Mish's Open Letter to President Obama

Okay, Mish and I are not politically aligned, but I like his approach and I think this Obama budget is going to be a powder keg in both parties. Full of democratic policy initiatives, much like the economic stimulus package, this budget is going to drive Americans and politicians crazy with images of overusing political capital.

In classic Mish fashion he captures the key points:

With all due respect Mr. President, Tim Geithner and Ben Bernanke are offering the same policies as President Bush and Secretary Paulson. Those policies are to bail out banks regardless of cost to taxpayers. Mr. President, it’s hard enough to overlook Geithner’s tax indiscretions. Mr. President, it is harder still. if not impossible, to ignore the fact that neither Geithner nor Bernanke saw this coming. Yet amazingly they are both cock sure of the solution. Even more amazing is the fact that solution changes every day.

More patchwork, fix-it, gadgetry going on. The programs, terminology, and acronyms created during this crisis would over-stuff an Oxford English Dictionary. One of the major challenges I see is that the programs are so numerous, overlapping, and tedious that the likelihood of any effectively being implemented equals close to zero percent (e.g., Hope for Homeownership).

With all due respect Mr. President, your budget proposal is the same big government spending as we saw under President Bush. The only difference is you promised more spending and bigger government, while President Bush promised less government and less spending and failed to deliver on either count.

An ode to the glory days of Reaganomics. Can I have an Amen for fiscal constraint?

With all due respect Mr. President, you and Congress want to force banks to lend when banks (by not lending) are acting responsibly for the first time in a decade. Mr, President can you please tell us who banks are supposed to lend to? Do we need any more Home Depots? Pizza Huts? Strip malls? Nail salons? Auto dealerships? What Mr. President? What? And why should banks be lending when unemployment is rising and lending risks right along with it?

I won’t entirely debate this point, but the capital constraint is reserving against illiquid assets. Ironically where we started this journey. What would have happened if Paulson hadn’t gotten cold feet on TARP?

With all due respect Mr. President, Fannie Mae Reported A Fourth Quarter Loss Of $25.2 Billion. Can you please tell us where you draw the line on taxpayer bailouts of Fannie Mae? Freddie Mac? AIG? Mr. President is there a line anywhere, on anything? If there is, we would appreciate knowing where it is.

With all due respect Mr. President, how can you talk about reducing the budget deficit while proposing the biggest budget in history?

This is my BIG question.

Thanks Mish! I eagerly await the President’s response. Please post

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