Report: US Will Appoint "Afghan PM" to Bypass Hamid Karzai, Obama: Exit Strategy Needed for Afghanistan, Obama: Bush-Cheney Policies Haven't Made Us Safer, Geithner Unveils Plan to Purchase $1 Trillion in Toxic Assets, White House Officials Oppose Tax on Wall Street Bonuses, World Bank: 2009 Will Be ?Very Dangerous? Year, Iran's Supreme Leader Responds to Obama's Message, IDF Soldiers Ordered to Shoot at Gaza Rescuers, Soldier: Israeli Rabbis Turned Gaza Invasion into Religious War, Israeli Activist Calls for Assassination of Mahmoud Abbas, Antiwar British MP Barred from Canada, Family of Slain Iraqi Guard Sues Blackwater, Costco, Starbucks and Whole Foods Fight Proposed Labor Law, Jury Acquits Former Puerto Rican Governor, Vermont Panel Approves Same-Sex Marriage Bill, NYC Pays $1.5 Million to Families of Two Killed by NYPD, Four Oakland Police Officers Killed in Shoot-Out, Protests Mark 6th Anniversary of US Invasion of Iraq, Israel Accused of Targeting Medical Personnel in Gaza

Obama's Bank Bailout

AIG Stiffs Taxpayers (continued)

World News in Depth

Cheney of Fools

Dictator Bush

The leaked reports of the Obama administration’s bank rescue plan Krugman refers to in our previous piece appear to be correct, given the NYT report of the announced Obama plan: "For a relatively small equity exposure, the private investor thus stands to make a considerable return if prices recover. The government will make a gain as well. In the worst case, the bulk of the risk would fall on the government. The presumption, of course, is that the auction will lead to realistic purchase prices." Here's the relevant Q and A at the Geithner press conference announcing the plan:

Q "Looking at the example you give in the fact sheet -- the first program -- you start with talking about $100 in bank loans, but the private investor only has to kick in $6 for -- seems to be on the hook for $6 at the end of the day, and the FDIC guarantees between there and whatever was paid for the bad loan.
"Do you think a person outside this room, outside the Beltway, looking at that would feel like that's a -- you know, you've gotten a good deal by getting someone to kick in $6 for a loan that is valued at a $100, that's being purchased for $84.

SECRETARY GEITHNER: "I'm very confident you and your colleagues will do a good job of framing this thing -- (laughter) -- but let me just come back to the basic point. Okay? The point is, relative to what? What our job is, is to try to fix this problem in our financial system at least cost to the taxpayer and ways to get the incentives right so we can have private capital come in and not have the government do all of it...." --Politex]

Fuller explanation here.

Here's Krugman's response:

...The whole point about toxic waste is that nobody knows what it’s worth, so it’s highly likely that it will turn out to be worth 15 percent less than the purchase price. You might say that we know that the stuff is undervalued; actually, I don’t think we know that. And anyway, the whole point of the program is to push prices up to the point where we don’t know that it’s undervalued. So default on those non-recourse loans is a substantial possibility, which means that there is a large implicit subsidy involved....We’re giving investors a big subsidy, so this has nothing to do with letting markets work. And a final point: If getting the prices of toxic assets “right” isn’t enough to rescue the banks, that doesn’t mean that we’re doomed; it means that we actually have to, you know, rescue the banks, Swedish style, rather than rely on fancy financial engineering to make the problem go away.

Portfolio's Felix Salmon just doesn’t see the plan for toxic assests, now being called "legacy" assets by Geithner, actually selling: "[T]here’s no indication whatsoever that this whole scheme will, you know, actually work. Private-sector investors want to pay as little as possible for these “legacy assets”, in order to maximize their returns. But the banks will not sell any of their legacy assets unless they can do so at a price close to the level to which they’ve already been marked down. Is there any reason to believe that there’s a private-sector bid out there for legacy assets at their current marks? Not really. But if there isn’t, the banks will simply refuse to sell, and there won’t be any money or assets changing hands at all."

On the flip side, some see Geithner's plan as being safer than the alternative, bank nationalization, the plan that Krugman favors: "Bank nationalization will be complex, costly, and contentious. To work, it will almost certainly have to include a broad guarantee of all bank system obligations, something the public won’t be happy about. Congressional support won’t be easy to come by. Geithner’s plan will either work or else it will pave the road for that support. It might not be pretty, but that makes it a plan worth trying." --Kevin Drum

Further, perhaps Geithne's foot dragging on filling the Treasury Department's top desks has something to do with preventing his department from being able to take on the job of nationalizing the banks:

"No one knows if the Treasury Department has the technical capacity or simple competence to swiftly assume control of much of the United States banking sector. If Treasury seems unable to simply build out a banking plan and claw back bonuses, what makes anyone think they can run the banking sector?" asks Ezra Klein>

On the other hand, Klein argues that support for nationalization will be stronger than it is now, should the Obama plan fail:

"No one knows how bad the downside is if you botch receivership, or if receivership doesn’t work. It is easier to abstractly argue the virtues of successful nationalization than contemplate the consequences of unsuccessful nationalization. As such, it should be the absolute last resort. And this plan preserves it as such. There is a non-trivial chance, after all, that the banks will not sell to the private investors because the private investors will not buy the assets at a price that makes the banks solvent. If the private market determines the assets are worth 30 cents on the dollar but the banks will collapse if they’re not bought for 45 cents on the dollar, then the auctions will reveal insolvent banks that cannot be rendered whole through market measures. In that scenario, nationalization will become a consensus strategy, and as such, lose much of its downside.

I've been thinking that what's wrong with Obama is his reliance on a belief in an idelized bipartisanship to get things done, even when those supposed bipartisans he selects don't have his best interests at heart. Paul Krugman has touched on another Obama flaw: his obsessivness. It's ok to have faith in yourself and fight in the face of adversity, but how much negative feedback do you need to know when you've made a mistake? In Obama's case, the answer is "too much." Perhaps hubris is a part of Obama's character, as well. Here's what Paul Krugman writes about the Obama administration’s bank rescue plan:

"Over the weekend The Times and other newspapers reported leaked details about the Obama administration’s bank rescue plan, which is to be officially released this week. If the reports are correct Tim Geithner, the Treasury secretary, has persuaded President Obama to recycle Bush administration policy — specifically, the “cash for trash” plan proposed, then abandoned, six months ago by then-Treasury Secretary Henry Paulson. This is more than disappointing. In fact, it fills me with a sense of despair.

"There’s something strange going on here. By my count, this is the third time Obama administration officials have floated a scheme that is essentially a rehash of the Paulson plan, each time adding a new set of bells and whistles and claiming that they’re doing something completely different. This is starting to look obsessive."

The plan is basically Robin Hood in reverse: private investors buy toxic assets at auction. If the assets go up, the investors make a profit. If they go down, taxpayers will cover most of the loss. "So this isn’t really about letting markets work. It’s just an indirect, disguised way to subsidize purchases of bad assets," writes Krugman. The "problem with this plan is that it won’t work....If this plan fails — as it almost surely will — it’s unlikely that he’ll be able to persuade Congress to come up with more funds to do what he should have done in the first place."

The Bush/Obama solution is the opposite of what has gotten countries, even our own, out of similar economic disasters over the centuries: "As economic historians can tell you, this is an old story, not that different from dozens of similar crises over the centuries. And there’s a time-honored procedure for dealing with the aftermath of widespread financial failure. It goes like this: the government secures confidence in the system by guaranteeing many (though not necessarily all) bank debts. At the same time, it takes temporary control of truly insolvent banks, in order to clean up their books....But the Obama administration, like the Bush administration, apparently wants an easier way out," and it begins by unreslistically overvaluing the toxic assets Obama wants to sell to private investors."

But wait, it gets worse: "An alarming aspect [of the laterst version] of the plan is that private investment companies will manage the process on behalf of the government, despite the fact that government is providing most of the capital and insuring most of the risk, writes Robert Kuttner. [This supposed aspect of the plan has yet to be verified after the Obama announcement of the actual plan. --Politex] "Basically, the Treasury is colluding with private speculators to create off-balance sheet entities, to offer new windfall profit opportunities and disguise the true degree of risk. If this all sounds vaguely familiar, Geithner's Treasury, with no sense of irony, is offering a reprise of the several abusive and opaque gimmicks that produced this crisis, a tour that winds back down Memory Lane, from AIG to Enron.

"Like everything else about the Paulson-Geithner approach, this latest twist is totally clubby and non-transparent. There is no objective process, and no public criteria. Congress is being kept in the dark. The Congressional Oversight Panel is being denied the documents it needs....The Treasury does not have the staff resources to do the job properly, so it hires private investment bankers. This recalls the era when J.P. Morgan and his financier pals mounted a private rescue to halt the bank panic of 1907. But Morgan was a purely private banker, and he was using his own bank's money. It this case, the Treasury is supposedly a public institution using taxpayer funds, yet behaving with all the transparency of Morgan.

"...Far too much power is being given to the least regulated and least transparent players in the financial game, and too much is being left to the caprices of speculators. Indeed, these are many of the same firms that took the other side of bets with outfits like AIG, whose gambles crashed the system. In addition, this desperation use of private equity companies and hedge funds is compromising government's ability to regulate these shadowy players.... It all adds up to the most expensive and risky way of trying to recapitalize banks, and the least likely to succeed. Instead of simplifying, it is adding complexity and leverage. In effect, Geithner is doubling down on the same kinds of speculations that crashed the system. This time, however, the government guarantees are explicitly negotiated in advance, rather than being cobbled together after the crash. The main purpose of this entire strategy is to disguise the true depth of the hole in bank balance sheets and to prop up insolvent banks, not to repair the larger system. It has been largely designed by and for the same Wall Street players that created the crisis.... "Where in this affair is the president who hired Secretary Geithner and at whose pleasure the embattled treasury secretary serves?...The entire Obama economic team is far too close to Wall Street and far too much a continuation of the Paulson approach....The grave political and economic risk is that Obama continues to let Summers and Geithner lead him down the garden path; the industry-oriented mortgage rescue saves too few homeowners; housing remains in the doldrums and mortgage securities with it; the hedge funds and private equity companies make some money with government guarantees, but the banking system remains comatose; and Republicans increasingly become the instruments of public anger. For the moment, the president is a prisoner of this thinking and these appointees...and we all will live with the consequences."

Axis of Error: Obama, Geithner Join the Zombies, Stiff Taxpayers, by Paul Krugman

The Geithner plan has now been leaked in detail. It’s exactly the plan that was widely analyzed — and found wanting — a couple of weeks ago. The zombie ideas have won.

The Obama administration is now completely wedded to the idea that there’s nothing fundamentally wrong with the financial system — that what we’re facing is the equivalent of a run on an essentially sound bank. As Tim Duy put it, there are no bad assets, only misunderstood assets. And if we get investors to understand that toxic waste is really, truly worth much more than anyone is willing to pay for it, all our problems will be solved.

To this end the plan proposes to create funds in which private investors put in a small amount of their own money, and in return get large, non-recourse loans from the taxpayer, with which to buy bad — I mean misunderstood — assets. This is supposed to lead to fair prices because the funds will engage in competitive bidding. But it’s immediately obvious, if you think about it, that these funds will have skewed incentives. In effect, Treasury will be creating — deliberately! — the functional equivalent of Texas S&Ls in the 1980s: financial operations with very little capital but lots of government-guaranteed liabilities. For the private investors, this is an open invitation to play heads I win, tails the taxpayers lose. So sure, these investors will be ready to pay high prices for toxic waste. After all, the stuff might be worth something; and if it isn’t, that’s someone else’s problem.

Or to put it another way, Treasury has decided that what we have is nothing but a confidence problem, which it proposes to cure by creating massive moral hazard.

This plan will produce big gains for banks that didn’t actually need any help; it will, however, do little to reassure the public about banks that are seriously undercapitalized. And I fear that when the plan fails, as it almost surely will, the administration will have shot its bolt: it won’t be able to come back to Congress for a plan that might actually work.

What an awful mess.

Obama is trying to put square pegs into round holes, and this may spell defeat for him in 2012. As most know by this time, his flaw is an idealized vision of bipartisanship. It doesn't work if the folks you select aren't as idealized as you are. As the drowning scorpion said from the back of the man it stung and drowned, it's in my nature to be your antagonist. For example, it turns out that Treasury secretary Timothy Geithner failed to inform the President that he stripped away the anti-bonus ammendment from Obama's TARP package, and ended up benefitting the very people at AIG that got us into this present economic disaster. Naturally, unlike Bush, Obama said he should be blamed. President Obama made an error of judgement in nominating a scorpion to head the Treasury. TA Frank, a Fellow at the supposedly centrist New America Foundation, predicts the results of Obama's idealized bipartisanship below. Frank, by the way, appears to be clueless about the real causes and results of our present economic meltdown. --Jerry Politex

...The Great Recession began in 2008 when Americans abruptly realised that their wealth had vanished. The purchase of billions of massage cushions and ceramic frogs no longer seemed prudent, so everyone decided to try saving and producing instead. But this didn't work very well, since without consumers there could be no producers. So Washington stepped in to fill the void. Since America had no money saved anymore, it borrowed from China, which was eager to sell off a growing backlog of massage cushions and ceramic frogs. Everyone hoped this might restart the old party.

While Obama encouraged vigorous debate among his advisers on most things, economics was different. No one seemed to agree, and no one seemed to speak English. Debates became a combination of solemn jargon and angry epithets - like "neo-Wicksellian", "Hodrick-Prescott filter" and "Austrian". Obama needed a sturdy guide to an unfamiliar field. His choice was Lawrence Summers, whom Obama found to be brilliant, persuasive and even intimidating. If Summers had curious social habits, like screaming at people while eating pizza and falling asleep at odd moments, he at least had a clear answer to everything. Treasury secretary Timothy Geithner tended to reinforce whatever Summers said. Meanwhile, advisers like Paul Volcker had trouble being heard.

Cerebral by nature, Obama favoured Summers, Geithner and other economists who counselled pragmatism over emotionalism on rescuing Wall Street. Fairness was nice, they said, but not at the price of mayhem. "This isn't a morality play," the White House told Washington opinion writers. "This isn't a morality play," Washington opinion writers told the White House. Everyone agreed it wasn't a morality play, except for ordinary Americans, who saw a morality play. They saw that a financial elite - once omnipotent and untouchable - had created its own undoing. They saw that this elite was demanding - begging, cajoling, blackmailing - to be saved, no matter how high the cost or unjust the policy. And they wanted a stern enforcer to open the books and say, if necessary, "Tough sheets".

But Obama preferred stern talk to stern action. Instead of forcing banks to open their books properly, Obama tried to buy them time by getting more money to them, hoping they'd patch things up. Instead of allowing house prices to fall to a level that would allow more people to afford homes, Obama sought to aid banks to keep prices as high as possible. Instead of confronting the biggest malefactors, he wound up indulging them. Obama forgot that he'd effectively run as a warrior priest, not a technocrat. But Americans were far more willing to forgive mistaken policies based on firm principles than mediocre policies based on expedience.

The stimulus packages were well intentioned. The goal had been to do the opposite of anything Herbert Hoover did. Since "starve this fevered patient" had been the wisdom of 1930, "force-feed this fevered patient" was the wisdom now. But the patient remained purple - albeit now fat and purple. Some economists advocated the fiscal equivalent of the second word war, forgetting that wartime economics depends on wartime feelings. Americans didn't feel the higher purpose that they'd felt after Pearl Harbour and 9/11. Appeals to shared sacrifice rang hollow when tax dollars were going to AIG. Inflation returned....2013 would see the inauguration, once again, of a Republican president....

Obama may be a one-term president for two reasons: he is following the failed Bush plan to rescue the economy with pretty much the same people and thinking that got us into this mess in the first place, and he has promised that if he doesn't fix the economy in four years he should not be re-elected. We need to hold him to that. If he won't hold the people who got us into this mess accountable, he should be made accountable in their place. There are at least two possible solutions to the mess we're in --staring another great depression in the face-- the Roosevelt Way, and the Obama Way.

The Roosevelt Way

...There is a whole other path to repairing the banking system, and a whole other set of experts, equally brilliant and better in touch with financial realities. But their unfiltered views are not reaching the president. This loyal opposition, of which more shortly, is not limited to lefties; it spans the ideological spectrum. Though the details are numbingly technical (and deliberately mystified both by the investment bankers and their allies at the Treasury), the basics of what's wrong with the banking system and how to fix it are, at bottom, very simple.

After all, what do banks do? They take in deposits and they put out loans and make other investments. In the past decade, far too many of the banks' investments were far too speculative. They lost vast sums, which now exceed the value of their capital. In plain English, they are insolvent. In a situation like this, a busted banking system can push the whole economy into prolonged depression. We are right on the edge of that condition, and there is little time to lose.

As the president of the Federal Reserve Bank of Kansas City, Thomas Hoenig, explained March 6 in a brilliant speech (PDF) that is being widely circulated on Capitol Hill, "Too Big Has Failed," to save the banking system we need a public corporation like the Reconstruction Finance Corporation of the 1930s, which at one point held about one-third of all U.S. bank stock, and by the time it wrapped up its affairs it did not cost taxpayers a penny. A modern RFC would be given the technical competence and manpower to audit just how bad things are. It needs to determine how far underwater is each of the large banks. (The top four hold about 55 percent of all deposits; fix them and you fix the system.)

The public corporation, according to Hoenig, would need to decide which banks to take into receivership, which ones have competent management teams, and which managers need to go. Once the size of the hole in bank capital is determined -- and it will be on the scale of two trillion dollars -- the government needs to decide who eats the loss. How much do the taxpayers put in, and how much do the bondholders have to sacrifice? Owners of bank stocks are not really relevant. They have already lost upwards of 95 percent of their investments. When a bank is taken into receivership, they will lose the rest. But it's no big deal for the system. Trying to use public money to pump up the value of bank stocks -- Geithner's approach -- has it backwards.

Finally, when the banks are restored to solvency, they need to be returned to private ownership. Hoenig is not exactly a Bolshevik, but he is embracing Roosevelt and the President's men are not. A well-staffed government corporation, which would take insolvent banks into receivership, is the most effective approach because it gets the job done swiftly and transparently, and with the least unnecessary government subsidy of market middlemen.

The Obama Way

In the past two weeks, political support for the Tim Geithner/Larry Summers approach to solving the banking crisis has been unraveling in Congress, with blistering criticism from legislators of both parties. The financial danger is that the Treasury will burn through the money approved by Congress without fixing the system. The political danger is that Republicans will posture as the populists, expressing faux-indignation that so much taxpayer money has gone to Wall Street. The overarching risk to Obama's presidency is that the plan won't work, and his political capital will evaporate along with the financial capital....

The Geithner/Summers strategy is the complete opposite [of the Roosevelt way]. Geithner hopes to enlist hedge funds and private equity companies to purchase bonds from banks, using loans and loan guarantees from the Treasury and the Federal Reserve, and thereby restart the very system that failed. This approach gives far too much power and taxpayer subsidy to the least transparent and least regulated parts of the financial system. On Saturday, the Wall Street Journal reported that the announcement of the details of the plan had to be delayed yet again, because two of the biggest firms wanted even sweeter terms before they came to the table.

This latest Geithner scheme to restart the doomsday machine of securitization for newly issued bonds is the fifth do-over since Paulson embarked on this path last October. Geithner's scheme sidesteps the core problem that stymied Paulson -- what about the pre-existing bonds that are clogging bank balance sheets? This huge hole in bank assets is a far bigger challenge than re-starting the engine of new lending, which never entirely quit. The Geithner/Summers approach is complex, slow, ad hoc, non-transparent, and far too Wall Street oriented. Only now is Geithner getting around to initiating proper audit of the zombie banks he is aiding, under the euphemism, "stress tests." [Business Week reports that comments by members of the Obama Administration suggest that everyone will pass: "It looks like flunking out is not in the cards." --Politex]

As an indication of just how closely Geithner and company are acting on Wall Street's behalf, consider this tidbit, whose significance the media largely missed: Friday's Washington Post reported that a man named H. Rodgin Cohen, under consideration for Deputy Treasury Secretary, had become the latest proposed senior appointee to withdraw from consideration. The Post treated the story as part of the continuing saga of unfilled sub-cabinet jobs. But who is "Rodge" Cohen? Astoundingly, he is a senior lawyer from the firm of Sullivan and Cromwell, and the man who has been negotiating with Geithner on behalf of the large Wall Street banks!

What the hell, if you're going to act mainly in the interests of the banks, why not bring just their people right into government? The story didn't give details, but only mentioned that "an issue" had emerged during the vetting process. We can only imagine what kinds of conflict of interest problems the vetting team unearthed. If you ask the question, how can we get America's banking system restored to health, the Geithner/Summers approach makes absolutely no sense. But if you ask a different question, it makes perfect sense: how can we pump up the share price of outfits like Citi and Goldman, while we pump in taxpayer and Federal Reserve money and hope for a miracle. Unfortunately, a miracle is just what it would take for this approach to work....

It would be hard to imagine two administrations seemingly more opposite than the Bush and the Obama presidencies. Yet Geithner's approach is essentially a continuation of the failed strategy of Bush Treasury Secretary Henry Paulson, Geithner's former close colleague in Geithner's prior role as president of the New York Fed. In defending the AIG bonuses, CEO Edward Liddy actually said that you had to pay bonuses to attract and keep "the best and brightest talent," in this case the very people who are costing America's taxpayers $175 billion and counting. Far from receiving bonuses, these people deserve to share a cell with Bernie Madoff.... [It's instructive that ONLY the very group at AIG responsible for selling the unsupported insurance that got us into this mess are contracted to receive bonuses: NYT: "The bonuses will be paid to executives at A.I.G.’s financial products division, the unit that wrote trillions of dollars’ worth of credit-default swaps that protected investors from defaults on bonds backed in many cases by subprime mortgages." --Politex]

Under Geithner as under Paulson before him, Treasury has been stonewalling. Legislators of both parties are increasingly viewing Geithner as part of the problem. As the administration continues its coziness with Wall Street and the approach fails to bring zombie banks back to life, populist anger passes to both the Republicans and to media tribunes such as Lou Dobbs. This brand of populism is one part anti-Wall Street, but two parts anti-government and anti-immigrant. It has no strategic coherence as a recovery plan. The alternative to Lou Dobbs' brand of populism is of course Franklin Roosevelt's. But something is really off when Sen. Sam Brownback, the AEI, and the Kansas City Federal Reserve Bank start sounding more like Roosevelt than Barack Obama's treasury secretary does. Obama needs to get a second opinion, firsthand.

First Fifty Days: Obama Changes 25 Bush Policies

President Obama's quickly taking steps to overturn policies that marked the legacy of his predecessor, George W. Bush....Here is a list of the Bush administration policies and laws that Obama has reversed so far:

1. Signed an executive order Monday lifting the 7½-year ban on federal funding for embryonic stem cell research and a memorandum covering all scientific research.
2. Funded international family planning groups that provide abortions or related services.
3. Revoked the Bush-era "Provider Conscience" rule that created more regulations to prevent those who refuse to hire doctors and nurses opposed to abortion rights from receiving federal funds.
4. Signed an executive order closing down the detainee center at the Guantanamo Bay military facility within a year, and established new guidelines on interrogation methods and the treatment of detainees.
5. Mandated all U.S. interrogators in all agencies to adhere to rules in the Army Field Manual.
6> Called for the shut down of CIA detention centers around the world.
7. Pentagon lifted the controversial ban on the photographing of flag-draped caskets of America's war dead, reversing the policy that was implemented by George Bush in 2001.
8. Ordered the drawdown of troops in Iraq" "Let me say this as plainly as I can: by Aug. 31, 2010, our combat mission in Iraq will end."
9. Authorized full scientific reviews of projects that might harm endangered wildlife and plants. Obama's memorandum overrides the Bush administration regulation that limits scientific reviews of projects that could harm endangered species.
10. Started a process and asked the Environmental Protection Agency to look at allowing California and 13 other states the right to set their own, stricter, automobile emissions and fuel efficiency standards, a plea by the states that was rejected by the Bush administration.
11. Directed Transportation Secretary Ray LaHood, to finalize the fuel efficiency standards for cars for 2011 and to make recommendations for beyond that year, an action expected to lead to stricter fuel efficiency standards.
12. Reversed a Bush order requiring federal contractors to post notice that workers can limit financial support of unions serving as their only bargaining representatives.
13. Ordered that federal contractors offer jobs to current workers when contracts change and that federal contractors be prevented from being reimbursed for expenses meant to influence workers deciding whether to form a union and engage in collective bargaining.
14. The Equal Pay for Equal Work Bill was signed into law Jan. 29 and sought to end pay disparities between men and women.
15. Announced in February that the government would withdraw oil and gas leases that were offered on 77 parcels of public land for drilling near national parks in Utah by the Bush administration and that are currently in court.
16. Scrapped leases for oil-shale development on federal land in Colorado and Wyoming.
17. Rejected a Bush plan to open areas off the Atlantic and Pacific coasts to oil drilling.
18. Wrote in a memo to heads of executive branch departments and agencies that [officials should check the validity of each Bush signing statement with the Justice Dept.] He said he will sign presidential statements, but do so more sparingly than Bush, who came under fire for using hundreds of these statements to tell government officials to ignore parts of the law that it believed were unconstitutional restrictions on the president's executive power.
19. Reverses Bush administration appeal of an air pollution case, signaling that the government will embrace tougher rules to cut mercury emissions from power plants.
[http://www.google.com/hostednews/ap/article/ALeqM5h776EhBm9MT8AWmnULEB5jp6pxCgD96688903]
20. Orders his gvt. not to rely on any legal opinions concerning interrogation, incuding torture, produced by the Justice Department or other agencies between Sept. 11, 2001, and Tuesday, when he assumed the presidency.
[http://www.nytimes.com/2009/01/23/us/politics/23obama.html?_r=1]
21. Executive orders mandate new limits on lobbyists and...
22. Demand that the government disclose more information.
[http://www.nytimes.com/2009/01/22/us/politics/22obama.html?ref=politics]
23. Appointment of two permanent envoys to major trouble spots—George Mitchell to the Mideast and Richard Holbrooke to Afghanistan and Pakistan. A sign that Obama intends a 180-degree reversal from the ultimatum-heavy approach of the Bush administration, which saw diplomacy mainly as an exercise in stating terms for surrender.
[http://www.newsweek.com/id/181038?from=rss]
24. Moves quickly to undo Bush "midnight regulations," some designed to relax large swaths of environmental rules.
[http://www.commondreams.org/headline/2009/01/23]
25. Appointed Bush's fiercest critics of his use of executive power to head up the Justice Dept.'s Office of Legal Counsel.
[http://www.politico.com/news/stories/0109/17895.html]

A warning...It’s September 2009, the unemployment rate has passed 9 percent, and despite the early round of stimulus spending it’s still headed up. Mr. Obama finally concedes that a bigger stimulus is needed. But he can’t get his new plan through Congress because approval for his economic policies has plummeted, partly because his policies are seen to have failed, partly because job-creation policies are conflated in the public mind with deeply unpopular bank bailouts. And as a result, the recession rages on, unchecked....[Obama's] economic policy is falling behind the curve, and there’s a real, growing danger that it will never catch up....

Many economists, myself included, actually argued that [Obama's stimulus] plan was too small and too cautious. The latest data confirm those worries — and suggest that the Obama administration’s economic policies are already falling behind the curve. To see how bad the numbers are, consider this: The administration’s budget proposals, released less than two weeks ago, assumed an average unemployment rate of 8.1 percent for the whole of this year. In reality, unemployment hit that level in February — and it’s rising fast. Employment has already fallen more in this recession than in the 1981-82 slump, considered the worst since the Great Depression. As a result, Mr. Obama’s promise that his plan will create or save 3.5 million jobs by the end of 2010 looks underwhelming, to say the least. It’s a credible promise — his economists used solidly mainstream estimates of the impacts of tax and spending policies. But 3.5 million jobs almost two years from now isn’t enough in the face of an economy that has already lost 4.4 million jobs, and is losing 600,000 more each month.

There are now three big questions about economic policy. First, does the administration realize that it isn’t doing enough? Second, is it prepared to do more? Third, will Congress go along with stronger policies? On the first two questions, I found Mr. Obama’s latest interview with The Times anything but reassuring. “Our belief and expectation is that we will get all the pillars in place for recovery this year,” the president declared — a belief and expectation that isn’t backed by any data or model I’m aware of. To be sure, leaders are supposed to sound calm and in control. But in the face of the dismal data, this remark sounded out of touch. And there was no hint in the interview of readiness to do more....

As I read it, this dismissal — together with the continuing failure to announce any broad plans for bank restructuring — means that the White House has decided to muddle through on the financial front, relying on economic recovery to rescue the banks rather than the other way around. And with the stimulus plan too small to deliver an economic recovery ... well, you get the picture. Sooner or later the administration will realize that more must be done. But when it comes back for more money, will Congress go along? Republicans are now firmly committed to the view that we should do nothing to respond to the economic crisis, except cut taxes — which they always want to do regardless of circumstances. If Mr. Obama comes back for a second round of stimulus, they’ll respond not by being helpful, but by claiming that his policies have failed....Also, an overwhelming majority believes that the government is spending too much to help large financial institutions. This suggests that the administration’s money-for-nothing financial policy will eventually deplete its political capital.

...There’s a growing sense of frustration, even panic, over Mr. Obama’s failure to match his words with deeds. The reality is that when it comes to dealing with the banks, the Obama administration is dithering. Policy is stuck in a holding pattern....Why do officials keep offering plans that nobody else finds credible? Because somehow, top officials in the Obama administration and at the Federal Reserve have convinced themselves that troubled assets, often referred to these days as “toxic waste,” are really worth much more than anyone is actually willing to pay for them — and that if these assets were properly priced, all our troubles would go away....

Earlier this week, Ben Bernanke, the Federal Reserve chairman, was asked about the problem of “zombies” — financial institutions that are effectively bankrupt but are being kept alive by government aid. “I don’t know of any large zombie institutions in the U.S. financial system,” he declared, and went on to specifically deny that A.I.G. — A.I.G.! — is a zombie. This is the same A.I.G. that, unable to honor its promises to pay off other financial institutions when bonds default, has already received $150 billion in aid and just got a commitment for $30 billion more.

The truth is that the Bernanke-Geithner plan — the plan the administration keeps floating, in slightly different versions — isn’t going to fly. Take the plan’s latest incarnation: a proposal to make low-interest loans to private investors willing to buy up troubled assets. This would certainly drive up the price of toxic waste because it would offer a heads-you-win, tails-we-lose proposition. As described, the plan would let investors profit if asset prices went up but just walk away if prices fell substantially. But would it be enough to make the banking system healthy? No.

Think of it this way: by using taxpayer funds to subsidize the prices of toxic waste, the administration would shower benefits on everyone who made the mistake of buying the stuff. Some of those benefits would trickle down to where they’re needed, shoring up the balance sheets of key financial institutions. But most of the benefit would go to people who don’t need or deserve to be rescued. And this means that the government would have to lay out trillions of dollars to bring the financial system back to health, which would, in turn, both ensure a fierce public outcry and add to already serious concerns about the deficit. (Yes, even strong advocates of fiscal stimulus like yours truly worry about red ink.) Realistically, it’s just not going to happen.

So why has this zombie idea — it keeps being killed, but it keeps coming back — taken such a powerful grip? The answer, I fear, is that officials still aren’t willing to face the facts. They don’t want to face up to the dire state of major financial institutions because it’s very hard to rescue an essentially insolvent bank without, at least temporarily, taking it over. And temporary nationalization is still, apparently, considered unthinkable. But this refusal to face the facts means, in practice, an absence of action...Inaction could result in an economy that sputters along, not for months or years, but for a decade or more.

Obama.

Granted, he's doing it slower than a Republican president would, but once you're out of money, you're dead.

He's doing it by continuing to fight never ending wars we can't afford, and he's doing it by by giving never ending amounts of money to the wealthy CEO's of bankrupt banks and corporations with little government oversight or control. That's because the people he's hired to continue the wars and give out the money are the same people who got us into these wars and allowed their friends to pocket billions and billions of our money. And there's no end in sight.

Bob Herbert, writing in the NYT, calls the Bush wars in Iraq and Afghanistan "endless," and sees Obama continuing to spend money we don't have, which will eventurally lead to our demise:

"The U.S. economy is in free fall, the banking system is in a state of complete collapse and Americans all across the country are downsizing their standards of living. The nation as we’ve known it is fading before our very eyes, but we’re still pouring billions of dollars into wars in Afghanistan and Iraq with missions we are still unable to define....

"Lyndon Johnson, despite a booming economy, lost his Great Society to the Vietnam War....The United States is on its knees economically. As President Obama fights for his myriad domestic programs and his dream of an economic recovery, he might benefit from a look over his shoulder at the link between Vietnam and the still-smoldering ruins of Johnson’s presidency....[Yet,] Instead of cutting our losses, we appear to be doubling down."

An editorial in the NYT calls the billions and billions in bailout money "never ending," and blames our stagger into depression on Obama's inability to control the continuing greed of banks and corporations: "Americans awoke to the news on Monday that federal officials had spent yet another feverish weekend concocting yet another bailout. This time, the Obama Treasury Department — sounding a lot like the Bush Treasury Department — promised another $30 billion to the American International Group, the giant insurer. It was the fourth time since September that taxpayers have been called upon to rescue A.I.G. from collapse. It brings the bailout commitment for that one company to some $160 billion.

"The A.I.G. bailouts fail the basic test of transparency: Who ends up with the money? Major financial institutions are not innocent victims of A.I.G.’s demise. They are sophisticated investors, and they should have known the risks being taken — and who profited mightily from the relationship before it all came crashing down. Whomever the recipients are, they should be investigated for their roles in the crash and, to the extent possible, be made to pay for the bailouts....

"It is...painfully clear that more of the same black-hole bailouts are failing to restore stability or confidence. Stock markets worldwide tanked on Monday. A growing chorus of economists and commentators — including this page — are urging the Obama administration to adopt a more comprehensive solution: a government-run restructuring, or nationalization. The government would not only take an ownership stake in firms that require extensive and ongoing bailouts — as it has done with A.I.G. and Citigroup — but also direct control of the weakest ones. It would get a realistic assessment of the assets crippling them and revamp their finances before returning them to the private sector, where they would be smaller and healthier and could start lending again....Each new bailout of old losers only feeds mistrust of the government and weakens public support for the even tougher decisions to come."

We simply cannot afford the wars we are in, and we cannot afford to allow Obama and his advisers to keep handing out money with few strings attached. Both must be stopped at once. Now. If Obama fails, he says he'll become a one-term president. Frankly, I'm more concerned about the United States becoming a one-term nation. --Jerry Politex, Feb. 3, 2009