Category Archives: The Great Recession

You are right. You were wrong. But not in the wrong way you want us to think you were wrong. Right?

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Joe Biden opens his mouth and out comes humor, drivel or drool.

“Everyone guessed wrong,” Vice President Joe Biden said Sunday, on the impact of stimulus legislation.

Not everyone. And by the way, they weren’t guessing – they were siezing an opportunity to not unwaste a crisis and transport America quickly to the left under the cover fire of Obama’s Doom and Gloom speech.

Some 330 economists signed a statement last winter saying that President Obama’s claim — that “there is no disagreement that we need action by our government, a recovery plan that will help to jump-start the economy” — simply “is not true.”

The economists were not crackpots but respected scholars, including Nobelists James Buchanan, Vernon Smith and Edward Prescott, as well as Reagan Office and Management of Budget Director James Miller, Walter Williams and John Lott.

Also opposed to the stimulus are the nonpartisan Congressional Budget Office and a core of U.S. representatives and senators, too small unfortunately to change the outcome, who saw through the smoke and weren’t fooled by the mirrors.

The result is now a soon-to-be total debt per American household of several hundred thousand dollars, the result of which will soon weigh heavily on the shoulders of liberal Democrats and our facist President when Republicans ask in 2012 “are you better off now than you were four years ago?”

The Pen of Pawlenty: A Beacon for Conservatives

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Governor Pawlenty’s discipline is tutelage for Republicans everywhere.

Congressional Republicans — the ones who got tossed because of their embrace of spending and earmarks — might start looking for a message up north. Fiscal responsibility? “It is the fundamental tenet of our party, and the conservative coalition more broadly,” says Mr. Pawlenty, nicely. “If we don’t have that, we are nothing.”

If Republicans are looking to get back their conservative groove, they could do worse than study Minnesota’s budget brawl. Mr. Pawlenty deftly (and amusingly) outmaneuvered his Democratic opposition, not only saving his state from huge tax increases but clearing the way to cut government spending. Call it a refreshing break from the financial-crisis norm.

While liberal TV ads equate fairness with sticking it to the “rich”…

…Mr. Pawlenty kept voicing three simple principles. “Number one, we must have [because of the constitution] and should have a balanced budget,” he told me. “Number two, the state government needs to live within its means, just like everybody else. Number three, we shouldn’t raise taxes in the worst recession in 60 years.” Minnesota already has one of the highest tax burdens in the nation.

While in Washington, Comrade Obama increases the Federal Government and National Debt at unprecedented speed…

this will be one of the first times in modern Minnesota history that the state will reduce the size of government in real terms, not just slow its rate of growth. “The correlation in recent history has been between job growth and states that have reasonable government cost structures,” he says. These cuts, he says, will position Minnesota to take advantage of the recovery when it comes.

A Crisis Not Wasted™ indeed, Governor.

A Lesson Lost on Them

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Americans that lived through The Great Recession of “Ought Nine” will not soon forget the lessons learned and in fact US savings rates are up; consumer debt has fallen like a rock.

In the end, history will point an impeaching finger at liberals whose “high-mindedness” led to the most catastrophic and costly financial crisis in American history.

And yet…

Grants of as much as [$16,000] to first-time buyers and the lowest interest rates in 49 years have emboldened more than 40,000 young [home buyers] to take out home loans since October, stoking demand for properties that cost less than [$385,000].

These buyers may be vulnerable when interest rates begin rising, potentially triggering a jump in foreclosures that will drive down property prices, cut profits at banks and damp household spending, which accounts for half the economy. A surge in defaults in America was a key trigger for the financial crisis that pushed the global economy into its worst recession since World War II.

History repeats itself indeed, only this is in Australia, where the toilet swirls the other way and lessons are apparently learned the hard way.

“We’re mirroring what happened to the U.S. three years ago, when people who shouldn’t have been in the market bought houses,” said Martin North, managing director of Fujitsu Australia, a Sydney-based property-consulting company. “It’s a strategy set for an unfortunate outcome.”

G’Luck, mate!

Unintended Consequences

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Government (or pseudogovernmental) actions have unintended consequences; these consequences are often worse than the original problem.

History is full of such examples. Peter Huber in City Journal Bdemonstrates how Obama’s “Green Economy” is going to screw up the ecology even faster than whatever’s happening now.

Snip:

Ten countries ruled by nasty people control 80 percent of the planet’s oil reserves—about 1 trillion barrels, currently worth about $40 trillion. If $40 trillion worth of gold were located where most of the oil is, one could only scoff at any suggestion that we might somehow persuade the nasty people to leave the wealth buried. They can lift most of their oil at a cost well under $10 a barrel. They will drill. They will pump. And they will find buyers. Oil is all they’ve got.Poor countries all around the planet are sitting on a second, even bigger source of carbon—almost a trillion tons of cheap, easily accessible coal. They also control most of the planet’s third great carbon reservoir—the rain forests and soil. They will keep squeezing the carbon out of cheap coal, and cheap forest, and cheap soil, because that’s all they’ve got. Unless they can find something even cheaper. But they won’t—not any time in the foreseeable future.

Read the whole thing; it’s Economics 300, which to be fair seems to be about 200 farther than the Administration ever got.

in unrelated-yet-germane news, Charles Gasparino at the NYPost looks into the role Elliot Spitzer’s “investigation” (which, according to the story, was mostly a repackaging of AIG’s own internal probe) played in turning a former pillar of good, sober management into financial chum and a not-so-funny punchline of the current economic crisis.

Conclusion:

THE former AIG executives I’ve been interviewing lately say many people deserve blame for the tragedy that is AIG: Sullivan, for taking his eye off the growing exposure; Greenberg, for hanging onto power as CEO even in his 80s and for creating the financial-products group without grooming a competent successor — and, of course, the guys who directly ran the credit-default-swap business.

But they save their harshest criticism and contempt for Eliot Spitzer for how his investigation, as trivial as it was, so consumed AIG’s management at possibly the most important time in its history — and for nothing more than a few cheap headlines.

The whole thing is worth a read.

Love and Greed

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Watching Wall Street (for the umteenth time) this week had me thinking about my last post and our Great Recession. Conservatives accurately lay the blame at the feet of liberals who forced banks to loan money where it should not have been loaned in the interest of “fairness.”

Liberals lay the blame at the feet of greed, capitalism, lax regulation – or all of the above.

But greed and capitalism are not the same thing – although liberals will assert otherwise; if not in their words, then certainly in their policy making.

While greed is a necessary element of capitalism, as attraction is to procreation, the villain in this Great Recession is not greed or capitalism.

In Oliver Stone’s Wall Street, Gordon Gekko’s “Greed is Good” speech to the shareholders of Teldar Paper is widely celebrated and at the same time offered as a cautionary tale respectively by proponents and opponents of the American entrepreneur’s quest for profit.

Having heard it again in its entirety, I was reminded of another famous passage, misused and misunderstood by those who would unintentionally, or intentionally as it were, twist its meaning by ignoring it’s full context or deliberately plucking it therefrom.

Exhibit A: “Money is the root of all evil” which is derived from scripture. Observe it however, in full context:

1 Timothy 6:10 (KJV) [emphasis mine]: For the love of money is the root of all evil: which while some coveted after, they have erred from the faith, and pierced themselves through with many sorrows.

Exhibit B: The infamous and polarizing “Greed is Good.” Now, behold the famous passage from Gordon Gekko [emphasis mine]:

Well, ladies and gentlemen, we’re not here to indulge in fantasy, but in political and economic reality. America, America has become a second-rate power. Its trade deficit and its fiscal deficit are at nightmare proportions. Now, in the days of the free market, when our country was a top industrial power, there was accountability to the stockholder. The Carnegies, the Mellons, the men that built this great industrial empire, made sure of it because it was their money at stake. Today, management has no stake in the company!

…

The new law of evolution in corporate America seems to be survival of the unfittest. Well, in my book you either do it right or you get eliminated.

…

The point is, ladies and gentleman, that greed — for lack of a better word — is good.

Greed is right.

Greed works.

Greed clarifies, cuts through, and captures the essence of the evolutionary spirit. Greed, in all of its forms — greed for life, for money, for love, knowledge — has marked the upward surge of mankind.

And greed — you mark my words — will not only save Teldar Paper, but that other malfunctioning corporation called the USA.

Thank you very much.

As an aside, read it again.

…and pretend he’s not speaking in 1985.

Now there have been plenty of bubbles and subsequent crises where unchecked greed coupled with insufficient regulatory oversight or intervention led to systemic havoc and widespread suffering.

This just isn’t one of them.

Only the federal government led by ill-informed “visionaries” can create a crisis this wide and this deep. More of the same can not and will not restore our economy.

It’s high time the other 53% of us came to grips with that fact.

Past Performance is No Guarantee of Future Results

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…as they say in every investment ad and prospectus.

But hopefully this time it offers tuition for those that would rebuild Wall Street. Again.

Wall Street, or what remains of it, has dealt a catastrophic blow to its reputation in the past eight months of bonuses, bailouts and bankruptcies. What its current leaders, and the young who are lucky enough to be entering business, have to do now is begin rescuing and restoring that reputation.

This will, in fact, be the great work of a generation of American business leaders.

More is at stake than their standing. At stake is the standing of a free-market system that has flourished since America’s founding and made it the wealthiest nation in the history of man.

Peggy Noonan likens these days to those not so long ago when Wall Street was literally rebuilding itself after an unprecedented disaster.

Those days offer hope to those that would count Capitalism dead. They serve as a blueprint for redemption for those vilified justifiably, or more predominantly in this left-dominated environment, those vilified for the sake of political opportunism – lest this crisis be “wasted.”

And so the next morning, Monday, Sept. 17, 2001, the New York Stock Exchange opened with a podium full of firemen, cops, emergency medical workers and elected officials. A Marine Corps major sang “God Bless America.” There was silence. Then a Port Authority police officer, one of the last guys to come out of the pile, began to ring the bell. The others on the podium joined in. And as the bell rang out in triumph, the traders on the floor began to cry and cheer and shout themselves hoarse. Catherine Kinney was below the podium. “Was there a cheer—oh my God, you wouldn’t believe. I cried, I did. And prices start to go across the tape . . .”

America was open for business again.

It was a great moment in Wall Street history.

I dare say, despite speaking from the bottom of a metaphysical crater this time, that Wall Street has had a great many more good days than bad, for all Americans.

Can I Beat the Stuffing Out of Frank?

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This crisis will not be wasted – especially since he created it.

I can’t even pretend to be surprised by these scumbags’ designs to socialize America any more:

In comments before testimony from both Treasury Secretary Tim Geithner and Fed chief Ben Bernanke Tuesday, Frank said he wants to regulate pay on Wall Street — even for companies that aren’t getting bailouts.

Frank, one of the chief architects of the housing mess that’s brought us so low, isn’t satisfied merely with pretending he and his Democratic pals aren’t to blame for all this. No, exploiting voter anger over the now-infamous AIG bonuses, he also wants to dictate to American capitalism what it can earn and what it can’t.

This is the kind of thing that normally happens in Third World countries ruled by tinhorn dictators, or in fascist states, where the democratic rule of law has collapsed. Not the U.S.

Yet, that’s where we find ourselves today, isn’t it? Democrats in Congress, who steadfastly rejected virtually all efforts to reform Fannie Mae and Freddie Mac as they went on the wildest, most irresponsible lending binge in the history of finance, now pose themselves as the saviors of fallen capitalism.

The hypocrisy is nothing short of stunning.

Click through and read the whole thing. Liberals are doing everything they can to destroy our country from within.

Guns and Hoses

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Americans are pissed – and rightfully so – that taxpayers got shafted in the AIG debacle, 90% tax rates and givesies backsies notwithstanding. Wait’ll ya see what happens when there’s a burglar outside or a fire burning inside their home…

…and no one shows up.

…we are just starting to see the unraveling of public pension systems that could well shake some of society’s basic foundations. Policemen, policewomen, firefighters, teachers and other public employees form the backbone of society. Many of these people happily take jobs offering lower wages in return for the psychic income of public service and, of equal importance, the financial income of a generous pension when they retire.

…expect a wave of [municipal] bankruptcies over the next decade as municipal pension plans get washed away by a tsunami of demographics and breakthroughs in longevity. In New York City, the average policeman retires at full pension at 48 years old and can expect to be paid over $2.1 million during the remainder of his life. In Houston, city workers can retire at full pension at 45 years old.

A generation of politicians agreed to absurd promises to public workers because they knew it would be some other politician’s problem.

And to whose feet shall we lay the blame for this?

Conservatives?

Not so much. Try again.

Just Say “No”

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…but not to That One That Won, comrade.

The captain of the USS Jimmy Carter II is painting opponents to his plans to Socialize America with a broad brush as if Republicans are the villains in pointing out the flaws in his plans for the bankrupting of America Federal budget.

President Barack Obama said he won’t scale back his plans to revamp the health-care and education systems in his proposed $3.6 trillion budget and challenged Republican critics to do more than “just say no.”

They should say “Thank You.”

Thank you Mr. Obama for demonstrating to America so quickly and efficiently why we don’t usually have Democrats in power during an economic crisis and thereby restoring America’s short memory.

Thank you Mr. Obama for making George W. Bush look like a fiscal conservative by comparison.

Thank you for making me forget about my athlete’s foot fungus by starting my hair on fire.

Obama, gearing up for a fight in Congress over his fiscal 2010 spending blueprint, met privately with the chairmen of the House and Senate budget committees before issuing a public rebuttal to Republicans who have criticized his plan as including too much spending at a time when deficits are ballooning.

Silly Republicans. You picked a fine time to grow some cojones. Quit worrying so much about fiscal responsibility and living within our means and focusing on the crisis at hand rather than thirty years of pent-up liberalism.

“‘Just say no’ is the right advice to give your teenagers about drugs. It is not an acceptable response” to economic policies “proposed by the other party,”

…unless their timing is monumentally assenine and most Americans are against them.

“The American people sent us here to get things done and at this moment of enormous challenge, they are watching and waiting for us to lead,” he said.

…and they will be waiting a long time it appears. Picking up where the last liberal majority left off is not leadership – especially given the current environment.

I think our junior President might be surprised to find that those “things to get done” didn’t include a much larger government, policies that amount to kicking the can further down the path and a crippling national debt.

So stay out of the way Republicans. It’s Barack and his posse’s turn to screw our kids.

Unlikely to be Particularly Effective

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Leave it to an economist to emit understatement so monumental as to be particularly humorous.

Several economists have said the stimulus package will not meet the administration’s goal of saving or creating 3.5 million jobs by the end of next year because the final package was smaller than expected and contained several provisions that they say are unlikely to be particularly effective.

…which is to say our misguided federal government is going to keep borrowing and spending; not because it will prove to be “particularly effective,” rather because that’s what liberals do.

Sort of reminds of the old saying “the beatings will continue until morale improves.”

The Seed of Recovery

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I have a theory; a hunch is a better moniker, that our economic recovery will germinate from a small and isolated seed of confidence. To paraphrase, extrapolate and else wise apply the teachings of a favorite advisor and author of mine, Nick Murray, our economic recovery’s timing is unknowable, it’s manifestation inevitable.

We can undeniably trace the origins of our current crisis to a seed delivered to the fertile soil of our economy via a turd laid by liberal Democrats of the Carter era, and germinated by the blue thumbs of the Clinton era. My hunch is that our nation’s, and in turn the world’s economies will be restored in much the same way.

That seed however, will be seemingly small and insignificant in its time but will retrospectively be shown to be the beginning of the end of the worst crisis since the Great Depression.

I could be; probably am wrong – but this morning I read this…

Stocks Post Best Rally of 2009 on Improving Citigroup Outlook

Citigroup Inc. said it was having its best quarter since 2007, spurring speculation the worst of the banking crisis is over. Treasuries fell, while oil and copper gained.

and this…

US Consumer Confidence Edges Up in March

…it occurred to me that this is a very large, visible bank exhibiting a rare and precious commodity of late: profits and optimism and at the same time consumer confidence exhibits a slight, if temporary uptick.

Now don’t be fooled for a moment into thinking that our nation’s financial crisis is going to vanish overnight. Rather, be prepared for multiple fits and starts – to reuse the President’s recent and widely panned phraseology – but I believe, even if this is not that seed, a future forensic analysis of our inevitable recovery will reveal an initial catalyst such as we have seen today.

An ever-so-slight restoration of confidence will lead to a loosening of lending and spending which at the same time will allow real estate and the financial markets to establish their lows in earnest.

An excruciatingly slow, uneven but evident march to recovery will ensue.

And the World will breathe a collective sigh of relief.

Or…

…none of the above is coming and we’re all screwed.

I suffer from Optimism, despite all it’s flaws and blind spots, so I’m going with the former.

…for now.