GEORGE W. BUSH IN RETROSPECT

I really can't be mad at George W. Bush because he never should have been president in the first place.  He was an unsuccessful business man who was repeatedly financially bailed out by someone, presumably a Saudi Prince.  The fault lies with us the electorate for electing him.  Wait, he wasn't elected by us, the Supreme Court chose him.  His opponent actually got more votes, but was done in by "hanging chads" and aggressiveness by Gays when Ohio was not ready for equality for them.

Granted there are lots of" landmines" in the way of a president becoming great.*  For example, in retrospect, Eisenhower looks pretty good.  He had positive cash flow twice in his presidential terms.  Only Clinton (Bill) has had more.  He made some fledgling moves on racial equality.   He got the interstate highway system.  Perhaps most important of all is that he showed us that sometimes the proper reaction to something is no action.

But then the Eisenhower negatives.  He overthrew a duly elected prime minister in Iran for wanting the same oil deal from BP (actually the forerunner of BP)  as Egypt got (half the profits).  Things have been downhill with Iran ever since.  And then there was the Hungarian uprising where we fomented them to revolt and then abandoned them.

But George W. Bush (Bush-43) had two absolute disasters that he plunged us into.  One was going to war in the Middle East, something we have been mired in ever since.  The other was the Great Recession  (It is not PC to use the word depression any more) because he believed that the financial industry is "self correcting" and didn't need regulation.  All of a sudden banks, as a result of the lack of regulation, stopped being staid conservative institutions and became go-go organizations.   It didn't help that he also got a tax cut during the war that was performed on the cuff. We are still mired in both disasters but have done much, much better on the recovering economy that should be called The Great Recovery.

Many pretend to see no difference between a recession and a depression.  Recessions are usually due to large buildup of inventories and recover when inventories work their way down whereas depressions are a collapse of a financial system and are self perpetuating unless something drastic is done.

There are those who say that the Great Depression was not overcome until WW-II with its enforced savings through rationing and lack of goods and a continued low birthrate.  In the Great Recession, there is no all consuming distraction such as a World War, which is a great tragedy and certainly not to be recommended.  Industry has to work its way out of the Great Recession with minor help by a congress (other than a small "stimulus program") that refused to have a major infrastructure program to help things along.

In fairness to Bush, once he recognized what he had done, he did start some action to save our financial system through the TARP Program, that Obama continued.   But a lot of damage had already been done.   Though saving the banks has been controversial, it was a key to the Great Recovery we have witnessed by President Obama.

Bush, of course did have some positives, perhaps the most important being Medicare-D (prescription drug coverage), though he left it up to the insurance industry to find a way to pay for it.  He did recognize the importance of Hispanics to our culture.  "Leave No child Behind" was well intended if much hated by the teaching community.

I will also give Bush credit for going to war in Afghanistan because we had to do something after the 9/11 (2001) attacks, even if it ended badly.  President Reagan on the other had "cut and run" from Lebanon after the Marine Barracks massacre and embassy bombings in Lebanon and Kuwait, emboldening the terrorists into believing that, if we were hit hard, we would just withdraw.

George W. Bush's two disasters, unfortunately, greatly outweigh everything else and make him a candidate for the worst president ever, certainly a big step worse than President Hoover.

* http://stopcontinentaldrift.blogspot.com/2012/05/land-mines-in-way-of-becoming-great.html

HOW TO GET OUT OF GREAT DEPRESSIONS AND GREAT RECESSIONS

I'm sure you have heard that Roosevelt's policies did not get us out of the Great Depression but that it was WW-II that did it.  You hear this especially from Republicans.  But it wasn't the war per se that got us out of the Great Depression, it was massive government spending that did it with an assist from forced savings as there wasn't much to buy during WW-II.

So if we wanted to rapidly get out of the Great Recession of 2008-2009 what should we have done.  We should have had massive government spending.  Yes, Bush's (43) TRAP program to rescue the banks had some deficit spending and Obama's small stimulus fund plus his increased Defense budget helped keep the Great Recession from getting worse, but they weren't big enough to get us out of the Great Recession.  In WW-II everyone who had a lath or drill press or spot welder worked  for the government war effort.  So  what was needed was a "war on infrastructure"  of at least several trillion dollars.  But of course, we can go into massive debt for shooting wars but not for building roads, airports, bridges, and buildings, etc.

SOME DODD-FRANK LIES BY POLITICIANS

An article titled "Presidential Candidates Don't Understand The Banking System" by Richard X. Bove* states (quotes in italics):

(1) It is often stated (by various candidates) that, since the passage of the Dodd-Frank Act, the biggest banks have gotten bigger.That's simply not true: In fact, the four biggest banks in the country have declined from having nearly 58 percent of the industry's assets in 2010, (when Dodd-Frank was passed) to nearly 52 percent in 2015 and they are likely to shrink even more rapidly in the next few years due to newly published regulations.

(2) It is being argued that small banks are failing at a faster rate since Dodd-Frank was passed. Also not true. From 1986, when the number of banks peaked in modern times, to just before the financial crisis, we were losing more than one bank a day to mergers and failures. We are still losing banks but at a pace well below the past.

(3) There is a fear that banks are still taking on too much risk, despite the hundreds of new regulations being put in place. This is the most outrageous untruth of all. Banks now have more cash as a percent of assets than any time in the past 25 to 30 years.

(4) Perhaps the biggest misunderstanding is the position of capital in the banking industry. Both sides of the political aisle and the regulators keep demanding more and more capital as protection for the banking system. Yet in the past five years, equity in the commercial-banking system has been consistently greater as a percent of assets than any time since 1938.

(5) Moreover, it was recently demonstrated that a number of politicians, and the media, did not realize that the Federal Reserve is no longer allowed to bail out banks. Further, it is not understood that the Fed now has a new system in place built around something called Living Wills. Under this system, every large bank in the country has provided a template to the regulators as to how to dismantle itself if it were to become insolvent.

Bove does say, " In that 77-year period [since 1938], the United States has not had one Depression or collapse of its banking system." I don't understand this.  What was it that we rescued ourselves from in 2008-2009 (e.g. TARP, Troubled Asset Relief Program)?

* http://www.cnbc.com/2015/11/12/presidential-candidates-dont-understand-the-banking-system-bove-commentary.html

THE AIG BAILOUT SUCCESS STORY

Who ever thought that the government $182.3 billion bailout of  American International Group (AIG) would ever be repaid much less make money to boot?*  Yet, to date, the Treasury and Federal Reserve have collected $197.4 billion from AIG for a $15.1 billion profit.   This sum includes the Treasury sale of 637 million shares of AIG common stock for a total of $20.7 billion on August 14, 2012!  All the stock sold above the breakeven point of $28.73/sh with the deal struck at $35.50/sh. The Treasury still owns 15.9% of the common stock in the company which, when sold, will be pure profit added to the current total.  The hero of this occurrence is Robert H. Benmosche, former head of MetLife, who took over AIG in August of 2009.  Is he Businessman Of The Year or what?

The AIG bailout was part of the Troubled Asset Relief Program (TARP) initiated by President George W. Bush and continued by President Obama.  It appears that the larger TARP program may eventually make an overall profit as well.**

*http://online.barrons.com/article/SB50001424053111904819604577647570064908412.html?mod=BOL_qtoverview_barlatest;
** http://www.thedailybeast.com/articles/2012/08/10/how-the-treasury-is-turning-a-profit-on-tarp.html

BEST ONE-TERM PRESIDENT EVER?

Barack Obama's record is very impressive particularly considering the opposition he has faced to almost everything. It started with the Stimulus Package, Cash for Clunkers, Health Care Reform bill, the BP oil spill fund and dividend discontinuation, GM & Chrysler rescue, and what has come to be called FinReg, among others. Though people tend to "blame" Obama for TARP, it was actually a George W. Bush initiative. Since it will eventually turn a profit and only one major financial institution failed (Lehman Bros.), how can one say it was not successful? Obama's real problem is unemployment.

Stimulus Package While it is probably true that the Stimulus Package has not created many permanent jobs, it has saved for awhile thousands of teachers, firemen, and police jobs. If these people had been put out on the street, certainly the economy would be in worse shape today. And the amount of highway construction going on is immense. It is the nature of construction jobs that they are not permanent, but thousands of workers must have been hired for these highway jobs.

Cash For Clunkers The claim was made on Cash for Clunkers, that it "just" advanced the sale of automobiles that would have been bought anyway. That does not seem to be the case in that the automobile companies continue to sell a lot of autos and are turning nice profits, even GM and Ford. The purpose of Cash For Clunkers was to get some low mileage cars off the road and that it certainly did.

Healthcare Of course I wish the Healthcare bill was a cleaner bill rather than the 2,040 page monstrosity it became, but in modern America, you seem to have to buy all sorts of extraneous things in major legislation to get it passed. And after that some important things weren't in the bill like single payer, Public Option,* tort reform, and completely getting rid of Medicare Advantage which costs 15% more than regular Medicare. At that, the Health Care bill, for example, has 788 amendments of which 161 were by members of the GOP (http://www.slate.com/id/2223023/). But finally after decades we have something nearly universal that we can start with. Obama said he would get a Health Care bill when he was campaigning for President, and he got it in spite of massive opposition. In our own extended family, the provision to increase the age at which children may be covered by the parents health care plan to 26 has been very important for a partly employed graduate student. It may well be that health plans will cost somewhat more, but there is more than just "me" in morality, and , finally, the right thing has been done or at least begun by covering some 30 million people that are currently uninsured. Many Presidents in the last 70 years have tried to get a Healthcare bill passed and failed. Obama succeeded.

FinReg (also known as Dodd-Frank) At 848 pages, the FinReg bill was comparatively brief; yet who knows what is in such a monstrosity? It took two years to write and get passed. The financial crisis we were in was so severe that I am really surprised that more Republicans didn't feel compelled to vote for it. Of course the financial industry got it watered down, but it seems to me that most analysts that seem objective feel it will do good. For example, Henry Paulson who was Bush-43's Treasury Secretary is pleased with the bill.** Other advances include placing "... derivatives on exchanges and clearinghouses, by creating a systemic risk council, by forcing banks to provide "funeral plans" that explain how to unwind them in the event of a failure, by creating an Office of Financial Research to collect daily data and provide quick analysis on transactions, there's much less chance that a financial crisis would leave regulators totally confused about what's going on, and who owes what to whom."* For more see the Ezra Klein article.** It is true that much is yet to be worked out on implementing the bill as is the case to some extent in the Healthcare bill too. For these reasons, it is probably best to slow down and work out these two major bills before taking up others like energy policy. That is a pity but is needed.

BP Dividend Elimination and Remediation Fund I have covered this item elsewhere: http://stopcontinentaldrift.blogspot.com/2010/06/if-it-wasnt-so-tragic-it-would-be-funny.html. In brief, first people laughed at Obama to think he could get a huge company to eliminate its dividend (said to be too important) and set up a $20 billion fund to reimburse damage done to businesses and individuals. When, in fact, BP voluntarily complied, the cry went up that he was too strong a president. Do we want a strong president or don't we in times of disaster? Well, I'm very impressed. Readers may also wish to take a look at a related item on BP: http://stopcontinentaldrift.blogspot.com/2010/06/its-only-matter-of-time-before-we-hear.html.

Unemployment Unfortunately for President Obama, the single most important statistic for reelection is the unemployment picture. When the voters perceive increasing unemployment on election day (whether it is true or not), the incumbent loses. This was the case with Jimmy Carter and George H.W. Bush. Of course in the next 26 months, the current dismal unemployment picture could turn around, as it did for President Reagan, but our current economic picture is much more severe than it was in the early 1980s and a vigorous growing employment picture seems unlikely. Therefore I feel that President Obama probably will be a one-term president no matter his other outstanding accomplishments; however, we have learned that it is dangerous to count out The Comeback Kid.

Notes added For 2011: Obama's accomplishments continue. His orders led to the killing of Osama Bin Laden on May 2, 2011. More controversial is the killing of the American trader Anwar Al Awlaki in Yemen on September 30, 2011.*** Got the new Start Treaty ratified by congress (Surprising opposition to this is what makes it so significant.); it went into effect on February 5, 2011. Lifted restrictions on stem cell research on March 9, 2011. Eliminated Don't Ask, Don't Tell on September 20, 2011, over strong congressional opposition.

*http://en.wikipedia.org/wiki/Single-payer_health_care; http://en.wikipedia.org/wiki/Public_health_insurance_option

**"We would have loved to have this for Lehman Bros.," Henry Paulson told Andrew Ross Sorkin: http://voices.washingtonpost.com/ezra-klein/2010/07/what_finreg_does.html

*** http://www.nytimes.com/2011/10/12/opinion/justifying-the-killing-of-an-american.html