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Is Obama's Populist Rage Against Big Banks Valid?
From The Daily Capitalist
President Obama used his bully pulpit on Thursday to chastise banks and bankers while announcing a punitive tax on them to assuage an angry populace.
To me it seemed rather "yesterday" when we're all taking in the magnitude of the earthquake in Haiti. That's another subject. But I hope you all will donate money to institutions that are helping the rescue efforts. We like Direct Relief International which sends free medical and emergency supplies to aid poor countries and have an excellent disaster response team. They have a long history in aiding Haiti. Please join me in supporting them.
Back to Barack. Is his rage valid? Should we be angry at banks for making lots of money and then paying out big bonuses?
This is not as easy as it sounds. In a perfect world, who cares? They should be able to pay whatever they want to their employees as long as the Board of Directors and the shareholders agree. If the shareholders don't like it, they can sell their stock. This would be the classic free market approach.
The other side of the argument is that this isn't a free market, it's a highly regulated market, these institutions are creatures of the federal government, and the banks which took TARP money open themselves up to criticism and penalty.
This gets down to some basic economic laws: the laws of unintended consequences, moral hazard, creative destruction, market competition, and the fatal flaw of fractional reserve banking. And a few others.
All these economic laws were ignored during the Panic of 2008. I'm not talking about the market crash, I'm talking about when Hank Paulson and Ben Bernanke panicked and bailed out their Wall Street buddies. They believed that they saved the world because their friends were too big to fail.
They were wrong. Yes, it is true that AIG, Citigroup, maybe BofA, Merrill, and others would have failed without government bailouts. That would have been good for the country. These institutions took big risks knowing that they would be bailed out because of who they were. I'm not saying they planned it that way, but it had to be in the back of their minds.
No one is too big to fail.
Bailouts rewards bad behavior and unfairly burden taxpayers. Which means that these institutions will do it again. That is, they will continue to take improper risks without full appreciation of the consequences. If they had failed, their business methods would go the way of the pterodactyl. Risk evaluation methods would change the entire banking system. Risk evaluation would change in the insurance industry if AIG had been allowed to fail because their actuaries would realize that they were gambling with credit default swaps, not insuring insurable risks. I'm sure AIG had grasped the concept of potential bank bailouts of the banks they guaranteed.
What would have happened if these large institutions had been allowed to fail? Credit would have dried up, many companies seeking credit would have failed, investment funds would have taken huge losses, housing would have collapsed, and these too big to fail institutions would have been put in receivership or Chapter 11 bankruptcy.
But as we all know, these things did happen after the bailout, so what was the point? You say that we avoided another Great Depression? Not at all. Depressions are caused by government interference in the economy by disrupting the healing process that occurs after every crash. The Great Depression was caused by Hoover and FDR.
What would have happened without bailouts is that we would have recovered by now, or at least be well on our way to recovery. I will concede that things would have been temporarily, cosmetically worse without the bailout. But so what: the point is that things are worse with the bailout because essentially failed or bankrupt banks and businesses are kept alive on life support thus substantially delaying any recovery. We won't recover until the balance sheets of businesses and financial institutions in this country are cleared up and repaired.
Let me say that I am mad at these financial institutions. I am mad at them for being dopes by failing to properly evaluate risk. I am mad at them for taking TARP money. I am mad at them for their false public hubris. I am mad at them for being part of the Washington-Wall Street Economic Complex. I am mad at them for their "stop me before I kill again" political stance. I am mad at them for failing to change their business models.
I am mad at the federal government for setting the stage which created the economic crisis. I am mad at them for bailing out their buddies. I am mad at them for their Keynesian stimulus. I am mad at them for failing to bring true reform. I am mad at them for their hypocrisy and fake outrage. I am mad at them for ... well, for most things.
Yes, I am mad at the big banks and the investment banks for the big payday. Without taxpayer support, their profit structure would be much lower. We would see a different Wall Street.
What we need is to stop doing what we keep doing cycle after cycle. No bailouts.
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However, given the bailout has happened, I think Econophile's is a bit off point...the question is, given the situation we are now in, is Obama's taxing of banks to pay back bailout money a good idea or not. Sure, we shouldn't even be in this position, I get it, but what now?
Your I get it but now what comment is way off. While I appreciate your attempt to be pragmatic in an ever changing landscape but the point of the matter is that it never should have happened. More specifically, the talk of bailouts and bonuses is exactly what the govt wanted debate about. To lose sight of that is to lose sight of everything. The govt endears themselves to the populace by acting angry against wall st when they force some banks to take tarp money. You are taking the bait hook line and sinker with your uber open minded progressive notion of now what. Not now what-fact is that govt meddling should never have been allowed and we and everyone else whom is discussing bonuses and bailouts is losing sight of the bigger picture that GOVT should have NEVER got involved with the bailout to begin with. This was govts backdoor entry into having a bigger say in free markets and that was the biggest tragedy of all. Attempting to move past this point in our futile efforts to maturely deal with what "is" is exactly what govt wanted for more control and too many of us are drinking the cool aid about the unintended consequences of this action when our efforts should be spent on getting govt back out of the way of markets. And yes both Bush and Obama were wrong and no McCain wasn't the answer either. Dems and Republicans are both little more than the same-republicrats is the appropriate term.
A good point, you're pushing to make the discussion pragmatic. That's different from the current discussion (e.g., the thrust of the "Is Rage Valid?") that focuses on understanding.
From "understanding", I conclude the far-left and far-right hold rage against the bailouts because of one or both:
I think there are a lot of people in both camps. I'm in (2), but I appreciate the people in (1) because they happen to bolster the people in (2). However, don't lose sight of the fact that both camps want the government to "stop" what they are doing (and the government shows no inclination of stopping).
For completeness, there are two other camps, but there aren't very many people in either: (3) I don't like it, but it's necessary; and (4) Yay! Look at all the free cash I'm getting!
From your "now what?" point, we can make no legitimate response. The elites are operating without disclosure of the plan nor the mechanics, and we don't have a vote. I have seen no discussion whatsoever of the "real" plan to resolve this mess, so there is no possibility of being "pragmatic". (A shame, as I'd prefer to be there.)
To specifically answer your question, "Is Obama's taxing of the banks to pay back bailout money a good idea or not?", I'll answer "it doesn't matter". This program is *so* "in-the-noise" that it will be insignificant (both in size of their "repayment" and the fact that they will merely be given the money by the Treserve to be paid back to the Treserve through "theatre", like how Citi "repaid" its TARP).
While I have specific things I would do to resolve this mess if I were in charge, my plans can only currently be viewed as irrelevant "naval-gazing" (because they have zero chance of being implemented since I'm not in the room making the decisions).
2. Definately 2. We are doing a number 2. People will increasingly find themselves in number 2.
+1, some clarifications:
Moneymutt's main assertion seems to be this is mostly not a partisan issue: I agree, "Econophile is making a legit, non-partisan point about TBTF and the bailout."
Additionally:
Disturbingly, this is true. If I can make a zillion dollars (personally) by crashing my company into a brick wall, I will do it. (That's exactly what happened.)
The only purpose of regulation is to ensure your stupidity only hurts you. I don't like regulation because morons in charge don't know what they are regulating nor how to write it. However, some regulation (like Glass-Steagal leverage limits) is clearly legitimate.
Agreed, both parties are inept (but often not equally inept). I'm amazed that in the 2008 elections, both parties selected the worst possible candidate for their parties. Mostly, discussion/talk of electing one "team" or the other is off-point. Both Obama and McCain were economic morons. (Similarly, as pointed out, both supported the bailout.)
Agreed, except that it doesn't need much more -- the system has failed, and will be replaced with a new system. With planetary derivatives measured in the quadrillions, and many countries leveraged north of 350% debt-to-GDP, there is no way off this precipice. It might be fun to talk about how we might avoid "paying the piper", but in reality the only legitimate talk IMHO is how the system will shut down, and then be re-started. (Yes, it is quite painful to think in those terms.)
I don't. Obama is a populist, and is not operating with a cogent plan. There is no plan. His actions and policies conflict. He has no idea what he's doing. He continues to make numerous amateur mistakes. (There is room for rebuttal to this assertion, but mostly we're in the land of simple political opportunism with an elected official that has no background nor understanding of economics.)
This Obama speech doesn't do anything, other than show how he can't commit to any particular direction with gusto. (It doesn't matter anyway.)
I agree with Moneymutt that it's silly to defend "my team" against "your team" because humans like to identify with a group. Both teams are currently outraged, and we can all at least agree on that. That's Econophile's point (as I understand it).
+1 - it's time to start dealing with what is, not what we wanted, nor hoped. TARP wouldn't have passed w/o both parties selling out.
If Obama was mad at the banks he would not have kept Benanke and Geithner. Obama is in love with the banks.
Taxing Americans is what Democrats do. They cannot help it. It is an obsessive compulsive disorder. At this time, the health care tax appears to be dying. This causes democrat depression. What do Democrats do when depressed? They go shopping. Shopping requires money. No wait, that was a stupid statement. Shopping requires credit. How do you pay for credit?: you tax. Bankers are an excuse to tax. Health care is an excuse to tax. It has nothing to do with need. Very similar to an obsessive compulsive hoarder; no reason to keep or bring home more trash to store in the house. It is the only OCD that has no medication to control it because those with it are in denial that they have it.
Bail them out and then tax them- the logic is lost via the disorder.
Here is the question....
Here is a list of SUSTAINABLE TYPE SOLUTIONS
that originated from the Obama Admin.....
1)
2)
3)
..............................
Which means that all attempts to date are of the
political NONSUSTAINABLE TYPE....
..............................
So what is the total additional COSTS that are
being stacked against the popultin ?
At the end of the Pbama term ...care to guess ?
Add a minimum of $2 to 7 Trillion per year ?
..............................
There is only one REAL solution that would become
a truly SUSTAINABLE one....and not a COST....
A BUSINESS FRIENDLY TAX STRUCTURE CHANGE.....
NO CORPORATE OR INDIVIDUAL TAXES....
a SIMPLE CONSUMPTION TAX ONLY....BY STATE MANDATE....
REMOVES THE LOBBYIST SYSTEM BY DEFAULT.....
10% STATE.....5% FED....
CHIPS FALL WHERE THEY MAY....
Bob Rubin set up the Obama campaign and arranged the financing...what else do you need to know?
Obama is a jabroni.
http://www.urbandictionary.com/define.php?term=Jabroni&defid=1184851
I rise to the defense of the Italian language which has adorned the page of countless opera libretti over the centuries and which has many more precise expressions for this occasion, to wit: Bugiardo. :-)
Obama is a disengenous politico.
He bails banks out, then he howls at them.
He has no ideology or policies, his only principles are power and expedience
The asshole doesn't even have power - all he does is take orders from the banksters. The lowlife just serves them so he can feed off the scraps they throw is way and doesn't have to struggle to survive like the rest of us.
Why would anyone pay any attention to what a mindless puppet is blathering is beyond me. Anyways, I was reading an article that reminded me how owning Gold was illegal for US citizens till 1970 (71?). Today, I don't think anybody (with a functioning brain i.e.) will give two shits and a fuck about giving up US citizenship in order to own Gold.
If BHO is a " mindles blathering puppet " then, so is the populace who elected him and deserves the rotten returns on its investment.
Amen -- for all those BHO voters - as his good buddy said, "The chickens are coming home to roost."
Sign me,
Unsurprised,
happy for the liberal morons,
and sad for the US.
+1
I personally don't as it is - I just happen to have been born in one of its "57" slave territories.
You always have the option of renouncing it. BTW, citizenship is overrated IMHO - just a means of identifying which slave camp on this planet you belong to. Of course some are more exploitative than others with the US at the top of the list - a "tax prison", if you will.
Molon Labe, Bitches!
I know this blog is overweighted with neocon fucksticks, but I'll call you on your bullshit. Is President Obama's outrage against the banksters justified? In the slang of your Godess Palin (an ignorant c*nt by any stretch of reason)...You betcha!
The USA elected Obama simply because we had seen where 8 years of Bush/Cheney had ruined our nation, and we were--and remain--hungry for change. Bush's boy Paulson was the corrupt moron who heaped taxpayer monies onto the corrupt banksters, with no strings attached. The taxpayers had no say on this, until the election. We selected our choice.
If George Bush Sr. would have manned up and removed Saddam Hussien from power during Desert Storm, we would not be in our current quagmire that his cocaine/alcohol addled son has emeshed us in. Had the healthcare industry not raped us with astronomical price increases, Obama would not have had to focus on that for an entire year.
The American voters are furious at the banksters, and Obama has rightly contested these bonuses.
Not one of us here can possibly understand the constraints that the President of the United States faces, show I encourage you all to shut the fuck up, and let the man do the job he was elected to do. Clinton faced the same opposition in DC, and it took time for his administration to get traction. Once he did, jobs and prosperity ensued. Obama is not perfect, but he is twice the man Bush was.
Your partisan outrage is pathetic.
I'm an anarchist.
"In the slang of your Godess Palin" ??? WTF bro??? who the hell says Palin is "our" leader?? You really think we like republicans who are fcking morons ?? (except Ron Paul who really is a Libertarian)
before you talk out of your ass, remember where you're posting.
This is Zero Hedge, not HuffPo. We're all either Libertarians or belong to the pure ideas of republicans who founded this country.
we have a two-headed on body system (I'll give you a minute to digest that you little turd).
Fck off of Zero Hedge you little diaper.
+ 10,000
The Hope & Change went right up your ass and you are perfectly justified in lashing out. I am likewise justified in feeling nothing towards your crushed aspirations. Some of us saw this coming plain as day. Your boy was bought looong ago in the south side of Chicago. I too was hopeful, hopeful that McCain might have learned a real lesson from the Keating 5 debacle. The fact that you can't even acknowledge the top of the ticket exposes you, hyper-partisan male c*nt.
Everyone here who was sentient for the last two decades knows who did what, so we don't need a comic book history lesson. What would be refreshing though, is for the Reality Based Community™ to start living up to their name. Heck, read some Rolling Stone... you might learn something.
+10,000
It is totally unclear why anyone is surprised by BO's behavior. He is and always has been a very liberal panderer.
The best and most damning part of Harry Reid's recent quote regarding his good friend BO, was "unless he wanted to." Yet the MSM let that skate by. BO is an excellent panderer - he will be WHATEVER he needs to be for the next 10 minutes.
I am not sure you grasp the article's heart Mr. Hammer. The point is
that Mr. Obama is a liar, and psychopath at that. He will say whatever is expedient to his
handlers who feel that maybe there may be about 15% of the population who would be satisfied to hear him lie just one more time throwing it the way of the bankers. The other 85% out there recognize it as just another politically expedient lie, whether it be about those "bad bankers" or those signing statements Obama would never sign or just pick one of the many lies that prove our media is Pravda reincarnate and our people under Communist rule.
1. Bring the troops home immediately
2. Close Guantanamo
3. No signing statements
4 Healthcare debated in PUBLIC on c-span
5 No lobbyist in his cabinet
6. A record number of "CZARS" the latest of which believes Cointelpro is not only legal but should be pursued like the Marxist he is.
I know there are those here who do not deal with the "general public" but I do and the rage that is rising now is long past rational. The public will have their change and it will be delicious and terrible. President George W. Obama is just a little more articulate in this iteration.
George W. Obama, nailed him. Touché!
Just another of the pack of jackal-liars reaming our country.
When's the next Tea Party?
Well, I know what you're not, now. And neo-cons are not welcome here and get weeded out pretty quickly.
Speaking of warz this is awesome!
http://www.youtube.com/watch?v=RG_Rkf0yRAY
"The American voters are furious at the banksters, and Obama has rightly contested these bonuses"
Spare us. Obama is the chief law enforcement officer in the country. He has the SEC, the Attorney General, the Treasury, and the FDIC to all bring to bear against these guys, investigate them, and prosecute them for any laws that were broken.
And yet, with all this capability, and a supposed mandate to do so, the best he's been able to muster is a few speeches that are alternately both pleading and damning. He proposes a tax that will take back a fraction of what was loaned to the banks. And you think this little sop to the sheeple is progress? It's not "a good start," it's not "at least SOMETHING to show he cares," it's a complete joke that only a total fool would fall for.
If Obama gave a crap about "getting" the banksters, he'd be prosecuting them AND the people in Congress that enabled this to happen. Wake up, man.
Actually, was it not under Clinton that Larry finally engineered the final solution re stegall-glass?
Today's word is unconscious.Also, use of gutter street curses add little to arguments.DUH
Are professional criminals ever honest? Obama is part of the syndicate.
I was going to post what I thought might be a reasonable comment on current Administration policy and Obama's comments -- but, I see that the discourse has degenerated into a crap-slinging mess. So, I'll pass.
By all means, contribute lucid comments.Try to ignore the counter intel/disinfo ops/ mega-tards.
I think the move is a cynical political ploy in response to very high levels of anger.I am sure it is too little, too late to placate the truly screwed here in recoveryland.
Rhetoric and extreme anger are definitely a concern to TPTB as well as the politicians unlucky enough to be up for election soon.Hence the lamo-matic ploy.
I can't resist.A previous troll poster made a partisan reference notable for it's crudity and complete, breathtakingly unconscious embracing of the left/right Demo/Repub dichotomy.
Listen carefully you ignorant jackass:The Power that runs this country cares not a whit what party you belong to.It supports and co-opts both parties.Money and Power is all it wants...how stupid, moronic and infantile do you have to be to embrace Control's version of reality?
Thanks for your encouragement. I've finished reading the newer posts now and feel much better. I guess it was like wading knee-deep into a swamp. Not wanting to encounter quicksand I retreated.
The comments by moneymutt (below) are pretty much what I wanted to say.
As long as the name of "Ron Paul" causes snickers and visions of tinfoil hats we don't have a chance. When persons of his ilk gain "mainstream" credibility we will have a chance.
+1
this economy, this country, and its "leaders" have degenerated into a crap-slinging mess
I think he's angry because the popular rage against big banks are causing him to loose face. He could care less about the real people who are footing the bill.
Uncle Tom, excuse me, President Obama is a slave to Wall St sucking on Blankfein & Dimon d!cks like a good pickaninny. I don't watch gay porn, but someone should make a porno spoof on our Commander and Chief c0cksucker with Wall St bankers.
Percolator---You're a sperm burping little BITCH, racist cunt. Go back to your gay porn, loser.
Hammer59, You obviously cannot understand basic reading comprehension, I said "I don't watch gay porn".
BTW I do NOT burp sperm nor am I a little BITCH or racist cunt as I have many friends of different ethnicities.
If you do not think Obama is a slave to Wall St you are very naive.
Lastly, I'm NOT a Neocon, I've been a registered Libertarian for over 20 years.
Disciples of Rushbah, you think too hard. I cant believe how cheap the cheap shots are getting. Some of you gloat that political IQ is as easy as calling every event a political ploy. Thats Klansmanship for ya, AKA the Rushbah philosophy. Like giving drivers licenses to parrots.
Register, pussy...
Hmmm...this coming from somebody using a moniker that isn't their name...which is the same as being anonymous.
BTW, I'm not the same "anonymous" whom you seem to want as a shower mate. I suppose I could register as "Breakfast in America" or "Crisis? What Crisis?", but it would still be no different than being anon.
Obama's populist rage? perhaps you should ask a less leading question for example:
Is Obama's Populist Rage Against Big Banks just an act?
Is Obama's Pseudo Populist Speech Regarding Big Banks a Political Ploy to Deflect attention from the Bonuses?
Is Obama's Pseudo Populist Speech Regarding Banks and TARP Intended to Distract the Public from the Trillions of Tax Payers' Gifts to the Banks?
Is Obama's Pseudo Populist Speech Regarding TARP and the Banks Indended to Mask the Fact that He Received More than Triple from Wall Street than his Rebublican Counterpart?or as NC puts it
Obama’s “Get Tough on Banks” Again Tries to Play the Public for Fools+1000 more.
Palabras, nada mas. Words, nothing else.
Obama, Congress and the Treserve can all go to Hell for screwing our country.
Gold, some dough outside the USSA and just enough FRNs to last 6 months. Maybe some lead and lead delivery systems as well.
Mentiras. Siempre mentiras. Yo amo muchisimo el plomo y las maneras de enviarlo.
+1000
Distraction alert.
O, I know my policies suck! but I am with you "the little people"
Oh please
+1000
+1000
Obama’s presidential radio address today, like his statements during the week, shows anger at the crisis the banks put us in and shows that his advisors are beginning to read the public anger and come up with a dutiful response. But, like his pre-election rhetoric, the words are worthless; his actions show that he is not only the bankers’ friend, he is the bankers’ errand boy. If this has changed, then America’s coalmines are full of diamonds.
But to say that we are angry at these developments is like Obama being angry at the symptoms. The bailouts and the TARP money are absolutely nothing compared with the wholesale prostitution of the Congress of the United States, the packing of the President’s Cabinet with every comrade Bob Rubin ever knew and the worldwide oppression of innocent peoples for the benefit of America’s ruling class. In comparison, these make a $700 billion TARP bailout look like a handful of dimes.
This gets down to some basic economic laws, you say? Unintended consequences? Moral hazard? I'm sorry but we’re not talking here about propping up failed financial institutions; we’re talking about the stolen American Republic, about a coup d’etat. Mad? Frankly, I don’t think mad covers the emotion that I feel.
+ 1000
Mad? I get mad at traffic, cell-phones used in cars,
the dog for shedding on the suit.
What I get when given freedom of expression is a fool-proof
plan to take out with extreme prejudice Joe Cassano, Laird Blankfeind, Jamie Dimon, geithner, orszag, bernanke, summers, paulson, greenspan, rubin, friedman, cox, moxillo, friedmand, fuld, frank, o'neal, mack, bush, clinton, dodd, mortgage brokers, 85 Broad, and several other key players.
Bingo.... as Gore Vidal also said, Bush´s theft of the presidency was the coup d´etat and Obama is the black Trojan Horse carrying the same policies.