Obama is not ‘inheriting’ this economy

November 13, 2008 at 4:26 pm Leave a comment

There are already moves to position Obama as having to ‘take over a bad economy left behind by his predecessor Bush’.  While this provides a convenient excuse for Obama to blame Bush for any failures in turning the economy around, let us be clear at the outset – Obama had a hand in shaping the economy that he is taking over.

The current financial and economic turmoil was initiated primarily by the crisis caused by sub-prime and mortgage lending.

While in Chicago, Obama demonstrated with Acorn members in front of banks and filed lawsuits against the banks forcing them to lend to people who would not be eligible for loans in normal circumstances.  It does not require judgement, just common sense, to know that giving loans to people who cannnot pay it back is not a good idea.  Business is in business to be profitable – so they would look to cut their risks from these bad loans.  That led to the packaging, securitization and selling of these loans onto other investors and the Fannie/Freddie Maes.

The immense systemic risk posed to the financial system by Fannie and Freddie as well as the securitization of mortgages was well evident back in 2003.  Obama was in the Senate in 2005 when efforts were made to reform Fannie and Freddie and reduce the risk posed by these entities to the financial system.  He chose to stand by and be ‘present’ while the effort died at the hand of the democrats.  Either he did not have the judgement to realize the risks and therefore did not support the effort or he did not have the political backbone to demonstrate his leadership/judgement against his fellow democrats.  Or he was too busy campaigning for the President’s office to do the job he was being paid for.

While he was in the Senate, he could have taken a more forceful stand against government spending and the deficits but there was no leadership from him on this matter either.  It is Congress that controls the budget, not the President.  Indeed, he was happier to be increasing the spending with earmarks to his constituents.

And, yes, we, the people, also had a role in shaping this economy (or economic crisis).  We borrowed recklessly, spent recklessly, assumed that house prices would continue to go up at rates far outpacing any economic or income growth and we could use them like our personal ATMs.

So for him or his supporters to attempt to claim that he is the victim of circumstances brought about by his predecessor’s policies is blatant ‘spinning’ of the truth.  He, along with other congress members, Democrat or Republic, as well as the people, had a role in shaping the economic conditions that he will be ‘taking over’.

Now he will be trying to clean up a mess that he had some role in creating.


Entry filed under: The land of life, liberty and the pursuit of happiness.

Curious timing of Obama’s resignation

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