Someone needs to explain Obama Economics

CitiCorp is extending a lower mortgage payment to unemployed borrowers who are at least sixty days behind on their mortgage payments. See details here. I suspect this policy did not come from their management but rather the Politburo known as the Obama administration. They of course trotted out the management to announce this policy so their grimy fingerprints would not be on it.

Lets look at this logically. Citi Corp is under management of the American Politburo because they are nearly insolvent. We are to believe that it is in the companies best interest to give a break to all of these people that are not paying their mortgage. In effect we are offering an incentive to stop paying your mortgage if you have lost your job. That way you can save up some money for sixty days and pay the new lower 'Obama Rate'. Traditional economics deals with incentives and trade offs. I suspect Obama Economics works under a different set of values. Perceived fairness doesn't amount to economic principles. The problem with fairness as an end goal is it can't be defined. To be fair to group A you necessarily have to punish group B. This always happens when the government is involved.

Sanjiv Das of Citi corp says "We expect that there will be thousands of people we can help". I was not aware that Citi Corp has been re-chartered as a welfare organization nor as a social work organization. How many people you can help is not what they are in business to do. They seem to have forgotten that in their wallowing in the mud with their masters in the Politburo. Let me make this crystal clear, I feel great empathy for those unemployed, I simply don't agree that the continued destruction of the banking industry is going to help them any time soon. We need these behemoth banks to:
1. Get Solvent
2. Start making prudent lending decisions.
3. Get out of bed with the Federal Government.

None of these things are going to happen by cutting peoples payments while bleeding red ink. Unemployed people need jobs more than anything else. Not compassion, not a shoulder to cry on by the government. Let me explain what I mean by that. It is the role of their families, friends, clergy if applicable, not the Government to offer support. These people need jobs. That will not happen as long as banks are acting as charity organizations. This move puts the three things I outlined above further back. As long as the banks are sinking deeper into government control they cannot start making prudent lending decisions.

Now for the Politburo (aka Obama Administration). They need to stop spreading panic. They need to stop throwing out trial balloons that spook investors. We need investors doing what they do. When every day there is a new policy announcement talking about how the government is going to change the fundamentals of the market, they simply will not do this. They will short the market, they will buy gold, they will invest in foreign markets. They simply will not invest in this country. In the Great Depression years, many industries that survived didn't have the option to move their businesses to more hospitable economies. Today they do. The President of course in true Democrat fashion will call them Benedict Arnold Corporations but they will move nonetheless. It is my belief he wants to spook markets. The more panic he can create the more control he can shift to the government. I believe this is part of his world view and will tolerate more bad times if he can see his end goals accomplished. That goal is government control of the economy.

Economic principles have not changed since Adam Smith. Variables in markets do, but principles don't. President Obama thinks he can change the principles just by saying so. by the way the Obama Administration will be referred to as the Politburo until they stop acting like a Politburo. I am not calling him a Communist nor even a Socialist. His economic actions however are similar to the role of the Politburo though so I will refer to him that way.