RUSH: Ladies and gentlemen, a quick question here. When did Barney Frank become the face of the Democrat Party? This guy is getting more face time than Pelosi. The amount of face time he’s getting is equivalent to what Obama’s getting.
Now, if Barney Frank is the face of the Democrat Party, what are we really looking at when we see his face? Seriously, now. Fifty billion, hundred billion, even that may not be enough to keep people in their homes. Let’s see if I understand this. If you cannot pay your mortgage, no matter who you are, no matter the circumstances of getting the mortgage, you will forever keep your home. Is that how the loan process works now? Seriously, folks, stick with me on this. If you can’t pay your mortgage and Obama’s going to have a big announcement on this Tuesday or Wednesday in Phoenix, if you can’t pay your mortgage, no matter who you are, no matter the circumstances of how you got the mortgage, you will forever keep your home? But then we are told that the banks screwed up, that they make stupid decisions that have cost them billions of dollars. The banks made stupid decisions, right? But here now the banks are told that they must maintain loans that are not paid. So the banks are blamed for making stupid decisions, Barney Frank comes along and orders them to continue to make stupid decisions, that the federal government is going to bail out the people to whom they stupidly lent money.
These are the same fools, by the way, the same fools who 30 years ago demanded that banks issue these bad loans, are demanding now that the banks maintain bad loans. You see, folks, if you’re a new listener here on Presidents Day, you have to understand the housing crisis is not brought to you by the Bush administration, and it’s not brought to you solely by the banks. It’s brought to you by Jimmy Carter, something called the Community Development Act that barely got a ripple of a start with Carter, but Clinton really juiced it, and it was all under the premise of affordable housing, that every American should have the opportunity to experience the American dream, which has always been defined as owning your own home. So the Community Redevelopment Act, ACORN, community agitators, all put pressure on banks to loan money to people who couldn’t pay it back. This became the subprime mortgage market: people who were lent money who had no prayer of paying it back, even after any cursory examination of their financial situation indicated they would not be able to pay it back, they were still required.
Janet Reno, when she was attorney general, pressured these banks with all kinds of harassing investigations if they didn’t comply. So the very government now that says we’re going to bail out anybody who borrowed money who can’t pay it back for any reason now says the banks made stupid lending decisions are now gonna keep the banks, force the banks to continue to maintain loans that are not paid, which is a continuation of the problem in the first place. Right under our eyes, right before our eyes, right under our noses, the reason the problem occurred is being repeated! Only this time it’s not being hidden. This time it’s right out in the open with Barney Frank proudly saying, $50 billion won’t be enough, a hundred billion, even if we have to go higher. It’s identical. The banks after being railed against and now bailed out, and their executives being told what they can and can’t spend money on, what they can and can’t pay themselves, same people 30 years ago demanded that banks issue these bad loans are demanding the banks maintain the bad loans.
So the thing that caused the problem is being repeated right front of our eyes. And the thing you have to understand is these are not business decisions; these are not market decisions; these are pure political decisions because the government is running the banks. No wonder the credit markets aren’t lending, no wonder there’s no confidence on Wall Street, for crying out loud, they’re being forced — just last week before we left on Friday it was JP Morgan Chase, and what was the other bank? JP Morgan Chase and Citigroup said they’re going to suspend foreclosures, that is, reclaiming houses that people can’t pay the mortgage on, until Geithner and Obama come up with their plan. The Dow Jones Industrial Average is down over 2,000 points since Obama’s election. Let’s go to the audio sound bites. We have some fascinating stuff from CNBC. Last Friday on the Kudlow Report, Kudlow talking with Charlie Gasparino of CNBC about the bank rescue plan, and they play this bite of Senator Chris Dodd from the Senate floor.
DODD: We’re in the deepest economic crisis in the lifetime of any living American. And they’re worried about their pay. Our system of economy is at risk these days and we’ll be judged by history as to whether or not we can respond intelligently to it.
RUSH: Kudlow says to Gasparino, ‘These horrible people, Dodd says they’re worried about their pay, Charlie, imagine that. How materialistic.’
GASPARINO: If this little thing that he snuck in there at the last minute last night in the stimulus bill does make it into the final draft of the legislation, it’s going to change forever the way Wall Streeters are compensated. What he’s doing is saying that he’s capping the bonuses, so what he’s essentially saying, and it’s capped at a pretty low level, for the top 25 guys, if you’re at a bank that received more than $500 million of TARP funds, which is just about every major bank, you can only make like a $200,000 bonus or a $100,000 bonus. What he’s mandating, Larry, is huge salaries.
RUSH: This is Gasparino’s theory for how they’ll overcome the restrictions on bonuses. They’ll just pay themselves salaries now and that’s where Barney Frank said, ‘Wait a minute now. We want some of that money back if you have a down year.’ And Kudlow says, ‘I don’t think Wall Street cares much about the stimulus plan, but I think they do care a lot about mortgages.’
GASPARINO: They don’t care about the stimulus plan. They know it’s a joke. Most of the people I talk to know it’s a joke. Over the summer I wrote a column that basically said, underlying a lot of the skittishness in the market is fears about Obama’s economics, you know, his theories about economics. I will tell you now that I was called like a — I was called Kudlowesque in that.
KUDLOW: You are Kudlowesque. That’s why we love you.
GASPARINO: And I’m proud to be. But you want to know something? Look at where the stock market is today.
KUDLOW: I understand.
GASPARINO: The market is scared of these guys.
KUDLOW: I understand.
GASPARINO: Because they don’t think they know what they’re doing.
RUSH: They know exactly what they’re doing. See, that’s the dirty little secret here. The Obama administration knows exactly what they are doing. This is an all-out assault on our capitalist system. There is no other way to describe this. And it has the support of practically everybody in the Drive-By Media, to the extent that they even understand what’s happening here. And, of course, the Democrat Party is all together. Finally Kudlow says, ‘Geithner has fled to Rome. He just got out of the country. Now he’s doing it under the guise of the G7 meeting, but I think he’s fleeing the American media and the stock market. When’s he coming home? When’s he going to announce the so-called details of this toxic asset rescue, the secondary securitization market rescue? Maybe this mortgage bailout rescue, when is it all going to happen, Charlie?’
GASPARINO: Well, at that meeting, that’s all everybody was asking for, when are we going to get some details? ‘Cause nobody really knows. And I will tell you this, Larry, if Tim Geithner was a conservative Republican he would have had a bullet in the back of his head. He wouldn’t have had columnists championing him because his debut was so bad, it was so horrible, and it sent the exact wrong message.
RUSH: It did especially after the night before at the press conference, Obama had built the expectations up so high, ‘Well, I can’t step on my Treasury secretary, he’s going to have a detailed plan.’ Geithner goes out there and looks worse than Dan Quayle ever looked, deer in the headlights and so forth, came off as a little authoritarian, which all these people are.
RUSH: CNBC. Again, I’m not sure exactly. Let’s see, when was this? I think it was Friday. It might have been earlier this morning, however. I’m not sure. I was sent a review, a partial transcript of a discussion on CNBC today about the Porkulus plan. It’s a good conversation about it. It’s all about picking winners and losers, how the wheels are coming off anyway. The interviews are with Larry Kudlow. The guests here are Dan Clifton of Strategas Research and Donald Luskin. He doesn’t think the thing’s going to work at all, but what this points up to, Dan Clifton here says his firm has researched the Porkulus bill, and companies that lobby as a greater percentage of their revenue outperform the market. Companies that lobby, as a greater percentage of their revenue, outperform the market. So we now have investment firms charting how much companies lobby as a measure of how successful they will be.
Not whether they make a good product, not what their balance sheet looks like, not how good their management team is. It’s all about how much damn money they spend lobbying Congress. So you have financial advisors, to illustrate this, charting a company — and, by the way, Microsoft is just going great guns. Microsoft is said because of the stimulus to make out very well. Well, guess what Microsoft is doing in big numbers ever since their anti-trust suit, and that’s lobbying. So this investment house advises clients to pick stocks, companies, based on how much money they spend lobbying, because they will be the winners, because Washington is picking the winners via legislation.
It has nothing to do with balance sheets, how good a product is, how well the company’s run or any of this. He talks about how he tells his clients to invest in ‘winners’ from the stimulus package regardless how flawed the stimulus package is. One of the areas that he says that people ought to invest in is wind and solar ’cause Obama’s moving in that direction, that Obama will do anything to make his alternative energy plan a success. So you have an investment counselor telling his clients to forget how bad the policy is, invest in the policy winners. So essentially Obama is picking market winners. Kudlow said, ‘Well, what about Boone Pickens and his wind program?’ And Dan Clifton says he will, and GE is going to be a winner, because they’re in the wind turbine business.
So invest in GE because they’re spending a lot of money lobbying to get done what Obama wants to get done. I have been… you know, this makes all kinds of sense to me, when I have watched all of these businesses go totally ‘green.’ I thought, ‘It’s just PR. It’s just marketing. All they want to do is capitalize on the public sentiment that buys into global warming.’ It turns out that’s not it at all. They figure out what political leaders want, they figure political leaders are going to get what they want, and so they lobby to be a part of what the political leaders’ desires are, in this case wind. This guy’s theory is that Boone Pickens is going to make out like a bandit — and of course if he does, it means Nancy Pelosi will, because Nancy Pelosi has invested in his company. And her husband, Pelosi and her husband.
Now for Boone Pickens’ company to actually do well on the bottom line — which of course may not now be necessary for Boone to get a lot of investment in his company. He may not have to ever do anything to get a lot of investment, just that Obama’s all for it, and if Boone does a lot of lobbying for that, then he’ll get some investors. So Boone may not even need gasoline to get back up to four bucks a gallon to succeed. I watched this interview. ‘What an idiot I am!’ Economics is so simple. It’s so simple, it’s complicated, and I shoulda figured this out on my own. I apologize. Now, this guy Donald Luskin disagrees with me. He says forget all of this and go buy gold ’cause we’re heading down the chutes and there’s nothing anybody can do to stop it. So they balanced it out.
RUSH: All right, now, here’s the other side to this. The other side is that, ‘Hey, somebody is going to lobby the government for some plan that a leader wants, like Obama? Invest in those companies.’ That is what Dan Clifton, Strategas Research, said Friday on CNBC with Larry Kudlow. Don Luskin, who, by the way, is chief investment officer of Trend Macrolytics, (it says here ‘an innovative investor for 30 years, frequent contributor to CNBC and National Review.’) Don Luskin also spoke with Larry Kudlow. He doesn’t think this is going to work at all. The stimulus isn’t gonna work because it will screw up the economy so bad that even Obama’s winners will be losers. He says, ‘Buy gold. I’m not going to dignify this nonsense, this winners in this green energy stuff. It’s common sense. Even if you subsidize losing ideas, you still have unprofitable companies.’
That’s true, but what if they keep getting propped up? What if they keep getting bailed out? What the hell are we doing now but bailing out the losers? It’s exactly what we’re doing. So what if they keep getting bailed out by people like Obama? He said, ‘Maybe the winners in the stimulus bill will beat the market but if the wheels of the government come off and it goes down 30%, it’s not going to help to beat that kind of market,’ is what Luskin says. I think the first part of this is, to me, somewhat interesting with how lobbying is now being looked at to determine in what company you should invest in terms of buying stock.
But all this is just minutia that obscures what’s really happening here, and that’s we’re losing our country. We’re losing the country you and I grew up with. If this goes on unabated, your kids are not going to recognize it, for certain. They’re not going to have the liberty and the freedom to engage in the pursuit of opportunity and prosperity that we all had. There isn’t going to be any prosperity to speak of — and whatever prosperity there is, is going to be limited by government, in terms of salary companies, who knows what else. This is nothing more than a blatant attack on the capitalist system, a blatant attack on liberty and freedom. It’s about stimulating the Obama presidency, stimulating the Democrat Party.
RUSH: You remember I was telling you what I saw on CNBC, I read a transcript summary. Here are the two sound bites. This is Dan Clifton of Strategas Research Partners, and Larry Kudlow says, ‘There’s a big energy play, wind, solar. Rate these two real quickly. Do you have a winner, a loser, or what?’
CLIFTON: There’s a new grant program, so the wing thesis works. I look at Vestas Wind, I look at First Solar, I look at SunPower. Obama is moving us into a direction, whether you agree with it or not, where it is going to be renewable energy. That’s where they are pushing. They will do anything to get there. There is going to be new demand in legislation. The wind thesis works at this point with these two pieces of legislation. We are creating the infrastructure for this renewable energy. That’s GE, those are the tech companies that have to write the software to create this type of new electricity.
KUDLOW: All right, let’s go down, a couple of others, quicky here. Health care, IT, Microsoft, is that true?
CLIFTON: I would say the same thing. In each of these issues, whether it is renewable energy, health care, information technology, we can go right down the line, Microsoft has positioned themselves to be the big winner in this stimulus package ’cause they are writing the software to make this happen.
RUSH: Now, this is the guy that is advising his investment clients not to look at the performance of the company or the balance sheet but rather how much lobbying they are doing, because if they are doing a lot of lobbying they’re going to get government contracts and it doesn’t matter whether they succeed or not, they’re going to have a lot of investment and the stock price is going to go up. This brought the following reaction from Donald Luskin. Kudlow says, ‘Don Luskin, what do you make of this rundown, buddy?’
LUSKIN: Larry, I’m not even going to dignify this mess by pretending that there are going to be winners. This green energy stuff, come on, throwing subsidies at stupid, unprofitable ideas isn’t going to make stupid unprofitable companies profitable. It will just make them subsidized for a year. The only winner in this stimulus bill is gold because this is leading straight to inflation.
RUSH: Donald Luskin putting the truth to — Snerdley told me during the break he thinks the economy is going to rebound in four years and the big challenge that we’re going to have is making sure Obama doesn’t get the credit for it.