The heyday of the Bush-Obama bailout frenzy is coming to an end.
The bailout's base of public support, tenuous from the outset, is collapsing. Its chief architects — Geithner and Bernanke — are politically dead or dying despite Bernake’s re-enlistment for another hitch. Obama adviser Paul Volcker and FDIC Chairman Bair are gaining rapidly in influence.
Suddenly and with growing momentum, America is shifting into a brand new phase of the crisis …
On Jan. 30 , Bloomberg reported that New York University Professor Nouriel Roubini, who anticipated the financial crisis, called the fourth quarter surge in U.S. economic growth, despite all the MSM ballyhoo “very dismal and poor” because it relied on temporary factors.
“The headline number will look large and big, but actually when you dissect it, it’s very dismal and poor,” Roubini told Bloomberg Television in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “I think we are in trouble.”
Roubini said while the world’s largest economy won’t relapse into recession, unemployment will rise from the current 10 percent, posing social and political challenges.
“It’s going to feel like a recession even if technically we’re not going to be in a recession,”
You and I knew all along; we were not among those sleepwalking through the storm. Nor did we ever support those who stumbled from one ill-conceived government rescue to another.
We knew all along that TARP was a classic financial blunder and ultimate moral hazard: It rewarded the guilty, while shafting innocent taxpayers.
We knew all along that the Fed's zero-interest-rate policy is a ticking time bomb: It subsidizes and stimulates The Casino we call Wall Street, while it robs America's prudent savers of nearly every penny they hoped to earn in interest and dividends.
We also knew all along that the original cause of the housing bubble was congressional policy & their money-printing machine — and that Bernanke's new machine has been running at light speed by comparison.
Throughout this entire crisis, we could plainly see the emperor had no clothes. What's changing is that, now, many others — including some who engineered the bailouts in the first place — finally see it too.
That's why …
- Public opinion regarding the president's handling of the federal deficit has nosedived.
- Voters say they want the deficit reduced even if it hurts the economy.
- Paul Volcker — previously shunned and ignored by most of the Obama team — has re-emerged from the shadows and regained the limelight. He's pressing the administration to get tough with Wall Street. And ultimately, he could push Obama to change course on key aspects of the bailouts.
Whether he will retain that standing in the heat of battle or in the wake of a renewed banking crisis remains to be seen. Also, the last time Volker had this much suasion with the White House, the resident was Jimmy Carter. For those of you who are too young to remember, that didn't turn out too well for the American taxpayer. Many of the policies that brought us to the brink go back to the Carter administration.
But for now, his reappearance on the front lines is a metaphor for the sweeping mood change among voters and a possible policy shift at the White House.
But, alas, there is still no one of stature standing up to the biggest public nemesis of all — the Congress & the intrenched government bureaucracy itself.
There is no single organization strong enough to stop Washington from sacrificing our children's future on the altar of a false prosperity. No one able to restore the prudence and balance that can sustain our greatness over time, except the people themselves.
More later.
Your Thoughts?
Omar P. Bounds III A.A.R.E., C.E.S., G.P.P.A.
The Bounds Auction Company
