Just Who IS In Charge?

President Obama is scheduled to give his State of the Union address tonight. I will probably watch, but I'm not sure why. He is not in control of the economy. He wants everyone to think he is. He talks like he is. The reality is different.

If Obama were really in control then careless posturing by Sen. Chris Dodd about privitizing banks wouldn't send stocks into a tailspin.

If Obama were in control they wouldn't have passed an enormous spending bill so complex that no one was able to read it before having to vote on it.

If Obama were in control his administration wouldn't feel the need to respond to criticism from Rick Santelli.

If Obama were in control he wouldn't have to hit the road to drum up support for his programs. The press would be doing it for him.

If Obama were in control he wouldn't have been caught off guard by so many of his cabinet picks being sunk by various corruption charges.

If Obama were in control we would not have so many Democratic members of Congress under investigation for various corruption scandals.

But the fact of the matter is either that the Obama who we voted into office in November is NOT the Obama who took office, or he is completely unable to do his job. Neither one is acceptable.

But the fact of the matter is this: there is no one clear voice from Washington calling the shots. There is no clear leadership. Obama is going one way, while Pelosi, Reid, Dodd, and Schumer are going their own ways. Tim Geithner is falling flat.

It's almost as if none of these people have met to come up with any coordinated plan. No one is in control of the message. It's almost as if they are purposely trying to break the economy down further.

I'm not one of those conspiracy theorists who believes that they're doing this on purpose in order to keep us scared enough to accept further hidden social restructuring (even Schumer was surprised by some of the provisions in the stimulus bill and vowed to roll them back). The thought has crossed my mind, but 2010 is not that far away. If they don't want to get thrown out of office they need to show clear progress by then. They would be foolish to dig themselves too deep of a hole.

But if they don't get their act together that is precisely what they will do. And they can ignore or belittle Santelli as much as they like, but they're failing to recognize what he started. Yes, HE may be a former commodities trader--a so-called poster boy for everything that went wrong with the economy--but his frustration is universal. There are a lot of people who are upset with how things are going and what the Administration is doing about it.

I am one of them. I am NOT a commodities trader. I'm a business systems analyst. I bought a house three years ago right before the top of the bubble. I had mortgage brokers encouraging me to buy bigger houses, but I knew what I could afford. I didn't bite. I didn't gamble on an adjustable rate mortgage to get more house. I knew what my budget was, and I knew how much of a house payment I could handle. I paid 20% down.

I save close to 15% of my income each year. I pay my taxes without complaint. I do not carry a balance on my credit cards. I live within my means. In short, I am responsible.

And I've had it with the government propping up all the irresponsible people. Because of all the irresponsible people I'll be losing my job soon. I am not happy about that. I am not happy to see nearly $800 billion dollars--only about 10-20% of which is actual stimulus--added to the public debt in my name, while the bulk of it is actually to appease Democrat supporters and advance socialistic agendas. Frankly, the mortgage rescue is the least of my concerns.

I'm concerned about a government that seems to have lost its mind. I'm concerned about an administration that can't control its message or its people. I'm concerned about a future that not even the people who sold us this stimulus mess will go on record saying will get better soon.

And that's probably why I don't want to listen to Obama tonight. I'm already depressed. I don't need to feel any worse.

Clinton Thinks Obama Doing Fine But Needs More Optimism in Message

From ABCNews.com:

Former President Bill Clinton gives President Barack Obama an "A" grade for his first month in office, but tells ABC News that Obama needs to put on a more positive face when speaking to the American people about the economy and must keep pressure on Republicans who try to obstruct his plans.

I'd argue on the "A" personally, but then I'm not Bill Clinton. But Clinton continues...

"Look, the American people, I think, know the president has tried to reach out to Republicans," Clinton told ABC News' Chris Cuomo. "And it takes two to tango. I think there are some of them who really believe that just-say-no politics is good politics.

"It was -- briefly, only briefly -- in the '90s. It isn't anymore," he added. "So, sooner or later, I think if he just keeps chugging along, just keeps the door open, invite 'em to every economic conference, invite 'em to every meeting, eventually, he'll start getting some votes" in Congress.

You're forgetting something, Bill. Add "listen to them and use their ideas" and you'll have a winner. Just inviting them isn't going to do the trick if they still feel it's only for show.

On the other hand, even that is more than the Congress Democrats have been doing.

Eh? What's That?

A few days ago when the stock market was rallying the headlines indicated it was rallying in anticipation of the Stimulus Bill's passage and the Bailout Plan being revealed.

So how come today, when both actually occur, stocks are tanking? Even the headlines blame it on these events:
Stocks Tumble as Bailout Plan is unveiled (MSNBC).

At any rate, let me get this straight. Congress is looking to spend as much as $839 billion, and this bailout plan will cost $1 trillion? We're not talking about the same money, are we? Where is all this money coming from?! We're talking about a 10-20% increase in the national debt load here, folks!

According to this source, the total value of mortgages in the US is about $3.6 trillion. So we're already half-way to buying back every mortgage in America. In fact, as someone where I work was saying yesterday, why don't we do just that? Instead of all this crap they're proposing, why don't they pay off all the mortgages on primary residences?

Consider that. I'm currently paying about $800 per month on my mortgage. If I suddenly didn't have to pay that I would probably invest much of that and spend the rest on stuff. Both moves would stimulate the economy. Now multiply that by every mortgagee in America. That, folks, would be stimulus. Plus the banks would be able to close out the books on the bulk of their bad mortgages at the same time they'd see a massive influx of cash. That would free up credit.

Americans wouldn't have any mortgage interest to deduct on their taxes. Tax revenues would increase. Many people might just roll their current mortgage payment into buying up some of the depreciated and un-sellable houses currently on the market. That would stimulate demand on housing and raise property values again, further stimulating credit and the economy.

Yes, I'm sure I'm oversimplifying, and there would be other consequences (ie. banks also writing off good loans that would have earned the 100-150% returns over time, and perhaps inflation from the sudden supply of money when production is actually down), but I don't think it's any more lame-brained than what we're currently being force-fed. If we're going to put the country that far into debt, we may as well do something that increases the likelihood of getting back OUT of debt as soon as possible.

I don't see how my plan is any worse than what we're getting.

We Have Nothing To Fear But Fear Itself

Fear sells. We all know that. Salesmen especially. I've had salesman after salesman, selling vitamins to vacuums, use fear to peddle their product. Our environment is poisonous, and our food is losing its nutrition value. We need super-vitamins to survive. There are dustmites everywhere, and they'll kill you! Buy our vacuums. When people don't already have a need for something, create that need. Fear sells.

So what do you do if you're the candidate of hope and you've got a major expenditure to sell? Drop the hope, pump up the fear:

"A failure to act, and act now, will turn crisis into a catastrophe."
-- President Obama, Feb. 4.

Catastrophe, mind you. So much for the president who in his inaugural address two weeks earlier declared "we have chosen hope over fear." Until, that is, you need fear to pass a bill. (Charles Krauthammer, Washington Post)

The lead story on MSNBC.com today is jobs: Worst Job Loss Since '74. Meanwhile the Dow is up 174 points. Wall Street has taken a nasty beating, so I don't know why they would be unduly optimistic at this point. But if you look over the last six months you'll see the markets have largely flattened out. We're bouncing around between 8000 and 9000. We've spent about four months in that range now. This would seem to suggest a bottom.

In short, things may be poised to start getting better. So act now, before the Democrats lose this golden opportunity! Pay no attention to the good news coming in. Things are BAD! Trust us on this! We're the politicians that, through our economic ineptitude, brought you this recession in the first place! We KNOW what we're talking about (this time)!

I've said it before. Now could very well be the time for our leaders to boldly stand up and do nothing!

I Can't Afford To Take That Job

Here's an angle on the economy I hadn't considered: Because of the housing bubble, people can't afford to move to where the work is.

More than one hundred thousand Americans have just lost their jobs. According to psychologists who study happiness, that is the most miserable experience many people will ever endure. Getting back to work is the best medicine. For thousands of workers and their families, getting back to work means packing up and heading to a new gig in a new town. But many will find it difficult even to consider a move. Because it's tough to sell a house you could never really afford in a town now bleeding jobs.

Show-me State

Megan McArdle addresses her commenters who claim it should be up to the opponents of the Stimulus to prove it won't work.

Her response:

Let's recall that the evidence for this kind of stimulus working in this kind of situation basically rests on a single instance (World War II)--the other two times it was tried (Japan in the 1990s and America in the 1930s) the economy basically rolled along in the doldrums for the rest of the decade.

Proponents say that that's because there wasn't enough stimulus, which is possibly true, but not really satisfying, because first, how do we know this package is enough, and second, that leaves us with a belief in the virtues of stimulus that is essentially non-falsifiable. We might as well move macroeconomic policy to the Office of Faith-Based Initiatives.

Amen, Sister!

As I keep saying, this isn't about Stimulus, it's about "Getting Our Way--Finally!" It's not a recession to these guys. It's Christmas!

The Senate was supposed to inject some sanity into the bill. Instead they're injecting more spending. At this rate our only hope is that they get this thing passed and signed before it gets any bigger.

I applied for a job with a government contractor yesterday. I hope I get it, as the government seems to be the one industry that is NOT cutting back.

Bi-Partisan Cooperation...But Not Today!

The House passed the Stimulus Bill over unanimous GOP dissent. Eleven Democrats also broke ranks to oppose it (including the one from my district--kinda makes me wish I'd voted for him).

It'll probably pass the Senate, too, but it'll be obvious that the Democrats will own this one, whatever happens. Obama had better pray this works, or else it'll go down in the history books that his first significant act was to blow his political capital to further trash the economy.

"Don't Just Do Something, Stand There!"

John Stossel has an article in the Weekly Standard making the case that there is no reason for the panic we're seeing over the economy right now:

But people are losing their jobs! President Obama frets that "the unemployment rate could reach double digits." Yes, that would be bad, but in the recession of '82, it reached 10.8 percent. Yet no one even remembers the "crisis" of '82. Today's 7.2 percent unemployment rate is higher than we've grown used to, but we've experienced that rate 16 times over the past 35 years. And it pales in comparison to the 25 percent rate of the Depression era.

"The bad news is that our economy is broken and there is nothing the government can do to fix it," economist Peter Schiff told the Wall Street Journal. "The free market does have a cure: It's called a recession."

Have we become so fragile that we can't handle any recession? The 11 recessions since World War II are part of the "creative destruction" that ultimately drives our economy, yet today politicians act as if they can insulate us from pain with bailouts and "stimulus packages."

Or, to quote from my favorite quotable movie: "Life is pain, Highness. Anyone who says differently is selling something."

I don't want to make light of the problems many people are facing right now. And I say this as someone working in a company that has announced pending lay-offs. But the government has been throwing money at the problem with no visible result so far. I don't think solution at this point is "More cowbell!"

We're in this mess, as someone pointed out, because people have gone havily into debt to make questionable investments and spend as if the bill will never come due. So why would the answer be to go heavily into debt to make questionable investments and spend as if the bill will never come due? I've only got an MBA, mind you, so perhaps I'm just not smart enough to see it.

I don't mind the government putting out a safety net to help those in need. I may be relying on that net myself in the next few months. But as someone who has scrimped, saved, and spent responsibly I'm still waiting to see a reward for positive behavior. And I'm not seeing that much of a punishment for bad behavior, either. In a world of no consequences one should not hope for change.

Do As I Say, Not As I Do

If you want taxpayer money, be prepared to grovel. Unless, of course, you're the government. First, we have this:

This week, the automakers are going out of their way to show deference to lawmakers and a willingness to flog themselves for past mistakes. “I think we learned a lot from that experience,” Ford CEO Alan Mulally told The Associated Press in an interview.

Mulally said he’d work for $1 per year if his firm had to take any government loan money. The company’s plan also says it will cancel all management employees’ 2009 bonuses, scrap merit increases for its North American salaried employees next year, and sell its five corporate aircraft.

So why shouldn't we have this?:

So in a show of good faith, I would like to see our federal leaders take the lead in fiscal accountability by refusing to accept a salary until, as they've demanded of the automakers seeking a bailout, they can demonstrate a plan to bring their enterprise into the black and repay their debt. Until then, Congress should just be grateful that, like the fat cat executives that they castigate, their pay is not determined by their performance, and avoid drawing undue attention to the fact with their hypocrisy.

I hadn't thought about it this way before, but I have to agree. If the Federal Government wants to lecture companies on poor performance, greed, and excess at the top, they should be required to look in the mirror and hold themselves to the same standards.

The Chicago Way? Not Today.

President-elect Obama has supposedly told his friends in Illinois not to expect any favors:

"Part of the charge [of the budget team] is to make sure that we are proceeding on projects and investments based on national priorities and not based on politics. Now you mentioned, sort of, my friends. I want to be clear friendship doesn't come into this. That's part of the old way of doing business.

"The new way of doing business is, let's figure out what projects, what investments are going to give the American economy the most bang for the buck. How can we protect taxpayer dollars so this money is not wasted; restore a sense of confidence among taxpayers that when we spend their money, it's on things that are actually gonna improve their quality of life; create the jobs that are so desperately needed; help to spur on economic growth and business creation in the private sector? That's all part of the new way of doing business."

Good for him.

Watching as he has rolled out his administration picks, and listening to the media report it (and the lefties scream), it appears that he really does plan to be more moderate than anyone would have suspected. While I'm not terribly fond of Hillary Clinton, foreign policy is one area she's more acceptable to me than many others he might have picked. In the election she was one of the more hawkish Democrats on national defense.

I also think that ignoring the media calls for him to unveil a team and a plan immediately to stabilize the economy was a good move. He only took a week longer than they wanted, and it's obvious to me at this point that one week is not going to make a real difference. Any gains he might have made by announcing earlier would have been psychological, and would have evaporated quickly if they hadn't been backed up with real substance. What he's showing so far is caution, but not indecisiveness.

I'm still holding judgment until he gets into office, but so far I'm not frightened by anything he's doing. I even find some of what he's doing encouraging.

Not-So-Good Economic Predictions

Don't count on the economy improving very quickly. According to Forbes.com:

The recession will continue until at least the end of 2009 for a cumulative gross domestic product drop of over 4%; the unemployment rate will likely reach 9%. The U.S. consumer is shopped-out, saving less and debt-burdened: This will be the worst consumer recession in decades.

They summarize a series of articles, all pointing to things getting worse before they get better.

Have a nice day!

Reality Check?

Stocks are down today, and the AP is attributing it to unease over Obama's presidency. (hat tip Instapundit)

I realize people don't like the economy as is, and it did get better under Clinton, but as a general rule, liberal policies are not business friendly. This shouldn't come as a surprise to anyone. Obama should spell out his economic plan in detail soon or we won't see much recovery until after his inauguration.