Opinion

Felix Salmon

Rattner’s Overhaul

Felix Salmon
Oct 31, 2010 23:00 UTC

I’m a fan of Steve Rattner’s book about the auto bailout, Overhaul, and I’m also a fan of Malcom Gladwell’s very tough review of it.

There are lots of reasons to read the book: it’s a surprisingly candid and open account of life in the early days of Obama’s White House, and Rattner is happy going public with a lot of information that the White House officials in question simply assumed was tacitly off the record. He’s also happy being very rude about lots of people who rubbed him the wrong way, from Sheila Bair to former GM CFO Ray Young.

Gladwell’s main problem with the book is Rattner’s view of former GM CEO Rick Wagoner. That view is pretty simple: Wagoner had overseen the decline of GM to the point at which the only choices were bankruptcy, bailout, or both. He therefore had to go. Gladwell, by contrast, is much more charitable: he sees Wagoner as a man who fundamentally transformed GM into a competitive powerhouse, and who, in doing so, did a certain amount of unfortunate collateral damage to GM’s balance sheet.

Gladwell’s view understates the financial nightmare that was GM pre-bailout: at one point its book value was negative to the tune of $98 per share. Wagoner caused billions of dollars in unnecessary bankruptcy costs by refusing to consider or prepare for any kind of bankruptcy at all, despite the fact that his quarterly SEC statements had been showing that GM was insolvent since 2006.

On the other hand, Rattner is comically out-of-touch when it comes to running companies: finance is all that he cares about, and it’s a very narrow view of what corporate finance can and should be, too. Let’s see if you can detect a pattern here.

On Ron Bloom: “Unlike most aspiring labor activists, he went to Harvard Business School”

On Rick Wagoner: “By most accounts, he had been a golden boy at GM. After graduating from Duke University and Harvard Business School, he’d begun as an analyst”

On Harry Wilson: “Harry had been the first in his family to earn a college degree, from Harvard, and he’d gone on to earn an MBA at Harvard Business School.”

On Sadiq Malik: “a skinny, intense Pakistani American who had graduated near the top of his class at Dartmouth, taken a Harvard MBA, and worked at the Blackstone Group”

On Bob Lutz: “Harry had admired Lutz ever since hearing him speak at Harvard Business School”

On Rob Fraser: “resumed his position at his private equity firm and then matriculated at Harvard Business School”

No other institution gets this kind of obeisance in the book: Harvard gets 17 citations in an Amazon search, while Princeton and Yale get precisely one between them. And it seems that what Rattner loves about HBS — and his own Team Auto taskforce more generally — is the way that everything can be reduced to clever questions about capital structure, and decisions can then be made in an incredibly dispassionate and pseudoacademic way. For instance, the bailout of Chrysler was a very close-run thing, and the company could easily have been left to die. Here’s how it was saved:

Larry pressed us to attach probabilities to our recommendations and countered with odds of his own… he confessed that as we gave our answers, he was discounting our probabilities based on what he thought we would say… Plainly, Larry was loving this debate…

Larry called for a show of hands. His question was precise: “If you assume that the probability is 50 percent or greater that Chrysler would survive for five years, would you save it?”

This says volumes about Larry Summers: how he acts, how he thinks, how he operates politically. And it’s clear from this book that it was Summers, rather than Rattner, who ultimately made the decisions which would then be presented to the president for sign-off. (Geithner was nominally involved too, but let Summers take the wheel when it came to Team Auto.)

The fact is that neither Rattner nor Summers nor just about anybody else in Team Auto knew anything much about Detroit, about car manufacturing, or about running industrial companies. They did know that GM’s treasury was a shambolic organization which could require weeks to find out how much money it had — so they judged the treasury operation, because they were good at doing that, and then they damned the whole company by association.

There’s another fact, too, though — which is that Team Auto did wonders for the future health and sustainability of GM by forcing it into bankruptcy and extinguishing large chunks of its actual and contingent liabilities. Gladwell is far too grudging here:

Team Auto was engaged in an act of financial engineering: it used the power of the bankruptcy process to rid G.M. of some of the liabilities that had been holding it back. This was cleverly and swiftly done. It was badly needed. But, at the end of the day, cleaning up a balance sheet is cleaning up a balance sheet.

In fact, it’s not remotely as easy as that, and the restructuring needed some very inventive bankruptcy lawyers, some extremely hard-nosed negotiators, the jettisoning of a lot of conventional wisdom about the abilities of automakers to withstand bankruptcy — and, of course, many billions of taxpayer dollars.

That Rattner’s team managed not one but two insanely complex bankruptcies in a hitherto unimaginably short timeframe is a real and noteworthy achievement of the Obama administration. Rattner is right about that. But Gladwell’s got a good point too. This kind of biz-school restructuring is easy to show off about. What’s hard is making millions of cars which are so good that the picky US consumer will buy them rather than the incredibly well-made competition — and making a profit by doing so. Eliminating GM’s monstrous debt burden by sending it through bankruptcy was a necessary step in getting there. But it’s not at heart what managing a company like GM is or should be about.

COMMENT

“I think that the past three years have demonstrated that the banking and auto sectors in the US are more alike than different. My guess is that the MBS investors are going to end up viewing the banks’ products as similar to the auto products discussed by @Curmudgeon – they fall apart after four years so you have to buy a new one.”

Brilliant! :)

Posted by yr2009 | Report as abusive

from Justin Fox:

Economists respond to incentives

Oct 29, 2010 21:28 UTC

Here's my short take, following on Barbara's post Wednesday, on economists:

1. The single most valuable and durable lesson of economics is that incentives matter. Monetary incentives don't always matter more than other motivations, and sometimes people's behavior regarding money is a little nutty. But as an organizing principle for a social science, incentives matter is pretty good.

2. Economists respond to incentives, too. Real and potential financial awards affect what they choose to study, how they go about it, and what conclusions they draw. This doesn't mean all economists are evil sellouts. It means they're human beings.

3. For people who purport to believe that incentives matter, economists can be strangely touchy when anyone brings up point No. 2.

COMMENT

yep, economists are people who respond to incentives; as a result, they believe everyone else does…

Posted by rjs0 | Report as abusive

from Barbara Kiviat:

Volcker’s rule on rules

Oct 29, 2010 17:29 UTC

Former Fed chairman Paul Volcker has some advice for financial regulators writing rules to define new limits on banks' ability to trade for their own accounts: be as vague as possible. At least that's the message in this WSJ piece by Deborah Solomon (for which, to be upfront, Volcker declined to comment).

At first pass, that sounds a little nuts. If Dodd-Frank means to clamp down on proprietary trading at institutions that receive federal guarantees (like deposit insurance), then why wouldn't regulations spell out, as specifically as possible, what those banks aren't allowed to do? Solomon explains:

Mr. Volcker's concern, according to several people familiar with the matter, is that narrow or prescriptive rules would invite gamesmanship on the part of banks and could allow firms to evade the rule's intent. Already, some banks and their lobbyists are seeking to sway regulators and encourage them to narrowly define certain types of trading activities, according to government officials.

By being less specific, the logic goes, regulators will better be able to adapt to changing circumstances—and to banks' tactics. Solomon compares this approach to the one the government already employs in the realm of money laundering. Another good example is insider trading law. It's never been particularly clear what is, and what isn't, insider trading. This can lead to bumpy prosecutions, but it does serve the important purpose of preserving flexibility. Leaving a fair amount of case-by-case judgment in the system lets regulators tap what Michael Polanyi called "tacit knowledge," or the thing Supreme Court Justice Potter Stewart was getting at when he wrote of pornography: ""I shall not today attempt further to define the kinds of material I understand to be embraced within that shorthand description; and perhaps I could never succeed in intelligibly doing so. But I know it when I see it."

In this Bloomberg column, Michael Lewis gives us reason to think this might be a good way to go. He writes:

The banks have no intention of ceasing their prop trading. They are merely disguising the activity, by giving it some other name. A former employee of JPMorgan, for instance, wrote to say that the unit he recently worked for, called the Chief Investment Office, advertised itself largely as a hedging operation but was in fact making massive bets with JPMorgan’s capital. And it would of course continue to do so. JPMorgan didn’t respond to a request for comment.

One conclusion: to have the best chance of ferreting out prop trading, regulators are going to need a lot of leeway in deciding what they go after.

Interestingly, though, Lewis comes to a different conclusion. He doesn't opt for vague rules, but rather very strict, draconian ones that would change the face of finance more dramatically than most people probably imagine Dodd-Frank doing:

There’s a simple, straightforward way… to construe the Dodd-Frank language, and it would reform Wall Street in a single stroke: to ban any sort of position-taking at the giant publicly owned banks… If that means that Goldman Sachs is no longer allowed to make markets in corporate bonds, so be it. You can be Charles Schwab, and advise investors; or you can be Citadel, and run trading positions. But if you are Citadel you will be privately owned. And if you blow up your firm, you will blow up yourself in the bargain.

If you have little faith in regulators' ability to keep up with Wall Street innovation* behavior and to use flexible rules to their fullest, then maybe Lewis's approach is the smarter one. I'm sympathetic to that argument; I've voted to chop up overly large and entwined financial institutions before. But I don't know if at this point that path is politically feasible. Dodd-Frank could have broken up the banks, but it didn't. And I'm not sure that since the bill passed, the political clout of the be-tough-on-Wall-Street camp has grown.

Yet that camp is, admirably, still fighting. A group of senators, led by Carl Levin, recently wrote a letter to the new Financial Stability Oversight Council, urging regulators to really crack down and not let Dodd-Frank get watered down in the rule-making. It's a good thing for people to hear, but so is Volcker's message—that often the toughest rules are the ones that specifically prohibit the least.

*I regret having used this word, so I have gone back and changed it.

from Justin Fox:

Is all quantitative financial risk management bunk?

Oct 28, 2010 15:43 UTC

The comments to my post here last week on Benoit Mandelbrot were for the most part significantly more sophisticated than the post itself. So, since my days at Chez Felix are numbered, I thought I should avail myself of the brilliance of his commenters while I still can to ask a very basic question: Is the practice of quantitative financial risk management one big con job?

That's one of the key arguments in Amar Bhidé's new book A Call for Judgment: Sensible Finance for a Dynamic Economy. He says in the book that the approach to risk management that grew out of Harry Markowitz's portfolio theory, Bill Sharpe's Capital Asset Pricing Model (yes, I know it wasn't just his, but he was the first to publish) and Fischer Black, Myron Scholes, and Robert Merton's option-pricing model—all of which netted Nobels for their (still-living) creators—is fatally flawed because it depends on predictions about future volatility, and no one knows how to predict future volatility.

The funny thing is that the Markowitz/Sharpe/Black/Scholes/Merton approach arose in part out of the realization that it's really hard to predict the trajectory of an individual stock—and that even if you did figure it out, others would start to imitate you, eventually affecting the the trajectory of the stock and rendering your predictions invalid. A stock's future volatility might not be easy to predict, they reasoned, but it was much easier to predict than the stock's future return. Bhidé turns that argument on its head:

Forming reasonable, subjective estimates of a stock's return can be a challenging exercise. Predicting whether and by how much IBM's price will appreciate requires researching and thinking about several factors such as its project plans, relationships with customers, existing and potential competitors, exchange rates, and the strength of the economy. With volatility, because there is no sensible way to think about what it should be, there is almost no choice but to take the "easy way out": Calculate historical volatility. Shade to taste.

Now the objection one often hears from those in the financial world is that practitioners have moved on from the simple volatility models of the 1960s and 1970s. And that they have. But the models they use still assume that they know how to predict volatility, right? Is there evidence that anybody actually knows how to do that—not just short-term but through an entire market cycle? Or is everybody just shading to taste?

Another issue with quantitative risk models that even many of their creators acknowledge is that when a particular method of modeling risk becomes popular enough, it begins to affect market behavior and creates new risks that the model cannot see. I think this may have been a major contributing factor to every financial panic of the past 25 years, starting with the 1987 crash. (Well, except maybe the dot-com bubble and crash. I can't really blame that on risk models. Although it is perhaps telling that the dot-com collapse wasn't really a panic.)

You can't prove the cause-and-effect, but it is clear that financial risk models have repeatedly broken down after years of seeming success. Which shouldn't be all that surprising: It is in the nature of financial markets that every good (that is, money-making) idea eventually becomes a bad one. The difference between a momentum-investing formula and a risk-management model is that a risk-management model is supposed to, um, manage risk. And so I guess the question remains: Are all financial risk-management models ultimately a joke?

I really don't know the answer. That's why I'm asking you folks.

COMMENT

Also here is an article from the author of the second best finmath book:

http://www.math.cmu.edu/users/shreve/Mod elRisk.pdf

Deals briefly with the real issue with the gaussian copula, also there is a pretty good book:

http://www.amazon.co.uk/Credit-Models-Cr isis-Journey-Correlations/dp/0470665661/ ref=sr_1_1?ie=UTF8&qid=1288711933&sr=8-1

Overpriced but short and sweet.

Posted by Danny_Black | Report as abusive

from Justin Fox:

What Gretchen Morgenson is good for

Oct 27, 2010 20:12 UTC

New York Times business columnist Gretchen Morgenson is Terry Gross's guest on Fresh Air today. I caught about ten minutes of the conversation while out driving this afternoon, and it reminded me of why I'm not a big fan of Gretchen Morgenson's work. She's just not very interesting to listen to, or read: Too flat, too broad-brush, too predictable, lacking in cleverness and nuance and curiosity. That's why I'd take a Joe Nocera column (or a Felix Salmon blog post) any day over a Morgenson offering.

But then talk on Fresh Air turned to the ongoing brouhaha over foreclosures of homes where it's not clear that the foreclosing bank can actually prove that it owns the mortgage. Morgenson pointed out that this is a problem she's been writing about since 2007. Has she been writing about it well? Not necessarily. Morgenson's columns and articles on this and other topics have been a favorite Felix target through the years. And remember how Tanta, Calculated Risk's late, lamented mortgage-banker co-blogger, used to get absolutely apoplectic over Morgenson's real-estate-related work. The anger comes about because Morgenson so often gets basic facts wrong, seemingly misunderstands the businesses she covers, offers assertions that she fails to back up with evidence—that kind of stuff.

Which makes it only more aggravating when she so often eventually turns out to have been far closer to right than her critics were. For example, Morgenson claimed in March 2007 that the mortgage market was headed for a big crisis. What a wild assertion! As one Felix Salmon wrote immediately afterward: "Morgenson adduces no evidence whatsoever that any crisis is looming at all." (I figure it's okay to pick on Felix for this because I came very close to writing exactly the same thing at the time but was just too lazy to actually do it.)

If this had just happened once, okay. But Morgenson was also among the first and most persistent on the case of the Wall Street scandals of the early 2000s. She also really spotlighted aspects of the financial crisis of the past few years that the rest of the media only got around to months later. Forget Nouriel Roubini or Bob Shiller; Gretchen Morgenson may be the most reliable early warning device around.

How does she accomplish this? I think it's partly that the same bullheadedness and simplistic approach that drives readers like me and Felix crazy actually enables Morgenson to zero in on targets that those more interested in nuance totally miss. It's also that Morgenson suffuses her work with a sort of high moral dudgeon—and disgust for the evil ways of Wall Street—that more "sophisticated" journalists won't allow themselves. The results speak for themselves: Sometimes battering rams work better than X-Acto knives. And I say that as someone who vastly prefers X-Acto knives (stylistically speaking).

COMMENT

When I said …”In other words, perhaps the chauvenist pigs are only digging for truffles.” in a previous comment, it was not to call Justin a Chauvenist pig.

It was meant to be an amusing way to finesse the Dan Hess remark into sublime humour (which obviously failed, but I was laughing)

It was supposed to convey that sometimes, when you are only looking for the one thing (details/truffles) you miss out on the important stuff. EG: On the not so funny side, the pilots who are focused on the faulty instrument as the plane slams into the side of a mountain.

So I apologize if you felt that i was going there when wasn’t, but not for the sounds like ‘sour grapes.’ That I meant=)

Posted by hsvkitty | Report as abusive

How to clean up the muddy mortgage mess

Oct 27, 2010 18:01 UTC

Felix Salmon has written extensively about the ongoing mortgage crisis, from the problems with mortgage bonds to the impact of foreclosures on bank stocks. Here is a new video in which Felix offers a potential solution, in the form of principal reduction.

Posted by James Ledbetter.

COMMENT

DannyBlack, I’m also very nervous about anything that weakens the principle of “rule of law”. (The concept of “moral hazard” is related.)

It is important that the rules be made clear when a deal is signed. It is important that the rules be followed. It is very important that the rules not be significantly changed after the fact.

We’ve had violations of the first two of those principles already, I would hate to see it compounded by tossing the third in the dustbin as well.

When talking about “underwater mortgages” (and I’ve heard that some 25% are technically underwater at this point?) we should remember that the market value of a home is only relevant when you refinance or move. There are many underwater homeowners who continue to make payments because for THEM nothing has changed. They still have jobs, still have income, and still wish to continue living in that house. Any sweeping restructuring of mortgages risks tripling the size of the problem.

Posted by TFF | Report as abusive

from Barbara Kiviat:

Why economists are(n’t) the answer to all our problems

Oct 27, 2010 13:45 UTC

Over at the Curious Capitalist, my former colleague Steve Gandel asks me to react to this NYT article about how economists manage to disagree on such fundamental questions as whether the government should spend more or less money in response to economic malaise. I've been perplexed by this sort of thing before. In this post from August, I worried about the influence of ideology, and then decided that maybe the bigger take-away is that we should spend less time listening to economists, who, after all, represent just one possible lens onto the world of human behavior, decision-making and social dynamics:

[T]he economy is as much a product of sociology and policy as it is pure-form economics. Yet we'd not expect a sociologist or a political scientist to be able to write a computer model to accurately capture system-wide decision-making. The conclusion I've come to: while economists may have an important perspective on whether it's time for stimulus or austerity, maybe we should stop looking to them as if they are people who are in the ultimate position to know.

After rereading my post, I started to wonder how economics and its famously flawed assumption of rational behavior came to dominate the discussion. If confidence is such an important part of getting the economy growing again, then why aren't we taking advice from legions of social psychologists? If multinational corporations are back to profitability but still not adding jobs, then why aren't we asking the organizational behavior experts for their models?

In search of an answer, I took a cue from Steve: I called Justin. He had all sorts of interesting things to say, like how economists after WWI thought long and hard about why they hadn't played a larger role in the war effort (ostensibly hoping to do better next time), and how in the 1960s economists moved to get everyone working from the same basic model partly because a unified voice would be more influential. That is to say, economics won out over other social sciences, at least in part, because the discipline got its act together. (Justin may fill in more of the details later, but, if not, you've always got his history-packed book to turn to.)

So what do we do now that economics doesn't, in fact, have all the answers? Well, some of us try to shoe-horn other approaches, like psychology, back into the picture. And some of us denounce academic economics altogether. But most of us just listen to the debate among economists and don't quite understand how it can be happening because these are the guys and gals who are supposed to know this stuff. We have so completely absorbed the economic world view in so many aspects of our lives—public policy is determined by cost-benefit analysis, doing good in the world has become return on social investment, efficiency has morphed from the best way to reach a goal to the goal itself—that it doesn't even occur to us that there could be a more illustrative starting point for asking a question or framing a debate.

That's one idea, anyway. The economists disagree because they don't have the tools to see the big picture. And most of us can't see that.

COMMENT

I remember a guy (Bob Mcnamara) who, if not an actual economist, sure was a guy who liked to use numbers and analysis. He was the best and brightest.
The only people demonstrated to know less than he were the ones who listened to him.

Posted by fresnodan | Report as abusive

from Barbara Kiviat:

The U.S. Chamber of Commerce is not the same thing as American business

Oct 25, 2010 21:00 UTC

I don't understand why everyone is so surprised to find out that large corporations are funneling massive amounts of money to the U.S. Chamber of Commerce. Last week's NYT report has been making the Internet rounds, and while I appreciate the point that the Chamber is much more partisan than its non-profit status would suggest—70 of the Chamber's 93 midterm campaign ads either support Republican candidates or attack their opponents, despite the Chamber's promise to the Federal Election Commission that it only talks about issues—there's also a curious amount of wonderment at big-company donations. Yes, Wall Street firms sent millions of dollars to the Chamber when financial re-regulation was on the table, and the insurance industry got out its checkbook when it was time to talk healthcare reform. Why would anyone be surprised?

The more counterintuitive and telling story, which the Times only flicks at, is how unsatisfied certain businesspeople are growing with the U.S. Chamber. A couple of weeks ago, New Hampshire's Greater Hudson Chamber of Commerce decided to break ties with the national organization, because, in the words of the Nashua Telegraph:

[I]t felt recent political advertisements by the national chamber in support of specific parties and candidates were in “direct conflict” with the foundation of the Hudson chamber. Jerry Mayotte, executive vice president of the Greater Hudson Chamber of Commerce, said the Hudson group is a nonpartisan organization. He said he can’t remember the last time they chose not to renew their membership.

Last year, the Chamber of Commerce of Eastern Connecticut did the same thing. Tony Sheridan, the group's president and CEO recently explained why:

"My issue with the national chamber is their willingness to take a very narrow slice of a piece of complicated legislation - and it's generally the most negative spin they're taking, like health care, when we all know that the health-care system is broken - and claim that the sky is falling, instead of using the money to educate people," Sheridan said.

During financial re-reform, a number of local and regional chambers, including the South Carolina Small Business Chamber of Commerce and the U.S. Women's Chamber of Commerce, tried to get out a similar message when it came to the proposed Consumer Finance Protection Agency. In one op-ed, the CEO of the U.S. Women's Chamber wrote:

The U.S. Women’s Chamber of Commerce disagrees with the U.S. Chamber’s big business scare tactics regarding the benefits of a strong, independent Consumer Federal Protection Agency.  The U.S. Chamber would have small businesses believe that protecting the rights of bank and non-bank lenders to deceive, manipulate and bet against small businesses is good for the economy and good for our future – all evidence to the contrary.

The big take-away: the U.S. Chamber of Commerce is not the same thing as American business. It's easy for the U.S. Chamber—in fact, it's easy for any well-funded lobbying group—to say that they speak for an entire population. That's probably never going to be true. And in the case of the U.S. Chamber, it seems to be less true with each passing day.

COMMENT

First of all, corporations don’t decide anything, they don’t speak. THE people who manage them do. If the CEO, and top management of a corporation decide to fund one political view or another, they are making that decision based on their personal bias. So, the average stockholder is funding the CEO’s personal political views.

A CEO should not have the right to use corporate money to fund his own political agenda. A Wall Street banker can use corporate money to weaken financial regulation, loot the company for his own personal gain, and the stockholder is left to pay the bill for the lobbying, and a falling share price.

IN the middle of this decade, the management of big financials were looting the companies, manipulating profit and loss statements to give themselves huge compensation packages. When the house of cards came apart, the stockholders were left with almost nothing, but the guys at the top still kept their ill gotten gains.

One other point. We need to quit lumping big financials with the rest of corporate America. There are good corporations out there in manufacturing, energy, agriculture, etc, who are doing things that make Americans lives better. Do not paint them with the same brush as the people who run the big financials on Wall Street.

Posted by randymiller | Report as abusive

from Justin Fox:

What’s really behind that $1.3 trillion deficit?

Oct 25, 2010 17:51 UTC

The Treasury Department reported on Oct. 15 that the deficit in fiscal 2010, which ended Sept. 30, was $1.294 trillion. That's less than FY 2009's $1.416 trillion, but it's still really really big. Why is it so big, though? Is it because of all that stimulus and bailout spending? Or is something else going on?

To find out, I created a fantasy world. I figured out how fast federal spending and revenue grew over the last business cycle, from 2000 through 2007, and calculated where we'd be today if those growth rates had continued through 2010. I was originally motivated to do this for a commentary that's supposed to air tomorrow night on Nightly Business Report. But I'm thinking there's not a huge overlap between Felix Salmon readers and Nightly Business Report viewers, so I'll go ahead and share what I learned.

In my no-financial-crisis, no-bailout, no-recession, no-stimulus scenario, spending kept growing at 6.22% a year, and revenue kept growing at 3.45%. You can see from the difference between the two numbers that this was an unsustainable path. But it clearly could have been sustained for a few more years.

Where would it have left us in fiscal 2010? With $2.843 trillion in federal revenue and $3.270 trillion in spending, leaving a deficit of $427 billion. The actual revenue and spending totals for 2010 were $2.162 trillion and $3.456 trillion. So spending was $186 billion higher than if we'd stuck to the trend, and revenue was $681 billion lower. In other words, the giant deficit is mainly the result of the collapse in tax receipts brought on by the recession, not the increase in spending. Nice to know, huh?

COMMENT

FifthDecade –

You are right that spending under Bush was quite out of hand. He is no longer our president.

“Democrats were voted in to dig the US out of the hole they had inherited from Bush”

Exactly. So imagine the dismay Americans feel when the solution to ‘dig the US out of the hole’ is to grab a bigger shovel!

Americans are very remorseful about their spending spree in the ’00s and they don’t want any more debt. Is it any wonder they are so upset that the government is trying to keep the party going?

Folks like to hold Clinton up as an example of fiscal rectitude but it is worth noting that the GOP class of ’94 forced responsibility in a brutal faceoff that literally shut down the Federal government for weeks. In a beautiful outcome for the left, Clinton got credit for look brilliant for the rest of his term as the economy improved.

Yes, Bush has blame for economic problems, but he is not running for any office anywhere. The present desire of Americans is for fiscal discipline and the party in power just passed an huge new entitlement because they are absolutely, completely insane.

And I voted for Obama because I an optimist. Hope springs eternal!

Posted by DanHess | Report as abusive
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