Bailouts

Despite his tax problems, President Barack Obama's newly minted Treasury secretary, Tim Geithner, was sold to Congress as the one who was going to save the fragile financial system.

However, in what was billed to be a big announcement, and Geithner's first major appearance, he failed to deliver. The Treasury Secretary was slated to outline his plan to rescue troubled financial institutions from the toxic assets they had on their books. But he failed to give specifics and the markets suffered; the Dow Jones Industrial Average (DJIA) nosedived 382 points.

CNBC "Fast Money" host Dylan Ratigan had his own description of Geithner's performance. In an appearance on MSNBC's Feb. 11 "Morning Joe," he likened it to "soiling a bed."

Capitalism Derangement Syndrome was on full display during Wednesday's House Financial Services Committee hearing when Chairman Barney Frank (D-Mass.) accused the financial industry executives present of needing to be bribed with bonuses to do their jobs.

That's right: a bonus is now the equivalent of a bribe as far as Frank is concerned.

Given the beating capitalism and the free market have been getting from the press on a daily basis since the financial crisis began in September, it seems a metaphysical certitude that Frank's rant to the CEO's of America's leading financial institutions will get a lot of play in the next 24 hours:

Imagine for a moment an American newspaper publishing a column with the following opening sentence:

Has Barack Obama’s presidency already failed?

Not in a million years, right?

Well, on Wednesday, one of the most respected international publications, the Financial Times of London, published such an article written by its associate editor and chief economics commentator Martin Wolf.

In it was an astonishingly frank analysis of what the Obama administration has done and not done to solve the current financial crisis (picture courtesy FT):

In excerpts aired on Tuesday's World News, of Terry Moran's interview with President Barack Obama for Nightline, Moran was as sycophantic toward Obama as he was during the campaign, lamenting Obama “got no honeymoon” and bemoaning the new President had been “too nice” to Republicans. “Mr. President,” Moran rued in overlooking the ongoing honeymoon from the media, “you got no honeymoon. Not a single Republican vote in the House on your first major piece of legislation.” Moran speculated: “I wonder in coming into the presidency, maybe you were too nice? If I'm a Republican Senator or a Republican Congressman, I think you're a very nice guy but maybe I don't have enough reason to fear you.”

Earlier, Moran cued up Obama: “How close do you think the country is to the kind of economic catastrophe that you're warning about?” In the ABCNews.com transcript, which does not include the “honeymoon” lament, the tri-anchor of Nightline suggested the banks should just be nationalized: “There are a lot of economists who look at these banks and they say all that garbage that's in them renders them essentially insolvent. Why not just nationalize the banks?” (That did not air on World News, but was part of what Nightline ran later.)

Audio: MP3 clip which matches the video (45 secs, 275 Kb)

The Obama-loving media might adore flowery rhetoric with little substance, but stock investors sure don't.

That's what traders and market professionals said was responsible for Tuesday's stock market collapse after Wall Street was tremendously disappointed with the lack of specifics in the highly-anticipated bank rescue plan presented by newly confirmed Treasury Secretary Timothy Geithner.

As such, it's going to be fascinating to see how sycophantic press members spin the market's almost 400-point decline.

Will it resemble how Bloomberg reported the event:

Time magazine is clearly dispensing with "news" reporting this week. Michael Grunwald started his article "How to Spend the Stimulus" with this sentence: "It's hard to take Republican leaders too seriously when they criticize the recovery plans for the economy; it's sort of like those geese criticizing the evacuation plans for US Airways Flight 1549."

That would be the geese that were ground into the jet engines of the airliner that crash-landed in the Hudson River.

Clearly impressed with his own comic stylings, Grunwald continued: "Their critiques seem even more comical when you see their alternatives. They warn that President Obama's stimulus package will explode the debt – so they want to make George W. Bush's debt-exploding tax cuts permanent. They say Democratic spending plans are full of pork – then they propose an extra $24 billion for the Army Corps of Engineers, the federal equivalent of Oscar Mayer. Let's just say their idea bank could use a bailout."

Obama's critics who claim the new president is a closet socialist lusting to seize profits have nothing to fear, according to liberal radio host Ed Schultz.

Look at Obama's experience as an author, Schultz suggested on Friday, for evidence that Obama is as much capitalist as the next entrepreneur.

But Schultz quickly leaped from conjecture about Obama's book deal for "The Audacity of Hope" to allowing those uncertainties to morph into hard fact. Not only that, Schultz got the title wrong and appears unaware Obama has written more than one book.

Here's what Schultz initially said (click here for audio of the excerpt) --

On Tuesday's "Good Morning America," financial correspondent Bianna Golodryga promoted the efforts of a radical housing group run by CEO Bruce Marks, a self proclaimed "bank terrorist." Of course, Golodryga skipped that description and glossed over the extreme actions of the Neighborhood Assistance Corporation of America [NACA]. Instead, she simply asserted that the organization tries "to help keep people in their homes."

Golodryga neglected important information, such as the fact that NACA has picketed outside the schools of children whose parents work for banks that are not acquiescing to the group's demands, which include insisting that mortgages be given to high risk individuals. In an April 2, 2008 column, Michelle Malkin quoted Marks as saying, "We will go to their neighborhood, we will educate their children on what their parents do. They should be ashamed." A December 2007 article by The Globe (featured on NACA's web site) unabashedly touted Marks as "a controversial character who once infamously called himself a 'bank terrorist.'"

Golodryga ignored this when she talked to the CEO. Instead, she highlighted non-confrontational quotes such as this one from Marks: "The thing that is so important is to say to the American people, don't give up. There's help on the way." The ABC financial correspondent did admit, "The group is also protesting the banks they feel are not helping struggling homeowners refinance their mortgages," while video of such a protest appeared onscreen. However, she grossly minimized the radical nature of NACA.

A week ago (at NewsBusters; at BizzyBlog), I noted that government bailout recipients General Motors and Chrysler had horrible sales in January, and that their declines are accelerating. GM was down 49% year over year in January, compared to -32% in December; Chrysler was down 55% in January, compared to -53% in December.

Meanwhile, the companies' main foreign competitors turned in January sales declines of roughly 30% that were just as bad, but at least not worse, than December. As a result, those companies took another 4% or so of market share from their US-based rivals.

Of course, no media outlets attempted to make any connection between the GM-Chrysler declines and the idea that consumers might either resent their bailed-out status, or might be worried about their survival and the potential impact of their bankruptcy or even disappearance on warranty and repair costs. Nor did any media reports that I'm aware of consider the idea that declining sales at those companies might jeopardize their ability to repay Uncle Sam's bailout "loans."

Now, despite the cash infusion from Uncle Sam, Reuters reports an analyst's belief that a bankruptcy filing by GM remains a possibility. More importantly, the wire service also claims that the government is actively involved in exploring that option. Finally (put down your drinks first), we learn that taxpayers aren't even first in line to get repaid:

The winter in Alaska has been a particularly harsh one this year. The early winter piled on top of economic hard times has caused some troubles for native people and those that live in remote areas in Alaska. But this is not a new tale of woe, it IS Alaska, after all. While nothing to entirely dismiss, one wonders, why CNN suddenly found this story so compelling? Could it be that they want to portray Alaska Governor Sarah Palin as just as harsh as the winter?

Native peoples and their neighbors in Alaska have been surviving for generations in the same manner. They hunt, fish, and store foods in the summer to survive the harshness of winter, and since becoming a state, they marshal their money to buy fuel and other items brought to them by American ingenuity. Not an easy life, but a life they are used to nonetheless. It hasn't really changed much for a long time in that remote part of the world. Yet, despite the sameness of it all, suddenly CNN finds Alaskans are "struggling to survive."

"I think it's a weaker deal than he thinks," MRC's Rich Noyes told Fox Business Network's Brian Sullivan, referring to President Obama's hopes for passage of the stimulus package. Noyes appeared on Fox Business Network's "Cavuto on Business" program shortly after 6:30 p.m. EST to discuss President Obama's campaigning for his stimulus package.

While Obama campaigned on the vague notion of "change," now that he's president, the stimulus bills under consideration have "fairly weak public support" compared to his personal approval ratings, Noyes noted. The NewsBusters senior editor cited a CBS News poll -- which went unreported that network's airwaves -- that found as Noyes put it, "a majority for the stimulus, but it's weak majority.":

NOYES: Sixty-two percent think the best thing about it would be the tax cuts. Only 16 percent are in favor of the government spending as being able to be helpful. This is something where the public is against massive spending because they're cutting back everywhere, they see business cutting back everywhere. That's his problem, his next phase in this political program is going to be another big spending program to deal with the banks.

Matt Lauer invited on two Senate supporters and no opponents of Barack Obama's stimulus bill, on Monday's "Today" show and asked pro-stimulus bill questions to his guests, even chiding those who opposed it, when he asked Republican Senator Susan Collins about two of her GOP colleagues who are against it: "So what do you get that those two are not getting?" Lauer, also depicted a gloomy picture for the states because of "draconian cuts," made in the bill as he ominously asked: "Senator [Ben] Nelson, to get the support from even these moderate Republicans, cuts had to be made...You lose $40 billion in aid to the states, that means states are gonna have to make draconian cuts in jobs, teachers, cops, firemen. You lose the $16 billion in school construction money. So is it still a real stimulus package? Will it have clout?"

The only voices of opposition came in a Chuck Todd set-up piece, where a soundbite from John McCain saying the negotiations were not "bipartisan," was aired. A soundbite of stimulus opponent Sen. John Ensign was also aired but it only highlighted him admitting the bill will pass.

Lauer, in the interview segment, did cite concerns from Senators Richard Shelby and McCain, as he noted: "Richard Shelby the ranking Republican on the Senate Banking committee said Sunday, 'This bill could put our country on the road to financial disaster.' And John McCain said, 'It was generational theft,'" but then added the, "So what do you get that those two are not getting?" line he asked Collins.

The following is a complete transcript of Lauer's interview segment with Republican Senator Susan Collins and Democratic Senator Ben Nelson as it occurred on the February 9, "Today" show:

On Friday's CNN Newsroom, anchor Rick Sanchez dazzled viewers with his profound grasp of economics.  His guest was CNN chief business correspondent Ali Velshi, whose most recent achievement was being called "incompetent" by Rush Limbaugh:

SANCHEZ: You know, it's funny, but, as I hear him (President Barack Obama).talk, I'm just thinking, tax cuts are spending, right? I mean, they really are, because you have got to get it from somewhere.

VELSHI: Right. If you think about it, is -- your own budget, right? If you have less money coming in, you have to have less money going out.

The issue is that -- the argument is that, tax cuts, while it brings less money into the government, which means it lowers the amount of money the government has, which makes it the equivalent of spending, it stimulates the economy, because it lets -- people will use that money in another way.

The way tax cuts could be considered spending, a contention with which Velshi agreed, is if one believes that all income belongs not to the individual earning it, but rather to the government.  It's then government's option to determine how much people are permitted to keep and if they're using it "appropriately."

Sanchez's reasoning reminds me of President Bill Clinton, who said of the budget surplus: "We could give it back to you and hope you spend it right." But "if you don't spend it right," bad things would happen to Social Security and other programs.

With the turndown in the economy and the crisis in the financial services industry, capitalism bashing has become all the rage at mainstream media outlets.

From making fun of corporate jets to lambasting executive pay, liberal press members are creating a cottage industry blaming all the world's problems on the free market.

Unfortunately, there are economic consequences for this "Capitalism Derangement Syndrome" that media members are either oblivious to or just don't care about: the bashing could end up worsening the recession.

As NewsBusters informed readers about Sunday, after some horrible reporting by CDS-afflicted news outlets, Wells Fargo was forced to cancel its annual sales conference in Las Vegas. As the New York Times noted Monday, such decisions though popular with class enviers aren't good for the economy:

As the financial crisis hit last September, NewsBusters regularly informed readers of the truth behind the matter, and that media assertions the Bush administration was to blame were politically motivated falsehoods intentionally designed to get Barack Obama elected president.

On Saturday, the financial publication Barron's offered readers an editorial by Hoover Institution visiting fellow Scott S. Powell which presented facts that were routinely withheld from the public during the campaign assuring the Democrat candidate victory in November.

More importantly, Powell offered some compelling insights into the dangers of partisanship which sadly is negatively impacting today's stimulus package discussion.

But before we get there, this was Powell's case as to who was really to blame for this crisis (h/t Hot Air):

While the Obama administration and its media minions castigate financial industry executives for their so-called greedy ways, a couple of inconvenient truths are going largely un- or under-reported: one bank being criticized for a lavish convention in Las Vegas was forced to take TARP money in October, while another is trying to pay back the funds to regain its autonomy.

As the press had a field day with Tuesday's revelation that Wells Fargo was going to hold its annual sales conference in Las Vegas despite having received $25 billion from TARP last October, the fact the bank was FORCED to accept these funds seemed completely irrelevant to those looking to point fingers.

This was how the Associated Press first reported the story:

Who cares if we're like Bill Murray in Groundhog Day, careening in his pickup toward the brink of the rock quarry?  At least we're moving fast!

That seemed to be Claire Shipman's logic in urging speed in the implementation of the stimulus plan. The ABC correspondent made her curious comment today during the roundtable segment of This Week.

CLAIRE SHIPMAN: Don't you think that, I mean as George [Will] said, given that nobody knows the outcome, it seems as though the most important thing is speed here.

Will made the logical response.

Newsweek's Jon Meacham and Evan Thomas are tired of all this talk of socialism. We need to stop talking about yesterday's news, they say, and embrace the great new fact that America is already a socialist country. They chortle that America is just like France. Meacham and Thomas chide Sean Hannity for using socialism as a dirty word because it "seems strangely beside the point." The pair is enthusiastic about our new American socialist society!

We are a European country and we like it, claim the Newsweek duo. Unfortunately, they seem to misunderstand so very much about what they speak.

Roughly five months after Joe Biden informed the nation that paying higher taxes is patriotic, it now appears radically increasing government spending and the federal debt is as well.

At least that's what one gets from a New York Times piece Saturday applauding a Senate compromise on President Barack Obama's stimulus package.

Here are the paragraphs where patriotism was prominently mentioned (emphasis added):

Say goodbye to hope and change. It's time to embrace the politics of doom and gloom.

MSNBC host Contessa Brewer, in an interview that seemed a lot like a lobbying campaign for the stimulus set for a vote in the U.S. Senate, quizzed Sen. John Barrasso, R-Wyo., about the possibility that his vote against a stimulus bill could send the country spiraling into a Depression - and endanger the public's footwear.

"But if it fails, if it fails and our economy implodes and we see ourselves stuffing cardboard back in our shoes like they did in the Depression era, are you willing to put your name behind that?" Brewer asked.

"I'm willing to stay here and continue through the weekend, next week, the next week, to try to solve something and get it right - don't rush into something like this country rushed into the bailout program right before the holidays last year," Barrasso replied. "I think that was rushed. We found out that that didn't accomplish the goal."

He might be on the Forbes list of billionaires with a net worth of $1.3 billion and he may appear frequently in the financial media, but Pimco's Bill Gross doesn't have a grasp of how much "trillions" are. Gross recently called for a massive government intervention or face certain catastrophe. 

"This economy requires support from the government, a check from the government in some form or fashion in the trillions as opposed to the hundreds of billions," Gross said to Bloomberg TV on February 5. "And I think President Obama was right - there is a potential catastrophe if Washington continues to focus on $100 or $200 billion. We need something in the trillions."

Gross' proposed amount includes a bailout for the banks, in addition to the stimulus to jumpstart the overall economy.

Have you ever wondered how the geniuses who report business news know why the stock market opens or closes up or down on any given day -- especially when they venture into political explanations?

I received this e-mail from CNN just after the markets opened:

Gosh, those e-mail drafters at CNN are smart. Who knew that the markets want the stimulus package so bad?

Can't you hear, senators? The markets want their stimulus and they want it now!

Give me a break. There is no hard evidence of CNN's assertion. Others commenting on the opening, including CNN itself, aren't buying all of what the e-mail was selling. Here's what CNNMoney.com had to say at 9:42 a.m.:

Chris Matthews is rooting for Barack Obama to get his so-called stimulus package passed so much, he offered him advice on how to sell it, on Thursday night's "Hardball," and cautioned him if he doesn’t succeed in that sales job he'll "let us down."

Matthews, the former Jimmy Carter speechwriter, offered the following piece of advice to Obama on the February 5 edition of "Hardball":

It's time to wave the white flag and surrender to "post-partisan" unity.

Yes, it's time for conservatives to abandon core principles and just allow the Pelosi/Reid/Obama pork-a-palooza, also known as the stimulus or the American Recovery and Reinvestment Bill of 2009, to pass into law. At least that's what one Newsweek columnist would have conservatives do.

Now is not the time for political bickering in this "post-partisan" era, said Newsweek columnist Michael Hirsh in a Web exclusive piece for Newsweek dated Feb. 4. Hirsh reflected on how Obama has lost grip on the "agenda in Washington," and complained how the debate on the stimulus has proceeded, "nitpicking over efficiency" instead of debating the size. 

On Thursday's "Today" show NBC reporters offered little skepticism of Barack Obama's dictations to corporate America, instead buttressing Obama soundbites with sloganeering as, Meredith Vieira declared, "President Obama lashing out at Wall Street and clamping down on corporate fat cats," and Savannah Guthrie underlined, "The President bashed Wall Street," and "took a shot across the bow." The "Today" show then brought on CNBC'ers Melissa Francis and Dylan Ratigan to discuss Obama's capping of executive pay at $500,000, to which they both agreed, "it didn't go far enough." "Today" anchor, millionaire and world traveler, Matt Lauer himself lectured: "Can the culture of Wall Street be changed? Let, let's just be clear here. Private jets, perks, lavish trips gone. Is it ever, are they ever gonna come back?" But when Ratigan tried to use the ratings performance of the "Today" show to make a point, Lauer jokingly, but quickly, cut him off as seen in the following exchange:

MATT LAUER: Just going back to the beginning. We talk about $500,000 for these corporate CEOs. Let's just be clear-

DYLAN RATIGAN: It's a ton of money.

LAUER: That's a lot of money. It's a lot of money-

MELISSA FRANCIS: Yeah.

LAUER: -for the average person waiting on tables and...

FRANCIS: Absolutely.

LAUER: ...restaurant.

RATIGAN: Not to mention if you, if you ran your, if, if this show had, has, ratings went to zero-

LAUER: Don't bring this show into it.

While most of the liberal media gush and fawn over President Barack Obama's plans to radically expand government while imposing constraints on the private sector and ridiculing companies for actually wanting to make a profit -- oh the humanity!!! -- Fox News's Glenn Beck Wednesday night asked a question that should be on the minds of all Americans:

When did socialism become a happy thing for us?

Sure, the economy isn't doing well right now, and folks are losing their jobs on a daily basis -- although certainly NOT at the rate House Speaker Nancy Pelosi (D-Cali.) believes -- but should our current woes lead us to sacrifice what our Founding Fathers and so many other brave Americans have worked and died for?

Beck doesn't think so, and marvelously illustrated on Wednesday what's really at stake at this moment in history -- something the Obama-loving media are clearly negligent in doing (video embedded below the fold with partial transcript):

If former President George W. Bush said 500 million Americans are losing their jobs each month, do you think media would report it?

Probably every hour on the hour until all 300 million Americans had heard about it, right?

Well, during a press conference on an undetermined date, House Speaker Nancy Pelosi (D-Cali.) -- you know, the second in line for presidential succession right behind the vice president!!! -- said, "Every month that we do not have an economic recovery package 500 million Americans lose their jobs."

Amazingly, she's made this same comment at least twice in the past month -- in front of cameras, mind you!!! -- without creating a media firestorm: (video embedded below the fold):

Here are the January 2009 results (source articles - Detroit Free Press, Associated Press; December 2008 results on the right are from this USA Today report [scroll to bottom left at article]):

• General Motors - Down 48.9%
• Ford - Down 40.3%
• Chrysler - Down 54.8%
• Toyota - Down 31.7%
• Honda - Down 27.9%
• Nissan - Down 29.7%
• Relatively minor players Subaru and Hyundai posted gains (that's right) of 8% and 14%, respectively.

What follows are three reader-catching headlines you won't see:

1. Bailed-out companies underperform the rest in January

The stimulus package being discussed on Capitol Hill contains a "Buy American" provision that smells a tad like the Smoot-Hawley Tariff Act of 1930 which most economists believe turned a bad recession into the Great Depression.

Despite such overtones, press members on this side of the Atlantic have mostly failed to make this connection, or, at the very least, chosen not to share it with their readers or viewers.

In fact, with the exception of Fox News, a LexisNexis search identified not one television outlet addressing the matter.

Yet, overseas, our trading partners are indeed worried about this as evidenced by Tuesday's BBC report: