Soothsayers, political pundits and media mush mouths are having a field day predicting what will happen when the Republican tide swamps Democrats in the mid-term elections. As you might expect, it is mostly conventional wisdom being preached as gospel by those with political axes to grind. And most of it is sheer nonsense.
Now it is time for a forecast you can bank on from a source you trust. In looking beyond the landscape of the Mid-Term Massacre, here is what you can expect in the weeks and months leading up to the seating of the new Congress in January:
First, President Obama can be counted on to thumb his nose at the results. There will be no statesmanship or conciliatory tone in the face of humbling defeat. Expect the President to do everything but admit the election results are a rejection of his policies. Instead, he will yak about how this is just something that happens in every mid-term election when the party of the president suffers losses. He will take no responsibility for voter anger, instead laying blame on his failure to communicate his achievements effectively and on Tea Party loyalists who lied about the state of the country without providing specific proposals. Count on him to also blab on about how outside money carried too much influence in the elections, robbing Democrats of a victory they richly deserved. (Never mind that unions dumped millions into campaigns, giving many Democratic candidates huge war chests that dwarfed their Republican opponents' funds.)
Conventional wisdom, as practiced in left-wing media such as The New York Times, argues the President will lurch to the center, a la Bill Clinton. It won't happen. Obama believes the country is wrong, not the other way around. He will continue to push his agenda. His secret weapon against the Republican onslaught will be his deficit reduction panel that has promised to produce a list of proposals for reducing the federal debt before the end of the year. The recommendations will surely contain massive tax increases. Obama can then point at Republicans and say, "Your own base wants to lower the deficit. You have to be willing to raise taxes to do so." Once the Republicans reject his proposals, the President will accuse the GOP of being disingenuous about lowering deficits.
Many of the nattering nabobs of negativism in the NPR world of fraudulent journalism are chattering about a few Republicans promises to "work with the president." Hogwash. Republicans have no incentive to join hands with a President who has spent the entire election cycle bashing the party like a birthday party pinata. Obama can expect a chilly reception for his agenda, which will send the media on a frenzied witch hunt to destroy Republican opposition by painting them as obstructionists. Expect the mainstream mouthpieces to cry foul at what it will call regressive partisanship--the same kind practiced with a vengeance by Democrats for the past two years.
As the president sees it, the Republican resurgence positions him strongly for the 2012 Presidential Election. Since this next election he cannot run against George Bush, he will lay blame for the country's lack of economic progress at the feet of the GOP to avoid the issue of his own failures. His rant will be that the "Party of No" has fought him tooth and nail on more aggressive government spending that would have produced millions of jobs. I know, it sounds like political suicide. But this is a President with a tin ear when it comes to listening to the body politic.
And don't expect the lame-duck Democrats to stand idly by as they abdicate their throne of power to the loathsome Republicans. Nancy Pelosi and her minions will be spoiling to punish the GOP for having the temerity to takeover their hallowed chamber. As a result, don't be surprised when Princess Pelosi and her Democrat Fiefs decide to build a fence around Obama Care to prevent the Republicans from overturning the law. Their last gasp power binge will also include a plethora of earmark legislation to help Democrats up for election next year. It also is a sure bet that the House will not extend the full Bush Tax cuts, electing to raise taxes on top wage earners. Pelosi's Bataan-like death march on Democracy will also include legislation aimed at citizenship for illegal Mexicans. Conventional wisdom says that Democrats won't try something like that because of the public outcry over a lame-duck Congress' attempts to ignore voters wishes. Hooey! Power-mad Pelosi will damn the torpedoes of criticism as she shoves the legislative medicine down the throats of Americans too stupid to vote Democratic. If that wasn't enough to raise your blood pressure, expect the Democratic-controlled investigations of fellow collaborators Charlie Rangel and Maxine Waters to go quietly into the night with only a polite slap on the wrists for abhorrent ethical lapses.
As a result, the remainder of this Congressional session will go down as one of the nastiest in history. Bad legislation will belch from the bowels of Congress while the President wags his finger and lectures the country on its failure to recognize his political greatness. The American public will be left dazed in disbelief at all these shenanigans. It's not a pretty picture. But these are ugly political practitioners with chips on their defeated shoulders. You should expect nothing less than the worse.
Thursday, October 28, 2010
Friday, October 15, 2010
Banking Bubble About To Burst
While the nation still struggles with the economic fallout from the housing carnage, a potentially more lethal explosion is bubbling just beneath the surface in the banking industry. Yet nothing is being done by the Obama Administration to address the issue.
Many small to medium-sized banks, the bedrock of thousands of communities throughout the country, are facing increasingly tough times. Slumping housing prices, rising foreclosures, high unemployment and commercial real estate loan defaults are eating into bank reserves and drying up loan demand.
The Federal Deposit Insurance Corporation (FDIC) has closed the doors of 129 banks this year. Nearly all have been small and medium-sized banks. At this time last year, bank failures had reached 98. For all of last year, the FDIC shuttered 140 banks, the most since the Great Depression. This year's total will easily eclipse that number, based on the current rate of failures.
For these community banks, the news may get even worse soon. Here's why: When the government coughed up $700 billion of taxpayer money to bailout the financial industry, a total of 707 banks received funds, including many small and medium-sized banks. Today many of those banks are struggling to repay the government, putting more pressure on their balance sheets and reducing their financial flexibility.
To date, a total of 80 banks have repaid the government in full. The amount comes to $140 billion, about 75 percent of the total Troubled Asset Relief Program (TARP) money lent to the banks. The remaining 627 banks owe $65 billion. That doesn't sound like a lot of money, when compared to the billions repaid by the likes of Bank of America and Goldman Sachs. However, for small and medium-sized banks the debt is weighing down their long-term prospects for recovery.
Banks were expected to repay most of the funds by 2011. The chances look grim for the remaining 627 financial institutions. As a result, most analysts predict that the banks will be forced to raise capital or sell out to the highest bidder. Raising capital for a weak bank in this economy is like trying to find an Obama supporter at a Tea Party Rally. Won't happen. That leaves the second option. There are some regional banks still circling like vultures, snapping up failed banks. However, there aren't many attractive banks left for the picking, even at today's distressed prices.
Many of the TARP banks are paying dividends to the government today as part of the repayment plan. However, those dividend payments will rise from five percent to nine percent on the fifth anniversary of the TARP loan in 2013. If banks are having a hard time making dividend payments today, any increase in the amount will drive the institutions closer to the financial cliff. A Congressional Oversight Panel recently came to the same conclusion.
In its report, the panel criticized the Treasury Department and warned that many of the banks that have not yet repaid their TARP funds could face rising challenges to meet obligations in the coming years. When dividend rates increase in three years for the TARP repayments, there will be almost no chance for the banks to pony up the money, the panel predicted.
Officials at many of the weakened banks are tap dancing with regulators to try to work out a repayment plan that will allow them to keep their doors open. However, the regulators, while sympathetic, have not budged. Further delays in payments and dividends could have dire consequences for the banks on the TARP repayment list.
That is only the beginning of the banks' problems. All financial institutions are dealing with stronger capital requirements forced on them by the Dodd-Frank Act passed this year with the support of the Obama Administration. These new requirements will only hinder the banks' efforts to try to renegotiate repayment schedules.
This is not a pretty picture for the community banking industry. While the Obama Administration has shored up the financial balance sheets for the banking Goliaths, the smaller Davids are suffering. Ultimately, the inability of many small and medium-sized banks to repay TARP funds will led to record numbers of failures and send a shock wave through communities stretching across the nation.
How long will the Treasury Department and President Obama dither before the issue is addressed?
Many small to medium-sized banks, the bedrock of thousands of communities throughout the country, are facing increasingly tough times. Slumping housing prices, rising foreclosures, high unemployment and commercial real estate loan defaults are eating into bank reserves and drying up loan demand.
The Federal Deposit Insurance Corporation (FDIC) has closed the doors of 129 banks this year. Nearly all have been small and medium-sized banks. At this time last year, bank failures had reached 98. For all of last year, the FDIC shuttered 140 banks, the most since the Great Depression. This year's total will easily eclipse that number, based on the current rate of failures.
For these community banks, the news may get even worse soon. Here's why: When the government coughed up $700 billion of taxpayer money to bailout the financial industry, a total of 707 banks received funds, including many small and medium-sized banks. Today many of those banks are struggling to repay the government, putting more pressure on their balance sheets and reducing their financial flexibility.
To date, a total of 80 banks have repaid the government in full. The amount comes to $140 billion, about 75 percent of the total Troubled Asset Relief Program (TARP) money lent to the banks. The remaining 627 banks owe $65 billion. That doesn't sound like a lot of money, when compared to the billions repaid by the likes of Bank of America and Goldman Sachs. However, for small and medium-sized banks the debt is weighing down their long-term prospects for recovery.
Banks were expected to repay most of the funds by 2011. The chances look grim for the remaining 627 financial institutions. As a result, most analysts predict that the banks will be forced to raise capital or sell out to the highest bidder. Raising capital for a weak bank in this economy is like trying to find an Obama supporter at a Tea Party Rally. Won't happen. That leaves the second option. There are some regional banks still circling like vultures, snapping up failed banks. However, there aren't many attractive banks left for the picking, even at today's distressed prices.
Many of the TARP banks are paying dividends to the government today as part of the repayment plan. However, those dividend payments will rise from five percent to nine percent on the fifth anniversary of the TARP loan in 2013. If banks are having a hard time making dividend payments today, any increase in the amount will drive the institutions closer to the financial cliff. A Congressional Oversight Panel recently came to the same conclusion.
In its report, the panel criticized the Treasury Department and warned that many of the banks that have not yet repaid their TARP funds could face rising challenges to meet obligations in the coming years. When dividend rates increase in three years for the TARP repayments, there will be almost no chance for the banks to pony up the money, the panel predicted.
Officials at many of the weakened banks are tap dancing with regulators to try to work out a repayment plan that will allow them to keep their doors open. However, the regulators, while sympathetic, have not budged. Further delays in payments and dividends could have dire consequences for the banks on the TARP repayment list.
That is only the beginning of the banks' problems. All financial institutions are dealing with stronger capital requirements forced on them by the Dodd-Frank Act passed this year with the support of the Obama Administration. These new requirements will only hinder the banks' efforts to try to renegotiate repayment schedules.
This is not a pretty picture for the community banking industry. While the Obama Administration has shored up the financial balance sheets for the banking Goliaths, the smaller Davids are suffering. Ultimately, the inability of many small and medium-sized banks to repay TARP funds will led to record numbers of failures and send a shock wave through communities stretching across the nation.
How long will the Treasury Department and President Obama dither before the issue is addressed?
Friday, October 1, 2010
Letters from O.H. Bama
Dear Princess Pelosi:
You were likely as surprised as I was when that intellectual giant Joe Biden recently declared in a public appearance that he was No. 2 in line for the presidency. I guess that makes you No. 1. Frankly, I wouldn't know because I've never read the Constitution. That document is so quaint and out of date. But I must admit that I was taken aback when when one of your limp-wristed staff members entered the Oval Office and began measuring for new drapes.
Just remember, whoever occupies the office is not only responsible for running the country, but also is on the hook for Michelle's credit card payments as well. When those overseas vacation charges begin showing up on the billing statement, you may pine for the old days as Speaker. I know Michelle's charges may seem a bit extravagant, but think of it in terms of the cost of just one of your plastic surgeries.
Perhaps, you should be more worried about keeping your job as Speaker of the House. Polling data shows our party will be booted out in the mid-term elections, despite all I've done to run up record deficits, saddle the country with a bloated health care system and sink the economy. My accomplishments aside, you are not helping matters with your recent decision to postpone a House vote on the Bush tax cuts.
However, I must admit that I liked the way you referred to the extension of the tax reductions as the "Obama" middle class tax cuts. Those stupid voters won't know the difference, particularly the ones who believed all that stuff about hope and change. On that subject, you better hope the Congress doesn't change hands in November because I will drop you from my Blackberry contact list faster than you can say, "Reverend Wright."
Guess you've heard that most of my economic team has abandoned the Good Ship Oh Bama. Good riddance, I say. It's not like they solved the economic crisis I inherited. Now even Rahm Emanuel, the country's real No. 2 in command, has decided to leap overboard. Imagine wanting to be Mayor of Chicago? The cab drivers there smell like the Potomac River after a fish kill.
On a lighter note, I appreciated the nice bible you sent me. I put it on my night stand next to the Quran. I will carry it over the next few weeks when I make carefully orchestrated appearances at churches to convince those dumb voters that I am not a Muslin. The folks at Fox News started that rumor. The First Lady got pretty steamed about it. She practically ripped off her burqa in anger.
No matter what happens in the elections, you will always be known as the first Madam Speaker of the House. Some day there be another woman in that job. But I doubt she will be a Madam. That title belongs to only you.
In closing, let me propose a coupling that might benefit us both. The Presidential Dog "Bo" is feeling a little frisky these days. Perhaps, "Bo" could mate with your bitch, "Tox." Imagine the offspring of "Bo"-"Tox."
Your Teleprompter in Chief,
O.H. Bama
You were likely as surprised as I was when that intellectual giant Joe Biden recently declared in a public appearance that he was No. 2 in line for the presidency. I guess that makes you No. 1. Frankly, I wouldn't know because I've never read the Constitution. That document is so quaint and out of date. But I must admit that I was taken aback when when one of your limp-wristed staff members entered the Oval Office and began measuring for new drapes.
Just remember, whoever occupies the office is not only responsible for running the country, but also is on the hook for Michelle's credit card payments as well. When those overseas vacation charges begin showing up on the billing statement, you may pine for the old days as Speaker. I know Michelle's charges may seem a bit extravagant, but think of it in terms of the cost of just one of your plastic surgeries.
Perhaps, you should be more worried about keeping your job as Speaker of the House. Polling data shows our party will be booted out in the mid-term elections, despite all I've done to run up record deficits, saddle the country with a bloated health care system and sink the economy. My accomplishments aside, you are not helping matters with your recent decision to postpone a House vote on the Bush tax cuts.
However, I must admit that I liked the way you referred to the extension of the tax reductions as the "Obama" middle class tax cuts. Those stupid voters won't know the difference, particularly the ones who believed all that stuff about hope and change. On that subject, you better hope the Congress doesn't change hands in November because I will drop you from my Blackberry contact list faster than you can say, "Reverend Wright."
Guess you've heard that most of my economic team has abandoned the Good Ship Oh Bama. Good riddance, I say. It's not like they solved the economic crisis I inherited. Now even Rahm Emanuel, the country's real No. 2 in command, has decided to leap overboard. Imagine wanting to be Mayor of Chicago? The cab drivers there smell like the Potomac River after a fish kill.
On a lighter note, I appreciated the nice bible you sent me. I put it on my night stand next to the Quran. I will carry it over the next few weeks when I make carefully orchestrated appearances at churches to convince those dumb voters that I am not a Muslin. The folks at Fox News started that rumor. The First Lady got pretty steamed about it. She practically ripped off her burqa in anger.
No matter what happens in the elections, you will always be known as the first Madam Speaker of the House. Some day there be another woman in that job. But I doubt she will be a Madam. That title belongs to only you.
In closing, let me propose a coupling that might benefit us both. The Presidential Dog "Bo" is feeling a little frisky these days. Perhaps, "Bo" could mate with your bitch, "Tox." Imagine the offspring of "Bo"-"Tox."
Your Teleprompter in Chief,
O.H. Bama
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