“We cannot continue to excuse poor decisions” and “cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars.”

Thus Barack Obama, on the subject of General Motors. This was in the course of a speech given yesterday, which indeed rewarded poor decisions by giving the company 60 more days to keep operating on taxpayer life-support.

Obama is the Revolution of Circumlocution. Whenever you want to know what he actually means, just reverse his statements 180 degrees.

The President of the United States is a man who has succeeded largely by substituting charisma for substance. It’s critically important for him to look like a heavyweight. Understanding this well, the New York Times is obliging Mr. Obama with the headline “Obama Issues Ultimatum to Carmakers,” accompanied by a picture of the Great Man looking stern and powerful by contrast with the non-entities who appear alongside him.

Under the terms of the deal in which GM borrowed emergency funds from the government last December, the company is required to produce a credible operating plan with sharp cost-cutting measures by March 31, or else face a demand to immediately return the funds (thus triggering immediate moves by creditors to liquidate GM). Those of us with eyes knew at the time just how empty a covenant this would turn out to be.

Today, Obama is putting lipstick on the pig. He’s presenting what is called an ultimatum to GM and Chrysler (the beneficiaries of emergency government funds), to shape up or ship out. And they have 60 days to do it. We don’t really know what Obama actually wants to see happen in 60 days. Characteristically, he doesn’t say, which is your cue to add your own writing to his blank slate.

Why am I so cynical? Because the deal was for GM to restructure or die by March 31. Obama just gave them a sloppy wet kiss in the form of a 60-day reprieve, and he wants us to think he was being tough. The only cost that he imposed on GM was the dismissal of CEO Wagoner, whose departure has long been only a matter of time. And I’m betting that 60 days from now, there will be another big dollop of taxpayer funding for GM, accompanied by more harsh words.

And of course, another opportunity to take stern photographs of our Dear Leader.

The big headline yesterday was that GM CEO Rick Wagoner is being dismissed in favor of Fritz Henderson. This isn’t remarkable in itself, because no one expected him to last, despite having the oft-expressed (in public, anyway) full confidence of GM’s board .

Today, the President of the United States is expected to make significant announcements about GM’s warranty policy. No, that’s not a typo, and yes, it’s remarkable. I didn’t say the President of General Motors, I said of the United States.

Since when does an urban agitator and small-time legislator with a law degree think he can run an enterprise with 100,000 employees, thousands of vendors, millions of customers, and operations in every part of the world? Well, that’s one of those questions you’ll just have to ask the people who voted for him last November. I can shed some light on the rest of this.

And there’s another really remarkable aspect here, which speaks either to tremendous political skill or luck among the Democrats: they kept the whole thing out of the news for the last three months.

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In the late 1960s, there was a well-publicized furor over corporations and individuals with very high incomes who, through combinations of legal tax-avoidance activities, wound up not  paying income taxes. So Congress responded with the Alternative Minimum Tax (AMT), which now hits millions of individuals and can’t easily be adjusted because it brings in too much revenue.

I’m now hearing stories about employees of Wells Fargo (which took TARP money not by choice but by force) who make $250K (which in my part of the country barely qualifies as middle-class) in total household income. These people will see their year-end bonuses taken away, if the bonus-clawback bill passed by a large bipartisan majority in the House becomes law. We’re not talking about a few hundred traders and executives at AIG anymore.

So, intentionally or not, has the House just created an income cap at $250K that eventually will get spread far and wide throughout the economy? After all, it’s obviously unfair to apply a salary cap only to people who just happen to work for a company that was forced to take TARP money against its will. So the only response would be to abrogate the salary cap altogether (making Congress look even stupider than they look now), or to spread it to many more companies.

Will the Senate be smart enough to see this for what it is when it’s their turn to vote on it?

We’ve been watching the President of the United States hyperventilate in shock over the fact that publicly-owned financial companies pay bonuses even when they lose money. It’s really hard not to get the impression that Obama is playing to the galleries here. He and David Axelrod were probably blindsided by the public furor that this news kicked up, even though the Administration was well aware that the bonuses would be paid, so they decided to jump in front of the parade.

Let’s leave aside the critically important question of whether the government should force AIG to break the contracts it freely made with its employees, and acknowledge that the public wants a pound of flesh. Even though there is a principled case to be made in favor of the bonuses, principle is something Obama has never known or cared anything about.

It makes more sense, rather, that he decided he’d better turn AIG into the bete noir, or else he’d see the people’s righteous anger turned on himself, heaven forfend. As always with this President, politics trumps policy.

But I need to clarify an important point that is getting thrown around by a lot of people this morning: the idea that a lot of the money that taxpayers gave AIG was actually paid out by AIG to other, perfectly healthy banks and investment firms, and also to some banks that themselves received government assistance.

Perfectly true, and perfectly misleading.

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With yesterday’s declines, we now have an “official” Obama bear market, defined as a 20% decline. The S&P 500 index closed at 850 on the last trading day before Obama’s inauguration, and now it’s at 682. And it barely took six weeks.

Don’t let ANYONE tell you that this is Bush’s fault, or that Obama inherited the decline. The stock market by definition is a leading indicator. It predicts the future for corporate earnings, not the present or the past.

The stock market is saying that with Obama in office, the outlook for business is poor. And with his promises of higher taxes and more regulation, Obama is doing his very considerable best to reinforce the negative perception.

Next time you open your 401(k) or mutual fund statement, try not to flinch at the thought that a great big bear with Obama’s face is looking over your shoulder.

More pieces fell into place today regarding the new Administration’s desire to end America’s access to low-cost energy, and replace it with high-cost wind and solar power.

Yesterday, the Senate Finance Committee heard from Treasury Secretary Geithner, who said that it’s the wrong policy choice to “subsidize” oil, gas and coal producers by allowing them to operate as they always have.

Today, Energy Secretary Steven Chu told the Senate Energy and Natural Resources Committee that using the Yucca Mountain underground repository for storing nuclear waste is no longer an option. In fact, the Administration’s proposed budget eliminates all but token funding for the site.

Senator McCain sharply questioned Chu, who replied smugly that “we have better options” than Yucca Moutain (conveniently located in Senate Majority Leader Reid’s state of Nevada) for storing commercial nuclear waste.

The waste storage problem has long been considered a key barrier to the expansion of nuclear power generation in America, and there are no clear alternatives to the Yucca site. Today, America’s nuclear plants store their waste on-site, above ground.

What Chu and his boss, the President, are saying in veiled language, is that they have no intention of allowing nuclear power to stage a comeback. If these guys get everything they’re looking for, America faces a future of much higher energy costs. On top of the powerful disincentives to business investment and expansion that are also contained in the new budget, the net result will be a severely underperforming economy in the years ahead.

I’ve been quite surprised at the number of very strange things Treasury Secretary Geithner has said recently. You get a distinct sense that the man either isn’t doing his own thinking, or else he’s not strong enough to resist being told what to say by the White House.

The latest one was yesterday in the Senate Finance Committee. He said, get this, “We don’t believe it makes sense to significantly subsidize the use and production of energy sources” that contribute to global warming.

What’s a significant subsidy? Apparently that means being allowed to produce oil and gas in the Gulf of Mexico. So what’s the response? Add a 13% tax on the revenue of a narrow class of producers that should raise $5 billion or so over the next 10 years.

Why is he even wasting his time with this? His job is to find anywhere from one to two trillion dollars every year for the remainder of his time in office.

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Ok, this one floored me. Some elected official with a funny name, “Obama” or something like that, just called a stock market bottom.

Forget about he’s one of maybe a million nimrods trying to do the same thing, for the same reason: valuation. Apparently this clown was over in London talking to some other politician, I think he’s named after a color or something, or maybe the other clown came over here or something, and he says, get this, he says that “Profit and Earnings ratios” have now come down to an attractive level for stock market investors that take a “long-term perspective.”

Forget politician, this guy sounds like some snot-nosed weenie that just got his MBA and passed his Series 7 and got a job selling stock in some retail Merrill Lynch office in Jersey or someplace. (Do they even have those anymore?) “Take a long-term perspective” means “yer gonna lose money on this puppy.”

So what’s the profit and earnings ratio this guy’s talking about? It can’t ever be anything but one, can it? Because aren’t profits and earnings basically the same thing? You divide something by itself, you get one, right? Unless it’s a freakin’ mortgage or something. I mean I can see talking about the price to earnings ratio. But that’s no good either because most of the quants I know are talking about another hundred points down on the S&P.

But who listens to politicians? I mean if Bernanke or Geithner or God or someone like that got up and started talking about the stock market, I’d listen. I mean, what they do might actually make a difference. But they’re too smart for that anyway, they know we’ll overreact.

Remember when Greenspan would go up to Congress, and people would buy or sell based on how thick his briefcase was? I mean forget about it, if the guy had a three-decker brisket-liver-’n-onions from the Second Avenue Deli instead of a baloney sammidge in there, the stock market’d go up.

But some politician? Who cares what he thinks?

I’m going to try to lay out the stresses pushing and pulling on the US economy in the medium term. I’m going to intentionally oversimplify some things in order to make the overall picture as clear as possible.

And I’m going to apply a bit of a curve to the analysis, to account for the uncertainty surrounding the banking sector. (By that, I mean that we don’t know yet whether the private-sector crunch will abate, not abate, partially abate, or sectorally abate.)

In the medium term, the United States faces an unavoidable liability to fund healthcare for the baby-boomers.

As people age, they tend to consume more healthcare with each passing year. In the US, the next several decades will see steady increases in health spending, probably peaking around 2030 and declining thereafter.

This is mandated consumption. There is a firm expectation that rationing healthcare for the elderly is not an acceptable social outcome. Therefore we need to fund the spending.

There is also a firm expectation that no one may receive a level of care that far exceeds what is available to people without wealth. We could argue this point until we’re blue in the face, but I won’t waste my time. Social justice is non-negotiable in the current political environment. Therefore, some amount of income redistribution is inevitable.

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Remember way back in the early Nineties, when history had ended? Global leaders and policymakers more or less settled on the “Washington Consensus”: a combination of free-market capitalism with at least a modicum of political liberty had won the Twentieth Century’s agonized debate over which system works best.

Countries all over the world rushed to implement the new model after the fall of the Soviet Union. The common features were market capitalism combined with either a lot of freedom (Estonia) or a little bit of freedom (China).

This was a revolution in how the world organizes its societies. Americans live in the only nation in history that has believed in freedom from the start. It’s all too easy for us not to appreciate that humans have almost always lived under the thumbs of despotic rulers.

Few remember this critical thing about the past two decades: the global revolution in finance and market-capitalism has enabled at least one, and perhaps two billion human beings to rise up out of grinding poverty.

And now everything is rushing back in the opposite direction. The world’s deep thinkers are considering whether capitalism, and even freedom itself, harbor a fatal flaw, a genetic predisposition to financial self-destruction. Whether or not this is true (and I don’t profess to know the answer), it will be a long time before the world tries them again on such a grand scale.

Americans will remember the coming decade as a lean period, not as bad as some we’ve lived through. But for many of the world’s poor, it might be an evil memory for centuries, like the Black Death.