Message #162283

[Harconen]

            Obama appears on CBS’ 60 Minutes to discuss the state of the economy. Despite the seriousness of the subject of the sour economy—and with millions of Americans unemployed—Obama laughs and chuckles several times during the interview. Asked about auto industry troubles, Obama laughingly states, “I just want to say that the only thing less popular than putting money into banks is putting money into the auto industry.” Obama’s lack of seriousness prompts CBS interviewer Steve Kroft to remark, “You’re sitting here. And you’re… you are laughing. You are laughing about some of these problems. Are people going to look at this and say, ‘I mean, he’s sitting there just making jokes about money…? ’ How do you deal with… I mean, explain… ” and asks Obama, “Are you punch-drunk?” Obama answers, “No, no. There’s gotta be a little gallows humor to get you through the day.” Referring to Wall Street investors who lost money, Obama says with a chuckle, as though he’s pleased that thousands of capitalists lost fortunes, “I mean there were a whole bunch of folks who, on paper, if you looked at quarterly reports, were wildly successful, selling derivatives that turned out to be… completely worthless.” In the interview, Obama also expresses confidence in his battered Treasury Secretary, Tim Geithner, and says, “Sorry buddy, you’ve still got the job.” [1924, 1927, 1934]

            On his weekly radio program Venezuelan President Hugo Chavez accuses Obama of “exporting terrorism” and calls him a “poor ignorant person” who “should read a little bit so that he learns about… the reality of Latin America.” [1928]

            On March 23, the administration unveils a Public-Private Investment Program (PPIP) to buy up $1 trillion in “toxic assets” from the economic downturn. Under the program, the government would offer hundreds of billions in low-interest loans to encourage private investors to buy the troubled assets. The program would also allow the Treasury Secretary to seize a firm with the agreement of Obama and the Federal Reserve Board. The seized firm would essentially be in conservatorship, as in a bankruptcy. (It is unclear why that federal conservatorship program is needed when the firm could more easily be allowed to file bankruptcy.) [1914, 1915]

            Attorney Dr. Orly Taitz resubmits her case, Lightfoot v. Bowen, to the U.S. Supreme Court. She alleges that court clerk Danny Bickel mishandled the original filing and that many of the original documents she submitted in December were either not received or were kept from the Justices. Dr. Taitz also files a Motion for Leave to File Writ of Quo Warranto. (A quo warranto, Latin for “by what warrant?,” is essentially a legal request to compel a person to show by what authority or right he is exercising some power or authority, such as compelling an elected official to prove his is eligible to serve.) [2344, 2345]

            The stock market reacts favorably, if only temporarily, to the news that the Federal Reserve Board and the Treasury Department will pour more money into the banking system via the Public-Private Investment Program. The DJIA closes at 7,775.86 on March 23, up 497.48 points (6.8 per cent). Shortly after the announcement of the new program, Pacific Investment Management Company (PIMCO) announces it would be willing to buy some of the “troubled assets” that will be available at bargain prices. On the up side, PIMCO may possibly make a substantial return on its investment. On the down side, the taxpayers will be lending money to the investors to buy the assets, and the taxpayers will share in any losses. (The government promises to put a floor on losses of only 10–20 per cent of what the investor pays for the assets.) Douglas Elliott, of the Brookings Institution, explains why the program can be a win-win for investors (but a “loss-loss” for the taxpayers). “For example, it could be rational for investors to offer 40 cents on the dollar, calculating that they would benefit sharply if the price went to 50 cents, while the government (the taxpayers) would absorb most of the losses if the value fell to 30 cents on the dollar.” PIMCO argues that the government should dump an additional $3 trillion into the economy. “Right now, the Fed has spent about $3 trillion. We believe there has [sic] to be further stimulus policies put in place,” said the CEO of PIMCO Asia, Ltd., Brian Baker. (The federal government does not have an additional $3 trillion to pump into the economy any more than it had the first $3 trillion, but PIMCO likely believes it would profit from the resulting federal borrowing and subsequent hyperinflation.) [1937, 1980]

            Although PIMCO may be eager to get involved in the federal program, many investors may shy away if they worry that making a profit off the purchase of troubled assets will result in the same abuse experienced by AIG executives (death threats, retroactive 90 per cent tax increases, public humiliation, ACORN tours of executives’ homes, and harsh media criticism and ridicule). Some of the assets have had willing buyers for months but many banks have been reluctant to sell them at greatly reduced prices; some banks have been waiting instead for a federal (that is, taxpayer-funded) program from which they might get a better return. By promising a bailout program, therefore, Obama and Geithner aggravated and extended the economic crisis by inadvertently encouraging the banks to hold on to their worst assets. (The bankers essentially thought, “Why sell ‘asset X’ for $50 million today when I can wait a while and possibly get $60 million from Obama and Geithner later?”) [1937, 1980]