We need a plan…
Barack Obama is about to take the oath of office tomorrow and this ought to be a moment for fresh, more consistent economic leadership. Instead, we’re getting a new version of the same ad hoc policy and scare-tactics that marked 2008. No clear spokesman or leader has emerged with a strategy to rebuild the financial system, and now President Obama’s term begins without a Treasury Secretary.
This is no way to start a Presidency… but Obama is not your usual President either. He has lady luck and gumption and risk calculus at his side.
Last week, the current Federal Reserve Chairman Ben Bernanke used his LSE City of London speech to pat the Fed on the back and present himself as the cool Cat in the midst of a panic.
This would have been appropriate if he had warned us and even if he had taken steps to avert or soften the catastrophe, a couple of years ago. But now he feels like a giant scam artist like the Bush and assorted Bushies rewriting history at the 12th hour…
Did I say rewriting? Sorry, they are just making a mockery of an attempt at rewriting…
Sad and Daft bastards.
Yet they are free to try. Amid the current uncertainty, daft Ben succeeded in all his purposes in London. But mainly he succeeded in suggesting that the financial system is in an even worse shape than we thought of. That he did so in front of ”toot le monde et tout le cite” is an even greater feat of callousness.
He essentially vouchsafed to all of the city at LSE that the President elect Obama’s “stimulus” isn’t sufficient, and thus more of Mr. Bernanke’s magic potion of a poison policy will be needed to save the day.
Sounds like he is angling for the job all over again… Albeit he goes about it the wrong flatfooted way.
Pre-empting the new President’s policy… Daft move.
But there is more… The Treasury’s request for the second $350 billion in Troubled Asset Relief Program (TARP) cash. This commitment to backstop the financial system ought to be reassuring, especially for financial stocks. Yet in requesting the funds, Obama transition aide Larry Summers indulged in familiar scare rhetoric about “a potential catastrophe.”
Congress also seems eager to use TARP II to bail out any and all industries that have powerful enough patrons. The car makers are already in line for a bigger chunk, and Barney Frank’s draft bill orders Treasury to line up community banks to see whether they pose a larger risk to the banking system, the economy and all nof us or not. Good to go to the root… but carefully with a lot of painkillers and some laughing gas…
Really the Democrats are insisting that as much as $100 billion needs to go to prevent more home foreclosures. This measure will unfortunately have little impact on the housing prices and will not make real estate any healthier. Jobs will do that, and jobs alone. The evidence from the last two years is that foreclosure mitigation often merely delays a day of reckoning because many of these homeowners never could afford the dream homes in the first place. Give them jobs though and they will afford the best of homes. My liberal heart goes out to them but the real economic policy is or has to be hard felt and not heart felt sadly. let’s spend the money in job creation and not bleeding heart waste…
But let’s listen to some more of Cool Cat Ben: “With the worsening of the economy’s growth prospects, continued credit losses and asset markdowns may maintain for a time the pressure on the capital and balance sheet capacities of financial institutions,” he declared. “Consequently, more capital injections and guarantees may be necessary to ensure stability and the normalization of credit markets.”
The message is clear:
”There’s more mayhem to come, but don’t worry, the Fed can keep printing money and buying private assets….”
No wonder the thinking world is scared half to death.
The Fed has been creating new financial vehicles right and left for nearly two years, so the problem isn’t a lack of liquidity. The problem is that too few people want to use the liquidity the Fed is creating. They don’t want to borrow nor lend money, nor take risks, in large part because they never know what Mr. Bernanke and the government might do next.
Neither a borrower nor a Lender be now… till you can see the Horizon again.
Ben doesn’t have a clue nor a plan.
I know Obama has both and the guts to go forward.
So Mr President… Please, give us a proper plan and we’ll folow it for job creation and Recovery.
God Bless and Good Luck to You and all of us.
Thank You.
Yours,
Pano
PS: Your plan though. Not some rehashed Cool Cat ben Bernanke porridge of a plan. It will not wash down with anything.
