Category Archives: Obama

more from Geithner and Obama

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Geithner: Tight Lending Threatens US Recovery

Dec. 22 (Reuters) —U.S. Treasury Secretary Timothy Geithner expressed confidence on Tuesday that the U.S. economy was on a solid recovery path, but said tight lending practices by banks still pose a risk.

He said the Treasury “will do what is necessary” to prevent another severe downturn. “We cannot afford to let the country live again with a risk that we’re going to have another series of events like we had last year,” Geithner said.

So how about a payroll tax holiday, revenue sharing for the states, and funding an $8/hr job for anyone willing and able to work? Maybe this is why:

On December 16, Mr. Obama told a television audience that if his “health care bill” doesn’t pass, “the federal government will go bankrupt” and that “health care costs are going to consume the entire federal budget.”

Someone needs to remind them how, operationally, the federal government actually does spend and lend:

(PELLEY) Is that tax money that the Fed is spending?

(BERNANKE) It’s not tax money. The banks have– accounts with the Fed, much the same way that you have an account in a commercial bank. So, to lend to a bank, we simply use the computer to mark up the size of the account that they have with the Fed.


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Summers supports Obama administration policy stupidity

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Banking and the entire private sector in a capitalist society is necessarily procyclical. Only the Federal government can be countercyclical, and,
indeed that’s it’s role in supporting aggregate demand in a slowdown. The blame for current conditions falls unambiguously on current policy. Comments below

Obama Plans to Press Banks Monday to Start Lending Again

Dec. 13 (CNBC) —President Barack Obama’s economic advisers are talking tough about the banks ahead of his meeting Monday with heads of financial institutions.

Larry Summers and Christina Romer say Obama will press bankers to ease lending to help Americans get back to work.

As Summers put it, bankers need to recognize that “they’ve got obligations to the country after all that’s been done for them.”
He says no major bank would be intact without the government’s bailout of the financial sector, and now they need to do all they can to get credit flowing again.

Why would we want to demand releveraging of the private sector and not growth through increased incomes via my proposals for a payroll tax holiday, per capita revenue distribution, and an $8/job for anyone willing and able to work to facilitate private sector expansion as demand is restored?

Only one reason- the usual deficit myths.

Summers spoke Sunday on CNN’s “State of the Union” program.
Romer, on NBC’s “Meet the Press,” said Americans are still paying the price for Wall Street excesses.

No, we are still paying the price for poor policy response due to disgraceful flawed mainstream economics mired in deficit myths that has blocked the obvious means of supporting aggregate demand readily available.

On Saturday, Obama singled out financial institutions for causing much of the economic tailspin and criticized their opposition to tighter federal oversight of their industry.

Why does he care if “they” oppose any particular policy?

This shows a profound weakness of leadership where he can’t use his bully pulpit to lobby congress to do the ‘right thing.’

Unfortunately, however, due to the lack of a fundamental understanding of banking and the financial sector in general the administration’s proposals fall far short of the mark even if they did get them passed.

While applauding House passage Friday of overhaul legislation and urging quick Senate action, Obama expressed frustration with banks that were helped by a taxpayer bailout and now are “fighting tooth and nail with their lobbyists” against new government controls.
In his weekly radio and Internet address Saturday, Obama said the economy is only now beginning to recover from the “irresponsibility” of Wall Street institutions that “gambled on risky loans and complex financial products” in pursuit of short-term profits and big bonuses with little regard for long-term consequences.

Its just barely stopped the slide from a too little too late fiscal adjustment that added precious little to the work done by the fiscal ‘automatic stabilizers’ of rising transfer payments and falling incomes due to the slowdown.

Not to forget Fed policy that further removes personal interest income, which should be a good thing as it allows for lower taxes for a given level of federal spending. But of course that’s not recognized and therefore the 0 rate policy is instead a wet blanket on demand.

“It was, as some have put it, risk management without the management,” he said.

Right back to you.

The president also told CBS’ “60 Minutes” that “the people on Wall Street still don’t get it. … They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down $10, $20 million bonuses after America went through the worst economic year … in decades and you guys caused the problem,” Obama said in an excerpt released in advance of Sunday night’s broadcast of his interview.

Right back to you.

The only question is whether this is innocent fraud or subversion.

(feel free to distribute)


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Obama vs the banks

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Looks like a lapse into behavior not becoming a President- name calling, cheap shots, demonizing, and failure to recognize the behavior in question is a consequence of incentives built into the current institutional structure.

The legislation in question completely misses the point.

More and more voters are beginning to believe this is deliberate.

‘True reform’ begins with my previous proposals:

Link

If gold is a bursting bubble rather than a bull mkt correction and the dollar remains firm (which makes sense with crude breaking 70),

psychology could quickly turn deflationary with the concern that the Fed’s tools may be unable to deal with deflation.

And a government and mainstream economics profession that believes the government has ‘run out of money.’

Obama complains about “fat-cat bankers”

Dec 11 (Reuters) — President Barack Obama complained about “fat-cat bankers” and sharply criticized Wall Street banks for paying out big bonuses to executives in a television interview to air on Sunday.

Obama, who has taken some heat from Americans for supporting a Wall Street bailout, told CBS’ “60 Minutes” banks do not understand how angry people are with them.

“I did not run for office to be helping out a bunch of fat cat bankers on Wall Street,” Obama said.

It very much appears that’s what he’s been doing.

The president said it appeared the only firms paying out bonuses and avoiding the caps put on them under the government’s Troubled Asset Relief Program (TARP) were the ones who had paid back their bailout money.

“I think that in some cases (to be able to pay bonuses) was the motivation,” Obama said.

That’s how capitalism is supposed to work- govt. establishes the incentives that determine private sector behavior.

“Which I think tells me that the people on Wall Street still don’t get it. They’re still puzzled why it is that people are mad at the banks. Well, let’s see. You guys are drawing down $10 (million), $20 million dollar bonuses after America went through the worst economic year in decades and you guys caused the problem,” he said.

No, the Bush and Obama administrations caused the problem by not supporting demand at full employment levels.

Obama told “60 Minutes” it was wrong for financial industry lobbyists to try to derail a financial regulatory overhaul that passed the Democratic-controlled House of Representatives on Friday.

It’s up to the administration to use the legal system to get the desired behavior. If what the banks are doing is illegal, prosecute them. If it’s legal but counter to public purpose, implement appropriate law.

“What’s really frustrating me right now is that you’ve got these same banks who benefitted from taxpayer assistance who are fighting tooth and nail with their lobbyists up on Capitol Hill, fighting against financial regulatory control,” he said.

They didn’t make the rules, govt. did. It’s up to govt. to make rules that promote public purpose.

After House passage of the financial overhaul, Obama issued a written statement in which he urged the Senate to join the House in passing what he called a necessary regulatory reform as quickly as possible.

“This legislation brings us another important step closer to necessary, comprehensive financial reform that will create clear rules of the road, consistent and systematic enforcement of those rules, and a stronger, more stable financial system with better protections for consumers and investors,” he said. (Reporting by Steve Holland; editing by Todd Eastham)

Unfortunately, none of them have a sufficient grasp of banking and the monetary system to get it anywhere near right.

For example, how many understand that TARP is nothing more than regulatory forbearance?

How many recognize taxes function to support aggregate demand and not to raise revenue per se?

How many recognize that exports are real costs and imports real benefits?

It continues to be a case of the blind leading the blind.


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Obama vs the banks comment

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Looks like a lapse into behavior not becoming a President- name calling, cheap shots, demonizing, and failure to recognize the behavior in question is a consequence of incentives built into the current institutional structure.

The legislation in question completely misses the point.

More and more voters are beginning to believe this is deliberate.

>   
>   (email exchange)
>   
>   Of course, your reform is vastly superior to anything that is out there.
>   
>   But this criticism of the banks is sheer hypocrisy on the part of Obama.
>   It’s kabuki.
>   
>   It might even be deliberate: see Matt Taibbi’s evisceration of the Obama
>   financial reforms. He’s usually on top of the prevailing zeitgeits.
>   
>   This legislation will be totally ineffective. Interesting today that the
>   bank stocks went UP on passage of the bill.
>   

yes.

Policy just keeps getting worse.

I’ve about lost hope that he can ever get it right, unless accidentally.

The longer term risk is fiscal tightening. So far it’s not actually happening.

A driving force behind tax rate hikes is the misread that the Clinton tax rate hikes ‘worked’ to both spur the economy and drive the budget into surplus.

I suppose a repeat of the massive expansion of consumer debt that reached maybe 7% of gdp by 1999 could
somehow materialize isn’t impossible, but sure seems highly unlikely in the current environment.

Apart from the fact that it’s also not my first choice for supporting output and employment.


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Obama: Too much debt could fuel double-dip recession

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This is getting depressing.
I thought McCain was bad when he said he’d cut spending to help the economy:


Obama: Too much debt could fuel double-dip recession

By Deborah Solomon and Jonathan Weisman

Nov. 18 (Reuters) — President Barack Obama gave his sternest warning yet about the need to contain rising U.S. deficits, saying on Wednesday that if government debt were to pile up too much, it could lead to a double-dip recession.

With the U.S. unemployment rate at 10.2 percent, Obama told Fox News his administration faces a delicate balance of trying to boost the economy and spur job creation while putting the economy on a path toward long-term deficit reduction.

His administration was considering ways to accelerate economic growth, with tax measures among the options to give companies incentives to hire, Obama said in the interview with Fox conducted in Beijing during his nine-day trip to Asia.

“It is important though to recognize if we keep on adding to the debt, even in the midst of this recovery, that at some point, people could lose confidence in the U.S. economy in a way that could actually lead to a double-dip recession,” he said.

Fox News, which released a transcript of the interview, showed that comment by Obama on Wednesday morning and said the full discussion would be broadcast later in the day. (Reporting by Caren Bohan; Editing by John O’Callaghan)


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Comments on Obama and the economy

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It’s like having the job of driving the bus and fixing it when it breaks, and much of the election was about who can fix the broken bus and how they are going to do it.

This bus can be immediately fixed by anyone who knows how it actually works and what it needs to get rolling again.

We suffer from a lack of demand which is easily remedied by an immediate fiscal response.

Quantitative easing, for example, is at best like installing a second battery to give the car more power. It completely misses the point.

He didn’t just show up for the job-

He volunteered for the job insisting he could fix the economy.

He pushed the TARP (as a Senator and a candidate) not recognizing giving capital to banks was nothing more than regulator forbearance and instead believed it was deficit spending.

His stimulus package came after the automatic stabilizers hiked the deficit to muddle through levels and has proven far too small to keep millions from losing their jobs and their homes.

And now the talk has turned to deficit reduction after proclaiming on multiple occasions “the US government is out of money”

which is like moving forward with the engine at idle speed not understanding that his foot on the brake is keeping the bus from getting up to cruising speed.

Obama and his administration is in this way over their heads.

Unfortunately, the mainstream opposition is probably worse.

Risking overstatement, McCain’s proposal was to not have a bus driver.


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Obama Meets Asian Bankers Who May Call His Loan

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Keeps getting worse, as we think we need them and continue to kowtow to their demands:


Obama Meets Asian Bankers Who May Call His Loan: William Pesek

By Deborah Solomon and Jonathan Weisman

Nov. 12 (Bloomberg) — Global recession. Free trade. Security. Climate change. Afghanistan. Iraq. North Korea.

Barack Obama sure has lots to discuss on his maiden voyage to Asia as U.S. president. Yet all this is just conversation compared with the real issue on Asia’s mind: a wobbly dollar that’s putting the region’s money at risk.

Think of this trip as a visit to America’s banker, and an unpleasant one. Asia wants assurances that the U.S. can repay its fast-mounting debt and prevent a dollar crash. The reality dawning on Asia is that Obama can’t offer them such a pledge — not with U.S. borrowing so out of control.


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Obama Trickle down policies would make Reagan blush

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Looking for more of the same with the preponderance of ‘top down’ initiatives.

Wall street banks dividing up tens of billions in bonuses, as fees and net interest margins remain wide, helped by income lost by ‘savers’ due to fed rate cuts, while unit labor costs plunge with productivity high and wages stagnating.

Negative headline CPI means no social security increase, unemployment near 10% and jobs still being lost, foreclosures running at record levels, and mortgage delinquencies continuing to climb.

And now with real GDP growing at maybe 3% and lower income groups still going backwards, a larger chunk of the output has to be going to the top.

Wealthy U.S. Shoppers Boost Spending 29%

By Cotten Timberlake

Oct. 16 (Bloomberg) — Spending in the U.S. on luxury goods and services spurted 29 percent in the third quarter from the previous three months, as consumers with the highest incomes unleashed pent-up demand, according to Unity Marketing.

Spending among 1,067 consumers with average annual income of $228,800 rose to $18,826 each in the three months ended in September from $14,554 a quarter earlier, the Stevens, Pennsylvania-based luxury-market research firm said today. Shoppers cut spending by 3.2 percent in the second quarter and spent $13,429 in the third quarter of 2008.

The increase was driven by consumers with the highest income levels, starting at $250,000 a year, said Pam Danziger, Unity’s Marketing’s president. Spending was strongest in the home, travel and dining segments, she said. The wealthy curbed purchasing earlier this year because of Wall Street job cuts, lower home values and volatile financial markets.

“No question that this quarter’s spending increase is good news for luxury marketers,” Danziger said in a telephone interview today. “Many affluent consumers returned after sitting on the sidelines for a year. However, the richest are few in number, 2.5 million households, so competition will be fierce to win their attention.”

MasterCard Report

U.S. luxury sales rose 3.4 percent to $891 million in September from a year earlier, the first such gain since August 2008, according to figures provided today by credit-card company MasterCard in its SpendingPulse report. Last month, those sales fell 13 percent from the previous year.

The luxury category covers apparel, leather goods and department-store sales at the highest 10 percent of prices. SpendingPulse measures retail sales across all payment forms, including cash and checks.

United Marketing said purchases increased in all but three of the 22 product and service categories it tracks.

The highest-income group spent an average of $43,111 in the latest quarter and the lowest-income group tracked, with earnings of $100,000 to $149,999, spent $10,423. The three categories that didn’t gain were fashion accessories, fashion apparel and art, Danziger said.

Gains in confidence among luxury consumers, meanwhile, slowed, Unity Marketing said.

The researcher’s luxury confidence index rose 1.6 points to 75.9, after jumping 18.6 points to 74.3 in the previous quarter. That index peaked at 113.2 at the end of March 2006. Its low was 40.3 in September 2008. It started at 100 in January 2004.

The findings were based on a survey conducted among adults aged 24 to 70 with income of at least $100,000 from Oct. 2 to Oct. 7. Unity Marketing does not calculate a margin of error. It plans to publish the survey results Oct. 19.


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Obama/Summers innocent subversion

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Further evidence of a deliberate policy that undermines our standard of living:

>   
>   (email exchange)
>   
>   On Fri, Oct 16, 2009 at 10:27 AM, Roger wrote:
>   

Larry Summers was just quoted on the morning news, as saying “We want the US to transition from a consumer-based to an export-based economy.” And he has the “complete agreement” of Obama and the G20.


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