Friday, March 06, 2009

The First 100 Days

It appears that Obama's first 100 day, that period when the President's program meets very little resistance in Congress, is over. And it took less than 46 days. That Obama really works fast. At this rate he may very well get his ten year Presidency done in less than four years.

The Senate, tied up in a fight over a huge omnibus appropriations bill, will have to pass a stopgap spending measure Friday in order to avoid a partial government shutdown.

The Senate worked late on Thursday trying to pass the $410 billion appropriations bill, which was denounced by Republicans — and a handful of Democrats — who said it was bloated and filled with wasteful, pork-barrel spending projects. Democratic leaders were forced to postpone a final vote on the measure until Monday under pressure from GOP senators who complained that Democrats hadn't allowed them enough opportunities to offer amendments.

With the vote postponed, senators need to pass a stopgap spending measure by midnight Friday to prevent a shutdown of most domestic agencies. Midnight is when a temporary law that keeps the government in business, mostly at 2008 levels, expires.

Before canceling the vote, Majority Leader Harry Reid, D-Nev., said he was one vote short of the 60 needed to close debate and free the bill for President Barack Obama's signature.

Democrats and their allies control 58 seats, though at least a handful of Democrats oppose the measure over its cost or changes in U.S. policy toward Cuba. That meant Democrats needed five or six Republican votes to advance the bill.
Finally. Some resistance to this porkapalooza. And what ever happened to Obama's promise of no ear marks? I'll bet he had his brain crossed behind his back when he said that one. He had to do it that way though. His hands were on the table.

So what are the people of this country mad about? Well the spending sure. But what spending specifically? The spending on banks. No not river banks. Banks that handle money.
The White House dispatched its economic team Tuesday to defend the administration’s $3.6 trillion budget in hearings across Capitol Hill.

They ended up spending hours defending the billions spent bailing out Wall Street banks instead.

Tuesday’s eruption of bipartisan economic anger illustrates how bailout fatigue and daily market terror threaten to overtake President Barack Obama’s economic plans, the keystone of his new administration.

Indeed, even as Treasury Secretary Timothy Geithner, Budget Director Peter Orszag and Federal Reserve Chairman Ben Bernanke testified, the stock market continued its bearish run, dropping another 37 points from the 12-year low it hit Monday.

In two of three Hill hearings ostensibly focused on the new budget, lawmakers on both sides of the aisle instead slammed the nearly $1 trillion spent to rescue the country’s struggling financial system.

“It’s hard to understand for a lot of families when they keep seeing things get worse and we’re still pouring money there,” said Sen. Patty Murray (D-Wash.).
Yep. The old "they are pouring my money down a rathole and I have no say in the matter" problem. Evidently raising taxes on business and high earners has not given the markets a sense of confidence. After a one day respite the markets have returned to their free fall mode and it isn't even spring yet. Down 281 points yesterday to close at 6,594.44. Actually that is not too bad. It is roughly a 28% loss in 46 days. At that rate it will take a year and nine months more for the market to get down to 66 points. So we have a lot to look forward to in the next year and some before the 2010 election.

We are so lucky to have elected the Smartest President Ever™. And with the help of Dodd, Frank, Pelosi, and Reid we will end this period of economic decline and enter a period of stagflation. I have to tell you though I do appreciate a politician who keeps his promises. He promised to loot the taxpayers and screw business. And he is doing exactly that. And don't forget "sharing the wealth". He is doing that. He just neglected to say who he was going to share your wealth with. Robbing from the poor and giving to the rich has always been a popular program, especially among Democrats.


LarryD said...

H/T to Daily Pundit via Instapundit

[WSJ] Bill seeks to allow FDIC to borrow up to $500 Billion.

[Countercolumn] It [FDIC] cannot absorb the Citigroups. It cannot absorb the Bank of Americas. One of these would wipe out the fund. Once FDIC was wiped out it would cause a run on the others. Congress would have to authorize another 500 billion or a trillion overnight to make good on FDIC promises and recapitalize FDIC.

And then there is AIG:
[via WSJ]"Essentially, AIG got into the business of insuring much of the world’s financial system against the consequences of a global financial meltdown. It turned out to be incapable of delivering on that insurance—no private company could deliver on it, which is one reason why AIG’s business of selling credit default swaps was a scam. And so government has stepped in as the ultimate insurer."

And the nationalization of the GSEs has driven investors away from the banking sector entirely.
"Mr. Miller, whose Legg Mason fund owned 53 million Freddie Mac shares last June, outlined his own criticism in a letter to investors near year-end: "The contradiction was that the government repeatedly said financial institutions needed more capital, and that it wanted private capital to solve the problem. But the government also indicated that if it needed to provide additional assistance in the future, then shareholders who had provided capital should be completely or mostly wiped out."

Let us acknowledge that there was no good solution, just as there isn't for Citigroup (another sad story, in which both managers also own sizable stakes). Washington has stepped up mightily with guarantees to protect depositors and creditors, allowing financial firms to stay in business regardless of any technical concerns about their solvency. But its message to bank shareholders was fatally mixed, with the result that regulators repeatedly have been impelled to take costly actions in response to a swoon in bank share prices that itself was driven by uncertainty about government actions.

Upshot: Investors don't have to put their money in any particular company's stock, or in stocks at all -- and the wholesale flight of investors from bank stocks has put almost the entire weight of recapitalizing the financial sector on the taxpayer.

As Mr. Lampert puts it, "These companies need to be investable. Citigroup survives as a company but it's not investable. Running a company to create value -- the government doesn't have any notion of that."

He adds that he means investors won't put up money if they don't have clear rules and assurance that regulators won't unreasonably damage their investment, and that boards won't abandon their basic duty to stockholders. And you only need to see the deepening hole that AIG has become to appreciate his point that government control, however well intentioned, is unlikely to do a better job of extracting value from an asset than properly incentivized private management.

M. Simon said...

Thanks Larry!

We are so screwed.