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.


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And here I am, like a fool I only took out a mortgage that I could afford.

rbj on November 14, 2008 at 11:04 AM

It truly appears that Paulson is still working for Goldman Sachs rather than the American taxpayer.

The guest host on Rush Limbaugh yesterday was praising the overall legacy of President Bush. In my mind, this final turnover of the American economy to political control damns any positives in the Presidency of George W. Bush, and marks him as one of the worst Presidents in American history. For President Bush to now extol the virtues of the free market is simply bad comedy.

pilsener on November 14, 2008 at 11:08 AM

Stock up your pantrys, get lots of bottled water, get handguns,rifles,ammunition & Firewood. Buy gasoline to store & candles…lots of candles. Get shutters on your windows and get ready to hold out as long as you can. Better yet, build your “Obama bunkers” underground.

portlandon on November 14, 2008 at 11:09 AM

The government makes the situation worse every single day. The markets sit back and react to every action or whisper of action that comes out of DC. The absolute best thing the government can do now is STOP. Stop doing anything at all. The markets will sort themselves out. It is out of pure arrogance and hubris that the governmetn fails to just sit back and take a hands-off approach. The mandarins in DC honestly believe they are smarter than everyone else.
If this doesn’t make the case for smaller government I don;t know what will.

DerKrieger on November 14, 2008 at 11:10 AM

portlandon on November 14, 2008 at 11:09 AM

And learn how to shoot with a bow…..cause the ammo may not last.

Rovin on November 14, 2008 at 11:11 AM

Better yet, build your “Obama bunkers” underground.

I’ve been working on my cellar. It’s starting to look fairly livable.

Bugler on November 14, 2008 at 11:12 AM

Help the economy……

Ammoday BUYcott

Limerick on November 14, 2008 at 11:13 AM

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.

The government also loosened the leverage limits on investment banks so that the wizards on Wall Street could leverage their capital 30-1. Unfortunately, they believed the credit rating agencies which were horribly wrong on which mortgage securities were AAA.

With little leverage these mortgage defaults would create losses for the banks. With massive leverage, and poor risk management, a few percentage point increase in foreclosures means that banks get blown up.

dedalus on November 14, 2008 at 11:14 AM

It’s pretty absurd to hear Bush talk about ‘free market’ forces. This is the guy who couldn’t spend less than 3 trillion dollars a year on a budget. This is the guy who wanted to expand entitlements to illegals, give drug companies a boondoggle under the guise of ‘medicare prescription drug benefit’, and spent a half a trillion on a war that should have been fought, finished and won on less than 50 billion.

No, this man Bush doesn’t know the meaning of fiscal restraint. He only knows that the US government can print money if it wants. Our grandchildren will have to pick up the tab. . . so who cares?

ThackerAgency on November 14, 2008 at 11:18 AM

In 1997 when we put a contract on our current house, we had a 27% down payment and excellent credit scores, I had to write a letter why I was three days late on a JC Penney card with a balance of $19.97. What am I missing? No more bail outs for anyone. Even though it is killing the value of the house I want to sell.

Cindy Munford on November 14, 2008 at 11:18 AM

I forgot to mention the 10 billion he gave to our friend Pakistan in a completely wasted effort. He should have just flushed that money down the toilet. . . it would have been a more effective use of tax dollars.

ThackerAgency on November 14, 2008 at 11:19 AM

The markets will sort themselves out. It is out of pure arrogance and hubris that the governmetn fails to just sit back and take a hands-off approach. The mandarins in DC honestly believe they are smarter than everyone else.
If this doesn’t make the case for smaller government I don;t know what will.

DerKrieger on November 14, 2008 at 11:10 AM

The markets will sort themselves out, but the question is how much disruption will occur before they do. The government should let companies fail, but it needs to increase spending and extend benefits for those dislocated during the crisis to minimize social upheaval.

dedalus on November 14, 2008 at 11:19 AM

And here I am, like a fool I only took out a mortgage that I could afford

Me too, but then again, when the mortgage broker told us the amount we could get, I told my wife “See, I told you I could get you a mansion – for about a month…”

We decided to have a life as well as a house. I’ve never understood why Net was considered instead of Gross plus expenses.

kybowexar on November 14, 2008 at 11:19 AM

That’s a great cartoon, but the building really ought to be the Capitol.

saint kansas on November 14, 2008 at 11:20 AM

Then you sit back and think if Paulson and Bernanke would have kept their mouths shut, told people to calm down, thought it through and not had the front page, financial meltdown mega-chicken-little-hype during the last weeks of the election would we have elected a different President?

Check the big financial players still standing and see who is on their board of directors or former CEO or consultants – how many are Democrats from the Clinton era?

albill on November 14, 2008 at 11:23 AM

Cliff Kincaid writes:
Media Should Demand Paulson’s Head

Kevin in Washington State on November 14, 2008 at 11:24 AM

The securitizing toxicicized the incentivizationizing.

whitetop on November 14, 2008 at 11:25 AM

Can anyone calculate how much of the federal budget will be consumed by interest expense if rates jumpt to 10%. Let’s see, 10% of 12 TRILLION is something like 1.2 TRILLION. In FY 2007 the US collected 2.6 TRILLION and budgeted 237 billion for interest (roughly 9%). The 9% share is do-able only because the Fed cooks the books and artificially depresses the cost of borrowing. When Europe and the Libor bump up, the US budget is in BIG trouble (and why shouldn’t lenders be bidding up the cost of capital, the US government is scarfing up so much it’s becoming scarce).
-
But why should these facts trouble the left, they got big plans to piss away invest with trillions. Just look how the targeted patronage investments at the Chicago Annenberg Project are paying handsome returns. The hope and change candidate can definitely deliver on half of those propositions.

Mark30339 on November 14, 2008 at 11:29 AM

Dammit!!! We would have survived just fine, if it weren’t for you meddling Government officials!

Meanwhile….I’m Still waiting for my mortgage to be paid and my free gas!

Scorched_Earth on November 14, 2008 at 11:31 AM

It’s pretty absurd to hear Bush talk about ‘free market’ forces. This is the guy who couldn’t spend less than 3 trillion dollars a year on a budget. This is the guy who wanted to expand entitlements to illegals, give drug companies a boondoggle under the guise of ‘medicare prescription drug benefit’, and spent a half a trillion on a war that should have been fought, finished and won on less than 50 billion.

No, this man Bush doesn’t know the meaning of fiscal restraint. He only knows that the US government can print money if it wants. Our grandchildren will have to pick up the tab. . . so who cares?

ThackerAgency on November 14, 2008 at 11:18 AM

+1

rockmom on November 14, 2008 at 11:32 AM

I want to be like that woman I saw that was waiting till Obama won the election so I can go buy a new hummer because the O was going to make gas cheap again and buy my house,oh wait I already own my home maybe he can buy me another one somewhere nice.

tee866 on November 14, 2008 at 11:35 AM

Oh, and by the way, check today’s Washington Post….Fannie and Freddie fix is going to end up costing WAY more than $200 billion in all likelihood. Fannie Mae lost $29 billion in the last quarter. Freddie announces today and it’s expected to be even worse. The regulator says both may be insolvent and unable to make payments on their bonds by the end of the year. Fannie’s chief economist says we are only halfway through the fall in house prices.

And there is still a trillion dollars worth of 3-year and pay-option ARMs that have not adjusted yet.

Can somebody PLEASE tell me why Christoper Dodd still has a job???

rockmom on November 14, 2008 at 11:36 AM

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.”

Who said this again?

Amendment X on November 14, 2008 at 11:37 AM

rockmom on November 14, 2008 at 11:36 AM

You know why, its because its all Bush’s fault or at least that’s what I’ve been told for the last few years.

tee866 on November 14, 2008 at 11:38 AM

People like Paulson just can’t help themselves…they screwed it up, so they think they can “un-screw” it. Never thinking that if they created the policy that was so wrong, what makes them think their new policy is any better?

right2bright on November 14, 2008 at 11:42 AM

Meanwhile….I’m Still waiting for my mortgage to be paid and my free gas!

Scorched_Earth on November 14, 2008 at 11:31 AM

Free houses and gas are, respectively, items 154 and 162 on all the things that Obama is going to do immediately on January 20th 2009 between the time he takes office and the time he has to go out for the inaugural balls. They would have had a higher place on the list but stopping global warming, curing cancer, and bringing about world peace all have a higher priority and, after all, if God had to rest after creating the world Obama should be allowed some slack!

highhopes on November 14, 2008 at 11:47 AM

Can somebody PLEASE tell me why Christoper Dodd still has a job???

rockmom on November 14, 2008 at 11:36 AM

Because the people of CT are liberal morons. Duh!

highhopes on November 14, 2008 at 11:48 AM

When Europe and the Libor bump up, the US budget is in BIG trouble (and why shouldn’t lenders be bidding up the cost of capital, the US government is scarfing up so much it’s becoming scarce).

Mark30339 on November 14, 2008 at 11:29 AM

The borrowing costs for the U.S. government are about as low as they have been since the 1960′s. As rates for LIBOR and corporate bonds have increased this year investors have piled their money into U.S. Treasuries. The government can borrow money now at unusually cheap rates and repay the debt when the price of the bonds sink.

dedalus on November 14, 2008 at 11:48 AM

Just saw on Drudge that the mayors of Philadelphia, Atlanta and Phoenix are all asking for bailout help. All three are Democrats. Chicago is anticipating massive layoffs of city workers — Mayor Daley; Democrat. Detroit is a basket case –Democrat. California, one of our most liberal states, wants a piece of the pie —RINO governor.

I think I see a trend here…..

Star20 on November 14, 2008 at 12:09 PM

I think it doesn’t work because people don’t know how screwed up this really got…even at the highest levels.

tomas on November 14, 2008 at 12:25 PM

Also…the panick was avoidable…the we are going to die if this doesn’t get passed…has created a much greater vacuum of pissing and moaning than need be.

I’ll start crying when my misery index gets over 22%

tomas on November 14, 2008 at 12:28 PM

I just want to cry. I am seeing the downfall of my country before my very eyes, the country my husband valiantly served for 26 years. I feel powerless to stop it. I’ve lost my Republican party and my country. My eyes are totally opened (thanks to ACORN, Obama’s campaign and the ballots in the trunk in Minnesota) as to the total corruption in our election system. I see nothing but disaster headed our way. Someone, toss me a ray of hope.

katablog.com on November 14, 2008 at 12:30 PM

“Consumer pessimism is more widespread than at any time in the past 25 years, according to the latest consumer
attitude survey.”

“Now that the crisis is here, there is a sudden frantic effort to visualize its implications. … Government and
business seem equally unsure.”

“‘Our clients just don’t know what’s going to happen. We’ve never seen anything like it before.’”

All from 1973

tomas on November 14, 2008 at 12:33 PM

I would toss you a ray of hope, but I don’t have one. I’m in the acceptance mode, sorry to say.

Alana on November 14, 2008 at 12:34 PM

That 1973 thing is pretty good, though!

Alana on November 14, 2008 at 12:34 PM

And the really fun part?

They have not regulated or changed a single thing in the flawed system that brought this on.

Subprime loans and NINJA loans are STILL out there… I just got a no Soc Sec Number needed loan Ad YESTERDAY!

Romeo13 on November 14, 2008 at 12:37 PM

1973 was small potatoes compared to what’s coming.

1930 is more like it….but with inflation instead of deflation, because the Idiot-in-Chief will be printing money until the gaskets blow.

This is gonna end in a war.

God help us all.

notagool on November 14, 2008 at 12:38 PM

The picture should have shown US Capital as well attached to the ATM drive thru.

ChuckTX on November 14, 2008 at 12:47 PM

New rules being released regarding mortgages:
“The FDIC said its plan would modify about 2.2 million mortgage loans by offering financial incentives to mortgage servicers. It would pay servicers $1,000 to cover expenses for each loan modified to the required standards, and would promise to share up to 50 percent of losses incurred if a modified loan defaults.

Eligible borrowers would include those who have missed at least two monthly payments on loans for homes they live in. Servicers would be expected to lower those borrowers’ monthly payments to about 31 percent of the borrowers’ monthly income.”
Link

So if your mortgage payment is more than 31% of your income STOP payment on the mortgage! You can now get a better deal.

Wonder how this will this effect housing prices? Drive them lower?
And wouldn’t the lender just lengthen the number of years payments are made or readjust the mortgage rate at a later date (higher) to make up the difference in the lower montly mortgage payment?

albill on November 14, 2008 at 12:48 PM

Gee, lets let the government run all the businesses! Look at how well they have done with Fannie Mae! Oops,my bad, it’s gone from 75 to almost 0 in five years. Well, look how well they have done with Freddie! Oh, sorry wrong again. Down from about 70 to almost 0.

I’ll keep looking. Surely letting the government run businesses is the best thing to do! It’s what the people want! /sarc off

riverrat10k on November 14, 2008 at 1:45 PM

I want my bailout. It’ll only cost you taxpayers a percent of a penny each. C’mon, you’re getting a deal y’all. It’ll cost you more the longer you wait.
Here I’m feeling like a total sucker for not getting a mortgage I couldn’t afford. So much for playing by the rules.

Geronimo on November 14, 2008 at 1:57 PM

This is what i get for paying my bills……
I cant even get a bailout

UNREPENTANT CONSERVATIVE CAPITOLIST on November 14, 2008 at 2:18 PM

The borrowing costs for the U.S. government are about as low as they have been since the 1960’s. As rates for LIBOR and corporate bonds have increased this year investors have piled their money into U.S. Treasuries. The government can borrow money now at unusually cheap rates and repay the debt when the price of the bonds sink.

dedalus on November 14, 2008 at 11:48 AM

-
I think we can agree that rates are currently at bottom but are trending up — kind of like a teaser ARM. Who bails out the US Treasury when the rates quadruple from 1.5% to 6%, but there’s no room in the budget to pay extra debt service? It only makes sense if short term stimulus is coupled with long-term commitments to over-balance budgets and pay down debt with surplus, that would provide Change AND Hope.

Mark30339 on November 14, 2008 at 2:36 PM

Just saw on Drudge that the mayors of Philadelphia, Atlanta and Phoenix are all asking for bailout help. All three are Democrats. Chicago is anticipating massive layoffs of city workers — Mayor Daley; Democrat. Detroit is a basket case –Democrat. California, one of our most liberal states, wants a piece of the pie —RINO governor.

I think I see a trend here…..

Star20 on November 14, 2008 at 12:09 PM

I’m going to LOVE watching these Dems squirm as they try to somehow pin this on Bush and the Republicans.

UltimateBob on November 14, 2008 at 2:40 PM

It’s pretty absurd to hear Bush talk about ‘free market’ forces. This is the guy who couldn’t spend less than 3 trillion dollars a year on a budget. This is the guy who wanted to expand entitlements to illegals, give drug companies a boondoggle under the guise of ‘medicare prescription drug benefit’, and spent a half a trillion on a war that should have been fought, finished and won on less than 50 billion.

No, this man Bush doesn’t know the meaning of fiscal restraint. He only knows that the US government can print money if it wants. Our grandchildren will have to pick up the tab. . . so who cares?

ThackerAgency on November 14, 2008 at 11:18 AM

Throw in 12-year Republican control of Congress, and you have the reason why we’re looking at an Obama administration. Given a choice between Democrats and Democrats Lite, the Democrats will win.

ddrintn on November 15, 2008 at 12:03 AM

California, one of our most liberal states, wants a piece of the pie —RINO governor.

Makes me almost wish Gray Davis could have completed his 2nd term

eaglescout1998 on November 16, 2008 at 12:39 PM