Dear Wall Street, RW and complicit media: You helped screw up the economy, now get out of the way.

As Obama Unveils Lending Program, Wall Street Journal Says His Time Is Up

Today, the Wall Street Journal editorial board decided that President Barack Obama has already had ample time to fix the economy, and can now be blamed for all of our economic woes:


So we had eight years to get into this mess and five weeks to get out? The Journal’s sole factor for determining Obama’s success was the fact that the Dow sunk below 7,000 yesterday. However, the Journal neglected to mention the administration’s housing plan — aimed at stemming the foreclosure crisis at the heart of the economic downturn — and also left out the new details of the administration’s public-private investment fund for the banks that were reported in the Journal’s own news pages.

These programs are part of Obama’s response to the mess President George Bush left behind, and the administration announced another facet today: the Term Asset-Backed Securities Loan Facility (TALF).

The goal for TALF is to boost lending to consumers and small businesses in a couple of ways. First, it will allow companies like GE Finance — which are already holding highly-rated asset-backed loans (like student or auto loans) — to use those loans as collateral for obtaining new federal funding, which it will turn around and lend right back out. Second, it will encourage hedge funds and private equity firms to go out and buy some of these loans, which they can then give to the Fed in return for funding to purchase more loans. This will create a market for loan securities, and as more are bought lending should get rolling again.

While there is a risk to the taxpayer, the loans eligible for the program included are relatively safe, as they have to be originated after October 2007 and AAA rated (which is the highest rating of credit worthiness). A push by the mortgage industry to include less stable mortgage backed securities has thus far been rebuffed.

The plan definitely isn’t perfect, and the federal government is going to be in the business of subsidizing hedge fund activities for a while (the program ends in December 2009). The Fed will have to carefully watch to ensure that firms receiving this money use it to buy more securities, and don’t run off to do something else. But at the end of the day, reviving credit is one more in a necessary series of steps toward economic recovery. And this recovery is going to take some time, a concept that the Journal evidently has a hard time grasping.

Climate of Change

By PAUL KRUGMAN
Published: February 27, 2009

Elections have consequences. President Obama’s new budget represents a huge break, not just with the policies of the past eight years, but with policy trends over the past 30 years. If he can get anything like the plan he announced on Thursday through Congress, he will set America on a fundamentally new course.

The budget will, among other things, come as a huge relief to Democrats who were starting to feel a bit of postpartisan depression. The stimulus bill that Congress passed may have been too weak and too focused on tax cuts. The administration’s refusal to get tough on the banks may be deeply disappointing. But fears that Mr. Obama would sacrifice progressive priorities in his budget plans, and satisfy himself with fiddling around the edges of the tax system, have now been banished.

For this budget allocates $634 billion over the next decade for health reform. That’s not enough to pay for universal coverage, but it’s an impressive start. And Mr. Obama plans to pay for health reform, not just with higher taxes on the affluent, but by putting a halt to the creeping privatization of Medicare, eliminating overpayments to insurance companies.

On another front, it’s also heartening to see that the budget projects $645 billion in revenues from the sale of emission allowances. After years of denial and delay by its predecessor, the Obama administration is signaling that it’s ready to take on climate change.

And these new priorities are laid out in a document whose clarity and plausibility seem almost incredible to those of us who grew accustomed to reading Bush-era budgets, which insulted our intelligence on every page. This is budgeting we can believe in.

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