Barack Obama is 'screwing up' on the economy. Be very afraid.

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posted on Feb, 12 2009 @ 09:19 AM
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The UK, my economics professor, and the markets are thinking the same thing ATS members are thinking.

blogs.telegraph.co.uk...

Barack Obama is 'screwing up' on the economy. Be very afraid.
Posted By: Iain Martin at Feb 12, 2009 at 13:35:52 [General]
Posted in: Politics , Three Line Whip , Eagle Eye

Tags:View More
Bank bail-out, Barack Obama, Martin Wolf, recession, Tim Geithner, Treasury Secretary

It's a little early to right-off Barack Obama's presidency you might think. He's only been in the post for a few weeks, there are wonderful pictures in circulation of him and his wife looking preternaturally cool like the Kennedys and he is very popular. The consequences of him failing do not bear thinking about.

So, we all want him to be the calm guy in the Oval office in the disaster movie who gets the world through a terrifying crisis. Unfortunately, real life is usually a little more complicated.

To that end, if you didn't get a chance to read Martin Wolf's column in the FT yesterday, then take the time. It makes a powerful case which is genuinely troubling.

Wolf thinks Obama may already have fluffed his biggest calls on the only subject that matters right now - the economy - and that he's in trouble.

"Hoping for the best is what one sees in the stimulus programme and - so far as I can judge from Tuesday's sketchy announcement by Tim Geithner, Treasury secretary - also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years' economic crisis, has let Congress shape the outcome.

The banking programme seems to be yet another child of the failed interventions of the past one and a half years: optimistic and indecisive. If this "progeny of the troubled asset relief programme" fails, Mr Obama's credibility will be ruined. Now is the time for action that seems close to certain to resolve the problem; this, however, does not seem to be it."

Geithner in particular has been unimpressive. When I look at him I am not filled with confidence, rather with trepidation.

Wolf has been arguing, as some of us have, for the kind of game changer which puts a floor under the crisis. In my view, reluctantly, that's further nationalisation to dramatically rationalise knackered banks, put a widely agreed price on debts and from there build a platform on which recovery becomes possible.

Instead, we are carrying out running repairs every few months (as the Japanese did disastrously in their long slump) rather than learning from the Swedes (who got the pain out of the way and could then refloat a rationalised banking system back out into the private sector).

I'll leave the last word to Wolf:

"The correct advice remains the one the US gave the Japanese and others during the 1990s: admit reality, restructure banks and, above all, slay zombie institutions at once. It is an important, but secondary, question whether the right answer is to create new "good banks", leaving old bad banks to perish, as my colleague, Willem Buiter, recommends, or new "bad banks", leaving cleansed old banks to survive. I also am inclined to the former, because the culture of the old banks seems so toxic.

By asking the wrong question, Mr Obama is taking a huge gamble. He should have resolved to cleanse these Augean banking stables. He needs to rethink, if it is not already too late."



[edit on 12-2-2009 by Dbriefed]




posted on Feb, 12 2009 @ 09:26 AM
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Amen and have they ever found a legal birth certificate on this freak...Oops!!! headed for the fema camps for sure now. Their are those that could see through the lies and deceptions before this clown ever show his pearly white teeth.



posted on Feb, 12 2009 @ 09:31 AM
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Here's part of the FT article referenced.

www.ft.com...

Why Obama’s new Tarp will fail to rescue the banks
By Martin Wolf

Published: February 10 2009 18:06 | Last updated: February 10 2009 18:06
Has Barack Obama’s presidency already failed? In normal times, this would be a ludicrous question. But these are not normal times. They are times of great danger. Today, the new US administration can disown responsibility for its inheritance; tomorrow, it will own it. Today, it can offer solutions; tomorrow it will have become the problem. Today, it is in control of events; tomorrow, events will take control of it. Doing too little is now far riskier than doing too much. If he fails to act decisively, the president risks being overwhelmed, like his predecessor. The costs to the US and the world of another failed presidency do not bear contemplating.

What is needed? The answer is: focus and ferocity. If Mr Obama does not fix this crisis, all he hopes from his presidency will be lost. If he does, he can reshape the agenda. Hoping for the best is foolish. He should expect the worst and act accordingly.

Yet hoping for the best is what one sees in the stimulus programme and – so far as I can judge from Tuesday’s sketchy announcement by Tim Geithner, Treasury secretary – also in the new plans for fixing the banking system. I commented on the former last week. I would merely add that it is extraordinary that a popular new president, confronting a once-in-80-years’ economic crisis, has let Congress shape the outcome.

The banking programme seems to be yet another child of the failed interventions of the past one and a half years: optimistic and indecisive. If this “progeny of the troubled asset relief programme” fails, Mr Obama’s credibility will be ruined. Now is the time for action that seems close to certain to resolve the problem; this, however, does not seem to be it.

All along two contrasting views have been held on what ails the financial system. The first is that this is essentially a panic. The second is that this is a problem of insolvency.

Under the first view, the prices of a defined set of “toxic assets” have been driven below their long-run value and in some cases have become impossible to sell. The solution, many suggest, is for governments to make a market, buy assets or insure banks against losses. This was the rationale for the original Tarp and the “super-SIV (special investment vehicle)” proposed by Henry (Hank) Paulson, the previous Treasury secretary, in 2007.

Under the second view, a sizeable proportion of financial institutions are insolvent: their assets are, under plausible assumptions, worth less than their liabilities. The International Monetary Fund argues that potential losses on US-originated credit assets alone are now $2,200bn (€1,700bn, £1,500bn), up from $1,400bn just last October. This is almost identical to the latest estimates from Goldman Sachs. In recent comments to the Financial Times, Nouriel Roubini of RGE Monitor and the Stern School of New York University estimates peak losses on US-generated assets at $3,600bn. Fortunately for the US, half of these losses will fall abroad. But, the rest of the world will strike back: as the world economy implodes, huge losses abroad – on sovereign, housing and corporate debt – will surely fall on US institutions, with dire effects.

Personally, I have little doubt that the second view is correct and, as the world economy deteriorates, will become ever more so. But this is not the heart of the matter. That is whether, in the presence of such uncertainty, it can be right to base policy on hoping for the best. The answer is clear: rational policymakers must assume the worst. If this proved pessimistic, they would end up with an over-capitalised financial system. If the optimistic choice turned out to be wrong, they would have zombie banks and a discredited government. This choice is surely a “no brainer”.

The new plan seems to make sense if and only if the principal problem is illiquidity. Offering guarantees and buying some portion of the toxic assets, while limiting new capital injections to less than the $350bn left in the Tarp, cannot deal with the insolvency problem identified by informed observers. Indeed, any toxic asset purchase or guarantee programme must be an ineffective, inefficient and inequitable way to rescue inadequately capitalised financial institutions: ineffective, because the government must buy vast amounts of doubtful assets at excessive prices or provide over-generous guarantees, to render insolvent banks solvent; inefficient, because big capital injections or conversion of debt into equity are better ways to recapitalise banks; and inequitable, because big subsidies would go to failed institutions and private buyers of bad assets.

Why then is the administration making what appears to be a blunder? It may be that it is hoping for the best. But it also seems it has set itself the wrong question. It has not asked what needs to be done to be sure of a solution. It has asked itself, instead, what is the best it can do given three arbitrary, self-imposed constraints: no nationalisation; no losses for bondholders; and no more money from Congress. Yet why does a new administration, confronting a huge crisis, not try to change the terms of debate? This timidity is depressing. Trying to make up for this mistake by imposing pettifogging conditions on assisted institutions is more likely to compound the error than to reduce it. ...


[edit on 12-2-2009 by Dbriefed]



posted on Feb, 12 2009 @ 09:33 AM
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I agree and disagree. I can't point the finger at Obama just yet. BUT... he certainly isn't helping himself. The current Porkulus package being negotiated between the House and Senate is the biggest non-military discretionary spending bill EVER in the history of this country. AND... most economists agree that it will very little to nothing to stimulate anything other than bigger, more bereaucratic government.

Instead of championing this effort himself and guiding and directing the types of spending that should be contained, he handed the reigns over to two of the biggest pork-barrel spenders, Pelosi and Reid, to craft a "Stimuls" package. One word for that decision: STUPID! With initiative in hand and a majority over each facet of Congress, the Democrats set out to fund their beloved pet projects knowing that they would face very little resistence in getting them passed; and it looks as though they may have succeeded.

Now, with the Bond market ready to bottom out, the country will need a way to finance this nearly $1T in new debt. However, they are not likely to find any takers in the form of foreign governments. What does that mean? Print more money and buy more of own T Bills - STUPID!!! This will further erode the power of the dollar causing it to lose value which leads to longer term hyper-inflationary risks. If/when that happens the Great Depression is going to look like a picnic in comparison. THIS current round of legislation is liekly going to be the impetus that takes us there.

So, to recap, I don't think Obama is going to be soley to blame for the worsening economic crisis. No, it is more likely going to be Congressional Democrats who will take the the heat for this. Sadly, they believe that they are being protected from the fallout my the MSM. It is exactly that hubris and arrogance that will lead to their downfall as MOST Americans are becoming more and more aware of what is happening AND who is to blame!



posted on Feb, 12 2009 @ 09:37 AM
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con't:

Assume that the problem is insolvency and the modest market value of US commercial banks (about $400bn) derives from government support (see charts). Assume, too, that it is impossible to raise large amounts of private capital today. Then there has to be recapitalisation in one of the two ways indicated above. Both have disadvantages: government recapitalisation is a bail-out of creditors and involves temporary state administration; debt-for-equity swaps would damage bond markets, insurance companies and pension funds. But the choice is inescapable.

If Mr Geithner or Lawrence Summers, head of the national economic council, were advising the US as a foreign country, they would point this out, brutally. Dominique Strauss-Kahn, IMF managing director, said the same thing, very gently, in Malaysia last Saturday.

The correct advice remains the one the US gave the Japanese and others during the 1990s: admit reality, restructure banks and, above all, slay zombie institutions at once. It is an important, but secondary, question whether the right answer is to create new “good banks”, leaving old bad banks to perish, as my colleague, Willem Buiter, recommends, or new “bad banks”, leaving cleansed old banks to survive. I also am inclined to the former, because the culture of the old banks seems so toxic.

By asking the wrong question, Mr Obama is taking a huge gamble. He should have resolved to cleanse these Augean banking stables. He needs to rethink, if it is not already too late.



posted on Feb, 12 2009 @ 09:39 AM
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reply to post by kozmo
 


I think it has less to do with Obama than his economics advisory team and Treasury Secretary Geitner, who led the NY Fed into the mess. Why do these administrations keep hiring the people who screwed it up?



posted on Feb, 12 2009 @ 09:45 AM
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No matter what you say he has a long way to go to compare to Bush's world crash. And I do agree Giethner needs to go. Hes just a bank crony.



posted on Feb, 12 2009 @ 09:55 AM
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Originally posted by Dbriefed
reply to post by kozmo
 


I think it has less to do with Obama than his economics advisory team and Treasury Secretary Geitner, who led the NY Fed into the mess. Why do these administrations keep hiring the people who screwed it up?


I don't know why do people keep voting the same clowns in office?

And now we have Mr. hope and change, lord have mercy.



posted on Feb, 12 2009 @ 09:59 AM
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reply to post by JBA2848
 


Couple of things... First, please post evidence that Bush caused the current crisis. I am a student of world financial affairs and believe me, I can point fingers at many other people before I even get to Bush. In fact, I have recently viewed video of Bush warning Congress early in his first term that we were likely to experience these problems if Congress didn't act.

Next, who says "We" keep "re-electing" these people? It's very strange because I know of very few people who cast a ballot to re-elect our current representative yet he won by a landslide! Elections in this country are no more secure than they are in Zimbabwe - they only appear to be - by design, I believe.



posted on Feb, 12 2009 @ 10:00 AM
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Where have you been?

Our economy is already wrecked. Do you not remember Bush’s bail out plan that was rejected by Americans in record numbers.

Do you not remember our representatives standing on the White House steps and saying directly into the camera that they did not care what we thought?

Do you remember President Bush calling a middle of the night meeting where he enacted constitutional martial law to coherence any dissenting members to vote for his bail out bill?

Do you remember President bush giving out halve of that bail out money less than a month before he left office to the banks that to this day have not and will not tell us how that money was spent?

So how can you blame President Obama for a wrecked economy when that is what was handed to him?

I know. It doesn’t matter. He is holding the ball so that is the guy you tackle.

It doesn’t matter that the game is over and the real players have left the field. It is just about tackling the guy that is holding the ball.



posted on Feb, 12 2009 @ 10:09 AM
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IMO the mortgage thing is the biggest hindrance, what to do what to do. Why should the govt. set up trillions of dollars to lend to home owners with $500,000 mortgages when anyone can now go and buy an identical house in the same neighborhood for $150,000?



posted on Feb, 12 2009 @ 10:11 AM
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reply to post by Dbriefed
 


While I was reading your post, the message below appeared on my screen.
Do you guys know what The table '202_clicks_spy' is full means




INSERT INTO 202_clicks_spy SET click_id='1331120', user_id = '1', aff_campaign_id = '70', ppc_account_id = '0', click_cpc = '0.00100', click_payout = '1.75', click_filtered = '0', click_alp = '0', click_time = '1234454711'

The table '202_clicks_spy' is full





posted on Feb, 12 2009 @ 10:14 AM
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i believe this title is misleading.

"someone" is screwing up the economy, intentionally, and propagating fear about it too, but it ain't obama or bush alone. both were cfr or otherwise controlled pawns. nothing more or less.

i for one wish many of the people here on this board would STOP making this a partisan issue or using it as a chance to attack the president you didn't vote for. it goes far, far beyond that, and the sooner you all see and accept this, the faster we will all be able to logically consider, thwart, and recover.

that being said, it's ludicrous to even think in your mind that this is in any way a reflection of this current pawn...er..i mean president. the die was cast long, long ago.

[edit on 12-2-2009 by ~Lucidity]



posted on Feb, 12 2009 @ 10:21 AM
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You haven't seen anything yet, just wait til the commercial real estate market implodes this year.

Worst economic collapse ever
Gerald Celente, U.S. trend forecaster.



Note: Celente predicted the Iranian revolution, the 1987 crash and the fall of the Soviet Union.


"When CNN wants to know about the Top Trends, we ask Gerald Celente."
- CNN Headline News

"Gerald Celente has a knack for getting the zeitgeist right."
- USA Today

"There's not a better trend forecaster than Gerald Celente. The man knows what he's talking about."
- CNBC

"Those who take their predictions seriously ... consider Gerald Celente and the Trends Research Institute."
- The Wall Street Journal

"Gerald Celente is always ahead of the curve on trends and uncannily on the mark ... he's one of the most accurate forecasters around."
- The Atlanta Journal-Constitution


[edit on 12-2-2009 by Regenmacher]



posted on Feb, 12 2009 @ 10:25 AM
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Originally posted by kozmo
First, please post evidence that Bush caused the current crisis.




From the start, George W. Bush's embraced a governing philosophy of deregulation. That perspective trickled down into the federal oversight agencies, which in turn eased off on banks and mortgage brokers. Bush did push early on for tighter controls over Fannie Mae and Freddie Mac but failed to move Congress. And after the Enron scandal he backed and signed the aggressively regulatory Sarbanes-Oxley Act. But when his second head of the SEC, William Donaldson, tried to boost regulation of mutual and hedge funds, he was blocked by Bush's advisors at the White House and other powerful Republicans, and quit. Plus, let's face it, the meltdown happened on Bush's watch.


TIME Magazine

25 People to Blame for the Financial Crisis

Obama is NOT on the list.



posted on Feb, 12 2009 @ 10:27 AM
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reply to post by Dbriefed
 


While I can agree that Obama has surrounded himself with the wrong people while claiming "change", I can not forget to be reminded by the failures of the Administration before him.

Where were the professors and economics when the Bush administration was lying the way to the crisis we have today?

Sorry to say that while Obama's original plan was of hope and to help the nation, what congress has done with it is no short of a mockery to the tax payer in the nation.

While I don't agree with the bloated stimulus to the economy and the next trillions of dollars on my unborn's back, America needs something to appease the resentment, anger and distruss that the last president left behind.

Now this will look to many like a step in the right direction, but I can see beyond the fake light, before long America will be billed once agan for another stimulus when this one fail to deliver.



posted on Feb, 12 2009 @ 10:31 AM
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The OP is a foolish FEAR MONGER!!!!!!!!!!!!!!!!

President Obama just got into office, for the few weeks he has been in office he is making some needed changes, and is scoping out others. If he can keep it up at this pace, in four years time he will be one of our greatest Presidents.



posted on Feb, 12 2009 @ 10:31 AM
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Originally posted by Regenmacher
You haven't seen anything yet, just wait til the commercial real estate market implodes this year.

Worst economic collapse ever
Gerald Celente, U.S. trend forecaster.




OH DEAR GOD!



posted on Feb, 12 2009 @ 10:32 AM
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What's the deal with this place lately, (ATS)

All of these, Depression looming, negative, scare mongers.

Why should I be afraid?

I thought the economy was going to collapse last fall? Ummm, we're still here.

Even if the economy collapsed tomorrow, I wouldn't be "scared" I would be "happy"

I'm just not really afraid of it like some of you guys are. So, please, speak for your self from now on, don't make thread titles like, "You should be really scared, the bogyman is coming"



posted on Feb, 12 2009 @ 10:33 AM
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Originally posted by RussianScientists
The OP is a foolish FEAR MONGER!!!!!!!!!!!!!!!!

President Obama just got into office, for the few weeks he has been in office he is making some needed changes, and is scoping out others. If he can keep it up at this pace, in four years time he will be one of our greatest Presidents.


Seriously?

it will last for three and a half years then , armageddon, you are just off by six months.






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