I try not to post more than twice a week, three times top, because I don’t want this to become a labor to read.  But I just heard President Obama speaking just before he left for the Orange County Fair and a Jay Leno show, and some of what he said blew my mind-hole.

Unfortunately, I wasn’t expecting to hear anything of real note, so I’m not going to dissect his speech line by line.  Here are some of the things he said that need addressing.

  1. He blamed the economy on excess greed and excess compensation.
  2. He said his people weren’t there when the contracts were drafted
  3. He defended Tim Geithner, saying he has taken all the right steps.

Okay, let me start by saying I’ve only been following the bailout circus with a passing interest.  There are more important aspects of the economy, especially as they deal with young people.  Additionally, these bailouts have been a bad idea from day one, and nothing was going to change that.  All of what has happened since then has been completely predictable and predicted.

  1. Excess greed and excess compensation.
    1. Even just typing that second part gives me chills.  Who determines excess compensation?  The easy answer, especially when taxpayer monies are involved, is the taxpayer.  Sounds reasonable, but the taxpayers didn’t want to spend the money in the first place.  The taxpayers were against bailing out failing companies.  The Federal Reserve, and specifically the New York office of the Fed decided to bail out AIG (I’ll explain why that is so important a little later).  So putting aside the idea of who determines what is excessive, I’m a little bothered that there is a discussion over excessive compensation.
    2. AIG is a private company (or it was).  The employees felt that they were good at what they did, and deserved to be paid for it.  Management felt the same way.  My dad used to tell a story about seeing an interview with Jackie Gleason.  For those who don’t know Mr. Gleason, he is most famous for starring in The Honeymooners TV show.  You’ve probably seen it on Nick at Night.  Back in the 1940s and 1950s, he was making about $1,000.00 a second for every second he was working.  Someone asked him if he thought he was worth that much money, and his response is that he was worth what people were willing to pay.  Since they paid him, they must have felt as though he were worth it.
  2. He said that his people weren’t there when the contracts were drafted.
    1. The bailout in September of 2008 was made from the Fed.  Below, I’ve made a chart as to who was on the Fed that might be important today.  Note the New York Vice Chair in 2008.

      2008 Fed

      2009 Fed

      * Ben S. Bernanke, Board of Governors, Chairman

      * Timothy F. Geithner, New York, Vice Chairman

      * Richard W. Fisher, Dallas

      * Donald L. Kohn, Board of Governors

      * Randall S. Kroszner, Board of Governors

      * Frederic S. Mishkin, Board of Governors

      * Sandra Pianalto, Cleveland

      * Charles I. Plosser, Philadelphia

      * Gary H. Stern, Minneapolis

      * Kevin M. Warsh, Board of Governors

      * Ben S. Bernanke, Board of Governors, Chairman

      * William C. Dudley, New York, Vice Chairman

      * Elizabeth A. Duke, Board of Governors

      * Charles L. Evans, Chicago

      * Donald L. Kohn, Board of Governors

      * Jeffrey M. Lacker, Richmond

      * Dennis P. Lockhart, Atlanta

      * Daniel K. Tarullo, Board of Governors

      * Kevin M. Warsh, Board of Governors

      * Janet L. Yellen, San Francisco

  3. He defended Secretary Geithner, saying he has taken the right steps.
    1. Tim Geithner was in charge of the New York Fed that made the deal.  Between him and Bernanke, they made a deal with AIG that a representative from the Fed would be at every AIG meeting to advise or say yay or nay to any decision the company wanted to make.
      1. I’ve been pretty fair-minded when it came to Geithner.  Okay, so he didn’t pay his taxes for 5 years.  Okay, so he didn’t have to pay the same penalty you or I would (like prison) for not doing it.  Okay, so he couldn’t figure out how TurboTax works, and now he’s the head of the IRS.  Whatever.  But to say that he has taken the right steps now strains the willing suspension of disbelief that Obama seems to expect because he pulled the winning ticket back in November.

A real problem, but certainly not THE problem is that we have the wrong people making these complex decisions.  Barney Frank, who wouldn’t come clean about how bad the housing problems were because he was protecting Fannie and Freddie (who are bankrupt); Chris Dodd, who got special privilege from Countrywide (who profited the most from fraudulent loans and who was subsequently taken by the Bank of America) because he was a powerful cheerleader for bad mortgage loans; Tim Geithner, who for all of the above problems still is in office instead of in jail; and that guy who got some really fuzzy mortgage deals from a convicted felon because they shared the same goals (look up Obama and Rezko and read about that relationship) have no business anywhere near my money.

The part of all this that pisses me off the most is this:  I’ve tried to keep politics away from this site.  I can respect someone who is honestly conservative or who is honestly liberal.  My personal politics have been my own, win or lose, my standards never suffer.  But we have entered a time when you can’t honestly talk about the economy without talking about policy and politics.

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