Friday, November 14, 2008

Is There a Plumber in the House?

Random Thoughts: It is amusing how the newspapers, television, websites and bloggers are in speculation mode guessing Barack Obama's appointments to cabinet posts during this transition period. Andrea Mitchell of NBC scooped the field by saying two reliable sources on the transition team confirmed that Sen. Hillary Clinton was being strongly considered for Secretary of State. This ignited the stragglers to speculate on the pros and cons of Hillary in that exalted foreign policy position. What went unnoticed was Mitchell's observation that the Obama transition team was leaking information freely, although most of the time anonymously. What a stark contrast, she observed, from Obama's campaign staff which leaked nothing for 19 months -- unless it was beneficial to the candidate. Keep in mind that two days after the election, one of the transition's top officials issued an email advising transition team advisers not to talk to the media unless approved in advance. Instead, the team needs a plumber to stop the leaks. You can bet the dwindling value of your home that most of the leaks are coming from 31 of the 47 folks on the transition team who were former appointees and staffers of President Clinton. They were an undisciplined and raucous lot who departed the White House by removing the W keypads from computer keyboards for George W. Bush's staff to replace. Andrea Mitchell, a superb reporter, offers an interesting insight. The media hated the strict discipline of the Obama campaign yet admired it at the same time for running a tight ship. Now, they are picking the carcass the best they can. Yes, they are generating some news but most remains speculation which in itself is both entertaining and poignant. For example, the entire nation is clamoring to know Obama's pick for Secretary Treasury. That selection will be the most crucial appointment of all considering the mess current Treasury Secretary Henry Paulson has created.
Oops! Wrong Direction: Hank Paulson, in his infinite wisdom, has decided that buying toxic home mortgages ain't gonna work. Like an epiphany he's decided to plow portions of the $700 bailout money Congress approved directly to banks to increase cash equity. That leaves the banks to figure out where all the bad loans dissipated into bundlings, defaults, derivatives and God knows what else only M.I.T. grads who concocted the scheme might know. The result is we have national banks that really are national(ized). Paulson has acted so wildly that even the Treasury's solicitor general can't figure out what he's done. Furthermore, there's growing evidence of a policy and directional squabble between Paulson, the chairman of the Federal Reserve Board and the FDIC chairwoman. What this foments is a political decision by Mr. Obama who can't render one until Jan. 20. Meanwhile, lobbyists are stampeding for more government handouts representing Wall Street, the auto industry, state governments and corporate giants such as FedEx and American Express. President Bush is lukewarm to give Detroit's Big Three automakers more than the $25 billion they already have received. He is mildly receptive to a congressional lame duck stimulus package. The biggest fear in conservative circles, including Blue Dog Democrats in Congress, are the dictates the Obama administration imposes on GM, Ford and Chrysler. In return for additional bailout money, concessions could be ousting current management teams and boards of directors and requiring fuel-efficient vehicles with a premium on hybrids and acquiring stock ownership shares. But the economic models in Detroit are different from foreign cars built in America. Toyota and Honda, for example, do not have the overhead expenses of health and retirement pensions and their governments provide the stimulus for new advances in technology.
My Take: Since Paulson, et.al, have proven they don't know what the hell they're doing, I'll offer my guidelines. Suspend any future bailout funds on Wall Street's financial sector. The lone exception would be to ensure the credit markets are flowing. Stop mortgage foreclosures for those who have proven ability to pay timely monthly payments at lower rates and allow the FDIC to insure the loans. Reduce red tape for FHA-backed home loans. And, whatever new regulations are imposed, make them flexible enough so they don't snuff out economic expansion. I predict a power struggle among liberal Democrats and the Obama administration over funding distressed businesses they favor such as the three U.S. automakers and its labor unions. Economic bailouts for political favorites who supported the Obama campaign is not good policy because it fails to answer the question: Where do you draw the line?

1 comment:

Erik Larson said...

Flying into Washington in separate corporate jets, then going to the Congress and asking for a bailout?
If that isn't crazy enough, why did much of America see this coming and they didn't?

If they want a bailout, they can talk to the oil companies, they already have most of our money and are positioned to get a lot more!