Obama's Weird Double Standard
The Obama administration has demonstrated admirable cojones in dealing with Detroit. It is taking a hard line that actually has a chance of producing a viable and sustainable U.S. auto industry -- and it is handing the bill for the existing wreckage to those who deserve to pay it: Current shareholders and bondholders.
Which makes the administration's wimpiness in dealing with Wall Street all the more bizarre.
Why does the Obama administration refuse to hand the bill for our banking catastrophe to the folks who deserve it -- bank bondholders and shareholders? Why do taxpayers have to pay those costs, while we're spared most of the pain in Detroit?
This is the central mystery of the Obama administration so far, and it's galling that folks who claim to be all about "transparency" refuse to even address the question.
Since the Obama administration won't tell us what they are thinking, let's speculate:
* Steve Rattner (car czar) has the experience and balls to see the world as it is. Tim Geithner (Treasury Secretary), meanwhile, sees the world the way it was explained to him by self-interested Wall Street. Remember: Tim Geithner still thinks the problem is liquidity, not bad debts. Very few serious economists agree with him.
* Wall Street folks are just a heck of a lot more influential and cool in Washington than the dying moguls of Detroit. Rick Wagoner? He's from the midwest, for goodness sake. Off with his head.
* Tim Geithner has decided that seizing Citigroup, et al, will create the same havoc in the global financial system as the collapse of Lehman Brothers. Geithner got blamed for Lehman, so this fear is understandable. But it's misplaced. The seizure of Fannie, Freddy, WaMu, et al, didn't paralyze the financial system, and the orderly seizure and restructuring of Citigroup wouldn't either. A friend of mine describes this Geithner thinking this way (and adds the two theories that follow): "A professor of mine used to talk about overlearning: a housecat that steps onto a hot stove learns that stoves burn, not that hot stoves burn. Geithner learned that bankruptcies are to be avoided, not that disorderly bankruptcies are to be avoided."
* We are suffering from narrow-minded American exceptionalism, which enables three views: 1) lessons from other countries don't apply to the US; we're different; 2) nationalization is untested (because it hasn't been tested here); 3) the Geithner plan can work (even though it was tried and failed in Japan).
* The Obama administration still thinks Congress wouldn't support nationalization; hence the Enron-like financing of the Geithner plan, an off-budget, end-run around Congressional authority, using the FDIC.
Whatever the administration's thinking, it doesn't make sense. It's also not Obama-like. So let's hope the president will reconsider taking a harder line with Wall Street -- or at least do some more transparent communicating.
See Also:
Geithner's Five Big Misconceptions
The Question That Geithner Refuses To Answer
Follow Henry Blodget on Twitter: www.twitter.com/hblodget
Tom Engelhardt: Why Military Dreams Fail -- and Why It Doesn't Matter
Robot war. It just couldn't be cooler, could it? Especially if the only blood you spill is the other guy's, since our "pilots" are flying those planes from thousands of miles away. So why am I not excited?
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The banks have been made to lie down with the Federal Government. Those that could are not being permitted to return the money forced upon them. The salaries will be controlled, the executives retained or hired will be selected with the governments help. Foreign banks and governments will now be allowed to make decisions regarding our banking system. All will be one and all will be well as long as we are quiet, docile and do not question. The social engineering on a national and international level that Obama and his ilk desire needs control of the world banking system. They need to be able to direct funds to some sectors and starve others.
The auto industry, the UAW helped Obama become President, but their continued existence is of little specific importance. Does anyone else feel a terrible mistake has been made? Why did we allow this inexperienced ideologue to rise to such a level of power?
Although Obama's executive leadership on this matter is somewhat curious, the pressure must be, and must remain, on the Congress. (This is something that I think the US Congress just isn't quite used to...) They're the ones who passed the laws, and who removed the laws, to make this whole swindle possible..
Furthermore, it's not altogether a bad strategy to pick up the hand that you have been dealt and to continue to play it out. If you waltz into the room and throw all the cards away as your first move, then you've just set yourself up as an autocrat ... and everyone in Congress will happily deflect attention away from themselves, squarely onto you.
We need "government that works." That's the mutual(!) goal here. We know that the CEO -will- stumble.
Before you can have a double standard, unquote, you have to have a standard. There is no evidence that this is the case; all of the white Houses decisions appear to be ad hoc and dependent on circumstances.
In other words, there's no evidence that there is even one set of rules; let alone two.
These 'rules' amount to one-size fits all ideology. President Obama is capable of seeing that each and every problem, situation and event is uniqure --- requiring unique and specific responses and solutions.
It was this reliance on a single 'standard' (aka ideology) that created most of the mess the world now faces.
Thank God for President Obama!
In reference to Blodgett's remarks:
" * Steve Rattner (car czar) has the experience and balls to see the world as it is. Tim Geithner (Treasury Secretary), meanwhile, sees the world the way it was explained to him by self-interested Wall Street. Remember: Tim Geithner still thinks the problem is liquidity, not bad debts. Very few serious economists agree with him. "
....any guess as to when Rattner will replace Tim Geitner as Treasury Secretary, the position that Rattner has apparently wanted for some time (or, according to an article in New York Magazine - August 2008).
For what I read last March, Rattner was one of the 20 donors who wrote Pelosi a strongly worded letter to NOT pressure HC to end her bid for the Presidency.
....but at some point, Rattner realizes that he's backed the losing candidate. (How could that be? ...surpris
Regardless, Rattner gets behind Obama and promises to deliver reluctant Hillary supporters. And now we see what was in it for him. Although, I think this is just chapter one.
Fair enough, I suppose, but it does seem that it's the Rattners of the world who are the decision makers, not those elected to office. And if Rattner did not even have the foresight to see that Obama had a better chance than Hillary of winning the nomination, how smart is he really?
The electric car was replaced by the hum mer. Wonder how the industry and would would be different now had it not gone that way?
Why was the GM electric car scrapped and replaced by the Hummer?
quite simple, donations O recieved from Wall St $14mil(more than Hillary and McLoon combined), donations from Detroit almost zilch. Next question.
How many Americans will be hurt if the two auto markets closed their doors? How many Americans buy/own American cars?
If AIG fails, millions of American will lose their insurance, 401K, and IRA Americans will lose big if AIG fails.
The president is taking a beating from his supporters for bailing out the auto industry. The poll after the President gave his press conference before leaving showed 89% of Americans didn't support the bailout. However the president went forward with the bailout using TARP money to negate having to go through the congress and senate.
I think the auto industry should be cheering the President and his support rather than biting the only hand outside of Michigan that is supporting them.
Dig this:
New Accounting Rules for Mortgage-Backed Securities
http://www
Those people are his homies, come on. The elites support each other; We will NEVER get health care either: http://oxd
the END
Plunder on dudes plunder on. The "new rules" are actually more deregulation. Wall St Barry strikes again.
Because there are two different types of market - those markets which are necessary to the continued functioning of the economy and those which are not.
In the first group I'd put markets like those for energy (oil, gas, electricity); telecommunications and yes, the capital markets. The entire economy depends on them and if they're not functioning efficiently (see the capital markets now) then everything else is paralysed. Individual businesses within these markets might be left to fail but the markets themselves must be maintained and not just left to implode. That's also why these markets need greater regulation (something that the Bush administration totally didn't get).
On the other hand, while it's nice to have things like pink handbags, rice pudding, newspapers or American-made cars around, it's not necessary to have a market in these goods for the economy to prosper. Sure, it might be incredibly tough for some if these markets collapse - and you may want to intervene somewhat to alleviate the suffering and hardship - but at the end of the day, if no more American cars were produced the economy would continue pretty much as before.
Absolutely right. If the car companies had come back with a plan to continue to employ their workers making other things--windmills, bicycles, public buses, trains, and energy-efficient products, then
they would have deserved our support. But instead they piddled around with laying off workers, promising new cars, and wanting to keep the SUVs "just in case" people still wanted to buy them.
Clearly, management didn't get it. Lubilu, if only they had seen it your way.
It's not a double standard. It's just a repayment for monies advanced during the campaign. Wall Street is getting what it paid for, including the installation of its disciples as Obama's economic team. The many defenders of these policies, including those posters on HP, seem to be suffering from abused spouse syndrome. After the implementation of the "shock and awe" disaster capitalism model, I guess that response is to be expected. New regulation of the financial industry should have been in place before the massive infusion of taxpayer monies, but without oversight and enforcement, that won't matter.
Reminder to all - the wall street bailout was done on Bush's watch - as were those AIG contracts - and I don't think Obama is done with the wall street folks just yet. Patience people. Patience.
NO. Patience is too unjust and costs too much money. Please grow a set.
Why? Follow the money.
Obama took over $100K in donations from AIG alone last year.
Obama's pal Emmanuelle took over $660K from Securities and Investment business (2007-2008)
Why?
1) Wallstreets problem is caused because they put several trillion a year into our economy and Americans could not pay it back. It was a 14% boost to our economy... everyone got a benefit from that, from contractors, real estate agents, mortgage brokers, consummer product and car sales. All was funded by easy refinance money until the pop.
All Americans benefited from that money that the banks/pension funds and Insurance companies are now owed. Yes, they took too many risk, they are way,way over paid greedy ba$tards who over did it.
Until banking is fixed, no business does well. Toyota makes good cars and their sales are down 53% world wide.
And as many Americans are (wrongly) are against bailingout Detroit as they are Wallstreet. Both groups are wrong. Detroit must be saved... a world power that cant make its own cars? Absurd. Or have a MFG sector which is just 3% of its GDP.. not sustanable .. in 1980 MFG was 32%.
We already cant make our own appliances, computers and TVs. Lost 5 million MFG in 8 years. Cant lose anymore MFG jobs and ever recover.
Regards
Henry....p
how are all of those dot com companies doing that you were so high on? Amazon still worth 400 bucks per share?
Your question to Henry is the wrong question. Amazon was NEVER worth 400 dollars a share. That is the idiocy of wall street....
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