2008 Meltdown

Graham: Obama is AWOL on Democrat Spending Bill

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In a FoxNews interview, Lindsay Graham pointed out Obama’s penchant for avoiding real work and instead performing for the press in the so-far lucrative public opinion venue he relies on so much. Lacking leadership isn’t a new thing from what I can tell, but now that he’s got the job, you’d think he’d want to at least appear presidential.

President Obama has been “AWOL” in negotiations over the economic stimulus package, Sen. Lindsey Graham said Thursday in a scathing rebuke of the new president.

The South Carolina Republican told FOX News that Obama has not been providing leadership, and he criticized the president for giving TV interviews and writing an editorial touting the package, rather than addressing the complaints of lawmakers.

“This process stinks,” Graham told FOX News, before repeating a lot of his criticisms on the Senate floor. “We’re making this up as we go and it is a waste of money. It is a broken process, and the president, as far as I’m concerned, has been AWOL on providing leadership on something as important as this.”

Republican senators and congressmen have been reluctant to direct any criticism at the president since his inauguration. They mostly have fired shots at Democratic leaders in the House and Senate, saying they have obstructed the bipartisan process Obama sought.

But Graham broke that practice after Obama granted a round of interviews defending his plan Tuesday and wrote an op-ed in The Washington Post Thursday in which he warned of disastrous consequences if Congress does not pass the stimulus bill.

“Scaring people is not leadership. Writing an editorial that if you don’t pass this bad bill we’re going to have disaster — we’ve had enough presidents trying to scare people to make bad decisions,” Graham said.

“I like President Obama, but he is not leading. Having lunch is not leading … and doing TV interviews is not leading.”

Obama renewed his plea for the bill at the Energy Department Thursday, shortly after Graham spoke.

“The time for talk is over. The time for action is now,” Obama said.

Obama, in his op-ed, wrote that inaction could lead the economy into an irreversible decline.

“Because each day we wait to begin the work of turning our economy around, more people lose their jobs, their savings and their homes,” he wrote. “And if nothing is done, this recession might linger for years. Our economy will lose 5 million more jobs. Unemployment will approach double digits. Our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.”

It’s really telling that a sitting president actually thinks that the economy “may not be able to reverse”. That just shows shocking misunderstanding for economy in general. Does he think we’re all going to lay down and die? It’s embarassing that he’s so naive. Four long years to go, dealing with a beginner.

Karl Rove Quotes Obama’s Larry Summers on Spending Bill

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This is from an interview Karl Rove gave to Greta Van Sustern. The transcript is on the website:

You know, I was reading something, rereading Larry Summers, the head of the National Economic Council in the Obama White House, some remarks that he made earlier in this process, I believe it was in December. He said, As with any potent medicine, stimulus if mis-administered could do more harm than good by increasing instability and creating long-term programs. A stimulus program should be timely, targeted and temporary.

Timely — we now know that more money in both the House and Senate versions is going to be spent in the years 2011 and beyond than in 2009. Think about that. We’re going to be spending more of this so-called stimulus money in 2011 and to 2019 than we’re spending in 2009.

Targeted — I mean, how targeted is it? You know, we’re losing jobs in manufacturing, and what we’re doing here is just throwing every dollar we can against the wall. It’s sort of like trickle-down Democratic economics. Give $2 billion to the National Institutes of Health. What is that going to do to employ somebody in a manufacturing plant?

And temporary? This is not going to be temporary spending. This is going to be the largest increase in discretionary non-security spending in the history of the United States. It will be an 80 percent increase over this year’s budget. This year’s budget is roughly $393 billion in discretionary non-security spending. This will add $307 billion into the budget this year.

Who thinks that next year, Congress is going to come in and say, You know, what? That $40 billion we added to education in 2009, for the FY 2009 budget, oh, that was just a one-year thing. How many people are going to say, That’s built into the baseline of the budget and we’ve got to start from that point for the 2010 budget? I mean, this is ridiculous, what we’re looking at here. It is the biggest expansion of government all in the name of the stimulus, and it’s not going to end up creating jobs.

Bush Tried To Rein In Democrat Driven Freddie Mac/Fannie Mae

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In yet another article about the Democrat responsibility for events that led to the hell we’re in now (and frankly most of the hell this country’s ever been in). Read the full article here. Excerpts are included below…

Mr. Bush wanted to limit systemic risk by raising the GSEs’ capital requirements, compelling preapproval of new activities, and limiting the size of their portfolios. Why should government regulate banks, credit unions and savings and loans, but not GSEs? Mr. Bush wanted the GSEs to be treated just like their private-sector competitors.

But the GSEs fought back. They didn’t want to see the Bush reforms enacted, because that would level the playing field for their competitors. Congress finally did pass the Bush reforms, but in 2008, after Fannie and Freddie collapsed.

Isn’t that interesting. Surrender Poodle Pelosi and the Freddi Mac executive’s boy-toy Barney Frank should be run out of the country on a rail. I don’t understand why fools in those states keep fools in power, but I guess I guess that explains it.

When Republican Richard Shelby of Alabama, then chairman of the Senate Banking Committee, pushed for comprehensive GSE reform in 2005, Democrat Sen. Chris Dodd of Connecticut successfully threatened a filibuster. Later, after Fannie and Freddie collapsed, Mr. Dodd asked, “Why weren’t we doing more?” He then voted for the Bush reforms that he once called “ill-advised.”

But Mr. Dodd wasn’t the only Democrat to heap abuse on the Bush reforms. Rep. Barney Frank of Massachusetts defended Fannie and Freddie as “fundamentally sound” and labeled the president’s proposals as “inane.” He later voted for the reforms. Sen. Charles Schumer of New York dismissed Mr. Bush’s “safety and soundness concerns” as “a straw man.” “If it ain’t broke, don’t fix it,” was the helpful advice of both Sen. Thomas Carper of Delaware and Rep. Maxine Waters of California. Rep. Gregory Meeks of New York berated a Bush official at a hearing, saying, “I am just pissed off” at the administration for raising the issue.

…

The housing meltdown is largely a story of greed and irresponsibility made possible by government privilege. If Democrats had granted the Bush administration the regulatory powers it sought, the housing crisis wouldn’t be nearly as severe and the economy as a whole would be better off.

That’s why some mythmakers are so intent on denying that Mr. Bush worked to rein in the GSEs. But facts are stubborn things, as Ronald Reagan used to say, and in this instance, the facts support Mr. Bush and offer a harsh judgment on key Democrats. Perhaps that explains why so many in the media haven’t told the real story.

Modified Mortgage Re-Default Rate More Than 50%

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The Comptroller of the Currency issued the following report regarding mortgages that were modified in 1Q 2008 in order to supposedly help the homeowners stay in their homes. The results are dismal. Yet I’m sure our President-Elect and Democrat Congress will push forward with plans to do this on a large scale, backed by government (our) $’s.

WASHINGTON — Comptroller of the Currency John C. Dugan said today that new data shows that more than half of loans modified in the first quarter of 2008 fell delinquent within six months.

“After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent,” the Comptroller said in remarks at the Office of Thrift Supervision’s National Housing Forum today.

Mr. Dugan spoke during a panel discussion with OTS Director John Reich, Federal Reserve Board Vice Chairman Donald Kohn, FDIC Chairman Sheila Bair, and Federal Housing Finance Agency Director James Lockhart.

A key question, Mr. Dugan said, is why is the number of re-defaults so high? “Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers? Is it because consumers replaced lower mortgage payments with increased credit card debt? Is it because the mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments? Or is it a combination of these and other factors?”

Read the full report here.

New Deal Economics

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A great op-ed piece by Amity Shlaes in the Wall Street Journal responding to Paul Krugman’s incessant campaigning on why New Deal spending works. Unfortunately our President-Elect seems to subscribe to Mr. Krugman’s brand of misguided economics.

Some highlights from the WSJ piece:

The New Deal is Mr. Obama’s context for the giant infrastructure plan his new team is developing. If he proposes FDR-style recovery programs, then it is useful to establish whether those original programs actually brought recovery. The answer is, they didn’t. New Deal spending provided jobs but did not get the country back to where it was before.

This reality shows most clearly in the data — everyone’s data. During the Depression the federal government did not survey unemployment routinely as it does today. But a young economist named Stanley Lebergott helped the Bureau of Labor Statistics in Washington compile systematic unemployment data for that key period. He counted up what he called “regular work” such as a job as a school teacher or a job in the private sector. He intentionally did not include temporary jobs in emergency programs — because to count a short-term, make-work project as a real job was to mask the anxiety of one who really didn’t have regular work with long-term prospects.

The result is what we today call the Lebergott/Bureau of Labor Statistics series. They show one man in four was unemployed when Roosevelt took office. They show joblessness overall always above the 14% line from 1931 to 1940. Six years into the New Deal and its programs to create jobs or help organized labor, two in 10 men were unemployed. Mr. Lebergott went on to become one of America’s premier economic historians at Wesleyan University. His data are what I cite. So do others, including our president-elect in the “60 Minutes” interview.

Later, Lee Ohanian of UCLA studied New Deal unemployment by the number of hours worked. His picture was similar to Mr. Lebergott’s. Even late in 1939, total hours worked by the adult population was down by a fifth from the 1929 level. To be sure, Michael Darby of UCLA has argued that make-work jobs should be counted. Even so, his chart shows that from 1931 to 1940, New Deal joblessness ranges as high as 16% (1934) but never gets below 9%. Nine percent or above is hardly a jobless target to which the Obama administration would aspire.

What kept the picture so dark so long? Deflation for one, but also the notion that government could engineer economic recovery by favoring the public sector at the expense of the private sector. New Dealers raised taxes again and again to fund spending. The New Dealers also insisted on higher wages when businesses could ill afford them. Roosevelt, for example, signed into law first his National Recovery Administration, whose codes forced businesses to pay an above-market minimum wage, and then the Wagner Act, which gave union workers more power.

As a result of such policy, pay for workers in the later 1930s was well above trend. Mr. Ohanian’s research documents this. High wages hurt corporate profits and therefore hiring. The unemployed stayed unemployed. “If you had a job you were all right” — the phrase we all heard as children about the Depression — really does capture the period.

Great stuff, and scary in terms of the plans our future President has for this country. Read the full article here.

Dems Wrong Yet Again – Temporary Stimulus Doesn’t Work

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This all makes such perfect, logical sense. I can’t believe they refuse to see it.

From the Wall Street Journal . . . .

The incoming Obama administration and congressional Democrats are now considering a second fiscal stimulus package, estimated at more than $500 billion, to follow the Economic Stimulus Act of 2008. As they do, much can be learned by examining the first.

The major part of the first stimulus package was the $115 billion, temporary rebate payment program targeted to individuals and families that phased out as incomes rose. Most of the rebate checks were mailed or directly deposited during May, June and July.

The argument in favor of these temporary rebate payments was that they would increase consumption, stimulate aggregate demand, and thereby get the economy growing again. What were the results? The chart nearby reveals the answer.

The upper line shows disposable personal income through September. Disposable personal income is what households have left after paying taxes and receiving transfers from the government. The big blip is due to the rebate payments in May through July.

The lower line shows personal consumption expenditures by households. Observe that consumption shows no noticeable increase at the time of the rebate. Hence, by this simple measure, the rebate did little or nothing to stimulate consumption, overall aggregate demand, or the economy.

These results may seem surprising, but they are not. They correspond very closely to what basic economic theory tells us. According to the permanent-income theory of Milton Friedman, or the life-cycle theory of Franco Modigliani, temporary increases in income will not lead to significant increases in consumption. However, if increases are longer-term, as in the case of permanent tax cut, then consumption is increased, and by a significant amount.

After years of study and debate, theories based on the permanent-income model led many economists to conclude that discretionary fiscal policy actions, such as temporary rebates, are not a good policy tool. Rather, fiscal policy should focus on the “automatic stabilizers” (the tendency for tax revenues to decline in a recession and transfer payments such as unemployment compensation to increase in a recession), which are built into the tax-and-transfer system, and on more permanent fiscal changes that will positively affect the long-term growth of the economy.

Why did that consensus seem to break down during the public debates about the fiscal stimulus early this year? One reason may have been the apparent success of the rebate payments in 2001. However, those rebate payments were the first installment of more permanent, multiyear tax cuts passed that same year. Hence, they were not temporary.

Read the full article here.

Video: Escaped The Plantation, Voting McCain

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Perhaps the best speech given during this entire campaign cycle.

The O-Team
More genius by ZO. See more great clips here

Would the Last Honest Reporter Please Turn On the Lights?

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In a piece entitled “Would the Last Honest Reporter Please Turn On the Lights?” columnist and novelist Orson Scott Card chastises members of the liberal media for failing to report on the sources of the financial crisis we’re suffering through right now…

This housing crisis didn’t come out of nowhere. It was not a vague emanation of the evil Bush administration.

It was a direct result of the political decision, back in the late 1990s, to loosen the rules of lending so that home loans would be more accessible to poor people. Fannie Mae and Freddie Mac were authorized to approve risky loans.

What is a risky loan? It’s a loan that the recipient is likely not to be able to repay.

The goal of this rule change was to help the poor – which especially would help members of minority groups. But how does it help these people to give them a loan that they can’t repay? They get into a house, yes, but when they can’t make the payments, they lose the house – along with their credit rating.

They end up worse off than before.

This was completely foreseeable and in fact many people did foresee it. One political party, in Congress and in the executive branch, tried repeatedly to tighten up the rules. The other party blocked every such attempt and tried to loosen them.

READ IT HERE

Obama Votes Present on Fannie/Freddie

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Again, the WSJ is on the ball today…

If Sen. Obama were truly looking for a kind of deregulation that might be responsible for the current financial crisis, he need only look back to 1998, when the Clinton administration ruled that Fannie Mae and Freddie Mac could satisfy their affordable housing obligations by purchasing subprime mortgages. This ultimately made it possible for Fannie and Freddie to add a trillion dollars in junk loans to their balance sheets. This led to their own collapse, and to the development of a market in these mortgages that is the source of the financial crisis we are wrestling with today.

Finally, on the matter of deregulation and the financial crisis, Sen. Obama should consider his own complicity in the failure of Congress to adopt legislation that might have prevented the subprime meltdown.

In the summer of 2005, a bill emerged from the Senate Banking Committee that considerably tightened regulations on Fannie and Freddie, including controls over their capital and their ability to hold portfolios of mortgages or mortgage-backed securities. All the Republicans voted for the bill in committee; all the Democrats voted against it. To get the bill to a vote in the Senate, a few Democratic votes were necessary to limit debate. This was a time for the leadership Sen. Obama says he can offer, but neither he nor any other Democrat stepped forward.

Instead, by his own account, Mr. Obama wrote a letter to the Treasury Secretary, allegedly putting himself on record that subprime loans were dangerous and had to be dealt with. This is revealing; if true, it indicates Sen. Obama knew there was a problem with subprime lending — but was unwilling to confront his own party by pressing for legislation to control it. As a demonstration of character and leadership capacity, it bears a strong resemblance to something else in Sen. Obama’s past: voting present.

READ IT HERE