Pardon my autumnal vacation. I don't know about the rest of you, but, perhaps like the candidates, I needed a break after the election was over and done with.
Contrary to President-Elect Obama's official line, we have two presidents at the moment, one with high approval ratings and one with low, one on his way in and the other on his way out. I asked my brother how history will grade George W. Bush and he said it all turns on Iraq, that if 20 years from now Iraq is basically Jordon (or perhaps Lebanon), is a democracy, a partner in peace, and more a force for stability than instability in the region, then his grade could be quite good, and as with Harry Truman, a quite rehabilitated rating from his final days in office. Under that theory, those things seen as damning elements of the Bush years, largely related to how the war was justified, planned, and pursued, including the torturing of prisoners, renditions, and suspensions of habeas corpus, will be forgotten by history in the same way history has largely forgotten Lincoln's suspension of habeas corpus, and Roosevelt's detention of Japanese Americans, at least as respects their overall performance. I think George W. Bush is a nice man - everyone says he is - if someone with a famous name not quite ready to be president. If Obama proves the opposite, someone unusually suited to be president, then his performance shall always be contrasted against his predecessor, and his ascension will be George Bush's decline. And there is a sadness and unfairness to that for which I cannot quite find words. I have said before that among the presidents of my lifetime - Nixon (well, Kennedy and Johnson, but I don't remember them), Ford, Carter, Reagan, George H.W., Clinton, and George W. - that George W. Bush is the worst, and that it's not really close. But he is not a reprobate. He is not a buffoon like Blagojevich. I didn't like the way he led this country, but I suspect I would like talking to him. And as a president from my lifetime, and eight years of it, it makes me sad to feel as I do, that history will not treat this president well, Iraq's possible rehabilitation notwithstanding.
Regarding Blago. I wrote a post after John Edwards' affair and pathetic explanation for same that he needed to go away, far away. The only space on this blog Blago deserves is just enough to say that Blago needs to go still further away, and Patrick Fitzgerald is going to help him.
A lot of people are down on Paulson. Newt called him the worst Treasury Secretary ever. Now, Newt's pretty smart, but he didn't make a lot of sense. He sounded to me like he was trying to carve out some new/old political territory by suggesting that rather than spend the money as Paulson has, largely, in direct recapitalizations of the banks through the purchase of preferred stock, the money instead be given to the American people as a two-month holiday from any and all taxes. For two months - your full pay check, no tax deductions. Newt can be political, too, and this was Newt stroking the favorite of all conservative / Republican rabbit's foots - tax cuts - as the solution to anything economically ailing us. He knows, as Paulson, the President, and a host of others in the Congress have said, and various Wall Street types have testified to under oath, that the crisis in the financial markets is a liquidity crisis resulting from large bank portfolios of mortgage-backed securities rapidly declining in value as a result of the mortgage crisis. Under law, banks have to estimate their asset worth in terms of what their capital assets are worth right now. Well, right now their worth is considerably lower. Further, by law, banks can only lend at some maximum ratio of their capital, meaning by law their ability to lend is now commensurately reduced. If Paulson in effect gives them capital - trades dollars for the bank's preferred stock - then bank capital increases instantly and they can lend again based on the legal ratio of lending to capital. Historically, this is how financial crises have been dealt with, along with subsequent regulatory changes to address the causes. Before we had a Federal Reserve, banks and bankers (like J.P. Morgan) organized these rescues themselves. Anyway, Newt knows that if the American people were given the financial bailout money in the form of a tax cut, that some portion would be saved (therefore, increasing bank capital in the form of increased savings deposits), and some portion would be spent, leading to an increase in economic activity, which, as with any stimulus, would eventually boost GNP (and with that, wealth, and with that, bank capital), but where if the phrase "liquidity crisis" is in fact accurate, that the whole process is a far slower response than a direct recapitalization of the banks. In no previous banking crisis was a large tax cut the adopted approach. Taxes, whether an increase or decrease, are always a longer-term strategy.
So, I like Newt, but I don't know what he was talking about there. Paulson is doing the right thing. But I also think the Obama team is correct on this issue, that management of the crisis requires both recapitalizing banks and stemming foreclosures, since it is the increase in foreclosures which directly leads to the devaluation of mortgage-backed security portfolios, and with that a decrease in capital and lending power of the banks. And, besides, personally, I'd like to see some help directly reach mainstreet. With all the bailouts and everything else, that would be a nice turn of events.
So how's Obama doing? Ok, so far. Am I the only one who thinks Kathleen Sebelius for DHS is kind of a weak pick? First of all, I hope Obama renames the agency. The word "homeland" has been used in fascist Germany and other times in history to swell a jingoistic form of us-and-them nationalism which, per my earlier comments, I see as among the historic missteps of the Bush administration. A change to Department of National Security would be welcome. Back to Ms. Sebelius, though, she seems to have no background in that which she shall lead. It makes her appointment the most curious to me. However I generally like Obama's other picks. Better to have Hillary with you than against you - besides, I think a genuine respect has developed between the two of them. And the security team minus Sebelius is brilliant - General James Jones, an excellent pick, and keeping Bob Gates for probably as long as Gates wants to stay. I am a big fan of his, and I hope he stays longer than the rumored year. The economic team is equally smart. In the end, though, it will be Obama's judgment on which everything else turns. A Sunday talking-head reminded the rest of the roundtable that Kennedy also signed on the "best and the brightest", and they led us promptly into the Vietnam war. Now, perhaps Kennedy was shot before he had the opportunity to reverse that decision, but the steady and predictable transformation from dark hair to white hair is testament to the fact that the important policies, strategies, and decisions all fall to the president. But, so far, so good.
Comments