I Almost Regret Voting For Obama by Josh Sidman

by Josh Sidman
Dandelion Salad
Featured Writer
Josh’s Blog Post
April 8, 2009

The “almost” is due to my firm belief that electing John McCain would have led to World War III. That being said, in terms of the economy, I don’t believe McCain could possibly have done worse than Obama is doing.

Those who read my blog regularly may have noticed that despite supporting Obama in the election, I quickly became critical of him when he took office. I felt somewhat bad about doing so – as if he deserved some kind of “grace period”. So, although I made a number of criticisms, I felt conflicted – like maybe I was being a little too hard on the guy. As of now though, I am convinced that Obama is either a) incompetent, or b) a bought-and-paid-for stooge of the banking industry.

The new Geithner Plan is an unmitigated disaster. I haven’t heard one reasonable defense of the glaring injustices at the heart of this plan. In essence, the plan boils down to an illegal subversion of Congress in order to improperly transfer wealth from the general public to large financial institutions. There are two aspects of the plan that ought to outrage every citizen of this country. The first is how the plan works, and the second is how the Administration is using the FDIC to circumvent Congress.

The essence of the plan is to encourage large financial institutions to make enormous bets which, if they turn out well will earn giant profits, and if they turn out badly will dump the losses on the American public. The plan selects a few large institutions and allows them to buy the so-called “toxic assets”, but it only requires them to put up around 5% of the purchase price (while the companies and the government share the profits 50/50). The government then guarantees that it will absorb 90% of any losses on these investments. (Keep in mind, this opportunity isn’t available to you or me – or even to medium-sized banks – its only for the very largest institutions.)

As an analogy, imagine that I was offered the opportunity to bet $100 on the Super Bowl, but I only had to put up $5 of my own money. If I win, I get $50 (the other $50 goes to the bookie), and if I lose I’m only out my original $5. With such ridiculous terms, I don’t need to be a football expert to make a profitable bet. In fact, I don’t even need to know who’s playing.

So, of course the Geithner Plan will generate a lot of enthusiasm among financial institutions. They are being offered the bonanza of a lifetime. But the truly disgusting aspect of the plan is the way it is implemented at the governmental level.

As everyone knows, the FDIC has one basic function. It insures depositors against bank failures. The Geithner Plan gives the FDIC a function that it was never intended to have. It uses the FDIC as the agency that will backstop the $1 trillion in toxic-asset purchases. The reason for doing so is that it enables the Administration to guarantee the asset purchases without the approval of Congress.

And hey, what about the recent talk of the FDIC itself becoming insolvent? How is a nearly insolvent agency supposed to backstop over a trillion dollars of highly questionable assets? Well, obviously it can’t, but we all know what will happen if push comes to shove. If the FDIC runs out of money, Congress will have no choice but to recapitalize it. The alternative would be financial Armageddon.

Truly, this kind of disregard for our system of checks-and-balances is every bit as blatant as the abuses of  the Bush Administration. All I can say is, Mr. Obama, I am very disappointed in you.

see

The Intentional Destruction of the Dollar by Josh Sidman

Meet the New Boss, Same as the Old Boss by Josh Sidman

Salbuchi: Global Financial Collapse + Will It Be World Government?

Michael Hudson and John Perkins Interviews on Iceland (must-see)

Bernanke’s Financial Rescue Plan: The growing prospect of a U.S. default by Mike Whitney

The Economy Sucks and or Collapse 2

17 thoughts on “I Almost Regret Voting For Obama by Josh Sidman

  1. Pingback: Stress Tests: Down the Rabbit Hole by Josh Sidman « Dandelion Salad

  2. Excellent article Josh, I wouldn’t say this is a shame factor on a Obama vote. For one, Obama didn’t squeak into the Oval Office, he won by crushing margins. If you look at policy and voting record he was more to the right then say Clinton, it shouldn’t be too much of a surprise when he continues that track. After two months in office I am still going to reserve judgment as this economic mess was created by Phil Gramm, who would of been the Sec. of the Treasury with a McCain victory. Kucinich, Nader, McKinney or Paul never had a chance as our democratic system is broken to a point where only those that will keep the status quo can get elected.

    I for one would say simply let the banks fail. Lets remember that the influx of foreclosures is the straw that broke the camels back here. A foreclosure is when you cannot pay the bank and they in return take your house. You can’t ask a bank for a bailout, they will tell you its all part of business and that was the risk you took. But the banks can ask even the people they foreclosed on for a bailout? That’s absurd.

    Also to note, the money given to the banks was done so at the dire threat of a impending credit freeze which in turn would collapse the entire economic structure of the nation. So the taxpayers gave away massive sums of money we had to borrow to get to the banks. The reason I know we gave it away is the same private banks that make up the Federal Reserve will not tell us what other (or the same) private banks got the money or how much. Pretty smart bankers, how can you foreclose on them if you don’t know who took the cash?

    Then a funny thing happened on the way to reestablishing those credit lines – they didn’t do it. They used the money to buy other banks and pay themselves. The new game is get as big as possible so then you are assured your “too big to fail” status. When times are good you keep the profits, when times are bad, the taxpayers pick up the bill. What motivation do they have to take on loans in a economy they destroyed when we already paid them.

    So who would take the role of the banks in the economy then? The answer is: we would. Credit unions and banking coops are member owned, don’t need a bailout and serve the exact same function as a bank. Loans could be made to get them established directly from the government without the middleman and corporate jets. Not for profit government regulated banking with each person a joint owner that does business. Its been done, its done right now.

    The FDIC does not insure depositors, it insures banks. The reason the FDIC was set up is that people lost faith in the banks to safely hold their money after the great depression. So the government guaranteed that a person’s money would be secure even the bank they are using fails. If a bank goes bankrupt, the FDIC pays the banks to cover each persons deposits. It should be changed to cover the depositors themselves, and the bank once bankrupt faces the same foreclosures they themselves do. Otherwise the banks again have no risk on their high risk gambling, when they win the game they keep the profits and when they lose the FDIC pays them.

    There is also the Swedish banking failure that happen in the 1990s for the exact same reasons we have here. They solved the problem by nationalizing the banks and then reselling them back to the public after the economy stabilized with a profit to the taxpayer…imagine that.

    All of this is of course ignoring the elephant in the room, the private banks known as the Federal Reserve. Without moving the Federal Reserve under congressional control these issues will never end.

  3. Guys, Guys hold on a second! So what’s the alternative here?..is anyone who’s knocking Obama down offering anything in terms of ideas or solutions..other than just expression of discontent? Don’t think so. Obama has no magic wand, but at least he’s trying his best to get us out of this mess. Is it gonna work?..no one knows for sure, if it’s going to work ot it’s going to make things worse, but for lack of anone else”with brains” who’s trying to do something, other than talking, Obama is the only game in town. Cut the guy some slack and give him some time to see the results. Rushing into making judgements has always been one of our less than great traits – Be patient, and wish him success, not like those sickos who wished he’d fail. Can you imagine the sick personality behind such wish. That guys (Limbaugh) just disgusts me. How would you like having a guy like that for a president?

    • Walid,

      If you’re not aware of people offering viable alternatives to Obama’s plan, then you’re simply not paying attention. There are any number of Nobel Prize winning economists and financial experts offering alternatives. For example, check out the following link:

      http://hussmanfunds.com/wmc/wmc090330.htm

      Of course I wish Obama success, but that doesn’t mean I should bury my head in the sand and pretend that his wrong-headed policies are going to work.

  4. Forget the almost. I regret your Obama choice.
    As long as “progressive democrats” like you keep accepting the mainstream corporate democrat option as a suitable choice, we will continue to fluctuate between corrupt republicans that ignore public well being in their support of private interests, and “incompetent” democrats that ignore public well being in pursrit of private interests. You had a choice; Obama, McCain, McKinney, Nader, Barr, . . .
    You chose a candidate that is ignoring the public interest and promoting the wealth and security of large private holdings. You can keep patting yourself on the back for not picking McCain, but until liberal, progressive democrats like yourself get the balls to vote for someone that really represents the interests of the American people our country will continue to be controlled by wealthy empowered financial interests.
    Your vote for Obama was no better than your neighbor’s vote 4 years ago for Bush. Keep telling yourself there is a difference though if it makes you feel better. You didn’t vote for war in Afghanistan, and the continuation of corporate bailout bankruptcy did you? What did you vote for? Hope and Change?

    • Dogger,

      Thanks for reading and commenting. First of all, I am not a “progressive democrat”. I’m not sure what led you to make that assumption. I have never registered democrat or identified in any way with that party. Furthermore, your assertion that a vote for Obama is no better than a vote for Bush on ’04 is completely absurd. To my way of seeing things, this past election was a single-issue contest. Our country is guilty of mass murder, and one candidate supported continuing it while the other didn’t. That was all I needed to know in order to make my choice. If I have to choose between economic prosperity at the cost of being complicit in mass murder versus economic stagnation with no mass murder, I’ll take the latter every time. That is why, despite my growing disappointment with Obama, I am still convinced he was the right choice.

  5. Actually I’m really glad I didn’t vote for Obama, as much as I want to see him succeed (because I’m so livid at what the conservatives did, and like everyone so desperate for the pendulum to swing back).

    Leaving aside this bankstering, there remains the undoing of the Botch regimes attack on the constitution, etc.

    But just reported tonight, Obama’s admin did something really BAD regarding immunity for Botch’s warrantless wiretapping (reported by Greenwald on Salon):

    http://www.salon.com/opinion/greenwald/

    Note Turley’s last words: We Will Not let you eviscerate privacy over a cult of personality.

    Between this and Afghanistan, I’m over the fantasy.

    I think I’m just about done searching online and in the news for evidence of ‘hope’ and ‘change’, this is just a bad scene.

    I looked hard tho!

  6. The Richard E. Cook plan will only cost $36 billion and getting the economy moving again almost immediately for everyone and not just the big banks. Obeyme is bought and paid for and always has been.

    I feel vindicated in not having voted for him McCrud.

  7. No doubt. The bailouts and the pppip or whatever it is, is a disaster waiting to happen. Seems like they’re setting up the FDIC to be the next AIG…

    One of the things Obama has rightly complained about is that none of the detractors are offering alternative plans. On the budget the republicans just came up with a fabulous solution that fixes everything: Cut taxes on billionaires another 10% (!)

    Krugman says spend even more on stimulus. Hard to imagine spending more on anything, but the way I see it, we’ve been spending trillions on defense, we have some catching up to do on the civilian side… Too bad it seems they have to do it all at once.

    It’s a bit of a problem for Obama, hiring Goldman Sachs graduates to fix banking is like hiring oilmen to fix energy, and at the same time the wars are hardly on the wane.

    But he’s definitely far less bad than Botch, and far further less bad than mcBomb/Impalin. I only wish there was some of the resistance shown against Botch back in the day that the left and right levies against the far less-bad Obama, back when Botch was being far worse. Obama likes hiring his adversaries so much, had he brought in Kucinich and Nader, he’d have a whole other level of advice. It’s truly tragic their ideas are not even consulted.

    But unfortunately Obama’s positives are buried in bailouts and budgets requiring resistance. Botch’s bank bailouts are now owned by Obama, and the budget includes vast military spending such that Kucinich rejected it. This is unfortunate.

    But still, he’s far more intelligent and progressive than the conservatives, and that’s a relief, a major bullet dodged. Maybe Obama’s more progressive attitudes will help steer the ship toward a new paradigm of policy that can be truly progressive (wishful thinking?)

  8. I agree with the feeling of disappointment regarding Obama, though when I voted for him, it wasn’t under the illusion that we’d see significant change, perhaps some damage control.

    Obama is rapidly becoming “Bush With A Brain”

    Chris Hedges is getting his message out. Just heard him on the Morning Show at Pacifica Network station KPFA in Berkeley, CA.

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