I can’t say with any certainty what this forebodes, but this is a staggering amount of debt to pile onto any country, especially within just a few months (my emphasis):
The U.S. government and the Federal Reserve have spent, lent or guaranteed $12.8 trillion, an amount that approaches the value of everything produced in the country last year, to stem the longest recession since the 1930s.
New pledges from the Fed, the Treasury Department and the Federal Deposit Insurance Corp. include $1 trillion for the Public-Private Investment Program, designed to help investors buy distressed loans and other assets from U.S. banks. The money works out to $42,105 for every man, woman and child in the U.S. and 14 times the $899.8 billion of currency in circulation. The nation’s gross domestic product was $14.2 trillion in 2008.
The really scary thing is, the government is not even close to being done spending money. Yet we’ve already committed about 90% of GDP. Where is all that money going to come from?
As we’ve said before, there’s only a few options: (1) taxes; (2) borrowing; and (3) printing press.
Taxes will only raise so much, even when the government starts raising rates on lower income quintiles, and certainly not enough to keep up with the ballooning debt-service payments.
Borrowing just isn’t going to happen because there isn’t anybody else who either wants to or is capable of lending us more money. To wit, here’s some of Peter Murphy’s analysis on our borrowing problems:
The biggest buyers of US Government (and Agency) debt, for the past several years, have been China, Japan, and the Oil States.
However, the supply of loanable funds among these entities from which the US can borrow is drying up.
China’s current-account surplus, the source of the funds for its Treasury purchases, has dropped precipitously as the global economy has contracted over the past several months.
Japan, another major buyer of Treasuries over recent years, is now posting trade deficits for the first time since the early 1970’s. This current account deficit, combined with a significant fiscal shortfall and planned issuance of $33 Trillion Yen ($340 Billion USD) in government debt this year, means that Japan will be, in effect, competing with the US for funds, rather than lending to us.
And, the oil-exporters are in no shape to be buying anything right now, as oil prices have collapsed since last summers $147/barrel peak. Russia is busy selling foreign exchange to prop up its currency.
Brad Sester of the Council of Foreign Relations reports that foreign demand for long-term treasuries has faded, and notes, ominously, that “global reserves aren’t growing”.
Accordingly, borrowing does not look like an option. Which leaves really just one choice.
Printing money in a down economy, which will have to be done, increases inflation and saps purchasing power (potentially leading to hyper-inflation). We may be able to pay off our debts this way, but we’ll wipe out the wealth of the nation doing so. Think post-Franco-Prussian War where France drove its economy into the ground in order to pay off about 22% of its yearly GDP in war reparations to Germany … over three years. That strife led to the Paris Commune uprisings among other things. Or worse, consider post-WWI Germany, with inflation rising so fast that workers had to be paid twice a day and cart around wheelbarrows full of money just to buy a loaf of bread.
Is that what we’re headed for? I sure hope not, but the signs aren’t very encouraging if history is any guide. It is true that a much more dynamic and nimble economy exists today as compared to the late 19th and early 20th centuries. But the world tendency right now seems to be to shackle that economy, making it much less dynamic and nimble. The end result must be less wealth produced, and less money to pay these debts. In short, our government is currently cashing checks that our economy can’t pay.
Pro-choice advocates are up in arms about Gov. Tim Kaine’s decision to sign a Virginia bill into law:
Tim Kaine, the Virginia governor and President Barack Obama’s hand-picked choice as the head of the Democratic National Committee, infuriated abortion-rights groups Monday by signing legislation that gives abortion foes a long-sought victory.
Kaine brushed off intense lobbying by abortion rights supporters in Richmond to sign a bill that allows Virginia motorists to advertise their anti-abortion views by sporting “Choose Life” specialty license plates.
The revenue from the specialty plates would go to crisis-pregnancy centers, which many abortion-rights backers believe proslyetize against abortion and encourage women to keep unwanted children.
Do these people even know what they stand for? Their mantra is that whether or not to have a child is a choice of the mother, not to be intruded upon by the state. But in order for it to be a choice, doesn’t one of the options have to be to have the child? So then, why would they be bothered by anyone encouraging women to pick one of the choices, as long as it is left up to the mother to decide? Are they really just pro-abortion advocates (keep the choice)?
Moreover, why would they care if crisis-pregnancy centers encourage birth over abortion? Again, if the choice is legally left up to the mother, then there shouldn’t be an issue. Advocates for choosing life over abortion have just as much right to say their spiel don’t they?
Apparently, these pro-choice folks are upset not just at the message on the license plate, nor that some of the revenue raised will go to crisis-pregnancy centers, but that Kaine took this action while also serving as head of the DNC, which leads to the second bit of confusion (my emphasis):
“It is surprising that Governor Kaine would do this, but it’s all the more surprising that he would do it as chair of the DNC,” said Paulette McElwain, the president of the Virginia League for Planned Parenthood.
McElwain exchanged numerous calls with the governor’s office over the license plates and organized a grass roots effort that logged more than 2,000 calls to the governor’s staff.
“We provided him with abundant information,” she said. “We’re terribly disappointed that he decided to sign it.”
In Washington, NARAL/Pro-Choice America channeled more than 17,000 emails and 200 calls to the DNC urging Kaine to veto the bill.
“It is unfortunate that, even after receiving thousands of messages from Virginians and pro-choice activists across the country, Gov. Kaine has opted to sign a bill that advances a divisive political ideology at the expense of women’s health,” NARAL/Pro-Choice America president Nancy Keenan said in a statement.
First of all, Kaine didn’t sign the bill “as chair of the DNC” because the chair of the DNC doesn’t have that power, the Governor of Virginia does. It was in that capacity, representing the people of the Commonwealth, that Kaine signed the bill.
Secondly, what difference does it make to the Governor of Virginia what people from outside the state think about what’s on our license plates? Especially when it’s something as innocuous as “Choose Life” (would they rather it said “Choose Death”?). Seriously, why do any of their opinions matter here?
The sad truth is that it seems these protesters really are just pro-abortion. Otherwise, I just can’t understand why they’re so exercised over what should be a non-issue.
Thus was the reason, according to former ACORN worker, Anita Moncrief, why the New York Times killed a story about the connections between the activist group and the Obama campaign.
A lawyer involved with legal action against Association of Community Organizations for Reform Now (ACORN) told a House Judiciary subcommittee on March 19 The New York Times had killed a story in October that would have shown a close link between ACORN, Project Vote and the Obama campaign because it would have been a “a game changer.”
Heather Heidelbaugh, who represented the Pennsylvania Republican State Committee in the lawsuit against the group, recounted for the ommittee what she had been told by a former ACORN worker who had worked in the group’s Washington, D.C. office. The former worker, Anita Moncrief, told Ms. Heidelbaugh last October, during the state committee’s litigation against ACORN, she had been a “confidential informant for several months to The New York Times reporter, Stephanie Strom.”
During her testimony, Ms. Heidelbaugh said Ms. Moncrief had told her The New York Times articles stopped when she revealed that the Obama presidential campaign had sent its maxed-out donor list to ACORN’s Washington, D.C. office.
Ms. Moncrief told Ms. Heidelbaugh the [Obama] campaign had asked her and her boss to “reach out to the maxed-out donors and solicit donations from them for Get Out the Vote efforts to be run by ACORN.”
Ms. Heidelbaugh then told the congressional panel:
“Upon learning this information and receiving the list of donors from the Obama campaign, Ms. Strom reported to Ms. Moncrief that her editors at The New York Times wanted her to kill the story because, and I quote, “it was a game changer.”’
ACORN does not exactly deny Moncrief’s allegations, but instead waives her off as a “disgruntled” employee:
“None of this wild and varied list of charges has any credibility and we’re not going to spend our time on it,” said Kevin Whelan, ACORN deputy political director in a statement issued last week.
And the NYT isn’t saying much either:
Ms. Mathis [the New York Times’ Senior Vice President for Corporate Communications] wrote, “In response to your questions to our reporter, Stephanie Strom, we do not discuss our newsgathering and won’t comment except to say that political considerations played no role in our decisions about how to cover this story or any other story about President Obama.”
Strangely, neither the Obama administration nor anyone connected with his campaign comments on the story. Of course, if the allegations regarding handing over the donor list are true, then there may campaign finance law violations to worry about, so they probably wouldn’t say much anyway.
I have to admit, this is almost a dog-bites-man story. There can’t be too many people who will seriously contend that the NYT isn’t a liberal newspaper. And it wasn’t any big secret during the run-up to the election that the MSM was in the tank for Obama. But I do wonder if many people realize the lengths that the MSM would go to in order to see their boy to the finish line. Hillary supporters got the message pretty loud and clear during the primaries, and Palin’s backers can cite chapter and verse on how the MSM dragged her and her family through the gutter. Some people might even remember that story suggesting that McCain had an affair with lobbyist Vicki L. Iseman (for which she sued the NYT and settled out of court).
Yet, how many people realize that the de facto leader of the MSM would spike a story that’s not just critical of their chosen candidate, but that implicates him in illegal activity with a notorious election law violator? Seems like that would be news fit to print. Just not in the NYT apparently.
By the way, keep this story in mind as plans continue to unfold regarding the federal government subsidizing newspapers. If the NYT was willing to spike a story just to help its chosen one, what will they do when that chosen one is paying the bills?
I‘ve been following this story with numbed amazement at just how surreal it all is. No matter how many times I repeat this sentence in my head — The President of the United States has just fired the CEO of General Motors — I can’t quite convince myself that it’s true.
That’s not to say that I’m unsympathetic to the argument that the U.S. government, as lender, has every right to demand such a resignation if its going to be funding the company. Indeed, that’s a fairly common demand whenever a funding source enters the picture at dire times. And rightly so.
But let’s not forget that Obama is not the U.S. government. And, in reality, he’s not the lender. Congress holds that dubious distinction by being the keeper of the public purse. You’d think that Obama would have understood that and, y’know, at least told them about his plans for Rick Wagoner’s head. You’d be wrong, though [HT: Allahpundit]:
President Obama didn’t want any advice from Congress on the decision to ask GM CEO Rick Wagoner to resign, according to Carl Levin (D), Michigan’s senior senator.
“He didn’t ask us about it, he informed us,” Levin told reporters in a conference call Monday afternoon. “The president said he’d already decided.”
Levin said he and three other lawmakers were informed of the decision in a phone call Obama made from the Oval Office. Obama told the members of Congress that Wagoner needed to resign so that the administration could show the public it was making an effort at a fresh start with helping the auto industry, according to Levin.
I guess Congress isn’t about to argue with The One over this. Maybe they’re just upset that they didn’t think of it first. Nevertheless, is there any doubt that Obama has absolutely zero authority or power to make this decision?
Aside from the stupefying hubris driving Obama’s actions here, what real good is going to come of Wagoner’s ouster? He’ll walk away with about $20 Million in severance, and GM will still have around $6 Billion in legacy costs to deal with each year, on top of pay for its unionized workforce. And even if all those costs were brought into line, what exactly is the new (Obama picked?) CEO going to recover from the fact that GM is losing about $1 Billion per month? The sad answer is “probably nothing.” GM will proceed into bankruptcy, just like it should have from the start of all this mess, and it will take down several billion taxpayer dollars with it.
But all that pales in comparison to the precedent now set, without even a peep of objection from Congress, that the President of the United States considers it within his purview to fire the heads of companies when he sees fit. Lovely.
Did I miss some fine print in the election last year about voting for King of the United States?
John Murtha! Yes, “that John Murtha” … seriously:
In one of his last moves before leaving office March 13, then-Navy Secretary Donald Winter quietly awarded 19-term Democratic congressman John Murtha (Pa.) with the service’s highest civilian honor.
Citing Murtha’s “courageous leadership, vision, and loyalty to the men and women of the Department of the Navy,” Winter presented the influential chairman of the House Appropriations Committee’s defense panel with the Navy’s Distinguished Public Service Award, an honor bestowed in “those extraordinary cases where individuals have demonstrated exceptionally outstanding service of substantial and long term benefit to the Navy, Marine Corps, or the Department of the Navy as a whole,” a Murtha release stated.
As you can imagine, this didn’t sit well with some in the military. Seems they don’t appreciate seeing elected officials who condemn their comrades in arms as “murderers” being awarded medals:
The primary reason for their ire stems from the congressman’s statements in May, 2006, that a squad of Marines who responded to an IED ambush and short firefight in Haditha, Iraq, rampaged through the village, murdering civilians “in cold blood.”
Murtha made those comments in the heat of the 2006 congressional mid-term election campaign, in a move some political analysts saw as an attempt to stoke the anti-war vote for a Democratic takeover of the House. The former Marine and distinguished Vietnam veteran continued his accusations in follow-up media appearances before an official Pentagon and Naval Criminal Investigative Service investigation had been completed.
When the dust settled more than two years later, six of the eight Marines and Sailors accused of crimes in the Haditha incident had their cases dismissed, one was found not guilty and the last has been continued indefinitely.
Murtha has refused to recant his accusations or apologize to the Marines he accused of war crimes. When asked by Military.com in late 2007 whether he regretted his initial statements and owed the exonerated Marines and Sailor an apology, Murtha refused to comment, saying the cases were still being adjudicated.
Well, I can understand why he wouldn’t apologize. After all, it’s quite well known that Murtha is an officious liar, and no one should believe a word he says.
As for some actual soldier reaction, Deebow at Blackfive queries “Are You F’ing Serious?!”
I was immediately a little suspicious about what kind of award Mr. Murtha could have received, knowing that he hasn’t done anything honorable lately, at least that I can remember. So I checked the Way Back Machine event tabulator I had next to my oatmeal and it says Representative Jack Murtha was an unindicted co-conspirator in the ABSCAM investigation done by the FBI, blatantly called his constituents racists and backwoods red-necks and, most recently, called United States Marines engaged in combat “Cold Blooded Killers” for their actions during a firefight in Haditha, Iraq.
WOW! Now that is one honorable Congressman…
[snip part where Deebow reads about the honor bestowed upon Murtha]
REALLY??? The former SECNAV thought that Rep. Murtha was someone who had “loyalty” to the men and women of the Department of the Navy? He really believed that Rep. Murtha had rendered “exceptionally outstanding service?”
Apparently he did. But, even if Deebow wasn’t impressed, the Congressman himself sure was!
“I’m proud of the service and sacrifices our troops are making, and I’m honored to receive this distinguished award from the Navy,” commented Murtha. “We have an obligation to ensure that our
cold-blooded murderersmen and women in uniform have the most modern equipment, effective training, first-class medical care, and family advocacy resources.”
Erm … there may be some mistranslation in there somewhere.
But one influential veterans group has reacted strongly against the award, crafting a petition to lobby the Navy to rescind it.
Vets for Freedom, a group that generally supports the wars in Iraq and Afghanistan, called Murtha’s award “appalling” and his accusations against the Haditha Marines “vile and despicable.”
“Congressman John Murtha should apologize for slandering the Marines of [3rd Battalion, 1st Marine Regiment], and for undermining the efforts of those servicemen and women who fought in Iraq,” the online petition states. “If he does not, the Secretary of the Navy should rescind this award as a sign of his unwavering support for those who served in combat during Operation Iraqi Freedom.”
So far more than 35,000 supporters have signed the online petition.
If you tend to side with Deebow rather than Rep. Murtha, then you can sign too by going to this link.
“You know, we should buy a gun.”
True story. I’ll leave it to you all what numbers one and two are.
Over the past several weeks we’ve been pondering Pres. Obama’s handling of the economic crisis. For the most part we’ve all agreed that Obama’s lack of leadership (whether from a dearth of experience or ability) is only serving to exacerbate the situation. But we also have somewhat divergent views as to whether there is a method to Obama’s madness.
Bruce is pretty convinced that the problem is a lack of executive experience, and the fact that Obama is learning on the job, while in the one government position that simply won’t allow for that sort of training. Being devoid of leadership skills or abilities, and being overly confident in his abilities to talk his way out of trouble, is driving Obama into mistake after mistake. Call this the Boy-King scenario.
Dale has suggested that Obama is simply disinterested in things like foreign and economic policy, thus he’s put little effort into guiding those efforts, and instead has handed these messy areas off to subordinates. That those on whom he is depending are not terribly proficient is not helping matters (e.g. Hillary and the “reset” button). But at bottom, the real problem with Obama is that his only real concern is with implementing his social agenda. This is bascially the Louis XVI problem (the King who famously recorded “Rien” as the sole entry to his July 14, 1789 diary, referring to his hunting exploits that day).
Last night on the podcast, I ventured that, in addition to a lack of experience and a disinterest in anything other than social policy, Obama is perfectly happy to let the economy flounder because (he thinks) it will drive more people into the arms of government dependency, and allow him to push forward with the radical transformation he envisions for this country. What he wants most, in my opinion, is to greatly expand the desire and need for government, to instill “democratic” controls into as many areas of life as possible (and especially in economic affairs), and to revise what he sees as a top-down power structure into a bottom-up one. Regardless of whether Obama is right or wrong in any of his thinking, it seems to me that his apparent lack of concern with respect to the economic crisis (only one of seventeen post filled in Treasury, despite the frightening prospects of a new depression?) has more to do with the fact that he does not envision the crisis interfering with his social agenda, and perhaps sees it as an enabler of that agenda. Call this the Commodus explanation.
I’m loathe to suggest that Obama is some sort of Manchurian Candidate, aiming to secretly impose socialism on the US, primarily because we’ve been teetering on that edge for several decades now, and he’s not been shy about wanting to give the final nudge. At the same time, I believe that Obama truly wants what’s best for this country. It’s just that what he views as “best” is something similar to European social-democracy, to which I am absolutely opposed.
So, I’m curious. How do you all see it? Is Obama the Boy-King, Louis XVI, or Commodus? Some combination of the three? Something different altogether?
In this podcast, Bruce, Michael and Dale talk about the AIG bonus Fiasco, limiting executive pay, and the public’s tolerance for President Obama.
The direct link to the podcast can be found here.
The intro and outro music is Vena Cava by 50 Foot Wave, and is available for free download here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here. For podcasts from 2005 to 2007, they can be accessed through the RSS Archive Feed.
Teleprompter, is the president ever argumentative with you, or is he compliant with your instructions?
Good question. Look, like any relationship, we have our ups and downs. Last year on the campaign trail, The Big Guy came to me and told me that like the cigarettes, he really felt like he needed to start working through his dependency. Then he went out and did this townhall session on health care.
Suffice it to say, we aren’t having those unpleasant discussions any more.
If you are inclined to accept without question that the bonuses paid to AIG employees deserve unmitigated moral indignation, as Pres. Obama and the Democrats seem to, then shouldn’t that opprobrium cut across the board? Well, I guess some animals are more equal than others:
At least four Fannie Mae executives are slated to receive more than $400,000 in bonuses each this year as a result of the company’s government-approved retention program, The Post’s Zach Goldfarb reports.
The executives include chief operating officer Michael Williams ($611,000), deputy chief financial officer David Hisey ($517,000), and executive vice presidents Thomas Lund ($470,000) and Kenneth Bacon ($470,000).
Each of these executives earned about $200,000 in retention payments last year and salaries ranging from $385,000 to $676,000.
According to the report, such bonuses are doled out depending on how integral the employee is to the companies, as approved by the FHFA:
Fannie Mae, which suffered $59 billion in losses last year, has requested $15 billion in taxpayer assistance, and has said it expects to need plenty more.
All major compensation decisions are authorized by Fannie Mae’s federal regulator, the Federal Housing Finance Agency, which created a retention program when the company was seized last September to hold on to key employees.
Under the program, employees are eligible to receive up to 150 percent of their salary in bonuses this year, but many will receive far less than that, and some might receive zero, depending on how central they are deemed to the company’s task.
Congressman Barney Frank, one of Fannie Mae’s and Freddie Mac’s biggest supporters, and Chairman of the House Financial Services Committee which oversees the institutions, was reached for comment and had this to say about whether paying retention bonuses was really necessary:
That’s nonsensical. It’s clear they made a lot of mistakes and we need to undo what they did. If they really understood what they did in the first place, seriously, they probably wouldn’t have done much of it. Secondly, when you are trying to undo something, it is often not the case that the people who did it are the ones to put in place. People are sometimes committed to not admitting mistakes. … So that argument I think is in fact almost counter, because the argument that you take the people who made the mistake and put them in charge of undoing the mistake goes against the human impulse not to admit a mistake.
Oops! Sorry, about that. The foregoing statement was from Barney Frank, but he was referring to AIG bonuses.
This morning, ThinkProgress sat down with Rep. Barney Frank (D-MA), who chairs the House Financial Services Committee and has called for the firing of AIG executives. When asked to respond to Sorkin’s claim that only AIG employees can navigate the economy out of the mess they created, Frank dismissed it as “nonsensical”
Pigs in the House indeed.