Best suggestion this week
Posted by aogSunday, 13 September 2009 at 11:14
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Let’s apply Sarbanes-Oxley to the federal government so that if President Obama’s budget numbers for any health care bill he signs turn out to be bogus, he gets heaved in to prison, just like a private sector CEO.
Via Gregory Koster
P.S. From the same string, “No Legislation without Explanation!”
Wednesday, 16 September 2009 at 07:11|
The FMs, however, in my view are the heart of the matter. […] President Bush and Senator McCain tried explicitly to stop the bleeding of the FMs before the collapse…
So Bush wasn’t responsible because he was too weak to get legislation through Congress?
The Office of Federal Housing Enterprise Oversight (OFHEO) was an agency within the Department of Housing and Urban Development. It was charged with regulating Fannie Mae and Freddie Mac, ensuring the capital adequacy and financial soundness of those two government sponsored enterprises. One thing that OFHEO did was to dictate tougher capital restrictions on Fannie after its corrupt CEO, Franklin Raines, was forced out.
Clearly, the OFHEO had the power to shut down the FMs’ buying spree, by raising their capital requirements. The OFHEO was an agency of HUD, whose Secretary serves at the pleasure of the POTUS. Therefore, Bush had the power - he just lacked the intestinal fortitude. After all, Clinton mandated that the FMs buy more CRA mortgages through simple Executive Order. But Bush wanted political cover for the GOP in ‘08, hoping to change the FMs operating structure through a bipartisan act of Congress.
I don’t think that Bush had an easy choice before him. If he’d acted responsibly, the economy would have gone into a recession, possibly a deep and protracted one. There would have been ballot-box repercussions. He would have been blamed by the Dems and the public at large for taking away the punchbowl, (and the Kool-Aid, and the LSD with which it must have been spiked), and by the GOP for losing Congressional seats and possibly the White House in ‘08.
BUT HE WOULD HAVE BEEN RIGHT, and he would have saved us all from what’s coming. Churchill got booted from office after rallying Britain through WW II, when it would have been easy to instead make some kind of deal with the Third Reich - the public is fickle, and not always grateful. Bush made the hard choices on Iraq, pulling victory from the jaws of both Iraqi social and American political defeat; why didn’t he do the same with this vastly more important issue, the bedrock of American global military might and the contemporary American way of life, the engine of most of the world’s advances in science and technology: The U.S. economy?
Maybe he was burnt out from hanging tough on Iraq; maybe he and his badly-chosen advisors and Cabinet didn’t understand - although Greenspan and former Comptroller General of the United States and head of the U.S. Government Accountability Office David M. Walker damn sure did…
Whatever the reason, Bush had the responsibility to act as an adult, and adults sacrifice themselves for the good of family, community and nation. He was not thrust into the role of POTUS, he fought for it, he clawed tooth and nail - in viewing the McCain/South Carolina episode of 2000, one might even conclude that Bush was willing to play underhanded and dirty to gain the White House.
So after all of that effort, turmoil and struggle to be annointed The Decider, in the end he FAILED. TO. ACT.
Now, if this current economic climate, the worst and longest recession since the Great Depression, (or GD I as it may come to be known, just as WW I was known as the War to End All Wars before it, y’know, didn’t), if this were it and we were at the nadir, then it would be regrettable but perhaps understandable. However…
Only a QUARTER of the middle-estimate eventual losses in residential and commercial real estate have yet been taken. Even if we were to use the lowball estimate, there’s still more real estate pain ahead of us than behind us. National employment figures are dropping like a rock, this Christmas is going to be a retail disaster1 which will lead to plenty of retailers biting the bullet and slashing locations and workforces, and the Obama admin. is already planning to borrow 15% of GDP2, before the budget is hit by the one-two of free-falling tax revenues and rising safety-net costs…
Meanwhile, we’re following the Japanese model of allowing “zombie banks” to roam the land, which has worked out great for them - 19 years after their bubble began deflating, a full 44%(!!!) of their entire labor force is classified as “part-time”, and not by choice.
Then there’s this:
US credit shrinks at Great Depression rate prompting fears of double-dip recession
By Ambrose Evans-Pritchard
14 Sep 2009
Professor Tim Congdon from International Monetary Research said US bank loans have fallen at an annual pace of almost 14pc in the three months to August (from $7,147bn to $6,886bn).
“There has been nothing like this in the USA since the 1930s,” he said.
Consumer spending falling, falling employment, falling real estate values, mounting losses on RE loans and securities (leading to rising pension-fund failures and lower pensions), unsustainable gov’t borrowing and banks making fewer loans - where’s the catalyst for economic growth?
I don’t see a repeat of the worst of GD I in the developed world, as we’ve got much better social safety nets now, but it’s going to be worse, AND FAR LONGER, than anything in most Americans’ living memory.
This wasn’t a garden-variety screw-up, it’s a world-class one, one that will be noted and remembered in history.
1 12% of the world’s container ships are IDLE, not making multiple trips between the world’s doo-dad exporters and the U.S., and dry shipping rates are down between 80%-95%(!!!) in what should be the busiest time of the year.
2 As is usual for White House incumbents, the Obama admin’s GDP and tax revenue projects for the next few years are, um, “optimistic”, which in this environment is synonymous with “delusional”. Running the deficits that we’d have to in order to meet the WH’s projected spending would push interest rates up to double where they are now, which would further devastate the RE markets. The various economic stimulus spending policies just can’t continue.
Wednesday, 16 September 2009 at 12:29|
Bush did not create this problem. However, it both began and came to a crisis point on his watch.
Bush is human, with limited time, energy and attention. However, it was HE who sought and viciously fought to be chosen as the nation’s leader - nobody forced him, nor did events thrust him into the position. By choice, he’s Where the Buck Stops.
Bush wanted Congress to fix the FMs problem, but he didn’t need Congress, as I demonstrated above - HUD already had the authority to reign them in. IMO the FMs were less than half of the problem, but Bush had direct authority over all of Treasury’s various agencies, and Presidential influence with the purportedly-independent Fed and SEC. That should have been sufficient to curb the excesses and halt the casino mentality of the rest of the financial sector.
Now it’s possible that I’m wrong, and that the Executive agencies didn’t have enough authority, or that the political price would have been too great and Congress would have passed legislation to shut him down, but we’ll never know because HE DIDN’T EVEN TRY.
Bush was not a villian, but he was the Ultimate Cop, with the Ultimate Responsiblity to stop or thwart those who were villians, and he possessed the authority necessary for the job. He just shrank from the cost of using the power. THAT is why I’m so bitter about his failure,1 because it wasn’t just that he tried but failed - he didn’t really try at all. Congress didn’t stop him; this was a problem COMPLETELY ADDRESSABLE USING THE POWERS OF THE EXECUTIVE BRANCH. Bush didn’t need Congress to stop the bubble, the way he needed them regarding Iraq.
Philosophically confronting the Levelers is moot, because if this thing goes the way that I think that it will, the Levelers will have the whip hand for decades to come. The general public will not be receptive to anti-Leveling arguments.
1 Well, that and also that I feel personally betrayed by his total incompetence regarding this epochal calamity, having voted for him twice and been a big booster.