Chattanooga blogger the Tennessee Federalist Student (scroll down for a perma-link on my blogroll) cracks open Ayn Rand’s Atlas Shrugged:

“I’m…particularly drawn to Rand’s use of the word “adequately,” which she repeats over and over. Businesses and workers do not believe that they have to be the best, or even good, only “adequate.” They do not believe that they should have to compete as long as their performance is “adequate.” It’s similar to the adage about how most workers work only hard enough to not get fired, and most businesses pay only enough to keep the workers from quitting.”

I (embarassingly) confess I’ve not read it yet, though I hope to soon.

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The former presidential adviser, in the Wall Street Journal this past week:

“Mythmaking is in full swing as the Bush administration prepares to leave town. Among the more prominent is the assertion that the housing meltdown resulted from unbridled capitalism under a president opposed to all regulation.

Like most myths, this is entertaining but fictional. In reality, Fannie Mae and Freddie Mac were among the principal culprits of the housing crisis, and Mr. Bush wanted to rein them in before things got out of hand.

Rather than a failure of capitalism, the housing meltdown shows what’s likely to happen when government grants special privileges to favored private entities that facilitate bad actors and lousy practices.”

Barry Ritholtz of the economic blog The Big Picture on the last sentence of the 2nd paragraph above:

“Wrong. Fannie and Freddie were cogs in the giant mortgage machine, but they had nothing to do with the abdication of lending standards from 2002-07. That was a function of the Lend-to-Securitize business model of the sub-prime mortgage originators. THAT was the primary cause of the housing boom and bust, along with Ultra-low rates and a lack of Fed regulation of these sub-prime lenders.”

&

OMISSION: Bush thwarted attempts to make lenders behave responsibly: Gee, somehow Mr. Rove forgot this one. Bank regulators had proposed new guidelines for writing risky loans. These were internal administrative rules; had they been enacted, the worst of the housing and credit crisis might have been avoided. The Bush administration backed away from proposed crackdowns on the subprime, no-money down, interest-only mortgages that were critical contributors to the credit and housing crisis. According to the Associated Press, pressure from banks (many of whom have since failed) was the reason:

“Bowing to aggressive lobbying — along with assurances from banks that the troubled mortgages were OK — regulators delayed action for nearly one year. By the time new rules were released late in 2006, the toughest of the proposed provisions were gone and the meltdown was under way. ‘These mortgages have been considered more safe and sound for portfolio lenders than many fixed-rate mortgages,’ David Schneider, home loan president of Washington Mutual, told federal regulators in early 2006. Two years later, WaMu became the largest bank failure in U.S. history.”

What was so damning was these proposals were all stripped from the final administrative rules by the Bush White House. None required congressional approval; they did not even require the president’s signature.”

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The President-elect, today:

“We have to make tough choices and smart investments today so that as the economy recovers, the deficit starts to come down.  We cannot have a solid recovery if our people and our businesses don’t have confidence that we’re getting our fiscal house in order.  That’s why our goal is not to create a slew of new government programs, but a foundation for long-term economic growth.

That also means an economic recovery plan that is free from earmarks and pet projects.  I understand that every member of Congress has ideas on how to spend money.  Many of these projects are worthy, and benefit local communities.  But this emergency legislation must not be the vehicle for those aspirations.  This must be a time when leaders in both parties put the urgent needs of our nation above our own narrow interests.”

Read the full transcript here.

Republicans soon after held a news conference with their take; House Minority Leader John Boehner said, “At the end of the day, how much debt are we going to pile on future generations?”

Nice of them to get religion. A little late, though.

(Photo: Stephen Crowley/the New York Times)

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Marc Ambinder:

“It’s quite unsettling to talk to members of Barack Obama’s transition teams these days, especially those who are helping with the economics portfolio. Without going into details, the sense I get from them is that they are very worried that the economy will get a lot worse before it gets better. Not just worse… a lot worse.

As in — double digit unemployment without the wiggle factors. Huge declines in aggregate demand. Significant, persistent deficits. That’s one reason why the Obama administration seems to be open to listening to every economist with an idea and is stocking the staff with the leading lights of the field. In one sense, the general level of concern among Obama advisers and transition staffers is reassuring; they get the magnitude of the problems, and they’re not going to assume that, just because the bottom has never dropped out before — certainly not in the lifetimes of most people doing policy these days, the bottom will never drop out.”

He goes on to worry about the foreign policy implications of this focussed-like-a-laser-beam mindset.

What do you think?

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[above: home demolition, Snakeranch, northwest Missouri, 1976. photo by my father.]

Two op-eds in today’s New York Times express (on different sides of the fence) the fear that Obama is more interested in fixing up the old instead of tearing down & starting from scratch.

David Brooks:

“..alas, there’s no evidence so far that the Obama infrastructure plan is attached to any larger social vision. In fact, there is a real danger that the plan will retard innovation and entrench the past.

In a stimulus plan, the first job is to get money out the door quickly. That means you avoid anything that might require planning and creativity. You avoid anything that might require careful implementation or novel approaches. The quickest thing to do is simply throw money at things that already exist.

Sure enough, the Obama stimulus plan, at least as it has been sketched out so far, is notable for its lack of creativity. Obama wants to put more computers in classrooms, an old idea with dubious educational merit. He also proposes a series of ideas that are good but not exactly transformational: refurbishing the existing power grid; fixing the oldest roads and bridges; repairing schools; and renovating existing government buildings to make them more energy efficient.

This is the federal version of “This Old House.””

Nick Taylor:

“The challenge for Mr. Obama, as it was for Roosevelt, will be to do the job efficiently, to avoid a jumble of projects that help cities and states but don’t improve the national picture. It’s not enough for the president and the Congress to just spend money. Local governments will be scrambling for dollars and showering plans on Washington.”

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Above: President-elect Barack Obama outlines in his weekly YouTube address how he plans to create millions of jobs by investing in infrastructure.

Read more about Eisenhower’s creation of the interstate highway system here.

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Great that the senator (& others) are holding their feet to the fire, but where the heck was this kind of scrutiny/outrage/demand for accountability with the heads of all the financial institutions that were bailed out with 20 times the money? Just asking.

FURTHER READING ON THE AUTO BAILOUT:

Jim Manzi looks closely at GM’s plan:

“The point of this document was supposed to be the presentation of the plan to achieve these operational improvements. But there’s no there there. I guess somebody who’s never read a real business plan might mistake this document for one, but it’s a joke.”

Joseph Romm looks at Ford’s plans, & likes what he sees:

“Ford Motor company goes into bailout negotiations with a much healthier balance sheet. And based on their restructuring plans, I wouldn’t be surprised if Ford ends up more successful in the long term.”

But he goes on to say that GM’s idea to implement corn/ethanol technology is a laughably horrible one.

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Obama taps the New Mexico governor for his Secretary of Commerce.

His remarks this morning, from Change.gov:

“Bill has never been content to learn just from briefing books — never satisfied with only the official version of the story. During his time in Congress, he held more than 2,500 town-hall meetings, so he could hear directly from constituents. He was a regular in the U.N. cafeteria, mixing it up with U.N. employees over lunch. And during his 2002 campaign for Governor, he actually broke a world record by shaking nearly 14,000 hands in just eight hours.

All of this reflects a determination to reach out and understand where people are coming from, what they hope for, and what he can do to help. This approach, I believe, has been the key to Bill’s success as a negotiator and will be key to his work on the critical functions of the Commerce Department — from administering our census and monitoring our climate to protecting our intellectual property and restoring our economic diplomacy.

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Blogger Grumpy Old Man (a registered Republican) likes the pick:

“After thinking about it, I agree that Bill is a good pick. It signals that we will be refocusing our business and trade agreements with Latin America, an area that has languished while the focus has been on the Middle East. China, Brazil, and Russia have formed an economic alliance, and we will need to address those spheres of influence.”

But Alex Conant of the RNC proved more contrary:

“Nothing says change like picking the Clinton administration’s energy secretary and UN representative to be commerce secretary.”

I think my favorite story about the Obama-Richardson debate is this one, in Richardson’s words as recounted on Daily Kos:

“I had just been asked a question — I don’t remember which one — and Obama was sitting right next to me. Then the moderator went across the room, I think to Chris Dodd, so I thought I was home free for a while. I wasn’t going to listen to the next question. I was about to say something to Obama when the moderator turned to me and said, ‘So, Gov. Richardson, what do you think of that?’ But I wasn’t paying any attention! I was about to say, ‘Could you repeat the question? I wasn’t listening.’ But I wasn’t about to say I wasn’t listening. I looked at Obama. I was just horrified. And Obama whispered, ‘Katrina. Katrina.’ The question was on Katrina! So I said, ‘On Katrina, my policy . . .’ Obama could have just thrown me under the bus. So I said, ‘Obama, that was good of you to do that.’”

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[above: a sign spotted in Seattle by a reader of Marc Ambinder's blog]

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Right at Home’s John Scott reads the tea leaves in a response he got from a letter he sent the senator opposing the Big 3 bailout (his emphasis added):

“Once I have received this report, heard new testimony, and have had a further chance to evaluate the viability of these corporations, I will make a final decision on this issue based on the new information. But unless there are significant changes, I am highly skeptical of making any loan to these troubled corporations.”

Scott wonders if he’s reading too much into it; I happen to think he’s successfully spotted some ‘outs’ in the language the junior senator from Tennessee chose to use.

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“In a sense, Bush’s inactivity is even less excusable than Hoover’s. Unlike Hoover, Bush could learn from the successes of New Deal and World War II-era programs to revive the economy. Keynes’s general theory of how to defeat depressions wasn’t around when Hoover was president, but it’s been with us now for 72 years. What’s more, virtually every reputable conservative economist, from Martin Feldstein on down, now supports a government stimulus program. But Bush, drawing on no known body of economic thought, remains opposed. (So does Republican House leader John Boehner, who seems determined to elevate stupidity to a party principle.) And with each passing day, the economic hole out of which we will have to climb grows deeper.”

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From RedState.com.

Short version: Hard to filter the message through the intense, dripping sarcasm, but he seems to believe what got us into this mess is both the government & consumers doing “too much spending,” & “not enough saving.”

& we haven’t heard him deliver this message in the last 8 years…why?

It certainly wouldn’t have anything to do with putting a party’s interest above the country’s, would it?

Seriously, Vote08 readers - if you have an answer, I’d love to hear it.

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Recommended: Play them both at the same time: begin the bottom clip 1st, & then play the top clip at about 30 seconds in.

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Wanna know how this current federal bailout compares with past American investments?

It’s not pretty.

From The Big Picture:

If we add in the Citi bailout, the total cost now exceeds $4.6165 trillion dollars. People have a hard time conceptualizing very large numbers, so let’s give this some context. The current Credit Crisis bailout is now the largest outlay In American history.

Jim Bianco of Bianco Research crunched the inflation adjusted numbers. The bailout has cost more than all of these big budget government expenditures – combined:

• Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
• Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
• Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
• S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
• Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
• The New Deal: Cost: $32 billion (Est), Inflation Adjusted Cost: $500 billion (Est)
• Invasion of Iraq: Cost: $551b, Inflation Adjusted Cost: $597 billion
• Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
• NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion

TOTAL: $3.92 trillion

That is $686 billion less than the cost of the credit crisis thus far.

The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost: $288 billion, Inflation Adjusted Cost: $3.6 trillion

Happy Thanksgiving, Anyway!

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SPRINGFIELD, Mass. (AP) - Everyone seems to want one, but apparently a lot of Americans aren’t sure exactly what a “bailout” is.
People looked it up so often on Merriam-Webster’s online dictionary that the publisher says “bailout” was an easy choice for its annual Word of the Year honor.
The rest of the list features other terms used at times of economic peril, “trepidation,” “precipice” and “turmoil.”
Several phrases from the presidential campaign also made the cut: “bipartisan,” “vet” — as in to appraise and evaluate — and, of course, “maverick.”

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An old college buddy of mine has a website & hosts a nationally-syndicated radio show on words, & his commentary (soon to come) on the “WotY” (word of the year) is always a treat for anyone with a passing interest in lexicography.

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CHICAGO (AP) - President-elect Barack Obama is pledging to eliminate unnecessary government spending and programs.
He’s vowing to get rid of programs that have outlived their usefulness, or that exist solely because of the power of politicians.
As he named Peter Orszag (OHR’-sag) as his White House budget chief, Obama told reporters that budget reform is a necessity, not just an option. He said it’s not about big government or small government, it’s about smarter government.
Renewing his campaign pledge, he said his staff is going through the federal budget, page by page and line by line, to make sure that those programs that are kept are done sensibly.
Obama’s comments come even as he calls for an economic rescue plan that could add up to hundreds of billions of dollars.

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“If you had any doubt at all about the primacy of Wall Street over Main Street; the utter lack of transparency behind the biggest government giveaway in history to financial executives, and their shareholders, directors, and creditors; and the intimate connections the lie between Administrations — both Republican and Democratic — and the heavyweights on Wall Street, your doubts should be laid to rest.

…

This is not a particularly good deal for American taxpayers, but it is a marvelous deal for Citi. In return for all the cash and guarantees they are giving away, taxpayers will get only $27 billion of preferred shares paying an 8 percent dividend. No other strings are attached. The senior executives of Citi, including those who have served at the highest levels in the US government, have done their jobs exceedingly well. The American public, including the media, have not the slightest clue what just happened.”

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DETROIT (AP) - When the CEO of General Motors heads back to Washington to seek a federal bailout, he won’t be flying on a private jet.
But that’s all that GM is saying about the travel plans of Rick Wagoner. He and the heads of the other two auto giants were criticized and ridiculed for using private jets to go to Washington last week to ask for federal help for their companies.
A Chrysler spokesman won’t comment on CEO Bob Nardelli’s travel plans. Ford says no decision has been made on how CEO Alan Mulally will go.
But they might decide to carpool.
Auto industry officials have been e-mailing and discussing how to set up a giant car caravan that would carry the CEOs and others back to Washington to ask for help from Congress.
The head of Dura Automotive Systems says the idea “really picked up momentum over the weekend.”
Congressional leaders called on the auto executives to come back and show how the industry would use the federal bailout to survive. President-elect Obama today said he’s surprised the CEOs didn’t have a better proposal in place the first time.
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Read more here.

Now: is it too much to ask THEM to drive?

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Well, this is interesting - check out the surprisingly anti-Bush e-mail we just got from Senator Bob Corker’s office reacting to this morning’s unveiling of Obama’s economic team:

“I am glad that President-elect Obama has rolled out his economic team and would encourage them not to take this administration’s bait by coming to the rescue of the U. S. automakers without making them take the painful steps necessary to ensure their viability which probably include Chapter 11 bankruptcy, reorganization and consolidation. Unfortunately, the Bush administration has made it clear they are willing to throw money at any problem as long as future generations are left paying it back.”

Interesting.

One possible reason Corker’s unsympathetic to a Big 3 bailout can be expressed in this picture:

Just think where we’d be if there were more Republicans in Congress who could have been willing to show candor like this sometime between 2000 & 2006. I’m convinced they exist, yet none had the gastrointestinal fortitude that Senator Corker displays above.

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Read more here.

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WASHINGTON (AP) - President Bush says there could be more decisions like the government’s dramatic rescue of Citigroup if other institutions need help.
Bush also says he consulted with President-elect Barack Obama on the Citigroup rescue. Bush says “There is close cooperation” between his administration and the Obama camp.
Referring to the Citigroup rescue, Bush said “We have made these kind of decisions in the past. We made one last night and if need be we will make these kind of decisions to safeguard our financial system in the future.”
He spoke outside the Treasury Department after consulting with Secretary Henry Paulson.

Read more about the Citigroup bailout here.

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Now that I’ve gotten my frustrations with the auto industry off my chest, I turn to the NASA space program, which is also headed down a budgetary black hole,” as Alan Stern puts it today in the New York Times:

“Our space program is running inefficiently, and without sufficient regard to cost performance. In NASA’s science directorate alone, an internal accounting in 2007 found over $5 billion in increases since 2003.”

…

Endemic project cost increases at NASA begin when scientists and engineers (and sometimes Congress) burden missions with features beyond what is affordable in the stated budget. The problem continues with managers and contractors who accept or encourage such assignments, expecting to eventually be bailed out. It is worsened by managers who disguise the size of cost increases that missions incur. Finally, it culminates with scientists who won’t cut their costs and members of Congress who accept steep increases to protect local jobs.

The result? The costs of badly run NASA projects are paid for with cutbacks or delays in NASA projects that didn’t go over budget. Hence the guilty are rewarded and the innocent are punished.”

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My Stepbrother Rhett & Me with a spent rocket, summer, 1981

I’m a space enthusiast from way back. But NASA’s method for spending & management has long been a source of frustration.

Just like we’re holding the U.S. auto companies’ feet to the fire, we should also call for a total revamping of the way the space program works.

& if that sets us back in the short term, so be it.

I would love for us to return to the moon in my lifetime (the last time we were there, I was too young to remember it). But I don’t think a mission to Mars - or, for that matter, a return to the moon anytime soon - is really the best use of our money at the moment.

What do you think?

FURTHER READING: NPR’s Nell Greenfield-Boyce talks about the future of the space program in the “Memo to the President” series (I was a bit frustrated that the piece didn’t talk more about the fatal budgetary mindset talked about in the NY Times piece above)

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