American taxpayers should not read anything into today’s stock market supposed reactions to the President’s verbal and policy attacks on banks. Markets have little to do with realities of the broader world and its economics. The Presidential attacks, however, should be very troubling to taxpayers for more profound reasons.
Obama is vociferously attacking “risk taking,” that very human characteristic at the heart of America’s success. Observing his address, it is evidently something he doesn’t have a good grasp of. It is also very, very obvious that the President does not understand business, or economics, even at their simplest denominations. The economy and its future progress is very dependent on risk taking.
This post has written repeatedly against the abuse by Wall Street, and has called for the re-instatement of “the Glass-Steagall Act (except as it pertains to the Fed) that was for the most part repealed in 1999 eliminating the restrictions of affiliations between banks and “investment banks,” … and don’t listen to any bankers who tell you different with stories about diversification reducing risk, or banks being completely capable of regulating themselves.” There is no need for knight-on-horse-saving-the-day-grandstanding. Congress should restore the act, but in the meantime, we can sit back and enjoy the theatre as the President shows us how to distinguish market making from proprietary trading within the banks.
Obama’s rhetoric of new populist policies against banks, comes across as a simplistic attempt to flirt with what he thinks is Main Street’s perception of banks. This also smells of the disingenuous, given this Administration’s early actions during the “bailout” debacle, that gave so much credence, and amperage, to the too-big-to-fail idiocy. It obstinately, and uncomprehendingly, provided hundreds of billions for the creation of financial behemoths. No preconditions were established, nor were any strings attached to the money. Wall Street played with this Administration, as it did with the Bush Administration, and helped itself to taxpayer-borrowed cash. This President should be taught that failure, big or small, is part of the long road to both personal and business success.
Contrary to Obama’s claims, the financial meltdown was NOT caused by the reckless abandon of speculative bankers mired in greed. It was the direct result of cheap money from The Fed, being pushed onto consumers with little, or no credit, by a Congress, which believed in the mantra, “everyone should own a home.” If anything, we would like to hear about some reigning in of Fannie Mae and Freddie Mac, . . . just for starters. The greed which drove the likes of Goldman Sachs, Morgan Stanley and City Bank beyond the fringes of ethical boundaries was not the root cause of the disaster the world is now burdened with.
Obama’s attack on banks is a knee-jerk reaction in response to the devastating Democrat loss of the Massachusetts Senate seat this week. This breathes the fragrance of panic. The President evidently has no idea how to approach the most important concern on the minds of his constituents – stimulating the creation of jobs. He should stay away from teleprompters for a few weeks, and educate himself on the workings of businesses, and the economy. Then he should surround himself with advisors who have actually managed a wide variety of successful enterprises. The result should then be a speech, without teleprompter, impassionedly promoting American business and ingenuity to the national and international community.
What America will definitely not need is a lecture on what its core values should be.
Crossposted from The Pacific Gate Post
A constituent of the vast baby boomer generation with a career which has been fortunate to know the ponderous corporate worlds, as well as the intimately pressurized, and invigorating entrepreneurial domains of high tech and venture capital, I have harvested my share of mistakes meandering through corridors of enterprise from Silicon Valley, to London and endless, colourful, sometimes praetorian points in between. The voyage has provided an abundance of fodder for a pen yielding to an inquisitive keyboard, a foraging mind, and a passionate spirit.
Whether political or business or social or economic or personal, is it not all political? It is a privilege to write, and an even greater privilege to be read by anyone, and sometimes with the wind at my back the writing may occasionally be legible. I do not write to invite scorn, nor to invite respect, but if I get really lucky the writing can stimulate thinking. I also write for the very selfish purpose of animating my own processes, and engaging the best of what life offers. Above all, whether biting fire or swatting shadows, I am grateful to be gifted the freedom to write and publish whatever flows down to the keyboard. To all those who enabled this freedom, and to all those standing guard to preserve it, I am indebted.
This post has been linked for the HOT5 Daily 1/23/2010, at The Unreligious Right
Ho hum, Obama attacks capitalism again … Can’t do anything but attack though.
Like a little man-child lashing out when he strikes out …
Maybe if he didn’t say “I and Me” so much?
For over a century, the left has felt the way to populism is “class envy”. Pit the little guy against the “big” guy. Apply Saul Alinsky tactics to any one segment of our society, demonize it, neutralize it, and it will win you votes. Unfortunately for the modern Pied Piper of Chicago, Americans have started to wake up from their Rip Van Winkle syndrome and are taking a look at the machinations of Washington, D.C. and the people they elected to represent them. And the great unwashed masses are not happy campers.
Obama campaigned as a “changer”, but those of us who really listened asked “What change?”. There was lots of style, but no substance as his 20’s something speech writer loaded up the teleprompters. Now, he is once again going to hit the campaign circuit and “explain” to Americans why he is tanking in the polls. THE EVIL BANKERS. You see, the left has to have someone to demonize. In the ’80’s, it was the telecommunication industry, in 2006, it was big oil and corrupt Republicans, in 2009, the evil insurance companies that were ripping off Americans as Pelosi and Reid made Bernie Madoff look like an Eagle Scout. This year, it will be the bankers.
They say that sunlight is the best disinfectant. And for Americans, the sun has come out. We learn that the wonder boy, Turbo Tim Geither, apparently cut deals with AIG to favor some banks with 100 cents on the dollar while other banks took a hair cut; we learn that the economists (Stan Leibowitz, just to name one) who were sounding the alarm bells on the GSEs years ago, were not just rank alarmists, but actually saw the on-coming train wreck in the mortgage industry. And we get this from the Wall Street Journal:
“New research bhy Edward Pinto, a former cheif credit officer for Fannie Mae and a housing expert, has found that from the time Fannie and Freddie began buying risky loans as EARLY AS 1993, they routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that made them clearly subprime or Alt-A.”
Buyers with credit scores of 590 were given loans that should have never been granted, considering that there was clear proof that they were already having debt problems. The GSEs borked the banks big time and left them on the hook. Anyone with a credit rating of 590 has a 51% chance of defaulting on a home mortage.
Do you understand what this means? It means that for 15 years (remember who was in office then?) the GSEs have been lowering credit rating in order to back mortgages that should have never been granted.
Maybe Turbo Tim should answer why, when he was busy helping to write TARP, he failed to put some bonus restrictions on banks that were going to benefit from the taxpayer bailout. Maybe it just slipped his mind like paying his taxes just slipped his mind until it became politically expedient.
So once again, we are going to be subjected to the Democrats “class envy” mantra while unemployed Americans don’t give a rat’s ass; they simply want a job. But alas, I fear we have an administration that is mired in it’s own dogma, socialism-lite. There are those who say that now Obama must tack to the center. I don’t see it happening. Someone so steeped in the Alinsky method of politics does not have the ability to tack to the center as it goes against everything he has ever believed or subscribed to.
Hang on to your seats. It is going to be a bumpy ride as the left digs into their bag of demons to see what one they can pull out next as the Pied Piper of Chicago continues to play his flute trying to lure the uninformed over the cliff.
Perfect! You summed up what I have been thinking for the better part of the last week.
I’m goning to have to go back and find the originals on Obama’s comments. The summary that I read sounded more like a call for something like Glass-Steagal that an attack on risk taking in general. As to root cause, while the government provided the dance floor the financial industry chose to get up and dance. And once they were out there they quickly decided that they enjoyed it and didn’t want to stop. They still don’t…look at all the machinations taking place today to keep them dancing. I’m not sure they wouldn’t have figured out how to build their own dance floor without the govt’s help.
Nice commentary R05.
Obama is not going to do a Clinton, he is a purist Marxist and will not back down. Now can America take three more years of Soros, Cass Sunstein, John Podesta, Axelrod and Emmanuel?
What about the people who put him there? Who are they? When are we going to do a documentary about these rich radicals? These people are destroying the US and we can not point out who they are?
PS: Talking yesterday to a guy(democrat) at the gas station, he said to me: “I am so ungry with Obama that you can give me back Clinton any day or even W.!”
Bob, you can blame the banks all you want, but they were dancing to the fiddler hired by the government. I suggest you read Professor Liebowitz’s investigative reports that he wrote long before the mortgage melt down make it to the front pages of the New York Times. Ever wonder why every bank in the nation had to have a CRA officer (CRA standing for Community Reinvestment Act)?
Social engineering (something loved by the left) was started long before George Bush. But then, social engineering has to be tweeked to work, consequently, we wound up with “creative” financing and banks being excoriated publically by the federal goverment if they didn’t live up to the social engineering through finance tactics of the government. Do you really want to do business with a bank that the federal government claims is “racist” because they are not giving out loans based on “racial” demographics?
If Obama really wants financial stability in the banking industry, he would repeal the CRA, allow banks to go back to standard lending practices, hold those who took out loans they knew they had no possibility of repaying responsibile for their own actions, and allow the market to reach it’s own level.
My own bank (where I bank, not one I own) , a locally owned establishment, refused to take TARP because they did not need it. It is the 5th most stable bank in Texas (and that is saying a lot for a small community bank) and refused to adhere to the CRA rules. When they wanted to open another branch in our county, the government refused to let them do so simply on the fact that they had not granted “high risk”, long term loans to people who had no hope of repayment. As our community grew, as a bedroom community to Austin, more and more people sought loans and these were people of all ethnic backgrounds who still met the CRA requirements. Only then was the bank allowed to open two branches still in the same county.
The idea that everyone should own a home is absurd. There are those who are not suited to home ownership. Owning a home is not right to be granted by the federal government, it is part of that “right to persue happiness” thing. There is such a thing as reading the fine print when you are putting your financial life on the line for 20-30 years.
When the federal government starts putting it’s foot on the neck of any industry, you are going to have problems. The CRA was the foot, the banks were the neck.
The liberal mantra this past two weeks has been ” populism”. They claimed Scott Brown had a populist message. He did. But it was against Big Government. So they decried Obama to capture that populist message….so he went after American businesses. Banks are the focus because of recent events. But his ” populism” is so hollow. Anybody with a pulse can see he is trying to be on the side of the American people but he has no clue that they actually like working for those evil businesses.
When you hear him save I will fight for good jobs. I think the American people are thinking ” ya know dude…any job would be great about now… I am really not that picky I gotta pay rent”
The man has lost his way. He is treating his presidency like a college course. ” hey I passed the stimulus bill …economy done…I got solid B+…what do you mean I have to take the test again?”
“…educate himself on the workings of businesses, and the economy.”
He is convinced he is brilliant, knows all, and there is nothing more for him to learn, except maybe why the American people are so dumb. In his own mind, there is no possibility that he could be wrong.
The fact that none of this is true just happens to be reality, but for those who live in marist fantasy, reality does not matter, particularly when they are living in the lap of luxury as the Won is right now.
Good commentary ditto Retire05. You hit it right on the head.
I’ve been thinking this about our dear leader,…. It appears, from what we know of his life story, that he’s been opportunistic and has moved onto newer and better positions for him and has not had to deal with either real criticism or upset or loss. He acts like an adolescent that is puny-minded and full of his oats and is just absolute in his mind , that he is correct… his views are sound, and if only he talks enough, he’ll sway others. Now that it’s hitting reality he is getting his first taste.
An adolescent in this conundrum will either dig deeper or mature and grow from it. Since our dear leader is a man of his late forties and is encountering this… I suggest the maturing from it route is closed and we can expect tantrums, doubling-down on fail and projection el’grande!
… and for us.. a good thing. The more he thrashes around at all the adults, the more he kneecaps the dems and I think guarantees himself a one-failed-term presidency. His rise and fall could have been predicted and mostly was…. except the masses didn’t listen or didn’t care. Let’s give it a try… well, he’s had his try and the epic fail of the whole thing is a pathetic indictment of the judgement of the millions who used their vote to act out and gamble with our government.
That’s why it was never a good idea to lower the voting age to 18…. not that the youth have ever mattered in elections… but they’re catered to way too much.
In late January 2009, Rasmussen’s polling Index showed 15% of likely voters “strongly disapproved” of Barak Hussein Banana (vs. Dunham, Obama, Soetoro… take your pick). As we asserted then, “attitudes aside” no-one with the brains of a chicken could fail to realize that BHO was raised a Maoist by pedophile Comintern creeps and thugs; was indoctrinated a supine hate-America Salafi/Wahabist by Saudi petrocrats in Djakarta, Indonesia, from age six; and remains viscerally hostile to every Enlightenment and Founders’ liberating ideal today.
Over the past twelve months this vicious anti-Semite, Black Supremacist quota-baby has done everything possible to alienate America’s allies, eviscerate national defense, hobble our free-enterprise entrepreneurial economy, while perversely siding with every wretched Statist satrapy from China and Iran to North Korea, Russia, even clownish Venezuela. “No act too vile, no lie too big” has long been this incompetent and corrupt impostor’s abiding stock-in-trade.
As a classic example of Narcissistic Personality Disorder (NPD) combined with grave character defects, our hyper-partisan, self-aggrandizing Speechifier-in-Chief lurches from manic-depressive, passive-aggressive pole-to-pole. A death-eating Luddite sociopath, by accident of fate his New World Order (NWO) came a cropper at COP-15– but over 36 months through AD 2012, economic collapse plus geopolitical catastrophe may well allow this demogogic, illegitimate little twerp to serially impact naive U.S. polities for generations.
Banana like his 1990s predecessor is wholly a creature of maleficent mass-media, acting in bad faith under false pretenses to the detriment of everything they touch. Now as Earth tips into a 70-year “dead sun” Maunder Minimum or worse, decades-long Green Gang sabotage of America’s energy economy will deprive citizens of attainable prosperity and well-being on a massive, even deadly scale.
Great comments here. Some really good insights that seem to be missing elsewhere.
It was good to see that finally Krugman at the NY Times has made a turn against his leader, although he’s turning on him because he thinks the President isn’t far left enough for him. That perception is just wrong. They’re both right OFF the edge of the rational envelope.
@ retire05,
Well said. Your comment, “. . . THE EVIL BANKERS. You see, the left has to have someone to demonize,” – in particular, provides the kind of insight into the mind of a President that holds very disconcerting connotations. It also underlines the point of my article.
History is full of very extreme political leaders who demonized corners of their society. The outcome is never good.
Look,it is pretty simple really. Obama is the fulfillment of the left wing dream that they have been having for the last century. How many people know that FDR appointed a supporter of Stalin and Stalinist policies to his administration? How many know that Rex Tugwell (the Stalinist) created government cooperative farms during the 30’s where farmers did not own the land they farmed, based on the Russian Stalinist model, until it fell into such disarray that even FDR had to abandon the idea?
Ever heard of the Second Bill of Rights? Look it up. How it is any different than what Obama is trying to force down our throats now? Everyone has the “right” to own a home; everyone has the “right” to health care; everyone has the “right” to this or to that, all of which have not one damn thing with the “right” to “persue” happiness.
Government owned banks, government owned auto manufacturers; how is this any different than the socialism FDR imposed by “nationalizing” the power industry? How many of you now get your electricity from a city or state owned utility? Houston Power and Light? Hello? And how has that worked out reducing the cost of your electricity? Any competition there to drive down costs? How many of you know that a municipally owned power company is not regulated by the PUC? The rates can be set by a board of directors that really don’t care. And the left has problems with the private market?
We are being told that all the government control is being done for our “collective” good. Funny, I don’t seem to recall that the Constitution limited government based on the collective. Instead, it was based on individual rights that came from nature and nature’s God.
The United States is not a collective of citizens. It is a nation of individual citizens that often work together to acheive a specific goal. But until now, we have the right to decide if we want to join in that united effort, or not.
I am not a ‘grassy knoll’ kinda person. But when I see that the Democratic Progressive Caucus is linked at the Communist Party of America’s web site (now taken down), I have to pause and ask myself what the hell is going on.
Maybe all of us need to ask what the hell is going on and understand that what we are seeing is nothing new; it is the left trying to achieve their progressive (progressive is what early 20th century Communists called themselves) goals they have had for 100 years.
@ URI,
Quite right, Clinton was pragmatic more than ideological. He was into whatever was good for his own success and bank account.
James Raider; it is pretty easy to understand what travels through Obama’s brain. Read Alinsky, read Coward and Pivin, read William Ayers. It’s all there. Then go back and read about the American progressive movement and the idea that academia and academics are so much smarter than the average Joe that they should be allowed to lead us into our own gulags. It started with Woodrow Wilson, it is time to end it with Obama.
You see, even if you believe that the Constituion provides for equal results and not equal opportunity, in all the socialist utopias that have ever been tried, there is still the prolitariate being ruled by the politburo.
You’re right, Retired05… this movement is only surprising to those that have not been taught history and/or are not paying attention.
The huge and fundamental changes that started at the beginning of the 1900’s with the federal government and then accelerated drastically from 1912 thru 1940.. Communism and fascism were the reigning ideals of the day world-wide and the US was not immune. We just didn’t go for it like some others did… but a segment of our fellows in the US are still at it… ever laboring for collectivism and “the greater good” and control over this and that and the little people.
More of the same. To the extent it’s out in the open is breathtaking and scary. I wish for serious study and airing of the way our country was founded and just how crazy and overbearing the federal government has become since FDR took the progressive start he got from TR and Wilson and took it and ran with it.
I’m not a knoll type either… but this is nothing new under the sun. A difference in ideologies are crashing against one another right now, like we’ve not seen in a long time. One chooses the foundation of our republic as founded and the other wishes to throw off that which makes America special in the world and embrace what others have. Don’t ruin America you leftards… leave it to those of us who embrace liberty and justice and individualism. You want collectivism?.. there is Europe… right over there… just perfect for you!
yippie21, of course you are right about not knowing our history. Most Americans don’t thanks to the Teacher’s Union and politically correct text books.
I guess I could sum it up all in one person’s opinion: Juan Williams, a FoxNews contributor. Now, don’t get me wrong, I have always admired Williams but with the understanding he had a leftist bent, but the other night he knocked my socks off. He said that Obama would continue to push the health insurance bill and that once it was enacted, Americans would love it. Williams went on to say that Americans like entitlement programs.
WHAT? AMERICANS LIKE ENTITLEMENT PROGRAMS? We are a nation built on individual ingenuity and ambition, not on a nanny state government that took care of every bump and scratch we encountered along the way.
I had to wonder if Williams lived in a different America than I do, until I realized that Williams was being honest in his personal assessment that Americans like entitlements by a bigger, and more controlling government. That is the way the left of today thinks and he was simply representing the mindset of the statists.
retire05: Don’t misunderstand me, I agree that government meddling created the basis for the mess…they are the root cause. The banks pretty much ignored the CRE until the gov’t put teeth in it in the Clinton years…then they had to start lending. However once they did, being inventive little bastards as well as greedy, they took the ball and ran with it right through the loopholes and we wind up with what we have today….a revolving door between the Fed and the Treasury and the banks. It’s the proverbial fox guarding the henhouse with the farmers blessing. Look at bank bonuses this year, for example. The economy is in the can and Wall street bonuses are reported to be 145 billion…1 percent of GDP. They haven’t made any money, they had it given to them by other bankers running the Fed and Treasury.
Bob, I understand that the CRA (not the CRE) was signed into law by Carter. And yes, it was pretty well ignored. So a little known law was put on steriods by William Jefferson Clinton, and now we see the end result.
You can blame the mortgage lenders all you want, but the bottom line is the responsibility lies with the very borrowers who signed on the dotted line, now doesn’t it? Sorry, if I don’t subscribe to “the devil made me do” it crap.
@ retire05,
One cannot condone consumers making absurd financial decisions, however, the government policies, and in particular the lack of attention paid to the laws & oversight, enabled the likes of Goldman & Morgan to seriously abuse the system through what can only be called “slight of hand.”
I am a strong supporter of corporate America, but not of abuse by corporate heads “just because they can.” Iceland declared bankruptcy because of the stupidity and greed of government officials, for example, but Goldman was complicit when they lied and misrepresented the derivative packages they sold them.
When you lay down with dogs, you get fleas; ergo, all those demonized by Obami are those who helped getting him elected. Wodering how it is working out for them now?!?!
Great article, great thread.
BE CAREFUL:
Obama now wants a Bipartisan BUDGET Commission. Translation, . . .
“We have to dramatically increase taxes to pay for this excess spending, so I want to have Republicans in on the bill.”
Don’t expect any reduction in spending from from this Administration or Congress, unfortunately.
Yippie 21
The reason the voting age was lowered was because the dem mantra at that time was a guy 18 could fight for his country but he couldn’t vote. It is ironic that in elections today the dems try to not count the military vote. The young people voted in droves for Obama. They have no clue about the issues or repercussions. They thought he was cool so they voted for him. I have often wondered if they have buyer’s remorse since their unemployment rate is twice as high as the other age groups. Or if they even understiand why they can’t get a job upon graduation. Or has their education been dumbed down so much they can’t put two and two together and get an answer.
Obama’s talk about banks is opening the door to taking over our IRAs, 401Ks and other investments and replacing them with t-bills. People who surround him have been dropping hints for months that that is a solution to the downturn of our country. Just think of this: what if the government owned all the stock and bonds on Wall Street? Wouldn’t you say this was taking over another private industry, like all private industry? What if the government owned controlling interest in all public corporations?
@ BarbaraS.,
“The young people voted in droves for Obama. They have no clue about the issues or repercussions.”
Unfortunately true. Many of us get affected by the University or College leanings to the left.
Fortunately, many of us get off that train, and go on to build businesses or otherwise become part of the fiber of the Nation’s economic engine.
Too many, like the President, just feed off the labor of others, and produce nothing.
James, I know it has been a couple of day, but perhaps you will read this:
You cannot, I repeat, cannot blame any lending agency for their lending practices were dictated by the federal government. And you can’t blame them when the GSEs were cooking the books on credit ratings prime loans to those with a 590 credit rating.
And still, the responsibility lies with those who accepted those loans and signed on the dotted line; the home buyer.
I am so damn tired of “the devil made me do it” attitude of shifting blame in this country.
I suggest you read the studies written by Professor Stan Liebowitz, not only on the CRA, but the false report put out by the Boston Fed on “redlining” of minorities.
Our nation tried socially engineering through finance and mortgages. It did not work. It will never work.
This has to be one of the better threads i’ve seen here!! Interesting, on topic & factual… AND informative!! The “second BOR I had never heard of!! Put the info into my files for later study.. Thanks!! This site is great.. learn a lot here.. Thanks guys!
@ retire05,
“I am so damn tired of “the devil made me do it” attitude of shifting blame in this country.”
Ditto. No disagreement on that one.
Nevertheless, Goldman & Friends have abused the system, and are still abusing it each and every day.
Obama today lied with a rant on special interests, in response to the Supreme Court decision on campaign contributions.
Soooo, . . . here is just a little taste of his hypocrisy:
Dems received almost three times the amount received by Reps From Fannie and Freddie, . . .
TOP RECEIVERS of Fannie Mae and Freddie Mac Campaign Contributions:
Dodd, Christopher – Dem. $165,400
Obama, Barack – Dem $126,349
Kerry, John – Dem $111,000
http://www.opensecrets.org/news/2008/09/update-fannie-mae-and-freddie.html
Since these were pretty much GOV run outfits.. how can they be allowed to “contribute” anyway????
@ Hankster58,
. . . Exactly. And how does it make sense that a taxpayer guaranteed company have its executives pay themselves tens of millions in bonuses?