Obama's economic clique and the Summers pick

By Frank Moraes 

When Obama and Clinton were running for the Democratic nomination for president, I tended to side with Obama. The reason was not one I've heard anyone else mention. My fear was that Clinton would be another George W. Bush, just on the left. By that I mean that she would have been to insular. I thought that Obama would be more broad in where he looked for input. But that hasn't been the case. Obama has been very insular. And when it comes to economic policy, it seems that the people he listens to are a group of New Democrat, pro-banking nitwits.

I've been thinking about this because of all the speculation about Larry Summers being nominated as Federal Reserve Chair. It isn't that Summers would make a terrible choice for the job. I have big problems with him, especially his strong dollar policies (under and then following Robert Rubin) while he was in the Clinton administration. But there are far worse candidates for the job. The big problem is: why would Obama be so keen on Summers?

The answer, I think, is just that Obama's insular economic decision making team is dominated by the kind of people who think that Larry Summers rocks. Obama could have just picked Janet Yellen, the current Vice Chairman of the Fed. She is extremely well qualified for the job and she is, as the pronoun indicates, a woman. Obama could have nominated arguably the best person for the job and also done something historic. Apparently, that didn't matter. Or more likely, that didn't even occur to Obama's economic clique.

It's pretty clear that a Summers nomination is not going to fly with most of the Democratic Party.

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Fed might as well have single mandate

By Frank Moraes

Matt Yglesias is very insightful about the Federal Reserve. Last year, he asked an incredibly important question, "If the unemployment and inflation rates were reversed, would the Fed do something about it?" The point is that the Federal Reserve has a dual mandate to keep both inflation and unemployment low. Yet all the Fed seems to care about is inflation. At the time he said that, inflation was 2% and unemployment was 8%. If it were the other ways around, the Fed would be working hard to cool the economy down. But they are perfectly happy with the way things were (and are).

There is some talk among conservatives that the Fed should have a single mandate: keep inflation low. The idea is that the Fed shouldn't worry about employment at all. Note that this is an idea that is designed to help the rich. Inflation hurts people who have a lot of money. Unemployment hurts people who have to work for a living. By saying that the Fed should only worry about inflation, the conservatives are telling us everything we need to know about them: they are policy hacks for the rich.

But today, Minnesota Senator Amy Klobuchar asked the Federal Reserve Chairman Ben Bernanke how the Fed would act differently if it did have the single mandate. Yglesias rightly noted that after much bobbing and weaving, the Fed chair said that he wouldn't do anything differently. And that's important, if not surprising. We have long known that the Fed didn't seem to think that 8% unemployment was anything to worry about. After all, none of the members of the Fed even know anyone who is out of a job.

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Ten ideas to fix the economy

By Frank Moraes

I have this strange idea that I don't care for Dylan Matthews over at WonkBlog. But I just looked at my writing over the last year, and I find I am always very impressed with his work. I know that from time to time, he falls into false equivalence and splitting-the-difference fallacies. But mostly he is a very good reporter who understands economics.

Last week, he wrote perhaps the best thing I have yet seen from him, "Ten Ways to Reduce Inequality Without Raising Tax Rates." He lists ways that will reduce inequality for "both sides to get what they want." That's reaching up to Ezra Klein-level adorableness. I am far too cynical to think that Republicans would ever go along with these ideas. The reason is simple: Republicans like inequality; they are as a rule against anything that is good for the country generally. (I would not have said this 30 years ago.)

  1. Make it easier to start and join unions. Oh, there's a proposal Republicans are going to jump on! This is a great idea. Unions are one of the big reasons why workers shared in the productivity gains after WWII for 30 years and their demise is one of the big reasons why workers have hardly shared at all in the gains of the last 30 years.
  2. Weaken the dollar. This is all about big dicks on both sides of the aisle. A weak dollar makes our exports more competitive. But those who already have wealth hate a weak dollar because it lowers what their wealth can buy. But this is a no-brainer: a weak dollar is good for the economy. Politicians like a strong dollar because it makes them think they are powerful. Or something.

3. Promote trade in highly-skilled professions. This is one that Dean Baker pushes. We have allowed globalization to hit low wage workers in manufacturing, but we continue to practice protectionism for doctors, lawyers, dentists, college professors, you name it. If we had a truly free market, workers would have less money, but they would need less to pay for things like healthcare and education.

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Same ol' Rubio plus "middle class"

By Frank Moraes

David Weigel posted an article at Slate yesterday, "Marco Rubio Mentions the Middle Class 35 Times in One Speech." But that's not really what it's about. But it does get to the heart of the matter. You see, Rubio mentioned the middle class, but never really engaged with the concept.

As I've noted before, this is par for the course when it comes to Republicans. Their idea of reaching out to groups that aren't already part of their coalition is to talk nice. There will be no changes to policy! I understand where they're coming from. Republicans have been very good over the past several decades at convincing people who have very contrary interests to vote for them anyway. Why wouldn't they think it will continue to work? And the sad thing is that they may well be right.

This is SOP: take traditional Republican positions and claim that they are good for the middle class. So Weigel notes that Rubio just reworks his standard speech except that "stuff that Republicans wanted to do already becomes stuff that will help 'the middle class.'" And just look at what that stuff is!

Rubio says, "Sound monetary policy would also encourage middle class job creation." This is just the old "job creator" canard dressed up. The Federal Reserve has a duel mandate: keep inflation low and employment high. But Republicans don't like this. They want the Fed to have a single mandate: keep inflation low. The claim is that this will help employment by helping the "job creators." This is supply-side economics: the money will tinkle down on the poor.


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Politics and treason: Republicans urge Bernanke to let economy tank, American people suffer

By Michael J.W. Stickings

As you may have heard, Congressional Republicans have sent a letter to Fed Chairman Ben Bernanke arguing that "further intervention by the Federal Reserve could exacerbate current problems or further harm the U.S. economy," that is, urging him to do nothing about the economy at this perilous time. As Matthew Yglesias puts it, they are basically urging him to keep unemployment high.

Here's how David Frum, a conservative (if also a renegade Republican) explains the letter:

I'm not shocked by much any more, but I am shocked by this: the leaders of one of the great parties in Congress calling on the Federal Reserve to tighten money in the throes of the most prolonged downturn since the Great Depression...

As is, we're looking at a continued economic slump, more unemployment, and more deleveraging via continuing catastrophic consumer default on mortgages, car loans, credit cards, and student aid. And now the GOP leadership is urging that the Federal Reserve make the catastrophe worse? To what end?

We know that Republicans these days usually put ideology (their extremist right-wing ideology) ahead of what's best for the American people. (Just think back to their hostage-taking of the country during the debt ceiling crisis.)

But this isn't so much about ideology, it seems, as it is about brute partisanship, about doing whatever it takes to get Republicans elected. If the economy continues its apparent downward trajectory, or at the very least if confidence remains low and uncertainty remains high, voters, they hope, will blame Obama and vote Republican next year.

Indeed, as Andrew Sullivan observes, looking at some deeply troubling poll numbers for the president (with independents in overwhelming numbers saying they'll vote against Obama), "the GOP's total intransigence seems to be paying off politically." What they're hoping is that even more intransigence, and getting the Fed to play along (as if the country's central bank should be a partisan extension of the Republican Party), will pay off even more at the polls. 

As Steve Benen writes:

Frum doesn't come right out and say it explicitly, but reading this, it appears Frum believes Republican leaders are — or at least may be — trying to hurt the economy on purpose, as part of a political strategy to undermine President Obama during a crisis.

In other words, Frum seems to be suggesting that the top GOP officials in Congress, including the entire party leadership, may be involved in some kind of sabotage campaign. That's no small charge.

No, but it appears to be an accurate one:

A few months ago, Kevin Drum wondered whether this will ever be "a serious talking point," adding, "No serious person in a position of real influence really wants to accuse an entire party of cynically trying to tank the economy, after all."

Given recent events — the debt-ceiling scandal, the GOP-driven downgrade, the Republican rejection of any efforts to boost the economy, the letter to Bernanke, the repeated threats of government shutdowns — it appears all kinds of serious people are at least entertaining the possibility.

We should do more than just entertain it. The evidence points to a concerted effort on the part of Republicans -- and not just any Republicans, the top Republicans on Capitol Hill, and perhaps also most of the Republicans seeking their party's presidential nomination -- to benefit politically from a weakened and (if they have their way) weakening economy, cruelly and callously to score political points at the expense not just of President Obama but of the American people, millions upon millions of whom are struggling to make it through this difficult time, if they are even in a position to struggle at all.

Personally, I call that treason. Do you have a better word for it?

Craziest Republican of the Day: Lee Bright

By Michael J.W. Stickings

South Carolina's Republican secessionist flag

Republicans really seem to miss the Confederacy. And they certainly seem to hate America. For yet another example of secessionist, anti-Washington thinking, let's head down to South Carolina, one of the craziest states in the union:

Continuing a pattern of attempts to assert South Carolina's independence from the federal government, State Sen. Lee Bright, R-Roebuck, has introduced legislation that backs the creation of a new state currency that could protect the financial stability of the Palmetto State in the event of a breakdown of the Federal Reserve System.

*****

"If there is an attempt to monetize the Fed we ought to at least have a study on record that could protect South Carolinians," Bright said in an interview Friday.

"If folks lose faith in the dollar, we need to have some kind of backup."

The legislation cites the rights reserved to states in the Constitution and Supreme Court rulings in making the case that South Carolina is within its rights to create its own currency.

Um... really? I'm hardly an expert on constitutional law, but Article I, Section 10 states no state shall "coin Money" or "emit Bills of Credit," which is to say, no state may have its own currency. Yes, a state may allow "gold and silver Coin" to be "a Tender in Payment of Debts," but as Madison explained in Federalist 44, "it may be observed that the same reasons which shew the necessity of denying to the States the power of regulating coin, prove with equal force that they ought not to be at liberty to substitute a paper medium in the place of coin. Had every State a right to regulate the value of its coin, there might be as many different currencies as States; and thus the intercourse among them would be impeded." That's pretty clear, it seems to me.

Now, Bright wants South Carolina's currency to be "gold or silver, or both," according to the legislation. His target is the federal reserve system, which is to say, the federal government (which is explicitly authorized by the Constitution (Article I, Section 8) to "coin Money" and "regulate the Value thereof," and one suspects that the Founding Fathers would not be amused.

But we're not there yet. "Bright's joint resolution calls for the creation of an eight-member joint subcommittee to study the proposal and submit a report to the General Assembly by Nov. 1."

As Phil Bailey, the director of the state Senate Democratic Caucus, quipped, "[i]t's a waste of time; it's a waste of resources. I mean who's paying for this study? Will they be paid in actual dollars or gold doubloons?"

Good question.

We used to call it "trust busting"

By Carl

Finally, some rational thought from the Federal Reserve:

"I think the disagreeable but sound thing to do regarding institutions that are TBTF [ed. note. Too Big To Fail] is to dismantle them over time into institutions that can be prudently managed and regulated across borders," he said. "And this should be done before the next financial crisis, because it surely cannot be done in the middle of a crisis."

Adam Smith would roll over in his grave to understand how perverted his elegant economic system, for all its initial flaws, has become, corrupted by the aggregation of money, power, and influence. He intended for small businesses to compete against each other to provide goods and services to consumers.

Indeed, our Founding Fathers had a great and long debate about even opening up a national bank which would serve as a 800 lb gorilla in the banking system to provide leverage against large business combinations attempting to wrest control of the national money supply. Inevitably, businesses of all sizes fail. It's just a question of time.

If a major multinational bank fails, it doesn't just hurt its employees and shareholders as we've seen. It threatens the entire nation, from its financial security right down to its physical security.

And that's not good.

"Too Big To Fail" is, quite simply, too big. Full stop.

We've discussed on this blog the marvels of distributed power generation. Money is power. Banks should be hacked down to manageable sizes that service the communities they are located in, with no direct entanglements in regions where they have no business being in, and I don't just mean geographic. I mean economic sectors, business sectors, even political sectors.

Will this harm the banking system? I don't think so. I think the system will evolve, perhaps parent corporations that can hold smaller banks under an umbrella, with governmental oversight to make sure there isn't as much crossover as there is now will be established.

One thing is certain: the banking system we have now is on the road to yet another collapse. Businesses fail. Industries fail. Banking will fail again unless we address the inherent flaws immediately.

(Cross-posted to Simply Left Behind.)

Show me the money

By Capt. Fogg

Sometimes I think Ron Paul's ideas may be too simplistic. This isn't one of them. In a Forbes editorial last week, Congressman Paul called for an audit of the Federal Reserve Bank. Paul of course, doesn't buy the idea that the Fed is necessary to keep inflation low and to promote growth. Truth be told, I've been of the opinion that it has played a part in all but eliminating the 10-15 year cycle of boom, panic and collapse that has plagued our economy since the Washington administration. Maybe it has, but maybe, as the Congressman claims, it's been the cause of inflation and a drag on growth. Maybe there's a better way, and I'm the first to admit I don't know.

The idea of an independent Fed is a fallacy, says the man from Texas. The allegedly independent Fed has:

far too much authority to make agreements with foreign governments and central banks, or create temporary liquidity facilities,

and, of course, the chairman and governors are appointed by the president and will reflect his politics, but the question of whether it is a good solution, a bad solution and more importantly whether we should have a Federal Reserve Bank at all isn't easy to answer and it isn't easy to discuss because of the political passions and partisanship involved. Everyone thinks he's an economist these days. Of course, supporter or detractor, we really don't know exactly what the Fed is doing anyway, not even today with the huge amounts of money being moved around in the dark.

"Let's have an audit" is Ron Paul's simple suggestion, and one would think that at a time when the government has the power to audit anyone; to investigate, spy on, wire tap, seize assets and records, imprison without charges, and even pour water up your nose, the answer would be "why the hell not?"

What possible arguments exist against this bill? Who opposes an audit of the Fed's activities and why?

asks Glenn Greenwald at Salon.com. "It would interfere with the Fed's independence," says Forbes in rebuttal, stressing that monetary policy is too complex for simple minded congressmen. Maybe it is, but maybe it's too complex for the Fed, too, and more than maybe; the lingering appearance of impropriety, if not incompetence, can finally be confirmed or dispelled by a little bit of transparency.

I wouldn't dare pass myself off as an economist and I'm not going to see this along party lines because I don't trust either side, particularly in this atmosphere of secrecy, but if an "independent" Fed means a Fed that operates in the dark, according to its own rules and politics, I'm with Congressman Paul. I want to see the books and you're going to have a lot of 'splainin' to do to talk me out of it.

Perhaps I can use the words of surveillance supporters against the government for once: if you've got nothing to hide, you've got nothing to fear.

(Cross-posted from Human Voices.)

Fasten your seatbelts

By Creature

AP:

The Federal Reserve on Wednesday sharply downgraded its projections for the country's economic performance this year, predicting the economy will actually shrink and unemployment will rise higher. [...]

The bleaker outlook represents the growing toll of the worst housing, credit and financial crises since the 1930s. All of those negative forces have plunged the nation into a recession, now in its second year.

The bill for Republican rule has yet to be paid.

Born in the USA?

By Carl

You know, I was born and raised in a free country, not a socialist, totalitarian state:

WASHINGTON — Having tried without success to unlock frozen credit markets, the Treasury Department is considering taking ownership stakes in many United States banks to try to restore confidence in the financial system, according to government officials.

Treasury officials say the just-passed $700 billion bailout bill gives them the authority to inject cash directly into banks that request it. Such a move would quickly strengthen banks' balance sheets and, officials hope, persuade them to resume lending. In return, the law gives the Treasury the right to take ownership positions in banks, including healthy ones.

Effectively, this gives the US Federal government the right to dictate bank policy, decisions, and effectively makes the US Government a shareholder, directly dependent on the quarterly profit of these firms.

This is not freedom, folks. Banks will be obligated to conform not just to the regulations and laws the US Congress has passed, as overseen (however poorly) by the executive branch, but to the caprices and whims of whatever man sits in oversight, presumably Hank Paulson, Treasury Secretary until January 20, 2009.

And who knows who, beyond that?

Now, that person may make good decisions, possibly. And he may influence better oversight and policy from the bank managers and boards themselves. But he also may make terrible decisions, terrible choices, and that alone makes this a really bad idea. After all, underpinning each and every bank in America, each and every investment bank in America, is the hard-earned money of the American worker. Those are your savings accounts that WaMu leveraged out to lend to mortgagers. Those are your checking accounts that Wachovia invested to earn themselves an extra few pennies in income.

And these were people who were supposed to be experts! Now turn this power over to someone with a political agenda.

Do you see where this might go? Imagine a bank in New York state that has lent money to build an abortion clinic, overseen by a McCain Treasury Secretary shoved down his throat like Sarah Palin was. Or a bank in Arkansas that's been forced by court order to lend money to minority clients for affordable housing, something guaranteed not to give the same return as a commercial property in Little Rock.

Suddenly, the government is not only in a position to dictate policy, but enforce it from inside, with little or no dissent. Imagine if in the 1950s, Dr. Martin Luther King Jr. had a credit card from a bank run by the government, the same government that tacitly allowed the states to determine segregation policies? Do you honestly think they would listen to a lone nutcase? Or would they yank that card, freeze hsi assets, and bring him to "justice"?

It gets worse, folks. Just the other day, there was talk that the Treasury Department and Federal Reserve might step in to buy commercial paper issued by companies like General Motors, or IBM, or Campbell's Soup. Now take those banking scenarios and extend them to buying food, clothing, shelter, or transportation.

And the bad news is capped off with the little notice but plaintive wail of individual states now unable to make good on their own bond issues, unable to make interest payments, unable to provide sufficient collateral for the funds they've borrowed, in danger of default.

Not only are they having trouble making good on these bonds, but they can't even refinance them because the credit markets are effectively closed until the bailout funds are made available, which may take months.

Careful readers of this blog will note that more than two years ago, I predicted the worst economic meltdown this nation, this world, has ever faced.

I underestimated the threat. This will make the Great Depression look like a picnic.

(Cross-posted to Simply Left Behind.)

A phenomenal nine days

By Carol Gee

The deal between the administration and Congress is far from set -- Even though it truly feels like the sky is falling, Congress needs to resist pressure that will be enormous to make an agreement. If a solution is to be found to end the crisis, it must be able to pass Congress. But some members of Congress have their backs up. The assumptions under which the financial sector and the administration are operating have been and continue to be seriously flawed, exhibiting a sense of entitlement that is amazing. "Democrats battling to add restrictions to $700 billion bailout" is at McClatchy today. To quote:

"The Bush administration has called on Congress to rubber-stamp its bailout legislation without serious debate or efforts to improve it. That will not happen," said Senate Majority Leader Harry Reid, D-Nev.

People close to the negotiations said that at least three areas of disagreement remained: limits on executive compensation at troubled firms, the terms of oversight of the Treasury's management of the bailout and whether taxpayers would gain an equity stake in companies that benefit from the bailout so that taxpayers could share in the firms' later profits.

Perhaps at the end of the week something will have happened, but many urge that the administration's plan has serious policy deficits, lacks accountability and likely badly underestimates what the actual bailout cost will be. "As Hill Debates Bailout, Wall St. Shifts Continue -- Paulson, GOP Oppose Democrats' Proposal to Limit Executive Pay." The Washington Post (9/23/08) has the story, from which I quote:

Senate Banking Committee Chair Christopher Dodd says it might be possible may meet approve the bailout by Friday, but it might take longer. . . . Congressional Democrats considering the Bush administration's emergency plan to shore up the U.S. financial system countered with their own demands yesterday, presenting draft legislation giving the government power to cut salaries of chief executives at firms that participate in the bailout and slash severance packages for their top management.

As an example of what some people in Congress are saying, I quote from an article Rep. Bernie Sanders wrote a few days ago (9/19/08) at The Huffington Post: "Billions for Bailouts! Who Pays?."# To quote:

The current financial crisis facing our country has been caused by the extreme right-wing economic policies pursued by the Bush administration. These policies, which include huge tax breaks for the rich, unfettered free trade and the wholesale deregulation of commerce, have resulted in a massive redistribution of wealth from the middle class to the very wealthy.

In my view, we need to go forward in addressing this financial crisis by insisting on four basic principles. . . Specifically, to pay for the bailout, which is estimated to cost up to $1 trillion, the government should:

1) The people who can best afford to pay and the people who have benefited most from Bush's economic policies are the people who should provide the funds for the bailout.

a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;
b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and
c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies' stock goes up.

(2) There must be a major economic recovery package which puts Americans to work at decent wages. . . (3) Legislation must be passed which undoes the damage caused by excessive de-regulation. . . (4) We must end the danger posed by companies that are "too big too fail," that is, companies whose failure would cause systemic harm to the U.S. economy.

A little heads up about what the Republicans will argue about the cause of the crisis comes from Josh Marshall* at TPM: Quote: "Democrats created the crisis by forcing banks to give too many loans to black people and other minorities." And Think Progress points out that "McCain Campaign Has Strong Ties To Corporate Lobbyists At Center Of Bailout."

This bears repeating as Congress and the White House negotiate -- "Meltdowns and Morality" by Ed Kilgore from The Democratic Strategist newsletter of 9/15/08. To quote:

As we all watch anxiously to see what the various maneuvers of the Fed and the Treasury and Wall Street mean for the rest of us, Matt Yglesias has made a simple but profound point that tends to get lost at times like these:

Unlike the guy who runs Lehman Brothers, the guys who clean the bathrooms in the Lehman Brothers office have, as best one can tell, been doing an excellent job. And yet if the company going under results in everyone involved losing their jobs, the guy who runs Lehman will wind up being better off than the guys who clean the bathrooms. This is because in the United States of America, hard work is the way to get ahead.

"Confronting Economic Meltdown" a forum -- The Washington Note's Steve Clemons is moderating a meeting this morning on at the New American Foundation. Participants include Congressman Walter Jones, former Senator Fritz Hollings and a panel of experts. (Link to streaming live). At the same time Ben Bernanke and Hank Paulson are testifying about the economy before a congress committee.

Background Stories -- a couple of analytical pieces for those who need to know a bit more.

• "Global financial meltdown"# comes from Global Research (9/19/08).


• A Yahoo! News story headlined - "Radical bailout plan has a jawdropping price tag."#

Hat Tip Key: Regular contributors of links to leads are "betmo"* and Jon#, who said, "The changes that Phil Gramm et.al. put in place are responsible for all this financial mess... Since we all are part owners of AIG, do we get a discount on our insurance?"

(Cross-posted at South by Southwest.)

That's easy for HIM to say!

By Carl

On the face of things, this sounds like a good idea:

Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages held by homeowners at risk of defaulting.

``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in a speech in Orlando, Florida today. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''

Approximately ten percent of mortgages in the country are in technical default, meaning that the amount owed to the lender exceeds the market value of the house. Figure another twenty percent beyond that are at or just around a default, meaning that if housing prices drop any further, they too would risk being in technical default. This doesn't take into account actual defaults, where families simply toss the keys on the table and walk away, unable to make anymore payments.

So would banks agree to this?

Probably not, except in limited circumstances. I can visualize a scenario where banks decided to reduce some mortgages on borrowers who they deemed to be good re-risks: in other words, likely to come back and borrow more, which would make up some of the reduction in loans receivable for the bank's balance sheets.

Widespread mortgage reductions simply ain't happening and we have only to look as far as the new Visa IPO to see how silly this talk is.

If you don't know about this, a consortium of banks owns the Visa credit card as a private joint venture amongst them. These banks are attempting to spin off the Visa division as a stand-alone public company.

Odd time to spin off a credit card company, don't you think? Consumer defaults on credit cards are at all-time highs, lending risk is skyrocketing, and people are maxed out on their credit cards. How could Visa possibly mine new territory now in order to make the IPO work?

Many reasons have been put forth for this, but underlying all these excuses seems to me a very simple piece of logic: the banks are seeing what Bernanke is seeing and taking self-serving action to support their own stock prices: they are off-loading bad debts not by expensing them and taking a hit to the bottom line, but by moving them into the new Visa entity, then spinning that off to basically drop dead and drop their debt off on the suckers who buy the stock.

This will give the banks the funds necessary to try to salvage their mortgage banking business, roughly $10 billion across the IPO.

Naturally, this makes the shareholders of the banks happy and they would not be pleased to see that money "squandered" on some bunch of suckers who borrowed more than they should have.

I guess it's easy to be bloodless when your blood runs cold anyway.

(Cross-posted to Simply Left Behind.)