There is dumb and then there is dumber. Our President has crossed from one to the other, no doubt egged on by the failure of his policies thus far to take root:
WASHINGTON – President Barack Obama outlined new multibillion-dollar stimulus and jobs proposals Tuesday, saying the nation must continue to “spend our way out of this recession” until more Americans are back at work.
You can’t spend your way out of a debt problem any more than you can drink yourself sober. This sort of bankrupt policy is an attempt to stop this:
But that – decreases in consumer credit outstanding – is good, not bad (in the intermediate and longer term.) We have roughly doubled the per-capita debt-to-income ratio over the last 20 years. It is unsustainable, and why we are in this mess. The tiny contraction we have seen thus far is nowhere near enough to restore balance, yet it is mathematically impossible to return to a “normal” economy until balance is restored. Unless our President has a plan to roughly double wages without commensurate price inflation, debt levels must come down – a lot – to restore that balance.
To remind everyone, here’s how much stupidity we have managed to take on over the last two decades:
That’s the root of the problem. Making it worse – which is what government spending inherently does, because the government is spending more than it makes, will not foster economic recovery. At best it will provide a short-term “pump” followed by another disaster, with each successive crash worse than the last.
All we are doing at present is guaranteeing that the final toll of the pain that must be absorbed in our economy will be worse, in total, than is necessary now.
“We avoided the depression many feared,” Obama said in a speech at the Brookings Institution, a Washington think tank. But, he added, “Our work is far from done.”
No we did not. I will note that this sort of “pump by claim” is common, to wit:
May 1, 1930
“While the crash only took place six months ago, I am convinced we have now passed the worst and with continued unity of effort we shall rapidly recover. There is one certainty of the future of a people of the resources, intelligence and character of the people of the United States – that is, prosperity.” – President Hoover
June 29, 1930
“The worst is over without a doubt.” – James J. Davis, Secretary of Labor.
How did that work out, exactly?
Never mind this ditty:
He called the bank bailout, under the 2008 Troubled Asset Relief Program (TARP), “galling.”
“There has rarely been a less loved — or more necessary — emergency program,” Obama said.
Really? How many assets did this program buy Mr. President?
“What is zero, Alex?”
That’s right. This “necessary” program wasn’t necessary at all. The bill was sold to you (I remind you that you voted for it) as a program that was necessary to purchase distressed assets to free up lending capacity and restart lending into the economy.
Not one asset was actually purchased, and the claimed “restart” of lending never happened. The so-called “distressed” assets remain stuck where they were in October of 2008 – rotting away behind fraudulent accounting scams that both the former and now your administration have both enabled and, in the case of your administration, literally demanded.
And don’t start this crap about blaming Republicans. There’s plenty to go around, and both your party and you personally, as a Senator, deserve part of the responsibility:
“And we were forced to take those steps largely without the help of an opposition party which, unfortunately, after having presided over the decision-making that led to the crisis, decided to hand it to others to solve.”
Riiiight. Larry Summers was one of the chief architects of the repeal of Glass-Steagall, which is where all the leverage came from, along with the expansion of that leverage that a Republican Administration permitted when Henry Paulson (then of Goldman) asked.
BOTH Republican and Democrat administrations are directly responsible for profligate spending, insane leverage increases, predatory lending being considered “ok” and mandates that were utterly unsustainable – and outrageous.
NEITHER party had the gonads to stop Credit Default Swaps and other OTC derivatives, neither party put a stop to AIG’s writing of contracts with zero capital, neither party wanted to pull the punchbowl and neither party has spent the people’s money in a sustainable (that is, no more than you take in via taxes!) fashion.
Both parties have practiced federal accounting that would land any private business executive in prison, including refusing to recognize more than $60 trillion of future liabilities for Social Security and Medicare.
And both parties voted for a fraudulent “asset purchase” program that, it was later admitted to Congress, had its purpose changed before Congress passed it, yet Treasury never informed the Congress of this fact nor was anyone held to account for lying to Congress as to the true purpose and intended use of those funds.
Mr. President, I realize part of your job is to cheerlead. It comes with being a President. That’s ok.
What’s not ok is bankrupting the nation and lying about it. Indeed, lying to Congress and The American People has, in the past, been considered just and proper grounds for impeachment.
In case you haven’t been paying attention the debt-rating agencies are all warning about deficit spending and unsustainable debt.
They’re serious, even if (very) late.
Dubai is just one example of what can (and will) happen if you don’t cut this stupidity out.
The simple fact of the matter is that if you want to do something positive for Main Street you could put a 99% “windfall profit” tax on all compensation and earnings from the big banks, then spend THAT into Main Street, and drop it ONLY when they consent to re-imposition of Glass-Steagall, the end of their participation in financial speculation, and realignment of the credit process so that productive investment became the dominant feature among American business.
But that means kicking people like Jamie Dimon in the proverbial nuts, instead of kneeling before him and his ilk.
That’s a bridge too far Mr. President, isn’t it?