Tuesday, February 10, 2009

The Psychology of Stimulus

“Repent. The end is near!”

No, Sen. Dick Shelby (R-Ala.) didn’t carry that sign with him on the Hill when he roared about what a mistake it would be to pass the Obama stimulus legislation. Shelby just engaged in exaggerated rhetoric and hit the traditional Republican bromides about financially overtaxing our children and the risk to future generations.

He’s fortunate that, as he spoke, his nose didn’t grow or that he didn’t turn to stone.

I shouldn’t be amazed at that behavior from a man who never saw a borrowed federal dollar (covered with red ink) going to Alabama that he didn’t like, but I was. Also, I didn’t hear too much of that talk from Shelby—and none of the “walk”—when “W” was in office and consistently hitting deficit records.

I picked out Shelby only because he was easy. But the hot air, foolishness, tall tales and just plain lies one heard on Capitol Hill the past week, from both sides of the Hill—mainly from GOP obstructionists--made me wonder if those folks really are listening to the public.

Congress’ phone lines are being swamped; they are receiving record mail and emails; and newscasts and newspapers lead with stories about the bad economy. The American people want to see Congress pass something and to do so now.

Economists of all political stripes seem to agree that more crafted federal spending mixed with fiscal relief, tax cuts, can stimulate the economy.

But, some congressional Nero’s seem to prefer violin practice.

Most people understand that eventually we are going to have to pay this mammoth financial “butcher’s bill.” The right kind of "stimulus" spending, oversight, and governing will produce a robust jobs rich economy that will make that task far easier.

By the time most read this blog, the Senate will be finishing its work and approve legislation. Then the all important conference will start to iron out the differences between the House and Senate passed “stimulus” bills.

The macro issues have been decided. The knit picking is on smaller stuff, which the Republicans don’t have the votes to stop but on which they will hector and threaten to employ their “41 vote" club to smite, if they don't get their way.

What is disheartening to me is that so many congressional “stimulus opponents” seem to be ignorant of the national psyche. The public is frightened and worried and they want their elected representatives to do something quickly.

The American people are telling Congress, "Stop your posturing and approve the new government spending. The sooner you do the sooner it gets into the system and the sooner it begins to work? Whatever legislation President Obama signs into law will lift our economy as well as remove some of our national gloom."

The Washington Post

What is with the Post and their news coverage of Fannie Mae and Freddie Mac?

Unless the paper can pillory one or both of the former GSEs, they seem, to ignore them, even with regard to recent history.

In a Sunday, Feb. 8 article, discussing how the federal government can aid financial institutions, the two Post reporters discussed “nationalization” and went onto write, “The most recent domestic example was the July (2008) nationalization of Indy Mac Bancorp, a California mortgage lender.”

Hello. That might come as news to the officers, employees, and investors of Fannie Mae and Freddie Mac which were “Paulsoned” last December, when the Treasury Secretary –using fresh, brand new federal authority in the TARP law--decided to take over Fannie and Freddie, fire their senior officers, disband their boards, dilute their private ownership, and turn over their day to day control to their new federal regulator, the Federal Housing Finance Agency FHFA).

A few weeks later, the Bush Administration—before leaving office—named new 10 member boards for each “agency”—and then waived bye-bye.

I am sure that the Post’s official dictionary has some caveats to its definition of “nationalization,” but those people who lost their investments, lost their jobs, and saw the nation’s secondary mortgage market structure savaged--merit a mention--might think differently about what was the most recent example of a nationalized financial institution.

How about just a mention because this “nationalization” carnage was “local,” in the Post’s (dwindling) readership market, affecting people and families who pay taxes in DC, Maryland, and Virginia?

Fannie Mae and Freddie Mac Salaries, Oops?

I don't know which Bush Administration official talked Herb Allison (Fannie) and David Moffett (Freddie) into assuming “leadership” of these newly acquired federal entities. But the two execs were offered million dollar salaries to do so.

Yet, last week the Obama Administration announced that any financial institution accepting Treasury bailout funds could only pay their top officials no more than $500,000.

Since, Freddie, first, and now Fannie has signaled its need for a Treasury cash infusion, does that mean Allison and Moffett get a 50% comp “haircut?”

Jim Lockhart, in Las Vegas?

Why did Jim Lockhart go all the way to Las Vegas to address a securitization group? What’s wrong with teleconferencing?

Doesn’t any industry group which parties there, I mean conferences in Vegas, get sullied?

When will the new Administration seek Lockhart’s “resignation?”

Maloni 2-10-2009

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