Obama's Prescription: FAIL, page 1

From Market-Ticker.org

Obama's Prescription: FAIL

Snippets....

"Must restart credit" - You can't until trust is restored, and doing that means JAILING all the fraudsters. Until the market and public is convinced that there are no more Madoffs and no more scam MBS and CDS underwritten by monkeys with no capital behind them, there will be no trust.

"Must get consumers spending again" - Not possible until the excessive debt is gone. We're here because of too much debt in the system, including on consumer balance sheets. Until and unless that debt defaults there is no marginal income to spend with. Tax cuts do not fix this.

"We have to make tough choices" - That doesn't include locking up the thieves, liars and fraudsters in NY and DC though, does it? Again - the issue is trust - confidence - and you can't get restore it until and unless the liars and thieves are purged from the system and put in prison where they belong.

"No longer can we allow Wall Street wrongdoing to slip through the cracks" - I'll believe you when Paulson, who was personally responsible for the leverage increase requests that led to these failures and bailouts, is under indictment. Until then I call this what it is - a lie.

There are some good pieces, like this:

"This crisis did not happen solely by some accident of history or normal turn of the business cycle, and we won't get out of it by simply waiting for a better day to come, or relying on the worn-out dogmas of the past. We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington, DC. For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny, and too little accountability. Banks made loans without concern for whether borrowers could repay them, and some borrowers took advantage of cheap credit to take on debt they couldn't afford. Politicians spent taxpayer money without wisdom or discipline, and too often focused on scoring political points instead of the problems they were sent here to solve. The result has been a devastating loss of trust and confidence in our economy, our financial markets, and our government."

True. But most of those abuses are felonies. Predatory lending may not be in some cases (whether it should be is another matter) but fraud is everywhere and anywhere, as is bribery and extortion. Wake me up when the indictments start flying.

"Only government can break the vicious cycles that are crippling our economy - where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit."

Right. And you break that cycle by showing us all that there is a cop on the beat, that he will arrest wrongdoers and throw them in jail, and that he will not be complicit with or look the other way when wrongdoing is going on. In short, we have a confidence problem which has led to a lockup in lending, employment and spending because of the theft and fraud that in turn led to debt being taken on that cannot be paid.

The fraudsters must be locked up and the debt defaulted. Period.

"That is why we need to act boldly and act now to reverse these cycles. That's why we need to put money in the pockets of the American people, create new jobs, and invest in our future. That's why we need to re-start the flow of credit and restore the rules of the road that will ensure a crisis like this never happens again."

Government is incapable of that. Government can only steal money and redistribute it - take it from one person and give it to another, or borrow yet more that we cannot pay back. It would be nice if you could find that magic Unicorn but it doesn't exist. Therefore, you must address the why and let the market work - and that means, once again, locking up the fraudsters.

"To give our children the chance to live out their dreams in a world that's never been more competitive, we will equip tens of thousands of schools, community colleges, and public universities with 21st century classrooms, labs, and libraries. We'll provide new computers, new technology, and new training for teachers so that students in Chicago and Boston can compete with kids in Beijing for the high-tech, high-wage jobs of the future."

If you'd simply demand that every kid learn the exponential function and be able to discount a note and compute the financial impact of debt, you'd have solved 90% of this. Computers don't do a damn thing; 8th graders had to demonstrate this ability with a piece of paper and pencil 100 years ago, and they didn't have computers. 21st Century? That's backwards - I want 19th Century classrooms and standards.

"I understand that some might be skeptical of this plan. Our government has already spent a good deal of money, but we haven't yet seen that translate into more jobs or higher incomes or renewed confidence in our economy. That's why the American Recovery and Reinvestment Plan won't just throw money at our problems - we'll invest in what works. The true test of the policies we'll pursue won't be whether they're Democratic or Republican ideas, but whether they create jobs, grow our economy, and put the American Dream within reach of the American people."

I'm not skeptical, I'm out-and-out calling you a lying empty suit.

Nowhere in any of your plans have I seen accountability for the sins of the last eight years, say much less the last 20. Nowhere have I seen a call to lock up the fraudsters including those in Congress who got tens of thousands of dollars in "benefit" via lower interest rates on their mortgages, then looked the other way while lenders raped millions of Americans. Nowhere have I seen you call for an army of special prosecutors to root out fraud everywhere and anywhere in the financial system and markets, no matter who it ensnares, including our Treasury Secretary. Nowhere have I seen you call for the re-enactment of Glass-Steagall and the 12:1 leverage limits, the repeal of both which are the proximate cause of this collapse.

If and when I see actual policies that address the root cause of this problem instead of campaign speeches, I will believe you Mr. Obama.

The campaign is over - you won - and now its time for you to go work instead of spewing bullcrap and platitudes, along with trying to borrow yet more money that we don't have which will only increase the mantissa of an exponential function that is doomed to go "boom".

"That is not the country I know, and it is not a future I will accept as President of the United States."

My answer: You're lying Mr. President-Elect.

Here's the full monte - if you don't want to hurl, read it before you eat lunch.

With this policy the S&P 500 will trade at or under 300 within 18-24 months.

Posted in full with permission of author, Karl Denninger