Time for Thorns

Sunday Treasury Sec.  Geithner began the walk-back on the no-new-taxes-on-middle-class campaign promise.    Of course,  this ignores the fact that the promise was broken shortly after Obama ascended to the throne with a big increase in tobacco taxes,   which primarily hit the poor and middle class,  more of whom  smoke.

Democrats are still blaming Pres.  Bush for the economy as well as everything else the public dislikes,  but as Byr0n York details,  the new Wall Street Journal/NBC News poll is bad news for Democrats versus Republicans across the board.

Philip Klein looks at polls on Obama personally,  and reminds us  ” it’s hard to point fingers when you’re running the show.”

As for taxes,  the middle class has begun to figure out that the light at the end of the tunnel is another train coming.

Stuart Varney has a fine column up on the Wall Street Journal.

I agree with him that Obama is making it almost impossible for financial institutions to return TARP money, because he wants to control them via those funds.  If you control the economy, you control almost everything.

His Oneness is many things, but stupid isn’t one of them.

And here’s his henchman, Treasury Sec. Geithner, using newspeak to confirm that if banks “need exceptional assistance”, he will be firing their CEO’s and boards.

Barack Obama has advising him 3 of the major players in creating the financial sector disaster:  Robert Rubin, Lawrence Summers and Timothy Geithner.

During the Clinton administration, Rubin was Treasury Secretary, Summers was his assistant, and Geithner was an undersecretary. This unholy trio lobbied Clinton and Congress  to ditch the Glass-Steagall Act, which prevented banks from entering into the securities market. They were also part of the group that rammed the Commodity Futures Modernization Act through.

Why does this ancient history matter?  Because banks then engage in credit-default swaps and collateralized-debt obligations -— financial instruments that normal people, and a lot of  regulators,  didn’t really understand.  Even the most straightforward explanations of those items warp your brain.  Suffice it to say that they are gambles, plain and simple.  It may help to know Warren Buffett called  them “financial weapons of mass destruction.”

Banks were then able to use derivatives to make their books look better, buy mass quantities of subprime mortgages, and become “too big to fail” institutions.

Geithner went on to become head of the New York Federal Reserve, where he was instrumental in backing the Paulson bailouts, including the infamous AIG bailout. He is now our Treasury Secretary, while Summers is a key economic adviser.  The pair of them were told in a Feb. 28th memo that the AIG bonuses were coming on March 15.

They’re the authors of the new plan, in which we taxpayers essentially buy back from the banks the very same bad assets the Toxic Trio helped create.

Rubin departs  Citigroup in April, having watched its stock go from $50 a share to under $2 in 2 years, but says he will still make himself available to the Obama administration as an adviser.

Ask your liberal friends if this is the change they voted for.

Yesterday the White House pushed out the chairman of General Motors and told Chrysler to form a partnership with Italian automaker Fiat within 30 days as a condition for receiving another round of government aid.

With the C.E.O. gone,  GM is now run by the Chief Operating Officer.  What reporters need to ask at the daily briefing from the White House is what the COO agreed to do that the CEO would not.    That ought to give Press Secretary Robert Gibbs a whale of a deer-in-the-headlights moment,  but I won’t hold my breath that any reporter will oblige me with what should be the most obvious question of all.

There is no mention, of course, of the new mileage standards the government just mandated.    Thank God I bought my big diesel truck before all this nonsense started.    Pretty soon we’ll all have vehicles that will tote about 2 bags of groceries,  and nobody in cities will be able to afford anything larger than a bicycle,  which is what the liberal urban planners consider Nirvana.

Let’s see, the financial sector is already run by White House dictates, now the auto industry.    Who’s next?    And there will be a next,  even if Congress manages to resist Geithner’s call for more regulatory power.    His Oneness isn’t concerned,  since they’ve taken the power without its being granted — so what if Congress doesn’t catch up.

If you happened to listen to any of the hearings on Capitol Hill today, you were treated to some residue of faked outrage about A.I.G.,  and even a few pointed questions,  but mostly Treasury Sec. Geithner’s irritating habit of gesturing with 2 fingers while not quite pointing.

To make it simple,  the Obama administration is pushing for him to have the power to go in and take over “bad” banks.    Of course, he will decide what “bad” means.    And so long as they refuse to rescind the mark-to-market rules,  he can make just about any financial institution bad.    That’s already happening, as banks are being told to increase lending while keeping a high capital reserve,  but they are not able to determine reasonably what that is,  because the value of their assets changes hourly.

And the regional and community banks, which prudently did not get into derivatives and credit-default swaps and all the other fancy-sounding financial terms for “Look! A new way to make money, and we don’t understand it either!”,  are receiving black marks from the feds because they have too much capital in reserve,  so they aren’t lending enough.

Now, how long is the journey from “insecure” and  “under-capitalized” to “we’re taking you over”?     What is the distance between “troubled” and “we just don’t like your company”?     How many steps would it take to apply the same principles to every other business sector?

Reality check — the federal government so regulates the financial sector that it has practically already nationalized it,  and never mind that its policies and regulations are in large part responsible for the current fiscal mess.

The steel industry has been regulated almost out of existence.    Ditto for the chemical industry.    Industry doesn’t send American jobs off-shore, the government and Congress do.    And they’re about to dispatch a hell of a lot more of them.

From The Corner at National Review Online:

The Geithner Plan [David Freddoso]

“What to make of Treasury Secretary Tim Geithner’s op-ed today  in the Wall Street Journal,  and his plan to save the financial system through a Public-Private Investment Program?   Rep. Scott Garrett (R, N.J.),   one of the few members of the House Banking Committee who really understands the issues involved and asks pertinent questions during hearings,  told me that he has a few concerns with it. Among them:

1) Is a $500 billion to $1 trillion plan large enough to restore confidence for investors, when the size of the problem here is greater than $2 trillion?   And what if the worldwide problem is several times as large?   What impact does the global market for toxic assets have on the ones we’re buying here?

2) Geithner says nothing in his op-ed about the issue of mark-to-market,  and whether some kind of measures will be taken when the PPIP purchases mortgage-backed securities to ensure that it does not have a ripple effect.   When the purchases are made, will the newly established (and lower) value of such assets suddenly burn huge holes in the balance sheets of institutions that do not or cannot take part in this round of the bailout?   “It probably would have been good if he said something in that op-ed about addressing mark-to-market at the same time.”

3) While advocating provisions that prevent abusive use of government bailout money — for huge bonuses, for example — Geithner offers this cautionary note:

These provisions need to be designed and applied in a way that does not deter the participation by the private sector in generally available programs to stabilize the housing markets, jump-start the credit markets, and rid banks of legacy assets.

With Congress acting out of rage and haste (and a desire on Democrats’ part to cover their rear-ends) to pass the 90 percent AIG bonus tax,  Garrett wondered whether they might be undermining what Treasury is trying to do,  creating a huge disincentive for marginal institutions considering participation in the new bank bailout.   (This concern is probably reflected in President Obama’s apparent coolness toward the AIG tax.)

Meanwhile, House Minority Whip Eric Cantor (R, Va.) offers up this statement in opposition, advocating instead the use of the insurance model that some Republicans had offered up as an alternative to TARP:

[T]he plan seems to offer little incentive for private investors to participate unless the subsidy is made so rich that it comes at the expense of the taxpayer.    In its current form, Secretary Geithner’s plan is a shell game that hides the true cost of the program from the taxpayers that will be asked to pay for it.    Six months after Congress debated the first TARP, it is inexcusable that taxpayers still have not been told their true exposure.”

If you can stomach it, read Timmy here.

The Wall Street Journal has done prodigious work in unearthing some facts.    Are you happy to learn that Germany’s  Deutsche Bank got some of it, along with other foreign entities?

It will make your blood boil,  but you need to know what happened and why, so you can understand that the problems still have not been fixed.  And as long as WonderBoy Geithner stays in charge, they won’t be.  Here’s why.

The underlying smackdown is here.

Our tax-challenged Treasury Secretary is a flop in Europe, too.  Now watch the Obama apologists trip all over themselves presenting new excuses for a second bad showing.

Don’t expect any really bad media attention though,  since most still  believe His Oneness is telling the truth when his lips move.