And he says so here.

I'm still working on the numbers, but
I've gotten a fair number of requests for
comment on the Senate version of the
stimulus.

The short answer: to appease the
centrists, a plan that was already too
small and too focused on ineffective tax
cuts has been made significantly smaller,
and even more focused on tax cuts.

According to the CBO's estimates, we're
facing an output shortfall of almost 14%
of GDP over the next two years, or around
$2 trillion. Others, such as Goldman
Sachs, are even more pessimistic. So the
original $800 billion plan was too small,
especially because a substantial share
consisted of tax cuts that probably would
have added little to demand. The plan
should have been at least 50% larger.

Now the centrists have shaved off $86
billion in spending - much of it among
the most effective and most needed parts
of the plan. In particular, aid to state
governments, which are in desperate
straits, is both fast - because it
prevents spending cuts rather than having
to start up new projects - and effective,
because it would in fact be spent; plus
state and local governments are cutting
back on essentials, so the social value
of this spending would be high. But in
the name of mighty centrism, $40 billion
of that aid has been cut out.

My first cut says that the changes to the
Senate bill will ensure that we have at
least 600,000 fewer Americans employed
over the next two years.

The real question now is whether Obama
will be able to come back for more once
it's clear that the plan is way
inadequate. My guess is no. This is
really, really bad.

I don't know who's but I want to kick more. The republicans for
being such ass holes or the Democrats for letting them. I hope
Obama vetoes this thing and says got back and do over. Because
I sure the hell would.

C

Well it looks like Obama's money gurus out did themselves
and Bush's to boot. They have come up with an even more horrible
plan than before.

After weeks of internal debate, the
Obama administration has settled on a
plan to inject billions of dollars in
fresh capital into banks and entice
investors to purchase their most
troubled assets.

The new financial industry rescue
plan, to be outlined in broad terms on
Monday in a speech by the Treasury
secretary, Timothy F. Geithner, will
not require banks to increase their
lending. That is despite criticism
that institutions that already
received money from the Troubled Asset
Relief Program, or TARP, either
hoarded it or used the funds to
acquire other banks.

The incentives to investors could be
in the form of commitments to absorb
some of the losses from any assets
they purchase, should their values
continue to decline. The goal is to
relieve the banks of their worst
assets so that private investors might
then provide more capital.

Officials hope that that part of the
plan is not labeled a "bad bank"
administered by the government,
although they expect that some might
call it that.

No matter what it is called, the
government would assume some of the
risk of declining assets at the heart
of the economic crisis. But by relying
on a combination of private investors
and government guarantees, the
administration hopes to reduce its
exposure to losses and avoid the
problem of having to place a value on
assets that the institutions have been
unable to sell.

Where did the president get these losers from anyway.
I'm beginning to think Obama's economic policies, at least
as far as the banks are concerned, are not much better than
bushes. I would like to think Congress will take some action,
but I ain't holdin my breath.

C

With the possibility of the populace loosing interest  in the stimulus,
it easy to understand why. We simply are not seeing the images that
are generally associated with a major economic down turn. Oh there
are the economists and pundits, senators and congressmen and CEOs
that are on the tube. Pictures of houses with For Sale or Auction
signs in front.

What is missing are the images of people on the street selling apples and
pencils, bread lines, soup kitchens. Kids in ragged clothes, men looking
down trodden. All those classic views from the depression of the 1930s
and even some of the recession of the 1950s.  No Hovervilles and people
with all their belongings in the back of a truck on the highway. Yes I know,
a bit mellow dramatic and dated. But you get my point.

In fact there has been very little reporting on the human aspect and unless
you live in one of the big metropolitan areas, you are unlikely to see much
of the effect your self. Those that are in trouble know but across town in
the upper class areas, a good deal of these people are blissfully unaware.
They know of the bank problems, but not THEIR bank. They know of store
closings, but they still have a job. For a large number of people in this
country, the idea is more abstract than real so they have a hard time
relating on a personal basis. So it's   far easier for them to rationalize
and blame others - the poor, bad corporate executives and on and on.
It's Not Their Problem, They weren't being irresponsible so why should
Their taxes pay for any of it.

What is needed is for a greater media coverage. More people aspect and
less numeric reporting. For people to see the effect this recession on others
and how But for the grace of God...go I.

C

Charles McMillion has an economic history lessen here.

At such a moment, it is imperative to
expose a dangerous popular myth regarding
the efficacy of President Roosevelt's
actions: that it was not the programs of
the New Deal, but only the placing of the
nation on a wartime footing years later,
that restored the health of the
nation's economy.

This belief, though widely held, cannot
stand up to even the most basic economic
analysis. Yet the mainstream corporate
media, which abound with anti-government
ideology, seek to reinforce this myth.
Just this past Sunday, The Washington Post
featured on Page One of its Outlook
section an article by Amity Shlaes
headlined "FDR Was a Great Leader,
But His Economic Plan Isn't One to
Follow." Underscoring Shlaes's
made-up claims, the Post ran the
continuation of her piece under the title:
"FDR's Plan Failed to Spark Real
Growth."

In it, Shlaes, having passed over the
anything-goes policies that led to the
financial crash in 1929-and, to a
great extent, the devastating economic
losses that occurred between 1929 and
Roosevelt's 1933
inauguration-also completely leaves
out any specific data on gross domestic
product, incomes, consumer spending,
production, investment or jobs even for
the New Deal period she presumes to
explain. Indeed, her pitch is based
entirely on emotional misrepresentation.

The basic economic facts from the
1930s-according to the Department of
Commerce, the Federal Reserve, and other
official sources-are fundamentally
different from the unsupported claims put
forward by Shlaes and prominent in popular
myth. The monthly data for industrial
production show a near three-year collapse
under President Hoover, ending when FDR
came to office in March 1933. Production
rocketed by 44 percent in the first three
months of the New Deal and, by December
1936, had completely recovered to surpass
its 1929 peak.

GDP, only available as annual averages,
plunged 25.6 percent from 1929-1932,
including by 13.0 percent in 1932.

Under the republicans.

It stabilized in 1933, and then soared by
10.8 percent, 8.9 percent and 12.0
percent, respectively, in 1934, 1935 and
1936. Real GDP surpassed its 1929 peak in
1936 and never again fell below it.
After-tax personal income, consumer
spending, real private investment and jobs
all reached or surpassed their 1929 peaks
by late 1936.

Under the Democrats.

Myth and ideology aside, the data show
that from 1933 through 1936 the New Deal
produced double-digit annual growth in
GDP, production, after-tax income and
private investment, with strong consumer
spending and job growth exceeding their
peaks in the 1929 bubble. The Great
Depression ended by late 1936.

While a new, severe recession began in May
1937 because FDR prematurely slashed
public spending on New Deal programs,
rapid growth quickly resumed in late 1938
when funding was restored.

Today, the U.S. and the world again face
extreme crises similar to those in the
early days of the 1930s. The largely
unregulated private financial and
commercial sector has utterly bankrupted
itself. I personally believe the recent
and current bailout and stimulus packages
are grossly misdirected and inadequate
when compared with the remarkable trade
and industrial policy strategies being
implemented elsewhere, particularly in
China.

But history has shown that crisis can
bring people together in common, public
purpose or it can set them against one
another. Our circumstances are far too
dangerous to leave uncorrected the
antigovernment disinformation and myths
from the 1930s, and in our own generation.

Which is why the Democrats need to keep the republicans from
their agenda of repeating the same mistakes they made under
Hoover, Reagan, Bush and the rest.

Oh and what was the definition of Insanity ? "Doing exactly the same
thing over and over again in exactly the same way and expecting
different results each time."

C

Typical republican. All about appearance but no substance.

C

Indeed. Rep. Pete Sessions seems to think so.

"Insurgency, we understand perhaps a
little bit more because of the Taliban,"
Sessions said during a meeting yesterday
with Hotline editors. "And that is that
they went about systematically
understanding how to disrupt and change a
person's entire processes. And these
Taliban -- I'm not trying to say the
Republican Party is the Taliban. No,
that's not what we're saying. I'm saying
an example of how you go about [sic] is to
change a person from their messaging to
their operations to their frontline
message. And we need to understand that
insurgency may be required when the other
side, the House leadership, does not
follow the same commands, which we entered
the game with."

Hey Pete. If the shoe fits, wear it.

C

As explained by The Christian Science Monitor.

Obama must do more than tinker on the edges of
Washington's big-money culture of entitlement.
Merely adding restraints on lobbyists, as he did
in the first few days, fails to address the way
Washington's expanding rulemaking and money
dispensing create a larger lure for well-heeled
interests to seek favors at the expense of the
common good.

He also makes a similar minor reform in his
proposal to cap compensation for Wall Street
executives at $500,000 if their firms accept
federal aid. What he really needs to change are
federal incentives for corporations to allow
shareholders to have more say over pay packages.
He must also change the tax structure to force
companies to think more long-term than the next
quarterly report.

Greed in government can have as much impact as
Wall Street's. Just ask the people of Illinois,
which removed a governor who abused his power to
extract donations for his election campaign.

Obama's ratings as an ethical leader still
remain high. Now he needs to show he also
deserves praise for competence in ethics.

A lesson for us all.

C

I love  Nassim Nicholas Taleb's ideas.

Mr. Taleb, who as you may have noticed
doesn't mince words, is no fan of private
equity.

"Private equity has absolutely no reason
to exist. The private equity holder has
all the upside and the banks all the
downside." He'd have no objection to a
system where private equity funds itself
via hedge funds, so long as neither party
had any recourse to government insurance.

And a bit like an Old Testament prophet,
Mr. Taleb is angry and wants those he
thinks are responsible to suffer.

"I want them poor and they deserve to be
poor. You can't have capitalism without
punishment."

Oh, and another thing, he wants Bob Rubin,
who trousered millions while chairman of
Citigroup, to cough up.

"I want Bob Rubin to return his $110
million dollars to the American taxpayer."

Hey...works for me.

C

Chris Hedges makes some good points here.

"The puzzle to me is the lack of
social unrest," Wolin said when I
asked why we have not yet seen
rioting or protests. He said he
worried that popular protests will
be dismissed and ignored by the
corporate media. This, he said, is
what happened when tens of
thousands protested the war in
Iraq. This will permit the state
to ruthlessly suppress local
protests, as happened during the
Democratic and Republic
conventions. Anti-war protests in
the 1960s gained momentum from
their ability to spread across the
country, he noted. This, he said,
may not happen this time. "The
ways they can isolate protests and
prevent it from [becoming] a
contagion are formidable," he
said.

I think that is because the economic down turn has not
hit everyone...yet. I'm talking about those upper middle
class folks who still think they will be OK. Of course this
could change.

"My greatest fear is that the
Obama administration will achieve
relatively little in terms of
structural change," he added.
"They may at best keep the system
going. But there is a growing
pessimism. Every day we hear how
much longer the recession will
continue. They are already talking
about beyond next year. The
economic difficulties are more
profound than we had guessed and
because of globalization more
difficult to deal with. I wish the
political establishment, the
parties and leadership, would
become more aware of the depths of
the problem. They can't keep
throwing money at this. They have
to begin structural changes that
involve a very different approach
from a market economy. I don't
think this will happen."

That's because there are still many who believe
that a Free Market economy will still work. AK
Reagannomics. Yes Democrats as well as
Republicans. It just needs some help.

"I keep asking why and how and
when this country became so
conservative," he went on. "This
country once prided itself on its
experimentation and flexibility.
It has become rigid. It is
probably the most conservative of
all the advanced countries."

Easyone. The whole country has turned into one big
bureaucracy. Just look at all the paper work, red tape
legal gobbledygook you have to go through for insurance,
to buy a house and at you job. You have to justify damn
near everything in triplicate these days. It's become nearly
impossible to just do something. Toe expect Obama or
anyone to be able to change the status quo, is optimistic
to the point of delusion.

C
 

Apparently Sarah Palin wants to build a road to Nome. Well if it
keeps those crazy Alaskans off the streets and out of trouble,
why not.

C

Joseph  Stiglitz has an approach that might work.

Many a bank may decide that the better
strategy is a conservative one: Hoard
one's cash, wait until things settle
down, hope that you are among the few
surviving banks and then start lending.
Of course, if all the banks reason so,
the recession will be longer and deeper
than it otherwise would be.

What's the alternative? Sweden (and
several other countries) have shown that
there is an alternative -- the
government takes over those banks that
cannot assemble enough capital through
private sources to survive without
government assistance.

Which is what FDR did. People lost a lot, but there
was no FDIC then either.

It is standard practice to shut down
banks failing to meet basic requirements
on capital, but we almost certainly have
been too gentle in enforcing these
requirements. (There has been too little
transparency in this and every other
aspect of government intervention in the
financial system.)

Which is what is supposed to be done when a financial
institution become insolvent. IE broke.

To be sure, shareholders and bondholders
will lose out, but their gains under the
current regime come at the expense of
taxpayers. In the good years, they were
rewarded for their risk taking.
Ownership cannot be a one-sided bet.

Of course, most of the employees will
remain, and even much of the management.
What then is the difference? The
difference is that now, the incentives
of the banks can be aligned better with
those of the country. And it is in the
national interest that prudent lending
be restarted.

There are several other marked
advantages. One of the problems today is
that the banks potentially owe large
amounts to each other (through
complicated derivatives). With
government owning many of the banks,
sorting through those obligations
("netting them out," in the jargon) will
be far easier.

And I agree. Of course there are those who will insist
that the private sector is so much better at managing these
things than government. This reasoning of course, seems more
than a bit flawed right now.

C

Paul Craig Roberts makes a good point here.

The discouraging fact is that even when
faced with crisis in the economy and in
foreign policy, the American political
system is incapable of producing any
leadership.  Here we are in the worst
economic crisis in a lifetime, perhaps in
our history, and on the brink of war in
Pakistan and Iran while escalating the war
in Afghanistan, and all we get is a
government made up of the very people who
have brought us to these crises.

Just as the Bushites could not admit the
failure of their man, the Obamacons will
not be able to admit the failure of their
man.

The era of American leadership has passed.
America's shyster financial system has
brought economic crisis to the world.
America's wars of aggression are seen as
serving no purpose except the enrichment of
the military industries associated with
Dick Cheney.  The world is looking
elsewhere for leadership.

Vladimir Putin made a play for this role at
Davos, where his speech at the opening
ceremony was the most intelligent speech of
the event. 

Putin reminded the World Economic Forum
that "just a year ago, American delegates
speaking from this rostrum emphasized the
US economy's fundamental stability and its
cloudless prospects.  Today, investment
banks, the pride of Wall Street, have
virtually ceased to exist.  In just 12
months, they have posted losses exceeding
the profits they made in the last 25
years."

Putin made his case that the existing
financial system based on the US dollar and
American financial hegemony has failed.

Putin showed that his economic
understanding was superior to that of the
Obama team when he said that creating more
debt on top of the "hopeless debts," as
Obama is doing, would "prolong the
crisis." 

With another swipe at America's failed
economic leadership, Putin said it is time
to get rid of virtual money, false
financial reports, and dubious credit
ratings.  Putin proposed a new reserve
currency system to "replace the obsolete
unipolar world concept."

Putin said that a secure world requires
cooperation which requires trust.  He made
it clear that the Americans have proven
that they cannot be trusted.

This was a powerful message.  It got a lot
of applause.

I'll bet it did but not from anyone representing America. Lets
face it. The Democrats are nearly as bad as the republicans
in the both groups are still convinced that the American free
market system can do no wrong and just needs a few tweaks
here and there. Yep...just like that 1955 De Soto that's rusting
away in the barn.

C