The horizon is not so far as we can see, but as far as we can imagine

Category: Barack Obama Page 9 of 13

The Fed’s Increase in the Discount Rate

As you may have heard, the Federal Reserve had decided to increase the discount rate: the rate at which short term loans are made to banks.

The primary effect of this is to strengthen the dollar.  That will help reduce effective resource prices and make it easier to export to the US.    Both of these things are what the US’s most important creditors (aka: China and Japan), want.

A quarter point increase won’t make much difference, the question is if this is a signal that the Fed intends to continue tightening.  Doing so is likely to strangle the incipient, but extremely weak, recovery.  One can only conclude that losing more Democratic seats is ok by Bernanke, and quite likely by Obama as well.  It is possible that now that Bernanke has been reappointed he’s biting the hand that fed him, but given Obama’s actions since before he was elected, it’s at least as likely that Obama is onside for this.  Keeping creditors happy is important if the administration wants to make another run at the financial play.

The bottom line is this, as I’ve been saying for some time: the plan is Japanification.  Except that since the US is not a net exporter, Japanification will not work nearly as well in America as it did in Japan—and it sucked in Japan.

Once more, the percentage of Americans employed will not recover to pre-Great Recession levels in at least a generation and probably more.  This is a deliberate policy choice and everything Obama and Bernanke has done—from refusing to take over banks, to refusing to force lending at reasonable rates, to engaging in an inadequate stimulus, to refusing to make Banks recognize their losses, to doing everything they can to encourage slashing Social Security and Medicare, has had the effect of making Japanification more and more likely.

Unfortunately Japanification is not a stable solution set for the US.

Oh well.

Paul Craig Roberts Speaks For Me

When he notes the US is a police state:

Siddiqui has never been charged with any terrorism-related offense. A British journalist, hearing her piercing screams as she was being tortured, disclosed her presence. An embarrassed U.S. government responded to the disclosure by sending Siddiqui to the U.S. for trial on the trumped-up charge that while a captive, she grabbed a U.S. soldier’s rifle and fired two shots attempting to shoot him. The charge apparently originated as a U.S. soldier’s excuse for shooting Dr. Siddiqui twice in the stomach, resulting in her near death.

On Feb. 4, Dr. Siddiqui was convicted by a New York jury for attempted murder. The only evidence presented against her was the charge itself and an unsubstantiated claim that she had once taken a pistol-firing course at an American firing range. No evidence was presented of her fingerprints on the rifle that this frail and broken 100-pound woman had allegedly seized from an American soldier. No evidence was presented that a weapon was fired, no bullets, no shell casings, no bullet holes. Just an accusation.

Wikipedia has this to say about the trial: “The trial took an unusual turn when an FBI official asserted that the fingerprints taken from the rifle, which was purportedly used by Aafia to shoot at the U.S. interrogators, did not match hers.”

An ignorant and bigoted American jury convicted her for being a Muslim. This is the kind of “justice” that always results when the state hypes fear and demonizes a group.

Siddiqui was an American citizen, by the way.  Seized and held in a secret prison, tortured and raped.  This is your America.

Your America.

Anyone can be next. Indeed, on Feb. 3 Dennis Blair, director of national intelligence told the House Intelligence Committee that it was now “defined policy” that the U.S. government can murder its own citizens on the sole basis of someone in the government’s judgment that an American is a threat. No arrest, no trial, no conviction, just execution on suspicion of being a threat.

This shows how far the police state has advanced. A presidential appointee in the Obama administration tells an important committee of Congress that the executive branch has decided that it can murder American citizens abroad if it thinks they are a threat….

In no previous death of a U.S. citizen by the hands of the U.S. government has the government claimed the right to kill Americans without arrest, trial, and conviction of a capital crime.

Go read the whole thing.

And, if there is a God, may Barack Obama and Dennis Blair face him along with George Bush, because no, the difference isn’t enough to matter.

Certainly not to Siddiqui.

As Jesus said “as you do to these, the least of my children, you do to me”. I wonder how Jesus is taking being raped, bombed and tortured so regularly by Obama and Bush.

As for me, I won’t pretend that I don’t despise Obama almost as much as I despised Bush.  Maybe more, since there’s evidence that George Bush is a brain damaged psyhcopath (he is known to have tortured animals as a child, one of the cardinal signs and recordings of him speaking in the early 90s show fluent speech without “Bushisms”).

Obama should know better, but if he does, he doesn’t care enough to do anything about it, to the contrary, he keeps making it worse.

A Small Victory

Panicked by losing Kennedy’s seat to the Repubicans, the Senate told Obama that if he wants to gut Social Security and Medicare, they won’t be joining in:

The Senate has rejected a plan backed by President Barack Obama to create a bipartisan task force to tackle the deficit this year.

The special deficit panel would have attempted to produce a plan combining tax cuts and spending curbs that would have been voted on after the midterm elections. But the plan garnered just 53 votes in the 100-member Senate, not enough because 60 votes were required. Anti-tax Republicans joined with Democrats wary of being railroaded into cutting Social Security and Medicare to reject the idea.

Sometimes elections do have good results.  Obama has lost a ton of influence with both the House and Senate, and that’s a good thing, but objectively, his policies stink.

Of course, Barack Obama certainly intends to keep trying:

Advocates of more aggressive steps to address the national debt failed Tuesday in their effort to create a bipartisan commission to press for tax increases and spending cuts, but President Obama now plans to establish a similar panel by executive order in his State of the Union address on Wednesday.

Pathetic.  The only President of my adult lifetime I’ve had more contempt for than Obama was Bush Jr.

Ok, I keep underestimating Obama’s

stupidity.  Seriously. (h/t Agonist.)

President Obama plans to announce a three-year freeze on discretionary, “non-security” spending in the lead-up to Wednesday’s State of the Union address, Hill Democratic sources familiar with the plan tell POLITICO.

This is in reaction to polling which shows that Americans are worried about the deficit.  Of course, if Obama does this, the economy will not recovery properly, and people will vote against him and Democrats anyway.  The correct response, politically and policy-wise, is to fix the economy, in which case people won’t give a damn about the deficit.

I should add, also, that security spending is very ineffective stimulus and even worse development or industrial policy. It’s better than tax cuts, admittedly, but it’s not better than most non-security spending.

I really don’t know what to say about Obama any more, other that the law of Bush is still in effect: no matter how bad you think things are they are always worse than you think, even if you take this law into account.  Except it’s now the rule of Obama.

Please re-read my post on getting out.

An optimist and a damned fool are the same thing

Back in April I noted that the fools (and yes, they were fools) who kept mocking the right for being dead, and believing their own propaganda, were full of it.

Enjoy mocking Republicans all you want, but in your cold hard calculating heart, take them very very seriously.

Of course, Huffington Post didn’t promote that piece, because back then those of us throwing the cold water of realism on the fevered delusions of Obamadom were out of favor.

So how’d that work out for the reality denying triumphalists?  Hmmm?

Mind you, Obama and the Democratic leadership screwed things up even faster than I, whom most people consider a pessimist, expected.  Leading me to conclude that the rule of Bush is now the rule of Obama.

“Obama is more incompetent than you think he is, even if you take this rule into account.”

Also, optimists and damn fools are the same thing, at least when it comes to analysis.  It may be good for your health to be unrealistic about the future, but it makes you bloody lousy at predicting the future.  Thinking back to major analytical mistakes I’ve made in the last 5 years, only two of them were due to negative expectations, and one of those was actually optimism in pessimism drag: I thought the Fed would not be so foolish as to keep the housing and financial bubbles going for as long as they did.

My grandmother told me that an optimist and a damn fool were the same thing when I was 5, and so far nobody has ever shown me otherwise.  Lord knows, Obama isn’t going to, and neither are any of his Obots.

Pessimism is usually, actually, realism.  Because most people have an optimistic bias.  Their optimism feeds them the delusions they need to get through their lives.

Why Democrats Are Trying to Commit Electoral Suicide

This question keeps coming up, so let’s tackle it.  45% of the Democratic base now says they aren’t going to vote in 2010 or are thinking of not voting.  This is a direct result of Democrats in Congress and the Presidency doing things the base disagrees with or not doing things the base wants to see done.  It appears politically stupid to act as they have, and yet, they did.  So why?

Elected Democrats at the Federal level are members of the national elite.  If they weren’t a member when they were elected, they are quickly brought into the fold.  They are surrounded by lobbyists, other members and staffers who were lobbyists, as a rule.  They learn they need to raise immense amounts of money in the off years when normal people aren’t giving, and that the only way to raise that money is for corporate interests and rich people to write the checks.  They also receive the benefits of elite status, very quickly. It’s not an accident that the every Senator except Bernie Sanders is wealthy.

Whatever Americans think, whether they support a public option or single payer; whether they’re for or against Iraq or Afghanistan; whether they agree with bailing out banks or not, elite consensus is much much narrower than American public opinion.  It starts at the center right and heads over to reactionary (repeal the entire progressive movement and the New Deal, taking America back to the 1890s).

The elites are convinced they know what has to be done.  Not necessarily what’s “best”, but what is possible given the constraints they believe America operates under and the pressures which elected officials work with.  So Obama can say, and mean, that if he were creating a medical system from scratch, he’d go with single payer.  But he “knows” that’s impossible, not just for political reasons, but because there are huge monied interests who would be horribly damaged or even destroyed by moving to single payer.  On top of that, he looks at the amount of actual change required to shift all that money away from insurance companies and to reduce pharma profits, and to change which providers get paid what, and he sees it as immensely disruptive to the economy.  In theory, it might lead to a better place, but to Obama, the disruption on the way there is unthinkable.

The same thing is true of the financial crisis.  The banks may be technically insolvent, but the idea of nationalizing them all, or shutting them down and shifting the lending to other entities would mean that the most profitable (in theory, not in reality) sector of the economy would largely be wiped out.  Add to that the fact that Obama was the largest recipient of Wall Street cash of the major candidates for the Presidency, and the immense influence the banks wield through their alumni who are placed throughout the Federal Reserve, the Treasury and other departments, and the idea of actually radically reforming the banking system becomes unthinkable.  Virtually every technocrat giving Obama or most Senators advice, will be against it.

Moreover they understand that with a few exceptions, the financial economy is the American economy.  It’s what the US sold to the rest of the world: pieces of paper in exchange for real money which could be used to import real goods, so Americans could live beyond their means.

Shut that down and what’s going to replace it?  How are you going to avoid an immediate meltdown of the US standard of living? How are you going to avoid a large part of the elite being wiped out?  You or I may have answers to that, except to wiping out a large chunk of the elite, which is something which needs to be done, but those who grew up under the system, who believe in the system, and who ran the system don’t.  What they’ve done all their lives is what they understand.  And more to the point the system has been good to them.  The last 35 years may have been a bad time to be an ordinary American, but the elite has seen their wealth and income soar to levels even greater than the gilded age.  The rich, in America, have never, ever, been as rich as they are now.

And if you’re a member of the elite, your friends, your family, your colleagues—everyone you really care about, is a member of the elite or attached to it as a valued and very well paid retainer.  For you, for everyone you care about, the system has worked.  Perhaps, intellectually, you know it hasn’t worked for ordinary people, but you aren’t one of them, you aren’t friends with them, and however much you care in theory about them, it’s a bloodless intellectual empathy, not one born of shared experience, sacrifice and the bonds of friendship or love.

So when a big crisis comes, all of your instincts scream to protect your friends, your family, and the system which you grew up under, prospered under and which has been good to you.  Moreover, you understand that system, or you think you do, and you believe that with a twiddle here and an adjustment there, it’s a system you can make work again.  Doing something radical, like single payer or nationalizing the banks or letting the banks fail and doing lending direct through the Fed and through credit unions: that’s just crazy talk. Who knows how it would work, or if it would work?  Why take a chance?

And so, until disaster turns into absolute catastrophe, the elites will fiddle with the dials, rather than engaging in radical change.  When the time comes when it becomes clear even to them that radical change is required, they are far more likely to go with their preconceived notions of what’s wrong with the US, which are very reactionary, than to go with liberal or progressive solutions.

So you’re far more likely to see Medicare and Social Security gutted, than you are to see the military budget cut in a third or Medicare-for-all  enacted. You’re far more likely to see a movement to a flat tax (supported by idiot right wing populists) than you are to see a return to high marginal taxation.

To the elites, ordinary Americans are pretty much parasites.  It’s not the bankers, with their multi-trillion dollar bailouts who are the problem, it’s old people with their Social Security and Medicare.  The elites made it.  They are rich and powerful.  They believe that their success is due entirely to themselves (even if they inherited the money or position).  If you didn’t, then that means you don’t deserve it.

Democratic party elected leaders, as a group, are members of this elite, or are henchmen (and some women) of this elite.  They believe what the elites believe, and they live within a world whose boundaries are formed by those beliefs.

They have no intention of engaging in radical change which threatens elite, which is to say, their, prosperity and power.  The financial industry must be saved, the medical industry must be saved.  Social Security and Medicare, which they don’t need and don’t benefit from, not so much.  The military, which funnels huge amounts of money to them, must continue to expand (in real terms military spending is now twice what it was in 2000.)

As long as elected Democrats at the Federal level are members of this elite, or identify with the elite they are not going to make fundamental changes against the interests of that elite.

And so, no, there is no “change” you can believe in from this class of Democrats.  There is no “hope” of an America which is better for ordinary people.

That doesn’t mean things are hopeless, but it does mean there’s little hope for anything radical from this Congress or President.

As Adam Smith pointed out, there’s a lot of ruin in a nation.  America’s going to have to endure a lot more of it before things actually change.

Number of Democrats thinking of not voting in 2010 up to 45%

How to (not) win elections and motive the base:

the highest percentage of Democrats to date (45%) indicated this week that they are either unlikely to vote, or certain not to vote.

Once more, doing things badly (health care “reform”, an inadequate stimulus, refusing to properly take on the banks) or doing things the base opposed (escalating in Afghanistan) has a price.

In 1994 Clinton lost Congress. He lost it in large part because of NAFTA, failing at health care reform and the the Don’t Ask, Don’t Tell fiasco.  Democratic base voters stayed home and Republicans were motivated.  Doing “moderate” things didn’t make Republicans not vote against Democrats, but it did make Democrats not vote Democrats.

Clinton may have gone on to win re-election in 1996, but after losing Congress, he did very few truly progressive things and did or signed off on many non-progressive things, like Welfare “reform” and gutting Glass-Steagall (a major reason for the financial crisis.)

Obama stands to repeat.  His major achievement, health care reform, is too compromised to really motivate the base.  He has two things going for him:

  • a large money advantage, since they are now the favored party of corporate America, and raking in money as a result;
  • the Republicans being in severe disarray.

The next year will have some bones thrown to the base, in an attempt to convince them to get out and vote.  But since Obama can’t, and won’t, do anything major for the base, I wonder what they’ll be. Healthcare is off the table, the immigration bill will not be good, carbon trading will be badly done and so on.

Convincing base voters they haven’t been betrayed, that there is hope and the change doesn’t mean “Bush’s 3rd term” is going to be an uphill struggle.

Oh Wait, the Freddie/Fannie Scam is Now Unlimited

Update: Go read Numerian.

Per Bloomberg:

The U.S. Treasury Department will remove the caps on aid to Fannie Mae and Freddie Mac for the next three years, to allay investor concerns that the companies will exhaust the available government assistance.

The two companies, the largest sources of mortgage financing in the U.S., are currently under government conservatorship and have caps of $200 billion each on backstop capital from the Treasury. Under the new agreement announced today, these limits can rise as needed to cover net worth losses through 2012.

The Obama administration is “beginning to realize it’s not getting better and it’s not likely to get better” soon in the housing market, said Julian Mann, who helps oversee $5.5 billion in bonds as a vice president at First Pacific Advisors LLC in Los Angeles. “They don’t want the foreclosures now, so they’re saying, we’ll pay whatever it takes to continue to kick the can down the road.”

Basically, at this point, almost all mortgage lending is guaranteed by the federal government under the FHA, or it doesn’t happen.  Private lending has pretty much dried up.

Since there’s no way Freddie and Fannie took unlimited losses, one has to wonder what all this money is going to be used for.  Is it to make up losses they don’t want to admit?  Is it to make future bad mortgage loans?  Is it so they can take bad debt from the banks and put the government at risk for it?

Notice also how they’ve made an unlimited commitment without consulting Congress.  You only need Congressional approval to spend money on wars and healthcare, when it comes to bailing out banks, apparently the Presidency controls the power of the purse all by itself.

It’s also interesting that this is unlimited till the end of 2012.

(See also the earlier post when it was just a 400 billion increase, not unlimited.)

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