More Money from Helicopters?

No, sorry, not from this one. We used all the money just to build it!

Today the Obama administration has finally released the details of its plans to jump-start lending.  The core idea of the plan is to help finally put a value on ‘toxic assets’ while simultaneously removing them from banks’ ledgers.  The thought is that without such uncertain assets, banks will be more willing to lend - not only to the public, but to each other.  But will it work?

Continue reading Buying Bad Assets vs. Nationalization

“A person is smart. People are dumb, panicky dangerous animals and you know it.”

Maybe we could use this on AIGFP's customers to make them forget about their contracts?

It may seem silly to quote a movie (Men In Black) with such a sobering, outraging topic, but it most definitely applies.  The level of hatred being directed at AIG, at the government, and at the administration for the payment of bonuses by AIG to members of its Financial Products division (AIGFP) is staggering.  The only thing that is more staggering is the utter lack of desire of these people (politicians included) to find out any facts about the issue, and to determine whether actually paying the bonuses would be the best thing for taxpayer interests.

Yes, people are being dumb.  Very dumb.  They are being irrational and emotional, and there is no place in business for either type of behavior.  When we have US Senators claiming that executives should be committing suicide (even rhetorically) I would say we have crossed the line.  If we take a careful, rational look at the situation, we can quickly see exactly why the bonuses should be paid.

And before you get horribly angry at me or think I’m insane, regarding the moral issues here I’m largely playing devil’s advocate.  I’m all for the government taking those bonuses back in any legal way possible.

Continue reading On AIGFP, and why the bonuses should be paid.

A cap and trade program is a good start for solving one of our most vexxing (and controverisal) environmental problems.

Today is the finale in the series of Special Reports outlining some of the major policy initiatives set forth in the Obama Administration’s budget proposal and 10-year ‘plan’.  We’ve already looked at Infrastructure improvements, changes to Education standards, and Healthcare Reform.  Now we turn our attention to what is possibly the most controversial of Obama’s goals - serious Environmental Reform.

So Much for ‘Global Warming’

That seems to be a fairly popular refrain in the middle of February when your town is covered in ice, or you’re digging yourself out of record snowfalls, or you’re seeing the bottom fall out of your outdoor thermometer.  It’s easy to take a single day, or month, or even an entire winter and use it as ‘anecdotal evidence’ to convince yourself (or others) that climate change is a myth.

Continue reading Special Report - Obama’s New Deal: Environmental Reform

America ranks 24th in Disability Adjusted Life Expectancy, behind many countries with 'socialized medicine'. Yet somehow they're the suckers?

Today comes Part 3 of the four-part series on “Obama’s New Deal”.  Last week I discussed the administration’s agenda regarding infrastructure and education.  These are perennial issues, and while there is always some debate over how and why to spend money on them, most of us agree that government does  have some place in their funding.  This week I’ll be tackling two issues where there is significant debate over the level of governmental involvement - health care and environmental reform.

Universal Healthcare Round 2?

Fans of the Clinton administration and its detractors both probably remember the epic battle of the 90s regarding the dreaded Universal Healthcare.  It was a pretty dismal failure for two primary reasons.  First, the plan was cobbled ‘in secret’ by the administration, then unveiled in somewhat of a ‘take it or leave it’ manner.  The second reason was that a Republican controlled congress decided to ‘leave it’ - health care reform was never given a legitimate shot.

Continue reading Special Report - Obama’s New Deal: Healthcare Reform

I wonder if NCLB leaves room to teach our youngsters about irony?

Yesterday I wrote about the Obama Administration’s plans for repairing and rebuilding our nation’s infrastructure.  They seem like worthy goals, even if the level of funding isn’t anywhere near what would be necessary for a solid overhaul of our bridges, roads, air traffic control systems, and railways.  It’s a start, and that’s probably the best we can hope for right now.

Today I’ll focus on the next major topic of the budget proposal turned policy document:  Education.

Continue reading Special Report - Obama’s New Deal: Education

It's on the table now. But will it pass?

Today starts the first in a series of Special Reports about the sweeping agenda introduced by Obama’s first budget proposal.  Make no mistake - these changes are bold, transformative, and already controversial.  Obama has quite a bit of political capital as a result of his decisive victory and his high approval rating.  Time will tell if it will be sufficient to see his agenda implemented.

This special report will come in four parts, addressing four big areas where we’re seeing significant policy changes and/or increased spending.  Part 1 will focus on infrastructure spending, Part 2 will focus on education reforms, Part 3 will deal with health care reform, while Part 4 will tackle environmental reforms.

Continue reading Special Report - Obama’s New Deal

A New New Deal?

An appropriate title given the last 8 years of fiscal indiscretion.

Yesterday Obama unveiled the administration’s proposed budget for the government’s FY2010, which will begin in October.  This document, titled A New Era Of Responsibility, appears to be far more than just a ‘budget’ and in fact isn’t quite as specific as the final budget will be.  This is more of a policy statement - an outline of the program Obama intends to implement.  Say what you will, it is certainly an ambitious plan, quite possibly the most ambitious since The New Deal.

That fact is made clear right off the bat in the “President’s Message”, an introduction to the document.  “There are the years that come along once in a generation,” it claims, “when we look at where the country has been and recognize that we need a break from a troubled past, that the problems we face demand that we begin charting a new path. This is one of those years.”

So what is that path, and can we realistically reach it?

Continue reading The Obama Administration, Day 38

Ask Bobby Jindal

I'll tell you where you can put that money!

I’ve been tossing this question around in my mind for the past several days.  The fact that Bobby Jindal, the current governor of Louisiana offered the Republican ‘rebuttal’ to Obama’s speech last night has driven me to take a good look at Louisiana and the current state of its economy in an attempt to answer it.

Jindal flirted with and then finally decided to turn down a portion of the funding granted his state by the ARRA.  Specifically, he is refusing to take nearly $100 million for unemployment benefits.  I’ll agree that his official reason for doing so has some merit - the strings attached to the money would require his state to change the way they distribute unemployment benefits.  However, if things were bad enough in Louisiana, don’t you think he would take it anyway?

Jindal can afford to say no to this money because unemployment in Louisiana is low compared to the national average.  The Bureau of Labor Statistics reports that as of November of last year, the unemployment rate in Louisiana was sitting at 5.3%.  Compare that to the national rate of 6.8% and Michigan’s rate of 9.6% in November.

Continue reading Does Federal Spending Really Stimulate Local Economies?

Obama Pledges to Slash Federal Budget Deficit, Partly Through Accounting Games

The Bush Administration has larger crimes to answer for in this arena than Obama.

“Generational Theft” was the favorite term amongst Republican opponents to the stimulus package while  it was still being debated.  If the stimulus package was passed, and we racked up another $787 billion in spending and tax cuts, we were in effect stealing from our grandchildren.  Funny that term never surfaced prior to the debate over this package.

Yes, funny indeed.  According to estimates, our total national debt in 2000 was approximately $5.6 trillion.  In the span of eight years, that sum nearly DOUBLED.  Ending 2008, it’s estimated that our national debt was approximately $9.5 trillion.  Our government over-spent by $3.9 trillion dollars in just eight years.  This, after being handed a budget that was at worst balanced, and at best actually showed a surplus.

Continue reading The Obama Administration, Day 34

The Recovery Plan Gains More Focus

Obama's plan aims to rebuild our crumbling mortgage industry.

All of the buzz surrounding the administration’s economic recovery plans has thus far been centered on the stimulus package.  While the ARRA is an important part of the recovery effort, it is by no means the only part of the plan.  It’s not enough to simply dump a ton of money into the economy, give a little more back in the form of tax breaks, and watch the tide turn.  We still have a severe problem in the banking sector.  That problem needs a solution, and fast - otherwise the stimulus will be as effective as a lead balloon.

Of course the administration knows this, and so they are working on plans for other parts of the economy.  While Tim Geithner’s original presentation was very short on details (much to the chagrin of the markets) I heard on CNBC last night that the actual final plan is very solid and doable.  I think Geithner’s original announcement was such a dismal failure because Obama promoted it heavily in prime time the night before, and it was just too early.  The administration wanted to show their willingness to work on the problem, and to assure the public that they were doing something, but in this case it did more harm than good.  Now that more details are starting to come out, though, the plan actually DOES seem solid.  Of course it has critics, but there is no happy way out for everyone in this situation or it would have been found already.  Yesterday in Arizona (one of the hardest hit states in terms of housing) Obama unveiled part of that plan.

Continue reading The Obama Administration, Day 30