The Pope's Answer to AIDS: A Sermon

So the Pope makes another incongruous statement, this time about how condoms are not the answer for the prevention of AIDS in Africa, and I thought we were well into the 21st century! The moral stance on the use of condoms in church doctrine is easily becoming the last straw for many Catholics, including those who might not have been initially swayed by the whole pedophilic scandals at the beginning of the decade.

I don’t see any other religious leader out there making the same outrageous statements. I bet, if you were to look inside this pope’s private trunk you would find several items of dubious character: a flagellation whip, the Harry Potter invisible cloak, the last surviving copy of The Last Inquisitor, and the manuscript autobiography of Adolf Hitler, which nobody knows exists.

To think that Africa’s AIDS pandemic can be reduced to a version of a Sunday sermon and serve as a tool to advance erroneous church doctrine is completely out touch, out of context, and out of this world. Does he have the guts to tell Africans that mosquito nets are not the answer to malaria deaths, and that digging holes to bury themselves is a better solution? I guess his PR department is AIG insured, and in that case, the bonuses are due anyway.

Desperate times call for drastic measures

Well, here we are again. I guess it must be foolishness, because shrewdness it is not. The Administration’s saga on economic recovery earnestness continues to show a lack of traction under the current regulatory parameters of the financial system. Last night’s 60 Minutes interview with Ben Bernake, the Fed Chairman, raises the stakes even higher and confirms our worst fears: Without a carefully constructed banking bailout, the success of the recovery and stimulus bill Congress just passed is zero to none.

This comes amidst the latest financial scandal from the corridors of Wall Street. Insurance giant AIG, which has received the largest government bailout in US history, has announced it will pay $165 million in bonuses from taxpayer bailout money as part of a total payout reportedly valued at $400 million. Needless to say, AIG’s last quarter earnings showed the biggest loss in US corporate history, which of course set the stock market on a downward spin for the first week of March. Adding to the fire, is that public trust in bailouts is beginning to erode, because there is nothing more damaging and harder to restore in an economic crisis, than public perception and trust, and this is turning to be Mr. Obama’s biggest and most lucrative headache.

Taxpayers are beginning to feel that the government is helpless in finding a way out of this capitalist jungle. But holding companies accountable is not flying with Wall Street, even as many of them keep accepting bailout money. Treasury Secretary Geithner seems to have underestimated the Amazonian arrogance of corporate America, as he could not find a way for AIG to reconsider the bonus payouts. The outrage has been coming from all fronts. New York Attorney General Andrew Cuomo has requested AIG to release the names and positions of the recipients of bonuses or face being subpoenaed.

Mr. Obama has to find a way to stop the foolishness and put his government into the driver’s seat. The bonuses represent a tiny symptomatic gesture of the total conceptual failure of his government to hand out money with no structurally sound accountability system in place. By this I mean, attaching legislation to bailout funds that would modify employees’ contracts to reflect the reality on the ground: That bonuses are to be paid if and only a company earns profit. Why is this Administration so scared of bending its muscles with Wall Street when they got us into this mess in the first place? AIG’s decision to pay bonuses will be the measuring stick of this Administration’s failure to act swiftly and boldly in correcting the capitalist renegades that refuse to play by the rules.

In the end, Mr. Obama should feel like he did everything he could to avert a second depression. He should start firing people in Wall Street; he should pass legislation that would put caps on financial instruments like CDS’s (credit default swaps), which are becoming the lethal protagonists of the current credit crisis in this saga of sagas; and finally he should start announcing plans for a banking rescue that would tie all the loose ends Wall Street giants are undoing with massive payouts and corporate gimmicks.

The Case for Nationalization

This has been a very difficult week for the Obama administration. The Geithner/Summers’ economic plan, mid-way from being implemented, has come under a half-sensical attack. On one side, Republicans have unitedly opposed it as a crazy spending spree with a socialist agenda, while a vast majority of economists, many now working for Team Obama, still think it is not enough to stimulate and grow the economy. Aside from a lack of bipartisan support in Washington, many economists and analysts now believe that the real cancer of this recession lies in the banking system, and if left to its own devices, it will burn through the recovery money like gambling junkies in a casino.

Take for instance the largest banks in the US: Wells Fargo, J. P. Morgan Chase, Citibank, Bank of America and HSBC. Economists and anyone out there in their right mind know that at this point, even if questions of fairness are raised at the notion that we are feeding the capitalist canker we are trying to eradicate, the government cannot allow these giants to fail. Why? Because the cost would be unthinkable and more damaging to consumers, investors, taxpayers and ultimately the American economy. So what is Obama to do? He should carefully consider plans to temporarily nationalize the banks, by breaking them into manageable sizes. By buying their toxic assets and controlling the freefall of their stocks and the increase in net-loss derivatives he can more easily restore lending. Capping CEO pay and re-establishing some regulations is a good start, but it is not enough to restore consumer confidence.

Last year, when the Bush administration bailed out the banks the first time, the purpose of the bailout was to free up credit and allow for banks to beef up their vaults. However, instead of taking the money to address their liquidity problems, they went out on a shopping spree. Wells Fargo acquired Wachovia, J.P. Morgan bought Washington Mutual and Bank of America seized Merrill Lynch. Is there something wrong with this picture? Absolutely. These bailouts left out the government’s conditions and specifications to interpretation. This time, the Obama administration has to be stricter. How about creating a banking czar? Republicans will never agree to this, even if they cannot put together one sound economic policy and present it to the American people. But the alternative is bleaker: throwing money at the banking industry without some strings attached can make Obama seem like an appeaser, not a reformer.

Even if the American people are willing to turn a cold shoulder to Republican criticism because of their lack of better and interesting ideas, time is of the essence if the Administration is to push for a bigger, bolder and desperately needed banking rescue. Unemployment is at a 25-year high, consumer spending has been at a record low, foreign investment has dried up, and confidence is running out in the financial markets. The American people should understand that the only way to erase these assets from the balance sheets is by buying up shares. At the end, the public should realize that they are the only ones that stand to gain.