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Bad Bank, Bad Bank! Or I’m not an economist, but this sounds REALLY Bad to me

Does the idea of a Bad Bank have anything to do with this  story from a couple of days ago?  And can they REALLY be thinking of a $4 Trillion Bailout?  For Banks?  Well, remembering this:

Schumer’s $3-4 Trillion Horror Story

While questioning Treasury nominee Tim Geithner at his confirmation hearing this morning, Sen. Chuck Schumer said he spent some time calling around Wall Street this weekend, and what he heard was that if the government wants to clean out all the toxic assets from the financial system, it will cost some three to four trillion dollars. Which is to say, an order of magnitude larger than the second $350 billion in TARP money the Senate just approved.

That’s pretty daunting stuff when you consider that the banking system probably won’t recover until most of this bad debt gets cleaned up. And that the economy won’t recover till the banking system does. Alas, the only thing worse than spending $3 trillion to clean up the banks may be not doing it.

That doesn’t sound like a joke.  Then today  via Calculated Risk we learn that the idea of a Bad Bank is close to a sure thing:

The Obama administration is close to deciding on a plan to purchase bad—or non-performing and illiquid—assets from banks, according to industy sources. The plan could be announced early next week.

The so-called “bad bank” plan, would address the key problem of how to price the assets by using a model-pricing mechanism.

The model would take account of the government’s ability to hold onto assets, even to maturity, and pay for the them with cheap funding. Result: the government might end up paying more than current market prices for the securities.

. . .

Clearly, the idea of a “bad bank” is gaining momentum. On Capitol Hill today, Senate Banking Chairman Chris Dodd said he was aware the idea is under discussion and “it makes some sense to me.”

The move toward a bad bank concept comes amid growing speculation that banks may need another government bailout.

Jesus! No wonder they’re so sure we can’t finance Health Care For Everyone.  We’ll be lucky to buy toilet paper when this is all over.

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Obama’s asking the GOP for advice on…the ECONOMY???


But…but, isn’t that the party who royally screwed the economy from 2000-2008?  This is like a farmer asking the fox for advice on building a more secure chicken coop.

Obama seeks GOP help on economy; McConnell hopeful

By LIZ SIDOTI, Associated Press Writer

WASHINGTON – President Barack Obama is making good on his promise to hear from Republicans as he pushes for swift passage and bipartisan backing of his massive $825 billion plan intended to jolt the country out of recession.

The unanswered question: Whether the new Democratic president will actually listen to GOP concerns about the amount of spending and the tax approach — and modify his proposal accordingly.

With the economy worsening, Obama was making his first trip to Capitol Hill since his swearing-in last week for two private afternoon sessions Tuesday with House and Senate Republicans. A former Republican congressman who is a member of Obama’s Cabinet, Transportation Secretary Ray LaHood, was accompanying the president.

“The goal is to seek their input. He wants to hear their ideas,” White House press secretary Robert Gibbs said. “If there are good ideas — and I think he assumes there will be — we will look at those ideas.”

“I think the president is genuinely serious about this,” Gibbs added.

The presidential spokesman would not, however, reveal what concessions Obama may be willing to make, if any, to demonstrate his seriousness about securing Republican support.[edited by me: oh yes he did, see below in next blockquote.] Gibbs, however, noted that there already are tax provisions in the measure, mostly small business cuts, that are direct GOP suggestions to Obama and his economic team.

DakiniKat, our resident Conflucian Economist, wrote about the dangers of tax cuts at this time in herTax Cuts Don’t Cut It or Cure It post. I’m no economist – but it seems to me that having a job stimulates the economy, not more of the same what Bush did.   When people are working, they can pay their bills, rent, mortgages, insurance, spend on consumer items, invest their extra pennies tucked away etc.

But WHAT is being done to make sure people don’t lose their jobs, and for those that lost their jobs (hello, me!) how can we help them to get new ones?  Not a damn thing.

This part of Liz’ article just made me angry as hell:

In a sign that Obama may be willing to compromise, officials said the president made a personal appeal to House Democrats to jettison from the package family planning funds for low-income people. Republicans have criticized the provision as an example of wasteful spending that would neither create jobs nor otherwise improve the economy. A decision on the provision was expected Tuesday.

Get that?  JETTISON.  As in, throw overboard.  Well, no soup for Planned Parenthood!  But Faith-Based initiatives are safe and tucked wonderfully under Obama’s wing.  Here’s where that “family planning to low income people”  money’s going to:

(From USA Today)

Many people assumed that any Democrat would restore the secular work of government and strive to remove religion from politics. But Obama has indicated that he intends to expand, not eliminate, the faith-based programs. Indeed, he has stated that Bush’s faith-based office “never fulfilled its promise” due to a lack of funding. This “lack of funding” cost this country $2.2 billion in 2007 alone.

Obama reportedly plans to change the name from the “Office of Faith-Based and Community Initiatives” into his own “White House Council for Faith-Based and Neighborhood Partnerships.” The old office would become 12 offices to carry out the expanded program. Not exactly the change that many secularists and liberals were hoping for.

Again, Obama is NOT interested in helping the middle class, the jobless, the uninsured, or for that matter, the liberal-minded.  He’s not interested in liberal principles or philosophies, since Obama considered them as “excesses of the 60s & 70s.”

But Obama will bend over & kiss the Republicans’ tooshies by doing away with programs that religious zealots have been fighting to eliminate since Jerry Falwell created the “Moral Majority.”   Yes he can!

I can see Obama making a deal with Republicans & PNAC Neo-Con crew, promising to carry out their agenda so long as he wins.  Is it any wonder WHY Obama had a secret dinner with Bill Kristol & friends?

Now I have no doubt.  Obama’s hell-bent on being Ronald Reagan with a tan & Caesar cut.