Another rough week for the Obama team. Down from 62.8 to 61.6. How low will his approval numbers go before he starts listening to the American people?

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The numbers are still cratering. Down from 61.2 to 60.8 this week alone…

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For those who believe the bank bailouts were necessary and worth the pain, guess again. The money didn’t help the banks unload toxic assets, pay creditors, or meet payroll obligations. No, the money was used to fund executive bonuses, pay dividends, and obtain smaller banks that threatened to compete against the big banks once they recovered.

Now that the government has bulked up FannieMae to absorb more bad mortgages (funded, of course, with taxpayer money), there’s no such thing as risk. The scent of easy money is bringing back some of the worst of the sharks who preyed upon the weakest during the last round of predatory loans and falsified paperwork that resulted in so many mortgage defaults. The most ridiculous thing about this is that the Treasury is encouraging this action. You have to read it to believe it!

Move over Fannie and Freddy; make room for Jenny Mac (excerpted from a March 12th CounterPunch article by Sharon Smith):

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The Federal Reserve and Treasury Departments have not merely rewarded the system of reckless betting with other people’s money that caused the banking crisis; they have also resuscitated the careers of some of the same executives who lost the biggest bets. A dozen former executives from mortgage lender Countrywide (which is also now owned by BofA), whose predatory lending practices played a key role in precipitating the subprime mortgage crisis, have launched a new corporate entity, the Private National Mortgage Acceptance Company — with a strategy to make exorbitant profits from individuals unable to keep up with their monthly mortgage payments.
Known as PennyMac, the company buys overdue mortgages at steep discounts from the federal government, which took them over from distressed banks. PennyMac then contacts the homeowners to negotiate new terms — and either pushes them into foreclosure or negotiates lower interest rates. It’s a win-win equation for PennyMac.
One of PennyMac’s leaders, Stanley L. Kurland is a former president at Countrywide and an architect of the classic sub-prime mortgage formula — mortgages with low “teaser” interest rates that later rose sharply. During the six years before Kurland left Countrywide in late 2006, Countrywide’s portfolio increased from $62 billion to $463 billion. Kurland sold $200 million in stocks shortly before leaving Countrywide. Now he stands to make many millions more reaping profits from the same category of people whose lives he helped to destroy. Federal banking officials nevertheless defend recruiting executives like Kurland to rebuild the financial system. As the New York Times explained: “[Federal officials] said that it was important to do business with experienced mortgage operators like Mr. Kurland, who know how to creatively renegotiate delinquent loans.”
Now the Federal Reserve and Treasury Departments are seeking to forge “an alliance with the very outfits that most benefited from the bonanza preceding the collapse of the credit markets: hedge funds and private-equity firms,” as the Washington Post reported on March 6th. The government’s new program, Term Asset-Backed Securities Loan Facility (TALF) states as its primary aim to resurrect the “shadow banking system” — the entirely unregulated investment-banking sector that proved responsible for much of the banking crisis.
Nevertheless, the government hopes to lure these same wealthy investors to start lending money again by offering the promise of easy profits without the risk of major losses. In what it is calling a “public-private partnership,” hedge funds would keep all profits, but the government would use taxpayer dollars to pick up the entire tab except for the investors’ initial down payments, in the case of a loss.

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Jeff V

Sharon Smith’s entire CounterPunch article can be found here:

http://www.counterpunch.org/sharon03122009.html

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blast: Mata, no doubt some of the spending might not help, but if you think extending unemployment benefits to people without jobs does not help, you are wrong. Should we just do nothing? Lets give the unemployed tax breaks… on no income. Maybe that will be stimulative. /sarcasm

blast, pre-ARRA, there is 20-33 extra weeks. This now adds another 13-20 weeks. This means that someone can collect anywhere from 33 to 53 weeks of unemployment … *after* their state funds run out.

Pray tell us how subsidizing the unemployed for up to (or more) than a year on federal funds after their state employment funds are gone is incentive to look for work? Why work at McDonalds when you can make more by walking to the mailbox and picking up your unemployment check? Look for work? Why? Naw… sit back… put your feet up. No sweat until the free money deadline starts looming.

Not only is it a disincentive, it also does nothing to create jobs and provide opportunities for the unemployed to find work.

Stimulus, my ass.

Secondly, last I looked, taxes ran by fiscal year. Until Obama/Reid/Pelosi made it possible to loiter around on state and federal funds for over a year, you couldn’t go a year on unemployment. Therefore the majority have worked in the past tax year. So yes… giving them a tax break on the amount they earned that year would most certainly be a huge help.

Ok, let the banks all fail and people can stuff the worthless dollars we do give them in mattresses.

I see… so spending ourselves into massive borrowing, and major dollar devaluation doesn’t make the dollar just as worthless, but indebt the nation for generations??

Some banks most certainly *should* fail. Because the bailing out isn’t going to help do a thing but postpone the inevitable. The toxic assets are going to remain toxic assets until the real estate (the foundation of the toxic assets) regains that value. I doubt it will be in my lifetime. The prices need to fall. The over value should be written off, then see where the banks stand when selling off the “toxic assets”… less the toxicity… I believe the real world calls this bankruptcy and restructuring. The auto manuf should do the same. A shorter “world of hurt”.

Of course people do, but until the economy stabilizes and job creation begins, at least unemployment benefits help.

Perhaps you’ll tell us how the trillions being spent will translate to jobs? Even the ARRA funds don’t start getting piecemealed out until next year, and the bulk of it a couple years downline. You want to extend unemployment benefits for three years? Where do I sign up?

Actually, private sector job creation could happen much faster than what O/P/R have in mind. The largest employers are the small and medium enterprises. (SMEs) There is no aid for these employers. Only promises of higher taxes. Add the O’energy program, and they are promised higher overhead. Add the O’no-more-secret ballot, and you add higher overhead with potential union contracts. Add the O’health plan and you have higher overhead for the group insurance.

Robert Blum had an interesting article out that I caught on SeekingAlpha late February. (ah, the things I read that I never had a chance to post on….)

In our posting last week, we suggested modifying tax rules and amending the mutual fund rules to attract and free up capital for senior secured SME loans. A third idea, discussed below, involves the government’s making direct equity or preferred equity investments in privately managed loan funds, which would use this money to make new senior, junior and mezzanine loans to SMEs. This would not be government aid, down the sinkhole, but government investment, achieving market returns on capital to the benefit of all Americans, while also creating long term jobs, helping stabilize the economy and encouraging more private investment. Additionally, the investment of Federal monies as equity in smaller, SME-oriented loan funds would better enable those funds to attract currently frozen private capital, through the reassurance of government regulation, decreased risk of fraud and community of interests due to the investment of Federal funds alongside private capital, not above it.

Models for this type of program have existed in government for decades, at the SBA, OPIC and a host of community redevelopment investment programs. The problem has been that they take years to obtain approval – time that we do not have – and these programs typically involve the government injecting debt or debt guarantees rather than equity into these investment funds (e.g., SBICs). Market-appropriate structuring of the government’s equity participation would enable streamlined approval processes for Federal investment. Customary fund structural features, that have worked for decades at protecting private investor capital, would do the same for the government’s money, and incentivize a profitable outcome (something we probably will not see from most of the TARP investments).

~~~

This program could either be administered out of the SBA, which has relevant experience in these matters but is hopelessly undermanned to move quickly, or by the Treasury Department, in either case employing third party investment consulting firms with relevant domain expertise, working off an expedited set of approval criteria. With this program, applied with urgency and using private industry decision processes, money could be flowing to SMEs within three months of finalization of the plan.

No single magic bullet will solve our financial crisis. This SME proposal, though, would more than carry its weight in creating long-term jobs quickly.

Mata Musing: read in entirety via link above

The point is not that the government shouldn’t infuse cash. But Obama’s snorting it up the nation’s nose instead of injecting it into the nation’s veins.

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Scott M: I think the money would have been better spent being given to the people rather than the banks. People’d have gotten debt relief, and the so-called toxic bank assets would have been made less or no more toxic by people getting caught up on their bills.

You got to be kidding. Ok, let the banks all fail and people can stuff the worthless dollars we do give them in mattresses. The repercussions worldwide from the failure of just one bank, Lehman Brothers, caused much damage to the system as it is. So odious I as find giving any of those clowns bailouts, (recapitalize), it had to be done. The so called toxic bank assets were not going to go away by giving the money back to the people… who should get the checks? Everyone? Or just the ones who bought too much of a house, or bought too many houses, or just those unemployed? If you answered everyone, there is not enough money to go around to everyone… and if you just give it to a few, you have the same problem we have now, except we would no longer have banks and our economy would be in ruin.

Scott M: Is Michelle Obama’s sleeveless in January scandal really more important than the 50000 people who lost their jobs since this thread started?

I could give a crap what Michelle Obama wears. Who really gives a f—!

Scott M: My point is that people prefer job creation to welfare. People prefer to work rather than survive on govt aid that can be stopped at anytime without their input. People wanted and expected job creation

Of course people do, but until the economy stabilizes and job creation begins, at least unemployment benefits help. and that money has a stimulative effect on the economy as it goes right back into the economy. As to people wanted and expected job creation, of course again… did you think it would be magic. Presto!!! Obama waves a magic wand and we have new enterprises popping up all over and new jobs! Yippee……. Sorry it does not work that way, not in 50 days or a 100 days. We have not seen the bottom of the job loss Scott. Predictions going into this year was we could drop nationally to 10%. That means in some areas it will be worse and others it won’t suck totally.

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Actually Scott, that is not true. The President did set in motion before he took office the framework of the stimulus package which was passed on Feb 17th. Not only was it a huge bill, it was passed in record time, less than 30 days from when he took office. Although you might disagree with his approach, does not mean he did not begin with a plan.

There is no question this present economic problem is deep, going to be deep and long. The massive losses in housing values, equities and commodities have been unprecedented and the loss of jobs as well. If you thought that Obama or McCain was going to be able to fix the economy on day one, well… you are mistaken.

I thought the problem was Bush and the Republicans who controlled Congress=remove them, no more problem (especially given time to plan, prepare, and implement it. As you said, if they can spend $700, 800, 1.1Trillion on stimulus, then they could have spent that money on job creation. Instead, the so-called stimulus was nothing more than a government spending proposal. I think the money would have been better spent being given to the people rather than the banks. People’d have gotten debt relief, and the so-called toxic bank assets would have been made less or no more toxic by people getting caught up on their bills. It would have added liquidity to the banks too from those people who had no bills to pay, but rather saved their bailout. No, that’s right, Dems had to spend a trillion (after interest) on paying off their donors and racking up faux accomplishments to run on in 2010…rather than give the people’s money to the people.

I think the people of the United States and through their representatives have been very generous to offer extended benefits to those unemployed. If you don’t want to avail yourself to these benefits, that is your choice, but it is only a temporary measure meant to mitigate the suffering of those who lost jobs. Many jobs won’t be coming back anytime soon given the nature of the economic crisis we are going through.

I agree, but that wasn’t my point. My point is that people prefer job creation to welfare. People prefer to work rather than survive on govt aid that can be stopped at anytime without their input. People wanted and expected job creation, and instead Obama and Dems take office, spend TRILLIONS, and tell us those trillions of dollars might (MIGHT!!!) create some jobs IN A FEW YEARS! C’mon, if Bush and Republicans had done that they’d have been ripped.

Obama said he was ready to lead on day1. Since then he has neither managed (how’s that banking plan coming along) nor led (he only campaigns in rust belt towns like Youngstown, Akron, Cleveland, and only does so if there’s money and electoral votes in it for him, but George Bush came here often in his second term; not for polls, campaign money, or electoral votes, but to lead.)

Where is our leader?
Where is our manager?

Do we even have a President, or just a guy who looked good on the cover of Rolling Stone and Vanity Fair?

Is Michelle Obama’s sleeveless in January scandal really more important than the 50000 people who lost their jobs since this thread started? Do we care more about Barack’s thermostat setting in the White House than the 80-100,000 people made homeless because their banks got bailed out but they didn’t?

Ya know, when Barack was elected, I was happy. I actually was. I didn’t vote for him, but I was happy. I was happy for all those tens of millions of people who felt that all their woes were the result of Republicans, of a lack of representation, and all those people who had hope that we’d have a leader who could unite the nation in times of crisis like Bush did on 911. Those people were misled. Obama’s no leader. He’s certainly not a manager (that stimulus bill isn’t stimulating anything till halfway through his term-MAYBE, and Congress did that, not him).

How many private trips to Walter Reed do you think he’s made? Ya think he’s doing one every few days like Bush did? No, that’s right, no cameras=not worth it.

Obamatons, you’ve been had. The big-eared moron in the White House got your vote through empty promises that played on your hopes while feeding your fears with lies and more empty promises.

FDR told us we have nothing to fear, but fear itself. He used the tools available to him to calm a nation rather than panic it further. Kennedy inspired. Bush rallied. Obama….spent trillions.

I’m sorry, but I have a real tough time understanding how a person can spend TRILLIONS of dollars without having a plan, and how can they manage to spend that kind of money and actually have NO EFFECT AT ALL other than making things worse?

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Blast,

Clarification is in order. The “people of the United States and through their representatives have been very generous to offer extended benefits to those unemployed” is patently false. Congress represents itself and special interest groups. The majority of “the people” disapproved of the stimulus bill when the House was voting on it, but the House passed it anyway. This was clearly taxation without representation. The House is supposed to represent the will of the people – nothing more, and nothing less.

Jeff V

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Scott M: He had 3 months after being elected to prepare to implement it. He’s had 2 months to implement it. He’s had enough time to spend over $2 TRILLION dollars, but no plan. No action, and not even the start of a solution.

Actually Scott, that is not true. The President did set in motion before he took office the framework of the stimulus package which was passed on Feb 17th. Not only was it a huge bill, it was passed in record time, less than 30 days from when he took office. Although you might disagree with his approach, does not mean he did not begin with a plan.

There is no question this present economic problem is deep, going to be deep and long. The massive losses in housing values, equities and commodities have been unprecedented and the loss of jobs as well. If you thought that Obama or McCain was going to be able to fix the economy on day one, well… you are mistaken.

Scott M: People don’t want to live on unemployment and govt healthcare.

I think the people of the United States and through their representatives have been very generous to offer extended benefits to those unemployed. If you don’t want to avail yourself to these benefits, that is your choice, but it is only a temporary measure meant to mitigate the suffering of those who lost jobs. Many jobs won’t be coming back anytime soon given the nature of the economic crisis we are going through.

Mata: “Just talk: is cheap, blast. Problem is Obama’s first 50 days have been fraught with spending that will do nothing to help the problem. And that includes extending the unemployment benefits

Mata, no doubt some of the spending might not help, but if you think extending unemployment benefits to people without jobs does not help, you are wrong. Should we just do nothing? Lets give the unemployed tax breaks… on no income. Maybe that will be stimulative. /sarcasm.

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Scott #13: The polls cited in the article explain why Obama’s overall approval rating is lower than Bush’s at the same time in his presidency. Bush had 911 to boost his approval for a while. Obama’s had a simlar (or arguably worse) crisis, and his approval has not gone up because he has not inspired, united, stirred, and led a nation toward recovery from tragedy.

Uh… Scott? Better re’heck your calendar, guy. Obama is 50 some odd days into his reign… er… term. At the same time for Bush, Sept 11th was still six months away. There was no 911 shock support behind him at that comparable time.

blast #25: You have taken every negative quote President Obama has made about the problems in the economy without using any of the positive comments he has made, or about how “we will get through this”

“Just talk: is cheap, blast. Problem is Obama’s first 50 days have been fraught with spending that will do nothing to help the problem. And that includes extending the unemployment benefits (why work when you can have the taxpayer and bank buy down your rate with discount points, lower your mortgage and live off the unemployment?)

And the housing program? Totally ignores the problem of toxic assets. Instead it preserves the toxic assets wtih a stay of execution with a five year arm for *some*, courtesy of the banks and the taxpayers. That latter is especially dangerous since it’s a desperate attempt to either reinflate the bubble, or prevent it from falling further… as it needs to do as a market correction.

While Obama may… finally… be saying “positive” things, he is not doing them.

Just a comment on your “solutions”, Scott. Congress and Obama are in complete agreement on the spending. Why would he rein them in when he is the cheerleader for running them at a gallop?

Even the political strategists say that Obama choose not to veto the omnibus because it would rile his own party, and make it harder for him to get thru his budget, his energy spending, his healthcare, etc etc. Quid pro quo. Business as usual.

But very happy to hear the good news from the Malenski household.

Fit: It will go back down. And back up again. [INRE stocks] So will Obama’s poll numbers, just like they have for months now…

Sorry, guy… pretty much a steady decline so far, combined with a steady increase in the strongly disapproves. But that aside, agreed that polls… worthless as they are… will fluctuate throughout the POTUS term.

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After 9/11 nearly everyone stood behind the president, regardless of party.

So, on this thread we’ve got people saying Obama’s poll numbers are good. We’ve got msm saying he’s a savior and has fantastic poll numbers, and then we’ve also got people on this thread saying that Obama has NOT united the nation-that the “hard right” is against him (as if the hard left wasn’t against Bush after 911-think Howard Dean).

No, it’s simple, millions of Americans are in serious danger. Entire zip codes (ironically, Dennis Kucinich’s leads the pack) are becoming vacant from foreclosures. Entire industries are dying. Obama himself says it’s an economic Pearl Harbor.

Why does he boast about creating 23 jobs w $900BILLION rather than go, comfort the affected, unite, and lead? Bush did it-even at his worst approval ratings and highest personal danger, he did it. He did it publicly, and privately.

Obama has parties to go to.

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