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Van Jones Bitterly Wraps It Up At the White House

Posted by Kenneth Hanson on Sunday, September 06, 2009 2:09:26 PM
In his letter of resignation, Obama's "Green Czar" stated the following: 

On the eve of historic fights for health care and clean energy, opponents of reform have mounted a vicious smear campaign against me. They are using lies and distortions to distract and divide.

Yes, that forged signature on the “Truther” petition should have been our first clue!  Oh that's right, he said he signed it but didn't read the whole petition.  Right.  It is amazing in this day of YouTube how lame this sort of response is.  Anyone can go out on the web and watch not just his public speeches but can watch videos produced by the groups he has founded or runs.

The guy is a far-left bomb thrower.  Like Obama, he is a community organizer. He is self described Communist and Black Nationalist that promotes the most virulent urban myths in minority communities.  Last year, as executive director of the Ella Baker Center for Human Rights, an Oakland, California based community organizing group focused on “eco-justice”, he said the following:

…the white polluters and white environmentalists are essentially steering poison into the people-of-color communities, because they don’t have a racial justice frame.

How do you square Valerie Jarrett’s statement just one month ago that team Obama had been tracking Van Jones’ work for a long time and they were thrilled to be able to get him into the administration with yesterday’s assertion that Van Jones represented a failure in the vetting process?

The answer seems obvious.  The administration knows exactly who Van Jones is and what he represents.  It is just that none of it seems radical in the world of Obama, until it plays out in public.  There are lots of people with these fringe views in the Obama administration.  Even worse, many are one of the almost 3 dozen extra-constitutional czars and their staffs which have virtually no accountability.

When Obama broke into the Illinois state senate his mentor was Alice Palmer, a self-described communist who had attended communist party meetings in the Soviet Union.  Obama and most of his closest advisors grew up in the world of radical Marxist-influenced south side of Chicago politics.  You and I would recoil in revulsion at the thought of having frequent Obama dinner guest Rashid Khalidi in our homes.  But for those like Valerie Jarrett all this seems perfectly normal.  It’s the fish don’t know they’re wet syndrome.  It is why they are constantly surprised by the way a majority of Americans react to the administration.

Not to go “all McCarthy”, but one wonders how many people there are in the administration that are “Truthers”, or self-described communists.  Obama’s job approval has fallen farther and faster than any president since Gerald Ford pardoned Richard Nixon.  One of the reasons I believe they keep misjudging the mood of the country is that too many in the White House have beliefs that probably only about 5% of the most liberal people in the country agree with.  After running as a centrist, he has governed from the far left in a country where the number of people that self-describe as being conservative outnumber those who describe themselves as liberal by almost 2 to 1.  

The administration seems confused and unable to comprehend why "the mob" doesn't want what they want.  Maybe they'll learn from this, but so far there is no evidence that they get it.

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Obama White House Consolidating Power Over Economy

Posted by Kenneth Hanson on Monday, April 06, 2009 8:04:09 PM
It has been widely reported for some time that Goldman Sachs has been ‘negotiating’ with the Obama administration to give back the TARP money they don’t need and don’t want.  The Democrat’s interference in Goldman Sach's business is killing their ability to compete.  I couldn’t figure out what needed to be negotiated.  Just write Obama a check.  Writing in the Wall Stree Journal, Stuart Varney discussed a "prominent bank" that I assume is Goldman Sachs, which was trying to give the TARP money back but the Obama administration is refusing to take it.  

Now it is clear what "negotiate" means.  Obama, Rahmbo and his band of liberal thugs are threatening Goldman in not too subtle ways that they better keep the TARP money, “or else”.  It seems entirely plausible that Obama wants to control the banks as long as possible to turn them into the vehicles of Democrat political patronage like Freddie and Fannie have been for decades – rewarding their supporters and punishing the non-believers.  The House last week passed a bill that will regulate not just the top bank executives but every single bank employee.  Paul Krugman seems to believe that anyone making more than $75,000 should be in jail.

At the end of December there were about 250 banks on the FDIC’s list of “troubled” banks that are significantly undercapitalized.  Most of these are smaller, community banks that will have to be closed and absorbed by stronger regional banks.  This is relatively small number out of the almost 10,000 U.S. banks.  But these banks are not the ones holding TARP funds.  Most of the banks receiving TARP funds were given the money because they were healthy enough to use the money to increase lending.  But while the Bush administration injected this capital for legitimate economic reasons, Obama is wielding the TARP like a cudgel to control every aspects of the banks business.

On auto front, Obama says he has no intention of running the auto companies, but then fires Rick Wagner, and mandates that most of the board of directors be replaced with a slate approved by the Obama administration.  Obama is now effectively GM’s CEO and has packed the board with the President’s loyalists.  He is dictating which brands will be retained and which ones must be killed.  How is all this not “running the auto companies”?  Obama and Pelosi’s House Politburo have no intention of getting rid of the two fleet mandate that forces GM and the other Detroit 3 to lose money building small cars in expensive UAW plants.  For all the posturing by President Obama about forcing GM into a controlled bankruptcy, I’ll believe it when I see it.  In the name of fairness why not fire Gettelfinger too?  How does serial wealth destroyer Bob Nardelli arbitrarily escape vengeance?

In a bankruptcy, a judge who is an expert in restructuring would make objective decisions based on the business and economics.  This is the last thing Obama wants.  It is about protecting the union at all costs and retaining political control of the company in order to dictate which products it will make.  The bondholders clearly don’t believe that Obama will allow GM to go into bankruptcy.  The bond bullies are refusing to take additional equity in exchange for debt.  Why should they?  A bankruptcy judge would cram the bondholders down and the union too.  But the bondholders are betting that won’t happen since the UAW loses leverage in a bankruptcy – which Obama won’t allow.  So they’re holding tough.

In an editorial last Tuesday, the Wall Street Journal opined:

Even if Chrysler merges and GM restructures, Mr. Obama wants the companies to make the kind of cars the political class favors, whether or not consumers want to by them.  “The United States of America will lead the world in building the next generation of clean cars,” the President said yesterday.  He didn’t mention profitability.  To that end, Treasury tapped Fiat’s know-how in small vehicles for Chrysler and wants to move in this direction.
It seems entirely plausible that President Obama will find a way to keep the U.S. auto companies in a Democrat purgatory just above insolvency in order to enact a leftist industrial policy.  All of this is about driving a leftist political agenda, not what is best economically.

I saw Bill Gross on CNBC last Friday.  He is the head of the world’s largest bond fund company, Pimco.  He has always struck me as apolitical.  He is a guy who wins or loses making enormous bets in the fixed income market, and he is one of the best.  I guess what I’m saying is he has to figure out what the truth is in terms of the economy to properly invest – irrespective of personal political beliefs.  He said that his believes that we are headed to a “new normal”.  This new normal will be one of extreme regulation and aggressive redistributionist policies.  He believes that although in the past our economy has been able to grow at a rate of 3-4%, this new normal will only permit growth of 1-2%.  That is a discouraging new reality.

Last year Charlie Gibson challenged then candidate Obama with the fact that his plan to raise capital gains taxes and top marginal rates would hurt economic growth and would lower tax revenues to the government?  Candidate Obama acknowledged that that was true, but answered that he would still enact those policies in the name of “fairness”.  This deep seated belief of Barack Obama that everyone should receive the same rewards without regard to an individual’s contribution is a fundamental Marxist tenant.  “From each according to his ability, to each according to his need,” said Marx.  Marxism severs any connection between contribution and reward.  

The socialist economies of Europe have not created new net jobs in a generation.  With apologies to Marx, in the real world people allowed to reap the rewards from risk taking is a powerful enabler of economic growth that benefits the greatest number of people through creating jobs and creating capital that can be reinvested in the economy.  Pro-growth policies in America created 40M new jobs in the last 25 years.  Government spending a dollar only takes a dollar away from private enterprise, through higher taxes or increased borrowing that has to be paid back, with interest.  It is a zero sum game.  Worse actually, because the dollar spent by the government is spent in a woefully inefficient way.  Only through rewarding risk-taking is new wealth and capital created.  But with Barack Obama and one-party Democrat rule we are headed to a world that many in Europe are now trying desperately to back away from.

The conservative President Sarkozy is now in power in France, attempting to stop the downward cycle of socicalist negative reinforcement.  Numerous British politicians are imploring the U.S. to learn from their mistakes and avoid the trap of nationalized, rationed health care.  Chancellor Merkle told Obama he was crazy if he thought she was going to spend stupid money on “stimulus” (“Stupid is as stupid does.”).  The Obama deficits surge to levels that are unprecedented and unsustainable.  From a historical 2% of GDP, Obama’s budget proposes deficits of up to 5% of GDP.  The majority of economists agree that deficits at 4% of GDP are economically unsustainable.  5% will be catastrophic.  All of this is even more disastrous if Bill Gross’ prediction of GDP growth of only 1-2% is correct.

Testifying before Congress, London School of Economics trained White House Budget Director Peter Ozag (who Obama promised was going to go through the federal budget line by line with a scalpel) admitted that spending and deficits at the levels proposed by the Obama administration are unsustainable.  But last week the House and Senate both passed bills that are more or less consistent with Obama’s “ask”.  Even more troubling, budget allocations for items like nationalized health care are acknowledged to be only a “down-payment”.  The real cost will be vastly higher.  But the Democrats are hurtling ahead, without time to even read their massive spending bills as they race to enact their final solution in the creation of the American welfare state. 
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Early In Term, Obama Most Polarizing President Of Modern Area

Posted by Kenneth Hanson on Monday, April 06, 2009 7:46:19 PM

http://pewresearch.org/pubs/1178/polarized-partisan-gap-in-obama-approval-historic

In a newly released Pew Research poll, Obama is now the most polarizing early term president of the modern era.  While Obama continues to be personally popular, there is also growing unrest with his radical policies.  In Europe, he was treated like a rock star, but got absolutely nothing that he sought from the G-20 leaders – a total strike out.

Polls show that in this country an overwhelming majority of Americans are concerned or downright in opposition to Obama’s policies such as growing government, increasing spending, etc. with overwhelming opposition in some areas.  There is a striking disconnect between Obama’s personal popularity and agreement with his policy proposals and actions to date.

Not helping Obama’s cause is that Nancy Pelosi’s unfavorable rating has skyrocketed to 60%, with 42% rating her “very unfavorable”.  That is an astonishingly high unfavorable rating.

To bolster his cause, the Obama administration has resurrected the Clinton White House’s approach of polling and focus group testing every phrase and message.  To this day I firmly believe that Bill Clinton had no strongly held beliefs or principles from which he governed.  He just wanted to be popular and to be a two term president.  Bush got rid of all this nonsense.  He didn’t need it since he believed in what he was doing and governed from a strong set of principles and did not govern according to popularity polls.  With Obama, he also has deeply held principles and beliefs.  But since his agenda is largely disconcerting to the center-right majority, he needs to focus group test and poll test the semantics in order to obfuscate his true intent.

Tags: obama  
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Richard Holbrook's Trifecta of Sleaze

Posted by Kenneth Hanson on Wednesday, March 25, 2009 4:19:54 PM
The Obama administration’s special envoy to Afghanistan/Pakistan is Richard Holbrook, who with apologies to Henry Kissinger and Hillary Clinton considers himself the world’s greatest living diplomat.  Just ask him.  His nickname for Secretary Clinton?  "Grasshopper".

It turns out that Richard Holbrook is the latest Democrat to have AIG entanglements.  Holbrook was a member of the board of directors of AIG from 2001 to 2008 and receiving more than $800,000 in compensation, leaving just last July.  That means that he was on the board of directors when they approved the dramatic expansion into risky real-estate credit default swaps that brought down the company and forced the U.S. taxpayers to pour $170 billion into AIG's ravenous maw to prevent a systemic economic collapse.

It that is not bad enough, it is only the beginning.  Holbrook was also a managing director at Lehman Brothers, a business so badly run that when it collapsed the Fed and Treasury could not find a buyer – even at a Bear Sterns like $2 a share.  What caused Lehman’s collapse?  The same overexposure to risky mortgage backed securities as AIG.

The kicker is that like Senator Chris Dodd, Holbrook was a beneficiary of Countrywide’s “Friends of Angelo” loan program where influential government officials and business movers and shakers were given the equivalent of a bribe in exchange for favorable treatment.

A member of the board of directors at AIG during the destruction of its business, managing director at collapsed investment bank Lehman Brothers, and a tainted mortgage from Angelo Mozillo’s Countrywide.  Now that’s what I call the Trifecta of Sleaze.  It’s a wonder Obama didn’t name Holbrook Treasury Secretary, given all the other top administration officials that are mired in charges of corruption or dubious ethics.

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Days of Our Financial Institution's Lives

Posted by Kenneth Hanson on Wednesday, March 25, 2009 2:51:25 PM

http://www.nytimes.com/2009/03/25/opinion/25desantis.html?_r=1&ref=opinion

Today a letter of resignation from one of the AIG-FP bonus recipients was published in the New York Times.  His letter is consistent with what I wrote the other day that probably 10-15 people at AIG are responsible for the CDS excesses that brought the company down - but the Democrats want to punish everyone there.  This guy’s approach of donating the bonus to charity instead of returning it to AIG or the federal government is sensible - and his frustration and sense of betrayal with how he has been treated by the company and the government comes through clearly.

A lot of these people that Obama and Congress are demonizing in the U.S. financial industry are leaving to go where our government can’t abuse them. The U.S. financial industry is one of America’s crown jewels, and the Democrats are committed to not allowing it to succeed in the future.  Vengence trumps constructive solutions.  It will be a real shame to lose our leadership in this field.

Some are ending up at places like British Petroleum, where commodity hedging is essential to smoothing out volatile oil and gas prices. Others will go to places like Southwest Airlines, who has maintained a significant competitive advantage through far superior fuel hedging strategies than the other airlines. Many companies will hire the best talent to hedge interest rate risk. The big multi-nationals need top talent who are adept at managing foreign exchange exposure.

The hedge fund industry and other private equity groups are raising capital increasing their activity after a long hiatus.  Many will go there.  Lots of talent will join foreign financial companies that are not under Barney Frank and Barack Obama’s "non-rule of law”.   The head of one of BofA’s Merrill unit had to rush to London the other day to convince a large group of talented players not to leave the firm in mass.  Like Sarbanes-Oxley, Congress and the Democrat business morality police will drive capital and talent off-shore, or into less regulated private equity ventures.  It is a real shame that the Democrats seem so committed to preventing the U.S. from maintaining and reassuming its leadership role in world finance.

BofA will start returning TARP money in April, CEO Ken Lewis announced today.  Of all the major national banks, with the exception of Citigroup which is by far the worst off, BofA needs the money more in order to backstop the Merrill Lynch deal. Unlike Goldman Sachs, which will be able to pay it back in one lump sum, BofA’s return of TARP money will take time.

When the extent of Merrill’s loses became clear before the deal closed, Lewis went to Treasury and told Secretary Paulson that he could not go through with the deal due to the size of Merrill’s loses.  Treasury very much wanted BofA to follow through.  To not do so would have meant Merrill Lynch going the way of Lehman Brothers.   The government agreed to provide temporary capital so BofA could absorb Merrill’s loses and guarantee addition losses beyond a certain point.

The bottom line is that with Goldman Sachs announcement yesterday, and BofA’s today, there will be tremendous peer pressure to get out from under TARP.  To not give the money back will now be seen as a sign of weakness, which is death in the financial services industry where so much depends on counter-party trust.

If Congress could just shut up for 5 minutes it would be a big help. If Obama could excert some actual leadership in standing up to the mob in Congress it wouldn't hurt either.

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The Obama Re-Naming Games Continue

Posted by Kenneth Hanson on Wednesday, March 25, 2009 2:26:47 PM
This week’s Obama name game replaces "Global War on Terror" with "Overseas Contingency Operations".  Well, Obama just “oversea’d” another 17,000 troops as a down-payment for the administration's non-war contingency operation.

We no longer can use the term “enemy combatants”, but Obama affirms the right to hold 600 detainees in Afghanistan without habeas corpus because these “non-enemy combatants” were captured on a foreign battlefield in hostile action during a military operation and are being held outside the U.S.  

The now “non-enemy combatants” held at Gitmo will instead be held indefinitely somewhere not called Gitmo whenever someone comes up with a plan that is not in the backyard of a congressional district.

There are no longer “acts of terrorism”, just “man-caused disasters”.

Instead of acknowledging constructive and dramatic progress in race relations in our country, highlighted by the first black president and first black attorney general, and recently the first black secretaries of state, the Obama administration has labeled America a “nation of cowards” on the subject of race.

“Toxic assets” have now been renamed “legacy assets”.

“Evil-doers” are no longer radical Islamic militants but are now bankers, entrepreneurs, small business owners and corporations.

Obama doubling the national debt in 5 years is no longer "borrow and spend" but "save and invest".

President Obama rarely misses a chance criticize Bush’s security policies, all the while continuing almost all of those policies: rendition, no habeas corpus, wiretaps, state secrets, harsh interrogation, etc.  Since Obama believes that “words matter”, he must believe renaming everything without changing the underlying polices is change everyone can believe in.  I suppose for the uninformed majority that voted for him, it is.  They just don’t have any real understanding of the facts or these policies and how politically cynical these name games are.

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Today's AIG Entanglements

Posted by Kenneth Hanson on Tuesday, March 24, 2009 6:01:46 PM

Another AIG entanglement cropped up today. It turns out that Senator Chris Dodd’s (D-CT) wife was on the board of directors of an AIG company until 2004.  

Maxine Waters (D-CA) has a similar conflict.  Her spouse used to be on the board of directors of a bank that both her and her husband have a current financial interest.  Ms. Waters recently intervened to make sure the bank received TARP funds.  This is a bank that is already under government conservatorship due to an incompetent and lavish spending management team.

How can it be allowed by ethics rules for members of committees that regulate banks and financial institutions for their spouses to be officers or directors of, or to take campaign contributions from, or to have a personal financial interest in, or get a "special" mortgage (read, "bribe") from a financial institution?

Meanwhile, I caught a bit of the Geithner/Bernake testimony to Barney Frank’s banking committee today.  Maxine Waters used her entire 5 minutes of questioning time to weave a harrowing and rather bizzare tale of conspiracy implying that Goldman Sachs was the evil “puppet master” that was secretly controlling all actions of Treasury and the Fed to Goldman Sachs ultimate financial benefit.  Geithner was not amused and told Ms. Waters he did not appreciate her insinuations.

In more AIG fun facts Barack Obama received the second largest amount of campaign contributions from AIG, second only to Chris Dodd.  Taking a few questions that other day before boarding Marine One for his Jay Leno California dreaming adventure Obama was asked about the contributions, and whether he will return those contributions.  Obama did not even acknowledge the question and moved onto the next reporter.  Perhaps for a bit of fun some intrepid reporter will ask again at his prime time press conference tonight.  I assume that the reporter from the other day will not be on the pre-selected “call-on list” that team Obama prepares for him.  Ask a tough question, and "Rahmbo" scratches you off the list for next time.

Tags: obama   AIG   Dodd  
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Goldman Sachs Starts A Snowball Rolling Downhill

Posted by Kenneth Hanson on Tuesday, March 24, 2009 5:17:47 PM

http://www.nytimes.com/2009/03/24/business/24sorkin.html?_r=3&partner=rss&emc=rss

As I have predicted, Goldman Sachs is now in talks to be the first firm to return the TARP money.  They didn’t need it and never wanted it in the first place.  With the AIG situation, and the clear intent of Congress to retroactively add what amounts to social engineering mandates, compensation restrictions and the like, Goldman Sachs has had enough.

The Times story reports:

“It’s just impossible to run our business in this environment,” said one senior Goldman executive who insisted on not being quoted by name for fear of crossing the Treasury Department.

The class warfare rage spewing from Obama and the Democrat cabal in Washington is only hurting the recovery, as banks and other financial institutions reduce their capital to get as far away from these demagogues as fast as possible.

Yesterday CNBC interviewed the CEOs of two regional community banks.  Both are healthy banks that were recruited into the TARP program in order to facilitate increased lending.  Neither of these banks has sub-prime exposure or balance sheets poisoned by toxic assets.  Both CEOs said that they will likely return the TARP funds.  One of the CEOs made the point that their executives are paid salaries that are somewhat lower than the industry average so that they can have a bonus structure that strongly incentivizes them to act in the best interest of the shareholders.  The pay restrictions passed by the House would damage this structure and make it hard for them to do business.  They’ll just have to give the money back and reduce lending by a relative amount (banks leverage up TARP capital 3-4 times in lending) – they’ll have no other choice.

What about all the vast majority of divisions in the banking and financial industry that are running health and profitable businesses, and had nothing to do with sub-prime mortgages, CDOs or credit default swaps?  They are being financially penalized too.  Let’s say are a senior manager (not an “executive”) living in New York and work at a financial institution that receives TARP funds, your salary is $200,000, and your spouse works at almost anything – teacher, firefighter, executive assistant, etc.  You now have a household income that means you cannot receive a bonus even if what you do is a million miles from the parts of the business that screwed up.  At Citigroup, the CEO says that they have purged all the bad actors.  They’re long gone.  But they’re not the ones the government is going after, only the ones that are left trying to rebuild the company and our financial system.

Meanwhile, I don’t seem to recall Barney Frank, Chris Dodd or any other of the congressional financial crisis instigators being financially penalized.  I’m sure Mr. Frank’s and Mr. Dodd’s congressional pensions are still paying out a defined benefit at 100% potential.  What about Larry Summers, who along with Robert Rubin pushed hard as members of the Clinton administration to expand the use of derivatives in the financial system?  What about Alan Greenspan whose monetary excesses helped inflate the mortgage market?  What about the former CEOs of Fannie and Freddie that committed accounting fraud and ran what amounted to a government guaranteed sub-prime hedge fund?  Where is the outrage for this band of losers?

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Challenges With Obama/Geithner Plan For Toxic Assets

Posted by Kenneth Hanson on Monday, March 23, 2009 3:04:36 PM
So for the first time, an Obama administration announcement about the economy is received positively by the market.  But tomorrow, Geithner testifies before Congress so it is too soon to know if a rabble rousing Congress will kill the positive buzz.

Nevertheless, there are three very serious challenges with the newly announced plan for a public/private partnership succeeding:
  1. Private capital is extremely hesitant to participate due to the risk that they will be retroactively punished if they make money in the program, or otherwise act in a way that Congress decides is inappropriate while they are a participant in the program.  Every source of private capital that has been asked about the program acknowledge that it is financially attractive, but that they just don’t know if they can trust Congress not to change the rules retroactively or put compensation restrictions in place that will damage their ability to compete.  In interviews the last two days, several senior administration officials have refused to say unequivocally that restrictions on profits or compensation are off the table.  The reality is that the Obama administration can’t promise that – Congress can pretty much do what they want. 
  2. The long overdue adjustment in mark to market accounting should be issued soon.  If you are a bank that is holding performing assets at 20 or 30 or 60 cents on the dollar, why would you agree to sell them to the public/private partnership when it is likely you can hold these assets without the risk of further writedowns?  In fact, it may be possible to write some of these assets up based on a mark to cash flow model.  The degree to which mark to market accounting has magnified the financial crisis is enormous.  Collateralized securities with unimpaired cash flows have been marked down severely, making the holders of these securities, or the sellers of swaps insuring against default, insolvent. 
  3. The challenge of how to price the assets remains problematic.  It is not clear if the “bids” and the “asks” can be brought close enough together to facilitate transactions.  If the bid is 30 cents and the ask is 60 cents, that is a wide cap to resolve. 
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Obama And Congress Ignore Rule Of Law, Make Everything Worse

Posted by Kenneth Hanson on Friday, March 20, 2009 4:39:49 PM

Charles Krauthammer has a terrific ability to get to the heart of the matter, and he has done so again regarding the AIG bonus flap.

Barney Frank has now introduced a bill that would allow Congress to cancel or change any legal contract or agreement they desire for firms that have received taxpayer money.  So now Barney Frank and Nancy Pelosi and Obama will be the ultimate and final arbitrators, changing or canceling legal contracts just because they want to - Hugo Chavez style?  

What about Lockheed Martin?  They are paid by the government to make the F-22, the F-35 and all sorts of military hardware.  But those darn planes sure are expensive.  Under the 'Barney Frank Contract Abrogation Bill' maybe Obama will just tell Lockheed Martin that the government is going to arbitrarily change the contract for procuring the F-22, and that Lockheed Martin still has to deliver the fighters, but will only be paid half as much.  Oh, and those rich aerospace design engineers, they cannot be paid any more than a G-12.  The executive that oversees one of the world’s most complex supply-chains, G-14, and no bonus.

All of this just makes the recovery slower and more difficult.  The Democrats keep going back and retroactively making new demands and conditions of the banks that received TARP funds.  Why wouldn't a bank refuse the funds or give the money back as fast as possible when the government continues to act in a arbitrary and capricious manner.  The result is that the extra capital will be drained from the financial system.  The only ones that will take or keep the money are those that are in such bad shape, like Citigroup, that they can’t help the economy anyway.  The healthy banks that have the ability to take the TARP capital and lever it up into expanded loans won’t do so.  This whole thing is a counterproductive farce.

And as I recently wrote on this blog, the supposed Obama/Geithner private/public partnership to soak up toxic assets from the financial system is probably DOA.  What private company would go anywhere near the government when they will be subjected to every sort of compensation restrictions, and open themselves up to Nancy and Barney retroactively changing the deal to put endless conditions on them? 

It is like the scene in "Star Wars - The Empire Strikes Back" when Lando gives up Han Solo to Darth Vader with the agreement that Lando will keep Chewie and Princess Leia.  When Vader changes the deal so that the empire will take Chewie and Leia prisoner, and Lando protests, Darth Vader growls, “Pray that I don’t change it further.”

From today’s Washington Post editorial:

The Obama administration reportedly intends in the next week or two to announce the details of a "private-public partnership" to buy troubled assets from ailing banks. The participation of private hedge funds, investment banks and other firms will be key to the plan's success. But what executive in his right mind will enter into a deal if he or she believes the rules can be changed six months or one year down the road purely on the basis of polls and politicians' fears? 

Michael Gerson in today’s Washington Post writes:

What sane money manager would want to partner with a government that blames others for its mistakes, urges the violation of inconvenient contracts and threatens to tax benefits retroactively? One Wall Street expert told me, "Even if people trust the president, they don't trust Congress." This kind of trust and confidence is essential to the next stage of our economic recovery. It is also being actively undermined by the incompetence and hypocrisy of the government itself.

From today's Wall Street Journal op-ed page:

It was not long ago that Mr. Obama assailed the Bush administration for its dangerous expansion of executive power during a complex crisis. The Obama administration's antics around the AIG bonuses suggest a similar effort to use political power to contort the law. But rather than doing so for reasons of national security, this administration is doing so to pander to an angry public. When the Obama administration and Congress flex this kind of muscle, they attach a new political-risk component to all contracts negotiated in the shadow of the bailout.

That risk may scare potential investors away from bailout recipients because they cannot trust our government's will in the face of public outrage. It destroys our moral high ground the next time Mr. Obama wants to criticize a foreign country for ignoring the rule of law by nationalizing private assets or repudiating international debt. It will certainly make Mr. Obama's task much more difficult when he tries to sell the public on his administration's ability to manage the rest of the bailout, and when he tries to sell private firms on the public-private partnership that will be needed to make the recovery work. 

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Pelosi's House Passes Unconstitutional 'Bill Of Attainder'

Posted by Kenneth Hanson on Thursday, March 19, 2009 10:50:29 PM
The U.S. House of Representatives passed today a bill that would strip the recipients of the AIG bonuses through a retroactive tax seizure.  

What the House just passed is described as a “Bill of Attainder”, and is strictly and absolutely prohibited by the constitution.  But that didn’t stop Nancy Pelsoi and the Democrat lynch mob from voting overwhelmingly for the AIG bonus seizure.  About half of the gutless Republican members joined in this abomination.  President Obama, who I seem to remember was ostensibly a constitutional law professor in a prior life, issued a statement in support of violating the constitution.

The following is from www.techlawjournal.com


Bill of Attainder

Definition: A legislative act that singles out an individual or group for punishment without a trial.

The Constitution of the United States, Article I, Section 9, paragraph 3 provides that: "No Bill of Attainder or ex post facto Law will be passed."

"The Bill of Attainder Clause was intended not as a narrow, technical (and therefore soon to be outmoded) prohibition, but rather as an implementation of the separation of powers, a general safeguard against legislative exercise of the judicial function or more simply - trial by legislature."  U.S. v. Brown, 381 U.S. 437, 440 (1965).

"These clauses of the Constitution are not of the broad, general nature of the Due Process Clause, but refer to rather precise legal terms which had a meaning under English law at the time the Constitution was adopted.  A bill of attainder was a legislative act that singled out one or more persons and imposed punishment on them, without benefit of trial.  Such actions were regarded as odious by the framers of the Constitution because it was the traditional role of a court, judging an individual case, to impose punishment."  William H. Rehnquist, The Supreme Court, page 166.

"Bills of attainder, ex post facto laws, and laws impairing the obligations of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation. ... The sober people of America are weary of the fluctuating policy which has directed the public councils.  They have seen with regret and indignation that sudden changes and legislative interferences, in cases affecting personal rights, become jobs in the hands of enterprising and influential speculators, and snares to the more-industrious and less-informed part of the community."  James Madison, Federalist Number 44, 1788.

Supreme Court cases construing the Bill of Attainder clause include:

Ex Parte Garland, 4 Wallace 333 (1866). 
Cummings v. Missouri, 4 Wallace 277 (1866). 
U.S. v. Brown, 381 U.S. 437 (1965). 
Nixon v. Administrator of General Services, 433 U.S.425 (1977). 
Selective Service Administration v. Minnesota PIRG, 468 U.S. 841 (1984). 
See also, SBC v. FCC.

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Obama's Cap & Tax Plan To Siphon $2T From Economy, For Starters

Posted by Kenneth Hanson on Thursday, March 19, 2009 4:09:57 PM
Obama economic advisor Jason Furman recently admitted in senate testimony that the real cost of the administration’s carbon cap and tax plan would be almost 3 times higher than they previously stated.  The new number?  $2 trillion.  $2T drained from the U.S. economy over 8 years, or almost $9,000 per American family!  And that is just one of many, many tax increases that are in the Obama budget.  This will provide significant downward pressure on the U.S. economy.  

In conjunction with the carbon cap and tax plan, the administration also said they are considering carbon tariffs on countries like China to “level the playing field”.  China has angrily responded that they will retaliate with trade sanctions of their own.  How does this all play out, you might ask?  The Obama administration’s plan slows economic growth and job creation, and makes us pay more for Chinese goods while lowing exports to one of our largest trading partners, while angering the country funding our country’s deficits, which Obama plans to double in 5 years and triple in 10 years.  

China has said that they are going to diversify their foreign reserve holdings (read, buy less U.S. debt) because in order for Obama to pay for his deficits, he will have to print money on an unprecedented scale, devaluing the dollar and damaging the value of China’s reserve holdings.  Quite a set of achievements for just one part of Obama’s policy agenda.

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Obama Backs Off Plan To Charge Soldiers For War Injuries

Posted by Kenneth Hanson on Thursday, March 19, 2009 4:07:13 PM
It recently came to light that President Obama was considering making soldier's private insurance pay for injuries suffered in the service to their country.  Today, after a political firestorm, Press Secretary Gibbs sprinted out to announce that President Obama has decided to discontinue pursuing the idea.  How chaotic and badly managed are things in the Obama White House for a plan like this to get so far along?  It is as politically a ham-handed move as I’ve seen in a very long time.  Where is Rahm Emanuel in this?  It is his job to protect the president from stupid ideas and stupid people. 

American Legion and VA people met with Obama in the oval office the other day to express their concern.  People in the meeting said that every time the question of whether this was “moral” or “right”, the president deflected the concern and refocused the discussion on what the administration’s “cut” would be by shifting military injury treatment to private insurers.  The head of the American Legion left the meeting disappointed and angry.  He said that the president appeared firmly committed to the idea.

Now that the idea is public, and it is clear to anyone with any sort of political savvy or sense of morality that it is an incredibly bad idea, it has been retracted.  But my question still is how does the west wing staff let something like this happen?  And what does it say about Obama that he was so firmly committed to it?

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Obama Looks Like A Kid Without Adult Supervision

Posted by Kenneth Hanson on Thursday, March 19, 2009 4:03:17 PM
Think about the “optics” of the following in light of the current economic crisis:
  • The Obamas have already thrown lots of parties at the White House and have had Earth, Wind & Fire and Stevie Wonder each perform at separate events. 
  • Obama has already signed a major book deal regarding his presidency. 
  • He flies Air Force One out to California so he can schmooze with Jay Leno on The Tonight Show. 
  • Michelle dyes the White House fountains green. 
  • Yesterday, while “Rome burned”, Obama filmed a special for ESPN filling out his NCAA tournament bracket in real-time. 
  • He proposes vast social spending and tax increases in the middle of a horrific recession. 
  • He rushes around announcing program after program that have nothing to do with the immediate crisis.  He tries to convince the country that electronic medical records are the key to recovery.  He is focused on everything but the economy. 
  • He bizarrely “outsources” the substance of the “stimulus” bill to Congress, providing almost no detailed input until it is too late.  Pelosi rolls him like a lumberjack on a log. 
  • Tim “Brownie” Geithner is still all alone at Treasury. 
  • The White House constantly seems to be stumbling in politically and operationally inept ways. 
Jon Stewart made fun of the above last week saying that President Obama looks like a kid that never had any toys and was never allowed to have any fun and suddenly has unlimited resources and no adult supervision.  I’m not saying he should be immobilized in the White House like Jimmy Carter during the Iran hostage crisis.  But I wonder if all of this won’t catch up with Obama.  The optics are not good given the economic troubles and challenges for many Americans.

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Obama/Geithner Bank Plan Probably Dead

Posted by Kenneth Hanson on Wednesday, March 18, 2009 11:59:18 AM
I’ve lost track of how long it has been since Geithner announced his plan for the financial system that was only the vaguest outline, with the promise of details to come.  There is still no plan.  But Geithner made it clear that one of key components was a private-public partnership to take toxic assets off the bank’s balance sheets.

I think we can assume that any effort involving private entities is dead.  No company in its right mind is going to go anywhere near the Obama administration and it’s one party Congress.  Every day more and more conditions are forced on banks that received taxpayer funds - all after the fact.  I certainly agree that the government has bought a seat at the table, but it is going beyond that.  All they get is abuse and Congress micromanaging every part of their business.  Retribution and social engineering trumps solving our county’s problems.

That means that the Democrat’s moralizing and demagoguery have now guaranteed that the taxpayers will have to fund 100% of fixing the mess going forward.  Companies aren’t going to touch the Obama/Pelosi/Reid with a 39 ½ foot pole.  Who needs the abuse?  

The AIG debacle has the Democrats practically eating their young.  The “Dodd Amendment” exempts AIG’s contractual retention bonuses from the compensation restrictions in the "stimulus" bill.  Dodd admits he put it in, but that it was tinkered with in committee.  Maybe it would have actually made sense to allow the members time to read the “stimulus” bill before voting on it.  Geithner was the head of the NY Fed which implemented the original AIG bailout, and has known about the bonuses for months.  Now the Obama administration is saying they just found out about the whole situation this month, never mind that Obama’s now Treasury Secretary has been up to his neck in this since the beginning.  Obama is throwing Geithner under the bus by saying he personally just learned about the bonuses last Thursday while at the same time saying he has “Complete confidence in Geithner”.  The Obama administration appears to be in complete chaos over the matter.

Instead of accepting that mistakes were made by everyone, Wall Street, main street, Congress, etc. and just focus on doing the right things to get it fixed, the Democrats are more concerned with politics and punishing the very people they need to get the financial system back on track.  I’m not sure I’ve ever seen anything more counterproductive that what Obama and the Democrat’s one party rule is doing to our country in the midst of this economic crisis.

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