Day: March 5, 2009

Operation Rushbo

The last several days has been a god send for us bloggers, both conserv and liberal, the battle royale going on for the hearts and minds of conservatives is just the stuff legends are made of…God I love this stuff!

Top Democrats believe they have struck political gold by depicting Rush Limbaugh as the new face of the Republican Party, a full-scale effort first hatched by some of the most familiar names in politics and now being guided in part from inside the White House.

The strategy took shape after Democrats included Limbaugh’s name in an October poll and learned their longtime tormentor was deeply unpopular with many Americans. Then the conservative talk-radio host emerged as an unapologetic critic of Barack Obama shortly before his inauguration, when even many Republicans were showering him with praise.

But liberals quickly realized that trying to drive a wedge between congressional Republicans and Limbaugh was unlikely to work, and their better move was to paint the GOP as beholden to the talk show host.

By Sunday morning, Emanuel elevated the strategy by bringing up the conservative talker, unprompted, on CBS’s “Face the Nation” and calling him the “the voice and the intellectual force and energy behind the Republican Party.”

Even Republican National Chairman Michael Steele joined in with a surprising critique of Limbaugh as a mere “entertainer,” who is “ugly” and “incendiary.”

“He took a little match we had tossed on the leaves and poured gasoline on it,” said one Democrat of Steele.

Steele was forced into calling Limbaugh to apologize Monday, an embarrassing climb-down following the RNC chairman’s criticism of the conservative talk-show host.

Democrats can barely suppress their smiles these days, overjoyed at the instant-ad imagery of Limbaugh clad in Johnny Cash-black at CPAC and, more broadly, at what they see as their success in managing to further marginalize a party already on the outs.

“I want to send Rush a bottle of vitamins,” said Begala. “We need him to stay healthy and loud and proud.”

All the attention only offers upside for the buzz-hungry Limbaugh, said Carville.

“The television cameras just can’t stay away from him,” Carville said Tuesday, a day when cable news played images of Limbaugh seemingly on a loop. “Our strategy depends on him keeping talking, and I think we’re going to succeed.”

The GOP and the RNC are just making this all too easy for the Dems….and you can bet your butt they will get all the mileage possible out of this situation.

God!  I love this stuff!

Should Geithner Go?

I have heard this on several occasions on the various news casts.  I have heard that he has NO idea what he is doing or that he has NO communication skills or that he does not instill confidence in the markets.  All in all pretty negative attitudes on the Secretary of Treasury.  I have also heard that Larry Summers would be a much better Treasury Secretary than Geithner.

We have heard all the BS on the handling of the economy.  All the pros and mostly cons….but are they handling it properly?

American officials like Larry Summers — now President Barack Obama’s economic guru — urged the Japanese to give up on failed institutions. Instead, Japan pumped 12 percent of its gross domestic product into saving the banks and got a “lost decade” of economic stagnation in return. Economic analysts across the board agree that the Japanese example must not be repeated, even as our lawmakers stumble into repeating it.

But yet, these “knowledgeable” economiosts are doing basically the same things that was done by the Japanese in the 90’s and we are to believe that it will have a different outcome this time because we are Americans and we do not make mistakes.

That is just all so much BS.

As it stands now, the U.S. government is keeping alive banks that would otherwise go bust at the same time it is hectoring them about lending more money — in other words, Japan redux. “Many banks continued to extend credit to insolvent borrowers, gambling that these firms would recover or that the government would bail them out,” wrote University of Chicago economist Anil K. Kashyap of Japan in the 1990s. “The Japanese government also encouraged banks to increase their lending to small and medium-sized firms to ease the credit crunch after 1998.”

The resulting misallocation of capital smothered growth. Tokyo short-circuited the natural churning of the capitalist system that is the only way to clear out failed companies and unproductive uses of capital. If the U.S. government keeps alive Chrysler and General Motors or Citigroup and Bank of America when they are no longer viable — and have rendered themselves such through poor business choices and foolish risk-taking — it will create a zombie economy without the capacity for self-renewal.

There is the problem in a nutshell….we are creating a “zombie” economy without the capacity for self-renewal.

IMO, then yes, Geithner and Summers should both go, getting back to the original question, neither of these guys learned nothing from the problems that the Japanese created from themselves and now they are creating the same circumstances in the US.  May I suggest that fresh blood is needed in Washington…people who understand the problem and have solutions, whether popular or not, as long as they repair the ailing economy.

So You Wanna Fix The Banking Industry?

Many media pundits are blasting the Obama approach to the economic crisis, saying that they should have fixed the banking industry first and maybe then there would be more confidence in the programs from there on.  There seems to be little good that Geithner is doing, according to most in the broadcast media.  They are blaming him for the screaming fall in the markets.

But if you really want to fix the banking industry then there is an answer.

While the Treasury busily fills in the gaps in its latest plan to save the banking industry, a former Federal Reserve official says that regulators should instead apply a law enacted in the wake of the savings and loan meltdown.

The law, the Federal Deposit Insurance Corporation Improvement Act, was signed into law in 1991. In an interview with Financial Week, Bob Eisenbeis, a former research director of the Federal Reserve Bank of Atlanta, said the FDICIA contains more than enough tools for regulators to help stem the current financial crisis.

If regulators had applied FDICIA’s provisions once the solvency of major banks was first called into question, Mr. Eisenbeis said, many would already have been taken over by Uncle Sam.

That would mean that their good assets would have been separated from their bad and sold off to healthy institutions or other investors.


Indeed, he said the Treasury’s approach suggests regulators have forgotten that the earlier law is in place, since the capital injections the department has provided since the Troubled Asset Relief Program was authorized by Congress last October reflect what Mr. Eisenbeis calls “regulatory forbearance.” Rather than apply FDICIA’s numerous capital adequacy tests, he said, regulators seem intent “to throw it out and start over.”

While that may buy the banks time in hopes that they won’t need further capital injections, Mr. Eisenbeis is skeptical. He said both the stress test and the plan to relieve banks of their toxic assets would only mask their losses—that is, if the banks aren’t required to value the assets on a mark-to-market basis.

Bernanke Speaks (Again)

But what did he really say?

Pressed by the Senate committee to justify the latest in an expanding series of bailouts for American International Group, Bernanke said there was no alternative, even though the company had been irresponsible.

“We know that failure of major financial firms in a financial crisis can be disastrous for the economy. We really had no choice,” he told the panel.

The U.S. government threw a fresh $30 billion lifeline to AIG on Monday, as part of a restructured bailout that had earlier swelled to about $150 billion.

Bernanke said AIG’s extensive relationships with banks around the globe presented the risk of “contagion” should the company fail, and said authorities were working hard to try to neutralize dangerous positions.

“We have been doing what we can to break the company up, to get it into a saleable position and to try to defang it,” he said. “If there’s a single episode in this entire 18 months that has made me more angry, I can’t think of one (other than) AIG,” Bernanke added, equating the company’s financial services division with an unregulated hedge fund.

“If there is a single episode in this entire 18 months that has made me more angry, I can’t think of one other than AIG,” Bernanke told lawmakers today. “AIG exploited a huge gap in the regulatory system, there was no oversight of the financial- products division, this was a hedge fund basically that was attached to a large and stable insurance company.”

Will You Stay in Your Home?

The administration, launching what it calls the “Making Home Affordable” initiative, said that borrowers will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify for the $75 billion loan modification program, which runs through 2012.

Borrowers are only allowed to have their loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Mortgages for single-family properties that are worth more than $729,750 are excluded.

Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

House Democrats, under pressure from a group of moderates in their ranks and the banking lobby, agreed Tuesday to narrow legislation that gives bankruptcy judges the power to force lenders to lower the mortgage interest rate or principal balance.

Under the terms of the agreement, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their mortgages.

“It is imperative that we continue to move with speed to help make housing more affordable and help arrest the damaging spiral in our housing markets,” Treasury Secretary Timothy Geithner said in a statement.