Monday, December 14, 2009
Obama's haranguing of the banks is weak leadership!
In what is becoming an all-too-familiar and nauseating scene, Obama summoned bank executives to the White House again yesterday to beg them to increase lending. The president told the CEO’s that their banks must make “an extraordinary commitment” to rebuild the nation’s economy.
From this statement we can clearly see that in Obama’s mind and in the mind of those who advise him, the vast resources of the Federal Government—the same government that bootstrapped the nation out of the Great Depression and paid for the greatest military buildup the world has ever seen—are now depleted.
Looking past the remarks, which by themselves seem unbecoming for a sitting president—the name-calling and empty threats—we see a weak leader whose ignorance of the monetary system is both mind numbing and downright scary.
Obama's erroneous beliefs have caused him to simply give up. With millions of Americans out of work, businesses and households strapped for cash and a large percentage of the nation’s physical capital sitting idle, he has decided to punt and put the banks in charge of America’s destiny. But as big as they are, they are no match for what the Federal Government can do, which, unfortunately, is a fact that is moot if the president does not understand it himself.
This is the same president who said that Americans should no longer expect to go on buying stuff with a credit card, yet he is begging, pleading, with the banks to load everyone up on debt once again.
It’s also the same president who acknowledges that banks took on hundreds of billions in risky loans, yet apparently wants them to do the same thing all over again on the grossly misinformed idea that more of the same will help the economy.
Someone ought to tell the president that the problem is not a lack of desire to lend. Rather, it is the dearth of credit demand as businesses continue liquidating inventories. And with so many people out of work who can afford to pay back a loan once it is made? In short, lending has become more risky because of an anemic economy.
If the president wants to get credit flowing again he should be focusing his efforts on creating jobs and boosting incomes rather than haranguing the banks, not that they don't deserve it. How about strongly getting behind a second stimulus or pushing for a government jobs program or a payroll tax holiday? All three of these measures would be strong medicine for what ails the economy and if you fix the economy, the credit crisis goes away.
As bankers haul in millions in bonuses the president advocates a deeper-in-debt solution for people and small businesses so that they can live at a subsistence level? What kind of a dumb plan is that? This is like indentured servitude. Something is terribly wrong with this picture.
The president could have taken a more forceful stance against destructive speculation, which is pushing up the price of commodities and leading to higher costs for food and fuel. Instead he takes a laissez-faire approach and lets a lobbyist-driven Congress pass financial reform that is loaded with gigantic loopholes for big speculators.
Yet as weak and misinformed as Obama is, one could almost give him a pass on the argument that he is not expected to know all things economic. That is why he has advisors. But those advisors have failed him and they have screwed the American people. Summers, Geithener, Orzag, Romer et al; the lot of them. It's should be obvious that their interests lie in the selfish safeguard of their positions of power and in doling out special privileges to their former cohorts whom they maintain close ties with.
The rest of us can go to hell and Obama seems okay with that.