Bush Redux

Nominating Austan Goolsbee is like G. W. Bush nominating Harriet Miers to the Supreme Court.
Keeping Geithner is like G. W. Bush keeping Rumsfeld.

You told America that the Economy is your number one priority. Everything was put on hold for two months while you worked out an Afghanistan policy. This was followed up with a team effort combining your Office, Defense and State. There has been no equivalent approach for the Economy and a dissolution of the economic team.

You never listened to me but time has borne me out – I told you so.

Two Chairman of the Federal Reserve Bank (Greenspan and Bernake) have said that “too big to fail” has to be stopped. Your government has done nothing.

January 8, 2010
From the outside, your economic structure is worse than the
anti-terrorist security structure. What is the benefit of the Economic
Recovery Advisory Board and the Council of Economic Advisors?

How about getting actionable advice out of the National Economic
Council? You are spending more money on advice than helping the
guy/gal on the street! With so many councils with so many opinions,
there is no accountability for the actual economic policy. It looks
like a no fault economic policy where you are left holding the bag.

December 13, 2009
The failure of teamwork by your economic sector has created a dismal
economy with dim prospects. I never fail to remind you how Geithner
fails you. In March 2009, I patiently waited for Geithner's solution
to the securitized mortgage crisis. I felt it was inadequate but
rather than pan it, I made an effort to provide an alternative. The
Congressional Oversight Panel’s year-end report concludes that “the
foreclosure crisis continues to grow,” and finds that “TARP’s
foreclosure mitigation programs have not yet achieved the scope,
scale, and permanence necessary to address the crisis.” Geithner
failed.

There is a real need for team wok in your Economic sector- amongst
themselves, with Congress and the electorate. They have failed at
teamwork. You have failed as coach, manager and owner. You need a game
plan, a set of plays to execute the plan and the bodies to execute the
plays.

November 9, 2009
If you want to salvage your Presidency I would create a true economic
recovery team. Bill Clinton, Alan Greenspan and James Baker. Each man
brings a great talent, Clinton the vision, Greenspan the specifics and
Baker the implementation). Sadly you bring nothing.

Monday, November 2, 2009
Empathy
Rahm Emnual, the noble statesman, picks his spots and fights the truly
worthy battles, the stimulus package and healthcare. His next
assignment should be to battle the national debt. Let him make
government more efficient, cut the waste and reign in uncontrolled
treasury excesses.

Your sense of government is troubling. There are 38 czars! You
required empathy in the Supreme Court nomination yet created a void of
empathy in the economic branch. Your economic teams operate with the
impunity of George Bush’s Defense Department invading Iraq. PBS makes
them out to be the Robert Rubin’s cabal.

I never fail to remind you how poorly Geithner is doing. He operates
like a czar, yet his sole supporter is you! He has no support in
Congress, among White House staff or the public. His plan to address
the credit crisis at the banks has not worked (I offered a timely
constructive alternative). The investment market place is not headed
to the sound foundations that you promised. A wage czar over the
private sector is an absurd sense of government. Turn your wage czar
on the government especially the military and the empire of czars.
You should be privately vetting candidates to replace Geithner

I think an empathetic White House would not ignore the plight, for
human dignity, of a person who is unemployed but is willing to work.
You are ignoring human suffering, the rising cost of the necessities
of life is not an arcane economic term “the cost of living” but the
cost of surviving! Like many successful people, you deny your past
when your mother was on food stamps. America is more than surviving,
it can afford to embrace human dignity.

You need an economic plan for main street.
Let’s do something to get American kids to exercise. In-line skating
and bicycling are great activities that can even save gas. So public
works for bike and skate lanes would be good. Ice skating is a great
activity and the rinks can be used as in-line skate rinks in summer so
build some ice rinks. This idea is so good even your daughters can get
excited about it.Basketball is also great, church and school gyms
should be modified to allow public access after school hours.

How do you finance the rinks and gyms? Partner them with Starbucks,
McDonalds, Burger King and Wendy’s. Rinks and gyms could be operated
by chains. You have to work on laws to address litigation for personal
injury because unfortunately these activities can break bones. A
screwed up society has made skating, biking and pick-up basketball
legally unappealing.

Mass transit is important for main street. Have a plan where companies
gain when they subsidize or pay for bus lines that service their
street so their employees use the bus to get to work. Encourage
companies to work with public transit to make it worthwhile to involve
public transit to transport employees.

Public works, that help Americans change the way they eat, would be
healthy. Greenhouses built on the roofs of government buildings. Grow
tomatoes, lettuce, cucumbers and strawberries. Use pubic lands for
urban farms. This was done in the thirties.

There is a real loss of sense of government. The big financial
companies can bully the government because government isn’t strong
enough to enforce laws like anti-trust. Government has spent the
people’s money bailing out failed companies not hard working people
who may become unemployed or lose their house. Government, at 30,000
feet, says there is no inflation but when you live on the ground, the
cost of surviving has increased while income has declined. The future
is bleak because of the national debt and unemployment. You talk as if
unemployment is some kind of economic term, ever think that in three
years you could be unemployed?

September 16, 2009
How’s my driving?
The “too big to fail problem” is common to the banking system, Freddy
and Fannie Mae and the single payer health care discussion. I think
those who wrote the anti-trust laws tried to address this issue. The
Federal Reserve has regional banks. Canada has six major banks. ATT's breakup
was less successful but don’t know why. Maybe some wisdom can be
gleaned from the principles of anti-trust so their wouldn’t be a
single payer but a group of regional not for profit health care
payers. The whole world knows Goldman Sachs, Bank of America and AIG
are too big. Doesn’t anti-trust apply?

July 18, 2009
President Obama has repeatedly said that we will get out of Iraq with
more care than we got into Iraq. I suggest he must speak to Geithner
about showing more care in spending the people's credit than his
public contempt when he admits he has no exit strategy for the bailout
commitments.

March 1, 2009
I see the banking crisis as a repeat of the Enron affair.
G. W. Bush K. Lay
B. Obama J. Skilling
T. Geithner A. Fastow
Geithner, the Wall St wiz kid, has been asked to build a house of
cards to cover up the banks' collapsed house of cards.
This doesn't work. Japans' banks' books were cooked, they never
addressed it and after ten years they still haven't dug themselves out
because their house of cards cancels the effectiveness of fiscal or
monetary policy. There is no exit strategy to recover the government's
infusion.
Geithner has pressed on the gas pedal (gas = people’s money) with a
heavy foot, oblivious of the amount of gas in the tank (the national
debt). He has not fixed the engine (securitized mortgages in the
banks) so we use more gas than we need to and we risk to have another
breakdown. The cars’ owners took out insurance from AIG for engine
troubles, and Geithner paid AIG to payoff the insurance policies
without an engine change. Geithner will use the people’s money to pay
the owners to fix the engine.

Geithner, who facilitated cash advances to Goldman Sachs when bailing
out AIG before the Credit Default Swaps were even settled under TARP.
He never questioned that the CDS should be settled at full value
rather than at a discount. It is suspicious since Goldman Sachs was
your leading campaign contributor. Only you and Geithner know.

The underlying instruments were mortgages on homes of human beings.
The people in expensive suits are all doing fine, the economy is going
in the “right direction”. Hey the blue jean folk think housing is
going in the “WRONG DIRECTION” and your man Geithner helps the bad
guys more than the deserving.

Some consider housing as the backbone of the American economy. The
mortgage modification program has provided 17 revised mortgages. Reset
mortgages will continue to trigger for a year. The number of homes
whose mortgage exceeds market value is unsustainably high.
Unemployment contributes to more foreclosures. The administration has
only provided band-aid fixes. They have never defined the problem and
this makes it difficult to arrive at a solution.

Let me remind you of the greatest one-liner on the failure of
management “Heck of a job, Brownie.”

PS

You promised Guantanamo would be closed in one year, it wasn’t.
You promised to cut waste in Government, you haven’t.
You promised to introduce immigration reform by your first year in
Office, you didn’t.
In February 2009, you announced that Geithner had a plan to resolve
the financial crisis. He never addressed the securitized mortgages and
resolution of housing valuation is not in sight nor a priority of your
administration.
A clearly legal failure is providing KSM a fair trial. I don’t
understand news reports suggesting that the White House is deciding
the forum for KSM’s trial. The mere suggesting of meddling and delay
is justice denied.

Seemingly minor annoyances outweigh monumental accomplishments

Much can be made of the successful passage of the stimulus package,
the healthcare bill and the financial reform bill. It is the folly of
human nature to let seemingly minor annoyances outweigh such
monumental accomplishments.

Good government means good management. The Department of Agriculture
fails to deal honestly with the facts. It discharged an employee
without sufficient facts. It fails dairy farmers in the face of clear
facts (The congressional district in New York state is mostly
Republican dairy farmers who elected a Democrat out of desperation.).
The facts show that unnecessary subsidies to corn farmers lowers the
cost of sweetened drinks compared the rising cost of milk. The facts
show that the plight of hog farmers is unfavorable. While your Chief
of Staff doesn’t care, your Secretary of Agriculture should.

Good management means accountability of the Secretary of the Treasury.
The 2008 recession was blamed on securitized mortgages. Tarp was
passed to address the losses resulting from lowered housing values.
The Secretary of the Treasury used bait and switch and applied Tarp
funds to many other purposes but less than 5% to the intended purpose.
The housing market has yet to recover yet so much money was budgeted
for it.

Of all places where honest dealing of facts is important is in the
Department of Justice. The failure of the prosecution to present a
case to the courts in the Blackwater affair means that society never
gets to see the facts. The government has detained and tortured
people at Guantanamo. The government promised to close the chapter of
American history but not fails to keep its promise. The failure to do
the right thing in face of the known facts is a failure of management.

It is the folly of human nature to let seemingly minor annoyances
outweigh such monumental accomplishments.

I told you so.

Do what has to get done

There is inattentiveness to the distinction between concrete targets and abstract targets. Concrete targets are closing Guantanamo, fixing toxic assets at Wall Street banks and ending the Gulf oil mess. Abstract targets are implementing health-care, immigration legislation and eliminating waste in government.

The major distinction is that it takes different people to achieve concrete targets than abstract targets. You have surrounded yourself with people like you, policy wonks, masters of abstract policy. That’s why you need your mother-in-law in your domestic life. She understands what it takes to accomplish concrete targets. You don’t.

Geithner has not yet addressed the devalued securitized mortgages booked at the major banks. Because you know nothing about accounting, you don’t understand that the banks made provisions for the devaluation, which they booked but never addressed the book value of the securitized mortgages. This was the downfall of the banks but Geithner never cleaned it up. He overpaid the banks on their claims for credit default swaps which digs the national debt deeper yet never used TARP for it’s intended purpose. To make you eat your own words - Geithner didn’t think through the consequences of his actions. You said this kind of conduct angers you. I hope you are empathetic to my anger. This problem has not gone away, could come back and contributes to the slow recovery of the housing market. This is not policy it is basic accounting, a concrete subject.

The closing of Guantanamo is fixed goal, there are no excuses. That it festers reflects weak, ineffective management.

Ending the Gulf oil mess is a fixed goal, it must not fester.

The bottom line is that real men do what has to get done. Failures are people like G.W.Bush and you, overwhelmed and helpless. Bush the “decider”, Obama the “guy in charge”.

I told you so.

Change

Goldman Sachs has been sued by the SEC. I don’t know law. Apparently the law is not clear enough to say that Goldman Sachs broke a law. They sold a designed defective product for commission and potential hidden gains if Goldman traders bet against the product in the backroom market. It’s not against the law but it is less than honorable.

You have an employee, Geithner, who facilitated cash advances to Goldman Sachs when bailing out AIG before the Credit Default Swaps were even settled under TARP. He never questioned that the CDS should be settled at full value rather than at a discount. It is suspicious since Goldman Sachs was your leading campaign contributor. Only you and Geithner know.

The underlying instruments were mortgages on homes of human beings. The people in expensive suits are all doing fine, the economy is going in the “right direction”. Hey the blue jean folk think housing is going in the “WRONG DIRECTION” and your man Geithner helps the bad guys more than the deserving.

I always recognize that the stimulus bill and healthcare are a celebration of well intentioned people doing really hard work.
Through the complexity of life, these same people have failings.
You promised Guantanamo would be closed in one year, it wasn’t.
You promised to cut waste in Government, you haven’t.
You promised to introduce immigration reform by your first year in Office, you haven’t.
In February 2009, you announced that Geithner had a plan to resolve the financial crisis. He never addressed the securitized mortgages and resolution of housing valuation is not in sight nor a priority of your administration.

At some point someone will say that you talk well but execute poorly.

You didn’t need this email, nor do I have time to waste. I wrote it for the following message, you need to improve your day to day handling of government. As much as Emanuel has contributed to your successes, he is too focused on his favorite causes, financial reform, energy and immigration.
He does no personnel evaluations, (Geithner and Holder have not worked out, but you have no replacements), he has no plan to reduce government spending and he doesn’t care about farmers. I hope you notice there is a lack of compassion for “the people”.

You have to put Emanuel on “Special Projects” and find a better rounded Chief of Staff, someone to be the Chief Operating Officer of the Government.

I told you so.

Government

I am concerned that the “success” of healthcare has empowered policy wonks to think government is all about policy. It took a year to hatch healthcare, in that same year closing Guantanimo failed, fixing the securitized mortgages at the banks failed and the big savings from removing waste in government failed.

I am sorry for all the family dairy farms that have closed. Pig farmers got to big because they are too greedy, but it’s sad to see farmers suffer.

Is it possible that you can only deal with one issue at a time? Everything was on hold while you dealt with Afghanistan and then Healthcare.

Do you ever spend time thinking that Treasury, Justice or Agriculture could do with improved leadership? If the answer is never, let me remind you of the greatest one-liner on the failure of management “Heck of a job, Brownie.”

You and your people love policy and basketball. What you need is a Chief Operating Officer who looks after the day to day business of good government. Women are especially good at this, Hilary Clinton and Nancy Pelosi come to mind.

Things you can do to improve is to find team players. Emnual, Pelosi, Clinton, Gates get things done through teamwork. The economy suffers partly because there is no teamwork from the members of your government.

Because of the tough political climate, everyone is thin skinned when it comes to hearing criticism. I suggest you have someone schedule a half hour a week to give you highlights of Inspector General Reports from various departments. Obviously Justice, Treasury and Defense come to mind.

I told you so.

Basic Justice

I perceive a wide gap between the theory of justice as viewed by an Academic and the practice of justice by an elected official. I have no expertise in law.

I am most disturbed by the failure of the People to present an acceptable case to the Courts regarding the Blackwater affair. Incompetence in the Justice Department is a serious failure to Society. This happened on your watch. What’s the point of teaching the theory of Justice, if the People cannot present credible cases?

The other clearly legal failure is providing KSM a fair trial. I don’t understand news reports suggesting that the White House is deciding the forum for KSM’s trial. The mere suggesting of meddling and delay is justice denied.

Another issue is more a failure in management but deals with a legal matter. There was a promise to close Guantanimo in one year. The reason for the closing was on principle. This should not be an empty campaign promise nor false rhetoric. It turns out to be just that. The Academic did not understand the real world issues in practicing justice.

The final issue is pure management. Why are you so behind in nominating judges in to the various courts? This is surely justice denied.

Let’s get real about Justice! That means the mundane matter of managing, making sure people are doing their jobs well. You are not minding the store, and you are supposed to know something about justice never mind the economy.

Basic Economics

To Christina Romer

I wrote you September 5, 2009 about the rising price of peanut butter and jam sandwiches with a glass of milk. I wrote to you because the President doesn’t listen to me. Believe it or not, I think you listen. It helps that you have been right, there hasn’t been any inflation, I’m waiting for the Yuan to rise (you will see a real bump in consumer prices because so much of consumer goods is made in China) and interest rates to rise because of the national debt.

Geithner has pressed on the gas pedal (gas = people’s money) with a heavy foot, oblivious of the amount of gas in the tank (the national debt). He has not fixed the engine (securitized mortgages in the banks) so we use more gas than we need to and we risk to have another breakdown. The cars’ owners took out insurance from AIG for engine troubles, and Geithner paid AIG to payoff the insurance policies without an engine change. Geithner will use the people’s money to pay the owners to fix the engine. I tried to keep it simple for the President to understand, may be he doesn't understand the car analogy either.

Some consider housing as the backbone of the American economy. The
mortgage modification program has provided 17 revised mortgages. Reset
mortgages will continue to trigger for a year. The number of
homes whose mortgage exceeds market value is unsustainably high.
Unemployment contributes to more foreclosures. The administration
has only provided band-aid fixes. They have never defined the problem
and this makes it difficult to arrive at a solution.

The following suggestion was sent to the President, March 8, 2009. I felt it was better than Geithner's plan, 13 months later, we know Geithner's plan hasn't worked.

The government consolidates all bundled securitized mortgages, uses a
task force of Audit firms to re-value them, then re-distributes the
actual mortgages back to eligible holders.
The banks will properly show mortgages in their long-term assets
instead of current assets when they held the securitized slices (An
improper accounting shift to enhance executive bonus's).
We will end up with a mortgage market true to capitalism.

Detailed explanation.

Securitized mortgages means mortgages were bundled then tranches of
the bundle were sold off. Every mortgage is local so this instrument
is invalid.

1)Collect all bundled mortgages.

2)Classify the Mortgages
Within each bundle is a list of mortgages.
All the mortgages must be placed on a master list.
This list must be sub-divided in the following order:
Region/city New England, Rust belt, New York, East coast,
Florida, Nevada etc
Interest rate Standard prime, escalating interest rates including subprime
Current market value divided by mortgage
Mortgagee income to mortgage amount -ability to repay

Within each region you will be able to determine three categories
Low, medium and high risk.

3)Calculate the write down.

4)Collect all holders of bundled mortgages

5)Pro-rate the write down according the portion of the bundled mortgage holding.

6)Classify holders
Banks allowed to issue Mortgages in US and those not allowed.

7)Re-distribute the gathered mortgages to the banks allowed to issue
mortgages in the US.
The US government only has jurisdiction over banks allowed to issue
mortgages in
the US. The other holders will get no mortgages, it's a risk they
took. If this is too severe offer silent partner relationships with
the banks with title.

The redistribution will have to depend on what the data looks like.
Redistribution must be as fair as possible so should be done before a
Judge (We want justice). Ideally regions would be distributed to a
regional bank but markets may have to be tranched among several banks
to fairly spread the risk