Posted by: Doug Henwood | February 10, 2009

Obama to coddle bankers

Emily Dickinson once advised: “Tell all the Truth but tell it slant.” Evidently the New York Times’ headline writers are taking advice from the enigmatic poet. The headline on the story on how the Obama administration will be going easy on banks and bankers getting bailout money blamed it all on the Treasury Secretary: “Geithner Said to Have Prevailed on the Bailout.” In internal administration battles, Geithner “successfully fought against” stricter rules on executive pay, and beat back the attempts to replace top maangement.

Of course, to say that Geithner won these battles is to say that Obama agreed with him. Once again, the embodiment of hope and change went with the status quo when he didn’t really have to. There would have been little political price to pay for putting the screws to the banksters. 

And it looks like the Treasury and the Fed will pump up some $250-500 billion to help hedge funds buy bad assets – with the FDIC guaranteeing the buyers against losses.

At this point, the only thing that makes any sense is to nationalize the weakest banks, kick out management, wipe out the shareholders, clear the decks, and start over with a tightly regulated system. This isn’t even all that radical a position anymore – and it may be inevitable, if these sick and devious “public-private partnership” schemes don’t work out, which seems likely. There is a radical nationalization position – take the banks over and convert them to public institutions – but I know that’s completely out of the question with this gang. But they’re doing absolutely everything they can to avoid even an orthodox nationalization. This is looking more and more like Japan’s disastrous indulgence of their “zombie banks” in the 1990s than Sweden’s successful bailout, the model for the “nationalize them and clear the decks” approach. Instead of a few rough years, we’re likely to get a miserable decade.

They’ve botched the stimulus, and they’re botching the financial rescue. They’re worse than I expected, and I wasn’t expecting much in the first place (see: Obamamania, a febrile disease).

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Responses

  1. Right on. Why has this administration not reached out to Paul O’Neill?

  2. Do you think this will harm Obama’s chances of a second term? It seemed to me that part of the rationale for his behavior up to now was to engineer a “political” business cycle (ie bust as you take office, boom around election time) as most two term presidents have done in the past 50 years. But if what your saying is accurate, this won’t work out well at all.

    I fear that Obama *really* believes all the right-wing nonsense about corporations creating jobs, the bailou being “our collective fault,” Reagan having “interesting ideas” etc., and isn’t just posing. He’s not just running to the right to please campaign donors and political allies: all that reagan inspired ideology he repeated during the capaign has actually got to his head.

  3. Hi Doug,
    I like the new blog.
    Seab

  4. …all that reagan inspired ideology he repeated during the capaign has actually got to his head.

    Or:

    Tony Blair loved recounting the story of a conversation with a traditionalist Labour MP who said he was sorry Blair felt the need to adopt all these right-wing stances simply to win power. “No, it’s much worse than that,” Blair replied. “I actually believe it.”

  5. Same old same old. Clintonites being reannointed. Didn’t Obama just get elected by criticizing the status quo. He is already a disappointment: as W. once said (incorrectly) “I’ve got some political capital and I’m are gonna spend it.”
    Grow some Mr. Obama and get some money into the hands of people who can spend it.

  6. The U.S. presidency is not a Monarchy–there is concept called “divided government”, so I am unclear at your contention that “they’ve botched the stimulus.” Congress and the apathetic American public are equally responsible in botching the stimulus.

    For someone, who on his radio program lamented against the vulgarization of discourse in the United States, you seem to take glee in glib, snarky commentary.

  7. Divided government? Thanks for the update, Troy!

    They botched it politically. They never articulated a compelling reason for doing what they’d planned to do, and it was easy for the Reps to attack it. To sell it properly would have required challenging market orthodoxy, which is something they’re scared of doing. Or maybe “scared” is too generous – maybe they just don’t want to do it.

    I’m reminded of Lou Reed’s remark: “If you can’t do jazz and you can’t do rock, you do jazz-rock, and what you get is one big piece of shit.”

    As for “snarky,” man is that a tedious critique. You been reading David Denby?

  8. Second term for Obama? He’ll be lucky to survive this one. Bush was so hopeless, people are relieved he didn’t blow us all up. Obama set himself up as the Special One, very dangerous if you turn out not to be so special.

    But hey, the American people RE-ELECTED (well, kind of) Bush. We’re a nation of masochists.

  9. Troy, how do you figure “the American people” come into what happens in Washington, D.C.. other than in the most tangential manner?

    Seems to me there’s a huge gulf between opinion polls showing large majorities (even without any leadership on the issues) for things like single-payer insurance and leaving Iraq and what we’re getting from “our” politicians, Obama distinctly included.

  10. Troy,, “glee,” “glib,” and “snarky” are what is known in the commenting biz as the “GSS trifecta.” Henwood now gets a $3,000 petrodollar check from Hugo Chavez, esq. See what you’ve done?
    As for the “apathetic American public,” I never once personally heard from Henry Hank Paulson in his stammering, fumbling way as to what I wanted done viz. the “Stimulus.”
    Lastly, if Mr. Henwood did indeed decry the “vulgarization of discourse” in the United States, then I join you,Troy, and the now gallant Mr. Henwood, in refusing to visit pornography sites, ever again. Only high-minded, Ralph Nader-like asceticism for us all now, right?

  11. Spot on, Doug. Obama is a Harvard man. I mean, he didn’t just GO to Harvard. There was mutual penetration. Everything so far seems consistent with that, including the Larry Summers appointment, the inaugural speech about how we should all, like our poor ancestors, work like sharecroppers to restore this great nation without regard to compensation, and a rather embarrassing infatuation with Soviet-sized bigness, both in organizational charts and in physical infrastructure. Although much is made of how much he learned from Clinton’s mistakes, he seems, like Mr. Bill, all too eager to give himself away before he finds the highest bidder. . .a slut for the rich, when what The People need is a whore. That said, I have no regrets about having fought for him to defeat McCain.

  12. “We’re likely to get a miserable decade.”

    You misspelled “another.” Between this and military adventures in the Graveyard of Empires, I have trouble with optimism.

    That said, it looks like retails sales, housing sales and unemployment may have hit a bottom last month, which would be on schedule. Additionally, the public despair and recognition factor is so high it’s hard not to think that’s a contrarian indicator. I haven’t looked at those figures, and there’s so much malfeasance in our economy that if this is a recovery, I can’t help but imagine the next recession being just as bad if not worse.

    Generally, I have to wonder about the Establishment types and the “Washington Consensus”: it strikes me as the type of groupthink, wrapped in ideology and mythology, that rots a nation. Not that long ago we actually had different schools of economists at various levels of the Establishment, at least to the extent that Keynsian technocratic liberalism differed from Friedman’s technocratic liberalism. Now there seems to be little real debate occuring among these folks, save some confused defense of looting behavior by the banks.

  13. It is time for American’s to publically acknowledge that the Bailout Executives are literally at war with the public. With that in mind, employees must learn how to identify those that are waging war and fight back. That is because when the elites practice open fraud and wage war on America’s it is time to begin waging war on them. It is called self defense. This war that is waged against the public has been going on for years.

    For example, executives now permit foreign workers to log onto American IT systems via the Internet without any visa requirement to steal jobs. I have personally witnessed foreign workers performing the routine duties of accountants, IT, customer service, purchasing agents, finance, banking, clerical, administrative assistants, engineering, and other categories of work.

    Everybody is now open to the attack on employment by American Executives. That is because American Executives have only one goal, and that is to enrich only themselves no matter what the human costs. As CEO’s continue to seek profits they follow a clear pattern of waging war on American’s. It is no longer enough to wait out the recession. American’s must learn to fight back using any weapon at their disposal. Writing letters to President Obama and our legislators is proving ineffective.

    How can American’s fight back? They can do that by becoming civilly disobedient. The goal is to create fear in the minds of the American

    Executives who have literally stolen trillions from the public. It is clear that no “day-of-reckoning” is coming for the CEO’s. They have too much power to influence our political leaders. The theft includes stolen jobs, and the crisis is escalating with no end in sight.

    Make no mistake. This is not your “normal” recession. The very survival of American’s and their ability to feed their family is at stake. It is thus mandatory to go to war against the enemy. That enemy is American CEO’s who are literally stealing from the public.


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