Now watch this drive
I have been arguing for some time that Barack Obama made a crucial tactical error in bailing out the big banks early in his presidency. His actions have left him vulnerable to populist resentment. In my view, this weakens his credibility and ability to push through other pieces of his legislative agenda and will harm Democrats in the 2010 elections.
Slipping poll numbers
Indeed, Obama has slipped somewhat in opinion polls. Now, some will tell you that it is because Obama is running a socialist left-wing big government agenda in a center-right country. And as a result, he is losing independent voters. But, is that really true?
While conservatives are opposed to the Democrats’ health care initiatives as an expansion of the state, progressives are identifiably more opposed to a greater number of Obama legislative issues (willingness to abandon the public option, escalation of war in Afghanistan, and continuation of rendition to name a few).
Bailouts poisoned the well
I would argue that it is the apparent ineffectiveness and unfairness of Obama’s policy initiatives on banks and the economy which has angered middle class Americans – conservatives and liberals alike. The economy is still in the tank despite incipient signs of a technical recovery. And Americans understand that banks and bank staff are making lots of money while thousands lose job and home.
Why then would you trust government? More likely, you would see government as the problem? Most people are not ideological and have no opinion about the role of government except when things are not going well. In my view, this is a major reason why so many are sceptical about changing healthcare. Barry Ritholtz gave voice to this sentiment in a post earlier today.
A problem of substance and style
However, I want to take this one step further because the problem is as much style as substance. Today, we are to hear Obama’s much-anticipated speech on healthcare reform. Some feel this is a make-or-break speech for the President. I look forward to hearing his ideas. But, I don’t expect to hear anything new and I suspect many others feel the same way. Has Obama’s charm worn off? In some ways, yes.
I have tried to put my finger on it in previous posts, and I think Barry did a fine job in describing the connection between the disgust over bailouts and Obama’s difficulty with healthcare. But, there was something missing for me until I saw Yves Smith’s last post on debtor’s revolt. The woman in the video calling for a debtor’s strike made a passing reference to the bailouts which made clear to me her anger that a bank could charge her 30% interest when that same bank wouldn’t exist except through taxpayer largesse.
And that’s when it hit me: it’s the Obama as Bush Three meme. Look at these two videos below. I have some words afterwards.
George W. Bush video
Barack Obama video
As I see it, the man in video number one shows extreme callousness when switching abruptly from a serious discourse about war to a game of golf, generally considered the sport of the wealthy. If one wants a defining moment for the failure of George W. Bush’s presidency, there it is.
Fast forward to August 2009 and we see an eerily similar circumstance. The economy is still in tatters and Americans are at verbal war over health care. Yet, the President of the United States is off playing golf. Why anyone in the White House thinks this is a good idea is beyond me. It certainly appears to be more of the same – and that is in striking contrast to the pre-inauguration image Obama enjoyed.
I was struck by the fact that Obama was golfing during his vacation two weeks ago as his legislative agenda was falling apart. So this is the image that I will have in my head as I listen to the President tell us why his legislative agenda is the right one for America.
There unquestionably is populist anger about the bailouts on both right and left. But the anger on the right is quite well organized, almost certainly by the RNC and neo-con interests and focused solely on the Obama presidency. It conveniently overlooks the Republican origins of the bailouts. The anger on the left, where it exists, more honestly blames the poisonous connections between lobbyists and politicians and is quite willing to include Obama in its sweep. For anyone to believe that the recent brownshirt townhall tumult was in any way aimed at the system is naive. The debt revolt lady takes the view of left opposition to the system and is more authentically populist. The fascists would never change the system, only the regime’s lead party. After all they’re part of it.
The argument about fascism already being here is one I have heard a lot recently but have not ascribed to as yet. Provocative, yes. Something to watch, definitely.
A very perceptive analysis. You may have hit the nail on the head: the President should instead have been photo-ed at his desk working on the nation’s problems despite being technically on vacation.
Of course “W” had other negatively-defining moments: “Mission Accomplished” and “Great job, Brownie” amongst them.
Likely you would agree that it’s not just the image of the bailouts from what I call the Bushbama Continuity of bailouts; it’s the numbers involved. If shareholders and bondholders of troubled financial companies had bailed out their own companies, perhaps true healthcare reform could be funded even given the parlous economy.
Now the Dems have to pretend that CBO is wrong, but the truth is that adding insurance coverage to tens of millions of people is very expensive. I suspect Mr. Bond Market would veto another huge unfunded liability.
Yes, Mr. Bond Market would indeed revolt because of the eye-popping numbers you have mentioned or alluded to. We’re talking about stimulus, bailouts, and deficits in the hundreds of billions and trillions. That is why it was one and you’re done for Obama on stimulus and on chances to reform banking.
At this point I am not creative enough to figure out how Obama can pull this off without some serious asset inflation tailwinds. On the other hand, if the economy falters, his goose is cooked. The question is what kind of populist gets into office then.
“The question is what kind of populist gets into office then.”
Since the regime consists of both fascist and center-right elements with the center-right its public face at the moment, the only conceivable alternative is something more purely fascist. And that’s entirely possible. I’m reminded of the make up of the immediately pre-Hitler Nationalist coalitions of early 1930s Germany. The “respectable” Von Papen types held power while their soon-to-be partners, the National Socialists, engaged in street violence. Eventually, of course, the Von Papen’s were devoured, hoist on their own petard.
You dont have anyone capable and well-connected enough to pull off a fascist takeover – the Russians has Putin, you have no one except sleazy lawyers. Totalitarianism you already have in spades, but by committee, like say in Communism!
Since there will be no “revolution” the crisis in the US will drag on and on until everyone has learned to work around the increasingly irrelevant “system” – Government will become like weather, unpredictable and bad for the people who happen to be in the way – the rest adjust to the climate.
Now, Please move along to the designated Free Speech area.
If I missed it, please, let me know.
But other than being a part of the loud and proud chorus of folks who shout that the bailouts were a bad idea, did you or do you have a feasible alternative for the administration? One that takes into account the 20 + year run up and sudden explosion of the situation, the political and fiscal realities faced by a new administration which had to decide how to proceed with the hasty and sloppy tourniquet Paulson et al applied to the nation’s financial system?
Rather than sit back and nit-pick why don’t you tell everyone how YOU would have handled things differently. You have to take into account the unprecedented nature of economy and the financial system and the trajectory set by the “rescue” implemented in the previous months. Remember the state of the world on January 20, 2009. Visualize what you would have done, what was financially and political feasible. Use your imagination, you didn’t use it when you posted those two videos to make a shallow comparison, so use it now.
Keep in mind you’d have a few other things to deal with. Not another blog to post to but two wars, a historic housing crisis, and any number of other grave and frightening situations we face.
What would you have done?
I have made a number of posts of just this nature. Here are three to start with addressing potential solutions and there pitfalls:
https://pro.creditwritedowns.com/2008/08/swedish-banking-crisis-response-model.html
https://pro.creditwritedowns.com/2008/09/i-was-wrong-heres-my-new-plan.html
https://pro.creditwritedowns.com/2008/11/the-problem-with-comprehensive-banking-crisis-solutions.html
These were all suggested well before Obama came to office, some even before he won the election.
One more thing, I do think you missed it. In the blogosphere there has been considerable debate for well over a year – even before the Lehman crisis – about the types of institutional reforms that were necessary in the financial arena.
Many mainstream economists like Simon Johnson, Nouriel Roubini, Raghuram Rajan, and Willem Buiter have blogged and written on these topics.
One can only assume that these considerations were rejected by the Obama team because they disagreed with the policy proposals not because reasonable alternative ideas were unavailable. As a result, it is wholly reasonable to criticize the political outcome from Obama’s having made the specific caculi he made after January 20th.
I knew about the stances of Roubini, Johnson and Buiter.
What I meant to say was “If I missed it HERE, please, let me know.”
I obviously did, and you let me know. Great stuff.
This confirms a few things… those who are quick to judge are usually quickly refuted, you know what you’re talking about and you are now one of my go to sources.
More than anything, my reaction was to the nature of the post. I think that the golf imagery is a bad idea too, but to compare it to the Bush video is a bit of a stretch.
“Eerily similar?” Hardly.
Thanks for the links! Again, great stuff.
Thank you as well. I look forward to seeing your comments in the future.
“One that takes into account the 20 + year run up and sudden explosion of the situation, the political and fiscal realities faced by a new administration which had to decide how to proceed with the hasty and sloppy tourniquet Paulson et al applied to the nation’s financial system?”
Oh, the poor dears. There they were, spiritually pristine, with not a hair in the past of the crisis, thrust unjustly into the vagaries of populist rage, and all the while thinking only of us, our progeny, and Jesus.
A little nudge, sir. These bacteria WERE the crisis when in their first incarnation in the 1990s, having set the world’s record for deregulation then and lost opportunities now. I’m afraid their concern with “how to proceed with the hasty and sloppy tourniquet Paulson et al applied to the nation’s financial system” has had one hell of a lot more to do with who funded their boss’s campaign and with their planned futures as K Street Johns working among the ubiquitious congressional whores than anything particularly self-donative. What they merit – as do their immediate predecessors – is a stint behind razor wire awaiting interrogation and public trial. How’s that for an alternative?
I meant a possible, reality based alternative.
I’m aware of the history of Summers, Geithner, et al.
I’m know who shouted the loudest for and benefited the most from de-regulation.
I’m aware of the insipid relationship between Wall St and politicians.
I’m aware that no politician can ever rise high enough above the swamp he/she made his/her career in.
But I seek plausible ideas of how to forge ahead in spite of the shitty political turnstile that keeps hitting us in the groin as we try to move ahead. As eloquent and pleasing as your imagery is, it ain’t gonna happen.
Name,
“But I seek plausible ideas of how to forge ahead in spite of the shitty political turnstile that keeps hitting us in the groin as we try to move ahead.”
In my view, there is no way plausibly “to forge ahead in spite of the shitty political turnstile that keeps hitting us in the groin.” The turnstile is itself an insuperable barrier. The only “reality based” methodology remaining to us now are massive public demonstrations – something along the lines of the Solidarity protests in Poland in the early 1980s – and/or the general strike aimed at the restoration of our democracy. One possibility open to us after these initial steps is a second constitutional convention aimed at mending the flaws in the first that made the present abuses possible. Another, a system of industrial government or workplace councils that would follow the broad outlines of the programme of the now defunct Socialist Labor Party, the one that ran candidates for political office in the United States for so many years.
And on a personal note, your sense that “it ain’t gonna happen”, brings to mind the concluding stanzas of a poem I read many years ago about Nelson Rockefeller’s commissioning the communist, Diego Rivera, to paint a mural entitled, Man At The Crossroads, for the opening of the newly completed Rockefeller Center in Manhattan in 1934. Rivera painted a scene which included representations of Trotsky and Vladimir Lenin and Rockefeller, absolutely furious, cancelled the commission. Here’s my recollection of the poem’s final lines:
“After all its my wall”, said Nelson.
“We’ll see if it is”, said Rivera.
A most poignant portrayal and emblematic of the kind of presumptuous disregard – better yet contempt – that so characterizes our political class in its dealing with the peoples’ interests. We’ll just have to see if their theft of our democracy will be so generously tolerated as we move into the future.
Edward,
Obama’s economic team was his first and crucial mistake.
Geithner is, all jokes aside, a person who cheated on his taxes and paid the minimal penalty he could get away with at the time, only making full restitution when he was selected for Treasury. He is incapable of giving a straight answer to any question. All evidence suggests the man completely lacks moral fiber and is a tool of the money-center banks.
Summers gives influence peddling a bad name. Here’s a guy who reportedly worked one day per week for $5.2M/year selling MBS to the Chinese for a hedge fund and “earned” $100K for a couple hours of “lecturing” at the money-center banks. He has apparently marginalized the most sensible member of the original economic team – Paul Volker.
Bernancke was re-appointed to please the “Market”.
Austan Goolsby makes about as much sense as his fellow Chicagoan Casey Mulligan.
This team has FAILURE written all over it – their interests lie with the rentier class that owns and operates the FIRE economy. There was and is no chance of meaningful reform from this group and the massive giveaway to the wealthy and privileged was a foregone conclusion.
I am angry. I feel cheated. I have lost faith in any hope for change.
OregonGuy,
“Geithner is, all jokes aside, a person who cheated on his taxes and paid the minimal penalty he could get away with at the time, only making full restitution when he was selected for Treasury. He is incapable of giving a straight answer to any question. All evidence suggests the man completely lacks moral fiber and is a tool of the money-center banks”.
I’m not sure when it is in anyone’s experience with Geithner that they realize that he is simply the most loathsome maggot. I suspect its when they sense that he doesn’t look at a questioner straight on. Add to that foreknowledge of his tax escapades and the impression is almost certainly clinched.