Barack Obama and the Democrats he led to a stunning victory two years ago are going down hard in the face of an economic crisis that he did nothing to create but which he has failed to solve. That is somewhat unfair because the basic blame belongs to his predecessors, Bill Clinton and George W. Bush, who let the bulls of Wall Street run wild in the streets where ordinary folks lived. And there was universal Republican support in Congress for the radical deregulation of the financial industry that produced this debacle.
The core issue for the economy is the continued cost of a housing bubble made possible only after what Clinton Treasury Secretary Lawrence Summers back then trumpeted as necessary "legal certainty" was provided to derivative packages made up of suspect Alt-A and subprime mortgages. It was the Commodity Futures Modernization Act, which Senate Republican Phil Gramm drafted and which Clinton signed into law, that made legal the trafficking in packages of dubious home mortgages. In any decent society the creation of such untenable mortgages and the securitization of risk irrationally associated with it would have been judged a criminal scam. But no such judgment was possible because thanks to Wall Street's sway under Clinton and Bush the bankers got to rewrite the laws to sanction their treachery.
It is Obama's continued deference to the sensibilities of the financiers and his relative indifference to the suffering of ordinary people that threaten his legacy, not to mention the nation's economic well-being. There have been more than 300,000 foreclosure filings every single month that Obama has been president, and as The New York Times editorialized, "Unfortunately, there is no evidence that the Obama administration's efforts to address the foreclosure problem will make an appreciable dent." The Times noted that the administration's main program has been a bust, with only $321 million of the $30 billion allocated to the program having been spent to help folks stay in their homes.
The ugly reality that only 398,198 mortgages have been modified to make the payments more reasonable can be traced to the program being based on the hope that the banks would do the right thing. While Obama continued the Bush practice of showering the banks with bailout money, he did not demand a moratorium on foreclosures or call for increasing the power of bankruptcy courts to force the banks, which created the problem, to now help distressed homeowners.
The subject of housing foreclosures is inherently boring unless you happen to own a home being foreclosed, in which case your family's life has just been turned disastrously upside down. But few of the well-paid pundits on television are in such a position, and as a result the tragedy that has hit 4 million families in the past two years has received scant notice.
But even that highly privileged group of commentators must now be aware that those foreclosures are behind Tuesday's news that U.S. home sales reached their lowest point in 15 years and that there is unlikely to be an economic recovery without a dramatic turnabout in the housing market. The stock market tanked Tuesday on reports that U.S. home sales had dropped 25.5 percent below the year-ago level.
When homes are foreclosed in a neighborhood the equity of those in the area who have faithfully paid their mortgages is slashed. And when the banks dump those foreclosed properties back on the market, prices drop even lower. Yet the administration has offered the most tepid of responses to stanch the fierce bleeding of home equity worth. A paltry $4.1 billion has been committed to efforts by the states to help the unemployed and other distressed borrowers stay in their homes. Compare that with the trillions spent on making the financial industry super-profitable once again.
There is no way that Obama can begin to seriously reverse this course without shedding the economic team led by the Clinton-era "experts" like Summers and Treasury Secretary Timothy Geithner who got us into this mess in the first place. They are spooked by one overwhelmingly crippling idea -- don't rattle the financial titans whom we must rely on for investment. But when it comes to keeping people in their homes, it is precisely the big banks that must be rattled into doing the right thing.
Obama gained credibility through sacking Gen. Stanley McChrystal for making untoward remarks. Why not sack Summers and Geithner for untoward policies that have inflicted such misery on the general public?
My biggest disappointment with Mr. O, is what I thought, was his AFFINITY for the PEOPLE. The stories about Mom and the Grandparents, and the Mrs, talking about her parents. It gave them the same appeal the Bushes gave rednecks, "Hey' they're like us".
But, they're not. That's why they're NOT on the same end of the stick that we are. Albeit , his parents were educated, their futures didn't include politics and this makes ALL the difference.
The circle they move in, is of other high achievers. They're beyond the struggles of their parents. I'm not saying they've forgotten, but at this point, really, it's almost like a past life in comparison to the life they live now. Their scope has narrowed and no amount of talking to the people is going to change that.
WE NEED ACTION ! NOW>
MAKE SOME HEADS ROLL for this DEBACLE>
TAKE THE POWER of this Presidency and do with it what BUSH /CHENEY did when they wanted a war.......... tell the banks and corporations to go FU*K THEMSELVES>
IF> you display the BACKBONE of the POTUS like an LBJ or Roosevelt, YOU WILL make it, IF NOT.....you WILL NOT and the will PEOPLE SUFFER>
How is it that Mr. Sheer and all of us see the truth but Mr. Obama can't? Is it because he's blinded by the light of his advisers --- or baffled by their bulls**t?
He has been under attack since before he took office, he knew racial hate was there, bigger then he could accept but did little address it and his "compromise" on everything to get "historic Bills passed'. Nothing has really been done for citizens, he has not defended nor discussed any of his "Historic Bills" to any degree and most are finding now, that the special interest/money got exactly what it wanted, making Obama look like a fool, again and again.
His only hope is to fire staff, stand up, street fight not "Harvard fight" for people, for now it seems he is isolated from the people, he had great support but squandered it, time now to earn it back, show us, not tell us Mr O..
The lesson here is the party is over --- and politicians need to read the tea leaves better. Either clean up this mess -- this disgrace of a nation -- or face the wrath of a very angry and yes in many regards "irrational" electorate .. The wheels have come off this bus -- better to get our heads around it now ...
VERY true, and geographically the USA is ruled, not governed by those living in, running the money, educated at, and "old school tie' type in a area, I refer to as "NE Power/Shadows Government/Business/Education Triangle", roughly a 100 mile wide line from DC-Boston-Philadelphia where all USA power is concentrated. Most running money, politics, media and government are inside that area, while "other 95% or more, live and try to make it in what is the real USA.
Doubt this one, well read the "News",check bios of paper, story content-subject matter as to location, education, positions, etc. nearly all rotatate through the now nearly elite/royals of revolving/revolting doors of "NE Power/Shadows Government/Business/Education Triangle", roughly a 100 mile wide line from DC-Boston-Philadelphia where all USA power is concentrated.
The thieving kleptomaniac banks caused the entire mess, let them pay for it.
Just cancel every home loan in the USA.
They make nothing, create nothing, do nothing, they steal anything of value and everything they they don't want they destroy, Mankind will be much better after they are gone!
How to get him to listen to America???? Who knows???? It's very frustrating to everyone who is experiencing what he cannot see and who can see what he refuses to.
The fact is he puts far too much faith in Ivy League degrees (owners of which tend to be more theoretical than sensible) and high IQs
and pays far too little attention to actual wisdom or knowledge or success.
He is not stupid. He is probably not even on the payroll.
He is simply naive, inexperienced, and sadly out of his depth while surrounded by sharks.
He will be a one-term president.
He says he's "resigned" to that; said so before taking office.
I would propose direct action by the government, to offer loan payment assistance, in exchange for subordinate equity (like a home equity loan). Then, the government need not ask the security or loan holders for anything, nor force them to do anything. Just work around them.
Direct loan payment assistance IS adding "moral hazard", in that people get to stay in "homes they can't afford". However, so long as they can't profit off the sale of their home without paying back the government, they will never make a killing at taxpayer expense.
To counter concerns about the "cost", I think we also need to account for the "zero interest" money being used by the banks, to purchase "treasuries", which are costing the taxpayers some $350 Billion per year. By reducing the foreclosures (and thus reducing the amount of assistance given to the banks for the failed loans), the cost of homeowner assistance is at least partially canceled out by reduced bailouts.
The reduced bailout costs must be included in any cost/benefit analysis of such a program. Typically, the "treasury interest backdoor bailout" is ignored, even though it is a HUGE continuing bailout, which is just accounted for as increased "interest" paid by the taxpayers.
The thieving kleptomaniac banks caused the entire mess, let them pay for it.
Just cancel every home loan in the USA.
Mr. President:
The core issue for the economy is the continued cost of a housing bubble made possible by what Clinton Treasury Secretary Lawrence Summers trumpeted as necessary derivative packages made up of subprime mortgages. In any decent society the creation of such mortgages and the securitization of risk irrationally associated with it would have been judged a criminal scam. But no such judgment was possible because thanks to Wall Street's influence the bankers got to rewrite the laws to sanction their treachery.
When homes are foreclosed in the equity of those in the area who have faithfully paid their mortgages is slashed. Yet your administration has offered the most tepid of responses to stanch the fierce bleeding of home equity worth. A paltry $4.1 billion has been committed to efforts by the states to help the unemployed and other distressed borrowers stay in their homes. Compare that with the trillions spent on making the financial industry super-profitable once again.
There is no way that you can begin to reverse this course without shedding the economic team led by Summers and Treasury Secretary Timothy Geithner who got us into this mess in the first place. They are spooked by one overwhelmingly crippling idea -- don't rattle the financial titans whom we must rely on for investment. But when it comes to keeping people in their homes, it is precisely the big banks that must be rattled into doing the right thing.