To what extent do all White House admins do this:  Promise a rose garden then deliver the same old shit?

Bush&Co sold an incredible line of shit to everyone.  I'm not saying everyone bought it, but that it was offered as beds of roses when it wasn't even fertilizer.  And far too many bought it or kept silent about not buying it.  I've been reviewing older Krugman essays in The Great Unraveling.  Krugman, at least in this collection, continuously pointed out the lies and frauds perpetrated by Bush&Co on economics issues.  In retrospect, he nailed it well.  But why was his voice so largely ignored, or if not ignored why so impotent the response? 

Now Obama is tending the rose garden.  He seems more honest than Bush and is talking a good line.  Does that mean he's not also shoveling shit in our direction?  No, lip service isn't reality. 

While it might be a mistake to over-react to the Bush years by demanding near perfection from Obama, that doesn't mean we should not remain critical of his conduct, or lack of conduct, in office.

What got me to pay attention to politics again were the headlines in Sept. about Paulson's Pig and "Armageddon".  What I think most people didn't get was that an armageddon-like scenario was nothing more than a final battle in capitalism of "creative destruction" of the excesses of the credit bubble.  That is, it was a NECESSARY, and even a GOOD, thing.  It's part of the capitalistic process, not the end of the whole world.  Yet from the responses it sure looks like some people took it as much more than it needed to be.  Paulson's demeanor and conduct clearly make him out to be more like an anti-Christ figure than a saviour, for example.  

Many Republicans called for letting nature take its course.  But Bush and Paulson, along with Democratic and Republican leaders and the support of both Presidential candidates, pushed through TARP as Bernanke was feeding AIG on the sly.

A natural question:  Were there alternatives to the two dominant views (Pig and Pasture)? 

Short answer:  Yes. 

The interlocking network of derivatives could have been frozen or declared to be null and void as a violation of public policy.  Of course Bush wouldn't do that on his own.  But while Obama has inherited the mess, he is not bound to the policies.  However, every day which passes locks him deeper in the mess, makes it his shit.

For some time I've been calling for facts, and more recently for not giving taxpayer or Fed money to "gamblers or crooks".  I've been suggesting that major intervention is warranted.

Today's TPM front page contains this excerpt :

Along these lines, TPM Reader GG sent in this last night ...

Respectfully, you guys are totally misunderstanding something crucial in the AIG bailout: Derivatives claims are not stayed in bankruptcy. (Yet another brilliant innovation from the 2005 bankruptcy reform legislation.) If AIG were to go down, derivatives counterparties would be able to seize cash/collateral while other creditors and claimants would have to stand by and wait. Depending on how aggressive the insurance regulators in the hundreds of jurisdictions AIG operates have been, the subsidiaries might or might not have enough cash to stay afloat.

While this can be read to justify the bailout of AIG and the passing of TARP, it can also be read the other way around.  If derivatives are the cancer, don't just put the patient on life support, cut them out and irradiate the area along with applying stimulative chemotherapy.

Okay, that's mixing metaphors, medicine and gardening aren't quite the same.  If derivatives are the fungus....  you get the idea.  Obama needs to take bold and smart action, not engage in endless and largely impotent defensive retreats.  Contracts which violate public policy and the public interest can be frozen or declared null and void, and clawbacks implemented in some cases.  All socialists could support this, and all honest capitalists too (yes, Virginia, there are some).  Geithner cannot do it on his own, he's pretty much just a technocrat rake puller at this point. 

We were promised Smart and Bold.  Let's apply pressure to get those!


And remember, nobody ever actually promised you a rose garden.


Update:  Here is a well-stated corollary viewpoint which mentions gambling. I recommend the full post which asks:

Why are the taxpayers making good on hedge fund trades gone bad?

...

You as a credit default swap gamblor [sic] have no reasonable expectation that anyone other than the incompetent firm you placed your bet with is going to make good. ...

Taxpayers should not be bailing out hedge fund trades. This insanity must cease immediately .