MonkeyBusinessBlog

The President Needs to Take a Vacation.

At one of the shops I used to work at we had an options trader who used to get pretty worked up on a daily basis about one thing or another.  Usually, he vented his anger and frustration at his poor option brokers.  The worst thing that he would say to them after he perceived, rightly or wrongly, that they screwed something up was, "You need a rest!  Why don't you go home and take a nap! In fact you should go on vacation because I am putting you in the box for a week!"

This is how I feel about President Obama.  The man has caved in on every major initiative he supposedly campaigned for.  Financial reform?  Health care? Afghanistan?  Whether you are a supporter of the President or not, it is really scary how the President seemingly does what the money people tell him to do.  Be it Wall Street, the health insurers or pharmaceutical companies, they are pulling the strings on the President like he is The Manchurian Candidate II.

We were on Pete Dominick's radio show "Stand Up with Pete Dominick" (XM/Sirius POTUS channel) and I gave a still incredulous Pete this line from the President made just last week;

 "Why is it," that we're going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or NFL football players?

What on earth caused the President to say something like that?  Not only is it stupid to compare bankers to NFL players (NFL players actually give us something for our money AND their actions can't take the whole global economy down!) but it is in contrast to everything he has been saying since last June! Whether you believe in pay caps or not, you have to really wonder what goes through this guys head.

Also, with regard to financial reform there's this; Volcker Says Obama Leaves Opening for Bailouts

THE Chairman has finally had enough of "reform" being written by the very same assclowns who created the mess in the first place.  

 Paul A. Volcker, a top White House economic adviser, said Thursday that the Obama administration’s proposed overhaul of financial rules would preserve the policy of “too big to fail” and could lead to future banking bailouts.

Mr. Volcker, a former Federal Reserve chairman, told Congress that by designating some companies as critical to the broader financial system, the administration’s plans would create an expectation that those companies enjoy government backing in tough times. That implies those financial companies “will be sheltered by access to a federal safety net,” he said.

He urged lawmakers to make clear that nonbank companies would not be saved with federal money.

The good news is, other than the "Too Big To Fail" and "Moral Hazard" thingee, Mr. Volcker agrees with mostly everything else Larry, Timmy and Lloyd have come up with.  Except this of course;

The House committee is leading the effort to pass Mr. Obama’s financial overhaul. Its chairman, Representative Barney Frank, Democrat of Massachusetts, agreed on Wednesday to scale down a pillar of the financial overhaul — a new regulator to protect consumers from unsafe financial products and activities.

Treasury Secretary Timothy F. Geithner endorsed the less ambitious plans, which would exempt retailers and other nonbank companies from oversight.

Mr. Frank and Senator Christopher J. Dodd, the Connecticut Democrat who is chairman of the Senate Banking Committee, say they will have a bill on financial regulation ready for the president’s signature by the end of the year.

Between the names highlighted in blue and the President, does this collective group have a pair of balls between them?  How about one ball?  If they aren't going to deal with the "too big to fail issue", or the consumer protection issue, why the hell are they wasting our time and our money?  For all I know, maybe they bring this sh*t up just to prod the bank lobby into forking over more dough.  It's probably not far from the truth.

Then there is health care.  Again, whether you want reform or not, what the President has done here, after promising so much on the campaign trail, is a flat out bad joke.  He's already ditched the public option and now this (although I guess this has been out there for months) Senate Panel Rejects Bid to Add Drug Discount

President Obama scored a big victory on Thursday as the Senate Finance Committee rejected a proposal to require pharmaceutical companies to give bigger discounts to Medicare on drugs dispensed to older Americans with low incomes. 

Obama, big victory?

The victory came at the expense of senators in Mr. Obama’s own party who had championed the proposal. The vote, in effect, upheld a deal reached in June by the White House and the drug industry, which saw the agreement as a possible way to avoid more onerous requirements that might be imposed by Congress.

The proposal, an amendment by Senator Bill Nelson, Democrat of Florida, would have required drug makers to provide Medicare with discounts in the form of rebates totaling more than $100 billion over 10 years.

Some of the money would have been used to close a gap in Medicare coverage of prescription drugs. In 2007, more than eight million Medicare beneficiaries fell into the gap, known as the doughnut hole.

Under the June agreement with the White House, drug makers pledged $80 billion over 10 years to help “reform our troubled health care system.” In the belief that their contribution was capped, drug companies have run advertisements in support of a health care overhaul.

The rebates proposed by Mr. Nelson would have more than doubled the amount of money to be given up by the industry.

Mr. Carper said the proposal to wring more rebate money out of the drug companies would “undermine our ability to pass comprehensive health care reform in this Congress,” because the drug industry would have opposed the legislation if it included mandatory rebates.

In arguing against the proposal, Mr. Carper said, White House officials told him that “a deal is a deal,” and he agreed.

"A deal is a deal."!!  Here is another example of caving and circle jerking.  If they're not going to do anything other than provide bad theater for us, just leave it alone and focus energy on our boys in Afghanistan who are fighting and dying for something that the President also seems unable to articulate and execute.

Mr. President, go home and take a nap.

A Presidency About Nothing.

From Yahoo News White House Appears Ready to Drop "Public Option". ;

Bowing to Republican pressure and an uneasy public, President Barack Obama's administration signaled Sunday it is ready to abandon the idea of giving Americans the option of government-run insurance as part of a new health care system.

Facing mounting opposition to the overhaul, administration officials left open the chance for a compromise with Republicans that would include health insurance cooperatives instead of a government-run plan. Such a concession probably would enrage Obama's liberal supporters but could deliver a much-needed victory on a top domestic priority opposed by GOP lawmakers.

Officials from both political parties reached across the aisle in an effort to find compromises on proposals they left behind when they returned to their districts for an August recess. Obama had wanted the government to run a health insurance organization to help cover the nation's almost 50 million uninsured, but didn't include it as one of his core principles of reform.

Health and Human Services Secretary Kathleen Sebelius said that government alternative to private health insurance is "not the essential element" of the administration's health care overhaul. The White House would be open to co-ops, she said, a sign that Democrats want a compromise so they can declare a victory.

WTF?  Up to just a month ago the President was insistent on a public option.  The reformation of health care was the one domestic agenda I thought Obama held sacrosanct, and a government option was key to that agenda.  Now he abandons it to "declare victory"?  Excuse my French, but what a pussy. An ass-clownette like Sara Palin throws some bull-sh*t out about "death panels" and ass-hats like Chuck Grassley talk about "pulling the plug on Grandma" , a few "town hall meetings" get fired up and Obama folds?

As you know on this blog we have a whole category devoted to "President Obama, Complaints and Grievances".  I focused on his wishy-washy and "naive" handling of the financial crisis.  At least with the financial crisis I am still debating whether he is just not very skilled or whether he is full of it. Health care?  That's all he has supposedly been dreaming about since he started running for the Presidency.  In my opinion, George W. Bush had a plethora of stupid and dangerous ideas.  However, you had to admire his conviction to see them through!  Did Abe Lincoln, after Bull-Run,  look for a quick skirmish that he could win and declare "victory" while letting the South secede?  Did Ronald Reagan stop his domestic agenda in the first two years of his presidency when the country lurched into a deep recession and his polls went through the floor?

I don't care what your position is on health care. Me personally?  I view it as a right for every citizen in a wealthy country.  I personally think its wrong to have the nation's health care system run in very large part by insurance companies, hospital management companies and the pharmaceutical companies. These are public companies answerable to shareholders.  Their job is to make money, not to make society as a whole healthier.  I think a public, non-profit option in a necessary counterweight. That's my opinion and if you disagree that's fine with me.  This is America.

What we all should be thinking about, whether you are deflated by this latest Obama move, or delighted by it is, what kind of a guy is our President?  Is he just another guy like Billy Clinton who just wants to be loved? Is he the kind of guy who folds when the pressure is on, sacrificing his most closely held principals when a few thousand people get mad and a few of his party's congressmen get worried that his plan might cost them their seats in 2010.  Isn't this when he is supposed to rally these people and make them feel that the cause is just?  In our finest moments, men and women, usually "ordinary" people did things like climb into landing crafts and go towards near certain death to defeat evil.  They got on buses, or marched on cities knowing that they were definitely going to be jailed and beaten and maybe even killed to fight for civil rights?

This President has no stomach for a real fight and as far as I have seen, doesn't really stand for anything.  We need better.

Don't Think Twice It's Alright.

Let me ask you a question.  If you became the leader of your country and the country was under the threat of imminent attack by a ferocious enemy would you;

• Immediately find the most qualified generals in the land and allow them to pick the best officers and enlisted units in order to meet the crisis head on or;
• Would you find the generals that put the country at risk in the first place, put forward senior officers with spotty backrounds, and re-organize the military in such a way that it may take months before you could actually USE the military?

I assume most of you would pick the former.  President Obama, on the other hand, gives every indication that he would pick the latter.  I say this because the latter example is exactly what he has done with our financial regulatory system to meet our financial crisis. 

When the Obama Administration came to power they inherited the mother of all financial crises.  I don't question that in the least.  However, rather than than order a immediate mobilization of the regulatory agencies at his disposal and task key subordinates to quickly assess what each agency was capable of, the President hired bad generals like Larry Summers and Tim Geithner, allowed good generals like Paul Volcker to be shunted aside, appointed bad senior officers that couldn't pass the confirmation process and sent a strong public message that he was going to completely overhaul our regulatory system in the future.

The time to publicly mull over a vast reorganization of the regulatory system is not when the crisis is raging all around us. All this did was paralyze each agency with regard to strategy and staffing and motivate senior officials to spend most of their time playing politics and covering their asses instead of dealing head on with the crisis.  It's tough to hire or fire people if you don't have any idea what the role of your agency is going to be or if it is even going to exist in the future.  As a leader in a crisis you make people perform, see who steps up to the plate.  In times of crisis, people can surprise you as to what they are really capable of.  This allows you to move out incompetent senior officials and find those who know how to fight.  Trust me, within many of these agencies there are folks who actually know what they are doing.  Unfortunately, most of them are not at the senior leadership level. 

Instead, we have numerous regulatory agencies doing..... I'm not sure what.  It doesn't seem like anyone is being hired, which makes sense considering the alteration of the regulatory framework will now be debated for months.  How do you know who and how many to hire if you aren't even sure what your agency is going to be tasked to do going forward?  The answer is you don't.  What you will do however, is spend the next months playing politics and not regulating.

This is the last of my "President Obama - Complaints and Grievances" series!  I voted for the man and I am indeed an idiot.  I thought he was competent and he has shown me that he is not.  Here's a song that best epitomizes our "breakup"!  Only good things happen when you combine Bob Dylan and Mike Ness!

As George Bush Might Say, "This is Ironical."

As I said in a earlier post, yesterday President Obama gave an interview on Bloomberg Television.  Here's some fascinating stuff concerning regulatory reform and "derivatives" from Bloomberg News.

The president today will announce his proposal for revamping financial regulation. Many of the changes must be approved by Congress, where jurisdictional and ideological clashes may shape the final legislation.

Crafted by Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers, the plan would put the Federal Reserve in charge of regulating companies whose collapse could damage the entire financial system. It would also create a new agency to oversee consumer financial products, such as mortgages and credit cards.

The proposal encompasses areas ranging from derivatives to executive pay to the mortgage-backed securities that helped fuel the housing boom and touch off the credit crisis.

“Derivatives are a huge potential risk to the system,” he said. “We are going to make sure that they have to register, that they are regulated, that you have clearinghouses.”

No offense Mr. President, but did anybody tell you who Larry Summers is or did you just do whatever Bob Rubin told you to do??  If you knew ANYTHING about Dr. Larry (and I'm not even talking about his $5 million payday from hedge fund DE Shaw where he was a "consultant") you would know that putting the phrase "revamping financial regulation" together with "crafted by Larry Summers" and then "regulating derivatives" is insane!!  Maybe the Prez needs a little history lesson.  This is from our blog a few months ago; 

With that out of the way, lets talk about yesterday's winner of the "Profiles in Courage" award from the JFK Library, former CFTC chief Brooksley Born.  One of our favorite readers was kind enough to dig up the original story of the battle that took place between Brooksley Born, Alan Greenspan, Larry Summers, Bob Rubin and Arthur Levitt.  Check this out from October 1998, right after the Long Term Capital collapse.  I wanted to cut out key excerpts but the whole article needs to be read.  You will see that Larry Summers CALLED FOR LEGISLATION blocking the CFTC from having any regulatory jurisdiction over OTC derivatives!  The "legal" issues that Born's opponents cited were the risks that a deep dive study into OTC Derivatives might result in the contracts being  treated like futures, which by law must trade on an exchange.  Fair enough, but I bet there could have been rational remedies for this.  The right answer was not to just ignore the risk or leave the product completely unregulated.  We had just come out of the LTCM disaster and the whole panic was systemic risk from OTC derivative products.  Sound familiar?  By the time this article came out, Born had been battling with Al, Bob and Larry for months.  You will see that she is conciliatory and really just wants the financial regulatory system to get its head around the potential risks of the products should they be misused.  From Bloomberg News;

    Washington, Oct. 1(Bloomberg) -- The head of the federal agency that regulates the U.S. futures markets expressed a new desire to regulate the $30 trillion over-the-counter derivatives
market following Long-Term Capital Management LP's losses.

Commodity Futures Trading Commission Chairman Brooksley Born for the first time said she is``getting notions'' about the type of rules that may be needed to prevent OTC derivatives use from disrupting the markets.  Her position puts her in opposition to Federal Reserve Chairman Alan Greenspan and Deputy Treasury Secretary Lawrence Summers, who today reiterated their opposition to a controversial CFTC review of the OTC derivatives markets even as key members of Congress asked the regulators to do a broad study.  Long-Term Capital's near-collapse ``confirmed fears I had'' about the OTC derivatives market, Born told reporters after a House Banking Committee hearing on the hedge fund.
   

Born said price transparency and disclosure would be her main goals in proposing any new rules, rather than regulation such as the Securities and Exchange Commission imposes on brokerages.``Too much is at stake now,'' she said.

                    Greenspan Comments

 The Federal Reserve Bank of New York helped organize 14 banks and brokerage firmsto take over Greenwich, Connecticut-based Long-Term Capital, which suffered as much as $4 billion in losses through highly leveraged bond and stock trades. Some of the trades involved OTC derivatives -- contracts tied to the value of securities, commodities, currencies or indexes.  Greenspan said Congress should prevent the CFTC from imposing rules on OTC derivatives, which a provision in the pending agriculture spending bill would do temporarily, even after the near-failure of Long-Term Capital.
   

 ``There is a very significant concern that the legal status of the OTC derivatives market would be subject to very severe legal challenges'' if the CFTC acted, Greenspan said at the banking committee hearing.
   

The comment came in response to a question from  Representative Maurice Hinchey, a Democrat from New York, about whether the CFTC should be allowed to proceed with a study of the OTC derivatives market it started in May. Derivatives dealers and rival federal regulators say the study jeopardized the industry by suggesting many contracts may be illegal. Three members of the five-member CFTC agreed to hold off on new rules for a year because of those concerns.

Summers said in a letter, dated yesterday, to House Banking Committee Chairman James Leachthat the need for legislation blocking the CFTC is greater than ever ``because it will reduce legal uncertainty with respect to certain OTC derivatives.'' Industry representatives have also objected to Born's attempt to draw a link between the hedge fund's problems and the need for more oversight of OTC derivatives.

WTF?  Time to wake up Mr. President!

What Happened to Paul Volcker?

President Obama did a little scolding yesterday as well as a little economic forecasting in a Bloomberg interview highlighted in this article from Bloomberg News Obama Sees 10% Unemployment, Chides Wall Street Critics.  Before we get into what the President said yesterday I have a question.  What happened to Paul Volcker?  The Prez seemed to take The Chairman everywhere he went in November and December, like a prop from central casting.  Now?  If The Chairman is involved, and given the actions this administration has taken in the last five months I would say he isn't, they sure are keeping him a secret.  This is exactly what I feared when President Obama picked Larry Summers to be his chief economic adviser.  Summers, for lack of a better description, is an arrogant prick.  As anyone who has followed Summers could have predicted, which we did, Dr. Larry was going to box out anyone who had the gall to question his brilliance.  At some point The Chairman must have said, "I'm 81 years old, I have better things to do than argue with this pompous ass.  Let the genius figure it out." 

Seeing how The Chairman is one of the few people on the planet Earth who has actually tackled a protracted structural crisis and solved it, it's a bit disconcerting that he was just used for public relations.  One might say it was a bit disingenuous of the President to let us think that The Chairman was "on his team" during the election.  It gave the Obama crew a bit of gravitas in a very dark hour and I'm sure helped win a lot of votes.  Now, when the work needs to get done we get Dr. Larry's presciption.  We get plans that might look good in a classroom, but have little bearing in the real world.  Do you think Paul Volcker would have;

• Coordinated a mortgage rescue strategy with the Fed to artificially cap mortgage rates by becoming the mortgage backed securities buyer of ANY resort and thus losing far more tax payer dollars than might be saved by touching off an anemic refinancing wave?
• Approved a mortgage modification plan that, like I said, may have looked good on a white board, but was structurally impossible to pull off (I think they have modified 12 mortgages.  The goal is 4 million)
• Signed off on an idiotic "legacy asset" clearing plan like the Public Private Investment Partnership ("PPIP").  A plan that lacked transparency and put tax payers at huge risk.
• Pushed for the easing of mark to market accounting, which assured that most banks would do everything in their power NOT to move their "legacy assets" because the relaxed accounting standards allowed them to carry the assets above even the pumped up PPIP prices.
• Used Freddie Mac and Fannie Mae as a back door Hoover of bad loans, with the Treasury bearing the risk and essentially keeping the activities a secret from the public.  You wonder why every three months Freddie and Fannie are coming to Treasury saying, "Please sir, may we have some more (capital)?"
• Allowed the sham banking "Stress Tests" to help govern decisions surrounding the adequacy of financial sector capital.
• Allowed the sick joke that has gone on between the government, AIG and AIG's counterparties wherebye $ billions of our tax dollars were funneled through AIG to these counterparties to produce "stellar first quarter earnings."  What I am referring to is AIG's mark down of their risk portfolio that resulted in such massive unrealized losses that they broke all records for losing money in Q4 2008.  They took a $61 billion loss.  These numbers were most probably decided upon in the early months of 2009.  They took the unrealized loss for Q4 2008 and then gave all their counterparties a nice late Christmas present by unwinding trades at extremely generous levels, giving all their counterparties huge Q1 2009 trading gains.  During this time AIG received another $30 billion in bailout money.  How we doin'?

There's more, but I'm sure you get my point.  President Obama was charged with a vital task upon taking office.  He gave the appearance that he was going to take it on seriously, and he used the illusion that Paul Volcker was to be involved in key decision making.  That has turned out to be just another "campaign trick".  The President has never made the claim to be a financial whiz.  However, what he has essentially done is made a bunch of speeches and produced policies that have done little more than build a Potemkin village of financial system recovery.  When the next shoe drops, and it will drop hard and soon, President Obama isn't going to have President Bush to blame.  This is his mess now.   

Complaints and Grievances - Stimulus Flow Chart

From our good buddy Banzai Bill at williambanzaiblog .com 

Why Did President Obama Sign the 2009 Omnibus Spending Bill?

The second in my series of what George Carlin would call "Complaints and Grievances", spurred on by Paul Krugman's Op-Ed piece today in the New York Times.  When President Obama signed the $410 billion 2009 Omnibus Spending Bill in March of this year why didn't at least 100 million people in this country say, "WTF??"

If there ever was a process in which Congress figuratively comes into our homes and pees in our soup it's the Omnibus Bill they sign every year.  The bill is a kind of thing that organized crime must envy.  The important point to remember is the Bill is all or nothing.  If the Bill doesn't pass then NOTHING in the bill is appropriated for. Congressmen take a bunch of spending that has to get done, but has not been appropriated for under the regular appropriation process.  Take "Providing for medical research for incurable diseases."  That goes in the Bill. Also, in these tough times provisions to provide or extend assistance for displaced workers as well as appropriations for veterans.  The kind of stuff that most congressmen are going to definitely say yes to for the actual reason that it's the right thing to do!  

Then the real "governing" gets done.  This is where they tack on all their pet pork projects.  Speaking of pork, I believe this bill has a few million going to research the effect of pig farts on the local environment. This is the crap (ear-marks) that buys votes back home.  You ever wonder why as a body, Congress has a 10% approval rating, but incumbents are always getting re-elected? This is why.  The Omnibus bill is a 535 person hand holding circle-jerk.  They basically say to each other, "You don't vote for my bull-sh*t, you ain't getting your bull-sh*t....oh, and you're also saying no to veterans and disease prevention.  Put that on a bumper sticker." Pretty sleazy no?  

Now it's 2009 and "Hope and Change" is in the White House.  He gets this Bill, knowing that he wants to spend $ trillions on things he thinks really need spending on, and he has this $410 billion turd on his desk.  President Obama has a 75% approval rating and Congress has 10%.  He's promised change so what better place to start.  He could have told the Congressional leadership;

"Now look, I've identified about $200 billion of spending that I think is vital.  It gets skipped by the normal appropriation process and we need to fund it.  This other $210 billion?  If Tom Harkin wants to get up and argue that we need to spend $9 million to study pig farts, I'll buy him some prime-time air on the networks.  Personally, if we are going to spend $210 billion more I want to rebuild New Orleans, give affordable healthcare to all uninsured children, and take care of our returning Iraq and Afghanistan veterans. If there's anything left over Harkin can have his pig fart study."

The Prez didn't say that though did he?  Instead he "reluctantly" signed what he called a "imperfect bill". Why, because it was too late in the budget game and because it would piss off the Democratic leadership in Congress the same way Jimmy Carter did in 1977 or Bill Clinton did in 1993?  Maybe, but isn't that what he hired Rahm Emanuel for?  Isn't he the kind of guy that supposed to crack skulls and remind his party that THEIR president is wildly popular and maybe THEY could get their approval rating to go from 10% to 20% if they actually showed that they cared about how they spend the people's money.  As far as buying votes back home?  The president just gave you cover.  He's the one who killed the pig fart study in the name of responsible leadership. By the way, I've asked this question before, "What the hell does Emanuel actually do anyway?"  Isn't he supposed to work this crap out with Reid and Pelosi?  

Whatever.  I know Paul Krugman probably feels the same exact way as I do about the Omnibus Bill. However, he brought up deficit spending so I put it on my list of grievances with the President.  He talks about change but he keeps delivering more of the same bull-sh*t without the slightest hint of political courage.  It's this kind of stuff that makes people very wary of government spending, even in these brutal times.

Krugman Speaks.....Again...and Again.... Which I Think is Good!

Hey look at that!  Paul Krugman has a piece in the New York Times Op-Ed today Stay The Course.  I'm starting to wonder if Krugman is getting more and more prolific with his writing, and more controversial with his opinions just to draw attention to himself.  Whatever the case,  I'm glad he is doing it because if anything, it keeps public debate going about very important matters.  That's a good thing.  A lot of people get mad at Krugman for his views and how he presents them.  However, I think that the service Krugman is providing is that he is framing the arguments that all of us, as citizens, should be having.  Additionally, Krugman's presentation of ideas surrounding fiscal stimulus, deficit spending, quantitative easing, etc make those of us who disagree, come up with coherent counter-arguments.  That helps too, as it provides for policy alternatives.

Anyway, Krugman got me thinking about fiscal stimulus, quantitative easing, fixing the banking system, regulatory reform, housing rescue plans, etc. I'll present my ideas throughout the day, breaking them up so this doesn't turn into a "New Yorker" type piece.  I would like to deal with the idea of fiscal stimulus first.  Here's something I wrote back in January of this year.

I've been thinking a lot about this stimulus package that everyone is rushing to launch.  What struck me as pretty odd this weekend, watching all the Sunday talk shows, was the politicians, the economists and the pundits all talk about massive stimulus packages like we've done them before and we know what we are doing.  I had to stop and think, "We haven't done anything near the scale that they are talking about since the 1930's and;

1. In the 1930's we were a agricultural and manufacturing economy.  The service part of the economy (finance, legal, accounting, advertising, etc) was nowhere near the percentage of the economy that it is now.  Additionally, the amount of the population that was college educated was minuscule compared to today.  In short, the "American Worker" was a much different animal seventy-five years ago.
2. There's not a lot of proof that massive stimulus packages work.  Even if you could argue that the programs of the 1930's worked with regard to stimulus (from what I understand, FDR's policies were mostly good for the nations psyche as opposed to producing much economic growth) the data that the smart people are throwing around ($1 of shovel ready jobs equals $3 of stimulus, etc) is based on what?  The 1930's?  Japan?  Different time and different people (and from everything I've ever heard or read, the Japanese stimulus was a costly failure).  We've already proved in the subprime mortgage market that using historical data on a product or a idea that has very little in common with the product or idea you are trying to make projections on ends up with everyone having  a sore tush (technical term). 

I guess my main point here is we have a lot of people running around looking to spend $1 trillion without any real idea how it should work.  Considering we are already a couple $ trillion in the hole we only get one shot at getting this right.  President-Elect Obama doesn't want to turn this into a intellectual exercise, but considering we really have no idea what we are doing, a little thought might be a good idea.

Now we are in the middle of June.  I agree with Krugman that it is silly to expect that the stimulus package passed in February should have fixed all that ails us in four months.  However, does anybody know where the money is going?  Has it gone anywhere?  President Obama tells us that this will be a transparent process but that is quite a tall order.  Transparency isn't Vice President Joe Biden telling us that thousands of "shovel ready jobs" are ready to go.  What are these projects?  If this is a transparent process then shouldn't somebody be able to tell us;

"Today the U.S. Government granted $500 million to repair the "Big Bridge" in XYZ-City.  Here is the budget, here are the companies that will serve as sub-contractors, here is how the money will be allocated and here is the time-table for such allocations, etc, etc... Additionally, here is how the bidding process for sub-contract work was done.  To the best of our knowledge there are no conflicts of interest in the process and the budgeted costs are as accurate and honest as possible. We will provide frequent updates as to allocations of the $500 million and progress of the project."

Have you seen anything like that?  I haven't.  They just tell us, "We're gonna give $20 billion to these 8 states for needed infrastructure repairs."  There's a process that always ends up well right?  We all know that when you put public funds in the hands of politicians, lot's of funny things happen.  There's a reason that all of us, as taxpayers, have probably spent $10,000 each over the years to "build stuff" in John Murtha's congressional district or Robert Byrd's state!  It all becomes a big old slush fund.

My point here is Paul Krugman and many other smart people ran around late in 2008 and early 2009 screaming that Congress had to pass a gigantic stimulus package by President's Day.  Debate, even debate on how the money was to be allocated, was completely cut off.  Anybody who questioned the plan was painted as an obstructionist idiot.  Now here we are.  It doesn't seem like we know how to spend the money and the package doesn't seem like it's stimulating the economy too much.  Meanwhile, the $787 billion package is already factored into the Treasury's mounting deficit and that is beginning to have a big, negative effect on Treasury borrowing rates.  Why couldn't we have a real debate on the stimulus package and fine tune the process and the investments?  Sure, maybe President Obama would have been signing the bill today as opposed to February but if we created a better package wouldn't that have instilled greater confidence on what we were borrowing the money for and actually showed our creditors that we had a clue?  A better package, passed later, would be stimulating the economy a lot more in my opinion and provided more confidence for the American people and the world.  Can we have a do-over?