ratcheting up the pressure

Article by missy on January 8th, 2009 at 10:03 am

I assume these recent speeches by Obama are intended to publicly call out Blue Dogs and Senate Republicans to get along and go along once the Economic Plan is presented. From today’s speech at George Mason University:

This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won’t get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past. We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC. For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability. Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn’t afford. Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve. The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government.

This sounds pretty good:

That work begins with this plan—a plan I am confident will save or create at least three million jobs over the next few years. It is not just another public works program. It’s a plan that recognizes both the paradox and the promise of this moment—the fact that there are millions of Americans trying to find work, even as, all around the country, there is so much work to be done. That’s why we’ll invest in priorities like energy and education; health care and a new infrastructure that are necessary to keep us strong and competitive in the 21st century….

To finally spark the creation of a clean energy economy, we will double the production of alternative energy in the next three years. We will modernize more than 75% of federal buildings and improve the energy efficiency of two million American homes, saving consumers and taxpayers billions on our energy bills. In the process, we will put Americans to work in new jobs that pay well and can’t be outsourced—jobs building solar panels and wind turbines; constructing fuel-efficient cars and buildings; and developing the new energy technologies that will lead to even more jobs, more savings, and a cleaner, safer planet in the bargain.

But this worries me:

To improve the quality of our health care while lowering its cost, we will make the immediate investments necessary to ensure that within five years, all of America’s medical records are computerized.

There are times when computerized medical records could have helped me enormously: having copies of x-rays from all my orthopedists, through all my moves from Florida to Georgia to Oregon to Louisiana to Washington, to better understand how my femurheads are holding up over time would be very helpful.

But computer security has not reached a point where any of us can be sanguine that our personal data – and medical information the most personal of all – will remain private. And, do you really want your private insurer today having access to all of your medical records going back to birth, trying to ferret out exactly how and why they are going to deny payment for what you need now? Do you want lawyers in a malpractice suit studying your psychiatrist’s notes along with the records of the surgery that went awry?

But back to Obama’s speech:

To give our children the chance to live out their dreams in a world that’s never been more competitive, we will equip tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries. …

Yes, we’ll put people to work repairing crumbling roads, bridges, and schools by eliminating the backlog of well-planned, worthy and needed infrastructure projects. But we’ll also do more to retrofit America for a global economy. That means updating the way we get our electricity by starting to build a new smart grid that will save us money, protect our power sources from blackout or attack, and deliver clean, alternative forms of energy to every corner of our nation. It means expanding broadband lines across America… And it means investing in the science, research, and technology that will lead to new medical breakthroughs, new discoveries, and entire new industries.

Great. Can’t wait to see the details.

To get people spending again, 95% of working families will receive a $1,000 tax cut…

Getting the banks to let go some of that $350 billion would be faster.

[W]e’ll continue the bipartisan extensions of unemployment insurance and health care coverage to help them through this crisis. …[W]e’ll help struggling states avoid harmful budget cuts, as long as they take responsibility and use the money to maintain essential services like police, fire, education, and health care.

All good. But I fear for what Chinless Mitch will do with all of this.

No longer can we allow Wall Street wrongdoers to slip through regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales. No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust.

That’s all fine, but how about “No longer can we allow the twisted incentives that push executives to take enormous risks for short-term profit and inflated bonuses at the expense of the company’s – and the country’s – long term financial health.” So often these execs reign over bubbles that end in total collapse, but have taken home millions of dollars in bonuses in the interim. There must be some disincentive to this kind of behavior, whether it’s a higher tax rate for immediate bonuses and a lower tax rate for deferred bonuses or some other mechanism.

Citigroup CEO Chuck Prince, for example, new the end was near, but WTF? Play on:

“When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing,” he said in an interview with the FT in Japan.

His comments come amid growing fears that problems in the US subprime mortgage market, rising interest rates and concerns about loose lending standards could lead to a downturn in the leveraged finance market.

“The depth of the pools of liquidity is so much larger than it used to be that a disruptive event now needs to be much more disruptive than it used to be,” he said.

“At some point, the disruptive event will be so significant that instead of liquidity filling in, the liquidity will go the other way. I don’t think we’re at that point.”

But he was willing to keep your 401k at risk until that happened, because it was to his benefit to keep playing. Who cares if Citigroup goes down in flames and he gets fired when the crash comes? He’ll have made his money.

Back to Obama:

It is time to set a new course for this economy, and that change must begin now. We should have an open and honest discussion about this recovery plan in the days ahead, but I urge Congress to move as quickly as possible on behalf of the American people. For every day we wait or point fingers or drag our feet, more Americans will lose their jobs. More families will lose their savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse.

That is not the country I know, and it is not a future I will accept as President of the United States. A world that depends on the strength of our economy is now watching and waiting for America to lead once more. And that is what we will do.

That is why the time has come to build a 21st century economy in which hard work and responsibility are once again rewarded. That’s why I’m asking Congress to work with me and my team day and night, on weekends if necessary, to get the plan passed in the next few weeks. That’s why I’m calling on all Americans – Democrats and Republicans – to put good ideas ahead of the old ideological battles; a sense of common purpose above the same narrow partisanship; and insist that the first question each of us asks isn’t “What’s good for me?” but “What’s good for the country my children will inherit?”

Again, that’s all good. But I wish he would have taken a cue from FDR and spoken to what we have not lost: our communities, our neighborhoods, the friends and family we can help and depend on in times of need. It’s not all about money and material wealth. It’s about a cultural poverty that have put money and material wealth above all else, to the point where people are willing to screw their children’s future for a leg up on the other guy.

Just last week at my office, I was passing on an offer from a basically insolvent debtor to a creditor; the debtor was willing to pay all creditors 20 cents on the dollar if all the creditors would agree to to that payoff. Our customer, the creditor, responded that, in effect, “unfortunately we lost out on this, but I don’t want to make any other creditor’s situation any easier by limiting our claim.”

He’d rather take nothing than 20%, if taking the deal means he’ll be helping some other unlucky, unpaid creditor in the same position get his 20%. These two creditors are not direct competitors, they’re not even in the same business (or the same country), but still this guy would prefer to fuck over another guy then lose less money.

And that kind of business mindset is why we are where we are today.