Fear & Loathing

Astonishingly Out of Touch

Frank Rich asks "Why has there been so little transparency and so much evasiveness so far? The answer, I fear, is that too many of the administration’s officials are too marinated in the insiders’ culture to police it, reform it or own up to their own past complicity with it." Obama's "Katrina Moment"? [NYTimes.com]. Newt Gingrich calls this "astonishing." Peggy Noonan in the Wall Street Journal dubs it the "incredible lightness" of the Obama policy team.

Wow. Who woulda thunk that only eight weeks into the new Administration Americans -- and especially liberal columnists from the New York Times -- would be pondering, let alone writing publicly, whether Barack Obama's crew is "out of touch" with mainstream anger?

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Suicide Still Isn't Right

Maybe populism has gone too far. The Weekly Standard noted this morning that U.S. Senator Charles Grassley in a radio interview remarked that the AIG executives who ran the insurance company into the ground, and then accepted taxpayer-funded bonuses, should resign and kill themselves, Japanese-style. Grassley to AIG: It's Seppuku time.

Now you know I have absolutely no sympathy for these AIG morons and think the bailout is absolutely stupid. We should have let the company fail and the chips fall where they may. But this is way over the top. What sets America apart from Japan is that we do not embrace their culture of "face" and respect, which is what drives executives to resign in shame and then, not infrequently, commit suicide. In the U.S., you are what you do and what you represent, not to whom you report. Organizations are important but have no real meaning aside from the individuals who make them up.

So as far as I am concerned, AIG should "claw back" those bonuses and fire these idiots.  (It's not like that so-called talent helped the company do anything other than rack up the largest quarterly loss in the history of capitalism anyway!)  But suggesting Seppuku is just out of line and un-American.

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Financial Scams are Not the Same as Nuremberg

Evil as he clearly is, Bernie Madoff's crimes do not justify an international tribunal reserved historically for "crimes against humanity." Lawyers Seek Global Forum to Handle Madoff Cases [Reuters].

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Bank of America Next to Feed at US Bailout Troth

So, $165B so far is still not enough for those imbeciles! The New York Times is reporting that Bank of America will need $100 billion in equity within the next 100 days. That is in addition to the $45 billion in cash and $120 billion financial backstops that the government already committed to shore up Bank of America’s capital base.  

What a complete waste of money and attention.  None of these people, whether in the government or the financial system, has any idea what is happening or how to fix it.  So what they do is what has always been done -- throw money (ours), and lots of it, at the problem.  But nothing is sticking.

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Can BHO Play FDR?

E. J. Dionne Jr. writes that Pres. Obama has a great historical opportunity to speak directly to Americans about confidence as part of his quest to ameliorate the fiscal crisis. Barack Obama's "Nothing to Fear" Moment [Washingtonpost.com]. In times of panic like now, we desperately need an inspirational leader like FDR, who bravely told Americans only to fear "fear itself." I hope he can step up to the plate, but so far on this score he has been a serious disappointment.

There They Go Again

$345 billion later and CitiGroup wants yet another handout. Citi on Fire? [Forbes.com]. Let them fail, I say! It is way past time for this totally mismanaged, complete waste of taxpayer money to stop. Accounts are insured and it is most definitely not the responsibility of the US taxpayer to maintain the financial solvency of financial institutions, no matter how large. A little fiscal discipline from the marketplace may be just what those morons on Wall Street need, for some real change!

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Less Than Zero

So the FOMC is going to meet and cut the federal funds rate yet again. Fed Meeting: Rate Cut Likely, Then What? [BusinessWeek]. Of course, given the lack of bank capital, that key interest rate measure has effectively been zero for awhile now, with no discernible effect on US or world economic output. Which suggests that the "Panic of '08" is not jut a routine economic downturn, but instead a transformative event that may well shake up the conventional wisdom of post-war macroeconomics. 

Lord knows we need that, as fluctuating from irrational exuberance to irrational gloom is not doing the markets or consumers any good. Government had better catch up, with some new thinking, or it may become irrelevant as well.  Sorry, Milton, monetary policy is really looking dead, at long last.

He's Back? Go Away

Had I noticed Bernie Ebbers, former WorldCom/MCI thief, seeking an 11th-hour pardon from the Bush Administration last week, I surely would have ranted. Ebbers Trying to Join the Bush Pardon Party [WSJ.com]. His sleaze never ends. Bernie was fairly convicted for some really serious financial crimes and deserves all the punishment he was handed. He absolutely ruined the life savings of scores of my friends, clients and colleagues from MCI by driving the company, and its stock price, into the ground. I for one hope he rots in prison.

What a Change Six Months Makes

It was less than a year ago -- when oil was selling at $140/barrel and gas for more than $4/gallon -- that forecasters said the growing demand for energy in the developing world (China, India, etc.) made this a seller's market for the foreseeable future. But not now.

Oil prices fell nearly 4 percent on Tuesday after the government forecast the world economic slowdown would shrink global oil consumption this year for the first time since the early 1980s.  Crude oil in New York trading fell $1.64, or 3.7 percent, to settle at $42.07 a barrel.

Oil Declines on Forecast of a Drop in Consumption [NYTimes.com].

So what does this tell us?  For me, it says that trends and statistics cannot be trusted.  Certainly not as a sign of Future Shock.  We could ask Alvin Toffler, but then he's deceased, isn't he?

I'm Chevy Chase, And You're Not

Another one bites the dust. Capital One to Buy Chevy Chase Bank for $520 Million [Bloomberg]. First American, Riggs Bank and now Chevy Chase. There are no DC-based financial institutions left in the Washington area. Ditto for (almost all) department stores, home improvement chains and supermarkets, like Woodward & Lothrop, Hechingers and Giant. For a "recession-proof" metro market, DC is looking very bad at retaining its own companies. 

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