The White House ATM
posted at 11:00 am on November 14, 2008 by Ed Morrissey
Michael Ramirez captures the essence of the giveaway mentality in Washington DC these days in his latest political cartoon at Investors Business Daily:
George Bush yesterday defended free-market capitalism:
President George W. Bush today urged leaders of the world’s biggest economies not to abandon free- market capitalism as they seek an escape from the financial crisis, calling it the “best system” for delivering growth.
In a speech at the Manhattan Institute in New York before weekend talks among leaders from the Group of 20 nations, Bush said policy makers should resist the urge to meddle too much in markets as they seek to reverse the financial and economic turmoil now engulfing the world.
“History has shown that the greater threat to economic prosperity is not too little government involvement in the market, but too much,” Bush said. “Our aim should not be more government, it should be smarter government.”
But his Treasury Secretary sent a completely different signal earlier in the week:
Henry Paulson has been doing his ”gang that couldn’t shoot straight” routine, announcing changes to the TARP plan aimed at loosening the lending mechanism that could end the constriction on consumer borrowing. Only the changes have convinced traders that banks actually are going to tighten that lending, which has sent eurodollar futures sharply lower on expectations that bank lending rates are going to rise once again.
The nearby eurodollar futures contract, the December expiration, has fallen 11 basis points to 98.035, amid expectations that LIBOR, which has declined steadily for the last month amidst coordinated global central bank liquidity infusions, would turn higher once again if the changes in the plan Paulson outlined are implemented. The two-year Treasury yield has fallen to a five-year low, in another demonstration of investors’ risk aversion.
The only legitimate use of the federal bailout money was to fix the “toxic assets” — the mortgage-backed securities issued by Fannie Mae and Freddie Mac under mandate of Congress. The government created the meltdown in two stages: by incentivizing bad loans through massive Fannie/Freddie purchases, and by securitizing the bad loans with good ones in MBSs. Since government created that toxicity, it had a responsibility to provide a specific antidote.
As critics warned, though, once given that kind of power, government wouldn’t stop with toxic assets — and apparently won’t even bother with them now. King Banaian has learned his lesson:
I feel like Charlie Brown — I should have known that government would screw this up, but I wanted to believe this one time you would get it right. I’m the idiot, not you. I have no excuse. But not again. Government failure was inevitable, and I have learned my lesson.
I know exactly how he feels.
Ramirez has a new collection of his works: Everyone Has the Right to My Opinion, which covers the entire breadth of Ramirez’ career, and it gives a fascinating look at political history. Read my review here, and watch my interviews with Ramirez here and here.