RSS Feed MenuThis is part two of a three part series. Read part one here, and part three here.
The scary thing about the Obama administration is not that they are guided by some sinister socialist masterplan. The scary thing is that they seem to have no plan at all.
It’s been more than a month since President Obama took office, and in that time he has been busy. Big domestic spending bill? Check. Make it easier to sue employers in discrimination cases? Done. Guantanamo? Symbolic mission accomplished.
But on the biggest and most urgent problem facing the country – the financial meltdown – we have a series of desperate short-term expedients, none of which has made much difference. The administration’s point man, Treasury Secretary Tim Geithner, failed to command the confidence of Congress or the markets, and is hobbled personally by the damage done to his moral authority by his personal tax troubles.
Criticize the administration for drift and inefficacy and the criticisms line up with facts visible to all. Attack it as a crazed bunch of lefties out to overthrow the free-enterprise system … and we invite an obvious reply: So how well was that free- enterprise system doing when you guys handed it over to President Obama?
gibberish // Feb 24, 2009 at 10:03 am
Obama has no idea how to fix things, neither did Bush’s team. All round the world they’re all making it up as they go, no one has any idea what will work in the end. As an opposition you can’t DO anything in a crisis, you’ll get no credit for successful joint efforts and a retreat into ideological purity makes you look insane when solutions are needed. Tough!
Chekote // Feb 24, 2009 at 10:21 am
David, the problem is that what they are doing is an attack on free enterprise. I believe in call it what it is.
Chekote // Feb 24, 2009 at 10:57 am
gibberish. There is a solution. Let zombie banks, companies and individuals fail instead of propping them up enough to keep infecting everybody else. It will be painful. We can alleviate some of the pain through unemployment benefits, payroll tax relief. But the sooner we take our medicine the better.
JJWFromME // Feb 24, 2009 at 11:44 am
Once again, you make a bald assertion while ignoring every serious argument that has been made. No mention of Keynes, the 30’s, Japan, Obama’s advisors’ work concerning these things prior to coming to his administration… And the stimulus is *not* short term. It is still ridiculously early… And thanks Chikote for making the typical Hooverist argument: http://krugman.blogs.nytimes.com/2008/04/08/rottenness/
bloodstar // Feb 24, 2009 at 12:39 pm
Chekote You’re joking right? at this point, if the banks fail, you can also kiss every 401K out there, bonds are going to be worth crap, people will get their insured bank account and that’s it. You’ll see a wipe out of every leveraged company and the recovery time will take decades. You’re not talking about medicine, you’re talking about economic suicide.
sinz54 // Feb 24, 2009 at 6:49 pm
Chekote: Real estate is governed by location more than anything else. When your next-door neighbor’s house is foreclosed, the value of that house plummets. According to the law of supply and demand, that will depress the value of your house by a wide margin too–why should anyone buy your house when they can buy your neighbor’s for a fraction of the price? Then, if the value of your house falls below the principal remaining on your mortgage, you may have no recourse but to file for bankruptcy yourself. And this chain reaction will ripple right through your neighborhood, until it’s turned into an impoverished, arson-ridden slum. Think about it: Would you want to own a house on a street that was full of foreclosures and bankruptcies, with at least one house being torched by arsonists every week? This urban blight can spread like cancer, and it has to be checked.
sinz54 // Feb 24, 2009 at 6:53 pm
Chekote: Another problem with your “Let ‘em fail” theory, is that we’re dealing with a global financial industry. Some 10 trillion dollars of derivatives floating around the world’s markets seem to be worthless. We may survive, albeit at a much reduced standard of living, including YOURS. But this kind of drastic reduction in global wealth could destabilize entire developing countries–”emerging markets” will revert to “disappearing markets.” The advent of those “emerging markets” was a major factor in promoting freedom and democracy and peace in the Pacific Rim and Africa. Take away those markets and who knows what might happen. The last time we had such a worldwide depression in the 1930, it led to the destabilization of Germany–and war. Back then, folks like you also said “Who cares, not my problem.” On December 7, 1941, it finally became clear that it had been our problem all along.
sinz54 // Feb 24, 2009 at 6:59 pm
bloodstar: There seem to be a surprising number of “Ayn Rand conservatives” these days. They see themselves as latter-day John Galts, refusing to go along with expansion of the federal sector, waiting for the entire structure to collapse (or at least take a big hit), so that they can then proffer their own free-market solutions. I was amazed how many times “Atlas Shrugged” got invoked during the TARP debate last year. Well, Ayn Rand wrote an entertaining novel, but she was dead wrong about her solution. When a nation’s economic system collapses, it’s never free-market capitalism which gets adopted. Rather, the collapse of a nation’s economic system usually leads to a “man on a white horse” who ends the last vestiges of freedom in that nation; either communism or fascism results.
Cavosie // Feb 25, 2009 at 6:40 am
Good post. Would you agree, however, that flexibility is a GOOD idea? In many respects, it is ideological rigidity that got us into this problem (as well as Iraq, etc.). I would hope that both Democrats and Republicans are willing to consider different options.
Chekote // Feb 25, 2009 at 10:56 am
Sinz. House value matters only if you plan to sell. The realitiy is that the vast majority of people buy homes for a place to live in. My 401K value is down 50%, where is my bailout. The moment you drive you car off the parking lot, you are upside down on your car loan. Should you stop paying it? Should the government come in an renegotiate the loan? Think.
Chekote // Feb 25, 2009 at 11:04 am
Sinz. Keeping zombies alive will continue to infect everyone. They are sick. They are contegious. You need to deal with that. Zombie banks need to be taken over by FDIC, sell off the good assets, break them up so that we will have no more “too big to fail nonsense” down the line. GM needs to go into bankruptcy and reorganize. Individuals who can’t afford their homes need to get out and let people who can afford the home move in. The sooner we do this, the sooner we will be able to clear out the inventory and home values will begin to rise again. Also, I am getting tired of people falling into the trap that if you don’t agree with my plan it means you want to do nothing. Nobody is saying to do nothing. It is another lie being put out there by the Dems.