Thursday, March 26, 2009

The Dithering Society

LBJ gave the US the Great Society. He also gave us Vietnam, but let's put that aside for the moment. A lot of the Great Society was really meant to co-opt radicalism, but some of what he did looks almost miraculous compared to what we have today. I would suggest we have today is the Dithering Society, except for the rapidity with which the administration responds the unmerited demands of finance.

Obama began with some vague ideas, sometimes even suggesting bold measures. Once in office, we got Clinton retreads, with a handful Goldman Sachs alumni placed in strategic positions.

So far we see few breaks with the loathsome Bush administration, either on the international or on the national front. Every time some Obama initiative seems to inconvenience them rich and powerful interest group, it is modified mostly to their satisfaction. All the while, the hammer falls on ordinary people.

One might at least expect competence, but even here disappointment awaits us. So far the bailout seems to suggest little improvement over the Paulson plan.

Even conservative economists recognize why bankrupt financial institutions should be allowed to go bankrupt. Instead, the Obama boys want to bail out the financial market by virtually guarantying hedge speculators who buy the bad debt.

There is one bailout bill waiting for some action. The Los Vegas casinos are hurting. I know: boo hoo. How could the government bail them out? They could lend me money to gamble. I will be obligated to share my winnings with the government, but they agree that I do not have to repay the loans if I lose. So, I would stand to gain a great deal with little risk.

How is my casino plan different from the present plan of creating a market for "legacy" [Isn't that nicer than saying toxic] assets, other than that financial firms will have to put up a wee bit of their investment.

The best we can hope for from Obama would be to continue to embarrass himself with the obsequiousness toward rich and powerful in such a way as to spark a massive protest comparable to the 1960s. Let's stop dithering. Any takers?


Anonymous said...

Well, as someone who shares some of LBJ's DNA (he was my grandfather's cousin), it's nice to finally hear some kind things about our 36th President. I hope I inherited more than his surname and big ears.

That said, I'm not sure I can be too hard on Obama here. He is not LBJ; he doesn't have LBJ's...shall we say...brusque temperment and earthy ways. I doubt that LBJ would be anymore effective today than Obama has been. LBJ inherited the office under special circumstances and those circumstances gave him two years of running amok and having his way with Congress. Until 1966.

Shag from Brookline said...

Speaking of Goldman Sachs alumni, I've been wondering what former Treasury head Henry Paulson has been doing. I just learned he has a book deal, perhaps a tell all like the first Treasury head under George W. Bush, on the economic crisis.

Jack said...

We are of a single mind. We are now seeing all too clearly that Obama is truly a product of Chicago politics wherein one must go along inorder to get along. The great conciliator as it were. You don't run a government, or a business for that matter, by being forever conciliatory. LBJ had years in the Congress, as a member and aleader, to prepare him for the task of being the President. He also had the strength of character, later to do him in via Viet Nam, to push his programs through a Congress that too often has not had the best interests of the country at heart. Corporate financial organizations are not the people. Nothing is too big to fail. The money squandered by Bush and Obama could have just as easily been used to protect individual investors after the fall and/or set up an entirely new system of banks operating under tighter controls. Geithner's current efforts at re-regulating the industry is a little too little, a little too late. Worse yet, the same foxes are still in charge of the hen houses.

TheTrucker said...

It is not too good an idea to focus on punishing the bad guys to the extent that you cause undue harm to the good. Justice will not be obtained by letting the whole system crash. However, we need a lot more "stimulus" to "even up the score". Dollar devaluation caused by massive bottom side cash infusions (infrastructure, and outright handouts like the one in early 2008) are the key to justice here. The bailout of the banks and the "toxic assets" can be made right by debauching the currency in which these assets are denominated. So long as we are aware of what "value" actually is then we will be OK; so long as the inflation is caused by wage increases then all is well.

My point is that we should not focus on the dollar denominated cost of this bailout but on the stimulus side of the issue. If a dollar loses 30% of its value (wages increased by 30%) then the dollar denominated prices of homes will rise by 30%. Real estate has always been _THE_ hedge against inflation and it will remain so until government takes steps to tax land values or until government finds other ways to prevent land price speculation.

The real key is to pump up per hour wages. That can be done more effectively by cutting the work week, but that does not seem to be politically possible currently.

Daro said...

Obama has allowed himself to be tied up in the trunk of the Goldman Sachs getaway car. Once they've extracted their ransom they'll ditch him in the middle of the road and escape overseas to plot their next raid.

Jack said...

"My point is that we should not focus on the dollar denominated cost of this bailout but on the stimulus side of the issue."

I'd be a bit more impressed if someone in the government would begin to focus on the causative aspect of the problem. I'm not referring to the entire economic ressesion, but to something that does have a paper trail. Those CDOs made up from various grades of mortgage debt have origins. The financial organizations which bought up the underlying debts and "washed" the sub-prime character of the regerated CDOs made a fortune of money distributing that crap. Now there are CDSs that some how magnified the destructive capacity of the mortgage derived bonds. Huge profits, ephemeral as they may have been, were also booked on those bits of crap. Huge compensation was paid out on all of that business for what now appears to be a five to ten year period. When is any one going to ask for an investigation of the sale of defective products? If Ford or GM is required to recall defective products, why not the financiers who produced "toxic waste" and sold it as diamdonds in the rough?

gordon said...

Blamers of Obama should remember that he got nominated at a time of a "mortgage meltdown" which everybody expected the Federal Reserve to fix somehow, so it wasn't something anybody expected him to have to deal with. It was all going to be so simple. The Fed would fix the mortgages, and Obama could just be not-Bush and sign Kyoto and make noises about health care and sort of have a re-run of the Clinton years. It was going to be so nice and easy.

Obama and the Democrats never expected all this nastiness, and they're completely unprepared for it. What seems to be happening is that they now expect Geithner and Summers to fix it (whatever this nasty thing is) and make it go away so they can get back to the script.

Anonymous said...

It is amusing to watch LBJ's speeches about various Great Society programs and realize that anybody expressing such aspirations and sentiments could even be elected dogcatcher these days !

Such ideas aren't even close to the boundaries of "acceptable" political discourse -- frankly, advocating killing & eating illegal aliens would be more acceptable than ensuring the welfare of all our residents.

When did we become the society of "I've got mine, now I want yours !"