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Stephen Herrington

Stephen Herrington

Posted: February 2, 2010 12:45 PM

Obama Throws Some Elbows

What's Your Reaction:

It was good to see it. Obama driving to the net, a feint, a shot and throwing elbows rather than trying to set up intricate passing plays with his half assed Congressional team. Obama is the star forward and that is what the public paid to see. The star draining three pointers from half court and a few charging fouls taking it to the boards are now the game plan, or so we the fans hope.

Young quarterback, pitcher coming up from the minors, skates and a stick, bronco busting cowboy with Congress as the clowns, pick your sports analogy, prudence is neither what we expected or need.

Friday he went to the den of the hyenas in Baltimore. Some have alluded to lions at which I scoff. Hyenas is what they are. He spoke of numbers, egad math! He spoke of process. He illustrated the paradoxes of their positions. He witched them there, into a pouting and stunned silence. Now that is the star forward we signed up to see. But there is still a problem with the game strategy and it is economic policy.

Should the banks have been bailed out? Yes, although it, in the President's words, is about as popular as root canal. Bailing was the right thing to do, otherwise some portion of 2.5 trillion dollars, the pre recession borrowing in the U.S., public and private, 18% of our 14 trillion dollar economy would have been seriously curtailed. It is not knowable, in detail, by how much. The problem is not intricate, other than politically. The public and government must borrow 18% of GDP for the economy to operate at pre recession levels. The bailout was 750 billion and the stimulus was 750 billion, combined 1.5 trillion. The economy has contracted 7%, so the combination of the two should have been sufficient, had the bankers lent their windfall instead of padding their books and bonuses with it.

Bush set us up, his bailout trying to defibulate the economy in the worst recession of our lifetimes so he could duck out on the responsibility. Don't let anyone ever refer to this as anything other than the Republican Bailout, unless it is as the Bush Bailout. The economy had been ruined by the supply side economics of easy money. So the bailout was doomed from the beginning as the competing goals of more responsible lending and lending at the same levels was impossible to resolve. You can't hold banks to higher standards when the public can't meet those standards and expect a positive result.

The public never understood it, and likely never will. The question is whether Obama and the Cabinet/Government will understand that the economy has to be reinvented. Nothing else will do, not and repay the national debt that we are running up to pay for the infantile supply side policies of the Reagan/Bush era. The national debt crisis is a private debt crisis. In due deference to Keynes, the government can borrow and stimulate until hell freezes and it will not change the fact that private debt compounded on declining wages subdues the ability for the economy to grow its way out of the debt that the government now incurs to save the economy.

The false prophecy of easy consumer debt driving the economy has been unmasked. The banks even understand it now and are acting on it. The things that need a remedy to reinvent our economy are two, the trade deficit and corporate profits. The trade deficit extracts the medium of exchange from our domestic economy and therefore shrinks it. Corporate profits, predicated on the false god of supply side philosophy of a war on wages, do likewise, those profits being bulit, ultimately, on wage concessions. Means must be found to reign in both of these with as little displacement of employed workforce as is conscionable. To not do it is to continue the path of decline on which Reagan set our nation and is to deny the only real solution for retiring the national debt.

These are the elbows that most need to be thrown, by a President, by earnest representatives and by the public, for to not do so is to forfeit the game. It is the opening of the second quarter now. The score is tied for the Obama Administration with momentum to the Republicans. Judging from the trajectory of the economy and law and dependent liberty under Republican rule, another loss to them will be the end of this democracy. Ask yourself President or simple patriot, do you not care enough to bloody a few noses under the backboards?