Letter to Obama's Economic Team

To President-Elect Obama's Economic Recovery Team,

I am very concerned about the direction President-Elect Obama seems to be headed as he tries to address what might be the biggest economic crisis the world has ever seen. Obama stated in his December 6 Youtube address that we cannot just throw money at the problem, but that is exactly what he has been doing so far. He supported the massive bailout of the financial system. He is supporting the bailout of the automakers. Bloated institutions with toxic balance sheets need to go bankrupt so we can clear the toxic debt out of the system. Shareholders of unsound businesses should be wiped out; bondholders should take losses. Instead, Obama is perpetuating a system where profits are privatized, and losses are socialized. His strategy is basically welfare for the elite.

Citibank and Bear Stearns should have gone under. Our country has hundreds of small banks and credit unions that have made wise lending decisions that would be thrilled to take market share away from the mega-banks, but Obama is picking winners and the winners are the most politically connected. If we need big banks to finance large-scale investment, then the Government should set up new banks with clean balance sheets, not prop up these worthless institutions with poor corporate leadership.

As for the automakers, the Big Three should allowed to fail. They should pursue a "prepackaged" bankruptcy that allows them to clear their debt, renegotiate with labor, and get back to making cars. If they have too many factories, they should sell some of them at fire-sale prices to up-and-coming battery-electric and plug-in hybrid manufactures. That is how the market is supposed to work. There is no way to save jobs if fewer people are buying cars! Bailout or no bailout, some jobs will be cut because demand is shrinking!

Finally, I am very disheartened that Obama made no mention of green-energy in the overview of his jobs plan. Solar, wind, and geothermal are the future of sustainable American energy. These technologies are quickly approaching "grid-parity" on an unsubsidized basis, but their progress will be stopped in its tracks without significant government support over the next few years.

If we keep throwing money away by constantly bailing out the well-connected entrenched elite and the dysfunctional corporations they own and run, the government may not have enough resources left over to create a better future for this country.

Obama will bankrupt our future if he continues down this road. How are our grandchildren ever going to dig themselves out of this mess? Obama says he welcomes diverse opinions about how to solve this problem, yet he hasn't invited anyone to join his economic team who actually saw this mess coming. People who don't understand the root causes cannot provide working solutions. Please check out Mike Shedlock's blog Mish's Global Economic Trend Analysis. Mr. Shedlock has been warning about this economic tsunami for years, but no one in power has listened. He understands the root of the problem and how to fix it. Here's a hint: it's not bailing out the shareholders, bondholders and executives of failed corporations.

I pray Obama stays true to his word and seeks guidance from those who saw this mess coming and understand that the root of the problem is too much debt. The solution cannot be for the government to try to Socialize the debt, as that just turns private debt into public debt. The debt MUST be allowed to be destroyed.

Thank you,
Underdog