The Failed Obama Administration

     Despite voting for McCain, I actually had high hopes for the Obama administration. I really really want it to be a success. It’s early, of course, but so far it does not look good. 

     The President has failed to exercise the needed leadership in dealing with the economic crisis, instead supinely letting the Congressional Democrats grab total control of what’s happening. The result is a gigantic spending bill — even today, $800+ billion is STILL a huge amount of money — that isn’t going to do what needs to be done. It’s telling that the bill didn’t get a single Republican vote in the House. The Republicans weren’t just being bloody-minded. Most of them fully recognize the need to push a lot of money out the door to stimulate the economy. But instead of doing that, the Democrats are just filling their own wish lists. 

     Our economic problem is especially nasty because it is not just a typical cyclical downturn — where businesses have built up inventory stocks, and cut back temporarily to get stocks down. That automatically corrects itself when inventories are run down and production needs to be ramped back up. But what we have now is an implosion of consumer buying, which would mean production won’t need to be ramped back up. It’s a vicious downward spiral; the worse it gets, the more consumer buying declines. That’s the essential problem the stimulus bill needs to attack. And quick. But the bill working through Congress, despite the huge price tag, in the main, doesn’t do so.

     Meantime, what ever happened to the $700 billion Congress voted last fall? Obama needs to get control of that situation as well. We hear nothing about it. Meantime too, there’s the mortgage default situation, which started the whole mess, because it throttled bank lending, which is what the $700 billion was supposed to cure. The economy as a whole will not get back to health as long as the mortgage sore continues to fester. Steps must be taken to prevent defaults, keep people in their homes, renegotiate their mortgage terms, and stabilize the whole situation, so it becomes possible to get a handle on what all the mortgage-backed securities are really worth, paving the way to getting banks back into a position where they are financially sound and can lend. What the Obama administration is doing about this, right now, seems to be absolutely nothing.

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5 Responses to “The Failed Obama Administration”

  1. littleriver Says:

    The phrase “Giant Democratic Spending Bill” is not an oxymoron.

    More than a decade ago Mr. O was one of the attorneys arguing for changes in mortgage laws that would make it easier for everyone to qualify for loans. This fact seems to get left out of most discussions regarding our current crisis.

    So now we have the fox pretending to be guarding the chicken coop.

    By sometime on 2010 there won’t be too many chickens left and we will be stuck in a huge hyper-inflationary depression. All I can say is. Buy Gold. Buy Silver. And start looking for another country to emigrate to.

  2. allusionist Says:

    I’m not quite sure what you’d want the bill to look like, exactly. I identify more with individuals who suggest that there should be no bailout since the reason consumer spending has imploded is that consumers have been spending too much and most of the economic development over the previous eight years came from unsustainable spending levels. Rather than just trying to work in consumer spending, the bill is using multiple projects to create jobs. This downturn has helped people understand what they can and cannot spend, which, once unemployment goes down, will (hopefully) allow people to live within their means. The new jobs created by this bill will cushion the fall and allow people to rebound more quickly.

    Additionally, the $700 billion from last year hasn’t been completely spent, and there has been some wrangling over the additional funds. I agree that using the TARP funds in the same way isn’t the best idea, but President Obama hasn’t made any “purchases” with it yet.

    Finally, President Obama supported calls during the campaign to allow judges to renegotiate mortgage terms in order to allow homeowners to stay in their homes. Admittedly, he hasn’t made any moves on that yet, but hey, it’s only been a week, and he can’t hand that down by order.

    FSR REPLY: The bill will not actually create many jobs, and not quickly enough. It’s spewing money in a lot of other ways. And see my recent posting, “Is consumerism bad?” Yes, people ought to live within their means. The problem is that if everyone does what’s prudent for them individually, the result is bad for everyone — because everyone’s livelihood depends on others buying what they produce, or their services. Keynes called this “the paradox of thrift.” Meantime, this spending bill shows that the government is not living with its means. Rather than one-shot emergency spending, this bill will permanently increase federal spending in many ways, that will be extremely hard or impossible to stop once this recession is over, locking in huge deficits and carrying costs, worsening our collective long-run economic position.

  3. Catherine Says:

    I think if you just lost your job or might lose it, the bill is spot on. You and your spouse and children can have Medicaid temporarily. Or you can have assistance in buying COBRA. If you were close to retirement, and still want the insurance you had with your company, you can keep it.

    I think you are right that keeping people in their homes and renegotiating mortgages is crucial, and I hope Obama works on that very quickly.

    I haven’t read the whole bill, so I would need to do that in order to comment on how effectively it actually stimulates the economy.

    FSR REPLY: I didn’t say there’s nothing any good in the bill. But unfortunately, it appears that the ratio of sensible initiatives to wish-list spending is nowhere near where one might have hoped. I don’t want to see people losing jobs, but that will increasingly happen if consumer buying does not recover; and consumer buying will not recover until the overall dark atmospherics change.

  4. Bill Says:

    Where is your optimism? Are you only optimistic for Republicans? I don’t know – just asking…

    FSR REPLY: Bill, I’m a rational optimist.

  5. How To Refinance Says:

    How To Refinance…

    Related posts: Homeowner’ s Loan Renegotiation Saving Tips Before you refinance your home owners loan visit: free home… 5 Expensive Homeowners Loan Renegotiation Mistakes to Avoid Before you refinance your home owners loan go to: online… Mortgage L…

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