My Hush Money Theory Looks Pretty Good Right Now
I just skimmed through Obama's speech. I am not particularly good at parsing this political stuff, so I won't. The speech had a lot of the typical politician's assertions about features of his programs that have no basis in their actual design. For example, he asserts that home bailout money won't go to the irresponsible, but there is no such design element in his actual plan (homeowners are eligible for bailouts based on various hard-wired value formulas and ratios -- there is no step where their motivation for becoming overextended is or even could be assessed, nor any step where the government may exercise discretion).
Anyway, the one overriding sense I got from reading the speech was that I was totally correct when I wrote this:
So you ask, will we get any stimulative effect? I would answer: Just one. Obama and Congress will now shut the hell up trying to panic everyone into battening down the hatches for the worst economy in history, and folks can get a bit of breathing space to look around them and see that business opportunity is still there. This is $800 billion in hush money, a bribe we are paying Obama and Pelosi in the form of passing a lot of their pent up leftish wish list, in return for them taking some ownership interest in real economic health.
Wiseburn:
Obama's housing bailout needs no design element to stop money from going to the irresponsible because that is where it is destined to go. To the insolvent banks that the Federal Reserve, the TARP and now the "stimulus" are trying to save from bankruptcy.
February 25, 2009, 10:42 amstan:
The "stimulus" pork fest should be called Obama's Friends and Family Plan -- Chicago Style.
February 25, 2009, 11:16 amEsox Lucius:
Someone help me out here, does all that stimulus money go to only union jobs? I thought that the feds could only do business with union labor...
February 25, 2009, 11:47 ammorganovich:
but they obviously have not learned the "quit freezing the markets" lesson. if you want private capital to be active, you need to let it operate in a knowable environment.
lending is being frozen by banks having no idea what the mortgage restructuring rules are.
and now the "stress test" that is due out in april freezes investment into the financial sector. there is a big unknown hanging over the space for 6 weeks.
this is either a brilliant Trojan horse for nationalization, or some of the stupidest policy planning i have ever seen. (seems a toss up to call this one)
consider a scenario like this:
you want to nationalize lending but fear it will be too unpopular.
obama has put a very clever smokescreen in place. he is publicly saying he does not want to nationalize.
but this “stress test†they are applying is wildly draconian and will force banks to show they can withstand depression type conditions. this will give him the ammo to “reluctantly†cave in and nationalize them as “the math has spokenâ€. these guys are fantastic at convincing people that their model is reality and justifying agendas based on slanted math. ( just look at AGW)
he’s got it all set up. congress clamoring, public getting sold on it by roubini and the trough feeders at pimco. greenspan prostituting himself (as a member of the pimco board) to provide ideological air cover.
it’s coming. can you really imagine this stress test coming up with "hey, the banks are in better shape than we thought"? seems unlikely as it would contradict all the fear and crisis we have been sold. the results of this are as forgone as the results of a GISS temperature index.
if true, buy goldman sachs.
Fox-pitt says Goldman Sachs expects headcount reductions to continue
on a small scale
* Fox-pitt says met with Goldman Sachs CFO David Viniar on Tuesday
* Fox-pitt says Goldman appears almost excited to participate in "bad
bank" process, however not as seller but as a buyer
* Fox-pitt believes assessment of Goldman will show that it does not
need converts and can safely pass back TARP prefs
* Fox-pitt says Goldman is likely to be on the offensive throughout 2009
JPM showing signs of ability to get out from under as well.
they will get out from under TARP and be one of the few on the street who can pay people. loads of new firms will start. the old guard will have a massive brain drain. who the hell would work for citi for no money and no job security? the salary cap will do more to hasten the demise of the TARP banks than just about anything else. it’s the talent that makes the money. they are all going to be like meredith whitney and start new firms. look for a vibrant crop of new, agile firms to profit from the wreckage like the clever little rodents who ate the shivering dinosaurs…
the i-banks are dead! long live the i-banks!
February 25, 2009, 12:25 pmBlackadder:
The problem with paying off a blackmailer is that he can always turn around and demand even more money for his silence. To wit.
February 25, 2009, 3:08 pmMesa Econoguy:
Morganovich said:
this is either a brilliant Trojan horse for nationalization, or some of the stupidest policy planning i have ever seen. (seems a toss up to call this one)
It sure smells like a ploy (possibly inadvertent, but outcome is the same) for socialization of the entire banking industry.
The real tinfoil hat conspiracy theorists out there are even saying government is actively using this opportunity to seize effective control of all financial channels, making government the controller of all capital flows.
February 25, 2009, 4:22 pmMike:
Coyote,
In the past you wrote about Obama talking down the economy, before there was enough evidence that the economy was down enough to talk down. I don't remember which post it was of yours, but this comes close:
https://coyoteblog.com/coyote_blog/2009/02/mis-reading-the-recession.html
I work for a manufacturer of automotive parts, we are feeling the pinch. Many of my co-workers do not like Obama. But after last night's address, they seem to love him! They did a 180! They don't even care if he can pull all of this socialization off or not!
I wonder, if it is possible, that Obama purposefully talked down the economy. Get our morale down to "rock bottom". At some point, even the most hardened capitalist may become a socialist just to survive.
Could it be that Obama knew that if he had pushed this spendulous one month ago, no one would have gone along with it, because they haven't suffered enough?
If someone isn't thirsty, they aren't going to take a drink from the trough. But get them thirsty enough, and they will do anything to survive.
I don't usually believe in conspiracies, but after seeing the 180 turn around from so many of my co-workers, it is starting to make sense!
February 25, 2009, 5:54 pmOrthogonal Vision:
The mortgage bailout is the best example of misplaced priorities. Rather than money going to people who either outright lied on their loan applications (to say nothing of the lenders who let them get away with this) or those who simply made bad judgements, mortgage bailout should go to the very people who could put that money to the best immediate use with long term implications.
The reality is that people don't lose their homes in a foreclosure. The house doesn't just disappear or get destroyed. Rather in a foreclosure, the house loses its people. It's still there waiting for a new owner. And the bank that now owns the house has a non-producing assest and would love to see new mortgage paying owners in there.
Therefore rather than slowing or blocking foreclosures, we should do all we can to accelerate the process and have the government stimulate home buying by people who can really afford a 30 year mortgage at current rates. This would be truly stimulative and it makes alot of economic sense. Housing prices have fallen much faster and farther than income. Combined with relatively low interest rates, this makes homes quite affordable for people who qualify AND can obtain financing. This last piece is where the government steps in. Make funds available (but not to the big banks that screwed everything up in the first place, rather) to the savings and loan and small local banks that are in more than adequate financial shape. Well funded lenders can be matched with credit worthy borrowers.
This has several direct and immediate impacts. First, we quickly clear excess real estate that is constraining home prices and contributing to bad debt staying bad. Second, we are giving financially prudent citizens an opportunity to lock in low, long term rates. Third, these people buying homes will be moving out of smaller homes or out of rental situations, thus freeing up space for all those going through foreclosure. Fourth, this gets bailout funds down into communities very quickly. Fifth, by quickly clearing the glut the housing on the market, the construction industry will be better placed to get in the business of building reasonable houses at a long term sustainable rate.
Finally, there are some major long term benefits. We are rewarding good economic behavior (what a message to send our children). We are also establishing a long term, sustainable home ownership program, rather than a short term band-aid. We are not simply throwing money at big institutions and hoping they do something good with it.
February 25, 2009, 6:49 pmBob Smith:
This is $800 billion in hush money, a bribe we are paying Obama and Pelosi in the form of passing a lot of their pent up leftish wish list, in return for them taking some ownership interest in real economic health.
If find this sentence amusing. In what meaningful sense does somebody who spends other people's money take ownership of anything?
Even if it were meaningful, when was the last time any leftist like Obama blamed the inevitable failures of socialism on socialism? They always take the standard narcissist's way out of always blaming failure on others, never themselves. That's not ownership, that's disclaiming all ownership.
February 25, 2009, 10:23 pmLink:
Sh*thead or Manchurian Candidate?
Growing up -- in our local slang -- "sh*thead" had a specific meaning ... reserved for people who thought they were smart but really weren't.
Obama doesn't want to deal with the realities of math, science and economics. He got away with this on the campaign trail, especially because MSM let him. Expect to see this exposed when details in his budget are revealed.
I expect that his energy plan will look especially stupid, because it comes down to cents per kwh. "Renewables" today aren't 2.5% of our electricity ... so a call to triple them won't change much. If you believe in global warming, this isn't an answer. "Nuclear" is, but Obama won't speak that word. Instead, Obama looks to propose an elaborate cap and trade tax to burden our use of coal ... are the folks in Pennsylvania listening?
So is Obama just a sh*thead ... or does he want to destroy the USA from within. It's one or the other.
February 26, 2009, 8:54 am