Saturday Morning Dithers

New and improved! We have turned on a new feature that allows for threaded comments 5 levels deep.  So, if you’ve been waiting to tell someone off, personally, here’s your chance!

If you’re looking for a topic, try the newest podcast from Planet Money on mortgage renegotiations.  Bottom line:  the Obama proposal is designed to help homeowners with their interest.  It won’t address principal on a house that was overvalued when it was bought in the first place.   (Another Obama proposal that misses the point until it’s too late) The mortgage industry has fought hard against principal renegotiation clauses in the past for good reason.  But in this current economic climate, that may cause strapped homeowners to walk away from their homes with underwater equity.  It’s a short podcast and there’s some “twitter” stuff too.  Is anyone interested in twittering The Confluence?  Let us know in the threads!

In other news:

“First you say you will, and then you won’t.  And then you say you do, and then you don’t.  You’re undecided now, so what are you going to do?”

The AP reports this morning that Obama did not say he was going to nationalize the banks.

WASHINGTON (AP) — The White House on Friday insisted it’s not trying to take over two ailing financial institutions, even as stocks tumbled again. On Wall Street, talk of nationalization of Citigroup Inc., and Bank of America Corp., prompted investors to continue to balk, worried that the government would have to take control and wipe out shareholders in the process.Citigroup fell 20 percent, while Bank of America fell 12 percent in afternoon trading but also came off their lowest levels.

“This administration continues to strongly believe that a privately held banking system is the correct way to go, ensuring that they are regulated sufficiently by this government,” White House press secretary Robert Gibbs said when asked about nationalizing the banks.

“That’s been our belief for quite some time, and we continue to have that,” Gibbs said

…

When a reporter suggested Gibbs could do that by saying point bank that Obama would never nationalize banks, Gibbs would not make that statement, but emphasized: “I think I was very clear about the system that this country has and will continue to have.”

Uh-huh.

This reminds me of the comments that Bush and Cheney made about Americans and their propensity to buy large, oil guzzling vehicles and how this was a uniquely American cultural thing and that no long-haired, hippy type, pinko fag, treehugger (and by this, I think they meant *us*, Oh Best Beloveds), was going to change us.  And how did that work out?

Paul Krugman writes about the fear of nationalization in his blog, The Conscience of a Liberal:

We are not talking about fears that leftist radicals will expropriate perfectly good private companies. At least since last fall the major banks — certainly Citi and B of A — have only been able to stay in business because their counterparties believe that there’s an implicit federal guarantee on their obligations. The banks are already, in a fundamental sense, wards of the state.

And the market caps of these banks did not reflect investors’ assessment of the difference in value between their assets and their liabilities. Instead, it largely — and probably totally — reflected the “Geithner put”, the hope that the feds would bail them out in a way that handed a significant windfall gain to stockholders.

What’s happening now is a growing sense that the federal government, in return for rescuing these institutions, will demand the same thing a private-sector white knight would have demanded — namely, ownership.

Yes, it seems like the thing that bankers fear most from nationalization is that they aren’t going to be saved by the white knight.  They are going to have to eat $@%! and die and the American people will own them, at least for awhile until they can be restructured and sold again to private investors.  THAT’S what’s sending the stock market down.  Some very rich people are going to see the end of the gravy train.  It is most certainly not what they paid Obama to do.  And Obama dithers because he knows he can’t count on $600 million for his next election if he screws his backers, er, bankers.

Verily I say unto you, President Obama, you cannot serve two masters.  You took an oath to “preserve, protect and defend” the Constitution of the US “to the best of [your] ability”.  The fact that you have no experience, insight or coalitions earned over time to help you does not excuse you from fulfilling your oath.  You may be a weak president, by design (thank you David Broder and Karl Rove), but this is something you will have to overcome or you will be a one term African-American president who will have a worse legacy than George W. Bush.  Your new freshness ties your hands.  Too bad for you.  Do the right thing. Promote the general welfare already.

But what’s this?  Obama is holding a fiscal summit to reduce the deficit? I thought that putting the brakes on deficit spending is exactly what one does not do during a deflationary cycle.  (Hey, I’m not an economist so correct me if I’m wrong here)  Is this the same fiscal responsibility summit that is designed to cut social security benefits?  Because Social Security is practically the only government program that is working fine all by itself with little excess overhead and a record of outstanding value to the taxpayer?  Ohhhh, right.  It’s sitting on a big wad of cash, that surplus I’ve been paying into my entire working life (thank you Ronald Reagan for raising my payroll taxes).  Yes, let’s give that money to the bankers to play with.  We’re not going to just throw the baby out.  We’re going to harvest its organs first.  Nice going.

It sounds like Obama is Ok with The Shock Doctrine theory of cultural change.  Or he’s desperate for the money.  Or both.  Aren’t we all lucky to be living through such interesting times?  And we couldn’t have Hillary why, exactly?

Hillary Clinton in Indonesia (note all of the happy faces)

(Note:  Funny thing about that picture above.  It used to be attached to the NYTimes article on her stop in Indonesia but it was replaced by another one which shows her pretty much in isolation without the adoring crowds.  That was no accident.  The original picture above is stunning.  She *looks* like The Foreign President.  Well, we can’t have that.)