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Posts Tagged ‘Clinton’

If we’re going to be spending tons of money on helping banks and dying, mismanaged companies, would it be too much to ask that the redistribution does not go from the productive 25% or so of this country to the risk-preferring .0001% on Wall Street, but that these huge sums actually goes to homeowners in some plan that injected capital into their pockets or forgave their debt in the process? Perhaps such a plan would allow those with reasonable prospects of repayment to pay down 25% of principal or lock in 5% notes over 40 years or something else that actually will not quickly blow up in the government’s face. Wouldn’t this be preferable to the current scheme whereby the housing-induced insolvency for banks is resolved by moving huge sums of taxpayer dollars around from AIG to Goldman or Credit Suisse and then back into the pockets of a few sovereign wealth funds, hedge funds, bank bond holders, and the like?

I mean, I’m not for any of this, but between helping Bear Stearns, GMAC, and AIG with capital infusions and helping average guys who are upside down on their houses, I guess I’d rather just have good, old-fashioned wealth redistribution. After all, the latter arguably would help more people, cut out the middle man in the form of the banks getting direct cash infusions and FDIC leverage, and would at least spread out the benefit of the inevitable inflation that we will face as result of the Treasury’s abject terror at the prospect of a few big banks’ failing. Welfare at least is more transparent and likely to create some Republican (and renter) backlash in comparison to the dishonest claims of “investment,” “emergency,” and Rooseveltian prescience surrounding the bank bailouts.

Of course, the banks have in reality failed, and they are insolvent. The loss is simply being spread to the taxpayers and the few well run banks through FDIC premiums. None of these measures will replace the huge sums of lost wealth nor lead to more lending–for housing or anything else.  Why?  Because the whole economy is uncertain, malinvested, and buried under huge sums of debt undertaken in times where we collectively foresaw a rosier future, and Obama’s reactive responses to these phenomena increase uncertainty, which is a major impediment to wealth creation and risk-taking economic behavior.

What exactly is propelling this Democratic Tribune of the People to spend so much money and political capital to bail out mismanaged bank shareholders and bond holders, who in effect endorsed the banks’ acquisition of huge positions in MBS and ABS products? I don’t think, like Clinton, he is a kind of globalist pro-capital guy, who wants to help international capital so long as DC gets a slightly larger cut. Judging by his rhetorical clumsiness on this issue, it seems more likely that Obama is acting out of a combination of ignorance, fear, and insecurity. After all, it would take real philosophical vision of free markets or a philosophical commitment to Krugman-style redistribution to stare down Bernanke and Geithner in a game of chicken. Obama has effectively outsourced the most important policies of his administration to these Wall Street lackeys, preferring instead to strong arm Detroit into making flying cars and spending time to gin up exquisitely nuanced youtube videos for the Iranian censors to jam.

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It’s a sign of real degradation in our republic that two families, whose claim to authority chiefly consists of great skill in acquiring power and dispensing benefits to loyalists, are now alternating rule in our country. Where are we . . . Iraq? Since 1988, either a Bush or a Clinton has been President. If Hillary wins, one wonders if Jeb or George P. Bush (who has been grooming himself for a run since college) is next? Geoff Wheatcroft criticizes this trend in the Washington Post:

Among so much about American politics that can impress or depress a friendly transatlantic observer, there’s nothing more astonishing than this: Why on Earth should Sen. Hillary Rodham Clinton be the front-runner for the presidency?

She has now pulled well ahead of Sen. Barack Obama, both in polls and in fundraising. If the Democrats can’t win next year, they should give up for good, so she must be considered the clear favorite for the White House. But in all seriousness: What has she ever done to deserve this eminence? How could a country that prides itself on its spirit of equality and opportunity possibly be led by someone whose ascent owes more to her marriage than to her merits?

We all, nations as well as individuals, have difficulty seeing ourselves as others see us. In this case, I doubt that Americans realize how extraordinary their country appears from the outside. In Europe, the supposed home of class privilege and heritable status, we have abandoned the hereditary principle (apart from the rather useful institution of constitutional monarchy), and the days are gone when Pitt the Elder was prime minister and then Pitt the Younger. But Americans find nothing untoward in Bush the Elder being followed by Bush the Younger.

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