Joe Biden, Comedian-in-Chief

For all the flap about President Obama stiffing the Gridiron Club and sending Vice President Biden in his stead, I have to think that from an entertainment perspective, Joe Biden was a better choice; it certainly sounds like he put on a good show.  Here’s a partial transcript of his remarks, courtesy of the “Playbook” at Politico:

Axelrod really wanted me to do this on teleprompter—but I told him I’m much better when I wing it. . . . I know these evenings run long, so I’m going to be brief. Talk about the audacity of hope. . . . President Obama does send his greetings, though. He can’t be here tonight—because he’s busy getting ready for Easter. [Whisper] He thinks it’s about him. . . .I know that no president has missed his first Gridiron since Grover Cleveland. Of course, President Cleveland really did have better things to do on a Saturday night. When he was in the White House—he was married to a 21 year old woman. . . . I understand these are dark days for the newspaper business, but I hate it when people say that newspapers are obsolete. That’s totally untrue. I know from firsthand experience. I recently got a puppy, and you can’t housebreak a puppy on the Internet.Now let’s see: we have a Republican speaker who was born in Austria, and tonight’s Democratic speaker was born in Canada. Folks, this is Lou Dobbs’ worst nightmare. . . We are now two months into the Obama-Biden administration and the President and I have become extremely close. To give you an idea of how close we are, he told me that next year—maybe, just maybe—he’s going to give me his Blackberry e-mail address. . . . But the Obama Administration really is a good team. I am the experienced veteran. Rahm can be an enforcer. And Tim Geithner is always there when you need to borrow money, no questions asked.You know, I never realized just how much power Dick Cheney had until my first day on the job. I walked into my office, and you know how the outgoing president always leaves the incoming president a note in his desk? I opened my drawer and Dick Cheney had left me Barack Obama’s birth certificate. . . . I now realize that we have to be extra careful when we annunciate new policy ideas to make sure they don’t look like they’re personally motivated. For example, the other day there were a whole bunch of stories about the President’s hair going gray; the next day there’s a story about a Vice President who’s trying to grow new hair, and then the day after that, the two of us come out in favor of stem cell research. That looked bad.I’d like to address some of the things I said: Like when I said that “JOBS” is a three-letter word. I did say that. But I didn’t mean it literally. It’s like how, right now, most people think AIG is a four-letter word. . . . Or when I announced our stimulus package website, I was asked how you get to it: All I said was I didn’t know the website number. What I really meant to say was, “Ted Stevens didn’t tell me what tube the website is in.”

The Not-So-Great Communicator

You know you’re not having a good week when you build your reputation on your speaking ability and then you start getting headlines like this:Obama struggles as communicatorThe Note, 3/20/2009: So Special—Obama loses a week, as a great communicator doesn’t communicateBarack Obama Is a Terrible BoreBut that was the week that was, for President Obama—the week in which he took a pounding for closing a press award ceremony to the press.  I think Ed Morissey’s crack on his Special Olympics gaffe captures the spirit of his week as well as anything can:

You know how you can tell when a President has a bad day?  When his comparison of an American corporation to terrorists is the second-stupidest thing he said.

He’ll bounce back, I’m sure; every scorer has games where they just can’t put the ball in the hole.  But no question, the president was in a real shooting slump this week, and the shine is starting to wear off with the press—they’re actually starting to notice these things.  He’d best get back on his game in a hurry, or it’ll hurt him.

The Servant for the World

(Isaiah 49:1-13Romans 11:11-21)

Isaiah 48 ends in a difficult place, with a real conundrum. God is not abandoning his plan for the world, nor is he willing to turn away from his people; but they’ve rejected the part he had prepared for them, and he’s conceding their refusal to change, and to play that part. He’ll still deliver them from Babylon and return them to Jerusalem, but he will no longer depend on them, or entrust his mission to the nations to them. Chapter 48 brings their corporate part in that mission to a close. Which raises the question: if Plan A is dead, then what’s Plan B? What does God do now?

The answer to that question begins in chapter 49 with the reintroduction of the Servant of the LORD. We’ve seen the Servant just once so far, in chapter 42, where he was already associated with God’s mission to the Gentiles, but not in a way that ruled out Israel’s involvement in that mission. Here, however, things have shifted, and the Servant has clearly replaced Israel; God’s promises to his people will still be fulfilled, but they will be fulfilled in a different way than they might have been.

Some things, however, haven’t shifted at all. One is that God still has no intention of reaching the nations by force of conquest. Thus the Servant says of himself, “The LORD . . . made my mouth like a sharp sword.” Now, it’s true that anyone who says “The pen is mightier than the sword” has probably never been stabbed with either, but words do have power, and the word of God most of all; God himself promises in Isaiah 55:11, which we’ll read in a few weeks, that “my word . . . will not return to me empty, but will accomplish what I desire and achieve the purpose for which I sent it.” The Servant would speak that word which pierces until it divides soul from spirit and joints from marrow—which, in other words, is so sharp it can separate even the inseparable—and which judges our innermost thoughts and intentions, and that would be all he needed to carry out God’s mission; but bear in mind that the power of words is not a power which protects those who wield it. That’s why the First Amendment enshrines freedom of speech and freedom of the press, because those who stab with the pen tend to end up skewered by the sword. Such people also often don’t see the fruit of their labor, which is left to later generations to pick and enjoy.

Clearly this is the case for the Servant. God says to him, “You are my servant—you are the ideal Israel—in you I will glorify myself”; but the Servant looks around and thinks, “That’s not what I’m seeing.” He sees no result from anything he has done, except that he has become “deeply despised and abhorred by the nation”; all his efforts have brought him no reward, only suffering. In a world that measures us by our success, he is a clear failure, and so he says to himself, “I have labored to no purpose; I have spent my strength in vain and for nothing.”

And yet . . . and yet. The Servant knows God is with him, and he knows that God’s word carries with it his power. He knows that the Lord will always accomplish his purpose, and that he takes care of those who follow him, and so the Servant says, “But—the justice due me is with the LORD, and my reward is with my God.” I may be done wrong now, I may have to suffer injustice—but the justice due me is with the LORD, and this injustice won’t stand. I may suffer now for speaking the word of God and doing what he calls me to do—but the justice due me is with the LORD, and all will be made right in the end. I may be attacked and persecuted for the sake of the truth, but my reward is with my God, and in the end this will seem a small price to pay. My faithful service may go ignored and unappreciated in this life, but my reward is with my God, and he doesn’t miss a thing. All my efforts may seem to get me nowhere, but if I speak his word, whether I see any results or not, that is enough, because his word carries his power and it never fails of its purpose. Regardless of what I see around me today, the justice due me is with the LORD, and my reward is with my God—and he never fails to accomplish what he sets out to do.

That is the Servant’s consolation in the face of his apparent failure; and after all, isn’t it backed up by his own life and ministry? God established Israel for a purpose, to be his faithful servant to be his salvation to the whole earth, but Israel was a faithless servant and failed in that purpose; now, not only has God’s plan not been carried out, but Israel itself has gone so far off the rails that it has been carried off into exile. God’s people have become part of the problem, not part of the solution. But even if Israel has derailed itself, that doesn’t mean God’s plan has been derailed; rather, he has raised up a new, ideal Israel, a new Servant who will be faithful to follow God’s will, and the plan goes forward. God always accomplishes his purposes.

But does this mean that God is settling for second-best? Is the Servant merely Plan B? Did Israel’s disobedience force God to come up with a backup plan?

Yes and no; but mostly no. There’s something very interesting going on in verses 5 and 6, but our English translations treat it as a mistake that must be corrected; that’s the reason the NIV’s translation of verse 5 is so choppy. You see, what we have in verse 5 isn’t the Hebrew text as it stands—it’s an amended version. A straightforward reading of verses 5 and 6 runs like this:

Now the LORD, the one who made me from the womb 
                     to serve him,
             resolved to turn Jacob to him,
                     but Israel would not be gathered;
      yet I am honored in the eyes of the Lord,
             for my God has been my strength.
He said, “It is too small that you should be my servant
             to raise up the tribes of Jacob
             and to restore the survivors of Israel;
      I will make you a light to the nations,
             to be my salvation to the end of the earth.”

In other words, the Servant sees himself as a failure, because he’s been sent to turn the hearts of the Israelites back to God, and they’ve rejected him—they’ve refused to be gathered; and God says in response, “It’s OK—that’s too small a task for you anyway. We’ll move on with the mission: I will make you my light to the nations and my salvation to all the world.”

Now, later generations of Jewish scholars really didn’t like that, and so they looked for ways to amend it. They came up with a couple that are pretty iffy by normal standards, but when the alternative is unacceptable, you take the best you can get—and so they did. They decided that the word meaning “not”—in the Hebrew, it’s “lo”—should be read as another “lo” (which is actually spelled differently), which means “to him.” Reading the text that way requires making a preposition or two behave in an unusual fashion, and it gives you a passage that doesn’t really fit together very well—but it makes the meaning of the text much more palatable, and so they went with it, leaving a note in the margin to indicate that this is how this verse should be understood. Our English translations follow that note, and so we end up with the reading we have.

If you don’t follow that note, however, if you don’t try to explain away the Hebrew text but take it straightforwardly as written, this passage makes perfect sense; it fits better with the rest of what’s going on in this part of Isaiah, and it helps us to see connections to other parts of Scripture. In particular, it reveals a link between this passage and Romans 11. In Romans 9-11, Paul deals with the question of the future of the Jews in God’s plan; he struggles with the fact that so many of his own people had hardened their hearts and refused to accept the Messiah, and builds an argument that in the end, Israel will be redeemed. In our passage this morning, he argues that even the Jewish rejection of Jesus served a purpose, because it provided an opportunity for Gentiles to come into the people of God. Though Paul doesn’t base his argument on Isaiah 49, it seems that Isaiah was looking forward to that same point: Israel’s refusal to be gathered back to God created the opportunity for the Servant to be the light to the nations.

This is not, of course, to say that all Israel rejected God, which is clearly not the case; nor is it to say that God has rejected Israel—an idea which Paul refutes at length in Romans 11, finally making the statement in 11:26 that “all Israel will be saved.” It is, however, to say that even when the Jewish leaders and people failed to turn as a whole and accept Jesus as the Messiah, God had included that refusal in his plan and made it an occasion of blessing for the Gentiles—for us. Israel’s earlier disobedience, refusing to be a faithful servant, Israel’s later rejection of the Messiah—these may appear to have forced God to Plan B; but in truth, God already knew they were coming. That’s not what he wanted to happen, but he knew they would, and he allowed for it in his plan.

This is an important point: God’s sovereignty is such that we can’t prevent him from accomplishing his purposes. He allows us freedom to choose, and he uses whatever we do, whether we choose to obey him or not. When we disobey him, obviously that’s not part of his perfect will and plan for us, but it doesn’t disrupt what he’s doing or force him to change plans, because he knew what we would do before we did; and though it isn’t best, he’ll use it for good. There is no failure he cannot redeem, no sinner he cannot restore, because in everything and everyone, he is still Lord, and he is the God who grows white flowers from even the blackest roots. He will work through our obedience or through our disobedience; if we obey, that’s better for us and for all concerned, but whether we do or don’t, none of it catches him off guard. Even his Plan B is Plan A.

And in this case, his plan was to bring his people back to himself—not just Jews, but people from all the nations. Thus God’s word to the Servant in verse 6, which the NIV mistranslates a little: “I will make you a light for the Gentiles, to be my salvation to the ends of the earth.” The Servant will not be merely the messenger announcing God’s salvation, he will be the one in and through whom God will extend his salvation to all people everywhere. Thus he says in verse 8—and don’t be misled by the NIV’s heading there, this section is addressed to the Servant, and talking about more than just the exiles in Babylon—“I will give you as a covenant to the people.” God’s people had broken his covenant with them in pretty much every way imaginable, but he wasn’t willing to give up on it, and so he would offer it in a new form—the form of his Servant. Only this time, the covenant would extend beyond the descendants of Abraham; it would involve the re-turn of the Jews, yes, but it would also draw people from every point of the compass. Look at verse 12—“from afar” denotes the east, then around the compass—from the north, from the west (literally “the sea,” the Mediterranean), and from the south—“Sinim,” at the southern edge of Egypt, the southern border of the known civilized world.

From every direction, God promises his Servant, from every tribe, nation and language of the earth, people will come home to me because of what you have done. My mountains will become a highway for them, and my blessing will be so abundant that even the barren places will provide them enough food to keep going; they will have food and water, and they will be protected from the heat of the desert. This is the imagery and the promise of Isaiah 40, now opened to all nations, including us, by the work of the Servant, Jesus the Messiah; Jesus, whom he gave to us to be his salvation for the whole world. By the power of his word, through his faithfulness, through his suffering, Jesus became the salvation of God for us and the covenant of God with us, so that we too might be called children of God.

President Bush is a class act

This from Andrew Malcolm, in the Los Angeles Times’ “Top of the Ticket” blog:

Tuesday in Calgary, the 43rd president gave the first of about a dozen paid speeches arranged so far by the Washington Speakers Bureau on his 2009 schedule. And here’s what Bush told about 2,000 business persons about his successor, the 44th president:”There are plenty of critics in the arena. He deserves my silence.”Bush said something else too:”I love my country a lot more than I love politics. I think it is essential that he be helped in office.” . . .Bush also said if the new president wanted his help, “he’s welcome to call me.”

Apparently, Dick Cheney’s not very happy with him, but I think this is both gracious and wise of our most recent ex-president.  Good for him.

An all-time classic bad review

I don’t normally post food reviews—actually, let’s come right out and say it, I’ve never before posted a food review, and never thought to do so—and even if I did, I’d have no particular reason to post a review of a restaurant in England, seeing as I live on the wrong side of the Great Puddle; but the food reviewer for The Times of London, AA Gill, just had an absolute screaming fit in print, handing out a zero-star review that actually, if you can believe it, makes the grade sound at least one star too high.  The whole thing’s worth reading for sheer unintentional comedy value (though one does feel a certain sharp sympathy for Gill for having to endure the experience), but the opening in particular is beyond price:

You’d think they’d get it. You’d think, wouldn’t you, that when the world falls on your head, you might do something different. It’s like Moses. Comes down from the mountain, still smelling of burning bush, eyes revolving, levitating with the true believer’s va-va-voom, and he bellows: “God, the God—Mr God to you—just gave me these instructions, written in sodding marble, and it’s going to get us out of here. After 40 years in this hole, we’re going home. Milk and honey, vineyards, fedoras. Listen up.”Then a bloke at the back says: “Well now, hold on. Hold on. Maybe we shouldn’t be hasty in discarding the golden calf. Granted, it’s been a bit tricky recently, but it just needs a bit of tweaking. Have you ever thought that perhaps what we need is a bigger golden calf?”And that’s when Moses loses the plot, and throws a right strop. Not only did God give him celestial sat-nav, he also gave him a proper, Old Testament, fundamental fire-and-brimstone temper. (That and a foreskin, which was something of a novelty for the Jewish ladies.) Anyway, I’m with Moses. Not only the foreskin bit, but I’m just about to have an exodus tantrum.

Read the whole thing, and you’ll understand why . . .

What do love and grace have in common?

They’re both a lot harder than we think.  I’ve been arguing for a while now that grace is painfully difficult to accept, because free is a higher price than we want to pay; yesterday, Jared Wilson put up a superb post pointing out that love doesn’t really make things easier, either.  It’s short and I’d love to copy the whole thing, but then you wouldn’t have any incentive to go over and read it there, so I’ll excerpt it instead.

Why do we think it’s easier to love people than it is to just be religious?I’m not sure people who think and speak that way really even know what love is.Maybe the reason we don’t all, in the spirit of unity and rainbows, just set aside our differences and love each other is because it’s really freaking hard to do that. . . .It’s a lot easier to follow some rules everyone can see me keep than it is to truly, actually love people.Anybody can be on their best behavior. But to love someone who hates you? That takes Jesus and his cross.

Go read the whole thing.

Why America needs Sarah Palin, cont’d.

Other Republican governors, such as Louisiana’s Bobby Jindal and South Carolina’s Mark Sanford, raised concerns about the “stimulus” bill just as Gov. Palin did, and announced their intention not to take all the money alloted to their states; and when the time came, they followed through on their promise not to take all the money, though they did take most of it.  Gov. Palin, on the other hand, told the feds, “Sorry, but we only need about half of that.”Seriously.

Protesting federal “strings,” attached to stimulus funding, Gov. Sarah Palin said she doesn’t want nearly half the estimated $930 million Alaska is eligible for.”Will we chart our own course, or will Washington (D.C.) engineer it for us?” Palin said.She expected to file an appropriations bill this afternoon accepting about $251.5 million in stimulus funds, coupled with allocations of $262.6 million already requested for transportation and aviation projects for a total state take of about $514.1 million. . . .

The Anchorage Daily News had this quote from the governor explaining her reasoning:

We are not requesting funds intended to just grow government. We are not requesting more money for normal day to day operations of government as part of this economic stimulus package. In essence we say no to operating funds for more positions in government.

The written statement released by the governor’s office contains a pretty pointed critique of the “stimulus” bill and the reasoning behind it.

Governor Sarah Palin submitted her federal economic stimulus appropriation bill to legislators today to provide jobs and needed infrastructure improvements in Alaska under the American Recovery & Reinvestment Act (ARRA). Governor Palin is accepting just 55 percent of the available stimulus funds, all for capital projects. This amount includes the funds the state accepted last month for Department of Transportation projects.”We will request federal stimulus funds for capital projects that will create new jobs and expand the economy,” Governor Palin said. “We won’t be bound by federal strings in exchange for dollars, nor will we dig ourselves a deeper hole in two years when these federal funds are gone. For instance, in order to accept what look like attractive energy funds, our local communities would be required to adopt uniform building codes. Government would then be required to police those codes. These types of funds are not sensible for Alaska.”The legislation does not include funding requests for government operating programs. . . .”The law requires me to certify that the requests I forward for legislative approval will meet the requirements of the ARRA to create jobs and promote economic growth,” Governor Palin said. “Legitimately, I can only certify capital projects that are job-ready. Alaska has seen unprecedented increases in the level of state funding for education because that is our priority. I don’t want to automatically increase federal funding for education program growth, such as the National Endowment for the Arts, at a time when Alaska can’t afford to sustain that increase.””Simply expanding state government under this federal stimulus package creates an unrealistic expectation that the state will continue these programs when the federal funds are no longer available,” said Governor Palin. “Our nation is already over $11 trillion in debt; we can’t keep digging this hole.” . . .”Our desire is to foster a discussion about what is true stimulus and what is just more federal interference in Alaskans’ lives through the growth of government,” Governor Palin said. “We think stimulus items devoted to government agency growth and program expansion ought to be examined in light of the funding needs already being addressed with our pending budget requests.” . . .”We need to ensure that these stimulus dollars are used for job opportunities for Alaskans, while preserving the regular operating spending decisions through the normal budget process,” Governor Palin said.

Here’s video of her press conference:

For those who may have forgotten, since it’s been a while:  that’s what conservative government looks like.Update:  OK, there was another 14% of the money, allotted for Medicaid funding, which the state had already accepted; Gov. Palin’s actually only proposing to reject 31% of the “stimulus” money.  The point holds.

Notes on the AIG story

Make This One Go Viral: Obama’s Stimulus Bill Explicitly Grants AIG the Legal Right to Hand Out Unlimited Bonuses (Update)

This amendment provides an exception for contractually obligated bonuses agreed on before Feb. 11, 2009, which exempts the very AIG bonuses Obama is condemning every single chance he gets. The amendment is in the final version and is law.

And who’s responsible for that language being there? Sen. Christopher Dodd (D-CT):
Embedded video from CNN Video
Embedded video from CNN Video

Dodd lied. He spent a full day lying to the American people, and now he’s trying to shift blame to others. He and his pal Barney Frank want to publicly name the people who received the bonuses authorized by Congress and this administration in an attempt to deflect blame for their own actions.

And whose idea was it to add the language on the bonuses? The Obama administration’s.

Both Dodd and a Treasury Department official who asked not to be named told CNN the administration pushed for the language because they were afraid that the government would face numerous lawsuits without it.Dodd told CNN’s Dana Bash and Wolf Blitzer that Obama administration officials pushed for the language to an amendment designed to limit bonuses and “golden parachutes” at those companies.”The administration had expressed reservations,” Dodd said. “They asked for modifications. The alternative was losing the amendment entirely.”

(Incidentally, speaking of bonuses from AIG, you know who else got over $100,000 from them? Barack Obama.) Dodd clearly bears considerable responsibility for this mess; but the president who proclaimed “a new era of responsibility” wants him to take all of it, in order to protect Tim Geithner and Lawrence Summers (and possibly himself). I can’t think that’s going to go over well with the Congressional Democrats.As unpopular as it may be to say, though, hammering AIG and the folks who took the bonuses is unwise.  There was actually some reason for these bonuses, for one thing—it may not have been sufficient, but this wasn’t just an attempt to fleece the taxpayer—and for another, the downside here is much greater than the upside, as Ruth Marcus points out:

In the short run, hammering the AIG employees to give back their bonuses risks costing the government more than honoring the contracts would. The worst malefactors at AIG are gone. The new top management isn’t taking bonuses. Those in the bonus pool are making sums that for most of us would be astronomical but that are significantly less than what they used to make. Driving away the very people who understand how to fix this complicated mess may make everyone else feel better, but it isn’t particularly cost-effective.In the longer term, having the government void existing contracts, directly or indirectly, as with the suggestions of a punitive tax on such bonuses, will make enterprises less likely to enter into arrangements with the government—even when that is in the national interest. This is similarly counterproductive.Remember, the contracts were negotiated long before the government put a cent into AIG. “The plan was implemented because there was a significant risk of departures among employees at [the company],” AIG wrote in a paper explaining the plan, “and given the $2.7 trillion of derivative positions at [the company] at that time, retention incentives appeared to be in the best interest of all of AIG’s stakeholders.” . . .”That was then and this is now” is not a valid legal principle. “We are a country of law,” Obama economic adviser Lawrence Summers said Sunday. “There are contracts. The government cannot just abrogate contracts.” He was right. . . .The administration argues that anger over the bonuses, among the public and members of Congress, was at such a level that the president needed to say something to show that he understood the fury. Perhaps, but there is a countervailing risk in stoking this populist rage—especially if the administration needs to come back to Congress for more money for the banks.Once the pitchforks are out, it’s awfully hard to convince the mob to put them down.

Truth to tell, though, I think Marcus has misunderstood the reason for President Obama’s faux-populist outrage; I think this is a deliberate attempt at misdirection.  After all, firing up “the mob” may be risky, but it’s the easiest way to manipulate a lot of people at once.  This whole scenario reminds me of the many mysteries I’ve read/watched in which the person who “discovered the body” actually turns out to be the killer.  What better way to keep people from thinking that you’re the one who did the deed than to be the guy who rushes out into the street shouting “Murder!”—it’s classic sleight-of-hand.  Blow outrage at the man who only took over after the disaster happened (and who at least has a plan to restructure AIG and repay the Treasury, which is more than we can say of anyone else) and at the big shots getting the big bonuses, you get folks made at all those “rich Republicans” (even if most of them actually voted Obama) and (you hope) keep them from looking for evidence of Democratic complicity.That complicity, by the way, goes beyond the White House or the Senate.  Most people remember, vaguely, that New Mexico Governor Bill Richardson withdrew his nomination to Commerce because he was under investigation in a pay-for-play scandal, but most folks don’t know anything about the nuts and bolts of that investigation, or about CDR Financial Products, the company on which it’s focused; unless you live in a county that’s staring at bankruptcy because of CDR’s “black box” deals, you probably don’t know that this scandal goes a long way beyond New Mexico.  In particular, you probably aren’t aware that this scandal is connected to the whole mess with AIG, or that Democratic politicians are tied into it at all levels of government.  The blog The 46 has been tracking this story for a while now; start with the post linked above and follow it out—the whole mess is complicated and will take some real focused attention if you aren’t a financial whiz, but it’s well worth your time.  When you understand the ways in which CDR has been colluding with local companies and politicians to use municipal bond issues to line their own pockets at taxpayer expense, it will blow your mind.Finally, Larry Kudlow offers a note of hope in the midst of everything.  He’s ticked over the way the government has mismanaged the takeover of AIG, calling it a “fiasco” and a “complete farce,” and concluding, “The government shouldn’t run anything, because it cannot run anything”; at the same time, though, he believes there’s reason for optimism:

This week’s decision by the Federal Accounting Standards Board (FASB) to allow cash-flow accounting rather than distressed last-trade mark-to-market accounting will go a long way toward solving the banking and toxic-asset problem.Many experts believe mortgage-backed securities and other toxic assets are being serviced in a timely cash-flow manner for at least 70 cents on the dollar. This is so important. Under mark-to-market, many of these assets were written down to 20 cents on the dollar, destroying bank profits and capital. But now banks can value these assets in economic terms based on positive cash flows, rather than in distressed markets that have virtually no meaning.Actually, when the FASB rules are adopted in the next few weeks, it will be interesting to see if a pro forma re-estimate of the last year reveals that banks have been far more profitable and have much more capital than this crazy mark-to-market accounting would have us believe.Sharp-eyed banking analyst Dick Bove has argued that most bank losses have been non-cash—i.e., mark-to-market write-downs. Take those fictitious write-downs away and you are left with a much healthier banking picture. This is huge in terms of solving the credit crisis.

This follows on a piece he wrote last Friday in which he wrote,

Out of the blue, bank stocks mounted an impressive rally this week, jumping nearly 40 percent on the S&P financial list. One after another, big-bank CEOs like Vikram Pandit of Citi, Ken Lewis of BofA, and Jamie Dimon of JPMorgan are telling investors they will turn a handsome profit in the first quarter, their best money gain since 2007. This is big news. And it triggered the first weekly stock gain for the Obama administration.But this anticipated-profits turnaround doesn’t seem to have anything to do with the TARP. It’s about something called the Treasury yield curve—a medical diagnostic chart for banks and the economy.When the Fed loosens money, and short-term rates are pulled well below long rates, banks profit enormously from the upward-sloping yield curve. This is principally because banks borrow short in order to lend long. If bankers can buy money for near zero cost, and loan it for 2, 3, or 4 percent, they’re in fat city. Their broker-dealer operations make money, as do all their lending divisions.So the upward-sloped yield curve is the real bailout for the banking system.Now, turn the clock back to 2006 and 2007. In those days the Treasury curve was upside down. Due to the Federal Reserve’s extremely tight credit policies, short-term rates moved well above long-term rates for an extended period, and that played a major role in producing the credit crunch. Since interest margins turned negative, the banks had to turn off the credit spigot, and all those exotic securities—like mortgage-backed bonds and various credit derivatives—could no longer be financed.The Fed’s long-lived credit-tightening also wreaked havoc on home prices and was directly responsible for the recession that began in late 2007. At the time, Fed head Ben Bernanke said the inverted yield curve wouldn’t matter. Gosh was he wrong.

In other words, Kudlow’s arguing (and the evidence seems to be with him) that the credit crash was caused by federal over-management of the economy, and that now that that particular form of over-management has ceased, things are starting to recover.  He went on to argue in that column that “if somebody tells the banks they don’t have to sell these loans at distressed prices,” which is what the FASB’s rule change noted above has done,

the banks will enjoy plenty of breathing room to reap the benefits of the upward-sloping yield curve.Let the banks hold these investments over a long period, rather than force them to sell now. The economy will get better, as will housing and other impaired assets.

If his analysis is correct—and the evidence seems to be with him on this—then the recovery has already begun; we simply need to let it take the time it’s going to take.  The one thing that seems to be clear is that further government attempts to manage the recovery will only make matters worse, since the government can’t manage its way out of a paper bag.  That’s not a shot at Democrats, either, as it was no different when Republicans are running the show—the economy is simply too big to be managed.  All you can really do is try to keep the rules as fair as possible and try to manage the inputs so as not to distort the market (since distortions create greater opportunity for bubbles and subsequent crashes).  Here’s hoping our current government can at least resist the temptation to make matters worse.