of you pseudo intellectuals commenting and positing your upchuck here have made it obvious that your blind faith turns to blind rage when you don’t have the skills to comprehend a true argument.
The Repubs don’t have much choice than to stand as watchmen and women on behalf of the other half of the populace that believe a small government, with support for small businesses, is the true manner to grow economically and extend the American dream for all who care to partake. Think of the boon that would occur if businesses conducted the business of the State and government was simply relegated to the administration of government
Get government out of the business better managed by businesses!!. ‘
*It did not get published*
Re your Daily Beast piece: How on Earth could the Republicans possibly smell the Democrats' weakness? The GOP lost that particular sense years ago.
Re the GOP. This is the GOP House. A Sherwood Forest kind of crew. They are going to all the meetings. They watch Geithner, Orszag, the others. The focus is the young guns vs the young guns. Generational contest. Newt and McCain and Romney and so forth, old old old news. Palin not in the game here. These guys don't want to be president. They are Congress. Fully informed. Money comes from the House. Obama team is weak on the money.
RE: Daily Beast - Thanks Mr. B - i now see where to aim my loyal opposition posts and practice my educating skills...nothing personnel folks but to be posting here is like singing to the Choir... We will need to advance conservative principles out side our own circles...proselytize to the outside communities if there is even the slimmest chance to see an opposition grow.
RE: Soupdragon the nut of the problem is that the preception is that Obama inherited this from Bush... and a strong section of the country is very anti-Bush (Similar to the way bush was viewed after 9/11- This was a debacle from the Clinton Admin regarding Al Queda.)
There are not enough of them (young, right-minded Republicans) to make a legislative difference. The Democrat train is unstoppable. In addition, any young Republicans that are left and would be willing to take it to the streets have no name recognition. The media will never allow them to get to first base. (Look at what they did to Jindal right out of the box.) They'll be swept aside and labeled ‘irrelevant’ (like conservative talk show hosts are). Now, under Obama, ‘irrelevant’ has been upgraded to yellow (or ‘threat’ level).
We actually already do have ideological censorship in this country. What’s happening at our universities is a prime example. It’s not at the point of a gun (yet), but at the point of ridicule and character assassination. Should someone on our side actually say something in opposition to Obama & (hell’s) company that has the potential of striking a sympathetic chord with the ordinary citizenry, the government/media complex will immediately swoop down to destroy him or her. It’s a ruthlessly effective killing machine. Palin never had a chance.
Love Sarah Palin, but, maybe she could help her chances by studying up on some famous Supreme Court decisions between now and 2011. Heck, even I know I few ... the Dred Scott decision ... that was the guy who refused to get off the bus, right?
John's effectively 86'd me from the blog recently, I suppose for being overly optimistic, but on the off-chance this gets posted, I'd like to say hi to you all and that I am burning the midnight oil for our wayward son, Capitalism, whenever it might want to find its way back.
Lou: Have no memory of speaking in any fashion negative of you or anyone. There was a lad who crossed the street during the Gaza fight, but I forget who and I was likely cranky. You are completely welcome. Beg pardon for any misunderstanding. J
Peter: I can appreciate your point i realize the fight will be almost impossible... but to fall silently in line and march ourselves straight into the depths of Socialism/Fascism DESPITE the overwhelming conservative base that is more accustomed to working at the local community level... in their churches and parishes synagogues and community centers... helping their next door neighbor... that silent majority that was tapped in the 2004 election.
We can at the very least start to lay the ground work to a foundation... it may not reap a single federal seat or position but we can not go quietly into the dark
No matter the odds against us.
If there is a lesson that McCain can offer to us now... it was not the failed election but the concept that to survive against all odds at the hands of the oppressor.
John, no, you never spoke of me at all. I had about half a dozen or so posts never show up. Then I sent you an e-mail asking if perhaps I had run afoul of some rules and didn't hear back. Glad I gave it one last try.
One sign of hope I see is that while Obama's approval rating has fluctuated between 60% and 69% over the last couple of months, the percentage of people who "strongly disapprove" has risen from 14% to 29%. If that keeps on the rise he may have to listen to the rest of us sooner or later.
One thing that's been really bothering me about Obama lately is that my family has been in the U.S. for 4-5 generations now, and it is particularly irking to me that a first generation immigrant is telling me what's good for America and what isn't. And how I'm somehow "evil" for achieving a modicum of success. How dare he. How dare he.....
Lou: Nhh, just my cluttered sked and running around like Huey Long in green silk pajamas between FDR and Baton Rouge. Regret missing our comments, will go back and look. This mechanism requires me to tap approval, which is okay but I need my assistants Huey Dewey and Louie to lend hands. J
I think that Obama's support is generational and largely comes from a crowd that has no real memmory of the Carter years and whose entire frame of reference has been dominated by Reagan small government politics - including Bill Clinton's administration. They think boomers boluxed everything up and hence have no credibility and so with their credibility goes small government philosophy. To their credit, if just cutting taxes were the answer, we wouldn't be in this fix b/c Bush did that. It is nevertheless mind-blowing to read people argue, in a sincere way, that raising taxes is for the good. If you open your frame of reference up, even with Bush tax cuts, we are still a welfare state and Reagan made small steps away from teh great society of LBJ and did nothing to unravel the semi-socialist state that FDR created. We are extremely lawyered and regulated - I'm a doctor, I am acutely aware of this fact. I think the way forward is not to make the argument about tax cuts per se but about liberty and morality. It's flat out immoral to confiscate 90% of someone's income, flat out immoral and by the way, it is devasting to an economy on life support. Also, as crazy as it may sound at the moment, I'm thinking that the day will come when it may be possible to build a real case for returning to some kind of gold standard. It seems inevitable that the dollar will someday fail - based on nothing that it is - I just never thought I would see it in my lifetime - I always that that it had another 100 years or so, but maybe not. A gold standard would remove an enormous amount of power that the government now holds to tinker with the economy and it's fiat currency and credit that allowed our credit bubble to blow up as big as it did.
I know a lot of very intelligent people, whose opinion I generally respect very much, who also call for a return to the gold standard. And I get a sinking feeling whenever I hear it, because to me it seems like just some sort of nostalgia, like the monetary equivalent of wishing for the days of Ward and June Cleaver. And I would ask you to consider that the call for a return to the gold standard is a sort of "referred nostalgia" - we may be remembering something else with fondness, but I don't think it was the gold standard in particular.
Repeated attempts by the anglo-american bankers in the early part of the 20th century to get their respective governments back on the gold standard resulted in all sorts of serious economic turmoil, and, I would argue, was a huge log on the fire of the very populist sentiments we all now find ourselves mired in up to our necks. Post-crash 1930's, the turmoil caused by England's abortive attempt at returning to the gold standard facilitated Hitler's rise to power. Germany couldn't make a reasonable attempt at WWI reparation, and one reason for it was that the currencies of the respective countries were so out of whack with each other that it was impossible to even determine whether the reparation schemes were just or unjust.
You mention that the dollar may fail. I know many people that are very concerned right now about hyperinflation. Russell Leffingwell once said that people worrying about the sudden devaluation of the dollar during the Great Depression was like a bunch of people freezing in the Arctic worrying about the heat in the tropics.
Let me summarize because I'm rambling a bit but it all has a common theme:
(1) I think that the ability for currencies of various countries to float freely against each other, traded no differently from commodities, is a valuable buffer against social unrest, gross inequities, and sudden failures of one country relative to all the others. With floating currencies, we all either sink together, or swim together.
(2) I think that the gold standard is a rich man's dream and it's one that the poor man finds particularly vile and will foment pro-socialist feelings about as much as anything could. You can't be free to enjoy your wealth and liberty if Madame LeFarge is coming up your avenue towing a guillotine behind her.
(3) Having said that, the government has got to have the self-discipline not to 'print' money it doesn't have. The gold standard cannot and should not be used as a proxy for the most important thing a government can have, which is a reasonably well balanced budget. Put a limit on the deficit as a % of GDP, a low limit, and stick to it, and your problems will be solved in the medium to long run.