$787 Billion (if correct) is a small percentage of the annual budget/tax revenue - well worth preventing a further plunge of the stock market, housing market and to stall the tide of collapse among major businesses. His regulation of the banking industry has further stopped the economy from crashing and curtailed the greed and fraud of an industry left unchecked under the Bush administration. He stopped the war drums and has invested heavily in renewable energies (see DoD mandate for 25% renewable energies by 2025)…the list goes on.
This doesn’t work.
I have a lot of bones to pick with Bush, but:
What this country had was a financial crisis. It has had them before, very bad ones, and recovered from them, usually within two years. It happened because underwriting standards on loans purchased by the market-makers, FNMA and FHLMC were so incredibly lax that others in the business did the same to remain in the market. When the securities issued on them became questionable, their value tumbled to an extent that nobody could actually gauge, but which they were required to gauge due to Sarbanes-Oxley. Theoretically, because there was no market for them (even though many had value) they were artificially worthless, which caused many institutions to be technically insolvent, if not actually insolvent.
Because banks portfolios were uncertain in value, banks became reluctant to loan each other Fed Funds, which really did threaten a liquidity crisis. The Fed guaranteed Fed Funds to the interbank lenders and the government created TARP to buy the questionable securities. It became apparent that it wasn’t enough money to buy them, so it morphed into TARP 1b, which was a temporary boost to bank liquidity and solvency in order for the already-solvent banks to absorb those which had over-loaned in (largely) development loans that failed.
Very few in government on either side of the aisle dissented from those measures. It was not entirely dissimilar to what Coolidge and J.P. Morgan did decades ago in resolving a similar financial crisis, but using banks instead of the government to re-establish liquidity. It was well targeted, and the measure worked both times. Dodd-Frank had absolutely nothing to do with it. Dodd-Frank was an attempt to close the barn door after the horse had left, been brought back and bedded in his stall. But the barn door is still wide open.
Nobody stopped the making of bad mortgages. I see it every day, and FNMA and FHLMC are still buying them and securitizing them. Very troubling. I see 100% and even 125% loans made all the time; with government guarantees of course.
Everything after TARP 1b was essentially political and more or less random spending.
As to the “rescue” of GM, it’s still insolvent, only kept on life support by the fact that the government stripped the bondholders and stockholders and paid $53/share for stock that’s perhaps now worth half that and will probably end up being worth nothing. You can keep any business going if you pump enough money into it and keep doing it. Eventually, it will go down because of legacy obligations that were NOT stripped away, and it will get bought by someone, just as it would have if the government had never intervened. The UAW workers will be hopping mad, but if Obama is safely re-elected before the fall, he won’t care.
And I thought everybody knew the present stock market is being largely supported by the “carry trade”; a very scary situation. The “retail market” has largely evaporated.
And the “war drums” stopped after what? After Obama’s undeclared and totally unwarranted war on Libya which appears to be putting Al Quada into power there? At least Bush had congressional approval for his wars. Obama didn’t. It served no national interest. Obama just went to war against Libya because, well, he wanted to.
And I think we know about the investment in “renewable energies”. The bankruptcy courts certainly do. Chinese manufacturers do as well, since they seem to be the only ones who are making the hardware anymore; subsidized by this government, of course, or even they wouldn’t be able to make the stuff cheaply enough.
