American Elephants

Not everybody is reacting with awe! by The Elephant's Child

An article on Vice President Biden’s Middle Class Task Force began: “Commentators left and right have reacted with awe to the ambition and transformative potential of President Obama’s economic blueprint.” Awe was not quite the proper descriptive.

Karl Rove wondered in the Wall Street Journal ” Is the Administration Winging It?” At National Review Online, ,Jonah Goldberg, Yuval Levin, Andy McCarthy and John Derbyshire agree that he is winging it. Charles Krauthammer thinks he is more Machiavellian, aiming to change America into a European-style social democracy.  Daniel Henninger sees him as a radical president.  After his first month in office, we are still trying to figure the guy out.

The markets clearly do not like the administration nor administration policies. The Dow has lost half it’s value and decimated most people’s 401Ks, and retirement funds.

The nation’s largest corporations’ CEOs have personally lost a whopping $54 billion over the most recent fiscal year.  These losses by CEOs amounted to 50% of their total holdings.  These are the much excoriated rich whom Obama and the congress expect to pay for their stimulus and earmarks and generosity to their favorite constituents.

In his speech to Congress, Mr. Obama said “CEOs won’t be able to use taxpayer money to pad their paychecks or buy fancy drapes or disappear on a private jet.” Funny, during the stimulus debate Barbara Boxer was off in an ante room picking out carpet samples, and immediately after it was hastily passed, Nancy Pelosi hopped on her personal government jet for a European tour.

After passing the $787,000,000,000 stimulus bill, Speaker Pelosi’s House has passed an omnibus appropriations bill for only $410,000,000,000 more, including 8,500 earmarks — the extra goodies that congressmen like to send home to their districts.  It is amazing to contemplate all those zeroes.  And that does not include the bank bailout that they haven’t figured out yet, nor whatever additional bailout money needs to be appropriated for the car companies.

As economist Larry Kudlow said:

Let me be very clear on the economics of President Obama’s address to Congress and budget.  He is declaring war on investors, entrepreneurs, small businesses, large corporations, and private-equity and venture-capital funds.  That is the meaning of his anti-growth tax-hike proposals, which make absolutely no sense at all — either for this recession or from the standpoint of expanding our economy’s long-run potential to grow.

Obama wanted to “hit the ground running” and Rahm Emmanuel said that “You should never let a crisis go to waste.”  “Bold action” apparently trumps deliberation and caution with the American people’s money.

4 Comments so far
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I find this attitude on the part of Wall Street as baffling as Republican hatred with extra vitriol against Bill Clinton. Neither one makes sense. Wall Street is getting a HUGE bailout from Obama, one that is actually probably not helping the economy but is saving the bums who work there. As my dad the cop said when a drunk got his car stuck up a huge elevated ramp when asked who was going to get the car down, “Who got it up there?” I am po’d that Obama is doing so much bank bailout. Weren’t those folks the ones who wanted a free market? Doesn’t that mean if they do business badly and collapse, that’s the way the market goes?


Comment by carrisa

Hi Effalants. Why do you highlight the names of the “bad guys”? Just wondering. LOL


Comment by helenl

Carrisa, You are making a common mistake. You are confusing “Wall Street” with “the Market.” Wall Street is a collective name for many large investment banks and brokerages who are in the business of managing money.

“The Market” on the other hand, is only the collective actions of millions of individuals, businesses and governments across the world, making individual decisions about what to do with their money. It’s made up of informed decisions, fear, confidence, guesses, and much else. Opinion polls are influenced by the way questions are worded and the make-up of the sample. The market is more representative of mass opinion.

Wall Street is getting a bit of a bad rap. The housing bubble was created by Congress with ill-conceived laws. The Fed erred by keeping interest rates too low for too long. Fannie Mae and Freddie Mac packaged bundles of sub-prime mortgages to be sold as investments. Because they were sub-prime, the interest rates were higher, but the bundling of many mortgages was thought to reduce risk, and because they came from Fannie and Freddie, they were assumed to be backed by the full faith and credit of the US Government. Very wise people should have noted the housing bubble, but nobody is always wise.

You surely know that when you put money in a bank, they don’t keep everybody’s money there. They loan it, invest it. If all depositors want their money back all at the same time, the bank will not be able to provide it. Because of deposit insurance, they will get their money back — just not at once. Some investment banks had to be bailed out, some didn’t want the govt. money that was forced on them. The bailout was a quick fix with all the problems that “quick” and brand new administration implies.

In a real sense,”greed” is the business of Wall Street. It is of course simply a political term used for political reasons. Investment banks are in the business of, through their skill with money, trying to create wealth for their customers — like your retirement fund or your mutual fund. It is a risky business and people are well paid, as are people in other risky businesses like crane operators in ports. The market goes down a lot as well as up, and people lose their jobs.

The market — representing what it does — is an important indicator. The market does not like the Obama administration’s stimulus, the administration’s policies towards the financial crisis, and is giving them a big vote of no confidence.


Comment by The Elephant's Child

Oh, Helen, bless your heart. You know we are partisan. These are not “bad guys” as you very well know. Karl Rove has been much demonized by those suffering from Bush Derangement Syndrome, but he is a brilliant man, and was an excellent political adviser to President Bush, and he is really a very nice man as well. The others all have important books out (check Amazon) that would be well worth your time. Larry Kudlow is simply representative of the many economists who believe that Obama is off on the wrong track.


Comment by The Elephant's Child

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